The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
ANNUAL
T
}f the Secretaiy of the Treasury
in the State of the Finances
FOR THE FISCAL YEAR ENDED JUNE 30, 1B70
T
io
1970
y
REPGRT
of the Secretary of the Treasury
on the State of the Finances
fOH THE FISCAL YEAR ENDED JUNE 3 0 . 1970
U.S>
IAjas-iMh^^f ^L^ajH^p^^'i^-',
DEPARTMENT OF THE TREASURY
DOCUMENT NO. 3251
Secretary
U.S. GOVERNMENT PRINTING OFFICE. WASHINGTON : 1970
For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C. 20402 - Price 32.25 (paper cover)
The statistical tables to this Annual Report will be published in a separate
STATISTICAL APPENDIX.
CONTENTS
Page
Statement by the Secretary
XV
REVIEW OF TREASURY OPERATIONS
Financial Operations
j . _
Summary
_.
Budget receipts and outlays
Cash and monetary assets
1
Corporations and other business-type activities of the Federal Government
Government-wide Financial Management
Federal Revenue Sharing
Federal Debt Management
^
Law Enforcement and Operations
Taxation Developments
'
International Financial Affairs
3
3
4
6
7
8
10
11
24
27
37
ADMINISTRATIVE REPORTS
Administrative Management
Law Enforcement
Comptroller of the Currency, Office of the
Customs, Bureau of
Director of Practice, OfRce of
Domestic Gold and Silver Operations, Office of
Engraving and Printing, Bureau of
Fiscal Service:
Accounts, Bureau of
Public Debt, Bureau of the
Treasurer of the United States, Office of the
Foreign Assets Control, Office of
Internal Revenue Service
Mint, Bureau of the
U.S. Savings Bonds Division
U.S. Secret Service
61
65
66
71
86
87
89
._.
.
_
.
94
101
106
112
113
127
131
135
EXHIBITS
PUBLIC DEBT OPERATIONS, REGULATIONS, AND LEGISLATION
Treasury Notes Offered and Allotted
1. Treasury notes
143
Treasury Bills Offered and Tenders Accepted
2. Treasury bills
150
Regulations
3. Department Circular No. 3-67, December 5j 1969, Revised, notice of
termination of sale of U.S. savings notes.
in
160
IV
CONTENTS
Page
4. Department Circular No. 653, December 12, 1969, Eighth Revision,
offering of U.S. savings bonds. Series E
5. Department Circular No. 905, December 12, 1969, Fifth Revision,
offering of U.S. savings bonds. Series H
6. Second Amendment, December 31, 1969, to Department Circular No.
1-63, regulations governing U.S. retirement plan bonds
7. Fourth Amendment, May 20, 1970, to Department Circular No. 300,
general regulations with respect to U.S. securities
...
160
243
276
277
Legislation
8. An act to increase the public debt limit set forth in section 21 of the
Second Liberty Bond Act
278
ECONOMIC AND FINANCIAL POLICY
9. Statement by Secretary Kennedy, February 19, 1970, before the Joint
Economic Committee
10. Remarks by Assistant Secretary Weidenbaum, March 13, 1970, before
the National Planning Association, Washington, D . C , on the postVietnam economy
11. Remarks by Assistant Secretary Weidenbaum, March 24, 1970, before
the American Bankers Association, National Installment Credit
Conference, Chicago, 111., on consumer spending, credit, and taxes
12. Remarks by Assistant Secretary Weidenbaum, April 16, 1970, before
the National Association of Business Economists, Cleveland, Ohio,
on Government, investment, and economic growth
13. Remarks by Assistant Secretary Weidenbaum, May 12, 1970, before
the 50th Anniversary Meeting of the National Association of Savings
Banks, New York, N.Y., onthe American economy in 1970
14. Statement by Assistant Secretary Weidenbaum, June 2, 1970, before
the Subcommittee on Economy in Government of the Joint Economic
Committee
15. Remarks by Assistant Secretary Weidenbaum, June 16, 1970, before the
McGraw-Hill Conference on Industry and Environment, on economics and the environment
278
281
284
287
292
296
308
PUBLIC DEBT AND FINANCIAL MANAGEMENT
16. Statement by Secretary Kennedy, May 25, 1970, before the House
Ways and Means Committee, on the public debt limit
17. Statement by Secretary Kennedy, June 18, 1970, before the Senate
Finance Committee, on the public debt limit
18. Statement by Under Secretary for Monetary Affairs Volcker,
March 17, 1970, before the annual meeting of the American Paper
Institute, New York, N.Y., on financing domestic growth
19. Statement by Deputy Under Secretary for Monetary Affairs
MacLaury, October 4, 1969, before the 16th Annual Bankers Forum,
Georgetown University, Washington, D . C , on Federal credit
programs in the 1970's
311
314
316
320
TAXATION DEVELOPMENTS
20. Statement by the President, December 30, 1969, on signing the Tax
Reform Act of 1969
21. Statement by Secretary Kennedy, September 4, 1969, before the
Senate Finance Committee on the Tax Reform Act of 1969
22. Statement by Assistant Secretary Cohen, September 4, 1969, before
the Senate Finance Committee, on the Tax Reform Act of 1969
23. Statement by Secretary Kennedy, May 12, 1970, before the House
Committee on Ways and Means, on the proposed trade act of 1969..
24. Statement by Assistant Secretary Weidenbaum, October 1, 1969,
before the House Ways and Means Committee, on the Employment
Security Amendments of 1969
25. Press release. May 19, 1970, announcing the President's request for
enactment by Congress of an environmental control tax on lead
additives used in motor fuels
324
325
328
350
352
355
JAM 3 G
CONTENTS
V
REiVENUE SHARING
Page
26. Message from President Nixon t o the Congress, August 13, 1969, on
revenue sharing
27. R e m a r k s b y Secretary Kennedy, November 13, 1969, before the
Greater S o u t h D a k o t a Association, Mitchell, S. Dak., on the fiscal
side of t h e new federalism
28. R e m a r k s b y U n d e r Secretary Walker, M a r c h 23, 1970, before the 10th
Annual Washington Conference on B u s i n e s s - G o v e r n m e n t Relations,
on new federalism in the 1970's—the financial dimension.
29. R e m a r k s b y Assistant Secretary Weidenbaum, August 27, 1969,
before t h e National Conference of State Legislative Leaders, St.
Louis, Mo., on a new fiscal federalism
30. R e m a r k s b y Assistant Secretary Weidenbaum, M a y 18, 1970, before
the Chemical Forum, Washington, D . C , on the progress of revenue
sharing
356
359
362
368
372
L A W ENFORCEMENT DEVELOPMENTS
31. R e m a r k s b y Assistant Secretary Rossides, April 16, 1970, before the
76th Anniversary B a n q u e t of the Bronx Board of T r a d e and Chamber of Commerce, Bronx, N . Y . , on President Nixon's antiheroin
action program
374
32. R e m a r k s b y Assistant Secretary. Rossides, April 23, 1970, before the
89th Annual B a n q u e t of Phi Delta Phi, Columbia Law School,
New York, N . Y . , on the Nixon administration's reform program to
c o m b a t t h e illegal use of secret foreign b a n k accounts
380
33. S t a t e m e n t b}^ Assistant Secretar}^ Rossides, J u n e 9, 1970, before the .
Subcommittee on Financial Institutions of the Senate Banking and
Currenc.y Committee, on secret foreign b a n k accounts
386
33a. R e m a r k s by Assistant Secretary Rossides, J u n e 24, 1970, before the
Senate Select Committee on Small Business, on the action program
of the Treasury t o combat international cargo theft a n d pilferage
402
INTERNATIONAL FINANCIAL AND MONETARY DEVELOPMENTS
34. S t a t e m e n t by Secretary Kennedy, J u l y 28, 1969, on ratification of the
Special Drawing R i g h t s A m e n d m e n t
35. R e m a r k s by Secretar^^ K e n n e d y as Governor for the United States,
September 30, 1969, a t the Joint a n n u a l discussion of the Boards of
Governors of the International M o n e t a r y F u n d and the International Bank for Reconstruction and Development and its affiliates._
36. C o m m u n i q u e of the Ministerial Meeting of the Group of Ten,
October 1, 1969, Washington, D.C
37. Resolution on allocation of Special Drawing Rights for the first basic
period, approved b}^ the Board of Governors of the International
M o n e t a r y F u n d , October 3, 1969
38. Announcement by the International M o n e t a r y F u n d , J a n u a r y 2, 1970,
of an initial allocation of Special Drawing Rights
39. R e m a r k s b}^ Secretary K e n n e d y as Governor for the United States,
April 10, 1970, a t the 3d annual meeting of the Asian Development
Bank, Seoul, Korea
40. S t a t e m e n t b}^ Secretary Kenned.y, April 16, 1970, before the House
Committee on Banking and Currency on behalf of legislation relating
to the I n t e r n a t i o n a l M o n e t a r y F u n d , the Internatibnal Bank for
Reconstruction and Development, a n d the Asian Development
Bank
41. R e m a r k s b y Secretary Kennedy, April 23, 1970, as Governor for the
United States, a t the l l t h annual meeting of the Inter-American
Development Bank, P u n t a del Este, U r u g u a y
42. R e m a r k s by Secretary Kennedy, Ma^^ 20, 1970, a t the American
Bankers Association M o n e t a r y Conference, H o t Springs, Va
43. S t a t e m e n t by Secretary Kennedy, J u n e 30, 1970, before the House
Banking a n d Currenc}^ Committee on proposed replenishment of
the Inter-American Development Bank
44. S t a t e m e n t by U n d e r Secretary for M o n e t a r y Affairs Volcker, September 3, 1969, before the Senate Finance Committee, on extension of
the interest equalization tax
405
405
410
411
411
413
415
423
426
430
435
VI
CONTENTS
Page
45. Statement by Under Secretary for Monetary Affairs Volcker, November 14, 1969, before the Subcommittee on International Exchange
and Payments of the Joint Economic Committee
46. Letter from Under Secretary for Monetary Affairs Volcker, January 9,
1970, to Congressman Reuss, on the handling of South African gold.
47. Press release of the International Monetar}^ Fund, December 30,
1969, on South African gold
48. Press release of the International Monetary Fund, January 13, 1970,
attaching correspondence from South African Minister of Finance
Diederichs and Under Secretary for Monetary Affairs Volcker
49. Statement by Under Secretary for Monetary Affairs Volcker, February 19, 1970, before the Joint Economic Committee
50. Remarks by Under Secretary for Monetary Affairs Volcker, April 20,
1970, before the annual dinner of the American Chamber of
Commerce, Brussels, Belgium
51. Remarks by Assistant Secretary Petty, May 28, 1970, before the
Conference on Economic Growth, sponsored by the Toronto Stock
Exchange, Toronto, Canada, on the World, North America and
Canada
52. Statement of the U.S. Treasury, August 8, 1969 concerning the
devaluation of the French franc
53. Statement of the U.S. Treasury, October 24, 1969, on revaluation of
the German mark
..
54. Press release, December 24, 1969, announcing extension of the exchange
stabilization agreement between the United States and Mexico
55. Press release. May 15, 1970, announcing the United States purchase of
$150 million in foreign currencies from the International Monetary
Fund and the sale of $20 million of Special Drawing Rights
56. Other Treasury testimony published in hearings before congressional
committees, July 1, 1969-June 30, 1970
439
443
444
445
448
451
455
461
461
461
461
462
GOLD AND SILVER OPERATIONS
57. Statement by General Counsel Eggers, October 1, 1969, before the
House Banking and Currency Committee, on H.R. 13252, on the
Coinage Act of 1969
58. Remarks by Assistant Secretary Rossides, October 20, 1969, before the
1969 Mining Convention of the American Mining Congress, San
Francisco, Calif., on silver
59. Press release, June 18, 1970, statement by Assistant Secretarj^ Rossides
concerning the weekly sale of silver through the General Services
Administration
464
466
471
JOINT FINANCIAL M A N A G E M E ; N T IMPROVEMENT PROGRAM
60. Memorandum from the President, August 12, 1969, to heads of Government departments and agencies, on the Joint Financial Management Improvement Program
471
ORGANIZATION AND PROCEDURE
61. Treasury Department orders relating to organization and procedure..
472
ADVISORY COMMITTEES
62. Advisory committees utilized bythe Department of the Treasury under
Executive Order 11007
.
INDEX
.
479
499
STATISTICAL APPENDIX
The tables to this Annual Report will be published in the separate "Statistical
Appendix."
NOTE.—Details of figures may not add to totals because of rounding.
Secretaries, Under Secretaries, General Counsels, Assistant Secretaries, and
Deputy IJnder Secretaries for Monetary Affairs, Serving in the Department
of the Treasury from January 21, 1969, through July 1, 1970 i
Term of service'
From
To
Officials
Secretary of the Treasury
David M. Kennedy, Illinois.
Under Secretary
27,1969
Charls E. Walker, Texas.
Under Secretary for Monetary Affairs
27,1969
. . . . . . Paul A. Volcker, New Jersey.
General Counsels
1,1969 Mar. 20, 1970 Paul W. Eggers, Texas.
1, 1970
Samuel R. Pierce, Jr., New York.
Assistant Secretaries
15, 1968
John R. Petty, New York.
11,1969
Edwin S. Cohen, Virginia.
1, 1969
Eugene T. Rossides, New York.
23, 1969
Murray L. Weidenbaum, Missouri.
Deputy Under Secretaries of the Treasury for
Monetary Affairs
12,1968 Mar. 31, 1969 Frank W. Schiff, New York.
1,1969
Bruce K. MacLaury, New Jersey.
Fiscal Assistant Secretary
15,1962
John K. Carlock, Arizona.
Assistant Secretary for Administration
14, 1959
A. E. Weatherbee, Maine.
Jan. 22,1969
Jan.
Jan.
Apr.
July
May
Mar.
Apr.
June
Feb.
Apr.
June
Sept.
1 For officials from Sept. 11, 1789, to Jan. 20, 1969, see 1969 annual report, pp. 382-390.
VII
PRINCIPAL ADMINISTRATIVE AND STAFF OFFICERS OF THE
DEPARTMENT OF THE TREASURY AS OF JULY 1, 1970
Secretary of the Treasury
Assisitant to the Secretary
Confidential Assistant to the Secretary—
Under Secretary of the Treasury
Assistant to the Under Secretary
Staff Assistant to the Under Secretary—
Under Secretary for Monetary Affairs
Deputy Under Secretary for Monetary
Affairs
Special Assistant to the Secretary (Debt
Management)
General Counsel
Deputy General Counsel
Assistant General Counsel and Ohief
Counsel, IRS
Assistant General Counsel
Assistant General Counsel
Assistant General Counsel
Assistant General Counsel
Director of Practice
Director, Office of Equal Opportunity
Program
Assistant Secretary (Tax Policy)
Deputy Assistant Secretary (Tax Legisl-ation)
Deputy Assistant Secretary (Tax Analysis)
Associate Director, Office of Tax
Analysis
Assistant Director
Assistant Director
Assisitant Director, Office of Tax
Analysis and Director, Office of
International Tax Affairs
Assistant Director—
Chief Excise Taxation Staff
Chief Business Taxation Staff
Chief Aggregate Economic Foreeasting Staff
Tax Legislative Counsel
Deputy Tax Legislative Counsel (International) and Special Assistant
to Assistant Secretary
Deputy Tax Legislative Counsel.
Associate Tax Legislative Counsel
Associate Tax Legis,lative Counsel (International) and Deputy Special
Assistant to Assistant Secretary
Assistant Secretary (Economic Policy)
Assistant to Assistant Secretary
Director, Office of Domestic Gold and
Silver Operations
Director, Office of Financial Analysis
Director, Office of Debt Analysis
VIII
David M. Kennedy
Donald A. Webster
Mary E. Harris
Oharls E. Walker
Edward J. Gannon
Richard D. Ohotard, Jr.
Paul A. Volcker
Bruce K. MacLaury
Edward J. Geng
Samuel R. Pierce, Jr.
Roy T. Englert
K. Martin Worthy
Charlotte Tuttle Lloyd
Michael Bradfield
Hugo A. Ranta
Donald L. E. Ritger
William H. Sager
David A. Sawyer
Edwin S. Cohen •
John S. Nolan
Joel E. Segall
Gerard M. Brannon
Richard E. Slitor
Thomas F. Leahey
Nathan N. Gordon
Oabriel G. Rudney
John Copeland
Seymour Fiekowsky
Ralph B. Bristol
Meade Whitaker
Robert T. Cole
John E. Chapoton
Jerry L. Oppenheimer (Acting)
Robert J. Patrick, Jr.
Murray L. Weidenbaum
Robert L. Joss
Thomas W. Wolfe
John H. Auten
Edward P. Snyder
PRINCIPAL ADMINISTRATIVE AND STAFF OFFICERS
Assistant Secretary (Enforcement and Operations)
^
Deputy Assistant Secretary
Special Assistant (Secret Service)
Director, Office of Law Enforcement
Deputy Director, Office of Law Enforcement
:
Director, Consolidated Federal Law Enforcement Training Center
:
Deputy Director, (Consolidated Federal
Law Enforcement Training Center
Director, Office of Tariff and Trade
Affairs
Director, Office of Operations
INTERPOL Chief
Assistant Secretary (International Affairs)
Deputy Assistant Secretary
Deputy to Assistant Secretary for Interin ational Monetary Affairs
Deputy to Assistant Secretary for International Financial and Economic Affairs._
Director, Office of Latin America
Director, Office of Industrial Nations
Director, Office of Developing Nations
Director, Office of Balance of Payments
Programs, Operations and Statistics
Director, Office of International Financial
Policy Coordination and Operations
Director, Office of International Gold and
Foreign Exchange Operations
Director, Office of International Economic
Activities
Director, Office of Administration
:_._
Director, Office of Foreign Assets ControlFiscal Assistant Secretary
Deputy Fiscal Assistant Secretary
Assistant Fiscal Assistant Secretary
Assistant Fiscal Assistant Secretary
Assistant Secretary for Administration
Deputy Assistant Secretary and Director,
Office of Budget and Finance
Director, Office of Planning and Program
Evaluation
Director, Office of Personnel
Director, Office of Management and Organization
Director, Office of Administrative Services
Director, Office of Security
Special Assistant to the Secretary (Public
Affairs)
Deputy Special Assistant to the Secretary
Special Assistant to the Secretary (National
Security Affairs)
Deputy Special Assistant to the Secretary
.
Special Assistant to the Secretary (Congressional Relations)
Deputy Special Assistant to the Secretary
Deputy Special Assistant to the Secretary
.
Senior Consultant
Deputy Assistant to the Secretary (Director,
Executive Secretariat)
Eugene T. Rossides
William L. Dickey
John T. Sherwood
Martin R. Pollner
G. Gordon Liddy (Acting)
Vacancy
Robert G. Efteland
Matthew J. Marks
William F. Hausman
Kenneth S. Giannoules
John R. Petty
Vacancy
George H. Willis
Ralph Hirschtritt
E. Jay Finkel
F. Lisle Widman
Sam Y. Cross
Philip P. Schaffner
Charles R. Harley
T. Page Nelson
Robert G. Pelikan
Leonard S. Dixon
^^rs. Margaret W. Schwartz
John K. Carlock
Hampton A. Rabon
Boyd A. Evans
Sidney Cox
A. E. Weatherbee
Ernest C. Betts, Jr.
Benjamin Caplan
Amos N. Latham, Jr.
J. Elton Greenlee
Paul McDonald
Thomas M. Hughes
Calvin E. Brumley
Alan B. Wade
Anthony J. Jurich
John J. McGinnis
James E. Smith
Gene A. Knorr
Philip H. Potter (Acting)
Henry C. Wallich
Paul R. Beach
IX
X
PRINCIPAL ADMINISTRATIVE AND STAFF OFFICERS
BUREAU OF ACCOUNTS
Commissioner of Accounts
Assistant Commissioner
Comptroller
Chief Disbur.iing Officer
Director, Government Financial Operations
Sidney S. Sokol
L. D. Mosso
Steve L. Comings
Lester W. Plumly
Sebastian Fama
BUREAU OF C U S T O M S
Commissioner of Customs
Deputy Commissioner of Customs
Assistant Commissioner, Office of Administration
:
Assistant Commissioner, Office of Investigations
Assistant Commissioner, Office of Operations
Assistant Commissioner, Office of Regulations
and Rulings
Chief Counsel
.
BUREAU OF ENGRAVING AND
Director, Bureau of Engraving and Printing
Deputy Director, Bureau of Engraving and
Printing
:
Myles J. Ambrose
Edwin F. Rains
Glenn R. Dickerson
Harold F. Smith
David C. Ellis
Robert V. Mclntyre
Alfred H. Golden
PRINTING
James A. Conlon
Donald C. Tolson
BUREAU OF T H E M I N T
Director of the Mint
Deputy Director of the Mint
As.astant Director
Mrs. Mary T. Brooks
Frederick W. Tate
Sidney F. Carwile
BUREAU OF T H E P U B L I C DEBT
Commissioner of the Public Debt
Assistant Commissioner
Deputy Commissioner
Chief Counsel
Deputy Commissioner in Charge,
Office
Chicago
INTERNAL REVENUE
Donald M. Merritt
H. J. Hintgen
J. J. Lubeley
Thomas J. Winston, Jr.
Michael E. McGeoghegan
SERVICE
Commissioner of Internal Revenue
Randolph W. Thrower
Deputy Commissioner
William H. Smith
Assistant Commissioner (Administration)
Edward F. Preston
Assistant Commissioner (Inspection)
Vernon D. Acree
Assistant Commissioner (Compliance)
Donald W. Bacon
Assistant Commissioner (Data Proces ing)
Vacancy
Assistant Commissioner (Planning and Research)
Albert W. Brisbin
Assistant Commissioner (Technical)
Harold T. Swartz
Chief Counsel
K. Martin Worthy
OFFICE OF T H E COMPTROLLER OF T H E
Comptroller of the Currency
First Deputy Comptroller
Administrative Assistant to the Comptroller
Deputy Comptroller
Deputy Comptroller
Deputy Comptroller for Economics
Chief National Bank Examiner
Deputy Comptroller (Mergers and Branches)—
Deputy Comptroller (FDIC Affairs)
Deputy Comptroller (Trusts)
Chief Counsel
CURRENCY
William B. Camp
Justin T. Watson
W. A. Howland
Thomas G. DeShazo
John D. Gwin
David C. Motter
F. H. Ellis
R. J. Blanchard
Albert J. Faulstich
Dean E. Miller
Robert Bloom
OFFICE OF T H E TREASURER OF T H E U N I T E D
Treasurer of the United States
Deputy Treasurer
Assistant Deputy Treasurer
STATES
Mrs. Dorothy A. Elston
William T. Howell
Willard E. Scott
PRINCIPAL ADMINISTRATIVE AND STAFF OFFICERS
U . S . SAVINGS BONDS DIVISION
National Director.
Assistant National Director
Director of Sales
Director of Advertising and Promotion
U . S . SECRET
Director
Deputy Director
Assistant Director
Assistant Director
Assistant Director
Assistant Director
Elmer L. Rustad
Thomas Hughes
Jesse L. Adams, Jr.
Edmund J. Linehan
SERVICE
(Administration)
(Investigations)
(Protective Forces)
(Pr9tective Intelligence)
James J. Rowley
Rufus W. Youngblood
Phil W. Jordan
Burrill A. Peterson
Lilburn E. Boggs
Thomas J. Kelley
C O M M I T T E E S AND BOARDS
Chairman, Treasury Management Committee—
Chairman, Treasury Awards Committee
Principal Compliance Officer
Equal Employment Opportunity Officer
Chairman, Advisory Committee on Ethical
Standards
-
A. E. Weatherbee
Amos N. Latham, Jr.
Samuel R. Pierce, Jr.
Samuel R. Pierce, Jr.
Samuel R. Pierce, Jr.
XI
ORGANIZATION OF THE DEPARTMENT OF THE TREASURY
Assistant to the Secretary
Dir., Exec. Secretariat
SECRETARY
UNDER SECRETARY
FOR
MONETARY AFFAIRS
UNDER SECRETARY
Assistant
A s s i s t a n t Secretary
(Tax Policy)
Congressional Relations
National Security Affairs
Public Affairs
Secretary
(Enforcement &
Assistant
Secretary
Fiscal A s s i s t a n t
General Counsel
Deputy Under Secretary
for Monetary Affairs
Assistant Secretary
(International Affairs)
Secretary
for A d m i n i s t r a t i o n
Operations)
Office of Law Enforcement
Office of Operations
Oflice of Tariff and Trade
Affairs
Office of Tax Analysis
Special Assistant
to the Secretary
(Debt Management)
Special Assts. to Secretary
Assistant
to the Under Secretary
Office of
Administrative Services
A s s i s t a n t Secretary
(Economic Policy)
Office of Administration
Legal Division
•
Bureau of Accounts
Office of Debt Analysis
Office of Balance of Payments
Programs. Operations & Statistics
Office of Developing Nations
Office of Financial Policy
Office of Budget & Financi
Office of Director of Practice
-
Bureau of tfie Public Debt
Office of Domestic Gold
& Silver Operations
Coordination & Operations
Consolidated Federal Law
Enforcement Training Center
Office of Foreign Assets Control
Office of Industrial Nations
Office of Intl Economic Affairs
Office of Management
& Organization
jreau of Customs
Program
Office of the Treasurer
of the United States
Office of International Gold
& Foreign Exchange Operations
Office of Latin America
Internal Revenue Service
Office of tlie
Comptroller of the Currency
•^
Office of Personnel
Bureau of Engraving
& Printing
Office of Planning & Program
Evaluation
Bureau of ttie Mint
M
U.S. Secret Service .
Office of Security
U.S. Savings Bonds Division
J
•
Office of Financial Analysis
A N N U A L R E P O R T ON T H E F I N A N C E S
DEPARTMENT OF THE TREASURY,
Washington.) December 17.^ 1970.
SIRS : Pursuant to the requirements of 31 U.S.C. 1027, I have the
honor of presenting to you the annual report on the finances of the
Federal Government for the fiscal year 1970. This report consists of
three pairts: First, this introduction reviews the major economic and
financial developments during fiscal year 1970—the overview, as it
Avere. Second, the main text of this report and its supporting data
provide detailed information on the operations and administrative activities of the Department of the Treasury during the fiscal year. The
last part of this report, the supporting tabular data, follows in the
separate Statistical Appendix.
The Overview
The N a t i o n a l Economy
Fiscal year 1970 saw the transition from an overheated, highly inflationary environment to a less inflationary environment capable of
sustaining renewed growth. As fiscal 1970 began, appropriate monetary and fiscal policies had been successful in slowing down the rate
of total spending and bringing it into approximate balance with productive potential. This reduction of excess demand was the first necessary step in bringing inflation under control.
The transition to a less inflationary environment was accompanied
by, and to some extent necessarily complicated by, a second major
transition—^the adjustment from a wartime to a peacetime economy.
The Government made progress toAvard investing as much in human
resource programs as in national defense. I n addition, between the
first and last quarters of the fiscal year, national defense purchases,
as recorded in the national income accounts, fell by $3 billion. Unfortunately, such a major change of emphasis carries some short
term disadvantages despite the merits of the change. I n this case, due
to the lower levels of defense procurement, there was an estimated
decrease of about 400,000 in job opportunities, and certainly some part
of the rise in regional unemployment rates can be attributed to reduced
defense orders. However, over the long run, through new job opportunities and human resource programs such as manpower retraining,
XVI
1970 REPORT OF THE SECRETARY OF THE TREASURY
it is expected that the persons affected by the change will be reabsorbed
into the work force.
The fight against inflation certainly overshadowed the shift to a
peacetime economy in terms of public interest—a natural emphasis
considering the readily visible effects of inflation on the purchasing
power of millions of Americans. The major economic indicators
showed that, by the end of the year, the combination of orthodox fiscal
and monetary policies had begun to slow down a persistent inflation.
I n the last quarter of the fiscal year, the G N P price deflator rose
at a 4.3 percent annual rate, compared to 5.3 percent on a comparable
basis in the previous quarter. In consumer prices, the rate of increase
fell below 6 percent by the end of the year. Further improvement was
expected since retail prices did not, at that time, fully reflect the
lower rate of advance which had been developing in the wholesale
price area. I n the latter area, on a seasonally adjusted basis, the annual rate of increase dropped to 1 percent in the last quarter of the
year, partly because of an actual decline in farm and food prices.
While it was fully expected that some of the observed improvement in
the price picture might not occur every single month, the outlook, from
all indications, was for a declining rate of inflation.
Since the remaining inflationary pressures were largely of the costpush variety, it was noteworthy that, after more than a year of little
gain or actual decline, productivity in the private economy rose at an
annual rate of 3.7 percent in the last quarter of the year. This gain in
productivity held the rise in unit labor costs in the closing quarter to
an annual rate of IV^ percent.
While these indicators were encouraging, strong inflationary momentum still existed at the end of the fiscal year. Continued gains in
productivity coupled with restraint in wage bargaining and pricing
decisions will be needed in fiscal 1971 in order to restore better balance
to the cost-price structure. The usual process can be assisted by the
inflation alert of the Council of Economic Advisers and by the Productivity Commission established by President Nixon shortly before
the end of the year. However, major reliance will continue to be placed
upon fiscal and monetary policy to bring the inflation to an end and
restore the conditions for balanced groAvth.
To restore conditions for balanced growth, it will also be extremely
important from the standpoint of the financial markets to avoid a
large Federal budget deficit. Such a deficit would undermine confidence
in the Government's resolve to fight inflation as well as the trend
toward lower interest rates which developed toward the end of the
year.
At the time the fiscal 1971 budget was submitted in February, a
surplus of $1.5 billion was projected for 1970. With tax receipts run-
ANNUAL REPORT ON T H E FINANCES
XVII
ning somewhat below expectations, a reestimate in May placed the
deficit at $1.8 billion. The final deficit for the year was $2.8 billion and
reflected the slower pace of the economy and the operation of the socalled automatic stabilizers. Budget outlays were actually $1.6 billion
below the May estimate and $1.3 billion below the February budget
estimate, despite higher outlays for such uncontrollable items as interest on the public debt and farm price support payments. Budget
receipts, on the other hand, were $2.7 billion below the May estimate
and $5.6 billion below the February budget estimate, reflecting lower
than expected levels of individual and corporate tax receipts.
At the time of the May estimate, fiscal year 1971 outlays were projected at $205.6 billion, with receipts of $204.3 billion, for a deficit of
$1.3 billion. The estimated receipts assumed favorable legislative action
upon administration revenue-raising recommendations in the tax area.
These legislative proposals consist of:
—Postponement of scheduled reductions in excise taxes on automobiles
and communication services to prevent a revenue loss of $650 million
in fiscal year 1971 and $1,250 million in fiscal 1972.
—A proposed acceleration in gift and estate tax payments to raise approximately $1.5 billion in additional receipts for fiscal year 1971.
—A proposed tax of $4.25 per pound on lead additives used in gasoline.
This tax is a vital element in the administration's top-priority program to reduce air pollution. While the proposed tax is estimated to
yield a first-year revenue gain of approximately $1.6 billion, it is designed primarily as an incentive for the development of lead-free
gasoline, not as a revenue-raising measure per se.
(A full discussion of taxation developments in fiscal 1970 appears on
pp. 27-37.)
I n domestic financial markets, pressures forcing up interest rates
were relatively intense at times during the year, but a more settled atmosphere seemed to be developing by the end of the year. In the first
6 months, short term interest rates rose sharply but fell by a roughly
equivalent amount in the second half. Three-month Treasury bill rates
began the year at 61/^ percent, rose to a peak of slightly more than 8
percent in late December 1969, and then dropped irregularly to about
6% percent by the end of June 1970. Market yields on long term
Government, corporate, and municipal securities rose fairly steadily
during the first half of the fiscal year but then flattened out. I n the
late spring and early summer of 1970, corporate and municipal yields
pushed still higher. The yield on new AA corporates reached 9.9 percent in mid-June, and yields on new offerings of municipals exceeded
7 percent in late May. But, by the end of the year, long term yields
were rapidly falling back from their highs.
3^7-7012 0—71
2
XVIII 1970 REPORT OF THE SECRETARY OF THE TREASURY
One favorable aspect of interest rate developments during the year
was the relative decline in short term market rates. This placed the
thrift institutions in a more favorable competitive position, and savings flows picked up considerably during the course of the year. I n conjunction Avith special Federal efforts, this increase in available funds
promised to support an upturn in housing over the long run.
At times during the year, considerable concern Avas expressed in some
quarters over the possibility of a so-called liquidity crisis. Markets
continued to function effectively, hoAvever. Actions by the monetary
authorities—particularly the June 1970 relaxation of regulation Q
ceilings in the short term area—and the demonstrated resilience of
financial markets did much to allay any fears that strains Avould unduly inhibit the financing of sound companies. With moderate groAvth
in the monetary aggregates resumed, no general shortage of liquidity
Avas expected to emerge.
Undoubtedly a large Federal budget deficit could disturb this more
settled atmosphere of the financial markets. Close restraint over Federal expenditures and favorable action on the above-mentioned tax proposals can avert this situation.
MeauAvhile, President Nixon took tAvo steps Avhich could have a
dramatic impact on the handling of finances in this country over the
long run. First, early in the fiscal year, the President sent a special
message to the Congress describing the administration plan for revenue sharing Avith State and local governments. During the course of
the year, the general approach A ^s endorsed by the National GoverAa
nors' Conference, the U.S. Conference of Mayors, the National League
of Cities, the National Association of Counties, and the National LegislatiA^e Conference of State Officials, and by numerous State and local
leaders.
Second, in an economic report in February, the President announced
that he would appoint a Presidential Commission on Financial Structure and Regulation to study the role of financial institutions and to
make recommendations for any needed changes. Under the chairmanship of Reed O. Hunt, the Commission held its first meeting in Washington on June 27 and announced plans for intensive research.
Specific T r e a s u r y Activities
Fiscal year 1970 saAv the Department of the Treasury carry out its
traditional responsibilities as Avell as some more novel responsibilities,
principally in the area of laAv enforcement.
I n the field of taxation, the enactment of the Tax Reform Act of
1969 (Public LaAV 91-172) Avas one of the most significant changes to
the Federal revenue system. Some of the provisions of the act had a
ANNUAL REPORT ON T H E FINANCES
XIX
short term impact, such as the extension of the income tax surcharge at
a 5-percent rate from January 1 to June 30,1970, and the extension of
automobile and telephone excise tax rates to December 31, 1970.
Other provisions of the 1969 Tax Reform Act are of a longer term
nature, such as the repeal of the investment tax credit and a variety
of tax reform and relief measures which are discussed at length later
in this report.
Treasury's debt management policies were conducted successfully
despite the difficult market conditions described earlier. During the
first half of the year there Avas net borroAving from the public (unified
budget basis) of $9.8 billion followed by net repayment of $4.4 billion
in the second half of the year. This reflected the normal seasonal
pattern. F o r the full year net borrowing from the public of $5.4 billion
compared with net repayment of about $1 billion in fiscal 1969 (after
adjustment for certain reclassification of debt and investments of
enterprises in fiscal 1969 to place the figures on a comparable basis).
The shift to net borrowing from the public was largely due to the
swing from a $3.2 billion budget surplus in fiscal 1969 to the aforementioned $2.8 billion deficit in fiscal 1970. The amount of net borrowing was relatively small by recent standards but was supplemented
by about an $11 billion increase during the year in the debt of quasiFederal agencies which are not included in the budget totals any
longer. (For a detailed discussion of Treasury financing operations
during the fiscal year 1970, see pp. 17-23.)
I n the area of law enforcement. Treasury strengthened its activities
at every level including the undertaking of a coordinated approach to
problems requiring enforcement by several departments.
Confronted by the drug crisis, Treasury secured and used an $8.7
million supplemental appropriation to improve customs control of
drug smuggling. Treasury shared the lead role in Operation Intercept,
a massive drug search effort along the U.S.-Mexican border. This was
followed by Operation Cooperation, a joint U.S.-Mexican effort to
control illicit drug traffic.
With full departmental support, Customs intensified inspection of
passengers, baggage, and cargo at all border points. A three-pronged
attack against cargo pilferage was also launched.
Treasury committed its resources to combat organized crime by:
(1) Participating with other Government agencies in National
Strike Force actions ;
(2) Urging adoption of laws designed to defeat the use of foreign
bank accounts to further unlawful purposes ;
(3) Acting administratively under existing laws and treaties to
make more accessible information on use by U.S. citizens and resi-
XX
19 70 REPORT OF THE SECRETARY OF THE TREASURY
dents of secret foreign bank accounts to further criminal activities;
and,
(4) Seeking a judicial assistance treaty with SAvitzerland to enlarge access to such information.
I n revitalizing its enforcement of antidumping and countervailing
duty laws. Treasury adopted policies which expanded the use of
enforcement tools, expedited procedures and increased personnel.
A separate Office of Law Enf orcement was created within Treasury
to facilitate top level cooperation on enforcement activities with the
appropriate Government agencies. I n addition. Treasury personnel
utilized the Consolidated Federal Law Enforcement Training Center,
an independent organization established to provide in-depth training
to criminal investigators for all Treasury and other Government
enforcement activities.
I n t e r n a t i o n a l Developments
I n the international area, there were further evolutionary improvements of the international monetary system during the year. Final
agreement was reached within the international financial community
on the procedures for planned and orderly creation of additions to
intemational gold and foreign exchange reserves. Creation of the
Special Drawing Rights facility in the International Monetary Fund
came after years of painstaking study and negotiations and was a landmark in international financial cooperation.
Provision for the allocation of SDR was made through amendment to the Fund's Articles of Agreement Avhich became effective
July 28, 1969. The first year's allocation of $3.4 billion in SDR was
made on January 1, 1970, and the facility entered into actiA^e use.
A proposal to increase quotas Avithin the International Monetary
Fund has been placed before the member governments. A quota increase is necessary at this time to keep pace with the groAvth in the
Avorld economy and AA^orld trade. This third increase in Fund quotas
since its founding in 1945 AA-OUM raise the total size of the Fund to
$28.9 billion, an enlargement of about 35 percent. The increase in the
U.S. quota Avould be $1,540 million, bringing the U.S. share up to
$6,700 million. Enabling legislation Avas pending before the Congress
at the close of the fiscal year.
During the course of the year, possible modification of exchange
rate practices AA^S also under study Avithin the International Monetary
Fund. Attention focused on some limited evolutionary changes, consistent Avith the basic purpose and functioning of the exchange rate
system established at Bretton Woods. While no consensus appeared
to have yet been reached among the Fund membership on the need or
ANNUAL REPORT ON THE FINANCES
XXI
desirability of an amendment of the Articles of Agreement of the
I M F , the discussions had been valuable in clarifying the nature of
proposals for limited exchange rate flexibility and in developing a
better appreciation of their usefulness and limitations.
Early in the year, the exchange markets themselves Avere subjected
to rather severe strains and two major exchange rate adjustments
occurred. The French franc was devalued by 11.1 percent on August 8.
I n late September and part of October the German mark was allowed
to float, after Avhich a neAv parity Avas established, Avith the eventual
revaluation amounting to 9.29 percent. By the end of December 1969,
these changes had exerted a cooling effect upon the exchange markets
by removing the threat that French and German payments disequilibria might provoke serious international financial difficulties. .
With sterling making a strong recovery in late 1969 and early 1970,
the exchange markets became much better balanced. At the end of
May, after heavy exchange market gains, the Canadian Govemment
announced that for the time being the rate Avould not be kept from
exceeding its ceiling. After an initial flurry of uncertainty, exchange
markets traded on an orderly basis. At the close of the fiscal year
the Canadian dollar Avas near $0.97, about 414 percent above parity.
(A fuller discussion of international financial affairs during fiscal
1970 Avill be found on pp. 37-57.)
I n priA^ate gold markets, there Avas a more settled atmosphere as
a result of the exchange rate adjustments of the French franc and
the German mark, successful implementation of the SDR plan, and
clarification of South African gold sales policy embodied in an I M F
policy decision. The price of gold in London fell from around $40.75
in early October 1969 and reached the $35 level during December.
After fluctuating around the $35 level early in 1970, the price rose
briefly above $36 in May before falling back near $35.40 in June. The
present tAvo-tiered gold system gives every sign of continuing to
function successfully.
The U.S. gold stock stood at $11,889 billion by the end of fiscal
1970. This represented a rise of $736 million during the year. Total
U.S. reserve assets—including SDR, holdings of convertible foreign
currencies, and the U.S. reserve position in the International Monetary Fund—totaled $16,328 billion at yearend.
While the reserA^e position of the dollar Avas strong, it Avas clear
that the chronic balance-of-payments problem still remained. Neither
of the conventional measures of the deficit—liquidity and official settlements—Avas giving an entirely meaningful picture. The liquidity
deficit was swollen by the cycling of funds through the Euro-dollar
market during a period of monetary restraint. The result on the official
XXII
19 70 REPORT OF THE SECRETARY OF THE TREASURY
settlements basis, on the other hand, tended to be distorted by short
term movements of foreign official funds into and out of the Eurodollar market. But even after alloAvance for temporary factors, the
deficits Avere sizable and indicated the need for better balance-ofpayments performance in the future.
On the basis of preliminary information, the deficit on the liquidity
basis amounted to about $4.9 billion for the year, roughly the same
as in fiscal 1969. On the official settlements basis, the deficit for the
year Avas estimated near $5.1 billion, compared to a surplus of $2.8
billion in fiscal 1969.
An encouraging development during the year Avas the steady improvement in the merchandise trade account. The balance moved from
a small deficit position at the end of fiscal 1969 to a surplus of $848
million in the final quarter of fiscal 1970, on the basis of preliminary
estimates. Sharp expansion in U.S. exports coupled Avith a much
sloAver rise in U.S. imports accounted for the better performance.
Over the longer run, a strong current account position Avill be essential for U.S. balance of payments equilibrium. Our natural role as a net
supplier of long term capital to the rest of the Avorld Avill require that
we cover a substantial portion of that outfloAv by a surplus on goods
and services transactions. The return of the economy to a noninflationary path of expansion Avill facilitate achievement of that objective.
We are trying to assure that financing facilities for our exports are
not inferior to those of other countries. I n addition, the Treasury
proposed to the Congress a modification of tax treatment of exporting
activity. Under the proposal, taxation of profits from export sales
of a so-called Domestic International Sales Corp., Avould be deferred
until such time as dividends from that income are distributed to the
shareholders.
Conclusion
By the close of the fiscal year, there were Avelcome signs that inflationary pressures were receding. The foundation Avas laid in fiscal 1970
for a reneAved and more stable expansion of the economy. HoAvever, in
the future, it will be essential to shape fiscal and monetary policy Avith
particular care to insure that expansion occurs within a much less
inflationary environment than in recent years.
DAVID M .
KENNEDY,
Secretary of the Treasury.
To T H E PRESIDENT OF THE SENATE.
To T H E SPEAKER OF THE HOUSE OF REPRESENTATIVES.
REVIEW OF TREASURY OPERATIONS
Financial Operations
Summary
On the unified budget basis the deficit for fiscal 1970 was $2.8 billion
(compared Avith a surplus of $3.2 billion for fiscal 1969). Net receipts
for fiscal 1970 amounted to $193.7 billion ($6.0 billion over 1969)
and outlays totaled $196.6 billion ($12.0 billion over 1969).
BorroAving from the public amounted to $5.4 billion and Avas related
to (1) the $2.8 billion deficit, (2) a $1.6 billion increase in cash and
monetary assets, and (3) a $1.0 billion decrease in other means of
financing. As of June 30, 1970, Federal securities outstanding totaled
$383.4 billion, comprised of $370.9 billion in public debt securities and
$12.5 billion in agency securities. Of the $383.4 billion, $284.9 billion
represented borrowing from the public. The Government's fiscal operations in fiscal years 1969-70 are summarized as follows:
In billions of dollars
1970
Budget receipts, expenditures, and lending:
Expenditure account:
Receipts
Expenditures
187.8
183.1
Expenditure account deficit (—), or surplus
Loan account:
Netlending...
Total budget:
Receipts
Outlays.-
193.7
194.5
4.7
—.7
1.5
2.1
187.8
'184.5
Budgetdeficit ( - ) , or surplus
193.7
196.6
3.2
Means of financing:
Borrowing from the public, decrease (—)
—11.1
Reduction of cash and monetary assets, increase (—)
—2.2
Other means:
Conversion of certain Government corporations to private ownership. 10.2
Other...
-.1
Total budget
' Revised.
financing
-2.8
5.4
—1.6
.4
-1.4
-3.2
2.8
4
1970 REPORT OF THE SECRETARY OF THE TREASURY
Budget Receipts and Outlays
1961
1962
1963
1964
1965
1966
hscal Years
1967
1S68
1969 °
1970
CHART 2
Receipts
Total receipts have risen in each of the last 11 years, amounting to
$193.7 billion in fiscal 1970, $6.0 billion above fiscal 1969. I n comparison Avith fiscal 1969 receipts, Avhich shoAved a rise of $34.1 billion, the
1970 results suffered by reason of the bunching of revenue in 1969 occasioned by the delayed enactment of the income tax surcharge in the
Revenue and Expenditure Control Act of 1968. I n addition, fiscal
control measures adopted early in 1969 restrained the buoyant (and
inflationary) course of general economic activity and had their necessary impact on Federal revenues.
I n summary. Government revenues continued to expand in fiscal
1970, although at a slower pace. A comparison of net budget receipts
by major sources for fiscal years 1969 and 1970 is shoAvn below.
[ I n millions of dollars]
N e t b u d g e t receipts
I n d i v i d u a l income t a x e s .
C o r p o r a t i o n income taxes
E m p l o y m e n t taxes
Unemployment insurance
C o n t r i b u t i o n s for other i n s u r a n c e a n d r e t i r e m e n t
Excise taxes
E s t a t e a n d gift taxes
Customs.
Miscellaneous r e c e i p t s .
.
Total budget receipts.
' Revised.
1969
1970
Increase or
decrease (—)
87.249
36,678
34,236
3,328
2,353
15,222
3,491
2,319
» 2,908
•
90,412
32.829
39.133
3,464
2,701
15.705
3.644
2,430
3,424
3,163
-3.848
4.897
•• 187,784
193.743
5.969
136
347
483
154
111
516
REVIEW OF TREASURY OPERATIONS
5
Projected estimates of receipts, required of the Secretary of the
Treasury, are shoAvn and explained in the President's budget. The
1971 estimates were reviewed and revised in the Bureau of the Budget
release of May 19,1970.
Individiud income ^6ja?e.9.—Individual income taxes amounted to
$90.4 billion in fiscal 1970, $3.2 billion above the 1969 fi^re. The
increase of 4 percent reflects rising incomes, offset by the reduced
income tax surcharge, and the bunching of receipts caused by the
delayed enactment of the 1968 act.
Corporation inoome taxes.—Corporation income taxes dropped in
fiscal 1970, totaling $32.8 billion, $3.8 billion below the 1969 receipts.
The decrease is attributed to a bunching of 1969 receipts and lower
expectations of 1970 profits and tax liabilities and the reduction in the
surcharge.
Employment taxes.—Employment taxes totaled $39.1 billion in fiscal 1970, $4.9 billion above such receipts in 1969. The rise reflected
expanding payrolls and number of people employed, as well as the fullyear effect of an increase in the combined tax rate from 8.8 percent
to 9.6 percent effective January 1,1969.
Unemployment insurance.—Receipts from unemployment insurance amounted to $3.5 billion in fiscal 1970, slightly above the 1969
figure.
Contributions for other hisurance and retirement.—Such contributions and premiums amounted to $2.7 billion in fiscal 1970, $0.3 billion
above receipts in fiscal 1969. These receipts are composed of medical
insurance premiums for the aged and Federal employees retirement
deductions. Receipts from each increased in fiscal 1970.
Excise taxes.—Excise tax receipts are detailed in the following
table.
[In millions of dollars]
1969
1970
Increase or
decrease (—)
Alcoholtaxes
Tobaccotaxes
Documents...
Manufacturers excise taxes
Retailers excise taxes (repealed)
Miscellaneous excise taxes
Undistributed depositary receipts and una,pplied collections
•'4.556
2,138
1
6.501
(*)
2,148
'"199
4,746
2,094
(*)
6,683
(*)
2,342
38
191
-43
—1
.182
(*)
195
—161
Gross excise taxes
Less refund of feceipts
Net excise taxes
15.542
320
15,222
15.904
199
15.705
361
-121
483
.
...
» Revised.
•
• Less than $500,000.
Excise taxes rose from $15.2 billion in fiscal 1969 to $15.7 billion
in fiscal 1970. The rise in total was $0.5 billion, over $182 million of
this occurring in manufacturers excise taxes. Other significant rises
occurred in the alcohol and miscellaneous excise taxes.
6
19 70 REPORT OF THE SECRETARY OF THE TREASURY
Estate and gift taxes,—Estate and gift tax receipts of $3.6 billion
in fiscal 1970 Avere $0.2 billion above receipts in 1969.
Customs.—Customs duties continued to advance in fiscal 1970 reaching $2.4 billion, $0.1 billion above 1969. The rise reflected further increases in taxable imports.
Miscellaneous receipts.—^Miscellaneous receipts amounted to $3.4
billion in fiscal 1970, rising $0.5 billion from receipts of $2.9 billion
in fiscal 1969. The increase Avas almost Avholly due to deposits of
earnings by Federal Reserve banks.
Outlays
Total outlays in fiscal 1970 were $196.6 billion (compared Avith
$184.5 billion for 1969). The outlays consisted of expenditures in the
expenditure account of $194.5 billion and net lending in the loan account of $2.1 billion. Outlays for fiscal 1970, by major agency, are
compared to those of 1969 in the folloAving table. For details of the
expenditure account and the loan account see the Statistical Appendix.
[In millions of dollarsj
Agency
Funds appropriated to the President
Agriculture Department
Defense Department
Health, Education, and Welfare Department
Housing and Urban Development Department
Labor Department
Transportation.Department
Department of the Treasury
Atomic Energy Commission
National Aeronautics and Space Administration
Veterans Administration
Other.
Undistributed intrabudgetary transactions
Total outlays
1969
4,967
8,330
• 79,137
•
M6, 594
1,529
3,475
5,970
16,924
2,450
4,247
7,669
^8,374
— 5,117
^84,548
1970
Increase or
(—) decrease
-193
4,774
8,307
78,360
52,338
2,603
4,356
6,417
19,609
2,453
3,749
8,653
11, 449
-6,380
3,075
-1,263
196,588
12,040
-24
-777
5,743
1,074
881
448
2,585
3
-498
983
' Revised.
Cash and Monetary Assets
On June 30, 1970, cash and monetary assets directly related to the
budget amounted to $15,077 million, an increase of $1,570 million over
fiscal 1969. The balance consisted of $9,291 million in the general
account of the Treasurer of the United States (this balance was $1,746
million more than June 30, 1969, and included $275 million net transactions in transit as of June 30); $3,374 million with other Government officers ($978 million less than 1969) ; and $2,412 million with
the International Monetary Fund ($802 million more than 1969). F o r
a discussion of the assets and liabilities of the Treasurer's account
see page 107. The transactions affecting the account in fiscal 1970
follow:
REVIEW OF TREASURY OPERATIONS
7
Transactions affecting the account of the Treasurer of the United States, fiscal 1970
[In millions of dollars]
Balance June 30, 1969
Less: In transit at June 30, 1969
Excess of deposits, or withdrawals (—), budget, trust, and
other accounts:
Deposits
Withdrawals ( - )
Excess of deposits, or withdrawals (—), public debt
accounts:
Increase in gross public debt
Deduct:
Excess of Government agencies' investments in public debt issues
11, 358
Accruals on savings and retirement plan
bonds and Treasury bills (included in
increase in gross public debt above).
7, 688
Less certain public debt redemptions
(included above in withdrawals,
budget, trust, and other accounts) __
6, 530
Net deductions
7, 544
441
209,924
223,648
-13, 723
17, 198
12, 516
4, 682
Excess of sales of Government agencies' securities in the market
Net transactions in clearing accounts (documents not received or
classified by the OfRce of the Treasurer)
^
Net transactions in transit
9, 397
Balance June 30, 1970
1, 556
275
9, 291
Corporatians and Other Business-Type Activities of the Federal (Government
The business-type programs which Government corporations and
agencies administer are financed by various means: Appropriations,
sales of capital stock, borrowings from either the U.S. Treasury or the
public, or by revenues derived from their OAvn operations.
Corporations or agencies having legislative authority to borrow
from the Treasury issue their formal securities to the Secretary of the
Treasury. Amounts borroAved are reported in the periodic financial
statements of the Government corporations and agencies as part of the
Government's net investment in the enterprise. I n fiscal 1970, borrowings from the Treasury, exclusive of refinancing transactions, totaled
$12,451 million, repayments were $9,955 million, and outstanding loans
on June 30,1970, totaled $30,660 million.
Those agencies having legislative authority to borroAv from the
public must either consult with the Secretary of the Treasury regarding
the proposed offering, or have the terms of the securities to be offered
approved by the Secretary.
During fiscal 1970, Congress granted new authority to borrow from
the Treasury in the total amount of $6,243 million, and reduced existing authority by $221 million, resulting in a net increase of $6,022 million. The status of borrowing authority and the amount of corporation
and agency securities outstanding as of June 30,1970, are shown in the
Statistical Appendix.
8
19 70 REPORT OF THE SECRETARY OF THE TREASURY
Unless otherwise specifically fixed by law, the Treasury determines
interest rates on its loans to agencies by considering the Government's
cost for its borrowings in the current market, as reflected by prevailing
market yields on Government securities Avhich have maturities comparable Avith the Treasury loans to the agencies. A description of the
Federal agencies' securities held by the Treasury on June 30, 1970, is
shown in the Statistical Appendix.
During fiscal 1970, the Treasury received from agencies a total of
$1,047 million in interest, dividends, and similar paynients. (See the
Statistical Appendix.)
Quarterly statements of financial condition, income and expense,
and source and application of funds are submitted to the Treasury by
Government corporations and agencies. Annual statements of commitments and contingencies are also submitted. These statements serve
as the basis for the combiried financial statements compiled by the
Treasury Avhich, together Avith the individual statements, are published periodically in the Treasury Bulletin. Summary statements of
the financial condition of Govemment corporations and other businesstype activities, as of June 30, 1970, are shoAAm in the Statistical
Appendix.
Government-wide Financial Management
New budget concepts.—During the year Treasury staff participated
in joint efforts Avith the Bureau of the Budget and the General Accounting Office to implement the President's February 1969 decision
to convert the fiscal 1972 budget and related Treasury reports to the
accrual basis.
On February 25, 1970, Secretary Kennedy, Budget Director Mayo,
and Comptroller General Staats met to assess the pilot operation of
agency reporting and the Treasury compilation of unpublished accrual data. They concluded that the President's budget should be converted to the accrual basis according to the planned timing.
Three problem areas Avere recognized, however, as precluding conversion to a full accrual basis immediately. These areas are (1) the
accrual of corporate taxes, (2) performance under grants-in-aid, and
(3) constructive delivery in the case of procurement to the Government's special order. These areas all require reliance ori source data
from outside the Government for either current reports or for A^alidation of statistical estimates.
The decision to convert the fiscal 1972 budget to a modified accrual
basis Avas announced by the Budget Director on April 13 in a letter
to the head of each department and agency. The announcement stated
that budget revenues (governmental receipts), and certain grant-inaid expenditures Avould remain on a cash basis. Also, Avhere accrual
REVIEW OF TREASURY OPERATIONS
9
data for constructive delivery on procurement of made-to-order items
are not available, or only partially available, the expenditures for
such items will not be on the full accrual basis, but will reflect as much
of the accruals as is practicable.
So that agencies could concentrate on improving their accrual accounting systems, the central agencies deferred efforts to identify subsidies involved in Federal direct loan programs in the expenditure
account of the budget, as was also recommended by the President's
Comniission on Budget Concepts.
Special draioing rights.—^In,January 1970, the International Monetary Fund made its first allocation of special drawing rights. The
creation of a neAv monetary reserve required the development of appropriate accounting and reporting systems to control and fully disclose the U.S. position in this new asset. Systems development involved the accounting and reporting systems of the Exchange Stabilization Fund, Treasury central accounts and the Federal Reserve banks.
The United States SDR position is disclosed in the Monthly Statement of Receipts and Expenditures, Treasury Bulletin, Combined
Statement, and this report.
Joint financial management improvement program.—On August 12,
1969, President Nixon issued a memorandum to the heads of departments and agencies giAdng his full support to the joint program and
emphasizing the use of financial management as a tool to achieve
better general management.^ With this important prologue and with
impetus proAdded by Secretary Kennedy, Budget Director Mayo, Civil
Service Chairman Hampton and Comptroller General Staats, the
steering committee continued to expand its efforts under the chairmanship of the Treasury representative during fiscal 1970. A permanent executive secretary Avas hired by the steering committee to
assist in the administration of the program and an agency J F M I P
liaison group Avas reactivated.
Bureau of Accounts' staff continued to represent Treasury on the
steering committee and interagency study teams. Studies were completed involving (1) civil agency passenger and freight transportation
services and (2) the financial administration of grant-in-aid programs.
A series of grant-in-aid followup projects have been initiated and a
State-Federal Financial Management Conference is being planned for
October 1970. Also underway are projects to (1) simplify intragovernment billing and collection procedures, (2) simplify legal and
regulatory requirements for civilian payrolling, and (3) convert
existing manual payroll systems to existing computer systems.
1 See exhibit eO.
10
1970 REPORT OF THE SECRETARY OF THE TREASURY
Federal Revenue S h a r i n g
A significant development during fiscal 1970 Avas the announcement
of the administration's proposal to inaugurate a program of Federal
revenue sharing Avith State and local governments. Treasury officials
played a major role in the formulation of this financial initiative,
working closely Avith State and local representatives. On September 25, 1969, Secretary Kennedy transmitted to the Congress a draft
bill embodying the substance of the administration's proposal.^
I n his revenue sharing message to the Congress,^ President Nixon
described the significance of the measure:
"This proposal marks a turning point in Federal-State relations,
the beginning of decentralization of governmental poAver, the restoration of a rightful balance betAveen the State capitals and the national
capital."
I n addition, he outlined the major features of the administration's
plan, Avhich Avere later set forth more explicitly in the bill. There
are four key provisions in the proposal.
First, the size of the fund to be shared Avill be a stated percentage
of personal taxable income—^the base on Avhich Federal individual
income taxes are levied. Thus, annual appropriations for revenue
sharing Avill rise automatically Avith general economic groAA-th. During
the next few years, due to budgetary pressure and the need for an
orderly phase-in, the size of the fund Avill be modest, based on a small
but growing percentage. HoAvever, by the fiscal year 1976, a permanent
1 percent of taxable income, representing about $5 billion, Avill be
appropriated for revenue sharing.
Second, the distribution of funds among States Avill be made on
the basis of each State's share of national population, Avith a small
adjustment for the State's revenue effort (defined as the ratio of
revenues to income). Thus, a State Avhich taxes the income of its
citizens more than the national average Avill receive a proportional
bonus over and above its basic per capita share.
Third, every general purpose local government—city, county, or
toAvn—Avill participate directly in revenue sharing. The distribution
of funds Avithin a State betAveen the State government and the localities Avill be based on a formula Avhereby each unit of general local
government Avithin a State Avill be assured a share that is proportionate
to its OAvn revenue collections.
Fourth, there Avill be no program or project restrictions placed
on the use of revenue sharing funds. Each State, county, city, or
1 See S. 2948. introduced In the Congress on Sept. 23. 1969, and referred to the Committee
on Finance ; or H.R. 13982, xntroduced in the Congress on Sept. 24, 1969, and referred
to the Committee on Ways and Means.
2 See exhibit 26.
REVIEW OF TREASURY OPERATIONS
11
town Avill look to its OAvn needs, rely on its OAVU judgment, and allocate
the funds as it deems best. Federal requirements Avill consist primarily
of simple reporting and accounting rules.
F e d e r a l Debt Management
The basic functions of Federal debt management are to provide
funds needed to meet Federal expenditures and to refund maturing
debt obligations. These objectives should be pursued in a manner that
contributes to noninflationary groAvth in the domestic economy and to
a balanced position in our international accounts. A number of secondary but important objectives are: To achieve a well-balanced debt
structure, to provide debt instruments meeting the needs of an orderly
securities market, to coordinate the groAving volume of obligations
issued hy Federal and federally sponsored agencies Avith Treasury
debt management policy, and to minimize the costs of Federal
borroAving.
The persistent inflationary pressures operating in the economy
shoAved no signs of diminishing Avhen fiscal 1970 began. Financial
markets had been under heavy pressure for over 6 months. The combination of strong credit demands, restrictive monetary policy, and a
loAver saving rate had boosted interest rates higher; and businessmen,
consumers, and State and local governments Avere bidding aggressively
for available credit.
Treasury requirements in the fiscal year included refunding $35.6
billion of maturing coupon securities of Avhich $21.4 billion Avere
privately held, providing for seasonal needs and financing the $2.8
billion budget deficit. The major portion of the ncAv money needed for
these purposes was raised in the short term bill area with the issuance
of $14.5 billion of tax anticipation bills and the net addition of $6.0
billion to the outstanding regular bills. The only cash raised outside
of the bill area was $2.2 billion, in connection Avith the 18-month 7%percent note in the May refinancing.
Compared Avith recent years the volume of maturing Treasury debt
in private hands was normal, the budget deficit Avas moderate, and the
Federal agency debt actually declined by $1.7 billion. The really large
new factor was the requirement of the federally sponsored agencies
who increased their debt outstanding by $10.8 billion during the fiscal
year. A major portion of this increase was attributable to the housing
market support furnished by the Federal National Mortgage Association and the Federal Home Loan Banks.
397-7012 o — m
12
1970 REPORT OF THE SECRETARY OF THE TREASURY
MARKET YIELDS AT CONSTANT MATURITIES^ 1966-70
/1
7.0
k
6.0
5 Years ^
y ^
^
//^%
r!^^2^V^N
4.0
vX
<^j
^
J^
^ 2 0 Years
June 1970
J Month
Bills
V
L
1 i .
_
....-ftm
m^
h
5.0
_
•.
• 1
1966
•
1967
'
.
1
1
1968
.
1969
.
CHART
1 . , 1 , .
1970
3
During the year the Treasury used the extended note authority in
three of the quarterly financings for a total issuance of $6.9 billion in
the 6- and 7-year maturity areas. The weight of the shorter issues,
passage of time and the volume of regular bill financing Avere overwhelming, however, and the maturity structure of the marketable debt
was further eroded. The privately held marketable debt in the under 1
year area increased from $69.3 billion to $76.4 billion and the average
length of the total privately held marketable debt declined by 6 months
to 3 years 8 months on June 30,1970.
CHANGES IN FEDERAL SECURITIES
By type
Federal securities include Treasury public debt issues and the securities of those agencies that have an element of Federal OAvnership and
are included in the Federal budget concept. In fiscal 1970, the principle
securities included among Federal agency issues Avere the guaranteed
issues of the Federal Housing Administration, the debt issues of the
Export-Import Bank and the Tennessee Valley Authority, the participation certificates of the Government National Mortgage Association,
the Commodity Credit Corp. certificates of interest, and the Defense
family housing mortgages. On June 30, 1970, total Federal debt outstanding was $383.4 billion^ an increase of $15.5 billion from June 30,
1969.
Over the fiscal year Treasury public debt increased $17.2 billion to a
June 30, 1970, level of $370.9 billion. Within this total, marketable
REVIEW OF TREASURY OPERATIONS
13
issues increased $6.5 billion, special issues to trust funds rose $9.5 billion, nonmarketable public issues increased $1.3 billion Avhile matured
debt and debt bearing no interest declined $0.1 billion.
Excluding the periodic refinancing of outstanding bills but including yearend to yearend additions to the regular Aveekly and monthly
bills, the Treasury issued $55.3 billion and redeemed $48.8 billion of
marketable debt during the fiscal year.
June 30,
1969
Class of debt
June 30, Increase, or
1970
decrease (—)
In billions of dollars
Public debt securities:
Marketable public issues by maturity class:
Within 1 year
1-5 years
6-20 y ears
Over 20 years
Total marketable issues
Nonmarketable public issues:
Series E and H savings bonds
U.S. savings notes
Investment series bonds
Foreign series securities
Foreign currency securities
Other nonmarketable debt.
.
Total nonmarketable public issues
Special issues to Government accounts (nonmarketable)
Noninterest-bearing debt
Total gross public debt
103.9
62.8
43.2
16.2
105.5
89.6
26.4
11.0
+1.6
+26.8
-16.8
-5.2
226.1
-
232. 6
+6.5
51.7
.5
2.5
1.7
2.4
.1
51.3
.7
2.4
3.4
1.4
.9
-.1
+1.7
-1.0
58.8
66.8
2.0
60.1
76.3
1.9
+1.3
+9.5
-.1
353.7
370.9
+17.2
—.4
+.2
+.9
I n the nonmarketable sector of the public debt, special issues to the
Government trust funds increased by $9.5 billion Avith the Federal old
age and survivors trust fund accounting for $4.0 billion of the increase.
The tdal of special securities issued to foreign official accounts increased
by $1.5 billion although the Foreign Currency issues had a net decline
of $1.0 billion. U.S. savings bonds and savings notes had a net decline
of $0.2 billion in outstanding issues during the year.
At the beginning of fiscal 1970 the $1.6 billion of Commodity Credit
Corp. certificates of interest were added to Federal agency securities
by means of a reclassification from budget transactions. All of the
certificates were redeemed during the course of the year. Other major
changes in Federal agency securities during the fiscal year Avere a $1.3
billion decline in the participation certificates of the Government National Mortgage Association, a $0.6 billion decline in the outstanding
securities of the Export-Import Bank and a $0.3 billion increase in.the
outstanding securities of the Tennessee Valley Authority. The Federal
agency debt outstanding at the end of the fiscal year was $12.5 billion
down $1.7 billion from the end of fiscal 1969.
14
1970 REPORT OF THE SECRETARY OF THE TREASURY
PRIVATE HOLDINGS OF MARKETABLE FEDERAL SECURITIES
1966.
1967
1968
1969
1970
1966
1969
1967
~T']
1970
Fiscal Years
CHART 4
Ownership
The $383.4 billion Federal securities outstanding at the end of fiscal
1970 consisted of $370.9 billion public debt issues and $12.5 billion
Federal agency issues.
Ownership of puhlic debt securites on selected dates 1960-70
[Dollar amounts in billions]
June 30, June 30, June 30, June 30,
1960
1968
1969
1970
Estimated ownership by:
Private nonbank investors:
Individuals:!
Series E and H savings bonds
U.S. savings notes 2
Other securities
Total individuals
Insurance companies
Mutual savings banks
Savings and loan associa tions
State and local governments
Foreign and international
Corporations...
Miscellaneous investors 3.:
Total private nonbank investors
Commercial banks.
Federal Reserve banks
Government accounts. _
Total gross debt outstanding
$42.5
Change
during
fiscalyear
1970
27.2
$51.1
.2
23.5
$51.2
.6
26.2
$50.8
.7
31.0
-$0.4
.2
4.8
69.7
12.0
6.6
4.6
18.8
12.3
19.5
8.0
74.8
8.1
3.9
9.8
24.6
12.9
13.0
12.4
77.9
7.7
3.3
9.5
25.2
11.1
12.6
12.4
82.5
6.8
2.9
8.5
24.6
14.8
11.1
13.6
4.6
-.9
-.4
-1.0
-.6
3.8
-1.5
1.2
151.4
55.3
26.5
53.1
159.5
59.7
52.2
76.1
159.5
55.3
54.1
84.8
164.7
53.3
57.7
95.2
5.2
-2.0
3.6
10.4
286.3
347.6
353.7
370.9
17.2
Percent
Percent owned by:
Individuals
Other private nonbank investors
Commercial banks..
Federal Reserve banks..
Government accounts
24
29
19
9
19
22
24
17
16
22
22
23
16
15
24
22
22 .
14 .
16 .
26 .
Total gross debt outstanding
100
100
100
100 .
»Including partnerships and personal trust accounts.
2 U.S. savings notes first offered in May 1967.
3 Includes nonprofit institutions, corporate pension trust funds, nonbank Government security dealers,
and Federal oriented agencies not included in Goverrunent accounts.
REVIEW OF TREASURY OPERATIONS
15
A little over 40 percent of the total or $155.4 billion was held by
Government accounts and Federal Reserve banks. Commercial banks
held nearly 15 percent or $55.5 billion and 45 percent or $172.5 billion
Avas in the hands of private nonbank investors. Estimated levels of
ownership and changes during the fiscal year for the major investor
groups are as follows:
Individuals.—Public debt securities held by individuals increased
$4.6 billion in fiscal 1970 to $82.5 billion. This was nearly one and onehalf times the increase in fiscal 1969. Holdings of marketable securities
rose $4.8 billion and U.S. savings notes rose $0.2 billion, while E and
H savings bonds fell $0.4 billion. Individuals' holdings of Federal
agency issues increased $0.2 billion to a level of $1.4 billion.
Insurance coinpanies.—Insurance companies reduced their holdings
of public debt securities $0.9 billion in fiscal 1970. Life insurance companies' holdings fell by $0.2 billion to a neAv postwar IOAV of $3.6 billion. Fire, casualty, and marine companies liquidated $0.7 billion
Avhich reduced their holdings to $3.2 billion. A good proportion of
life company holdings is still in long term issues. The average length
of their holdings of marketables Avas doAvn 14 months from fiscal 1969
to 16 years and 2 months on June 30,1970.
The average length of marketable public debt issues held by fire,
casualty, and marine companies fell 4 months to a level of 5 years 11
months at the end of fiscal 1970. Insurance companies' holdings of
Federal agency securities declined modestly to a level of $0.8 billion.
Mutual savings banks.—Holdings of public debt securities by mutual savings banks declined $0.4 billion to a level of $2.9 billion while
the average maturity of their marketable debt fell 1 month to 8 years
and 5 months. Federal agency issues held by mutuals declined $0.3 billion and on June 30, mutual savings banks held $0.5 billion of Federal
agency issues.
Nonfinancial corporations.—Corporations faced with heavy capital
demands and experiencing increasing difficulty in raising funds at the
banks and in the markets again reduced their holdings of public debt
securities, reaching the IOAV levels of 1967. Short term securities continued to dominate their portfolios and at the end of fiscal 1970 the
$11.1 billion of corporate holdings had an average length of 18 months.
Estimated holdings of Federal agency issues by corporations was
down $0.1 billion to a level of $0.4 billion.
Commercial banks.—In the second year of record credit demands
commercial banks again disposed of public debt securities. The decline of $2.0 billion Avas less than half the decline of the previous year
but it brought commercial bank holdings to a postAvar IOAV of $53.3 billion. Most of the decline, $1.9 billion, came in the portfolios of the
smaller country banks. At the same time the average life of the remain-
16
1970 REPORT OF THE SECRETARY OF THE TREASURY
ing holdings Avas shortened to 2 years 8 months from 3 years at the end
of fiscal 1969. Commercial bank holdings of Federal agency issues
were also reduced during the year from $3.0 billion to $2.2 billion.
Savings and loan associations.—Experiencing declines in savings,
capital groAvth, and heavy increases in borrowing from the Home Loan
Banks, savings and loan associations reduced their public debt holdings for the second consecutive year. The 1970 reduction o'f $1.0 billion, more than triple the 1969 decline, reduced their holdings to $8.5
billion at the end of the year. The average length of their holdings Avas
maintained at 5 years 11 months. Their holdings of Federal agency
issues declined by $0.1 billion to a level of $0.3 billion at the end of the
year.
State and local govern^inents.—State and local governments reduced
their holdings of public debt securities $0.6 billion in fiscal 1970. Pension funds liquidated nearly $0.5 billion and general funds dropped
$0.1 billion reducing their holdings to levels of $5.2 billion and $19.4
billion, respectively. Pension funds have about 75 percent of their
holdings of public debt issues in long term issues and the average
maturity of their marketable holdings was 16 years 4 months compared to 17 years 10 months a year ago. By contrast State and municipal general funds remain invested in relatively short maturities, and
the average maturity of their marketable holdings was 3 years 3
months on June 30, 1970, doAvn 5 months from the previous yearend.
State and local governments held $3.8 billion Federal agency issues
at the end of fiscal 1970 which was slightly less than holdings of a
year earlier.
Foreign and intemational.—Foreign and international agencies'
investments in public debt securities increased $3.8 billion in fiscal 1970
to a level of $14.8 billion—09.3 billion of marketable and $5.5 billion of
nonmarketable issues. Holdings of marketable public debt issues rose
$2.4 billion and special nonmarketable securities issued directly to foreign monetary authorities increased $1.5 billion. Major changes by
countries in fiscal 1970 Avere additions of $2.0 billion by Germany and
$1.1 billion by Canada Avhile Great Britain liquidated $0.2 billion.
Foreign and international holdings of Federal agency issues increased
about $0.1 billion in fiscal 1970.
Other private nonbavJc investors.—Holdings of public debt securities by these invest^(9i)fsHncreased $1.2 billion to $13.6 billion on June 30,
1970. The largest cjianges. Avere $1.0 billion increase in the holdings of
Federal Home Loau banks tind a decline of $0.3 billion in the holdings
of miscellaneous investors. Holdings of Federal agency issues fell by
$0.4 billion.
^ ;' ; ^ :
' ':
Federal Reserve System.—The Federal Reserve System acquired $3.6
billion of public debt; issues in fiscal 1970 or nearly tAvice the acquisi-
17
REVIEW OF TREASURY OPERATIONS
tion of a year earlier. Holdings o'f Treasury bills increased $2.9 billion
and coupon securities rose $0.7 billion. The average length of the System's holdings declined 1 month to 2 years 3 months by the end of
the fiscal year. On June 30,1970, the System open market account held
$57.7 billion of public debt issues.
Govemment accounts.—Public debt securities held by Government
accounts increased $10.4 billion as these accounts absorbed about 60
percent of the $17.2 billion increase in public debt. Major increases
Avere $4.0 billion in the accounts of the Federal old age and survivors
insurance trust fund, $1.8 billion in the civil service retirement funds,
$1.4 billion in the Federal disability insurance trust fund, and $1.1
billion in the higliAvay trust fund. Holdings at the end of fiscal 1970
reached $95.2 billion. Federal agency issues (primarily participation
certificates) held by Government accounts declined $0.3 billion to a
level of $2.6 billion.
OWNERSHIP OF FEDERAL SECURITIES, JUNE 30, 1970
$Bil.
Total
4^
Gov't
Accounts
300
m^um
i
200
383.4
Com 7 ^
Banks
, Federal
Reserve
5b.bi
Private
Nonbank Investors
Individuals ^ ^ i f § ^
^^•;;^f
100
111.5
A l l Other
CHART
5
FINANCING OPERATIONS
The first cash financing in fiscal 1970 A ^s an offering of $3.5 billion
Aa
tax anticipation bills evenly divided betAveen the December 22, 1969,
and March 23, 1970, maturities. The offering Avas announced on July 2
AAuth separate auction dates of July 9 for the December maturity and
July 11 for the March maturity. Delivery date for both issues Avas set
for July 18. Commercial banks were alloAved to make payment by
crediting Treasury tax and loan accounts and the usual provision for
18
1970 REPORT OF THE SECRETARY OF THE TREASURY
acceptance at face value in payment of taxes on the 15th day of the
maturity month Avas iiacluded. The auctions resulted in average rates
of 6.78 percent for the December maturity and 7.20 percent for the
March maturity.
^
FolloAving the tax bill, auction prices in the Government market
generally drifted doAviiAvard as the time for the quarterly refunding
approached and concern developed over the possible additional supply of notes. For the August refunding the Treasury chose a single
short offering Avith preemptive rights to the holders of the $3.4 billion maturing 6 percent note. The offering announced on July 30 provided for a 7%-percent 18-month note due February 15, 1971, priced
at $99.90 to yield about 7.82 percent. Market reception of the announcement Avas reflected by immediate price gains on outstanding issues and in an atmosphere aided by the congressional extension of the
10 percent surcharge, a substantial portion of the maturing issue was
refunded. Private investors exchanged $2.8 billion or 87.3 percent
of their $3.2 billion holdings of the maturing 6 percent notes.
FolloAving the August financing the Treasury returned to the shortbill market to raise cash. Bill rates had declined during the early part
of the month and there Avere definite indications of heavy investor demand for short term bills. On August 14 it Avas announced that a
strip of bills consisting of the addition of $300 million to each of the
seven outstanding issues maturing from September 18 to October 30
Avould be auctioned on August 20 for delivery August 25. Subscribers
Avere required to bid for equal amounts of each of the bills reopened.
Commercial banks Avere permitted to pay for their purchases by crediting Treasury tax and loan accounts.
With the exception of a couple of short-lived rallies in early September, interest rates in all sectors moved steadily higher as the Treasury approached its second quarterly financing. The schedule of maturing securities in the second quarter of the fiscal year Avas unusual in
its timing. The typical November 15 date Avas free but it Avas surrounded by a $6.2 billion maturity of 4 percent bonds and a $0.2 billion
maturity of l i ^ percent exchange notes on October 1 and a $2.5 billion
maturity of 2i/^ percent bonds on December 15.
On September 17 the Treasury offered the holders of the October
and December maturities a choice of three IICAV issues. The long option
in the offering was a 7y2-percent 6 year lOi/^ month note priced at $99.50
to yield 7.59 percent, the middle issue Avas a 7%-percent 3 year 71^
month note at par, and the anchor Avas an 8 percent 1 year 71/2 month
note at par. The maturing October issues were to be exchanged at maturity value and the December issues were to be adjusted for market
price and accrued interest.
REVIEW OF TREASURY OPERATIONS
19
FolloAving the announcement, rates in the Govemment market
continued to climb Avith bill rates equaling the high levels of July
and August and coupon rates breaking through to ncAv peaks.
I n spite of the climb in rates the public gave the IICAV issues a good
reception exchanging $4.5 billion of their $5.4 billion holdings of the
October maturities and $1.3 of their $1.9 billion December holdings.
The attrition rate of 20 percent on the privately held portion Avas
Avithm the range of Treasury expectations.
Intermediate and long term Treasuries declined sharply during the
first 3 Aveeks of October and most areas of the bill market Avere modestly improved. During this period, the Treasury turned to the tax anticipation bills tAAace for a total of $5.0 billion of cash financing. An
announcement Avas made on October 2 for $2.0 billion of Aj)ril 1970 tax
bills Avhich Avere auctioned on October 8 at an average rate of 7.28
percent. On October 23, $3.0 billion of June 1970 tax bills Avere auctioned at an average rate of 7.20 percent. Commercial banks Avere alloAved to credit their tax and loan accounts for 50 percent of their
purchases of the April tax bills and for 100 percent of their purchases of the June tax bills. As is typical in cash financings having
tax and loan credit, banks Avere the dominant force in the auction. As
was the case in several of the prior bond rallies, investor support and
substantive evidence of a decline in inflationary pressures Avas not
forthcoming. On the basis of October releases on the state of the economy and further setbacks in efforts toAvard a Vietnam cease-fire there
Avas a reversal in market sentiment and rates in all sectors rencAved
their upAvard spiral.
Beginning Avith the auction of November 3 the Treasury announced
that "for the time being" it AA^ould raise $100 million of ncAv money
in each of the Aveekly auctions to satisfy a portion of the seasonal
financing requirements. This cycle of bill additions Avas carried
through a full 13 AA^eeks to the auction of January 26 raising $1.3
billion of ncAv money.
The final cash operation for the first half of the fiscal year Avas an
addition of $1.0 billion to the outstanding April 1970 tax bills and
$1.5 billion to the June 1970 tax bills. The auction for both issues Avas
held on November 21 and resulted in average rates of 7.81 percent
and 7.98 percent. Full tax and loan credit Avas alloAved for commercial
bank purchases on both issues.
During this period from early November to the end of the calendar
year the pressures of monetary restraint and credit demands continued
to exert their upAvard influence on all market rates and pushed Government rates to recent historic peaks at the end of December. A heavy
volume of agency and corporate new issues strained the intermediate
20
19 70 REPORT OF THE SECRETARY OF THE TREASURY
and long term markets and foreign government selling of bills contributed to the pressure that the Treasury financing was applying to
short term markets. On December 29, 3-, 6-, and 9-month bill rates
in the market exceeded 8 percent, the 1-year coupon rate reached 8.40
percent and the 3- and 7-year rates Avere 8:51 and 7.77 percent,
respectively.
With the exception of some intermediate issues January brought an
easing to the security markets. I n the Treasury bill inarket, small
iuA^estor interest Avhich had been groAving throughout the year intensified and the noncompetitiA^e aAvards accounted for nearly $1 billion
or a third of each of the first three Aveekly auctions. This extraordinary volume greatly increased the administrative costs of the Treasury,
overtaxed market facilities and contributed to the diversion of the
floAv of savings from the housing market. In a move to ]3rovide relief,
on February 25 the Treasury changed the minimum denomination for
Treasury bills from $1,000 to $10,000.
Attention in the last half of January centered on the coming quarterly financing Avith considerable speculation that in the slightly improved atmosphere the Treasury AA^ould refund the March 15 maturity
and Avould go to the limit of its 7-year note authority in choosing a
maturity. I n the refunding announcement on January 28 the Treasury
offered holders of the 4 percent bonds of February 15, 1970, and the
21^ percent bonds of March 15, 1970, the right to exchange their holdings for an 18-month 814 percent note, a 3V2-y^ar 8i/8-percent note or
a 7-year 8-percent note at par. The total of the maturing issues Avas
$6.7 billion. Private investors held about $3.9 billion of the February
bonds and $1.6 billion of the March bonds. Initial market reaction to
the terms of the financing Avas good and the rate of attrition on the
maturing issues Avas belpAv expectations. During the 3-day exchange
period beginning on February 2 private iuA^estors exchanged $4.9
billion of their holdings for ncAv securities. The cash attrition from
private investors Avas $0.7 billion or 13 percent of their holdings.
FolloAving fairly close to the quarterly financing the Treasury again
returned to the bill market for additional cash financing. The February 13 announcement provided for the addition of $100 million to
the Aveekly auctions of 6-month bills and $200 million to the monthly
auctions of 1-year bills. Also announced Avas the addition of $ 1 %
billion to the outstanding April tax anticipation bills. Although the
number of additions to the Aveekly and monthly cycles Avere not announced, the Aveekly increases Avere carried past the end of the fiscal
year raising $1.8 billion during the fiscal year, and the increase in
monthly bills in the months of February through May resulted in
$0.8 billion of neAv money. Commercial banks Avere alloAved full tax
REVIEW OF TREASURY OPERATIONS
21
and loan credit in the tax bill sale and the bidding in the February 25
auction resulted in an average rate of 6.55 percent.
The market atmosphere surrounding the February cash financing
Avas the most encouraging of the fiscal year. Prices in the money and
bond markets had rallied strongly through the month and generally
reached their loAA-est IcA^els since October of 1969. There Avere strong
coiiAdctions that economic activity Avas slowing and interest rates
AA'ould continue to decline.
The improved atmosphere began to fade in mid-March under an
increasingly heavy supply of IICAV corporate and agency financings but
the mood Avas temporarily sustained by a series of events. The market
interpreted a statement by Chairman Burns before the Senate Banking and Currency Committee as indicating that the System had relaxed monetary restraint, the Treasury turned to the bill market
rather than the note market for its pre-tax date cash needs and on
March 25 a reduction of one-half percent in the prime rate began at
major banks.
The Treasury cash offering Avas for $ 1 % billion of tax bills to mature in the rarely used September tax period. Tax and loan credit Avas
again available to the commercial banks and the March 19 auction
resulted in an average rate of 6.18 percent.
Bond market prices drifted lower in the early part of April as the
supply of ncAv corporate and agency securities continued to groAv.
After midmonth several factors contributed to the further rapid erosion of prices. Indicators failed to shoAV the expected sloAving in the
economy, the American Telephone & Telegraph Co., added a $1.6
billion offering to the corporate finance calendar, and security dealers
Avere in the process of working off heaA^y inventories that had accumulated in expectation of jDrice increases. In this atmosphere the
coming Treasury ref unding became the principal object of concern to
the market in the final days of April.
For the May refunding the Treasury chose a combination exchange-cash operation designed to eliminate the cash loss from
attrition and at the same time raise the remainder of the cash needs
for the fiscal year.
I n the exchange the 7%-percent notes of May 1973 and the 8percent notes of February 1977 Avere reopened to the holders of the
$16.6 billion maturing 5%-percent note and 6%-percent note. The
cash offering to the public Avas $3.5 billion of a UCAA: 7%-percent 18month note priced at $99.95 to yield approximately 7.79 percent. The
subscription books were open for 3 days. May 4 through May 6 in
the exchange offering and for 1 day. May 5, in the cash offering.
22
1970 REPORT OF THE SECRETARY OF THE TREASURY
Offerings of marketable Treasury securities excluding refunding of regular hills,
fiscal year 1970
[In millions of dollars]
Cash offerings
Date
Description
1969
Apr.l
Aug. 15
Oct.l
Oct.l
Oct.l
Oct.l
For new For remoney funding
Exchange offerings
For
maturing
issues
In advance
refunding
Total
NOTES
1J^% exchange note, Apr. 1,1974 1
7K% note, Feb. 15,1971
8% note, May 15,19713
7K% note, May 15,1973
7 ^ % note, Aug. 15,1976
lH%exchangenote, Oct. 1,1974 »
2 28
2,924
4,176
3i,160
3 1^683
42
28
2,924
4,176
1,160
1,683
42
8 ^ % note, Aug. 15,1971
8H% note, Aug. 15,1973
8% note, Feb. 15,1977 <
1>^% exchange note, Apr. 1,1975 1.
7M% note. May 15,1973, additional
8% note, Feb. 15,1977, additional..
7 ^ % note, Nov. 15,1971«
< 2,255
U,846
1,856
2
4,682
3,313
2,255
1,846
1,856
2
4,682
3,313
10,743
23,967
34,710
1970
Feb. 15
Feb. 15
Feb. 15
Apr.l
May 16
May 15
Mayl5
Totalnotes
2,181
8,562
2,181
8,562
BILLS (MATURITY VALUE)
1969
Increase in offerings of regular bills:
July-September
October-December
January-March
April-June
Other et increases in regular bills
Tax anticipation bill offerings:
1969
Julyl8
July 18
Oct.l4
Oct.29
Nov.26
Nov.26
1970
Mar.3
Mar.26
2,121
800
1,400
1,700
18
2,121
800
1,400
1,700
18
6.775%157-day,maturIngDec. 22,1969..
7.202%248-day,maturingMar. 23,1970..
7.284%190-day,maturingApr. 22,1970..
7.204%236-day,maturing June 22,1970..
7.814% 147-day, maturing Apr. 22,1970,
additional.
7.976% 208-day, maturing June 22,1970,
additional.
1,763
1,752
2,007
3,004
1,007
1,763
1,752
2,007
3,004
1,007
1,604
1,504
6.549% 50-day, maturing Apr. 22, 1970,
additional.
6.177% 160-day, maturing Sept. 22,1970..
1,753
1,753
1,768
1,758
Total tax anticipation bill offerings....
Total offerings
1970
14,548
22,768
14,548
56,297
8,662
23,967
> Issued on demand in exchange for 2% percent Treasury bonds, Investment Series B-1975-80.
2 Issued subsequent to June 30,1969.
3 The 2H percent December 1964-69 bonds included in the October 1969 refunding.
* The 2}4 percent March 1966-70 bonds included in the February 1970 refunding.
« The cash offering of the 7H percent note of November 1972 was part of the May refunding. See footnote
3 of the Disposition table.
The financing which had been undertaken in an unsettled securities
market Avas further complicated Avhen on April 30, the day folloAving the announcement, the President reported the movement of American troops into Cambodia. I n the cash offering the public subscriptions totaled $3.7 billion, only $200 million more than the amount
offered by the Treasury and for the first time in recent history subscriptions Avere allotted in full.
The exchange part of the financing was more successful with the
proportion of maturing notes redeemed for cash considerably smaller
REVIEW OF TREASURY OPERATIONS
23
than had been anticipated. Of the $5.0 billion of maturing issues held
by private investors $2.3 billion was exchanged for the 3-year 7%percent note and $1.2 billion Avas exchanged for the longer 8-percent
note. The Federal Reserve System and Government accounts held
$11.6 billion of the maturing issues. They exchanged $7.0 billion for the
short cash offering, $2.4 billion for the intermediate note and $2.1
billion for the long note. The net new cash raised in the May refunding
was $2.2 billion.
The accompanying tables summarize the Treasury's major financing operations during the fiscal year. Data on allotments by investor
classes will be found in the Statistical Appendix.
The exhibits on public debt operations provide further information on public offerings and allotments by issues in tables and representative circulars.
Disposition ofmarketable Treasury securities excluding regular bills, fiscal year 1970
[In millions of dollars]
Dateof
refunding
Securities
retirement
Description and
maturing date
1969
Aug. 15
Oct.l
Oct.l
Oct.l
Dec. 16
1970
Feb.l6
Feb.15
Mar.15
Apr.l.
Mayl6
Mayl6
Issue date
BONDS AND NOTES
6%note, Aug. 15,1969
1^^% exchange note, Oct. 1,1969
4% bond, Oct. 1,1969
2>^% bond, Dec. 15,1969
23^% bond, Dec. 16,1969
May
Oct.
Oct.
Sept.
Sept.
15,1968
1,1964
1,1957
16,1943
16,1943
442
93
1,097
4% bond, Feb. 15,1970
. . J a n . 15,1966
2K% bond, Mar, 15,1970
Feb. 1,1944
2M% bond. Mar. 16,1970
Feb. 1,1944
lH%exchangenote,Apr. 1,1970
Apr. 1,1966
55^% note. May 15,1970
Nov. 15,1968
6 ^ % note, May 15,1970
Feb. 15,1969
Retirements of unmatured debt for
estate taxes, etc
406
Total coupon securi t i e s . . .
1969
Dec.22
1970
Mar.23
Apr.22
Apr. 22
Apr.22
June22
June 22
Redeemed Exchanged for
for cash
new issue
or carried
Total
In adto matured
At
^rance reredebt
maturity vance
funding
673
300
88
748
816
2,924..
66...
5,143
11,811
3,366
159
6,240
1,811
673
3,975
21,980
4,381
1,980
300
88
7,793
8,764
37,046
37,949...
460
6,122
460
30,893,
36,016
T A X ANTICIPATION BILLS «
6.775% (tax anticipation).
July 18,1969
1,763
1,763
7.202%
7.284%
7.814%
6.649%
7.204%
7.976%
July
Oct.
Nov.
Mar.
Oct.
Nov.
1,752
2,007
1,007
1,763
3,004
1,604
1,752
2,007
1,007
1,753
3,004
1,604
(tax anticipation)
(tax anticipation)
(tax anticipation)
(tax anticipation)
(tax anticipation)
(tax anticipation)..
18,1969
14,1969
26,1969
3,1970
29,1969
26,1969
Totalbills.
12,790
Total securities
17,912
12,790
30,893
48,805
1 Included in October 1969 refunding.
2 Included in February 1970 refunding.
3 In the May flnancing private holders of maturing issues were not given preemptive rights to exchange for
the 75<-percent note of November 1971, but could present them in payment or exchange, in lieu of cash for
allotments of the new issue. Federal Reserve and Government account exchanges are included.
* Including tax anticipation issues redeemed for taxes in the amounts of $464 million in December 1969,
$425 million in March 1970, $1,135 million in April 1970, and $1,222 million in June 1970.
24
19 70 REPORT OF THE SECRETARY OF THE TREASURY
Law Enforcement a n d Operations
During fiscal 1970 Treasury strengthened enforcement activities at
every level.
Drug smuggling
Treasury made illicit traffic in narcotics and dangerous drugs its
priority enforcement target during the fiscal year. In response to
President Nixon's call for a major new initiative against drug traffic.
Treasury sougflit and secured an $8.75 million supplemental appropriation used to increase Customs personnel and' equipment. These
ncAv resources enabled Customs to launch a major antidrug smuggling
program beginning in June 1970 and to provide intensified examination of passengers, baggage, and cargo at all border points and
principal seaports and airports of entry.
Earlier in the year Treasury shared the lead role in Operation
Intercept, a large-scale drug search effort at the U.S.-Mexican border.
This Avas folloAved by Operation Cooperation, a joint U.S.-Mexican
effort designed to reduce drug flow.
Organized and white collar crime
Organized and Avhite collar crime also received special attention
during the fiscal year. Treasury action focused upon prevention of the
use of secret foreign bank accounts to further tax frauds, to screen
a Avide variety of criminally-related financial activities, and to conceal
and cleanse criminal Avealth.
I n the United States, laAv enforcement authorities are able to obtain
bank information through legal process. HoAvever, investigations and
prosecutions have been tliAvarted by the inability to obtain comparable
information located abroad.
The Department has undertaken a program of administrative, legislative, and treaty action to remedy the problem. The Department has
been analyzing measures available pursuant to existing tax treaties
and statutory authority. A determination Avas made that, beginning
in taxable year 1970, U.S. taxpayers Avould be required to disclose on
their tax returns their direct or indirect interest in foreign bank and
brokerage accounts.
' Treasury has propounded numerous legislative proposals designed
to curb the legal use of secret foreign bank accounts, many of Avhich
proposals have been incorporated in legislation.
Operating pursuant to existing statute and treaty laAv, Treasury
has greatly stepped up efforts in obtaining information from foreign
banks on criminally-related uses of the secret foreign bank account.
Further, Treasury representatives have participated in discussions
Avith SAVISS authorities concerning a treaty of judicial assistance in
REVIEW OF TREASURY OPERATIONS
25
criminal matters, as AA'CII as discussions concerning the interpretation
of the provisions of the 1951 income tax treaty Avith SAvitzerland Avhich
provides for the exchange of information to prevent income tax fraud.
Treasury agencies increased their contribution of manpower and
resources to the organized crime strike forces, coordinated Government enforcement units designed to fight organized crime in many
prominent cities throughout the- United States. Treasury UOAV provides approximately 50 percent of the Nation's strike forces personnel.
Another major development during the year was the launching by
Treasury of the three:pronged attack against cargo theft, largely the
product of organized criminal activity.
Administration—Study and Organizational Improvement
Pursuant to the recommendations of a study of the activities of the
Office of the Assistant Secretary (Enforcement and Operations), on
March 30, 1970, the Office Avas reorganized, creating three constituent
offices: Office of LaAv Enforcement, OfRce of Trade' and Tariff Affairs,
and Office of Operations. Further reference to these three offices is
made in the Administrative Keports section, pages 65-66.
Law Enforcement: Study and Implementation
On July 18, 1969, a study of Treasury laAv enforcement operations
Avas initiated, and the final report Avas published in January 1970, containing numerous recommendations Avhich are currently being implemented by the Department of the Treasury. Pursuant to those recommendations, Ave have:
—Designated the Office of the Assistant Secretary (Enforcement and
Operations) to serve as a point of coordination betAveen the Department's OfRce of Personnel and the laAv enforcement agencies in the
establishment and implementation of j)ersonnel policies, standards
and practices applicable to all of the enforcement agencies;
—Developed systems and procedures for periodically revicAving the
overall inspection programs of the enforcement agencies;
—Developed a management information system to keep the Office of
the Secretary fully advised as to the significant developments and
other matters affecting the Treasury laAv enforcement image;
—Set in motion procedures to revicAv and decide on an appropriate
course of action concerning personnel and administrative policies
that appear to constitute a source of dissatisfaction to the enforcement agencies;
—Issued a policy statement encouraging the participation of local laAv
enforcement personnel in meetings or luncheons that Avill bring them
in contact Avith other Treasury, Federal, State and local enforcement-related personnel;
26
1970 REPORT OF THE SECRETARY OF THE TREASURY
—^^Supported securing additional Secret Service agents during the
period of 1971-72 to cover the Secret Service protective and investigative responsibilities;
—Reorganized the intemal audit section of the Customs Agency Service to combine it Avith and make it an integral part of the inspection
system.
Trade and tariff affairs
I n the trade and tariff area, two significant changes Avere made in
Antidumping Act administration. One relates to the policy of accepting price assurances, the other to the expediting of antidumping
investigations.
O n May 20, 1970, Assistant Secretary Rossides announced that
"price assurances are being accepted only in cases Avhere dumping
margins are minimal in terms of the volume of sales involved." I n the
past, a foreign exporter who sold in the United States at prices below
those in his home market could be reasonably certain of avoiding a
Treasury determination of "sales at less than fair value" by revising
his prices and offering assurances that he Avould not engage in these
practices in the future. This alloAved foreign exporters to obtain a foothold in American markets by undercutting the prices of their U.S.
competition Avithout concern for the possible consequences under the
Antidumping Act.
The Department of the Treasury also revised its antidumping regulations to provide that when a case is closed on a price-assurance
basis, the published closing notice Avill state the facts relied on by the
Secretary in publishing the notice and that these are to be considered
evidence Avarranting the termination of the investigation. This contrasts Avith the former practice under Avhich cases closed with assurances of price revision Avere terminated Avith a determination of "no
sales at less than fair value."
FolloAving a management study Avhich was completed in the preceding fiscal year, the Department of the Treasury has taken numerous
efficiency measures to decrease the time required for the completion
of antidumping investigations. I n addition, the Bureau of Customs
substantially increased its professional and clerical staff assigned to the
administration of the antidumping and countervailing duty laAvs. This
Avill expedite antidumping investigations.
In September of 1969 Treasury representatives attended the annual
meeting of the Subcommittee on Anti-Dumping of the GATT. The
purpose of this meeting Avas to consider steps that signatory countries
had taken to comply Avith the International Dumping Code.
REVIEW ''OF: TREAStTRY OPERATIONS
27
Consolidated Federal Law Enforcement Training Center
On March 2, 1970, the: Consolid,ated Federal Law Enforcement
Training Center Avas est^blisihed ag a:h independent organization, acquiring Bureau status under the administration of the Department of
the Treasury. I t Avill train agents for all Treasury enforcement arms as
Avell as provide agent and police training to personnel of other Government agencies.
INTERPOL
During fiscal 1970, I N T E R P O L processed 1,287 cases of Avhich 305
Avere U.S. originated. The balance of 982 cases Avere foreign-originated
requests for information or investigation within the United States.
This caseload represents a significant increase of both total caseload
and proportion of U.S.-originated cases. The U.S.-originated cases
represent requests from U.S. Federal, State and local laAv enforcement agencies for information or investigation overseas, and denotes
a marked increase in requests for assistance by State and local police.
We attribute the caseload increases largely to a greater aAvareness of
available I N T E R P O L services on the part of U.S. laAv enforcement
personnel.
I n October 1969, Assistant Secretary Rossides Avas Chairman of
the U.S. Delegation to the 37th Annual Meeting of the I N T E R P O L
General Assembly held in Mexico City Avhere he Avas elected as one
of the three vice presidents of the organization. Considered at that
General Assembly meeting, in Avhich the United States took an active
part, Avere several enforcement questions relating to counterfeiting
and narcotics at an international level. Several substantiA^e resolutions
Avere introduced, discussed and passed during the General Assembly.
Creation of the Executive Protective Service
A major enforcement action taken Avas the creation of the Executive
Protective Service, Avhich extended to foreign embassies situated in
Washington, D . C , protection by the same personnel protecting the
White House.
Taxation Developments
Legislative highlights
The major development in fiscal 1970 Avas the passage of the Tax
Reform Act of 1969 Avhich constituted the most significant legislation
for reduction of special preferences in the tax laAv ever enacted in the
United States. During the last half of the fiscal year the Treasury
issued a large number of regulations implementing the provisions of
that Act.
S97-702 0—^71-
28
19 7 0 REPORT OF THE SECRETARY OF THE TREASURY
I n addition to tax reform the Congress in earlier legislation extended the surcharge at 10 percent for the balance of 1969. The Tax
Reform Act further extended the surcharge at a rate of 5 percent for
the first 6 months of 1970, and delayed for 1 year the scheduled reductions in excise taxes on telephone service and automobiles.
Separate legislation, described later, imposed additional taxes in
the nature of user charges on air transportation.
I n testimony before the Ways and Means Committee on May 12,
1970,^ the Secretary of the Treasury recommended adoption of legislation to provide deferral of tax Avith respect to profits arising from
export sales channelled through a Domestic International Sales Corp.
( D I S C ) . This proposal is intended to remove a tax disadvantage to
U.S. exports relative to foreign manufacturers and to provide an
incentive for further export activity by U.S. businesses.
On May 19, 1970, President Nixon proposed the enactment of a
special excise tax of $4.25 per pound on the lead content of additives
used for motor fuels, to encourage industry to provide IOAV or nonleaded gasoline. 2 This environmental control measure Avas designed
both to support the rapid development of more advanced automobile
emission control systems requiring unleaded fuel and to reduce the
amount of background lead in the environment. The proposed tax,
in addition to this important antipollution incentive, Avas estimated
to provide transitional revenue of $1.6 billion in the first year and
diminishing amounts as the incentive takes effect.
The President's message to the Congress of March 23, 1970, on improving the prospects of small business contained recommendations
for significant ncAv tax benefits to help small business, summarized
in a later section.
Tax Reform Act of 1969
H.R. 13270, the tax reform bill, as passed by the House of Representatives on August 7, 1969, contained substantially all of the administration proposals described in the Secretary's Annual Report
for fiscal year 1969 (pages 26-33), but Avith some important
modifications and additions.
I n his testimony before the Senate Finance Committee on September 4, 1969,^ Secretary Kennedy praised the SAveeping reform nature
of the House bill but urged that its long-run revenue cost of an estimated $2.4 billion be reduced by half, that the balance of tax shifts
in favor of individuals in the bill be redressed by granting some tax
relief to corporations as Avell, and that certain structural changes be
revised. Specifically, the administration proposed returning to a
1 See exhibit 23.
a See exhibit 25.
3 See exhibit; 21.
REVIEW OF TREASURY OPERATIONS
29
vanishing loAv-income alloAvance, although at a sloAver phaseout than
it originally proposed, rather than the more costly approach of a minimum standard deduction adopted by the House, and limiting the maximum standard deduction to the loAver of 12 percent or $1,400 rather
than 15 percent or $2,000. The administration also recommended introducing a ncAv rate schedule for single persons, instead of granting
head-of-household status to those over age 35, and loAvering the
corporate tax rate by two percentage points.
The administration did not oppose the House action in lowering
the rates of personal income tax or in reducing the maximum percentage depletion rate from 27i/^ percent to 20 percent. I t did advise
restoring such depletion to the limit on tax preferences ( L T P ) and
suggested several other changes, such as removing State and local
bond interest from the L T P and relaxing someAvhat the House approved increases in the taxation of capital gains and foundations'
investment income.
The Senate Finance Committee reported out the bill on November 21, 1969, and it Avas approved by the Senate with modifications
on December 11. The Senate version of the bill accepted some of the
administration's recommendations, including those Avith respect to
single persons and retaining the 6-month holding period for long
term capital gains; but it increased rather than decreased the net
revenue cost of the bill to a long-run total of about $5.5 billion.
The Senate bill substituted increased personal exemptions for the
rate reductions and the maximum tax on earned income provided in
the House bill. HoAvever, the more serious rcA'^enue consequences resulted from changes* in other aspects, such as softening the increase
in capital gains taxation and introducing a very costly tax credit for
higher education expenses. The latter provision Avas eliminated by the
conference together Avith other revisions which resulted in a final net
revenue cost of an estimated $2.5 billion.
The Tax Reform Act Avas signed by President Nixon on December 30, 1969.^ It,^^ri^v,yl6s in the long run a revenue reduction at
1969 income leA^els of $2.5 billion. The details of the effects on calendar
year liabilities of taxpayers are shoAvn beloAv:
[In millions of dollars]
.
1970
1971
1972
1974
Tax reform program
. . . , ^ . . . . +$1,150 +$1,430 +$1,660 +$2,195
Repeal of investment credit
......
+2,600 +2,990 +2.990 +3,090
Tax reform and repeal^f the investment credit..'.
+3.650 +4.420 . +4.650 +5.286
Income tax relief
-1.441 -4.927 -7.269 -9.134
Balance between reform (+.) and relief ( - )
Extension of surcharge and excises
Total
1 See exhibit 20.
'..'..
+2.209
+4.270
+6.479
-607
+800
+293
-2.619 -3,849
+800...
-1.819 -3.849
Longrun
+$3,320
+3.300
+6.620
-9,134
-2.614
-2.514
30
19 70 REPORT OF THE SECRETARY OF THE TREASURY
I n the short run the fiscal impact, including the extension of the
surcharge at 5 percent to June 30, 1970, was to increase revenues in
the fiscal years 1970 and 1971 by $3.7 billion and $2.7 billion respectively at 1969 income levels. The increases Avere loAver by $0.5 and $2.9
billion respectively than the original administration proposals. The
details of the short-run impacts are shoAvn below:
[In billions of dollars]
Fiscal year
Provision
1970
Tax reform provisions (+):
Corporation!
Individual
+$0.2
(*)
1971
+$0.9
+.2
Total, tax reform provisions
+.2
+1.1
Tax relief provisions (—): Individual3
—.3
—3.1
+.9
+.4
+1.9
+.6
+1.3
+.3
+1.7
+2.5
~"=
+.7
+.4
+2.0
+1.1
Other provisions ( + ) :
Repeal of investment credit:
Corporation
Individual
-..
Total, repeal of investment credit
Extension of tax surcharge:
Corporation
Individual
Total, surcharge extension
Extension of excise taxes
:
,
,
+.6
+1.1
Total, other provisions
+3.8
+4. 7
Total, all provisions
+3.7
+2.7
! Does not reflect the increase in tax receipts resulting from the imposition of increased penalties for failure
to pay tax and make deposits when due.
2 Does not reflect increase in tax receipts resulting from the imposition of increased penalties for failure
to pay tax and make deposits when due; nor the increase in receipts resulting from the provisions regarding
the reporting of medical payments for which data are not available.
3 Does not reflect $200 million reduction in receipts resulting from certification of nontaxability for withholding tax purposes.
*Less than $60 million.
The Tax Reform Act contains a large number of provisions affecting different parts of the tax laAv. Some of the principal features are
indicated below.
Individual income tax relief.—A major development in the legislative history of the Tax Reform Act Avas the adoption of amendments converting it from a measure that would have increased
revenue in the long run to a tax relief measure providing major reductions in the tax liabilities mostly for loAv-income taxpayers. The Treasury proposal of a loAv-income alloAvance which Avould be phased out
by $1 for each $2 of income above the poA^erty level was converted
to a flat-amount loAv-income alloAvance of $1,000 plus an increase in
the general standard deduction to 15 percent of adjusted gross income
with a ceiling of $2,000 (from 10 percent and $1,000), and an increase
in personal exemptions from $600 to $750 over a 3-year period.
REVIEW OF TREASURY OPERATIONS
31
In addition the act establishes a maximum marginal rate of 50 percent on earned income. The amount of relief for earned income is computed as if this Avere the only income and carried its share of deductions. The relief is also reduced Avhere the taxpayer has significant
amounts of preference income.
Single persons will benefit from a ncAv rate schedule under which
their tax liability may not exceed that of a married couple by more
than 20 percent at any level of taxable income.
The relief provisions of the act have an important impact on taxfree income levels of individuals and thus operate to eliminate or reduce tax for many loAver income individuals. The tax-free income level
is equal to the sum of personal exemptions plus the low-income allowance, or formerly the minimum standard deduction. The final effect
of the four-step increase in the personal exemption from the 1969
value of $600 to $625 in 1970, $650 in 1971, $700 in 1972, and $750 in
1973 and the increased minimum expense deduction or low-income
allowance is that a single indiAddual's tax-free income reaches $1,750
in 1973. The corresponding tax-free income level for a family of four
becomes $4,000 when these provisions are fully effective. These levels
represent increases over 1969 incomes not subject to tax of $850 and
$1,000, respectively. The following table shoAvs the increased tax-free
income levels for other family sizes.
Tax-free income levels: 1969-1973
Number of exemptions*
1
2
3
4
5
6
7
8
1969
$900
1,600
2,300
3,000
3,700
4,400
6,100
5.800
1970
1971
1972
$1,725
2,350
2.976
3,600
4.225
4,860
5.475
6.100
$1,700
2.360
3,000
3,650
4,300
4,950
5,600
6.250
$1,700
2,400
3,100
3,800
4,600
6.200
5.900
6.600
1973 and
thereafter
$1,750
2.600
3,260
4,000
4,750
6,500
6,250
7,000
• A single person age 66 or over is eligible for 2 exemptions, and a married couple both taxpayers age 66 or
over is eligible for 4 exemptions.
Because the elderly are granted an additional special exemption for
age, the act provides generous increases in tax benefits to the Nation's
aged. The tax-free income level of single persons age 65 or over will
be $2,500 Avhen the act becomes fully effective; the comparable figure
for a married couple both age 65 or over is $4,000. This represents an
increase of $900 over the tax-free income level of 1969 for an elderly
indiAddual and $1,000 for an elderly couple.
A further consideration is that students will be able to earn up to
$1,750 without being taxed, while their families claim them as
dependents.
32
19 70 REPORT OF THE SECRETARY OF THE TREASURY
Other features of the law benefiting individuals are the averaging
provisions and the moving expense deduction, both of which are more
generous than imder prior law.
The averaging provision was modified by permitting capital gains
to be averaged and by reducing the percentage of increase over base
period income from 33 percent to 20 percent that must occur before
averaging comes into effect. The moving expense deduction was
extended to certain related costs involved in moving.
The administration's proposal to include in taxable income one-half
of tax preference income was replaced by a tax of 10 percent on the
amount by which tax preference income exceeds the sum of $30,000
plus ordinary income tax liability. The definition of tax preference
income was also altered somewhat.
The list of preference incomes includes the excluded part of long
term capital gains, stock option benefits, the excess of percentage over
cost depletion, the excess of accelerated over straight-line depreciation
on real property (and certain personal property), the excess of rapid
amortization over straight-line depreciation on antipollution equipment, railroad rolling stock and rehabilitated housing, excess investment interest, and excess bad debt reserves of financial institutions.
Limitations on specific tax preferences.—In addition to the minimum tax, the act establishes limits on certain specific preferences. For
example, the amount of long-term capital gains Avhich may enjoy the
favorable 25-percent rate is limited to $50,000 per year; on gains above
this amount the maximum tax is raised to 35 percent for individuals.
The maximum capital gains rate for corporations is increased to 30
percent. The availability of capital gains treatment on income related
to farm losses will also be restricted.
The act provides that net long term capital losses must be reduced by
50 percent Avhen they are deducted against ordinary income. The
annual ceiling of $1,000 on such deduction is retained.
The act also carries out the administration's proposal to eliminate
the use of corporate chains to claim multiple exemptions from the
corporate surtax. Corporations having over 80 percent common OAvnership will be limited to one such exemption after a 5-year transition
period.
The unlimited charitable contributions deduction has been repealed
while the general limit has been raised from 30 to 50 percent of adjusted gross income. In some cases the deduction for contributions of
appreciated property is limited to the contributor's basis; Avhere this
is not the case the contribution is subject to the 30-percent limit (rather
than the new 50-percent ceiling).
Private foundations are prohibited from engaging in acts of self-
REVIEW OF TREASURY OPERATIONS
33
dealing with violations subject to progressively increasing fines. They
are subject to a tax of 4 percent on their net investment income.
The tax on unrelated business income is extended to virtually all
exempt organizations.
The former mineral depletion percentage rate of 27V^ is reduced to
22. The 22-percent rate Avill also apply to minerals formerly eligible
for the 23-percent rate (plus molybdenum) while the 15-percent rate
is lowered to 14 percent except on domestic deposits of copper, silver,
gold, and iron shale.
The act also restricts the use of mineral production payments to
avoid the limitations on depletion, loss carryovers, and the foreign
tax credit. I t does so by treating such transactions as loans rather than
the transfer of an economic interest.
Accelerated depreciation on real estate (except residential) is reduced to depreciation not faster than 150 percent declining balance
on new property, nor faster than straight line on used property. New
residential rental housing continues to be eligible for 200 percent
declining balance and sum-of-the-years digits methods; used residential property may be depreciated at a 125-percent declining balance
rate if it has a useful life of 20 years or more at acquisition. The portion
of the gain subject to recapture on subsequent sale of the property is
increased (except publicly assisted housing). I n addition, tighter rules
apply to the payment of tax-free dividends out of earnings and profits
made possible by accelerated depreciation.
The use of losses generated on farms to offset ordinary income
Avhile future sale of the farm enjoys capital gains treatment has been
a tax-saving practice Avhich is curtailed by the Tax Reform Act by
requiring in certain cases treatment of part of the gain as ordinary
income. The rules denying deduction of hobby losses are expanded.
I n the future bad debt reserves maintained by commercial banks
will be tied to actual loss experience. The special reserve deductions
of mutual thrift institutions were reduced.
Distributions of income accumulations by the trust will be generall}^
taxable to the beneficiaries at their regular rates with a credit for
the tax paid by the trust. Several other more technical reforms were
included.
New incentive provisions.—The act introduced incentives in the
form of accelerated capital write-offs in four areas. Expenditures on
rehabilitation of low-cost rental housing, pollution control equipment,
railroad rolling stock, and certain coal mine safety equipment may
be amortized over 5 years. In general, the rapid amortization is limited
to investments made in the period prior to 1975.
One of the major actions taken in the act was the repeal of the 7percent investment credit. This was proposed by the administration in
34
1970 REPORT OF THE SECRETARY OF THE TREASURY
1969 (see annual report for fiscal year 1969, pages 25-26). The repeal
applied in general to investments under contracts entered into after
April 18,1969.
Tojx-exempt organizations.—The act sets forth additional guidelines (and revised sanctions) with regard to prohibited activities of
tax-exempt organizations, principally foundations. The new rules
involve self-dealing, holdings in unrelated business, insufficient distribution of income to charity, and political activity. I n addition, the
act imposes a 4-percent tax on the net investment income of private
foundations and the full corporate tax on the unrelated business income of other exempt organizations which were previously excluded
from the unrelated business tax.
Extension of the surcharge.—^The combination of the Tax Reform
Act and Public Law 91-53, approved by the President August 7, 1969,
resulted in extension of the surcharge previously scheduled to expire
June 30, 1969, at a rate of 10 percent through December 31, 1969, and
at a rate of 5 percent through June 30, 1970. The Tax Reform Act
also provided for delay of 1 year in the scheduled reductions in the
automobile and telephone service excise taxes previously scheduled for
reduction January 1,1970.
Domestic international sales corporation
A Treasury proposal, presented to the House Ways and Means Committee on May 12, 1970, would provide for the establishment of a new
class of domestic corporation to be known as a Domestic Intemational
Sales Corp. ( D I S C ) . The D I S C proposal is intended to stimulate U.S.
exports by providing for more equitable treatment of U.S. export
income eamed through a DISC, vis-a-vis foreign investment income
of U.S. companies. More specifically, the proposal would permit a
company, Avithin prescribed rules, to defer income tax on exports sold
through a domestic export subsidiary. The income that could be
reflected in the export subsidiary, and enjoy deferral, Avould be prescribed by formulas which in general Avould permit half of the manufacturing profit to be treated as export income. To qualify for deferral
the subsidiary profits must be reinvested in export related activities
including certain loans to U.S. manufacturers of exported products.
Small business taxation
An administration bill entitled "Small Business Taxation Act of
1970," accompanying the President's Message of March 23, 1970 on
measures to strengthen the small business sector, included provisions
for (1) deductions of 20 percent of the gross income derived by corporations from obligations guaranteed by the Small Business Administration, (2) extension of the net operating loss carryforward from
REVIEW OF TREASURY OPERATIONS
35
the present 5 to 10 years for small business, (3) increase in the permissible number of shareholders from the present 10 to 30 for qualifying for partnership-like treatment under subchapter S of the
Internal Revenue Code, (4) treatment of payments to Minority Enterprise Small Business Investment Companies as charitable contribution deductions, and (5) liberalization of the stock option ruleS
for qualified small business corporations to permit exercise of qualified stock options up to 8 years after they were granted, as against
5 years under present laAv.
Air transport taxation
Public Law 91-258, known as the Airport and AirAvay Revenue Act
of 1970, approved May 21, 1970, established an Airport and Airway
Trust Fund to help finance Federal aid to airports and help pay for
the Federal airway system. The fund is to receive revenues from the
tax on transportation of persons by air which was increased from
5 to 8 percent, a new $3 per person tax on trips to foreign countries,
a new tax of 5 percent on domestic air cargo shipments, a new annual
use tax on civil aircraft, new and increased taxes aggregating 7 cents
a gallon on fuel used in aircraft when not engaged in commercial
transportation of persons or property, and the revenues from the existing taxes on aircraft tires and tubes.
Administration, interpretation, and clarification of tax laws
I n connection Avith the administration of the tax laws, the Department of the Treasury, during fiscal 1970, issued 18 final regulations, 17
temporary regulations and 12 notices of proposed rulemaking, relating
to matters including alcohol and tobacco taxes. Four of the final regulations, five notices of proposed rulemaking and all the temporary regulations covered projects under the Tax Reform Act of 1969.
Among the subjects dealt Avith in Treasury decisions published during the fiscal year Avere grants to individuals by private foundations
aAvarded prior to but paid after January 1,1970, taxes on self-dealing
Avith respect to scholarship and felloAvship grants by private foundations, certain indirect transactions by a private foundation with respect
to Government officials, the distribution of cash in lieu of fractional shares under section 305 of the Internal Revenue Code, and
Avithholding with respect to certain employees Avho incur no income
taxliability.
International tax matters
Legislation., regulations and administrative procedures.—Aside from
several minor provisions in the Tax Reform Act of 1969, there were
no legislative enactments in the international tax field in fiscal 1970.
36
1970 REPORT OF THE SECRETARY OF THE TREASURY
Pending legislation relating to the treatment of Domestic International Sales Corps, is described in a prior section.
The Office of the Assistant Secretary for Tax Policy has taken
an active role in developing legislative proposals to control the use of
secret foreign bank accounts by U.S. citizens.
A ncAv administrative procedure was issued on June 26, 1970, to
provide guidance for taxpayers in invoking competent authority procedures for settling disputes arising under U.S.- tax conventions.
Tax treaties.—An income tax treaty with Finland Avas signed on
March 6, 1970. The new treaty, Avhen ratified, will replace the treaty
which was signed in 1952.
A ncAv income tax treaty Avas signed on January 9,1970, Avith Trinidad and Tobago, which, Avhen ratified, will replace a limited, interim
treaty Avhich Avas signed in 1966.
A ncAv income tax treaty Avith Belgium was initialled and prepared for early fiscal 1971 signature. The ncAv treaty Avill replace the
1948 treaty noAv in effect.
An agreement was reached on a protocol to the 1968 income tax
treaty Avith France which, when signed and ratified, Avill provide for
the extension by France to U.S. portfolio investors in French companies of the credit noAv given to French shareholders for one-half of
the 50 percent French corporate tax.
Draft income tax treaties were initialled with Japan and Norway
during fiscal 1970, and are being prepared for signature, to replace
existing treaties Avith those countries.
Initial discussions were held with Turkey in September 1969 on an
income tax convention. There is no income tax treaty in force between
the United States and Turkey.
An estate tax convention between the United States and the
Netherlands Avas signed on July 15, 1969. There Avas no estate tax
treaty in force between the two countries. The new treaty will come
into effect after the treaty is ratified and instruments of ratification
are exchanged.
Negotiations Avere continued, but not concluded, during the year on
a new estate tax treaty with France, to replace the treaty Avhich has
been in force since 1949.
Intemational organizations.—Treasury representatives participated
in the work of the Fiscal Committee of the Organization for Economic Cooperation and Development ( O E C D ) . During the year the
committee advanced its Avork on revising its model tax convention and
agreed to undertake a study of comparative depreciation practices.
The committee moved toAvard a greater involvement in questions of
domestic tax policy by receiving reports on tax reform progress in the
REVIEW OF TREASURY OPERATIONS
37
United States and Canada. A Treasury representative was elected
chairman of the committee.
Treasury representatives also participated in the work of an O E C D
ad hoc group of tax experts which met to consider a broadening of the
fiscal committee's terms of reference to include the study of tax policy
matters not dealing necessarily Avith double taxation. The group reported favorably on such a broadening. Among the suggestions for
projects to be undertaken by the reconstituted fiscal committee are a
standardization of fiscal reporting and definition, and a study of the
problems in corporate income taxation and of the issues raised by the
emergence of multinational corporations.
Treasury officials participated in a meeting of experts on tax treaties
between developed and developing countries, held under the auspices
of the United Nations Economic and Social Council. The group, meeting this year for the second time, continued its discussion of the kinds
of provisions appropriate to a treaty betAveen a developed country and
a developing country.
The U.S. delegation to the fourth annual meeting of the InterAmerican Center of Tax Administrators in Montevideo, Uruguay,
included Treasury officials. The program dealt with a variety of subjects, including the value-added tax and the U.S. Tax Reform Act
of 1969.
Other activities.—Under an agreement Avith A I D , a Treasury representative visited several countries in Southeast Asia on a tax policy
assistance mission. A written report Avas delivered to A I D on the
equity problems and fiscal prospects of land taxation in Nepal.
I n t e r n a t i o n a l Financial Aifairs
U.S. balance of payments
For fiscal 1970 as a whole, the U.S. balance of payments measured
on the liquidity basis did not change substantially from the fiscal 1969
level. The fiscal 1970 liquidity deficit, including the favorable impact
of the $867 million initial allocation of Special Drawing Rights
( S D R ) , was about $4.0 billion, and that excluding the SDR allocation
about $4.8 billion, compared with the .fiscal 1969 total of about $4.8
billion.
The balance measured on the official settlements basis, on the other
hand, showed a $7.1 billion adverse swing^from a $2.9 billion surplus
in fiscal 1969 to a $4.2 billion deficit (including the SDR allocation)
in fiscal 1970.
Changes in the liquidity deficit included a $1.9 billion increase in
the U.S. trade surplus, only partially offset by some Avorsening in
other current account categories, especially payment of investment in-
38
1970 REPORT OF THE SECRETARY OF THE TREASURY
comes to foreigners. This resulted in a $1.4 billion improvement in the
overall current account balance (including Government economic
grants and other unilateral transfers), from a deficit of $1.1 billion in
fiscal 1969 to a small surplus of $0.3 billion in fiscal 1970.
The deficit on total capital account (excluding special inflows) was
$3.6 billion, or about the same as in 1969. Net special receipts were
slightly negative compared with a net infloAv of more than $1.6 billion
in fiscal 1969; and the errors and omissions outfloAv was $1.5 billion,
down $0.3 billion from the preceding year.
The $7 billion adverse SAving in the balance on official reserve transactions substantially eliminated, for fiscal 1970 as a whole, the abnormally large divergence Avhich had developed during fiscal 1969
between the two indicators of our external position. The unprecedented
increase of roughly $7 billion in Euro-dollar borrowing by domestic
banks from their branches abroad, which had been the primary factor
accounting for this divergence in the previous year, gave way during
fiscal 1970 to a moderate net decline (of approximately $1 billion) in
the outstanding amount of such borrowings. Partially offsetting the
approximately $8 billion effect of this change, on the official settlements
balance as compared Avith that on the liquidity basis, Avas the fact
that only $0.2 billion of the adverse swing on total special transactions affected the official settlements measurement.
The improvement in the trade account accompanied a fall-off in the
rate of growth of U.S. imports, up 12 percent in 1970 compared with 16
percent in 1969 as a result of the slowdown in the domestic economy.
At the same time, the continued strong pace of business in most foreign
markets resulted in a further healthy groAvth in U.S. exports, up 17
percent in fiscal year 1970 compared Avith 8 percent in 1969. Most of the
improvement in the trade account occurred during the last half of the
fiscal year, with the net trade surplus in the J a n u a r y - J u n e 1970 period
rising to $1.4 billion compared with a net trade deficit of $0.1 billion in
the same period in the preceding year.
While there Avas a Avelcome increase in the U.S. trade balance during
fiscal 1970, the U.S. trade position is not as strong as it needs to be.
For example, the U.S. share of Avorld manufacturing exports, after
adjustment for trade generated by the U.S.-Canadian automobile
agreement, continued to decline as it has CA^ery year since 1962. At
the same time, imports of manufactured goods are becoming a significantly larger share of the commodity component of U.S. gross national
product.
On overall capital account, excluding liquid liabilities to foreigners,
special transactions, errors and omissions, and the SDR allocation,
there was a net recorded outflow of $3.6 billion in fiscal 1970, about the
same as in fiscal 1969. Total recorded U.S. capital transactions showed
REVIEW OF TREASURY OPERATIONS
39
an improvement of $1.6 billion over the previous year as nearly all
categories showed small to moderate improvements. This was offset,
however, by a nearly equal decline in net inflows of nonspecial foreign
capital reflecting in particular sharply reduced net purchases of U.S.
stocks by foreign residents.
Total outflows on U.S. direct investment account increased to $3.9
billion from $3.7 billion in fiscal 1969. Excluding the use of foreign
source funds obtained by ncAv issues of long term securities abroad,
such direct investment outflows were $3.4 billion in fiscal 1970 compared with $2.8 billion in the prior year.
A $226 million improvement in U.S. bank outflows during fiscal 1970
resulted mainly from a $320 million shift in short term U.S. bank
claims on foreigners. Outflows declined from $978 million in fiscal 1969
to $658 million in fiscal 1970. I n addition, there was a continued sizable
reflow of long term bank capital in 1970. Such claims fell by $239
million in fiscal 1970 compared Avith the $333 million drop Avhich occurred in fiscal 1969. The reduction in long term U.S. bank claims on
foreigners Avas partly due to continued tight monetary conditions in
the United States.
U.S. nonbank claims on foreigners increased by $317 million in fiscal
1970 compared Avith the $585 million increase which occurred in fiscal
1969. While there was some increase in the outflow of long term funds,
this Avas more than offset by the nearly $500 million turnaround in
short term flows (from an increase of $201 million in the previous year
to a decrease of $285 million in fiscal 1970). The net change in nonbank claims reflected, among other factors, further foreign sourcing
of funds by direct investors under the direct investment program—as
such investors continued to use proceeds from prior Euro-bond borrowings, held in deposits abroad, Avhile neAv Euro-bond borroAvings
declined substantially.
Net U.S. purchases of foreign securities during fiscal 1970 amounted
to $0.7 billion, down $0.9 billion from the $1.6 billion level in the
previous fiscal year. There Avas also a $0.3 billion improvement on Government capital account as net outfloAvs fell from $2.3 billion previously
to $2.0 billion in fiscal 1970.
The big capital account change during fiscal 1970, compared Avith
fiscal 1969, Avas in foreign capital infloAvs into the United States which
fell to $3.7 billion for the year, a decline of $1.6 billion. This Avas in
large part due to a substantial reduction in net purchases of U.S.
stocks by foreigners. Such purchases which were running at quarterly
rates of about $540 million during fiscal 1969 declined to an average of
$330 million in the first tAvo quarters of fiscal 1970. During the last half
of the fiscal year there was a net disinvestment by foreigners in U.S.
stocks. This reduction in foreign purchases of U.S. stocks reflected
40
19 70 REPORT OF THE SECRETARY OF THE TREASURY
mainly the continued weakness of the U.S. stock market as major
market indicators declined throughout most of the fiscal year. Net
foreign purchases of U.S. corporate bonds continued at a relatively
high rate during most of the fiscal year.
Partially offsetting this decrease in foreign portfolio infloAv was a
$507 million increase over the previous fiscal year in foreign direct
investment infloAvs into the United States. Sizable foreign direct investments in several major U.S. corporations, resulting in a shift of
control to foreign based firms, accounted for muoh of the increase in
these inflows.
A second major factor adversely affecting the liquidity balance during fiscal 1970 Avas the substantial turnaround in total special transactions from an infloAv of $1.7 billion in the previous fiscal year to a
net outflow of $21 million.
The approximately $1 billion net decline during fiscal 1970 in the
outstanding volume of U.S. bank Euro-dollar borrowing from foreign
affiliates Avas concentrated in the final months of calendar 1969 and the
J a n u a r y - J u n e half of the fiscal year; a sloAver but continued increase
occurred in such borrowing (by roughl}^ $1.5 billion) during the early
months of the year, giving Avay thereafter to a net decline of about
$2.5 billion.
The shifting pattern of this borrowing in the course of the fiscal
year reflected both the progressive emergence of somewhat easier
monetary conditions in the United States and a number of institutional modifications in domestic banking practice or regulations. Particularly important Avere the Federal Reserve imposition for the first
time, effective September 4, 1969, of a 10 ]3ercent reserve requirement
against additional U.S. bank borroAving from foreign banks, including their OAVU branches abroad, in excess of a specified base level; and
the increased development of domestic borroAving on the commercial
paper market, through bank holding companies, as an alternative
source of funds. Finally, the Federal Reserve suspension, as of J u n e 27,
1970, of previous regulation Q ceilings on interest rates payable domestically on large-denomination negotiable certificates of deposit
may also have had an important impact during the final Aveek of the
fiscal year.
The effects of this SAving in U.S. bank demand for Euro-dollars both
on interest-rate levels and on the general demand for and availability of
funds in that market relative to domestic monetary conditions in major
foreign countries have presumably tended: To reduce, and possibly
to reverse in part, the apparent "circular floAvs" of U.S. resident deposits into Euro-dollar banks and through them back to U.S. banks;
and to weaken the unusually strong incentives for commercial banks
and other private residents in major foreign countries to convert local
REVIEW OF TREASURY OPERATIONS
41
currencies into U.S. dollars, at the expense of foreign official reserves,
for placement in the Euro-dollar market which had developed during
the latter part of the prcAdous fiscal year.
The net result of these Euro-dollar market developments plus the
above-noted shift in the direction of net special transactions was a
major turnaround between fiscal 1969 and fiscal 1970 in the size and
direction of the variation betAveen the tAvo official measures of the U.S.
overall payments position. The difference between the liquidity balance and the official settlements balance fell from nearly $7.7 billion
in fiscal 1969 to less than $300 million in fiscal 1970 with most of the
change being registered between the second half of fiscal 1969 and
the first half of the current year. This further evidence ofthe volatility
of variation betAveen the two measures lends added weight to questions Avhich have been increasingly raised during recent years as to
the significance and adequacy of the two present payments balances.
The Avhole question of Avhether some alternative or additional kind
of balance might perhaps provide a more useful measurement and
assessment of the U.S. international payments position is currently
under review.
The international monetary system
Summary of international developments.—The period of this report,
July 1, 1969, to June 30, 1970, Avas one of solid progress in international monetary affairs. Of fundamental importance to the international monetary system Avas the decision to activate the Special
DraAving Rights (SDR) facility, and to allocate $9.5 billion of SDR's
during the first 3 years of the facility's operation. The Executive Directors of the Intemational Monetary Fund also proposed a sizable
increase of Fund quotas to provide a needed expansion in medium term
credit facilities for member countries. The tAvo-tier gold market arrangement continued to prove its value in practice and the nonmonetary gold price has stabilized close to the monetary price. Agreement
Avas reached on arrangements for the sale of South African gold.^
Adjustments in the exchange rates of the Deutsche mark and the
French franc and the improvement in the French and British trade
and payments positions contributed to a relative degree of calm in
international exchange markets and to a strengthening of the international monetary and payments structure. At the end of May, the
Canadian dollar Avas allowed to rise above the parity limits, following
a large iiiAvard movement of funds.^ The Executive Directors of the
International Monetary Fund began studies of possible improvements in the system of exchange rate adjustment.
1 See next section on foreign exchange developments and operations.
42
1970 REPORT OF THE SECRETARY OF THE TREASURY
Approximate balance in the U.S. official settlements position during
the July-December period of 1969 gave Avay to a large deficit during
the first semester of 1970. A continuing deficit on the liquidity balance
and a Aveak (but gradually improving) trade position indicated a
continuing unsatisfactory situation, both as to basic structure and
overall results, in the U.S. balance of payments. (See preceding
section.)
The activation of Special Drawing Rights in the substantial amount
of $9.5 billion in 1970-72 Avill enlarge global monetary reserves, totaling about $77 billion at the end of calendar year 1969, by about 12.5
percent. The activation of the SDR in a sizable amount signalizes
transition of the world's monetary system from dependence for growth
in reserves on IICAV gold and rising official dollar holdings to principal
reliance on a carefully designed and consciously created international
monetary instrument. The United States received $867 million, or
about 25.4 percent, of the first allocation of SDR of $3.4 billion on
January 1, 1970.^
Enlargement of Fumd quotas.—^^On December 30,1969, the Executive
Directors of the Fund submitted a proposal for an increase in the
quotas of all members of the Fund. The resolution providing for the
increase in quotas Avas approved by Governors casting the required
85 percent of Aveighted votes. The Secretary of the Treasury, on the
advice of the National Advisory Council, cast the U.S. vote in favor
of the resolution on January 19, 1970, Avhile formally recording that
he Avas not requesting or consenting to an increase in the U.S. quota.
Legislation necessary for the U.S. participation in the quota increase
Avas submitted to the Congress in March.^ Should all members accept
the proposed increases, aggregate Fund quotas Avonld rise from the
current level of about $21.3 billion to approximately $28.9 billion, an
increase of $7.6 billion. The IICAV quota proposed for the United States
is $6,700 million, an increase of $1,540 million from the present quota
of $5,160 million. The proposed increase in quotas Avould strengthen
the international monetary system by providing the Fund with substantial additional resources for lending to member countries. Such
an expanded facility for medium term credits of the Fund Avould provide members more scope to meet temporary balance-of-payments disequilibria in an orderly fashion. The proposed quota increase will
come into effect on October 30, 1970, for those members which have
accepted their proposed increases by that date. Supplementing the
ordinary resources of the Fund is the $6 billion of the General Arrangements to Borrow which, having proved its usefulness during the
^ See exliibits 37 and 38.
2 See exhibit 40.
REVIEW OF TREASURY OPERATIONS
43
past 8 years, was extended for another period of 5 years beginning
October 24, 1970.
I M F study of proposals for limited exchange flexibility.—Largescale movements of speculative funds from currency to currency and
the continuation of persistently unbalanced trading positions in some
countries during recent years combined to stimulate proposals for
study of possible improvements in the international monetary system
and to attract many proposals for reform from academic economists.
At the annual meeting of the Fund in September 1969, Mr. Schweitzer,
the managing director of the Fund, suggested that the Fund study
the mechanism by which exchange rates are changed, and investigate
"whether a limited increase in flexibility of exchange rate variation
would be desirable and attainable with the necessary safeguards; and
through what means any such increased flexibility might be achieved."
This study was supported at the meeting by many Governors, including Secretary Kennedy who stated that the United States Avould
participate actively.* The Executive Directors of the Fund are noAv
carrying out an investigation of the question.
Movement in %oorld reserves.—The outflow of speculative funds
from Germany following the mark revaluation ^ resulted in a reduction by more than $5 billion in Germany's international reserves
during the final quarter of 1969. This reduction in German reserves
Avas not, however, reflected in a comparable increase in the official
reserves of other countries, since these funds were used largely to repay
official short term debts or were absorbed by private holdings. As a
result of these developments, the industrial countries of Europe as a
group lost almost $4 billion of reserves, and the international monetary
system as a whole almost $3 billion, during the final quarter of 1969.
International reserves declined from $79.8 billion at the end of September to an estimated $77.1 billion at the end of the calendar year.
The movement of global reserves leveled off during the first quarter
of 1970, rising by only slightly more than the amount of the SDR
allocation. At the end of the second quarter, global reserves were
about $83.3 billion.
Interest rates and U.S, balance of payments.—As indicated above,
large-scale movements of short term speculative funds were a dominant factor in the exchange markets during the first half of the
period. The Euro-dollar market played a key role in these speculative
movements, as funds were shifted in and out of this market to benefit
from expected chahges in exchange rates and to maximize interest
rate returns. Interest rates on 3-month Euro-dollar deposits rose from
10 percent in July to about 11.5 percent in November, declining again
1 See exhibit 35.
2 See next section on foreign exchange developments and operations.
397-702 0—711
^
5
44
1970 REPORT OF THE SECRETARY OF THE TREASURY
to 10 percent at the end of the year. Euro-dollar rates continued
to fall to about 8 percent in mid-April, moved upward to about 9.5
percent by mid-June, but fell off slightly to about 9 percent at the
end of June. These changes reflected several developments but mainly
the speculative flows before and after the German reevaluation, borrowings by U.S. banks from their European branches, and restraints
imposed by a number of European countries on investment by their
banking systems in the Euro-dollar market. More recently, relatively
high interest rates in France and Germany have attracted funds from
this market and supported the Euro-dollar rate level.
The massive borrowings by U.S. banks in the Euro-dollar market
during the first semester of 1969, amounting to about $7 billion, caused
the Federal Reserve Board to amend its regulations in a way designed
to moderate the flow of Euro-dollars between U.S. banks and their
foreign branches as well as between U.S. and foreign banks.^ The
amendments and reversal of the speculative flows to Germany slowed
the growth in Euro-dollar borrowings by U.S. banks. By December
24, these borrowings had risen another $1.1 billion, but heavy repayments in the last week of December brought the total at the end
of the year back to the June 1969 level. Repayments continued through
mid-April, contributing to the decline in Euro-dollar rates. Subsequently, Euro-dollar borroAving by U.S. banks has tended to hold at a
plateau with some variation from week to week.
The U.S. balance of payments on an official settlements basis was
in approximate balance during the second half of calendar 1969
following a large surplus during the early months of the year which
was attributable to tight monetary conditions in the United States
and the high interest rates v/hich attracted private short term funds
both to the Euro-dollar market and to the United States.
Large repayments of Euro-dollar borrowings by U.S. banks during
the early months of 1970 contributed to a reversal of the 1969 official
settlements surplus to a deficit of $2.8 billion (excluding SDR) during the first quarter of 1970. The liquidity balance, in substantial
deficit in 1969, continued in deficit ($1.5 billion excluding SDR)
during the first quarter of 1970. Deficits on both the liquidity and official settlements basis were also recorded in the second quarter of
1970. The underlying structure of the balance of payments remained
unsatisfactory as the current account balance was not sufficient to sustain the U.S. propensity to lend and invest abroad and to provide
foreign aid without paying out liquid dollars to the rest of the world
on a substantial scale.
^ See sectioii on U.S. balance of payments.
REVIEW OF TREASURY OPERATIONS
45
Foreign exchange developments and operations
Apprehension as to probable parity changes in the exchange rates
for the German mark and French franc, and possibly other currencies, continued into this fiscal year. The dollar, while occasionally
buffeted by speculative movements occasioned by these fears, remained essentially strong. Restrictive credit policies undertaken to
combat inflation in the United States exerted a pull of short term
funds from abroad in the first half of the year, most manifest by
borrowings by U.S. banks in the Euro-dollar market. This led to a
sizable U.S. official settlements surplus in its balance of payments for
calendar year 1969 and consequent pressures on the reserves of a
number of other countries.
Following the changes in parities of the German mark and French
franc in the first half of the period, the exchange markets returned to
more normal conditions, and gold markets were quiet throughout the
period. An easing of money-market pressures in the United States
after the beginning of 1970 and a tightening in many foreign centers
led to a reversal of short term capital flows and a large deficit in the
U.S. balance of payments.
Although a devaluation of the French franc had been widely anticipated, when it occurred in August 1969 during a period of relative
calm, it took exchange markets by surprise.^ Some speculative attention was directed to the Belgian franc and the pound sterling following the French move, but in general little speculative activity Avas
generated, and "sympathetic moves" were limited to the franc area.
The question of an appreciation of the mark remained open and as
the German national elections approached, speculative activity grew.
On September 24, just prior to the election, the German authorities
suspended official operations in the exchange market and following
the election announced that temporarily the official margins would
not be maintained. The Deutsche mark appreciated in the market
rather steadily as the Bundesbank intervened to counter any tendency
for the rate to fall back from the higher levels reached in the market.
On October 26, a new par value was established representing a revaluation of approximately 9.3 percent.^ Beginning with the period of
"transitional float" the DM was allowed to depart from its old ceiling,
and continuing through the end of 1969 there was a very large outflow
of funds that had been built up in anticipation of revaluation. German
reserves fell by $5 billion in the fourth quarter of 1969.
1 See exhibit 52.
2 See exhibit 53.
46
1970 REPORT OF THE SECRETARY OF THE TREASURY
The revaluation of the mark also gave rise to some speculation as
to moves by other currencies, most notably the Dutch guilder, which
in 1962 had revalued along with the mark, and the Swiss franc. The
Belgian franc, Avhich only a short time before had experienced adverse speculation, was now also considered a potential candidate for
revaluation enabling the Belgian National Bank to more than recover
losses sustained earlier. The French franc and pound sterling also
benefited from the German move which was recognized as a major
step in bringing exchange parities into a viable alignment.
Throughout the year the Italian lira was the subject of continuing
rumors concerning political uncertainties and labor difficulties. Capital
outflows continued and there was a deterioration in the trade accounts
as productivity lagged. At the close of the period, the lira was still
under pressure, though without apparent justification.
Near the close of the period, at the beginning of June 1970, the
Canadian Government announced that it had ceased to maintain its
exchange rate within the 1 percent margin prescribed by the International Monetary Fund but would intervene to maintain orderly
conditions in the exchange market and to operate for the time being
to moderate any appreciation of the Canadian dollar. The intent was
also expressed of resuming the I M F obligations of maintaining a rate
Avithin 1 percent of an established parity as soon as circumstances
permitted.
After rather erratic movements on the first day following the Canadian announcement, the rate for the Canadian dollar moved within
a range of 95% cents to slightly over 97 cents to the U.S. dollar. This
compares to the previous parity rate of 92% cents.
The freeing of the Canadian rate did serve to stem the large inflow
of funds and appeared to have no lasting direct effect on exchange
markets or relationships elsewhere. Indirectly, however, this step may
have contributed to some nervousness and uncertainty in exchange
markets.
I n general, speculative pressures were at a minimal level following
the mark revaluation. By the end of the period, however, some uneasiness had returned to the market. The large U.S. deficit gave cause
for concern although up to that point it had largely served to enable
credit repayments by the United Kingdom and France, a partial restoration of reserves by Germany, and an inflow to Canada which had
been reinvested in special Treasury medium term securities. Also, the
marked improvement in sterling had faded somewhat as the British
trade account returned to a deficit position in the final quarter. The
political uncertainties continued in Italy. I n Germany a stringent
monetary policy was being followed to curb inflationary tendenices
REVIEW OF TREASURY OPERATIONS
47
with the result that high German interest rates attracted funds from
abroad.
Exchange operations by the United States through the Treasury
and the Federal Reserve system took the form primarily of the reversal
of credits previously extended.^ The United Kingdom made large
exchange market gains, Avhich it mainly devoted to repayment of swap
and similar type credits to the United States and others. U.S. holdings
of sterling, which were largely generated through such operations,
declined by about $2.2 billion. France also experienced a great improvement in its accounts during this period which, together with
drawings on the International Monetary Fund, enabled it both to add
to reserves and repay short term credits, which in the case of the
United States amounted to $200 million. The French announced that
by June 30, 1970, all foreign indefctedness but that to the I M F had
been repaid.
Pressures in 1969, prior to the mark revaluation, had led both the
?Dutch and Belgian Central Banks to avail themselves of draAvings on
the Federal Reserve swap line. As a result of reverse flows beginning
in October, both banks were able to repay their swaps and by yearend
the Federal Reserve was providing cover for dollar inflows to the
Dutch and Belgians and the Swiss as well. A good deal, if not all, of
the dollar gains by these countries was attributable to speculation that
their currencies might be revalued as a result of the mark revaluation.
The Swiss swap was repaid early in the year and by the end of May
the Dutch and Belgian lines had been repaid. I n the case of the latter
two, the United States drew $150 million in Belgian francs and
guilders from the I M F and sold $20 million in SDR to complete the
repayments.^
An influx of funds to Switzerland in May required the Federal
Reserve to utilize again its swap facility with the Swiss National Bank
and a small drawing had also been made again on the Belgian swap
line by June 30,1970.
Italy availed itself of the Federal Reserve swap facility on several
occasions—once in September with repayment in November and again
in January and February of 1970. The swap facility of the Federal
Reserve with Italy was increased by $250 million and the Exchange
Stabilization F u n d of the Treasury extended a line of $250 million.
These additional facilities were not, however, used during the fiscal
year and much of the earlier Italian drawings had been repaid by
June 30.
^ Detailed reports on Treasury and Federal Reserve foreign exchange operations are
contained in the March and September issues of the Federal Reserve Bulletin and the
Monthly Review of the Federal Reserve Bank of New York.
2 See exhibit 55.
48
1970 REPORT OF THE SECRETARY OF THE TREASURY
U.S. reserve assets increased during the fiscal year by about $200
million. Of this increase $736 million was in gold, $9^57 million in SDR
(of which $867 million represented the allocation on January 1) and
$800 million in the IMF reserve position. These increases were largely
offset by a decline in foreign exchange holdings of $2.2 billion which,
as previously noted, was primarily due to repayments of swap credits
by the United Kingdom and France.
The increase in U.S. gold holdings was due to a sale by Germany of
$500 million in December occasioned by the large outflow of funds
from Germany which had seriously eroded its foreign exchange holdings and by a sale of $200 million to the United States by the Bank
for International Settlements. Other gold transactions were small and
purchases and sales were about in equilibrium.
In the first 6 months of operation of the SDR facility, the United
States received $110 million of SDR against the sale of $20 million.
The U.S. position in the IMF, which had been fully restored at the end
of 1968, increased primarily as a result of dollar drawings by France
and Germany.
The gold markets, since institution of the two-tier system in 1968,
have been relatively immune to pressures that have been apparent in
the currency exchanges. This trend was even more marked during this
fiscal year. The price in London and Zurich was still relatively high,
around $42 per ounce, as the period opened but declined steadily
through September to just under $40. Following the final approval for
allocation of SDR in 1970 at the annual meeting of the IMF, the price
began to drop rather precipitously and by the end of December was at
the $35 level. In December arrangements were made through the IMF
for the handling of South African gold. In brief, these provided for
orderly sales in the market of new production by South Africa when
the market price was above $35 and sales to the IMF when below (see
exhibits 46-48 for additional details). During the January-March
period, the market price of gold was, for the most part, slightly below
$35 and in the closing quarter of the fiscal year fluctuated between $35
and $36 per ounce.
Treasury exchange and stabilization agreements
During fiscal 1970, exchange agreements were in effect with Mexico
and Venezuela. In December 1969, the Department of the Treasury
and the Bank of Mexico extended their $100 million exchange agreement to cover the 2-year period ending December 31, 1971.^ In March
1970, the Department of the Treasury and the Central Bank of
Venezuela extended their $75 million exchange agreement to cover the
2-year period ending March 18,1972.
* See exhibit 54.
REVIEW OF TREASURY OPERATIONS
49
I n t e r n a t i o n a l Monetary F u n d ^
The pace of I M F activity increased during fiscal 1970. The par
values of two major currencies were adjusted, and one major country
had permitted its currency to float as of the end of the period. Currency
purchases by member countries returned to a high level and, of great
significance for the Fund and for the intemational monetary system
as a whole, the Special Drawing Rights (SDR) facility began operation with an initial allocation on January 1,1970. The I M F and South
Africa reached agreement on the treatment of South African gold.^
Currency purchases (drawings) by members totaled $3.1 billion
during the year. The bulk of the drawings were made by three countries and were intended primarily to protect official reserve positions
affected by massive speculative flows prior to and following the revaluation of the Deutsche mark. The U.S. dollar was the main currency
drawn although significant amounts of other currencies were also used,
chiefly the Japanese yen, the Canadian dollar, the Deutsche mark, and
the Italian lira. Repurchases during the year totaled $1.5 billion.
As of June 30,1970, cumulative drawings since the beginning of operations amounted to $21.2 billion of which $7.7 billion was in U.S. dollars.
Cumulative repurchases as of June 30, amounted to $11.0 billion, of
which $4.1 billion was in U.S. dollars.
The substantial net drawings of U.S. dollars by other members
resulted in a large buildup of the U.S. reserve position in the I M F
during the year. The U.S. reserve position rose from $1,549 million to
$2,350 million at the end of June 1970 and consisted of the U.S. gold
tranche of $1,290 million and a super-gold tranche of $1,060 million.
The initial allocation of SDR took place on January 1, 1970, pursuant to a decision to allocate $9.5 billion during the 1970-72 period.
The first allocation under this plan amounted to $3.4 billion of which
the U.S. received $867 million, or 25.4 percent. Use of the facility during the first 6 months of 1970 was fairly extensive, and participants
gained considerable experience with the technical details of its operation. As of June 30, less developed areas, had used about 33 percent of
their initial allocations. The United States, Industrial Europe, Canada, and J a p a n received substantial additions to their SDR holdings,
while the United Kingdom made considerable net use of its allocation. By June 30, the United States had purchased an additional $110
million of SDR while selling $20 million thus increasing its holdings
by $90 million during the period. As a result of all transactions in
1 Fuller discussions of the activities of the International Monetary Fund and the other
international financial organizations are included in the National Advisory Council's
Annual Report for fiscal year 1970.
2 See section on foreign exchange developments and operations.
50
1970 REPORT OF THE SECRETARY OF THE TREASURY
SDR, the IMF's holdings amounted to $244.4 million of SDR at the
end of the period.
International development banks
Lending activity by the three international development banks in
which the United States has membership—the World Bank, the InterAmerican Development Bank, and the Asian Development Bank^—
expanded substantially during the fiscal year. Proposals were
developed to increase the lending resources of each of the institutions
in support of anticipated continuing high levels of activity made possible by expanding opportunities for productive use of capital and
improved economic performance in the developing countries. These
proposals cover special increases in subscriptions to the World Bank
parallelling special quota increases in the IMF, increases in the ordinary capital and the fund for special operations of the Inter-American Development Bank, and authority for the United States to join
other nations in making a contribution to Asian Development Bank
Special Funds. Secretary Kennedy during the second half of the fiscal
year testified before Congress in support of required authorizing legislation and the National Advisory Council on International Monetary
and Financial Policies prepared a special report on each proposal
(House Documents 91-261, 91-281, and 91-344). Annual meetings of
each of the institutions were also held during the year, the World
Bank in Washington and the others abroad. The U.S. delegation in
each instance was headed by Secretary Kennedy in his capacity as
U.S. Governor and included congressional advisors.
The international bank group
The International Bank for Reconstruction and Development
(IBRD) and its affiliates, the International Development Association
(IDA) and the International Finance Corporation (IFC), committed
a total of $2.3 billion during the fiscal year—about 22 percent greater
than in fiscal 1969—for financing economic development projects in
the member countries. The World Bank made new loans of $1,580
million ($181 million more than in the previous fiscal year) mainly to
less-developed countries for electric power, roads, railways, education,
agriculture, and industry. The World Bank also increased its loan to
the IFC by $100 million. IDA credits also showed a sharp increase to
$606 million during the year compared with $385 million in 1969.
IFC investments, which are made exclusively in the private sector
without government guarantee, were made on a loan and equity basis
to support increased production in areas such as copper, alumina,
cement, petrochemicals, textiles, and printing. Commitments were also
made in developinent banking and tourism. The total, including underwriting commitments, was $112 million.
REVIEW OF TREASURY OPERATIONS
51
The loan operations of the World Bank are financed by paid-in
capital subscriptions, sales of participations, principal repayments on
loans, and earnings on loans and investments. During the year the
Bank's outstanding funded debt increased by $487.1 million to the
equivalent of $4,568.3 million. The debt includes 89 separate issues,
denominated chiefly in U.S. dollars ($2,876.7 million), Deutsche mark
($1,086.8 million equivalent), Japanese yen ($200 million equivalent),
and Swiss francs ($180.8 million equivalent).
The World Bank's borrowing during the year totaled $735 million
equivalent compared with the previous year's record level of $1,224
million equivalent. The Bank did not issue any securities in the United
States during fiscal 1970. New money borrowings in Germany during
the year amounted to DM150 million as compared with DM1,600
million in fiscal 1969.
,
The $735 million borrowed by the World Bank in fiscal 1970 included $362 million equivalent sold to raise new funds and $373 million equivalent of refunding obligations. The principal supplier of
new borroAved funds was the Japanese market which lent $200 million
equivalent to the World Bank.
The market for the Bank's obligations continued to broaden internationally during fiscal 1970 as is indicated by the estimated division
of holdings by investors as of June 30, 1970: About 37 percent in the
United States; 29 percent in Germany; 6 percent in Switzerland; 5
percent in J a p a n ; and 4 percent in Canada. The remaining 20 percent
is held largely by central banks and other governmental accounts in
some 75 countries.
During the fiscal year, the Executive Directors proposed to the
Governors two resolutions affecting the capital of the World Bank.
One resolution provides for selective increases in the subscriptions to
the Bank's capital and the other raises the Bank's authorized capital
by $3 billion to $27 billion. The new authorized capital limit will
accommodate not only the selective increases in subscriptions but also
subsequent subscriptions by new members and possible future upward
adjustments in the subscriptions of existing members. The proposed
selective increases would raise the subscribed capital of the Bank by
$2,222 million to a total of $25,429 million. The U.S. share of the
increase is $246.1 million, which will raise the total U.S. subscription
to $6,596.1 million.!
I D A credits are funded by member subscriptions and contributions,
grants from the net earnings of the World Bank, repayment of credits,
and earnings. IDA's usable resources, cumulative to June 30, 1970,
amounted to $3,230 million of which part I (developed) countries
contributed $2,701 million; I B R D grants $385 million; and earnings
and repayments on outstanding credits together with contributioris of
1 See exhibit 40.
52
19 70 REPORT OF THE SECRETARY OF THE TREASURY
part I I countries, the balance. As of June 30, 1970, $2,773 million had
been committed (net of cancellations) leaving a balance of approximately $457 million available for lending. Under present plans this
amount plus any additional amounts which become available during
fiscal 1971 (a grant of $100 million from fiscal 1970 I B R D net income
has been proposed) are expected to be fully committed by June 30,
1971. With this in view the Executive Directors have recently sent
forward a proposed third replenishment of IDA's resources to cover
a 3-year period beginning Avith fiscal 1972. The proposed replenishment calls for total additional contributions, subject to necessary legislative action, of $2,448.17 million of which the U.S. share for the full
3-year period is $960 million. Legislation to authorize the U.S. contribution will be submitted to the Congress next year.
Inter-American Development Bank
At the l l t h annual meeting of the Board of Governors of the
I D B , held at Punta del Este, Umguay, April 20-24, 1970, the Governors unanimously agreed to recommend to their governments that
appropriate steps be taken not later than June 30, 1971, to adopt
two resolutions providing for (1) an increase in the Bank's authorized capital stock by $2 billion, including $400 million in paid-in
capital and $1.6 billion in callable capital, and (2) an increase in
the resources of the Fund for Special Operations of $1.5 billion.^
With the resources made available, the Bank plans to increase its
total lending by 50 percent or more over the next several years, i.e.,
from a recent annual level of roughly $600 million to $900 million
or higher. The proposed expansion is characterized by only very moderate increases above the substantial levels of financial support the
United States has been giving the Bank but significant increases in
the share and levels of Latin America's own contributions.
The Board of Governors at the Punta del Este meetings also adopted
a resolution, at U.S. initiative, calling for the study of measures to
assure an increased flow of resources to the I D B from nonmember
countries. A committee of the Board of Governors was appointed to
examine, among other things, possible alterations in the provisions of
the Bank's charter that now limit membership in the I D B to countries
that are members of the Organization of American States. This committee is to report by the end of the year.
I n fiscal 1970, the I D B borrowed $60 million net, with ncAv resources
obtained in Europe, Latin America, Japan, and Israel. This com^ The U.S. delegation to the meeting was headed by David M. Kennedy, Secretary of the
Treasury and U.S. Governor of the Bank. Assistant Secretary of the Treasury John R. Petty
served as Temporary Alternate Governor. The delegation also included congressional
advisors and other ranking officials of the Department of the Treasury and the Department
of State. (See exhibit 41.)
REVIEW OF TREASURY OPERATIONS
53
pared Avith $207 million in the preceding fiscal year. The new borrowings included : a $25 million bond sale in Germany; a $11.4 million
loan from the Swiss National Bank; an $8 million sale of guaranteed
participations to the Bank of Tokyo; and a $34.25 million sale of
2-year bonds to Latin America and Israel, of which $25.35 million
represented a rollover of previous borrowings. As a result of the
above transactions, the IDB's funded debt on June 30,1970, amounted
to the equivalent of $774.6 million (after sinking fund purchases).
The subscribed capital of the I D B totaled $2,282.3 million equivalent
as of June 30, 1970, of which $1,893.8 million was callable capital.
An increase of $480.8 million is anticipated early in fiscal year 1971
when action will be completed under an increase of $1 billion in
callable eapital approved in 1968. The U.S. portion of this increase,
$205.9 million, was appropriated by the Congress under Public Law
91-305, July 6,197,0.
The subscribed resources of the Bank's Fund for Special Operations totaled $2,328.0 million equivalent as of June 30, 1970. During
the year member countries made their final payments under a $1.2
billion increase in the Fund's resources which had become effective in
December 1967. U.S. participation in this increase Avas authorized by
the Congress under Public Law 90-88, approved September 22, 1967.
The final payment by the United States under this authorization,
amounting to $300 million, was made to the I D B in December 1969.
As of June 30, 1970, the Bank had approved net loans totaling
approximately $3.7 billion from its own resources and those of the
Social Progress Trust Fund and other administered funds. The estimated cost of the projects financed has greatly exceeded the amount
of funds committed. Loan disbursements of $1.9 billion were approximately 51 percent of net commitments through the end of fiscal 1970.
I n terms of the distribution of loans by purpose, slightly over $1
billion, or 30 percent of total loan commitments, was channeled into
agriculture. Among other purposes, $599 million was approved for
industry and mining, $540 million for transportation, $503 million
for power, and $465 million for water and sewage.
The Asian Development Bank^
During fiscal 1970, the Asian Development Bank approved 20
loans amounting to $95.7 million equivalent, of which 12 loans aggregating $62.0 million Avere from Ordinary Capital resources and
8 loans totaling $33.7 million were from Special Funds resources. This
brought the Bank's loans as of June 30, 1970 to a total of $173.1
million equivalent—^$138.4 million from Ordinary Capital resources
^ F o r background on tlie establishment and early operations of the Asian Development
Bank, see 1966, 1967, 1968, and 1969 Annual Reports, pp. 64-65, pp. 49-50. pp. 51-52,
and pp. 52-54, respectively.
54
1970 REPORT OF THE SECRETARY OF THE TREASURY
and $34.6 million from Special Funds resources. As of June 30, 1970,
the Bank had undertaken 27 technical assistance projects in 13 countries, as well as important regional activities.
With the accession of Fiji to membership in April 1970, the Bank's
total membership reached 34, including 21 countries in the region and
13 nonregional developed countries, with subscriptions totaling $979
million.^
The fourth of the five $20 million installments on the paid-in portion of the U.S. subscription to the Asian Development Bank was paid
during the fiscal year. It consisted of $10 million in cash and $10
million in the form of a noninterest-bearing letter of credit. The fifth
and final installment is due in August 1970. Of the $489.5 million subscriptions on paid-in capital for all members, installments totaling
$389.6 million had matured as of June 30,1970.
As of June 30, 1970, Australia, Canada, Denmark, Japan, the
Netherlands, and the United Kingdom had offered to contribute a
total of $159.5 million equivalent to the Bank's Special Funds, of
which $72.5 million had been made available to the Bank. In addition,
the $14.6 million set aside in 1968 by the Board of Governor's from
Ordinary Capital resources for Special Funds purposes is available
for such lending.
On February 25, 1970, President Nixon submitted to the Congress
a proposal for a $100 million U.S. contribution to the Bank's Special
Funds over a period of 3 years—$25 million in fiscal 1970, $35 million in fiscal 1971, and $40 million in fiscal 1972. The proposed legislation is pending before the Congress.^
The Third Annual Meeting of the Bank's Board of Governors was
held in Seoul, Republic of Korea, April 9-11, 1970. Secretary Kennedy, U.S. Governor of the Bank, headed the U.S. delegation.^
Trade policy
Fiscal 1970 represented another period of intense activity in international trade policy. The administration trade bill was considered
during extensive hearings before the House Ways and Means Committee. The bill proposes granting the President authority to make
limited tariff reductions; liberalization of the existing escape clause
and adjustment assistance criteria; new authority to protect U.S. exports against unfair competition; and elimination of the American
Selling Price system of customs valuation.
1 France's application for membership with a $25 million subsicription was approved by
the Board of Governors in April 1970, but procedures within the French Government to
permit formal accession had not been completed by June 30, 1970. The accession of France
will bring total membership to 35 and total subscribed capital to $1,004 million.
a See exhibit 40.
3 See exhibit 39.
REVIEW OF TREASURY OPERATIONS
55
In Secretary Kennedy's testimony in May 1970, in support of the
administration's trade bill, he introduced a proposal to amend the Internal Revenue Code to establish a new type of corporation, known as
a Domestic International Sales Corp. (DISC).^ The DISC proposal
would reduce current inequities in the tax laws by extending the
privilege of deferring taxes on income now enjoyed by foreign subsidiaries of U.S. companies to export iricome from domestically produced goods. By providing exporters the same tax priAdleges afforded
foreign subsidiaries, positive and substantial benefits for the U.S.
balance of payments are anticipated.
In an effort to continue the movement toward freer intemational
trade the contracting parties to the General Agreement on Tariffs and
Trade (GATT) continued their examination of nontariff barriers.
Special committees on industrial products and agriculture began discussions on possible ways to reduce or eliminate the significant nontariff barriers notified by GATT members. Department of the
Treasury personnel played important roles both in the development
of U.S. positions for these meetings and in GATT discussions as
members of U.S. delegations.
The Department of the Treasury continued to take an active and
leading role in international discussions on the GATT rules dealing
with border tax adjustment, i.e., the remission of indirect taxes on exports and the levying of compensatory duties on imports. The special
GATT working party, established at the request of the United States,
completed its background study and established a consultative
mechanism.
A major new departure in U.S. policy toward the less developed
countries was initiated by President Nixon's decision in favor of U.S.
participation in a scheme for generalized tariff preferences for the
developing countries. The U.S. proposal, subject to congressional
approval, provides for duty-free treatment on imports from the less
developed countries for all manufactured and semimanufactured
products, with the exception of textiles, shoes, petroleum, and petroleum products. Preferential treatment would also be granted a
selected list of primary products. The United States also embarked
on a concerted effort to provide greater trade opportunities to Latin
American countries by reducing or eliminating tariff and nontariff
barriers on products of special interest to them. The Department of
the Treasury actively participated in the international discussions
in the OECD and UNCTAD which sought agreement on the various
preference proposals introduced by the industrialized countries. Department of the Treasury representatives also participated in the spe1 See exhibit 23.
56
19 70 REPORT OF THE SECRETARY OF THE TREASURY
cial U.S.-Latin American discussions on barriers to trade between the
United States and Latin America.
To assist U.S. exporters and producers, continued efforts were
made during fiscal 1970 to obtain the removal of Japanese quantitative
import restrictions and arrive at an agreement on trade in man-made
and woolen textiles. The Department of the Treasury participated in
the formulation of policy on these subjects and was represented on
several delegations involved in direct negotiations with the Japanese
Government on these issues. As a member of a special task force on
nonrubber footwear, the Department of the Treasury assisted in the
development of the administration's proposals to help this industry
meet competition from imports.
Organization for Economic Cooperation and Development
The ninth Ministerial Council meeting of the Organization for
Economic Cooperation and Development (OECD), in Paris May 2022, 1970, focused attention on the fight against inflation and agreed
that priority must be given to elimination of heightened inflationary
pressures. An increase of 65 percent in real national product as a
collective growth objective for the decade 1970-80 was set, compatible
with the achievement of other objectives of policy such as better longterm price performance. The Secretary-General will also move ahead
on the coordination of OECD activities dealing with the environment.
The members reaffirmed their resolve that their countries would play
their full part in the economic development effort during the second
development decade. Assistant Secretary of the Treasury for International Affairs Petty served on the U.S. delegation.
Under Secretary Volcker continued as a member of the U.S. delegation to the Economic Policy Committee of the OECD and as Chairman of the U.S. delegation to its Working Party on Policies for the
Promotion of Better International Payments Equilibrium (WP-3).
WP-3 devoted niuch of its attention over the year to examination of
monetary developments in the major financial centers and the Eurodollar market and to discussion of individual country situations, notably in light of the exchange rate adjustments by France and Germany.
Continuation of efforts to ensure the compatibility of members' balance-of-payments aims was urged by the OECD Ministers at their
May meeting.
A staff official of the U.S. Department of the Treasury was elected
Chairman of the Fiscal Committee and an ad hoc group met during
the year to develop an expanded program of work for the OECD in
the fiscal field. A Group of Governmental Experts on Financial Markets (GGEFM) was also formed, with U.S. support, to carry forward
OECD efforts to improve capital markets. The GGEFM in turn
REVIEW OF TREASURY OPERATIONS
57
created a working group, chaired by a staff official of the Department of the Treasury, to investigate the possibility of developing
standard rules for mutual fund operations. The Departirient of the
Treasury also continued to participate actively in the work of other
bodies of the OECD, including the Development Assistance Committee, Trade Cominittee, and Committee for Invisible Transactions and
the Group on Export Credits and Credit Guarantees. In addition, an
official of the Department of the Treasury regularly represented the
United States as an observer at the meetings of the Managing Board
of the European Monetary Agreement.
Treasury foreign exchange reporting system
During fiscal 1970, several steps were taken to improve reporting
on the Treasury foreign exchange forms by nonbanking business
concerns and nonprofit institutions in the United States, which provide
an important component of the statistics on capital movements between the United States and foreign countries. The forms on which
these firms and institutions file reports were revised and simplified,
and a canvass was undertaken of a large number of firms not previously reporting. The canvass added substantially to the reporting
panel and increased the level of reported liabilities of nonbanking
firms to foreigners by about 20 percent as of December 31, 1969, and
the level of reported claims on foreigners by about 9 percent. This
increase in reporting by nonbanking firms is expected to result in
a significant improvement in the reliability of the capital movements
statistics.
Changes were also made in a preliminary report of liquid liabilities
to foreigners which is filed by the larger banks in the United States
to provide an early indication of monthly balance-of-payments developments. The number of reporting banks was enlarged, and the report
Avas made more responsive to fluctuations in liabilities.
A supplementary instruction was issued to all banks filing on the
Treasury foreign exchange forms to clarify their reporting of claims
and liabilities arising from refinance acceptances drawn by Japanese
agency banks.
Interest Equalization Tax statistical reports
During the fiscal year the statistical reports filed by U.S. commercial
banks pursuant to the Interest Equalization Tax were reviewed. In
view of the development of essentially similar information in the
statistical reports of the Federal Reserve System, the Department of
the Treasury eliminated three Interest Equalization Tax reports Avhich
had been filed by banks to provide information concerning their foreign
branches and their foreign banking subsidiaries.
ADMINISTRATIVE
3i97-702 O — 7 1 -
REPORTS
Administrative Management
Management improvement program
The Department established a goal of $63.5 million to be achieved
from management improvement actions in fiscal 1970. Actual benefits
at the end of the year totaled $95 million. This sum represents $25.4
million in cost reduction savings and $69.6 million of either increased
revenue or interest savings resulting from management improvement
actions. The management improvement actions instituted in fiscal 1970
are expected to result in 3-year benefits of $254.7 million.
In conformance with Govemment-wide instructions of the Bureau of
the Budget, the scope of the Department's cost reduction program
was enlarged significantly. The new elements included institution of
a management effectiveness program, participation in Governmentwide s'tudies of common problems, and Presidential recognition of
outstanding contributions to the management improvement effort.
While the scope of the program was broadened, reporting requirements
were reduced iand simplified to permit greater concentration on the
development and application of improvements.
Under the revised program, the Department is currently participating in the first Government-wide study to improve reporting and
reduce related paperwork. Another first was the submission of four
nominations for recognition by the President. The nominees were
selected for their outstanding achievements in improving management
effectiveness and achieving substantial cost reductions in major program areas.
Special studies and projects
The individual bureau reports which appear later contain details of
studies and projects carried on by the bureaus to promote economy and
efficiency. Among six studies completed at the departmental level were
a study of the mission, organization, and management of the Bureau
of Engraving and Printing; a study of selected aspects of Treasury
law enforcement operations; and a study of the field organization of
the Bureau of Customs.
Treasury participation in the foreign technical cooperation programs of the Agency for International Development continues at a
relatively hig^h level Avith teams of customs and tax advisers operating
in 23 developing nations. The Treasury program to provide tax policy
assistance initially was concerned only Avith Latin Ajnerican countries
but now has responded to urgent requests for advisory services in several Near East and South Asian countries.
Emergency preparedness
Departmental staff visited Treasury field offices in major cities to
assist in an understanding of national policies and the implementation
of emergency preparedness directives. The number of such visits was
61
62
1,970 REPORT OF THE SECRETARY OF THE TREASURY
increased following a recommendation in a study of emergency planning in the Treasury.
Current readiness was maintained at two headquarters' relocation
sites esta;blished to provide continuity of essential departmental functions in the event of a national emergency. This included training of
communications equipment operators, briefing relocation cadres, and
updating prepositioned records.
Directives were published on civil defense, protection of vital records, care of dependents of relocatees, and the conduct by bureaus of
inspections of emergency preparedness.
Planning and program evaluation
During fiscal 1970 the planning and program evaluation staff:
(1) Developed a simulation model for use in analysis of operations
and allocation of resources of the Service Centers of the Internal
Revenue Service;
(2) Chaired the Audit Review Committee in a major review of
the basic strategy of the tax audit program of the revenue service,
leading to recommendations for improving the means of determining
audit resource requirements comprising approximately one-third of
Treasury's operating budget;
(3) Participated in a study leading to the redefinition of audit
classes for the Internal Revenue Service audit program, to improve
evaluation of program plans as well as tax administration;
(4) Organized a study team to develop uniform Federal law enforcement statistics on a pilot basis for Treasury law enforcement
programs;
(5) Provided liaison and technical advice to the Customs Mail Examination Study, with improved criteria for selection and examination
of mail packages for imiportation; and
(6) Continued preparation of the periodic coin sample to monitor
coin supplies and to aid in estimating coin requirements.
Financial management
Budgeting.—^Controls of obligations, outlays, and employment were
continued this fiscal year. Public Law 91-47, dated July 22, 1969,
repealed the personnel limitation provision which had restricted the
filling of vacancies. I t also established an expenditure limitation for
fiscal 1970. Reduced pei-sonnel levels, however, were required by the
President and monitored by the Bureau of the Budget. The levels set
permitted the use of available funds. Controls were continued over the
size of motor vehicle fleets, overseas employment, and expenditures
relating to international transactions. Supplemental requirements for
pay increases under the third phase of Public Law 90-206, dated
December 16, 1967, were reduced by the absorption of $5.9, million.
The Department also absorbed $9 million in unfunded costs for increased per diem rates, an increase of one-half of 1 percent in the
Government's contribution to the civil service retirement fund and
other increases in overtime costs and costs of printing.
The House of Representatives passed H.R. 16199 which would
provide authority for a working capital fund for certain common
services performed by the Office of the Secretary. T h e Senate had not
ADMINISTRATIVE REPORTS
63
acted on this measure at the fiscal yearend. A circular of permanent
instructions was issued for preparation and submission of the annual
budget estimates ofthe Department.
Accounting systems.—At the close of fiscal 1970 all Treasury administrative accounting systems had either been approved or were
under consideration by the General Accounting Office for approval.
Management of automatic data processing.—The Department used
78 computers, 23,450 man-years and $205 million in its A D P operations during fiscal 1970. These operations, which involved 20 percent
of the Department's operating resources, continued to provide significant benefits. Among the tangible and intangible benefits were
annual operating savings of 595 man-years and $6.4 million, net
additional internal revenue of $595.1 million, increased exchange of
data between Federal agencies and State governments, support of law
enforcement operations, and more timely service to the general public.
Accomplishments in the management of 'automatic data processing
activities included use of new approaches to the procurement of new
computers as well as acquisition of two computers excess to other
agencies and completion or continuation of studies for new uses of
computers in six bureaus.
I n t e m a l auditing.—An appraisal was made of the Bureau of the
Mint's internal auditing actiAdties, and an audit of Office of the Secretary's payroll activities for fiscal years 1969 and 1970 was substantially completed at yearend. Efforts to strengthen the Department's
internal auditing were continued, primarily by assisting the bureaus
in such work as rcAdsing internal auditing policy statements, reorganizing the intemal auditing function, and locating high quality candidates for auditing positions.
Personnel management
Principal attention centered on providing leadership and policy
guidance in personnel management areas which have been given special Presidential emphasis. I n addition, special assistance was given in
activation of the Executive Protective Service and the Consolidated
Federal Law Enforcement Training Center, inauguration of a preretirement planning program, and central professional direction of the
occupational health program. A priority function for certain bureaus
was the need for rapid recruitment of quality personnel to meet new
targets for law enforcement complements.
Treasury's equal employment opportunity regulations were updated, new and demanding aotion plans were developed, a system was
designed for maintaining minority statistics by computer, and continued emphasis was given to employment of the disadvantaged and
"upward mobility" for lower-grade employees. The midyear census
showed an encouraging increase in the number of Negroes in mid-level
positions.
New instructions were issued implementing President Nixon's call
for increased involvement of young people in the processes of Government. During the summer months the Treasury employed more
than 2,500 young pieople, whose educational levels ranged from potential high school dropouts to graduate students whom the Department hoped to attract to permanent positions.
64
1.970 REPORT OF THE SECRETARY OF THE TREASURY
Implementing policies and regulations were issued, and added staffing and training provided, to effectuate the purposes of Executive
Order 11491, Labor-Management Relations, dated October 29, 1969.
The Secretary issued a policy statement emphasizing the importance
of improved personnel management, the Under Secretary was assigned a central role in the personnel management evaluation program,
and a departmental implementation plan for program evaluation was
developed for issuance early in fiscal year 1971.
Implementing directives were issued to give effect to such special
employment programs as (a) the veterans' readjustment appointment
program, providing for the hiring of returning military veterans;
(b) a program calling for expanded use of cooperative work-study
agreements with Negro colleges as a means of offering opportunities
to qualified minority group members and of meeting departmental
manpower needs; and (c) placement of employees subject to reduction
in force, primarily Defense Department surplus employees.
The Office of the Secretary fostered the systematic exchange of
supergrade spaces within Treasury to get maximum benefit from the
scarce supply, and continued to make full use of executiA^e training
facilities. Numerous changes in executive assignments Avene made in
response to program needs of the new Administration.
The Office of Personnel assisted in personnel planning and staffing
for the ncAv Consolidated Federal Law Enforcement Training Center,
and successfully negotiated Avith the Civil Service Commission for
the authorization of simplified appointment procedures (schedule B)
to facilitate the tripling of the Executive Protective Force, formerly
the White House Police.
The preponderance of training continued to be in-service for required professional and technical development. Attendance at the
5-week Treasury Law Enforcement School program rose from 389
in fiscal year 1969 to 845 in fiscal year 1970. Executive and management dcA'-elopment efforts of the bureaus were supplemented by the
attendance of 21 Treasury executives at the Federal Executive Institute 8-week course in Charlottesville and of 107 middle management
personnel at the Civil SerAdce Commission Executive Seminar Center
2-week courses. A total of 3,457,891 man-hours of training was provided to Treasury employees during fiscal 1970.
The suggestion program was modified to restrict recognition of
suggestions to those contributing to economy, efficiency, and effectiveness of operations. Estimated first-year benefits from employee suggestions totaled $902,524 and similar benefits recognized by special
achievement aAvards brought the total to $1,668,579.
The occupational health program was strengthened by the appointment in April of Treasury's first medical director.
A model preretirement planning program Avas presented for the
benefit of eligible Washington-area employees and as a pattern for
field programs.
Administrative services
Exhibit Hall.—The Treasury Exhibit Hall Avas in the final phase
of extensive redevelopment at the fiscal yearend. The reorganized
exhibition Avas designed to show the origin of Treasury's missions and
ADMINISTRATIVE REPORTS
65
correlate the groAvth of Treasury's responsibilities with the history
of the nation.
Property-and space.—By maintaining liaison Avith all Treasury
activities the Department insured that items no longer needed by one
organization Avere transferred to another, thus avoiding new procurement. From the end of the first quarter 1969 to the end of the first
quarter 1970, over $2.5 million Avorth of personal property Avas reassigned Avithin the Department. Treasury also obtained personal property valued at over $3.6 million from other Federal agencies without
reimbursement, and about $52,000 Avas realized from the sale of surplus
personal property. Treasury transferred nearly $850,000 in personal
property to other Federal agencies for their use. To assist certain
organizations outside the Federal community, such as State bodies
and nonprofit groups, Treasury donated about $700,000 worth of personal property no loriger needed by the Federal Government.
The Department's program to consolidate purchases resulted in 29
blanket purchase agreements and savings of approximately $295,000.
With overall space of 18.5 million square feet. Treasury increased
its space by only 1 percent in spite of major expansion of its enforcement actiAdties and service programs.
Safety.—Treasury's safety efforts produced a relatively low rate
of job-connected lost-time injuries and property damage. The personal injury record is 50 percent below the Go vernment-wide average.
Comonunications.—Plans were completed at the end. of the fiscal
year for an integrated Customs communications system along the
U.S./Mexican border. When within range of a station, this system
Avill provide the Customs law enforcement agent Avith communications
to anyAvhere in the Avorld. When completed, the system will be operated
continuously and Avill provide service to all radio operations along
the border. One-hundred and fifty people would have been required
to maintain 24-hour operation at 30 border points. This system will
proAdde the same operation with 15 people at a saAdngs of $1.6 million
in salaries alone. The system is expected to be fully installed and
operating in fiscal 1971.
Security activities
During fiscal year 1970 physical security inspections were conducted Avithin the Office of the Secretary, bureau headquarters offices,
and 84 bureau field offices.
I n the personnel security program, 1,138 sensitive cases, 206 nonsensitive cases, and 334 reinvestigation cases Avere processed.
Law Enforcement
Office of Law Enforcement
On March 30, 1970, the Office of Law Enforcement was formally
established. Operating under the direction and supervision of the
Assistant Secretary for Enforcement and Operations, it provides him
Avith advice and assistance in the direction of Treasury-wide law enforcement programs and in the development or approval of broad
policy decisions relating to them.
66
1970 REPORT OF THE SECRETARY OF THE TREASURY
Included among its functional assignments are: Providing leadership for the Treasury Law Enforcement Council; review of plans
and programs for suppression of smuggling, including narcotics and
dangerous drugs; providing leadership, coordination, and participation in the organized crime drive; and providing liaison with the
Justice Department and other Federal agencies, along with State and
local enforcement agencies.
In addition, the Office is responsible for the Treasury field coordinator program, designed to bring local Treasury enforcement personnel in contact with other Federai, State, and local enforcement
personnel. The Office of Law Enforcement also has a broad range of
responsibilities and concerns, including overall planning affecting law
enforcement personnel, technical research, new developments in investigative technology, and developments affecting law enforcement
generally.
Office of Operations
The Office of Operations was established on March 30, 1970. Under
the direction and supervision of the Assistant Secretary for Enforcement and Operations, the Office reviews policy and program matters
concerning the operations of the Bureau of the Mint, the Bureau of
Engraving and Printing, and the Bureau of Customs and, as appropriate, coordinates such matters with other offices of the Department
of the Treasury and other departments and agencies.
Principal problem areas under consideration by this office since it
has been established and during the fiscal year include reduction of
passenger and cargo congestion at airports; prevention of cargo theft
and pilferage; automation of merchandise entry processing; studies
of the organization of Bureau of Customs offices and field units; designation of new ports of entry; new facilities for Customs border stations; charges to private aircraft and boats for overtime services by
Customs; review of preclearance operations in Canada, Bermuda, and
the Bahamas; guidelines for mitigation of Customs penalties; reexamination of overseas personnel assignments (OPRED); Customs'
contribution to the control of black marketing and currency manipulation in Vietnam; Customs' intensified campaign against drug smuggling; and cooperation of the Intemal Revenue Service and Customs
in processing imported spirits at distilleries.
Office of Tariff and Trade Affairs
The Office of Tariff and Trade Affairs Avas created in March 1970.
It operates under the direction and supervision of the Assistant Secretary for Enforcement and Operations. It provides advice to the Assistant Secretary in the administration of the Antidumping Act and the
Countervailing Duty law, and in reviewing decisions made by the
Bureau of Customs which can have a significant policy impact in the
tariff and trade field. The office also proAddes the Assistant Secretary
Avith policy advice concerning the interrelationships of technical Customs decisions and their broad impact on the Administration's international trade policy.
Office of the Comptroller of the Currency
The Comptroller of the Currency, as the Administrator of the National Banking System, is charged with the responsibility of main
ADMINISTRATIVE REPORTS
67
taining the public's confidence in the System by sustaining the banks'
solvency and liquidity. An equally important public objective is to
fashion the controls over banking so that banks may have the discretionary power to adapt their operations sensitively and efficiently to
the needs of a growing economy.
Office operations
During fiscal 1970, a continuing review of the bank examination
function resulted in several actions to improve the effectiveness of
examinations. An internal advisory committee was established, composed of bank examiners proficient in electronic data processing
( E D P ) and representatives of management. This committee was
formed to function as a focal point for the office in evaluating, resolving, and disseminating technical problems and improvements in
the examining process through the expanded use of E D P methods in
the banks.
An accelerated program of management improvement through
organizational review Avas conducted in fiscal 1970. Headquarters personnel visited several regional offices to study and improve administrative procedures in the field and to aid in reorganization where
necessary. Concurrently, the administrative support staff in Washington refined procedures to effectively respond to the needs of field
operations, among them: An improved space management program,
a reorganization of supply and property management functions,
greater use of automation in reports preparation, and major format
revisions to the report of examination.
Personnel
Personnel administration continued to explore new programs in
fiscal 1970 to provide a more progressive personnel management program. A review of administrative organizations and positions resulted in new organizational and functional charts, documented descriptions of most positions, and identification of workload needs
and surplus positions. This action provided the Office with a more
meaningful basis for recruitment, promotions, and performance requirements. Personnel studies were broadened during this period to
examine positions in the regional offices with the objective of establishing duties and responsibilities for standard clerical positions and
developing appropriate grade patterns and career ladders. Additionally, a formal pay policy covering all positions was established to pro\dde a systematic approach for determining proper grade levels and
equitable pay rates for all employees within the Office.
The employee development program was strengthened during fiscal
1970. A supervisory handbook Avas drafted which outlines the basic
responsibilities of supervisors in carrying out their personnel and administrative functions. The handbook emphasizes supervisory objectives, principles, and guidelines, and supplements a basic training
course for supervisors now under development. A school for newly
commissioned national bank examiners was inaugurated in fiscal 1970
Avith the objective of providing guidance and information on effective
examining techniques.
68
1970 REPORT OF THE SECRETARY OF THE TREASURY
Fiscal management
I n fiscal 1970 a comprehensive and timely financial management
information system was developed and implemented. This system has
provided decisionmakers with necessary information on income and
expenses for every functional entity within the Comptroller's Office
and has aided in deriving more meaningful projections and budget
data. I n the continuing program of mechanizing accounting operations, the inventory of capitalized nonexpendable property was converted from a manual to a machine procedure, thus improAdng
the speed and accuracy of accounting and property management
operations.
The internal audit function was strengthened by recruiting additional professional employees and by broadening the area of general
inquiry into financial matters and organizational entities and operations. A significant achievement during fiscal 1970 was the development of a comprehensive audit program to be implemented in fiscal
1971.
Information services program
The purpose of this continuing program is to make the policies and
procedures of the Office of the Comptroller of the Currency better
known and to facilitate communications among the Office, the banking
industry, and the general public.
Basic publications available to employees, banks, and other interested parties are: "Comptroller's Manual for National Banks,"
"Comptroller's Manual for Representatives in Trusts," and the
monthly "Summary of Actions." The "Directory" also is published
and contains the address and telephone number of every decisionmaking official in the Office together with his picture and a biographical sketch. The "Annual Report of the Comptroller of the Currency"
is available to interested parties and contains a general statement of
policy, descriptions of the state of the National Banking System, of
Office operations, and reprints of selected Office documents relating to
crucial public issues in banking.
Status of national banks
At the end of fiscal 1970, the number of national banks in operation
was 4,638, compared to 4,701 a year previously. Virtually all of the
decrease was accounted for by absorptions through mergers. Total
offices of national banks reached 16,553 at June 30, 1970. This figure
included 11,915 branches, a total 6.6 percent larger than that of 1 year
before.
Total assets of the 4,638 national banks reached $312.6 billion at
the end of fiscal 1970, a figure higher by $7.7 billion than the $305.9
billion amount a year earlier. The 2.5 percent increase was sharply
lower than the 15.3 percent rate during fiscal 1969. The monetary
tightness was reflected in figures for total demand deposits and total
time deposits which grew only slightly during fiscal 1970. The net
income of national banks during calendar 1969 was $2.53 billion, compared to $1.93 billion during calendar 1968. The respective income
figures are not fully comparable because of changes in reporting
format.
ADMINISTRATIVE REPORTS
69
Numher of national hanks and hanking offices, hy States, June SO, 1970
National banks
Total
UnitedStates
Alabama
Alaska
Arizona
ArkansasCalifornia—Colorado
----Connecticut
Delaware
District of Columbia-Florida
Georgia
HawaiiIdaho-.
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
J
MinnesotaMississippi
Missouri
Montana
Nebraska
Nevada
NewHampshire
NewJersey
New Mexico
NewYork
North Carolina
NorthDakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhodelsland
SouthCarolina
South Dakota
Tennessee
Texas
Utah..
Vermont
Virginia
Washington
WestVirginia
Wisconsin
Wyoming
Virgin Islands
District of Columbia (all) »
4,638
-
-.
89
6
4
68
64
121
26
5
11
213
62
1
8
414
123
99
171
80
49
20
44
85
99
199
38
98
49
126
4
50
131
33
172
22
42
217
208
10
304
5
20
33
77
627
10
26
102
27
84
122
40
1
14
With
Number Number of
branches of branches
offices
Unit
3,033
1,605
11,915
16,553
47
0
2
35
U
118
7
3
1
213
31
0
2
367
61
60
142
36
12
4
12
21
. 28
197
6
76
48
104
1
27
22
8
69
3
32
73
173
3
148
0
4
24
17
527
6
12
27
10
84
89
40
0
1
42
5
2
33
53
3
19
2
10
0
31
1
6
47
72
39
29
44
37
16
32
64
71
2
32
22
1
22
3
23
109
25
103
19
10
144
35
7
166
5
16
9
60
0
4
14
76
17
0
33
0
1
13
184
48
209
81
273
63
213
149
2,328
2,392
3
212
4
67
0
161
8
107
47
325
63
29
138
174
94
246
408
546
6
139
22
1
23
56
48
642
69
124
238
9
78
213
223
9
115
461
448
162
200
218
223
114
290
493
645
206
177
120
50
149
60
98
773
102
1,212
1,384
523
10
714
35
243
991
91
234
67
272
0
64
47
454
424
0
60
0
6
102
646
62
931
243
253
1,296
96
254
90
349
627
74
73
556
451
84
182
40
7
116
»Includes national and nonnational banks in the District of Columbia, all ofwhich are supervised by the
Comptroller of the Currency.
70
1.970 REPORT OF THE SECRETARY OF THE TREASURY
Assets, liabilities, and capital of national hanks, selected dates
[In millions of dollars]
June 30, 1969 Dec. 31, 1969 June 30,1970
(4,701 banks) (4,669 banks) (4,638 banks)
ASSETS
Cash, balances with other banks, and cash items in process of
collection.U.S. Government securities 1
Obligations of States and political subdivisions »
Other securities 1
Total securities I
:
-..
Federal funds sold and securities purchased under agreements
toresell
Direct lease
financing
Loans and discountsL:
Fixedassets
Customers' liability on acceptances outstanding
Otherassets
Totalassets
,
-
$52,283
34,355
36,640
1,435
$64,727
29,589
34,526
6,002
$51,953
33,003
37,064
1,460
71,430
70,117
71,527
4,070
647
166,832
4,746
1,687
4,211
5,809
696
171,702
5,280
1,838
3,879
6,544
759
169,915
5,657
2,229
4,137
305,906
314,048
312,621
LIABILITIES
Demand deposits of individuals, partnerships, and corporations
Time and savings deposits of individuals, partnerships, and
corporations
Deposits of U.S. Government
Deposits of States and political subdivisions
Deposits of foreign govemments and official institutions,
central banks, and intemational institutions
Deposits of commercial banks. Certified and officers'checks, etc
Totaliiabilities
98,207
105,869
5,200
20,803
2,936
14,337
5,987
2,138
16,649
5,696
4,636
14,866
4,811
251,685
256,426
254,382
131,015
120,670
141,092
115,334
133,342
121,040
7,763
2,132
9,947
2,284
11,346
1,715
1,708
16,701
1,880
16,472
2,267
15,000
287,009
284.710
3,269
-
105,961
103,238
3,175
19,569
279,889
Total deposits
Demand deposits
Time and savings deposits
Federal funds purchased and securities sold under agreements
to repurchase
Liabilities for borrowed money-,
Acceptances executed by or for account of reporting banks and
outstanding
Otherliabilities
-
97,217
107,150
3,722
20,237
3,698
3,710
113
87
89
3,382
3,785
3,799
1,142
59
6,090
10,287
4,368
689
22,636
1,120
62
6,166
10,488
4,707
711
23,254
1,136
63
6,357
10,438
5,437
681
24,112
306,906
314,048
312,621
RESERVES ON LOANS AND SECURITIES
Reserves on loans
Reserves on securitiesTotal reserves on loans and securities
CAPITAL ACCOUNTS
Capital notes and debentures
Preferred stock
Commonstock
Surplus
Undivided profits
Reserves
Total capital accounts
Total liabilities and capital accounts
» Gross, reserves not deducted.
Resume
The Office of the Comptroller of the Currency continues to change
and grow with the national economy and the banking industry. Internal operations and administration are undergoing constant refinement
and improvement in order to better serve the public whose demands
must be met.
ADMINISTRATIVE REPORTS
71
B u r e a u of Customs
The Bureau of Customs has the mission of collecting revenue on
imports and of enforcing the laws regarding controlled and prohibited
exports and imports. I t s tasks include the assessment and collection of
duties and taxes; control of carriers, persons, and merchandise entering or departing the United States; administration of the tariff and
related laws affecting international trade and traffic; detection and
prevention of smuggling and frauds on the revenue; and regulation of
vessels in the coastwise and fishing trades. The Customs Service has
special programs to inform the public of its requirements and encourages voluntary compliance by the international trading community
with the laws, regulations, and controls established by Customs and
numerous other Federal agencies.
Customs assigns high priority to its enforcement efforts in support
of the President's urgent program to prevent the illicit introduction
into the United States of narcotics, cocaine, hashish, marihuana, and
dangerous drugs. During fiscal 1970 this effort was greatly intensified
through increased inspections, reassignments, and the addition of new
employees.
The most dramatic effort of the fiscal year was Operation Intercept/
Cooperation on the Mexican-United States border. On September 21,
1969, Operation Intercept was launched at 31 ports of entry along the
Mexican border with the objective of interdicting the flow of marihuana and narcotics into the United States. I t consisted of highly
intensified examinations of all persons, cargo, and mail arriving from
Mexico. Normal Customs staffing at border points was increased 66
percent, through temporary duty assignments plus augmentation from
other Federal inspectional agencies. A wide assortment of additional
equipment was provided to border offices, including trailers, flood
lights, auto lifts, radio cars, pursuit aircraft and patrol boats.
A major result of the campaign, which was later renamed Operation Cooperation, was the increased effort of the Mexican Government,
working with growers and suppliers of marihuana in the Mexican
provinces, to eradicate the sources of this dangerous contraband.
Mexican and U.S. Customs are continuing to work closely to combat
the narcotics problem.
The Customs Agency Service now has rapid access to intelligence
information through a new computer service known as C A D P I N .
Presently the system is in full use in the California area, in partial
operation along the Mexican border, and scheduled to become nationwide within 6 months.
A Congressional supplemental appropriation in December 1969 of
$8.75 million was used to add to Customs' capabilities to combat drug
smuggling: 307 criminal investigators; 378 inspectors; over 200 supporting staff; five aircraft and two patrol boats; 148 passenger cars
for police type use; 40 trailers for housing in isolated areas along
the Mexican border; additional electronic and radio equipment; and
two new offices in the remote Big Bend area of Texas.
On J u n e 1, 1970, Customs utilized these new resources to initiate a
program of intensified examination, particularly of air traffic and
commercial cargo, with special concentration on the Canadian border
72
1.970 REPORT OF THE SECRETARY OF THE TREASURY
and the eastern seaboard which included a new "re-check" procedure
for "precleared" passengers from Canada, Bermuda, and Nassau. (The
first precleared flight that was rechecked resulted in the seizure of
nearly $1 million worth of cocaine.) During the first month of the
intensified inspections more than 9 tons of marihuana and significant
quantities of illicit drugs were seized and 335 persons arrested.
F o r more details on the antidrug smuggling.program, see speech of
Assistant Secretary Eugene T. Rossides on April 16, 1970.^
I n addition to the study of the Customs Agency Service reported
under investigative activities, a study, looking toward the reorganization of the New York region, was completed and submitted to the
Assistant Secretary for approval. An extensive joint DepartmentBureau study of the regional-district-port structure was concluded at
yearend. A study recommending relocation of the security and audit
functions within Bureau headquarters was made and awaits Department concurrence.
Customs Courts and Administrative Reform Act.—On June 2,1970,
the President signed into law an act which modernizes the procedures
of the U.S. Customs courts and the Bureau of Customs, effective on
October 1,1970.
Designed to change an antiquated system that is so complex it has
led to a backlog of some 400,000 cases in the Customs Court, the new
law permits Customs to determine all elements of duty liability in a
single step, provides longer periods for filing a protest, and allows
routine administrative review before court action. Only one judge
is required to conduct a trial and cases do not automatically go to the
court for action without a new initiative by the importer. The act
also permits consolidation of similar cases and reduces the volume
of paperwork. Court filing fees will now be required as in other U.S.
courts.
Cargo theft program.—A 10-month study of theft and pilferage of
international cargo at airports and seaports of entry culminated in a
Customs program of proposed regulations and legislation to eradicate
this growing cancer on trade and commerce. This program was announced by Assistant Secretary Rossides in testimony before the
Senate Select Committee on Small Business on June 24, 1970.^ Public
comments on the proposed rulemakings and interdepartmental clearances on the legislation are still being received.
Overtime charges for private aircraft and vessels.—Owners and
operators of private aircraft and vessels have complained for many
years about the large charge often incurred as a result of the requirement that the overtime compensation paid to inspectors for clearing
arrivals outside regular working hours must be reimbursed to the
Government by the parties served. Whenever possible, the total overtime charge is prorated over all the arrivals during the overtime
period. However, for a single entry under certain conditions the
charge could amount to nearly $100. I n Public Law 91-258, effective
July 1,1970, a Treasury-developed provision will limit the reimbursement chargeable for a single arrival to $25. If the prorating process
1 See exhibit 31.
2 See exhibit 8i3a.
ADMINISTRATIVE REPORTS
73
results in a charge less than $25, the private party will continue to
receive the benefit of the lower sum.
Cost reduction/management improvement program
During fiscal 1970 this program resulted in savings of $4,534,000.
Of this amount $770,780 was cost reduction, $3,613,598 was cost avoidance, and $149,662 was savings to other agencies. The savings were
used in the Customs Service to handle the workload without adding
to staff oir expenditures.
Bureau operations
Collections.—Revenue collected by Customs during fiscal 1970 of
$3.30 billion, showed an increase of 1 percent over 1969, making this
the year of highest receipts in the history of the Bureau. Collections
and payments by customs regions and districts, as well as the major
classes of all collections made by the Bureau of Customs, are contained
in the Statistical Appendix. The cost of collecting $100 was $3.92,
as compared with $3.08 in fiscal 1969. The increased cost was due
principally to greatly increased enforcement activities which were
largely nonrevenue producing.
Carriers and persons entering.—Nearly 226 million persons, arriving either as pedestrians or on the nearly 66 million carriers entering,
were inspected by Customs during fiscal 1970. There was a 0.8-percent
decrease in persons arriving and a 2.1-percent decrease in carriers over
fiscal 1969. (See Statistical Appendix.)
Entrance and clearance of vessels.—The following table compares
entrances and clearances of vessels for fiscal years 1969 and 1970.
1969
Total
-
Total.---
---
-
-
-
48,063
41, 293
-2.9
13.3
89,356
4.0
48,650
36, 396
-
Clearances:
Direct to foreign ports
Via other domestic ports
Percentage
increase
85,962
Entrances:
Direct from foreign ports
Via other domestic ports
1970
49,500
36,462
Vessel movements
47,693
41,732
-2.0
14.7
85,046
89,425
5.2
Entries of merchandise.—The value of imports reached $38.2 billion
in fiscal 1970 as compared to $34.1 in 1969, an increase of 11.8 percent.
Volume and type of entries handled during the last 2 years are shown
in the Statistical Appendix.
A total of 20 percent of all entries were free of duty.
Audits.—Internal audit activities for fiscal 1970 emphasized intemal controls, purification of data processing services to field management, and controls over merchandise in customs custody, including
review of entry liquidations.
During the year 226 offices were examined; 77 internal audit reports,
204 commercial audits of brokers and 11 cost system audits (wool)
were made; and 47,911 liquidations were verified, taking 1,435 corrective actions.
74
1.970 REPORT OF THE SECRETARY OF THE TREASURY
Security.—A total of 1,971 personnel investigations were made
during fiscal 1970. Of 1,652 full field investigations, 980 were conducted
by Civil Service Commission investigators under contract arrangements with the Bureau made necessary by the greatly increased recruitment program under the supplemental appropriation.
A total of 213 personnel conduct and special inquiries were opened,
230 were closed, and 38 were pending at the end of the fiscal year.
There were 801 critical-sensitive clearances, and 400 noncriticalsensitive clearances. A total of 27 field offices were inspected to assure
compliance with Treasury orders and Executive orders relative to
safeguarding classified material.
Equal employment opportunity.—The Bureau made extensive efforts
to recruit inspectors and agents from minority groups, including many
visits to predominantly black campuses, often by black recruiters.
Campus recruiting was only moderately successful because of a lack
of interest and a lack of students in related fields. Region VI (Houston,
Tex.) was extremely successful in hiring Mexican-American candidates. Female candidates were also hired. A program for selecting
and training equal employment counselors was developed.
Foreign customs assistance.—A 10-man team is in Saigon, Vietnam,
advising the Vietnamese Customs Service and supervising the AID
funded commercial import program and the Customs boat fleet. Of
this effort. Assistant Secretary Rossides stated in testimony delivered
before the Permanent Subcommittee on Investigations of the Senate
Committee, on Govemment Operations, "The U.S. Customs is playing a significant role with the limited resources we have available in
Vietnam in advising Vietnamese Customs personnel and promoting
better liaison with U.S. law enforcement agencies in Vietnam. * * *
The Bureau of Customs is also providing a training program in the
United States for Vietnamese Customs officers. Since January 1970
six members of the Vietnamese Fraud Repression Service underwent
a 2-month training program at Bureau headquarters, at the Customs
National Training Center on the campus of Hofstra University, and at
Customs Agency Offices."
During the year the value of seizures in Vietnam increased 519 percent, cases investigated 24 percent, and fines collected 229 percent.
Three advisory teams in Latin America (Argentina, Colombia, and
Panama) were terminated on June 30, 1970. A team remains in Costa
Rica and a temporary detail in Brazil. One advisor is maintained in
Afghanistan and a two-man team in Ethiopia.
During fiscal 1970 there were 138 foreign participants from 29 nations who received Bureau of Customs orientation in the office of
Foreign Customs Assistance. They were given training in various
fields, including organization and management; inspection of baggage
and cargo; airport, seaport and border port procedures; merchandise
contrdl; warehouse operations; foreign zones; investigative techniques,
internal audit, fiscal operations, drawback, classification and value
procedures; and personnel administration. In addition to the training
facilities at the National Training Center at Hofstra University,
Hempstead, N. Y., those at Laredo, Tex., were used.
Planning amd research.—The Director of Planning and Research
served as project manager for the contract study of an automated
ADMINISTRATIVE REPORTS
75
merchandise processing system. Phase I, describing the conceptual
elements of the process, was completed at midyear. Phase I I to produce a detailed systems design will continue through October 1970.
Revisions in the random time sampling system were made in October 1969. Customs field officers were provided with percentage factors derived from the sampling for use in determining manpower requirements for the Planning-Programing-Budgeting ^ System
( P P B S ) . Customs manpower devoted to performing functions for
other Federal agencies is being analyzed through the time sampling
process.
Facilities management.—During fiscal 1970 a new Canadian border
station was completed and is in full operation at Point Roberts, Wash.;
sites were acquired and housing and office facilities provided for two
new crossings on the Mexican border, now in operation at Boquillas
and Heath Crossing, Tex.
A joint mail facility in cooperation with the Post Office Department was completed at Oakland, Calif.; and a truck weighing station
was constructed by Customs at Castle Island, Boston, Mass. Engineering assistance was provided to the Immigration and Naturalization
Service for a new check point facility at San Clemente, Calif., with
Customs completing the structural design.
Requirements were developed and funds obligated to GSA to accomplish the following projects in support of the present Customs
intensified enforcement effort: Search and hold rooms, lifts and canopies at various locations in the Houston, Tex., region; three emergency
generators in the Boston, Mass., region; a temporary commercial truck
crossing at San Ysidro, Calif.; a temporary truck inspection area at
San Luis, Ariz.; a highway bus passenger inspection facility at Pacific Highway crossing, Blaine, Wash.; secondary inspection facilities at Peace Arch Crossing, Blaine, Wash.; and secondary inspection
facilities at Douglas, Ariz.
Space arrangements and special requirements for the new consolidated Customhouse at the World Trade Center, New York, N.Y.,
were accepted by the General Services Administration and the lease
was signed June 3, 1970. I n addition to the expenditure of approximately $900,000 for new laboratory equipment, funds totaling some
$280,000 have been made available to GSA to provide equipment for
the mechanization of examining areas plus other special needs in
the building.
Procurements involved some 400 actions, totaling approximately $4
million. This exceeds by 400 percent the activity in previous years.
Narcotics testing kits for use in identification of drugs, three communications sector control consoles, and new improved handguns for
all agents were among the items purchased.
New truck-mounted fluoroscopes were procured and larger conveyor
type film-safe X - r a y fluoroscopes for use in mail facilities at Chicago,
111., and San Francisco, Calif., were ordered. Undercar scanners and
searchlights were redesigned to improve efficiency.
Contracts were let for the housing of students at the National
Training Center, for Spanish language training for agents and inspectional personnel, and for systems analyst training courses at two
different universities. Equipment was installed at San Diego, Calif.,
3i97-702 O—7;i—.—.7
76
1970 REPORT OF THE SECRETARY OF THE TREASURY
for a computer center to process enforcement intelligence information.
A 365/50 I B M computer for the Bureau's Data Center in Silver
Spring, Md., was obtained through the GSA excess program at a saving of $200,000.
Personnel,—The Bureau of Customs undertook an intensified recruiting drive in implementing the supplemental appropriation to
strengthen the antidrug smuggling and organized crime program.
The result was a net increase of over 800 employees between January and June 1970. I n addition, over 500 emploj^ees were recruited
to replace customs employees who left during this period. Over 50
percent of the new Customs inspectors and special agents hold college
degrees.
On June 30, 1970, the Bureau of Customs had 10,343 full-time permanent employees. This was 23 short of authorized strength.
Trainmg,—The sudden input of hundreds of new agents and inspectors into the Customs Service created critical problems in training. These were resolved by quadrupling the number of classes at the
National Training Center during the fiscal year. Beginning in January, some 500 inspectors and over 150 special agents completed basic
and advanced training courses.
To establish a pool of customs employees capable of directing automated merchandise processing operations, a systems analysis training
program was developed at Customs' National Training Center and
40 employees were trained in these skills.
At the request of the Department of Defense, operations officers,
together with field officers and supervisory inspectors, established and
operated a baggage inspection training program in South Vietnam for
a period of 6 months. Approximately 900 military and security police
were trained on-site at various embarkation points. These military
personnel, under the supervision of the customs team, cleared 50,000
troops redeploying to the United States. Except for occasional spot
checks, such inspection eliminated the need for further processing
upon arrival and permitted military units to redeploy directly to their
bases.
Antidumpmg and countervailing duties.—A total of 23 antidumping cases were initiated during the year, and 23 were closed. Of the 2i3
cases closed, seven were referred to the Tariff Commission with determinations of sales at less than fair value; five were closed out with
determinations of no sales at less than fair value on the basis of price
revisions and assurances of no future sales at less than fair value. The
remaining 11 cases that were closed during the year resulted in determinations of no sales a t less than fair value, no dumping margins having
been found. Five findings of dumping were issued during the year and
33 cases remained on hand at the yearend.
Tariff classiftcations,—During fiscal 1970, 841 applications for free
entry of scientific instruments and apparatus were processed, compared to 706 in 1969. A total of 7,702 letters of inquiry were answered
in 1970, compared to 7,258 in 1969.
A Legal Precedent Retrieval System which provides a printout of
all Tariff Classification abstracts and Customs Court and Court of
Customs and Patent Appeals decisions published since 1963, when
the Tariff Schedules of the United States came into use, was placed
ADMINISTRATIVE REPORTS
77
in operation in fiscal 1970. The system allows Customs law specialists to retrieve decisions without the manual search through various
sources previously required.
Regmations.—Rules have been proposed to amend Customs Regulations to substitute, so far as possible, four of the six standardized
model forms of the Intergovernmental Maritime Consultative Organization (IMCO) for certain customs forms presently in use ih connection with the arrival and departure of vessels in foreign trade. The
present combined form of passenger and crew list. Customs and Immigration Form 10418, will remain in use pending further study.
To implement the Customs Convention on the International Transport of Goods under Cover of T I R Carnets, a notice of proposed rulemaking was published under which documentation would consist of a
" T I R Carnet," a booklet containing a manifest and a number of
vouchers and counterfoils which are completed by customs officers when
the goods enter, leave, or transit a country.
Czechoslovakia, Austria, Mauritius, and Malaysia were added to the
list of nations which are exempt from the payment of special tonnage
tax and light money.
Upon receipt through diplomatic channels of assurances of reciprocity to vessels of the United States, the Customs Regulations were
amended to extend to vessels of Greece and Liberia the privilege of
transporting cargo containers and related items between U.S. ports.
The Federal Republic of Germany, Liberia, and France were extended
similar reciprocal privileges with respect to containers and lash-type
barges.
Treasury Decisions were published designating automotive frame
spacers, devices to secure automobiles within containers, drums for
antiknock compound, and three and four-legged holders used to transport wire coil as instruments of international traffic.
I n the current general revision of the Customs Regulations, the
revised parts are being numbered from 101 to 199 and arranged in a
different order. Six parts of the regulations were revised and adopted,
effective June 13, 1970.
Drawback,—To reduce the volume of paperwork in the drawback
program, section 22.18 of the Customs Regulations was amended by
Treasury Decision 70-94 to provide that under certain circumstances a
single corporate notice of lading may be filed monthly to cover deliveries to vessels of fuel supplies with benefit of drawback. Previously
a separate notice was required for each lading.
Also, proposed amendments to the Customs Regulations were published which would eliminate the notice of exportation. Customs form
7511, now prepared solely for drawback purposes and required to be
filed for each shipment. Under the proposal, the claimant would file a
copy of an export document already prepared for other purposes, such
as a bill of lading.
The total drawback allowance paid during fiscal 1970 amounted to
$40,088,887, as reflected in the Statistical Appendix. Drawback allowance on the exportation of merchandise manufactured from imported
materials amounts to 99 percent of the customs duties paid at the time
the goods are entered.
78
1970 REPORT OF THE SECRETARY OF THE TREASURY
Protests.—Protests filed by importers against the rate and amount
of duty assessed and appeals for reappraisement filed by importers who
did not agree with the customs officers on the value of merchandise are
shown in the following table.
Protests and appeals
1970
Protests:
Filed with district directors by importers (formal)
Filed with district directors by importers (informal)
Appeals for reappraisement filed with district directors
66,500
94,041
13,582
Percentage
decrease (—)
66,448
66,687
12,952
—0.08
- 29.09
—4.64
Penalties,—Decisions were made on 762 penalty cases in 1970. A total
of $31,434 was paid to 37 informers.
Penalty cases, fiscal year 1970
Type of case
Penalty and forfeiture
Liquidated damages
-
.
Full statutory
liability of
violators i
-
655
107
-
Total
$113,289,060
2,340,863
762
-
.
Number
115,629,923
1 Subject to mitigation in appropriate cases by the Bureau or by the courts.
Net liability imposed hy penalty, decisions, 1969 and 1970
Type of case
Penalty and forfeiture cases
Liquidated damages
Total
1969
-
-.
i $63,976,548
223,996
164,200 544
1970
$3,561,863
143.372
'
3.705.2.^'5
1 Includes 1 case involving $61,778,940.
Restricted merchaiidise.—Approximately 1,600 cases involving import restrictions, prohibitions, or controls were handled during the
year. These included country of origin marking and various label requirements ; use of foreign convict labor; trademarks, copyrights, and
I)atents; obscene matter, contraceptive devices, lottery or seditious
materials; birds, plumage, eggs, and wild animals; switchblade knives;
Federal and State liquor laws; and technical matters arising under
the International Coffee Agreement.
There were recorded 159 trademarks, trade name renewals, assignments and name changes, and 68 copyrights; 10 patent surveys, or
renewals, were approved. A total of $40,460 of recordation and related
fees was collected for these services.
Ports of entry seized and disposed of approximately 25,000 prohibited switchblade knives, the great majority having been personal
importations in baggage.
Bureau headquarters reviewed under the obscenity provisions 20
commercial feature-length motion pictures, finding seven such films
ADMINISTRATIVE REPORTS
79
inadmissable to entry. Six additional feature films were seized at ports
of entry.
Approximately 300,000 pieces of screened mail, principally examined
at the port of New York, N.Y., contained obscene materials and
approximately 250,000 pieces contained lottery materials.
Notable Customs litigation included two cases involving personal
importations of "hard core" obscene matter in the districts of Los
Angeles and New York, in which the courts with appellate jurisdiction
ruled 19 U.S.C. 1305 an unconstitutional repression of First Amendment'rights. A seized motion picture was also ordered released on the
same grounds in the Los Angeles district. The Justice Department is
seeking United States Supreme Court reversals in consolidated
proceedings.
Containerization.—Treasury Decision 69-216 implemented Resolution No. 24 of the Working Party on Customs Questions Affecting
Transport, of the United Nations Economic Commission for Europe,
of which the United States is a participating member. This permits
containers loaded with merchandise and admitted as instruments of
international traffic to be used in point-to-point local traffic on a route
which would bring the container by a reasonably direct route to, or
nearer to, the place where the export cargo is to be loaded or where the
container is to be exported empty.
Treasury Decision 70-72 (24) provided that lash-type barges which
are dropped off and taken aboard the mother vessel outside U.S. territorial waters are subject to the usual entry and clearance requirements
applicable to vessels in the foreign trade.
Treasury Decision 70-101 (2) declared that a container brought
into the United States to be leased to others for a use in international
traffic planned at or before the time of importation may be considered
an "instrument of international traffic" and may be released under
section 10.41(a), Customs Regulations, without entry or payment of
duty.
Appraisement.—Further improvement and updating of the
automated liquidation system were accomplished. The number of
liquidations computed on the Programma 101 machine increased
markedly, enabling regional liquidators to reduce their workable back. logs without personnel increases.
A program for verifying invoices of imported cargo was established,
with emphasis on value, description, and count factors. More intensive
examination of cargo by import specialists on the piers, at importers'
premises, and in the public stores is of critical importance.
The Customs Court upheld Treasury guidelines concerning footwear subject to American selling price. I n order to bring field practice
into accord with the intent of the statute, the Bureau issued instructions concerning the American selling price valuation of sneaker or
basketball-type shoes containing iron powder midsoles. As a result, it
is expected that a greater number of such shoes will be appraised at
the American selling price.
A monthly consolidated entry of nondutiable merchandise under
immediate delivery procedures was approved and implemented. All
shipments between one shipper and one importer through one port are
80
1970 REPORT OF THE SECRETARY OF THE TREASURY
treated as a single transaction or importation for examination, entry,
and liquidation purposes.
I n addition to cooperation with the Department of Health, Education, and Welfare in enforcing the air pollution control program, and
with the Department of Transportation in enforcing auto safety
standards. Customs, working with H E W , issued instructions pertaining to the enforcement of radiation control standards for all electronic
products imported into the United States.
Mail operations.—The goal of processing all mail at the port of first
arrival came one step closer with the completion of the Oakland, Calif.,
surface mail facility in the San Francisco area. The mail unit which
became operational in November 1969, has 18 lines of powered belts
along with other mechanized equipment. The ability to process more
mail at these large mechanized mail divisions resulted in increased
economy and efficiency.
Greater emphasis on enforcement resulted in Customs' mail divisions
making 2,621 seizures of guns, munitions, and narcotics in the second
half of fiscal 1970. Special enforcement units were used in the larger
mail divisions exclusively to detect and remove contraband from the
mails.
A record number of narcotic and munitions violations was found in
mail parcels originating in Southeast Asia in the first three quarters
of the year. However, a joint program conducted with the military
services substantially reduced the number of these illegal shipments in
the last quarter.
New detection devices are being developed along with new operating
procedures in an effort to stop this flood of illegal shipments.
Quotas.—During fiscal 1970, two quotas were imposed under the International Coffee Agreement Act, five quotas under the Philippine
Trade Agreement Act, and 113 tariff-rate and absolute quotas under
specific Presidential proclamations and legislation. Sixty-eight directives were received from the President's Cabinet Textile Advisory
Committee, which resulted in the implementation and administration
of 179 cotton textile quotas, involving 19 foreign countries. Quotas
administered totaled 299.
Four prohibitions on cotton textiles, involving three foreign countries, were also administered. Cumulative import statistics in 268 categories, involving nine foreign countries under surveillance, were furnished weekly to the Interagency Textile Administrative Committee
(Commerce Department), along with a weekly report on the status
of 179 cotton textile quotas.
Fibers administration.—A total of 8,897 reports of wool importations were submitted and reviewed for uniform classification actions.
There were 1,095 samples of questionable AVOOIS submitted for opinion.
I n addition, 138 samples of wool wastes; 332 samples of manmade
fibers and wastes; 169 samples of cotton and cotton wastes; and 43
samples of animal and fur fibers were received for the purpose of
advice on the classification and origin thereof.
A total of 202 samples of raw cashmere and raw camel hair were
received from official govemment agencies in the United Kingdom,
Belgium, Switzerland, and Czechoslovakia. Samples from these sources
are reviewed for the purpose of determining origin for the Office of
ADMINISTRATIVE REPORTS
81
Foreign Assets Control, which then approves processing or manufacturing actions for eventual importation into the United States.
Customs information exchange.—The C L E . located in New York
City, acts as a clearinghouse for the Customs Service, receiving reports
of merchandise processing actions and requests for advice, and both
distributing regular reports and advisories and transmitting special
opinions. I t thus serves to standardize treatment of similar transactions at all ports of entry.
I n addition to publishing regular lists of rates of exchange for countries exporting to the United States, C L E . responded to 721 requests
from Customs officers for special rate determinations. National alerts
were issued when France devalued the franc and Germany increased
the value of the mark.
There were 2,126 catalogs, price lists and other value data of foreign manufacturers and shippers received, reproduced and disseminated to customs officers at ports known to have received importations
of such or similar merchandise.
C L E . maintained and distributed a list of commodities exported
from Japan which are appraised at ex-factory prices and a list of
more than 7,000 names of firms exporting commodities to the United
States who have submitted satisfactory evidence to establish that their
goods should be appraised at an ex-factory price.
The Marking Digest, a compilation of decisions relating t o current
applications of section 304 of the Tariff Act, was revised and distributed to all interested customs officers.
A total of 86,000 "Reports of Classification and Value" were received, on which 15,000 discrepancies in value and classification were
processed. Only 49 decisions in value and 77 in classification, not
reconciled, had to be referred to the Bureau for decision. A total of 129
foreign and local inquiry reports were processed.
During the fiscal year, 155 advance reports were received from various import specialists. Whenever differences of opinion appeared
between the New York Regional Commissioner and the reporting
port, the C L E . acted as the middleman to reconcile differences.
There were 534 reports of significant value changes transmitted to
district directors on shipments entered during the previous 12-month
period from the same manufacturer or seller.
Export Control.—In conjunction with the Office of Export Control
and the Bureau of the Census, a new simplified procedure for the
processing of many export declarations Avas developed and implemented. Known as the "NAR" (No Authentication Required) procedure, it places on carriers the responsibility for verifying information on export declarations and permits post-filing of the declarations.
Blanket filing of declarations on a monthly basis was also expanded.
Laboratories,—Aggressive efforts to improve the efficiency and responsiveness of laboratory operations highlighted the activities of the
Division of Technical Services during the year.
The new narcotics laboratory in San Antonio, Tex., became operative in October 1969. A new method for selecting laboratory samples
for analysis, first tried out in 1969, was extended to cover more laboratories. Called "Routine Control Sampling," the new system is designed
to provide a data base for a more rational method of sampling for
82
19 70 REPORT OF THE SECRETARY OF THE TREASURY
laboratory examination. A new sample reporting system, keyed to
TSUS and to census reporting categories, was implemented. A new
narcotics testing facility was also opened in San Diego, Calif., to
serve Mexican border points and assist in prompt prosecution of
narcotics smugglers. In addition, a small but well-equipped analytical
facility was established in Bureau headquarters to study the nature
and concentration of volatile materials in the immediate vicinity of
marihuana, hashish, and heroin packages.
A program and data file to computerize retrieval of infrared spectral
data was incorporated into the Bureau's ADP system and is now
servicing the laboratories.
Central procurement of major analytical equipment items, instituted in 1969, resulted in the following significant purchases during
1970:
Chicago: Atomic absorbance spectrophotometer and gas chromatograph.
Baltimore: Gas chromatograph.
Savannah: Gas chromatograph.
San Francisco: U.V. visible spectrophotometer.
San Diego: I.R. spectrophotometer and gas chromatograph.
San Antonio: LR. spectrophotometer and gas chromatograph.
New York: Mass spectrometer.
A large number of proposals were received from commercial firms
suggesting various devices for detection of smuggled narcotics without actually opening baggage, packages, or vehicle compartments.
Most of these w^ere essentially devoid of information concerning the
substance believed to be present in the immediate environment of such
contraband, which is essential to their intelligent evaluation.
During 1970, a total of 178,660 samples were tested, as compared
with 167,834 in 1969.
Detector dog program.—Recruitment of skilled dog trainers and
handlers from the U.S. Air Force and Army and procurement of dogs
from civilian and military sources began in January 1970. Training
facilities and logistic support were obtained from the military working dog program, located at Lackland Air Force Base, and an experimental training program was initiated on April 1.
Subsequent tests conducted at several customs mail facilities indicate that the use of dogs with experienced handlers will be extremely beneficial in preventing the introduction of dangerous drugs
via the mails. Because of this success, a training session to explore
other uses of dogs in marihuana and other drug detections was scheduled. Preliminary tests showed that dogs could also function effectively
in cargo areas and for automobile and truck searches. The feasibility
of using smaller dogs in ship and aircraft searching will also be
studied.
Intemational conferences,—Participation in the activities of the
Customs Cooperation Council in Brussels and the Economic Commission for Europe in Geneva was continued. Subsidiary organizations of
both bodies (the Permanent Technical Committee of the CCC and
the Inland Transportation Committee of the ECE) are drafting new
conventions on the international movement of containers. Staff officers
ADMINISTRATIVE REPORTS
83
of Customs were members of the U.S. delegation at 10 meetings during
the year.
Discussions were also held in Washington and London with representatives of British Customs and Excise on containerization and
other matters of mutual interest to both services.
Commissioner Ambrose visited England, France, Italy, Mexico, and
Canada, urging customs officials of those countries to intensify their
antidrug smuggling enforcement activities. Such cooperation, it is
envisaged, would result in the trafficker having to transit several
customs barriers and undergo more rigorous customs inspections.
This would increase risk of detection, disrupt normal smuggling patterns and expose professional smugglers to discovery by more investigative agencies.
Improved services to the public,—During the year, applications
were received for the establishment of ports of entry at 23 locations.
Two new ports of entry were approved, at Little Rock, Ark., and
Greenville-Spartanburg, S.C. Two customs stations were established
at Boquillas and at Heath Crossing, Tex.
Public information.—Operation Intercept/Cooperation on the
Mexican border and the new intensified enforcement procedures at
all border points greatly increased the requirement for forewarning
the public of delays to be encountered in clearing customs and for
explaining the reasons behind these operations.
Special radio spots were issued for use on the Mexican-United
States border. A flyer explaining the reasons for the operation was
widely distributed. A special award-winning supplement for "Customs Today," the Bureau internal publication, was also prepared.
Both radio and television spots by the Commissioner of Customs
were distributed to stations in the United States and Canada. Over 8
million copies of a leaflet, "An Explanation to You . . . the
Traveler," were distributed to the various ports and stations, the airlines, the U.S. Travel Service and the Department of State.
Two posters were distributed for use in customs facilities to persuade arriving travelers that "a few extra minutes to clear customs
is a small price to pay to help us keep drugs away from your children."
The U.S. Travel Service continued its assistance by distributing
abroad releases prepared by Customs for the benefit of travelers from
other countries visiting the United States. The "Ask the Customs
Man" series was also used in many papers throughout this country.
The Department of Defense, using press conferences, T V media,
military press, and Armed Forces Radio Network, cooperated in a
campaign against dangerous war trophies being mailed through A P O
and F P O ' s from military personnel overseas.
During the year, two traveling exhibits were produced to tell the
Customs story. A new leaflet, "A Gift . . . Are You Sure?," was
issued to help eliminate many protests on items which could not be
released under the $10 duty-free gift provision.
A record number of tape recordings by U.S. and foreign networks
and of articles in national magazines and feature syndicates was
produced.
84
1.970 REPORT OF THE SECRETARY OF THE TREASURY
The Commissioner of Customs made extensive use of the speaking
platform, addressing 25 associations, societies, and convention groups
from September 1969 through June 1970. He also gave 33 personal
interviews to TV, press, and radio, all stressing customs enforcement
against narcotic smuggling.
Monthly lectures were continued at each class of inspectors, agents,
and import specialists at the National Training Center, to empliasize
that courtesy, tact, and consideration for the traveler must accompany intensified enforcement efforts.
Of over 50,000 letter requests for information received from the
traveling public, 76 percent were received during the last 6 months
of the fiscal year.
Investigative activities
The Customs Agency Service of the Office of Investigations is the
primary investigative and enforcement arm of the Bureau. A study
recommending radical changes in that organization was made during
the year. These changes were approved for implementation at the
beginning of fiscal 1971.
During fiscal 1970 approximately 300 special agents were added to
the force and about 80 customs port investigators were advanced to
special agents. Eighteen new effices were opened at Jaclnnan, Maine;
West Palm Beach, Fla.; Lubbock, Tex.; Alpine, Tex.; Deming, N.
Mex.; Albuquerque, N. Mex.; Tucson, Ariz.; Phoenix, Ariz.; Las
Vegas, Nev.; Eureka, Calif.; Spokane, Wash.; Williston, N. Dak.; International Falls, Minn.; Sault Ste. Marie, Mich.; Minneapolis, Minn.;
Kansas City, Mo.; Milwaukee, Wis.; and Newport, Vt.
The principal emphasis of the Office of Investigations during the
year has been on stricter enforcement of the laws regarding illegal entry of narcotics and dangerous drugs. A massive effort was carried out
on the Mexican-United States border and, at yearend, intensified enforcement operations were in effect all along the northern border and
the eastern seaboard, as well as a continuing effort at all other ports.
A new automatic data processing network to file and disseminate
enforcement intelligence was established, initially with the cooperation
of the State of California. Information concerning suspected smugglers and their vehicles was stored in the computer, located at San
Diego, Calif., and selected border stations could query the computer
by teletype concerning automobiles entering from Mexico and receive
an answer within 6 to 10 seconds. This portion of the system is the first
stage in the nationwide Customs A D P Intelligence Network (CAD
P I N ) to integrate information on criminal activity in one easily and
speedily accessible A D P file.
Cases investigated,—The number of cases investigated under customs, navigation, and related laws enforced by Customs increased from
28,175 in fiscal 1969 to 32,040 in fiscal 1970, as shown in the Statistical
Appendix.
Arrests.—^There was a total of 7,340 arrests during the year, as compared to 6,200 in 1969, with 2,006 convictions under U.S. statutes and
3,064 turned over to local authorities.
85
ADMINISTRATIVE REPORTS
Fiscal years
Activity
1969
Persons under or awaiting indictment at beginning of year.
Arrests
Turned over to other agencies
Prosecutions declined
--.
Not indicted
Convictions under U.S. statutes
Dismissals and acquittals
-.-Nolle prossed
Persons under or awaiting indictment at end of year
Percentage
increase
1970
2,639
6,200
2,117
621
13
1,795
328
38
3,927
3,927
7,340
3,064
663
23
2,006
454
57
4,977
48.8
18.4
44.7
6.8
76.9
11.8
38.4
50.0
26.7
Merchandise seizures.—Customs seizures of merchandise for various
violations of customs laws, by number and value, are shown in the
Statistical Appendix.
Drug seizures,—In fiscal 1970, there were extraprdinary increases in
seizures of cocaine, hashish, marihuana, and dangerous drugs. Details
are shown in the following table.
Fiscal years
Drug seizures
1970
1969
Narcotics:
Heroin:
Gram?..-Pounds
Number of seizures
Opium:
Grams.-.
Pounds...
Number of seizures
Cocaine: ^
Grams
Pounds
-Number of seizures
Other:
Grams
Pounds.Number of seizures
Hallucinogens:
Hashish:
Grams
Pounds
.-.-Number of seizures.. Marihuana:
Grams
Pounds
Number of seizures
Dangerous drugs: 2
5-grain units
Number of seizures.. -
-
-
141,269
311.43
240
-
----
15,347
33.88
''42
20,642
45.51
203
-
90,213
198.87
253
-.
---
282,771
623.39
186
1,416,212
3,122. 22
646
25,929,683
57,164
2,673
47,311,901
104,305. 43
4,113
4,763,361
630
12,271, 023
1,080
-
-39
17.745
39.12
335
-
-
-85
48,944
107. 90
-.-
-
--.-
9,390
20.70
42 .-
NA.
NA
NA
-
Percentage
increase or
decrease (—),
in amount
seized
-
+401
+82
+158
NA Not available.
1 Included in "other" in fiscal 69.
2 Consisting principally of amphetamines and barbiturates.
Foreign trade zones
Customs duties and internal revenue taxes collected during fiscal
1970 from the 10 zones in operation amounted to $11,131,404.
The following table summarizes foreign trade zone operations
during fiscal 1970.
86
1970 REPORT OF THE SECRETARY OF THE TREASURY
Number of
entries
Trade zone
NewYork
NewOrleans
New Orleans (subzone) i
SanFranciscoSan Francisco (subzone)
Seattle
Mayaguez
Penuelas (subzone)
Toledo
Honolulu
-
Received in zone
Duties and
internal
revenue
taxes
collected
Value
Long
tons
Value
$37,152.777
26,210,309
483,391
216, 785
2, 836,110
1,325,251
6,615, 549
13.284, 542
6,000, 597
28,265
27,023
21,780
5,112
78
1,172
973
234,242
21,265
3.293
$34.385,360
24, 660,258
3,176,420
7,138,440
172,494
1, 749.470
1,190.477
10,849,947
13,169,329
4,952,348
$2,188,668
3,897,891
1,248
78
423
469
3
196
6,384
23,252
26,441
14,215
4,307
30
1.610
1,250
348,789
24,183
4,092
16,685
448,169
96,170, 554
343,203
101,444,543
11,131,404
3,690
4,194
--
Total-.-
Long
tons
DeUvered from zone
2, 046,243
487.'90i
36.536
227.957
127.337
16.440
3,360, 050
788.624
1 Due to the nature of the transactions in this subzone, entries are not required and duties and internal
revenue taxes are not collected.
Cost of administration
Customs operating expenses amounted to $129,420,353, including
export control expenses and the cost of additional inspection reimbursed by the Department of Agriculture.
The following table shows man-years employment data in fiscal
years 1969 and 1970.
Man-years Man-years
1969
1970
Operation
Regular customs operations:
Nonreimbursable.
Reimbursable ^
-
-
--
8,222
435
-
--
8,900
418
8.2
-3.9
8,657
208
278
Total regular customs employment
^
Export control
Additional inspection for Department of Agriculture
Total employment
Percentage
increase or
decrease (—)
9,318
197
277
7.6
-5.3
- .4
9,143
9,792
1 Salaries reimbursed to the Government by the private firms who received the exclusive services of
these employees.
Office of Director of Practice
The Office of Director of Practice is a part of the Office of the Secretary of the Treasury and is under the immediate supervision of the
General Counsel. Pursuant to the provisions in Treasury Department
Circular No. 230 (31 CFR, Pt. 10), the Director of Practice institutes
and provides for the conduct of disciplinary proceedings against attorneys, certified public accountants, and enrolled agents who are alleged to have engaged in disreputable conduct or who are>a;lleged to
have violated the rules and regulations regarding practice before the
Internal Revenue Service. The Director of Practice also exercises jurisdiction, as the first level of administrative appeal, in those cases where
the Commissioner of Internal Revenue denies an application for enrollment to practice before the Internal Revenue Service made by persons seeking enrollment pursuant to Section 10.4 of Circular 230.
On July 1,1969, there were 62 derogatory information cases pending
in the Office under active review and evaluation, two of which were
ADMINISTRATIVE REPORTS
87
awaiting presentation or decision before a hearing examiner. During
the fiscal year 169 cases were added to the case load of the Office.
Disciplinary action was taken in 55 cases, either by the Office or by
order of a hearing examiner. These 55 actions consisted of two orders
of disbarment, 28 suspensions (either by order of the examiner or by
consent of the practitioner), 23 reprimands, and two instances where
an enrolled agent was permitted to terminate by resignation his enrollment to practice before the Internal Revenue Service. The 55 actions affected 16 attorneys, 21 certified public; accountants, and 18
enrolled agents.
Nine proceedings for disbarment or suspension were initiated before
a hearing examiner during fiscal 1970. Therefore, including the two
cases remaining on the examiner's docket on July 1, 1969, there were
11 cases before the examiner during fiscal 1970. In four cases, the complaint which initiated the proceedings was withdrawn after stipulation settlement was reached whereby the respondent consented to a
suspension from further practice before the Intemal Revenue Service.
Decisions by the examiner were rendered in five of the cases. I n two
cases, one involving an attorney and one involving a certified public
accountant, the examiner's initial order was that the respondents be
disbarred from further practice before the Service. I n the remaining
three cases, the examiner issued initial orders for suspension from
practice before the Intemal Revenue Service. As of June 30,1970, two
cases were pending on the examiner's docket awaiting presentation.
Ninety-six cases were removed from the Office case load during fiscal
1970 after review and evaluation showed that the allegations of misconduct did not state sufficient grounds to maintain a disciplinary proceeding under the regulations of circular 230. Including the two cases
pending on the examiner's docket, there were 78 derogatory information cases under consideration in the Office as of June 30,1970.
During June 1970, two applicants filed appeals from decision of the
Commissioner of Intemal Revenue denying their application for enrollment to practice before the Internal Revenue Service. Both appeals
were under consideration at the fiscal yearend. Two practitioners petitioned the Director of Practice, pursuant to Section 10.75 of Circular
230, for reinstatement to practice before the Internal Revenue Service.
Favorable consideration was given to each petition and reinstatement
was accordingly granted.
Early in the fiscal year, the American Bar Association finalized the
*esta;blishment of the National Discipline Data Bank at the American
Bar Association Center in Chicago. The National Discipline Data
Bank (which began operations on April 1, 1970) consists of a nationwide depository of information on attorneys who have been disbarred,
suspended, resigned during disciplinary proceedings, or subjected to
a public reprimand. The Office of Director of Practice was the only
Federal administrative agency invited to participate and cooperate in
this important project.
Office of Domestic Gold and Silver Operations
The Office of Domestic Gold and Silver Operations, in the Office of
the Under Secretary for Monetary Affairs, assists the Under Secretary
and the Assistant Secretary (Economic Policy) in the formulation.
88
1970 REPORT OF THE SECRETARY OF THE TREASURY
execution, and coordination of policies and programs relating to gold
and silver in both their monetary and commercial aspects. The Office
administers the Treasury Department gold regulations relating to the
purchase, sale, and control of industriai gold and gold coin; issues
licenses and other authorization for the use, import and export of gold,
and for the importation and exportation of gold coin; receives and examines reports of operations; and investigates and supervises the
activities of users of gold. Investigations into possible violations of the
gold regulations are coordinated with the U.S. Secret Service, the
Bureau of Customs and other enforcement agencies.
Gold
Use of gold for industrial purposes,—Sales of gold by the Treasury
for industrial use and purchases from,the private market were terminated on March 18, 1968. Since that date, gold used in industry, the
professions, and art in the United States has come from new domestic
production and from imports. Estimated industrial use of gold in the
United States during the calendar year 1969 was 7,109,000 ounces as
compared with 6,604,000 ounces in 1968. Of this amount, 5,242,000 fine
troy ounces were imported in 1969 for commercial use and the other
1,867,000 ounces came from U.S. mine production. The estimated use of
gold and its allocation by types is shown in the following table.
Estimated net industrial use of gold for calendar year 1969
Fine ounces
Jewelry and arts
Dental
Industrial, including space and defense.
Total
-
-
3,839,000
710,000
2,560,000
7,109,000
Percent
54
10
36
100
Exports of gold,—On April 20,1970, the regulations governing exports of gold were amended to authorize the issuance of licenses permitting holders of certain types of Treasury gold licenses to export
gold bullion for sale in foreign countries, subject to existing restrictions
on transactions in gold with U.S. nationals abroad and foreign monetary authorities. Prior to this amendment, export licenses were issued
only for the export of gold for refining and return or manufacture into
fully fabricated items.
Gold coins,—Licenses are required to import gold coins minted
during or after 1934. Licenses are issued only for coins of recognized
special value to collectors of rare and unusual coin. Gold coins minted
after January 1, 1960, may not be imported unless the particular coin
had been licensed for importation prior to April 30,1969. The number
of gold coins licensed by the Treasury was 3,893 in the calendar year
1969 as compared with 20,399 gold coins licensed in calendar year
1968. During the first half of 1970, 91 gold coins were licensed. The
decrease from the 1968 figure reflects in part the elimination in 1968 of
the requirement that licenses be obtained for pre-1934 coins.
Licensing of gold dealers,—The Office continued licensing banks and
commodity firms to acquire and import gold for sale to domestic Indus-
ADMINISTRATIVE REPORTS
89
trial users. Seventeen such licenses were outstanding at the end of the
fiscal year.
Silver,—Sales of Treasury silver for domestic industrial use at going
market rates on a competitive sealed bid basis continued during fiscal
1970. The sales are conducted by GSA, as agent for the Treasury.
During fiscal 1970, 73,070,799 ounces of silver were contracted for sale
under this program at a profit to the Govemment of $25,675,334.
On June 18, 1970, the Treasury announced that sales of silver from
the Department's existing stock would continue at the rate of 1.5
million ounces per week through November 10,1970.^
Bureau of Engraving and Printing
The Bureau of Engraving and Printing is responsible for manufacturing U.S. paper currency, various public debt instruments, and
most other evidences of a financial character issued by the Government,
such as postage and internal revenue stamps, food coupons, and military payment certificates. In addition, the Bureau prints commissions,
certificates of awards, permits, and a wide variety of other miscellaneous items. The Bureau also executes certain printings for various
territories administered by the United States.
The Bureau conducts extensive research and development programs
for improving the quality of its products, reducing manufacturing
costs, and strengthening deterrents to the counterfeiting of Government securities. It manufactures ink and gum used for its products;
purchases materials, supplies, and equipment; provides maintenance
services for its buildings, plant machinery, anci ecjuipment; and stores
and delivers its products in accordance with requirements of customer
agencies.
Management review
In December 1969, a five-member study team, composed of three
representatives from the staff of the Office of the Secretary and two
from the Bureau, completed a comprehensive review and evaluation of
the Bureau's organization and management. The objective of tlie study
was to evaluate the effectiveness of current policies and practices and
to determine if financial economies and increased efficiency could be
achieved. The scope of this review extended to the role and mission of
the Bureau, covering every aspect of Bureau operations.
In its report of this review, the survey team concluded "that the
Bureau of Engraving and Printing is managed in an efficient, effective,
and progressive manner by the Director, Deputy Director, Office
Chiefs, and Division Superintendents." The report was highly complimentary of the Bureau's "management team" approach to
operations.
Plans for modernization
During fiscal 1970, the Director of the Bureau visited 12 European
countries to observe major national bank note printing plants, nationally and commercially contracted postage stamp printers, security
paper manufacturers, security ink manufacturers, and manufacturers
iiSee exhibit 59 ^
90
1970 REPORT OF THE SECRETARY OF THE TREASURY
of currency and postage stamp presses and processing equipment. This
experience proved of immediate value in allowing comparison and
exchange of technical information; in creating a new awareness of the
tedhniques employed by international counterparts, as a basis for evaluating present technological planning; and in establishing good-will
relationships to provide for a continuing exchange of technical data
and information.
Planning this year centered primarily on the acquisition of two additional high-speed sheet-fed printing presses for the production of
currency, a prototype model of currency overprinting and processing
equipment ( C O P E ) , to automate some of the more costly processing
operations associated with the production of currency notes, automatic
equipment to replace the present manual operations for making food
coupons and postage stamps into book form, and a seven-unit rotogravure printing press to meet specific requirements for gravureprinted multicolor commemorative postage stamps, as well as new
design aerogrammes for the Post Office Department.
Currency program
Deliveries of currency notes in fiscal 1970 totaled approximately
2.5 billion pieces, as compared to 2.4 billion pieces in fiscal 1969. Despite large increases in costs of labor and materials, the unit cost
rate of manufacturing currency in 1970 of $8.02 per thousand notes,
came close to meeting the noteworthy low of $7.95 attained in 1969.
I n order to meet an increasing demand for currency, the Bureau is
constantly planning and implementing programs for the modernization of its currency manufacturing operations and facilities. Longrange planning is directed toward the replacement of those existing
currency printing presses which are now fully depreciated and technologically obsolete and the development and acquisition of a sufficient number of production models of custom-designed, currency overprinting and processing equipment to supplant present manual currency finishing operations. The planned modernization will not only
allow an increased production capability, Which will be consistent
with the projected growth rate in currency demands, but it will also
allow for the incorporation of the latest advances in the continually
evolving technology of the graphic arts.
Studies conducted of the manual finishing operations for currency,
pending the development of the automated currency overprinting
and processing equipment, led to interim improvements being made in
these operations in March 1970. Implementation of these procedures,
coupled with the attainment of an all-time low in the currency spoilage rate, has resulted in greatly increased employee productivity, with
an associated savings in manpower requirements.
Postage stamp program
Production of postage stamps is the second most important segment
of the operations of the Bureau of Engraving and Printing. I n order
to have the flexibility to meet the requirements of the Post Office Department for gravure printed work, the first high-speed, web-fed,
seven-unit, gravure press was delivered in July 1970. Plans were made
to prepare the pressroom, with provision for proper alignment of
operations and flow of products. The Bureau has planned to use this
ADMINISTRATIVE REPORTS
91
rotogravure press to produce certain multicolor commemorative postage stamp issues until a combined rotogravure, line-intaglio, web press
can bo obtained. The first contingent of three foremen and six printers
has been scheduled to attend training sessions relating to the gravure
press operations.
I t is the Bureau's objective to combine the unique advantages of
the gravure and the line-intaglio processes to produce postage stamps
with the full, unrestricted color potential of gravure, enhanced by the
esthetic and security features of line engraving. Accordingly, plans
have been made for the acquisition of a combination gravure-intaglio
presSj with capabilities for such combined printing, as well as for perforating and phosphor tagging. These presses will introduce new dimensions in the Bureau's production of multicolor postage stamps.
Deliveries of U.S. postage stamps remained relatively constant, approximately 26.2 billion pieces in fiscal 1970, as compared to 27.4
billion pieces in fiscal 1969. New issues of postage stamps delivered
in fiscal 1970 are shown in the Statistical Appendix.
Food coupon program
The printing and processing of the number of food coupons requisitioned by the Department of Agriculture is becoming an increasingly important segment of Bureau operations. FOCKI coupon deliveries
increased from 502 million pieces in fiscal 1969 to 964 million pieces
in 1970.
This year, food coupons were produced only in 50 cents and $2 denominations. The Department of Agriculture has been receptive to
a Bureau proposal for the issuance of a $5 food coupon, in adciition to
the current denominations. This change will result in considerable
savings by reducing production requirements for the volume of coupons issued.
Estimated savings of $117,500 were realized in fiscal 1970 from use
of the new collating-stitching-slitting machine that was installed late
in fiscal 1969 for performing the former manual operations used in
processing full sheets of food coupons into books. Following installation of this machine, a complete reevaluation of the food coupon
program was made with a view to reducing production costs. I t is
estimated that further savings of 13 man-years, or approximately
$90,000, resulted from certain changes m^ade in personnel assignments
and processing operations.
By the close of fiscal 1970, the Bureau had totally converted to imprinting serial numbers on all food coupons, as a deterrent to the theft
of coupons and future request for their redemption. Consideration is
being given to the possible advantages of numbering food coupons
with magnetic ink.
Awards program
A completely revised incentive awards program became effective October 1, 1969. Significant changes were made in the program to improve its effectiveness, by placing more responsibility for conducting
the program directly in the hands of line officials and abolishing the
committee on employee awards.
The Bureau's second annual performance awards ceremony was held
in April. Because of the large number of award recipients, the cere3i97-70i2 0 — 7 1
8
92
1970 REPORT OF THE SECRETARY OF THE TREASURY
mony was held over a 3-day period, April 15,16, and 17. The Director
personally presented each award and supervisors were present on the
stage with their respective groups to congratulate the awardees. During
fiscal 1970, 609 employees received superior work performance awards,
34 receiveci high quality pay increases, and nine received special service
awards. Nonrecurring savings of $106,005, or 16% man-years, were
realized in fiscal 1970 from the superior work performance phase of
the incentive awards program. Under the employee suggestions program, 266 suggestions were received and 126 suggestions were adopted.
I t is estimated that the Bureau will realize annual recurring savings
of $20,090 and nonrecurring savings of $715 from suggestions adopted
in fiscal 1970.
A t the Department of the Treasury's sixth annual awards ceremony,
held on October 24, 1969, the Bureau received the Secretary's annual
award for outstanding accomplishment for the incentive awards program.
Improved service to the public
Throughout the year, the Bureau conducted an active program designed to improve communications with and services to the public and
to advance the Bureau's goal for increased public awareness of the
security characteristics of genuine currency. I n fiscal 1970, the Bureau
furnished exhibit materials for and participated in 47 numismatic and
philatelic shows and conventions. Bureau representatives accompanied
the prepared exhibit material to explain and demonstrate to the public
the techniques of the intaglio process used in the production of currency, postage stamps, and other securities. Special programs were
geared to school children attending these events. Public response to the
Bureau's participation has been most enthusiastic.
The Bureau produced six distinctive souvenir sheets to compliment
certain major philatelic and numismatic exhibitions in fiscal 1970: the
San Diego International Philatelic Exhibition; the 78th Anniversary
of the American Numismatic Association, in Philadelphia; the Fresno
Numismatic Society; the American Stamp Dealer Association National Postage Stamp Show; the 12th International Stamp Exhibition,
in New York; and the Combined Philatelic Exhibition, in Chicago.
The souvenir sheets were initially offered for sale at the Bureau's displays at the respective exhibitions, and any sheets remaining after
the close of the shows are sold to the public directly from the Bureau.
I n May, the Bureau added a new item, the U.S. Flag and Allegiance,
to the group of engraved and lithographed printings available to the
public. This print sells for 75 cents each, including handling charges
and postage; it proved to be a very popular item, with approximately
4,700 copies sold by June 30.
During this fiscal year, 861,057 visitors, as compared to 608,323 last
year, took the self-guided tour through the Bureau. Other tours were
conducted on an individual basis for special visitors, such as agents
of the U.S. Secret Service, representatives of foreign firms in the printing industry, writers and staff members of numismatic and philatelic
publications, and photographers and writers engaged in producing
film strips for television presentations.
ADMINISTRATIVE REPORTS
93
Equal employment opportunity
Throughout the year, the Director and management staff at all levels
continued to devote their full support to the equal employment opportunity program. The Bureau's overall EEO goal is the development of
a climate of understanding in which all employees, without question or
comj)laint, know that equality of opportunity exists in the Bureau.
Significant improvements and changes have been instituted in this
area, reflecting the positive actions taken as a result of this program.
The employee committees for EEO meet regularly each month, inviting guests from specialized areas. The Director is a freq^uent participant and attendance by other management officials has increased.
New members were designated to serve as employee committee members for fiscal 1971. Distribution of the monthly summary was expanded to include all supervisors. Committee activity, as well as general EEO program activity, is reported on a regular monthly basis to
the Director, EEO program. The Department of the Treasury.
Labor-management relations
It has been a long-standing policy of the Bureau to foster constructive and harmonious relationships with its employees and labor organizations representing them. Special emphasis and attention is
directed toward the conduct of all labor-management dealings within
the spirit and intent of Executive Order 11491 of October 29, 1969.
At the close of the .fiscal year, the Bureau recognized 16 AFL-CIO
affiliate unions and two independents. Included are 15 grants of exclusive recognition covering 25 craft units, one noncraft unit, and one
guard unit. There exist eight approved substantive labor-management
agreements. The unions function as a dynamic part of the Bureau and
are a major factor in management considerations.
Safety program
Through continuation of the revitalized safety program inaugurated
the previous year, significant achievements have been noted. The Bureau works for zero accident months as one of its prime objectives.
On May 1, 1970, the Director held two meetings to give recognition
to 925 employees of the 18 production sections that worked a full year,
without a disabling injury. The Postage Stamp Division received special recognition because all five sections in that Division had a perfect
year.
The many new safety innovations instituted during the past year are
having the desired effect of creating a safety awareness in employees
and a sincere interest in improving the Bureau's overall safety
performance.
Training program
During the year, 1,608 employees completed Bureau or departmental training courses; 84 employees completed interagency training
courses; and 153 employees attended specialized seminars, training classes, conferences, and exhibits sponsored by nongovernment
organizations.
Training was supplied at all levels and in most occupations, to meet
the needs at different stages of employment. The training courses included on-the-job and refresher training for current needs, develop
94
1'970 REPORT OF THE SECRETARY OF THE TREASURY
mental training in anticipation of future needs, training to develop
unavailable skills, and training to develop under-utilized and disadvantaged employees.
Internal audit
I n the interest of maintaining efficient and economic operations, the
Bureau continued to conduct intensive, announced and unannounced
audits, providing for both fiscal auditing and auditing of operations.
During fiscal 1970, 22 reports of audit, containing 86 recommendations for improvements, were released for managemient consideration
and action.
Savings from cost reduction and management improvement eflForts
The Bureau's objective is to maximize effectiveness in the timely and
economical production of its products through optimum utilization of
manpower, equipment, and other resources.
Estimated savings totaling approximately $998,000 on a recurring
annual basis and $107,000 on a one-time basis were identified for fiscal
1970 as a result of the Bureau's overall cost reduction and management improvement efforts. All savings realized are passed on to customer agencies through reduced billing rates. Noteworthy savings in
fiscal 1970 were $117,500 from the purchase, installation, and use of a
12-station, sheet-fed, collating machine in the production of fcx)d
coupon sheets and book covers; $136,000 from the award of an exclusive 4-year contract to furnish the requirements of distinctive currency paper at a reduced unit cost per pound; and $390,000 representing a pro rata share of the recurring annual savings anticipated to be
realized from reduced spoilage and changes made in the manual
finishing operations in processing currency.
Finances
Bureau operations are financed by reimbursements to the Bureau of
Engraving and Printing fund, as authorized by law. Comparative
financial statements for fiscal years 1969 and 1970 appear in the Statistical Appendix.
Deliveries of finished work
A comparative statement of deliveries of finished work for fiscal
years 1969 and 1970 appears in the Statistical Appendix.
Fiscal Service
BUKEAU OF ACCOUNTS
The functions of the Bureau are Government-wide in scope. They
include central accounting and financial reporting relating to the
Government as a whole; disbursing for virtually all civilian agencies;
supervising the Government's depositary system; determining qualifications of insurance companies to do surety business with Government agencies; a variety of fiscal activities, such as investment of trust
funds, agency borrowings from the Treasury, international claims and
indebtedness, and liquidation of the Postal Savings System; and
Treasury staff representation in the joint financial management improvement program.
ADMINISTRATIVE REPORTS
95
Management improvement
Under the cost reduction and management improvement program,
savings of $620,000 were realized during fiscal 1970, attributable to
further improvements in technology and systems, realinement of organization and staffing, and the fruits of continuing programs for the
development of people in management and operating skills at all
levels.
Personnel
A reorganization of the Bureau, effective July 1,1969, among other
things, merged the central accounting and reporting functions of
the former Division of Central Accounts and Keports with the related systems development activities and the investment of Government funds operations into a new Division of Government Financial
Operations. The reorganization has achieved its purpose—better utilization of manpower and enhancement of potential of career personnel.
A great deal of emphasis was placed during the year on evaluation
of personnel programs, in terms of goals established for the Bureau
as a whole and the effectiveness of those programs in achieving those
goals. Another program given special emphasis was youth involvement
in Govemment; a Bureau-wide youth committee was chartered to
come up with recommendations for the more active participation of
young careerists in management. Staffing efforts of the Bureau were
particularly fruitful, culminating in bringing on board over 20 career
development trainees.
Systems improvement
Bureau staff' continued to represent the Treasury on the steering
committee and study teams of the joint financial management improvement program. Primary attention was given to implementing the
recommendations of the President's Commission on Budget Concepts
as described under "Government-wide Financial Management." ^
During the year, other systems work included a number of studies
to improve internal procedures and further codification of Government-wide regulations within the Treasury Fiscal Eequirements Manual. Procedural requirements were prescribed for Government agencies
concerning the following matters: (1) Central accounting and financial reporting for receipts, disbursements, and related cash operations
of the Federal Govemment; (2) the withdrawal of cash from the
Treasury for advances under Federal grants and other programs consistent with the restatement of policy in Treasury Department revised Circular No. 1075; (3) tax withholdings applicable to reimbursements of allowances for moving expenses; (4) special notice concerning new interest rates on series E bonds and discontinuance of
Freedom Share Notes applicable to payroll savings plans of Government agencies; (5) the withholding of State income tax by Federal
agencies from employees' wages; and (6) unclaimed moneys.
The Federal Tax Deposit System established in fiscal 1967 was
extended during fiscal 1970 to include the collection of Federal unemployment taxes.
^ In the "Review of Treasury Operations" section of this report, pages 8-9.
96
l 9 0 REPORT OF THE SECRETARY OF THE TREASURY
!7
A survey of civilian and military payrolls paid in September 1969
revealed that substantial savings are being realized through the issuance of composite net salary checks. Such a check is issued to a financial organization to pay a number of personnel who have elected to be
paid by credit to their accounts in that financial organization. I n view
of the efficiency and economy for the Government inherent in composite check applications, the implementation of procedures for the
issuance of composite checks for agency payroll offices which have
potential applications is receiving the highest priority. I n the Treasury disbursing area, arrangements were underway at yearend with
seven agencies with a total of 30 separate payroll offices for the establishment of such procedures.
Central accounting and reporting
I n May 1970, Treasury Circular No. 945 was converted to a brief
policy statement and all procedural instructions were incorporated in
the Treasury Fiscal Requirements Manual, P a r t I I , Central Accounting and Reporting. This release, under Transmittal Letter No. 45,
prescribed several minor procedural changes but its primary purpose
was to document in manual form the present system of central accounting and reporting for cash operations of the Federal Government.
Actions were taken to accelerate yearend closing operations. Government-wide, for fiscal 1970. A revised schedule under Circular No. 965
was issued to agencies in June, setting forth dates for finalizing receipt
and outlay data and for submission and feedback of data to be included
in Treasury's annual Combined Statement. This release, in line with
the stated objectives of the joint financial management improvement
program, was intended to enable Treasury to publish final budget results on a more timely basis and permit agencies to discontinue traditional preoccupation with "prior-year" figures long into the current
fiscal year.
Also, in June 1970, the Bureau of Accounts issued Transmittal
Letter No. 46 to the Treasury Fiscal Requirements Manual prescribing a change in the basis of reporting collections on SF-224
Statement of Transactions. With this change, effective June 30, 1970,
all moneys received for deposit are now being reported on a "collections received" basis.
During the year. Bureau staff continued to represent the Treasury
in joint efforts with the Bureau of the Budget and the General Accounting Office toward Government-wide implementation of the accrual basis and conversion of the President's budget and related
Treasury reports. I n July 1969, the Bureau of Accounts issued Transmittal Letter No. 36 to the Treasury Fiscal Requirements Manual,
prescribing revised reporting requirements for monthly agency reports on the accrual basis. The Government-wide pilot operation of
agency reporting, begun July 1968, was continued throughout fiscal
1970 and unpublished statements of accrual data were prepared
monthly for review and evaluation by the central financial agencies.
On February 25, 1970, Secretary Kennedy, Budget Director Mayo,
and Comptroller General Staats met to assess the pilot operation. They
concluded that the JPresident's budget for fiscal 1972 should be converted to an accrual basis according to the planned timing, subject
ADMINISTRATIVE REPORTS
97
to the understanding t h a t certain problem areas precluded conversion
to a "full accrual" basis immediately. The decision to convert the
fiscal 1972 budget to a "modified" accrual basis was announced by the
Budget Director on April 13 in a letter to heads of departments and
agencies.
Several improvements were made during the year in Governmentwide financial reports. I n the Treasury Bulletin, a new (trust fund
transactions) table was introduced and the series of tables on the
Federal debt were revised. Also, in response to a request for more
timely obligation data, the publication of such data in the Treasury
Bulletin was accelerated by 1 month with the cooperation of reporting
agencies.
Auditing
During fiscal 1970, the audit staff conducted 12 financial audits and
five management audits of varying scope in carrying out its review of
Bureau activities. I n addition, management surveys were performed
in seven regional offices.
Also completed was the annual examination of the financial statements and related supporting data of surety companies holding Certificates of Authority as acceptable sureties on bonds running in
favor of the United States (6 U.S.C. 8). Certificates are renewable
each July 1 and a list of approved companies (Department Circular
570, revised) is published annually in the "Federal Register" for the
information of Federal bond approving officers and persons required
to give bonds to the United States. As of J u n e 30, 1970, a total of 260
companies held certificates.
General coordination and staff assistance were also furnished for
the annual audit of the Exchange Stabilization Fund.
Disbursing operations
This year, the 12 field offices comprising the Division of Disbursement produced a total of 497.9 million check and bond items at an
average unit cost of 2.8 cents. Ninety-eight percent of the total items
produced were generated by the eight disbursing centers equipped
with computers. Tlie newest computerized office (Denver) was converted anci became operational in November 1969.
Because of its increased capacity and continuous high productivity,
the central disbursing activity has been able to provide services benefiting the public and/or Government agencies by reducing costs or
improving services. Examples include: (1) A D P payroll accounting
service for certain small agencies unable to perform these services
for themselves; (2) disbursing service for the, District of Columbia
Government, U.S. Courts, Comptroller of the Currency, and U.S.
Soldiers' Home, on a reimbursable basis; (3) the production and
mailing of nearly 87 million Federal Tax Deposit forms annually;
and (4) issuing nearly 1.1 million series E savings bonds annually for
the Bureau of the Public Debt to General Electric Corp. employees.
The following projects or activities resulted in monetary and/or
man-year savings for the Bureau of Accounts or the agency serviced:
(1) Installation of a small, used computer in the Denver office
acquired at bargain prices, permitting redistribution of workloads and
increased productivity.
98
li970 REPORT OF THE SECRETARY OF THE TREASURY
(2) Release of approximately 52 million tax refund checks to the
Post Office Department in Z I P Code order.
(3) Increased productivity resulted from installation of new highspeed inserting and sealing machines in several offices during the
latter part of fiscal 1969.
(4) Savings of $250,000 annually, reported by the Post Office Department, as a result of the Z I P Code presort operation by the Austin
Disbursing Center for almost 5 million veterans' benefit checks issued
every month.
(5) The General Services Administration estimated annual savings
of $65,000 as a result of our implementing a system to provide their
nationwide accounting centers with the beginning check number and
date of payment on magnetic tape for inclusion in their vendor payment records.
The table below is a comparison of the workloads for fiscal years
1969 and 1970.
Volume
Classification
1969
Operations financed by appropriated funds:
Checks:
Social security benefits
Veterans' benefits
--.Income tax refunds
Veterans' national service life insurance dividends program
Other
-Savings bonds
-.-Adjustments and transfers
-
1970
--
Operations financed by reimbursements:
Railroad Retirement Board
Bureau of the Public Debt (General Electric Co. bond program)..
Total workload-reimbursable items
Total workload
-.-
-.
258,664,062
68,683,466
50,968,396
3,868,129
51,610,090"
7,497,943
264,368
290,331,722
71,387,254
55,691,879
3,918,918
54,496,995
7,294,301
271,482
441, 556,454
.
483,392,551
13,214,575
1, Oil, 467
13,369,528
1,092,520
14,226,042
14,462,048
455,782,496
497,854,599
Depositary services, investments, and other activities
Federal depositary system.—^The types of depositary services provided and the number of depositaries for each of the authorized
services as of June 30, 1969 and 1970, are shown in the following
table.
Type of service provided by depositaries
Receive deposits from taxpayers and purchasers of public debt securities, for credit in
Treasury tax andloan accounts
--Receive deposits from Government officers for credit in Treasurer's general accounts
Maintain official checking accounts of Government oflicers - - Furnish bank drafts to Government officers in exchange for collections
Maintain State unemployment compensation benefit payment and clearing accounts..
Operate limited banking facilities:
In the United States and its outlying areas
In foreign areas
-
1969
1970
12,593
1, 500
7,576
1,430
63
12,716
1,168
7,958
1,230
54
233
252
223
257
Investments.—The Secretary of the Treasury, under specific provisions of law, is responsible for investing various Government trust
funds. The Department also furnishes investment services for other
ADMINISTRATIVE REPORTS
99
funds of Government agencies. At the end of fiscal 1970, Government
trust funds and accounts held public d^bt securities (including special
securities issued for purchase by the major trust funds as authorized
by law). Government agency securities, and securities of privately
owned Government-sponsored enterprises. Seethe Statistical Appendix
for table showing the investment holdings by Government agencies
and accounts.
Loans by the Treasury,—The Bureau administers loan agreements
with those corporations and agencies that have authority to borrow
from the Treasury. See the Statistical Appendix for tables showing
the status of Treasury loans to Government corporations and agencies
asof J u n e 30,1970.
Surety bonds,—Executive agencies are required by law (6 U.S.C.
14) to obtain, at their own expense, blanket, position schedule, or other
types of surety bonds covering employees required to be bonded. The
legislative and judicial branches are permitted by law to follow the
same procedure. A summary of bonding activities of Govemment
agencies follows :
Number of oflScers and einployees covered on June 30, 1970
Aggregate penal sums of bonds procured
Total premiums paid by the Government in fiscal year 1970
Administrative expenses in fiscal year 1970
963, 269
$3,489, 348, 850
$425, 753
$78, 581
Foreign indebtedness
World War I,—The Governments of Finland and Greece made payments during fiscal 1970 of $353,455.00 and $328,898.02, respectively.
For status of World W a r I indebtedness to the United States, see the
Statistical Appendix.
Credit to the United Kingdom,—The Government of the United
Kingdom made a principal payment of $63.3 million and an interest
payment of $67.0 million on December 31, 1969, under the Financial
Aid Agreement of December 6, 1945, as amended March 6, 1957. The
interest payment included $11.0 million representing interest on principal and interest installments previously deferred. Through June 30,
1970, cumulative payments totaled $1,790.5 million, of which $1,005.7
was interest. A principal balance of $2,965.2 million remains outstanding ; interest installments of $319.9 which have been deferred by agreement also were outstanding at the fiscal yearend.
Japan., postwar economic assistance.—^^The Government of Japan
made payments in fiscal 1970 of $37.4 million principal and $6.5
million interest on its indebtedness arising from postwar economic
assistance. Cumulative payments through June 30,1970, totaled $259.5
million principal and $69.8 million interest, leaving an unpaid principal balance of $230.5 million.
Payment of claims against foreign governments
The tenth installment of $2 million was received from the Polish
Government under the Agreement of July 16, 1960, and pro rata payments on each unpaid award were authorized.
The fifth and final annual installment of $700,000 was received
100
1'970 REPORT OF THE SECRETARY OF THE TREASURY
from the Government of Yugoslavia under terms of the Yugoslav
Claims Agreement of November 5,1964. On July 15,1969, the Foreign
Claims Settlement Commission completed its certification of awards
to the Secretary of the Treasury for payment under the agreement.
As the awards were received, initial payments up to $1,000 were made
on each award. A further distribution of 23 percent of the unpaid
principal balance of the awards was authorized on August 29, 1969.
A final distribution of approximately 9.7 percent of the unpaid principal balance of awards was authorized on January 9, 1970, and payments Avere made during the fiscal year. See Statistical Appendix for
more details.
Defense lending
Defense Production Act.—^Loans outstanding were reduced from
$7.9 to $7.1 million during fiscal 1970. Further transfers of $1 million
were made to the account of the General Services Administration,
from the net earnings accumulated since inception of the program,
bringing the total of these transfers to $27.5 million.
Federal Civil Defense Act,—Outstanding loans were reduced from
$340,586 to $73,417 during fiscal 1970.
Liquidation of Reconstruction Finance Corporation assets,—The
Secretary of the Treasury's responsibilities in the liquidation of E E C
assets relate to completing the liquidation of business loans and securities with individual balances of $250,000 or more as of June 30, 1957,
and securities of and loans to railroads and financial institutions. Net
income and proceeds of liquidation amounting to $54.6 million have
been paid into Treasury as miscellaneous receipts since July 1, 1957.
Total unliquidated assets as of J u n e 30, 1970, had a gross book value
of $8.1 million.
Liquidation of Postal Savings System
Effective July 1, 1967, pursuant to the act of March 28, 1966 (39
U.S.C. 5225-5229), the unpaid deposits of the Postal Savings System
were required to be transferred to the Secretary of Treasury for
liquidation purposes. As of June 30, 1970, a total amount of
$65,139,269.29 representing principal and accrued interest on deposits
had been transferred for payment of depositor accounts. All deposits
are held in trust by the Secretary pending proper application for payment. Through fiscal 1970, payments totaling $53,389,303.12 had been
made, including $1,769,011.42 during fiscal 1970.
Federal tax deposits
The Federal Tax Deposit System is used for the collection of individual and corporate income tax, social security tax, railroad retirement tax, and Federal excise tax. As described on page 11 of the 1967
annual report, the Bureau of Accounts prepares and mails Federal
Tax Deposit forms quarterly to business concerns. During fiscal 1970,
the Bureau issued almost 87 million forms. The following table shows
the volume of deposits processed by Federal Reserve banks for fiscal
years 1962-70.
ADMINISTRATIVE REPORTS
Individual
Railroad
income and retirement
social security
taxes
taxes
Fiscal year
1962_
1963
1964
1965..
1966
1967
1968
1969
1970
-..
--. . . .
...
...
...
.--
10,477,119
11,161,897
11,729,243
12,012,385
12,518,436
15,007,304
17,412, 921
23,939,080
26,612,484
10,262
9,937
9,911
9,869
9,986
10,551
14, 596
12,479
11, 622
Federal
excise
taxes
610,026
619, 519
633,437
644,753
259,952
236, 538
233,083
272,048
296,487
Corporate
income
taxes
lOl
Unemployment
taxes
.
.
.
.
22,783 .
394,792 .
1,297,052 .
1,235,452
192,905
Total
11,097,407
11,791,353
12,372, 591
12, 666,997
12,788,374
15,277,176
18, 055,392
25, 520, 659
28,348,950
NOTE.—Comparable data for 1944-61 will be found in the 1962 annual report, p. 141.
Government losses in shipment
Claims totaling $167,748.08 were paid from the fund established by
the Government Losses in Shipment Act, as amended. Details of
operations under this act are shown in the Statistical Appendix.
Other operations
Donations and contributions,—During the year the Bureau of Accounts received "conscience fund" contributions totaling $46,988.07
and other unconditional donations totaling $374,443.14. Other Government agencies received conscience fund contributions and unconditional donations amounting to $10,534.90 and $84,725.72, respectively.
Conditional gifts to further the defense eft'ort amounted to $20,548.21.
Gifts of money and the proceeds of real or personal property donated
in fiscal 1970 for the purpose of reducing the public debt amounted to
$165,351.77.
BUREAU OF THE PUBLIC DEBT
The Bureau of the Public Debt, in support of the management of
the public debt, has responsibility for the preparation of Department
of the Treasury circulars offering public debt securities, the direction
of the handling of subscriptions and making of allotments, the formulation of instructions and regulations pertaining to each security
issue, the issuance of the securities, and the conduct or direction of
transactions in those outstanding. The Bureau is responsible for the
final audit and custody of retired securities, the maintenance of the
control accounts covering all public debt issues, the keeping of individual accounts with owners of registered securities and authorizing
the issue of checks in payment of interest thereon, and the handling
of claims on account of lost, stolen, destroyed, or mutilated securities.
The Bureau's principal office and headquarters is in Washington,
D.C. Offices also are maintained in Chicago, 111., and Parkersburg,
W. Va., where most Bureau operations related to U.S. savings bonds
and U.S. savings notes are handled. Under Bureau supervision many
transactions in public debt securities are conducted by the Federal
Keserve banks and their branches as fiscal agents of the United States.
Approximately 18,800 (29,600 outlets) private financial institutions,
industrial organizations, selected post offices, and others cooperate in
the issuance of savings bonds, and approximately 16,600 financial
institutions (30,100 outlets) act as paying agents for savings bonds.
102
1'97.0 REPORT OF THE SECRETARY OF THE TREASURY
Management improvement
The Bureau has continued to make steady progress in the application and refinement of data processing techniques in the Washington
office. All operations previously performed on tabulating equipment
have now been converted to the computer, and several manual operations have also been automated.
Systems work on the conversion of the registered accounts relating
to marketable securities is also well advanced. As a preliminary step
in automating the total process, magnetic tape/selectric typewriters
are being used to enter data on tape and simultaneously produce hard
copy in connection with the issuance of registered securities and the
establishment of the registered accounts. This procedure eliminates the
preparation of addressograph plates, reduces manual posting, and
speeds completion of the issue of the securities.
The use of book-entry procedures for marketable Treasury securities
was extended to include securities deposited with a Federal Eeserve
bank in connection with deposits in member banks of funds of political
subdivisions, or in connection with the performance of an obligation or
duty under law or judgments or decrees of courts. I n addition to these
so-called third party accounts, Treasury securities held by the Federal
Reserve Bank of New York for the System Open Market Committee
and for various foreign accounts were converted to book entry. The
marketable securities in this form now exceed $100 billion.
Book-entry procedures have also been applied to U.S. savings bonds
issued under qualified employee's savings or thrift plans. Eight industrial savings plans are currently reporting transactions in savings
bonds under the book-entry system through four Federal Eeserve
banks. Transactions are accomplished by accounting entries in the
records of the Federal Eeserve banks and the agents, as distinguished
from processing definitive bonds. The procedure eliminates the issue,
reissue, and retirement of physical securities, thereby reducing administrative costs.
The Parkersburg office computerized system for calculating the redemption value of U.S. savings bonds and savings notes was expedited
by the adoption of a procedural change which provides for the automatic assignment of issue dates to these securities from the magnetic
tape master tile, thus eliminating the manual key punching of the
information. The adoption of this change will result in substantial
annual recurring savings, which are being used to fund the cost of
providing additional reports to the Internal Eevenue Service concerning series E bond accruals.
Additional encoders, which permit the entry of data for computer
functioning directly onto magnetic tape rather than through the medium of punch cards, were being installed at the fiscal yearend in the
Parkersburg office for the U.S. savings bonds issues application. One
hundred and ten encoding machines with card reader attachments will
be used in this application and the same efficiency and economy of the
equipment previously demonstrated on the retired paper bonds are
expected on the issues operation. Another 14-inch tape drive was installed to accommodate the conversion of this additional volume of
i/^-inch tape to 34-inch tapes.
ADMINISTRATIVE REPORTS
103
The Parkersburg office continued to expand the project of having
large volume issuing agents, which use computers to inscribe bonds,
report issue data on magnetic tape in lieu of registration stubs. I t is of
particular significance that the private sector is also participating in
this program. One of the four additionar agents converted to this system during the year was the State Bank of Albany. Others included a
Federal Eeserve bank, a military agency, and a Government agency.
There are 13 agents currently reporting issues on tape; pilot studies
have been initiated with three additional agents, another of which
reaches to the private sector, the General Motors Corp.
The Bureau's internal audit activity was reorganized as the Internal
Audit Service with greater centralization of responsibility. Other organizational changes involved the consolidation of correspondence
activities in the Division of Loans and Currency in Washington and
the realinement of mail and file operations in the Chicago office.
As a means of improving public service, information sheets providing basic details on various types of Treasury securities were updated and a new document describing securities of various Government
agencies was prepared. The basic forms used by the public to submit
eligible securities for redemption in payment of Federal taxes were
also redesigned.
Bureau operations
The extent of the change in the composition of the public debt is one
measure of the Bureau's work. Tlie debt falls into two broad categories:
public issues and special issues. Public issues consist of marketable
Treasury bills, certificates of indebtedness, notes, and bonds; and nonmarketable securities, chiefly U.S. savings bonds, U.S. savings notes,
U.S. retirement plan bonds, and Treasury bonds of the investment
series. Special issues of certificates, notes, and bonds are made by the
Treasury directly to various Government trust and certain other accounts and are payable only for these accounts.
During the year, 78,883 individual accounts covering publicly held
registered securities other than savings bonds, savings notes, and retirement plan bonds were opened and 40,530 were closed. This increased
the number of open accounts to 261,686 covering registered securities
in the principal amount of $10,827 million. There were 440,001 interest
checks with a value of $403 million issued during the year.
Eedeemed and canceled securities other than savings bonds, savings
notes, and retirement plan bonds received for audit included 9,292,490
bearer securities and 285,545 registered securities. Coupons totaling
17,303,418 were received.
During the year 22,246 registration stubs of retirement plan bonds
and 11,518 retirement plan bonds were received for audit.
A summary of public debt operations handled by the Bureau appears
on pages 17-23 of this report and in the Statistical Appendix.
U,S, savings bonds,—The issuance and redemption of savings bonds
results in a heavy administrative burden for the Bureau of the Public
Debt, involving: Maintenance of ownership records for the 3.3 billion
bonds issued since 1935; adjudication of claims for lost, stolen, and
destroyed bonds (which totaled 2.6 million pieces on June 30, 1970);
and the handling and recording of retired bonds.
104
19 70 REPORT OF THE SECRETARY OF THE TREASURY
Detailed information on sales, accrued discount, and redemptions of
savings bonds will be found in the Statistical Appendix.
There were 121 million stubs or records on magnetic tape and microfilm representing the issuance of series E bonds received for registration, making a grand total of 3,243 million, including reissues, received
through June 30, 1970.
All registration stubs of series E savings bonds and all retired series
E savings bonds are microfilmed, audited,^nd destroyed, after required
permanent record data are prepared by an E D P system in the Parkersburg office. The following table shows the status of processing operations for savings bonds and savings notes in the Parkersburg office.
Fiscal
year
Received
Microfilmed
Converted Audited
Key
to magand
classipunched netic
tape
fied
Balance
Destroyed
-
Not conUn- Not key verted to Unaufilmed punched magnetic dited
tape
stubs of issued card type series E savings bonds (in millions of pieces)
706
101
104
102
104
98
705
101
104
103
102
98
702
100
105
103
102
97
702
100
105
103
102
98
700
100
103
103
102
95
656
100
103
98
104
108
Total 1 1,216
1,213
1,209
1,210
1,203
2.3
2.3
2.6
1.7
3.1
3.3
4.5
5.5
5.2
4.4
6.1
6.9
1,169
1968-65--.
1966
1967
1968
1969
1970
4.6
5.9
5.2
4.4
6.6
6.9
6.6
7.5
8.9
8.1
9.7
13.2
Retired card type series E savings1 bonds and savings notes 2(in millions of pieces)
1958-65...
1966
1967.
1968
1969
1970
450
82
87
95
111
116
449
81
88 .
94
110
116
447
80
87
96
108
118
447
80
87
97
108
117
445
80
86
95
106
114
400
92
85
84
98
125
Total.
941
937
935
935
926
3.2
5.0
4.9
3.6
6.7
5.3
3.5
5.0
5.5
3.6
6.7
6.7
5.2
6.5
8.3
7.6
11.9
14.2
0.9
1.0
.8
.8
.8
.7
1.3
1.3
1.4
1.3
1.3
1.6
885
1.7
2.2
2.0
2.5
3.4
3.6
!
Retired paper type series> E savings bonds (in millions of pieces)
1962-65 3 . .
1966
1967
1968
1969
1970
65.4
19.3
16.8
15.2
13.7
13.3
64.9
19.4
16.8
15.2
13.7
13.3
64.6
19.1
17.0
15.3
13.7
13.4
64.5
19.2
17.0
15.2
13.7
13.4
64.1
19.3
16.7
15.3
13.7
13.0
39.5
33.9
16.0
13.8
18.4
15.5
Total.
143.7
143.3
143.1
143.0
142.1
137.1 .
0.5
.4
.4
.4
.4
.4
0.8
1.0
.8
.7
.7
.6
Stubs of issued U.S. savings notes5 2 (in millions of pieces)
1967
1968
1969
1970
Total.
(*)
(*)
(*)
(*)
(*)
(*)
6.9
11.0
10.4
6.6
10.9
10.6
6.5
10.7
10.7
6.5
10.6
10.7
6.2
10.6
10.6
2.3
9.3
12.2
28.3
28.1
27.9
27.9
27.4
(*)
(*)
(*)
(*)
23.8 .
0.3
.4
.1
0.4
.7
.4
0.4
.7
.4
0.7
1.1
.8
* Less than $60,000.
1 Excludes records received on magnetic tape: 6.3 million in 1966, 6.4 million in 1966, 12.8 million in 1967,
17.2 million in 1968, 19.9 million in 1969, and 22.7 million in 1970, for a total of 84.3 million.
2 U.S. savings notes were first issued in May 1967.
3 In 1962 (and prior years) most paper type bonds were processed in other offices manually and on tabulating equipment.
ADMINISTRATIVE
105
REPORTS
Of the 121.8 million series A - E savings bonds and savings no-tes
redeemed and charged to the Bureau during the year 119.0 million
(97.7 percent) Avere redeemed by authorized paying agents. For these
redemptions these agents were reimbursed quarterly at the rate of
15 cents each for the first 1,000 bonds and notes paid and 10 cents each
for all pver the first 1,000 for a total of $15,205,335 and an average of
12.78 cents per bond and note.
The following table shows the number of issuing and paying agents
for series A - E savings bonds by classes.
Post
offices 1
June 30
Banks
Building
and savings
and loan
associations
Credit
unions
Companies
operating
payroll
plans
All
others
Total 2
Issuing agents
1945
1960
1966
1960
1966
1966
1967
19681969
1970
--..
--
-
.
24,038
25,060
2, 476
1,093
.
943
934
901
870
836
777
-
15,232
16,226
16,692
16,436
14, 095
14,114
14,181
14,234
14,267
14,319
3,477
1,567
1,565
1,861
1,702
1.710
1,717
1,701
1.711
1,698
2, 081
522
428
320
246
241
231
227
230
224
3 9,605
3,052
2,942
2,362
1,695
1,621
1,641
1,485
1,408
1,365
560
588
643
510
482
460
448
446
442
54,433
46, 966
23,681
22,695
19,191
19,102
19,031
18,965
18,897
18,825
57
56
60
15
15
14
4 14
416
18
13,466
16,691
17,652
19,153
16,178
16,283
16,327
4 16^463
416,524
16,597
(3)
Paying agents
1946
1950
1966
I960.1966
1966.1967
1968
1969
1970...-
-:
-
----
-
--
..-.
13,466
16,623
16,269
17,127
14,190
14,247
14,264
14,304
14,336
14,399
874
1,188
1,797
1,816
1,857
1,884
1,970
1.997
1.998
137
139
169
167
164
165
176
176.-181
-
--...
-
-...
1 Estimated by the Post Office Department.for 1955 and thereafter. Sale of series E savings bonds was
discontinued at post offices at the close of business on Dec. 31,1963, except in those localities where no other
public facilities for their sale were available.
2 Effective Dec. 31, 1960, a substantial reduction was made due to reclassification by Federal Reserve
banks to include only the actual number of entities currently qualified. Does not include branches active
in the savings bond program.
3 "All others" included with companies operating payroU plans.
4 Revised.
Interest checks issued on current income-type savings bonds (series
H ) during the year totaled 4,706,645 with a value of $319,266,518.
New accounts established for series H bonds totaled 83,396 while
accounts closed totaled 167,000, a decrease of 83,604 accounts.
Applications received during the year for the issue of duplicates of
savings bonds and savings notes lost, stolen, or destroyed after receipt
by the registered owner or his agent totaled 43,445. I n 24,070 of such
cases the issuance of duplicate bonds was authorized. I n addition.
106
1 9 0 REPORT OF THE SECRETARY OF THE TREASURY
.7
27,813 applications for relief were received in cases where the original
bonds were reported as not being received after having been mailed
to the registered owner or his agent.
OFFICE OF THE TREASURER OF THE UNITED STATES
The Office of the Treasurer of the United States was created by the
act of September 2, 1789 (1 Stat. 65; 31 U.S.C. 141), for the purpose
of receiving, holding, and paying out the public moneys for the Federal Government. The office maintains accounts of the source, location,
and disposition of these funds.
The Treasury checks issued to pay virtually all of the Federal Government's obligations are drawn on the Treasurer, and upon their
presentment for payment are examined by the Treasurer's Office and
reconciled against the records of the issuing officers. I n fiscal 1970,
almost '626 million checks were issued from about 2,000 disbursing
stations.
Claims for checks that are lost in the mails, or which bear forged
endorsements, are paid by the Treasurer by issuing or authorizing the
issuance of new checks. The Treasurer also handles claims for partially
destroyed paper currency.
Most of the Federal Government's operating cash is held in accounts
of the Treasurer maintained in the Federal Eeserve banks and
branches, of which there are 36. These banks have been designated,
pursuant to law, as fiscal agents of the United States. Eevenue receipts, public debt borrowings and other incoming moneys are credited
to those accounts, and checks drawn on the Treasurer are charged to
those accounts after they have been endorsed by the payees and enter
the banking system for collection from the Treasurer. The Federal
Eeserve banks make daily reports of these transactions to the Treasurer, who keeps cash accounts of the Federal Government's receipts
and expenditures, and publishes daily reports of them.
Eepresentatives of the Treasurer make regular inspections of the
procedures employed by Federal Eeserve banks in verifying and destroying paper currency of the United States which has become worn
out and will be replaced. Unfit currency delivered to the Treasury in
the Washington, D.C. area, is verified and destroyed by the Treasurer.
The Treasurer is vault custodian of a quantity of securities and other
valuables deposited with the Treasury by many Govemment agencies.
I n the Washington, D.C. area, the Treasurer supplies coin and currency to local banks, cashes checks drawn on the Treasurer, and issues
and redeems Government bonds and other securities. I n other parts
of the country, these functions are performed by Federal Eeserve
banks and branches.
Management improvement
A D P management.—During fiscal 1970 the Treasurer's Office continued performing A D P services on a reimbursable basis and sharing
its computer systems with other agencies. The computer systems were
installed and are used primarily to process Government checks; however, during the year, the systems were used a total of 3,006 hours by
personnel of the Treasurer's Office in performing services for other
bureaus and agencies on a reimbursable basis. I n addition, the systems
ADMINISTRATIVE REPORTS
107
were used 1,365 hours by personnel of other agencies after regular
working hours and on weekends when the equipment was not needed
for operations performed by the Treasurer's Office. These agencies included the Post Office, Labor and H U D departments, the National
Oceanographic Data Center, and the General Accounting Office.
About 90 percent of the computer systems were purchased in 1962
and 1963 anci the purchase cost is fully amortized. Because of this, the
Office was able to provide computer time to other agencies at a
cost of less than $24,000. Purchase of this time through a commercial computer service company Avould have required an expenditure
of $352,000, thus providing a cost avoidance of $328,000 to the serviced
departments.
Tabulating equipment is used in support of the electronic equipment
in this office. Some of this equipment has been purchased but most of it
is being leased direct from the manufacturer. During fiscal 1970 orders
were placed to substitute most of the leased tabulating equipment with
equipment leased from another party; this will save $23,000 annually.
Check forgery insurance fumd.—An additional $100,000 appropriated to the check forgery insurance fund in fiscal 1970 has enabled
the office to accelerate settlements of check claims where forgery is'involved and recovery has not been made from the endorsers. This is
particularly helpful in cases where delay in recovering from endorsers
causes personal hardships to the individuals entitled to the proceeds
of the checks.
Delegation of authority to issue substitute checks,—During fiscal
1970 the Treasurer's Office delegated authority to the Departments of
the Army, Navy, and Air Force to issue substitutes for checks drawn
in payment of salaries and allowances when the checks are lost, stolen,
or destroyed while in transit to the payees. Previously, these substitute
checks could only be issued by the bepartment of the Treasury in
Washington, D.C. These delegations of authority save several weeks
in the issuance of substitute checks and reduce personal hardships to
individuals who need the money.
Assets and liabilities in the Treasurer's account
A summary of the assets and liabilities in the Treasurer's account
at the close of fiscal years 1969 and 1970 appears in the Statistical
Appendix.
The assets of the Treasurer consist of gold bullion, coin, coinage
metals, paper currency, deposits in Federal Eeserve banks, and deposits in commercial banks designated as Government depositaries.
Gold.—The Treasurer's gold assets increased by approximately $1
billion during fiscal 1970.
On the daily Treasury statement basis, the beginning balance of
$10,367.0 million was increased by purchases of $1,054.4 million. This
was offset by sales of $39.9 million and by a withdrawal of $17.5 million by the International Monetary Fund, leaving a closing balance
of $11,367.0 million.
Silver and other coinage metals.—On the daily Treasury statement
basis, silver holdings decreased from $112.9 million to $76.3 million
during fiscal 1970. Other coinag'e metals declined from $120.2 million
to $71.7 million in the same period.
I3i97-70l2 0 — 7 1
9
108
l!970 REPORT OF THE SECRETARY OF THE TREASURY
Balances %oith depositaHes,—The following table shows the number
of each class of depositaries and balances on June 30, 1970.
Number of Deposits to the
accounts
credit of the
with depos- Treasurer of the
itaries »
United States,
June 30, 1970
Federal Reserve banks and branches
other domestic depositaries reporting directly to the TreasurerDepositaries reporting through Federal Reserve banks:
General depositaries, etc
Special depositaries. Treasury tax and loan accounts
Foreign depositaries 3
Total
36
21
2 $i^ 359^ 705,310
9,107, 726
1,790
12, 726
54
14,627
-
190,608,140
6,929,174,606
18,099,626
8,606,595,407
1 Includes only depositaries having balances with the Treasurer of the United States on June 30, 1970.
Excludes depositaries designated to furnish oflicial checking account facilities or other services to Government oflBcers, but which are not authorized to maintain accounts with the Treasurer. Banking institutions
designated as general depositaries are frequently also designated as special depositaries, hence the total
number of accounts exceeds the number of institutions involved.
2 Includes checks for $364,921,404 in process of collection.
3 Principally branches of U.S. banks and of the American Express International Banking Corp.
Bureau operations
Receiving and disbursing public moneys,—Govemment officers deposit moneys which they have collected to the credit of the Treasurer
of the United States. Such deposits may be made with the Treasurer
at Washington, or at Federal Eeserve banks, or at designated Government depositaries, domestic or foreign. Certain taxes are also deposited
directly by the employers or manufacturers who withhold or pay them.
All payments are Avithdrawn from the Treasurer's account. Moneys
deposited and withdrawn in fiscal years 1969 and 1970, exclusive of
certain intragovernmental transactions, are shown in the following
taible on the daily Treasury statement basis.
Deposits, withdrawals, and balances in the Treasurer's account
Balance at beginning of fiscal year
1969
$6,604,062,122
1970
$7,103,638,020
Cash deposits:
Internal revenue, customs, trust fund, and other collections
- 201,734,755,299
209,924,497,264
Public debt receipts »
314,836,956,194
339,673,982,332
Less:
Accruals on savings bonds and notes, retirement plan
bonds and Treasury bills
-..--.--. -6,269,766,952
-7,687,945,023
Purchasesby Government agencies 2
-89,894,340,903 -100,708,357,273
Sales of securities of Government agencies in market 2...
26, 550,021, 080
38,178, 626,251
Total deposits
-
-
--.
---
446,957,624,717
Cash withdrawals:
Budget and trust accounts, etc
201,491,323,510
Public debt redemptions »
308,696,108,778
Less:
Redemptions included in budget and trust accounts
-. -6,336,685,803
Redemptions by Government agencies 2
-81,746,188,465
Redemptions of securities of- Government agencies in market 2
22,515,802,860
Total withdrawals
-
-
Change in clearing accounts (checks outstanding, deposits in transit,
unclassified transactions, etc.), net deposits, or withdrawals (—)
Balance at close of
fiscalyear
-
--
-
444,620,460,870
— 1,927,687,949
7,103,638,020
479,380,702,661
223,647,818,493
322,475,529,224
-6,529, 767, 707
-89,360,143, 584
28,781,392,960
479,024,829,375
1, 566,484, 584
9,016,896,781
1 For details see Statistical Appendix.
2 "Government agencies," as here used, includes certain enterprises which were converted to private
ownership during fiscal 1969.
ADMINISTRATIVE REPORTS
109
Issuing and redeeming paper currency,—The Treasury is required
by law (31 U.S.C. 404) to issue U.S. notes in amounts equal to those
redeemed. I n order to comply with this legal requirement in the most
economical manner, U.S. notes are issued only in the $100 denomination and only for local distribution in the Washington, D . C , area.
Unfit U.S. notes and silver certificates are redeemed and destroyed at
the Federal Eeserve banks and branches and at the Treasurer's Office
in Washington, D.C.
Silver certificates are no longer issued and by late 1969 it was noted
that the $1 certificates were only a fraction of 1 percent of the total $1
currency being redeemed, the remainder being Federal Eeserve notes.
Accordingly, effective January 1,1970, the Federal Eeserve banks and
Treasurer's Cash Division were instructed to discontinue sorting unfit
$1 currency. All $1 currency is processed as Federal Eeserve notes
when redeemed but a record is kept of the number of silver certificates
found in sampling the currency for verification. From this, the number
of silver certificates is determined for accounting purposes while the
expense of manual sorting is avoided.
Federal Eeserve notes constitute nearly 99 percent of the paper
currency in circulation. When printed by the Bureau of Engraving
and Printing, these notes are held in a reserve vault for the account of
the Comptroller of the Currency. The Bureau ships notes to Federal
Eeserve banks and branches as needed. Federal Eeserve banks then
obtain notes for issuance to the commercial banking system by depositing equivalent amounts of collateral with their respective agents.
As the notes become unfit for further circulation, they are retired
under procedures prescribed by the Fiscal Assistant Secretary pursuant
to delegation from the Secretary. Approximately 97 percent of the
notes retired are verified and destroyed at the Federal Eeserve banks.
The remaining 3 percent are verified and destroyed at the Treasury
Department in Washington.
The Treasurer's Office accounts for Federal Eeserve notes from the
time that they are delivered by the Bureau of Engraving and Printing
until retired and destroyed. The accounts show the amounts for each
bank of issue and each denomination of notes held in the reserve
vault, held by each Federal Eeserve agent, or issued and outstanding.
The Treasurer's Office retires unfit paper currency of all types
received locally in Washington and from Government officers abroad,
and handles all claims involving burned or mutilated currency. During
fiscal 1970, payments totaling.$12.7 million were made to 52,000 claimants for burned and mutilated currency cases.
A comparison of the amounts of paper currency of all classes, issued,
redeemed, and outstanding during the fiscal years 1969 and 1970
follows.
Fiscal year 1969
Fiscal year 1970
Pieces
Outstanding July 1
Issues during year
Redemptions during year
Outstanding June 30-..-
Amount
Pieces
4,826,036,060
2,381,911,697
2,124,197,050
6,082,760,607
$46,078,310,143
13,896,698,395
11,061,247,567
47,912,760,981
6,082,760,607
2,477,166,223
2,186,042,681
6,373,864,149
Amount
$47,912,760,981
16,221,189,800
12,079,049,836
51,064,900,946
110
l 9 0 REPORT OF THE SECRETARY OF THE TREASURY
!7
Details of the issues and redemptions for fiscal 1970 and of the
amounts outstanding at the yearend are given by class of currency and
by denomination in a table in the Statistical Appendix. Other tables
in that volume give further information on the stock and circulation
of money in the IJnited States.
Processing Federal tax deposits.—Under provisions of Treasury
Department Circular No. 1079, tax withholders and certain taxpayers
are supplied with partially punched cards which they forward to their
banks with their tax payments. The cards are then routed to Federal
Eeserve banks which complete the punching and forward the cards
to the Treasurer's Office in Washington. The Treasurer's Office enters
the data from the cards on magnetic tapes which are furnished to the
Internal Eevenue Service for reconciliation with taxpayers' returns.
This procedure obviates the need for any handling of tax remittances
in the Department and expedites the crediting of tax payments in the
Treasurer's account.
The types of tax payments collected in this manner include withheld individual income and social security taxes, corporation income
taxes, certain excise taxes, railroad retirement taxes, and, beginning in
1970, Federal unemployment taxes. Payments received under this procedure in fiscal 1970 totaled $145,718.7 million and required the processing of 28.5 million cards, compared with $133,092.2 million collected
and 25.5 million cards processed in the previous year.
Paying grants through letters of credit.—Treasury. Department
Circular No. 1075, dated May 28, 1964, established a procedure "to
preclude withdrawals from the Treasury any sooner than necessary"
in cases where Federal programs are financed by grants or other payments to State or local governments or to educational or other institutions. Under this procedure. Government departments and agencies
issue letters of credit which permit grantees to make withdrawals from
the account of the Treasurer of the United States as they need funds
to accomplish the object for which a grant has been awarded.
By the close of fiscal 1970, 50 Government agency accounting stations were making disbursements through letters of credit. A total of
65,910 withdrawal transactions, aggregating $24,786.4 million, were
processed during the year, compared with 61,259 transactions, totaling
$21,089.5 million in fiscal 1969.
Checking accounts of disbursing officers and agencies,—As of
June 30,1970, the Treasurer maintained 1,988 checking accounts, compared with 2,114 the year before. The number of checks paid by
categories of disbursing officers during fiscal 1969 and 1970 follow.
Disbursing oflBcers
Number of checks paid
1969
Treasury
Air Force
Army
Navy
Other
Total
1970
441,920,785
35,643,468
39,298,690
41,231,278
26,702,633
481,695,416
36,061,161
38,722,671
41,367,002
27,991,327
684,796,864
626,717,567
ADMINISTRATIVE REPORTS
111
Settling check claims,—During fiscal 1970 the Treasurer processed
almost 800,000 requests to stop payment on Government checks, and
120,000 requests to remove stoppage of payment.
The Treasurer acted upon 386,000 paid check claims during the
year, including those referred to the U.S. Secret Service for investigation becausie of forgery, alteration, counterfeiting, or fraudulent
issuance and negotiation of Government checks. Eeclamation was requested from those having liability to the United States on 54,000
claims, and $7.7 niillion was recovered. Settlements and adjustments
were made on 45,000 cases totaling $8.6 million. Disbursements during
the year from the check forgery insurance fund, established to enable
the Treasurer to expedite settlement of check claims, totaled $806,000.
As recoveries are made, these moneys are restored to the fund. Settlements totaling almost $8 million have been made from the Treasurer's
check forgery insurance fund sinoe it was established in November
1941.
Claims by payees and others involving 190,000 outstanding checks
were acted upon. Of these, 169,000 were certified for issuance of substitute checks valued at $61 million to replace checks that were not
received or were lost, stolen, or destroyed.
The Treasurer treated as canceled and transferred to accounts of
agencies concerned for adjustment purposes the proceeds of 22,000
unavailable outstanding checks, totaling $4.8 million.
Collecting checks deposited.—Govemment offices during the year
deposited 9.6 million commercial checks, drafts, money orders, etc.,
with the Treasurer's Cash Division in Washington for collection.
Custody vf securities.—The face value of securities held in the custody of the Treasurer as of June 30, 1969, and June 30, 1970, is shown
below.
June 30
Purpose for which held
1969
As collateral:
To secure deposits of public moneys in depositary banks.
In lieu of sureties
In custody for Government ofRcers and others:
Forthe Secretary of the Treasury i
Forthe Comptroller of the Currency
For the Federal Deposit Insurance Corporation
For the Rural Electrification Administration
For the District of Columbia
For the Commissioner of Indian Affairs
Foreign obligations 2
others
For Government security transactions:
Unissued bearer securities----Total-
--..-.
1970
$40,663,200
2,346,500
$39,615,100
3,632,860
34,643,999,666
10,452,500
.246,000,000
159,748,818
-261,269,879
47,363,325
12,036,696,451
44,290,017
36,600,036,156
10,462,600
245,000,000
154,048,600
316,243,623
222,764,650
12,032,489,451
42,448,697
---
1,662,192,800
-
1,681,304,260
49,134,001,146
51,348,036,877
1 Includes those securities of Government corporations and other business-type activities reported in the
Statistical Appendix as held by the Treasury.
2 Issued by foreign governments to the United States for indebtedness arising from World War I.
3 Includes U.S. savings bonds in safekeeping for individuals.
Servicing securities for Government corporations., and Federal and
non-Federal agencies.—In accordance with agreements between the
Secretary of the Treasury and various Government corporations and
agencies, the Treasurer of the United States acts as special agent for
112
l9 70 REPORT OF THE SECRETARY OF THE TREASURY
!
the payment of principal and interest on their securities. A comparison of these payments during the fiscal years 1969 and 1970, on the
daily Treasury statement basis is as follows.
1970
1969
Payment made for
Principal
redeemed
Banks for cooperatives
District of Columbia Armory Board
Federal home loan banks
Federal Housing Administration...
.Federal intermediate credit banks
Federal land banks
Federal National Mortgage Association
Others
-..-
$2,629,460,000
Interest
paid
Principal
redeemed
Interest
paid
$75,469,956 $2,946,645,000
714,262
266,429,348 6,266,549,000
23,726,623
86,851,400
218,514,873 5,616,135,000
284,307,908 2,317,567,700
177,093,863 1,239,729,000
33,983
114,860
$109,623,217
799,428
425,268,008
23,431,217
289,866,144
336,911,261
328,263,373
30,058
14,201,154,360
Total.--
4,163,906,000
43,610,360
4,919,240,000
1,608,483,000
936,347,000
119,000
1,046,290,796 17,461,581,950
1,514,172,696
Office of Foreign Assets Control
The Office of Foreign Assets Control administers the Foreign Assets
Control Eegulations and the Cuban Assets Control Eegulations. These
regulations block the assets in the United States of Communist
China, North Korea, North Vietnam, Cuba, and nationals thereof, and
prohibit, except pursuant to license, trade and financial transactions
on behalf of such countries and their nationals or involving their
property. The major purpose of the regulations is to prevent the
authorities of the blocked countries from utilizing their dollar assets
in the United States and to preclude the acquisition by those
authorities of foreign exchange through transactions with Americans.
During fiscal 1970, the Foreign Assets Control Eegulations were
amended in an important respect by the issuance of general licenses
authorizing among other things, the following: (1) Trade and financial transactions with mainland China and dealings in merchandise
originating in mainland China or presumed to originate there, by
American owned or controlled business enterprises and banks located
in foreign countries, except trade or financial transactions involving
strategic merchandise, U.o. dollar accounts, or the shipment of U.S.
origin goods and goods produced abroad with U.S. components unless
such shipment is authorized by the Department of Commerce; and,
(2) the purchase abroad or importation for noncommercial purposes
by Americans, including individuals in the United States, of any
merchandise of mainland Chinese origin or any presumptive
merchandise.
The Office also administers the Transaction Control Eegulations
which supplement the export controls exercised by the Department of
Commerce over direct exports from the United States to Eastern
Europe and the U.S.S.E. These regulations prohibit, unless licensed,
any person within the United States from purchasing or selling or
arranging the purchase or sale of internationally controlled strategic
commodities located outside the United States for ultimate delivery
to Eastern Europe and the U.S.S.E. The prohibitions apply not only
to domestic American companies but also to foreign firms owned or
controlled by persons within the United States.
ADMINISTRATIVE REPORTS
113
The administration of assets remaining blocked under the World
War I I Foreign Funds Control Eegulations was continued. These
regulations apply to assets blocked under Executive Order 8389, as
amended, of Hungary, Czechoslovakia, Estonia, Latvia, Lithuania,
East Germany, and nationals thereof who were, on January 1, 1945,
in Hungary or on December 7, 1945, in Czechoslovakia, Estonia, Latvia or Lithuania, or on December 31, 1946, in East Germany.
The Office of Foreign Assets Control continued the administration
of the Ehodesian Sanctions Eegulations. These regulations were i^ued
under Executive Order 11419 of July 29, 1968, which extended the
mandatory economic sanctions against Southern Ehodesia under
United Nations' resolutions.
Under the Foreign Assets Control and the Transaction Control
Eegulations, the number of specific license applications received (including applications reopened) during fiscal 1970 was 3,487. During
that period a total of 3,541 was acted on.
Under the Cuban Assets Control Eegulations, 478 applications for
licenses were received (including applications reopened) during the
fiscal year, and 547 applications were acted on. Comparable figures
under the Foreign Funds Control Eegulations were 99 applications
received and 96 acted on. Under the Ehodesian Sanctions Control
Eegulations, 391 applications were received and 390 acted on.
Certain broad categories of unexceptionable transactions are covered by general licenses set forth in the above regulations, and such
transactions may be engaged in by interested parties without need for
securing specific licenses.
The enforcement efforts of the Office of Foreign Assets Control have
resulted in the referral of five cases to the Department of Justice during the fiscal year for criminal violations of the regulations administered by this Office. In one of these cases the defendant was convicted
and fined $10,000. Criminal action is pending in the other cases. Also,
violations of the Foreign Assets Control Eegulations led to the forfeiture to the United States, under applicable Customs laws, of merchandise totaling $84,000. In addition, merchandise tentatively valued
at approximately $396,000 was seized and is expected to be forfeited
after the completion of the necessary formal procedures. In still other
cases where forfeitures and civil penalties were mitigated as a result
of extenuating circumstances, more than $330,000 was collected in lieu
of forfeiture and civil penalties.
Internal Revenue Service ^
The Internal Eevenue Service administers the internal revenue
laws embodied in the Internal Eevenue Code (title 26 U.S.C.) and certain other statutes, including the Federal Alcohol Administration Act
(27 U.S.C. 201-212), the Liquor Enforcement Act of 1936 (18 U.S.C.
1261, 1262, 3615), the Gun Control Act of 1968 (18 U.S.C, chapter
44), and Title VII of the Omnibus Crime Control and Safe Streets
Act of 1968 (18 U.S.C. 1201-1203). It is the mission of the Service to
encourage and achieve the highest possible degree of voluntary
compliance with the tax laws and regulations.
^ Additional information will be found In the separate "Annual Report of the Commissioner
of Internal Revenue."
114
l 9 0 REPORT OF THE SECRETARY OF THE TREASURY
!7
Financial management activities
Financial resources were strained in fiscal 1970. Funds planned for
specific programs were used for unanticipated cost increases. To meet
these increases the Service was forced to severely restrict purchasing,
training, and travel. Eecruitment was restricted by overall Government limitations during the last half of the fiscal year. The ceiling for
permanent employment was 61,442 and June 30 employment was 152
under the ceiling. The restrictions seriously jeopardized the Service's
ability to fulfill its mission and resulted in the loss of revenue from the
principal compliance programs.
Management of resources enabled the Service to conduct operations
without overexpending. Of the total authorization of $881.5 million,
$879.1 million was obligated as of June 30. Of the $2.4 million unobligated balance, $1.5 million Avas reserved to offset pay act increases.
With this amount excluded, the Service came within one-tenth of 1
percent of utilizing all money available.
Informing and assisting taxpayers
I n fiscal 1970, the Service continued its efforts to make the selfassessment tax system more effective. I n addition to numerous actions
designed to improve direct communications with taxpayers, three
major public information campaigns were developed for use during
the filing period: Introduction of the new form 1040 used by all taxpayers; prevention of errors on tax returns; and reaching taxpayers
who delayed filing their returns pending anticipated changes in tax
laws.
The Service developed a publicity campaign to minimize the impact
of the changeover for some 20 million former 1040A filers, and to
gain public understanding for the change. Special "1040 packages"
were prepared for media use, with emphasis on television, newspapers,
and magazines. The Service printed and distributed 50,000 posters
to postmasters for display on the sides of mail trucks during January 1970.
To reduce the number of errors on individual income tax returns,
the Service conducted a vigorous publicity campaign alerting taxpayers of the most common errors made in preparing tax returns.
The error reduction campaign was geared to the idea that "errors
can delay tax refunds."
Use of public information materials was extensive. The weekly
"question and answer" column based on the most frequently asked taxpayer questions was used during the filing period by 1,132 daily and
4,0'35 weekly newspapers.
Service personnel gave more than 5,500 speeches to civic and practitioner groups, handled more than 40,000 media inquiries, and arranged
for approximately 3,500 interviews throughout the country. District
and regional officials participated in 5,500 locally-developed radio
and television presentations. Service-produced materials were used
by 4,235 radio stations and 720 television outlets. The Service made
available 16 television spot announcements, a 27i4-minute color film
for television viewing, a 12-minute slide presentation designed for
use at group meetings, a number of radio spot announcements, and
a 10-minute film for theater showing.
ADMINISTRATIVE REPORTS
115
During the filing period, weekly error rates were made available
to field offices so that local releases could pinpoint problem areas.
To encourage prompt filing, weekly releases were distributed citing
the number of returns filed and refunds issued.
Taxpayer assistance program.—Nearly 28 million taxpayers were
served by Internal Eevenue Service offices in 1970, excluding requests
for tax forms and publications. These contacts were handled by
1,176 taxpayer service representatives who provided year-round service at 373 locations and, on designated days, at 156 locations not staffed
with full-time taxpayer service employees. During peak filing periods,
these personnel are augmented by temporary employees who are
trained to answer questions of limited scope.
Tax forms activity
The major impact on tax return forms in fiscal 1970 resulted from
the passage of the Tax Eeform Act of 1969 and the decision by the
Service to combine forms 1040 and 1040A into a single form.
The Tax Eeform Act posed many filing problems because of its
far ranging effect and varying effective dates. Of immediate concern
were the retroactive provisions because they affected periods for
which returns could already have been filed and circumstances under
Which amended returns could be required. Several new forms (including forms for fiscal year computations) were developed on a "cra^h"
basis.
The decision to provide a single return for use by all individual
taxpayers was based, in part, on study findings that many filers lost
the benefits of certain deductions and tax credits because they filed
form 1040A rather than form 1040. The use of one individual income
tax form was considered to be the best means of insuring that all filers
are made aware of available benefits.
The disappearance of form 1040A generated a number of adverse
and constructive comments. The constructive comments will be considered in developing the 1970 tax form together with the results of
a study by a private firm to report on taxpayer experience with the
form 1040 during the last filing period.
Tax rulings,—The Service responds to written inquiries from individuals and organizations as to their status for tax purposes and
as to the tax effects of proposed transactions in the form of rulings.
District directors request teclinical advice from the national office in
connection with the examination of a taxpayer's retum or claim for
refund. During the year 25,612 requests for letter rulings and 1,352
requests for technical advice were processed.
Regulations program,,—A great part of fiscal 1970 was devoted to
developing appropriate regulations under the Tax Eeform Act, in
keeping with a priority system that will take care of the greatest
needs first. By the close of the year, four final regulations, 17 temporary regulations, and five notices of proposed rulemaking had been
published covering projects under the Tax Eeform Act. Ten other
regulations and four notices of proposed rulemaking were published
in the "Federal Eegister."
116
1'970 REPORT OF THE SECRETARY OF THE TREASURY
Personnel
Despite hiring restrictions fiscal 1970 was a successful recruitment
year in terms of the Service's ability to attract quality recruits. Eecruiters exceeded expectations in fiilling positions authorized after
the close of the 1968-69 school year. A significant element in the successful hiring effort was advertising placed in newspapers and professional journals.
^
Hiring in alcohol, tobacco, firearms and intelligence activities
reached an alltime high. Eecruits were needed to replace investigators
selected for the organized crime drive program and to meet the workload resulting from firearms legislation.
The initial results of the Service's experiment with the Assessment
Center technique proved to be a valuable adjunct to traditional methods of evaluating and selecting personnel. This advanced selection
technique was adapted by the Service from a Bell Telephone System
prototype application. I t provides an objective look at candidates for
supervisory positions during a 2-day series of simulated work situations, group exercises, and interviews.
Training
Specific programs concerned with job problems and situations, as
well as generalized management training programs, were provided
for managers. Formal training was combined with assignments as
acting managers to build a high level of managerial skill and an
awareness of responsibilities. During formal training. Service managers and executives were used as instructors, making the programs
more realistic.
The executive development program provided participants with the
broadening experience and training needed for their future roles as
assistant district directors and assistant service center directors. The
program participants visited regional, district, and service center
offices to observe management activities and to gain familiarity with
operations. A new feature of this year's program was the introduction
of an electronic data processing system and its connection with district
and service center operations.
Selected articles and readings were distributed periodically under
the readings in management program as part of the development of
supervisors and managers. This program provides an opportunity for
incumbents to read the latest theories and ideas in a broad range of
topics of concem and interest.
Internal revenue collections and refunds
Gross collections,—Gross collections rose to a record high of $195.7
billion, an increase of $7.8 billion (4.1 percent) over fiscal 1969.
The Federal tax deposit ( F T D ) system accounted for $145.0 billion or 74.1 percent of all Federal tax collections. This was an increase
of $11.2 billion or 8.3 percent over the prior year.
Payment by F T D was extended to Federal Unemployment Act tax,
( F U T A ) on January 1, 1970. This tax, now payable quarterly rather
than annually, generated revenues of $768.1 million for the last half
of the fiscal year for an increase of $136.4 million or 21.6 percent over
the comparable period for fiscal 1969.
ADMINISTRATIVE REPORTS
117
The tax surcharge was in effect through December 31, 1969, at the
10-percent rate. The Tax Eeform Act of 1969 reduced the surcharge to
a 5-percent rate for both individuals and corporations for the period
January 1 to June 30,1970.
Increased rates for Federal Insurance Contributions Act taxes
( F I C A ) and Self Employment Contributions Act taxes (SECA)
were in effect for the full year. The total employee-employer rate for
F I C A tax increased from 8.8 to 9.6 percent, and S E C A tax increased
from 6.4 to 6.9 percent.
All major classes of tax, except corporation income tax and individual income tax (other than withheld), recorded gains over the
preceding year. Both of these taxes had big increases in 1969 (30.1 percent for individuals and 28.2 percent for corporations), thus accentuating their performance for 1970.
Corporation income taxes fell from $38.3 billion in 1969 to $35 billion in 1970 and individual income taxes (other than withheld) fell
from $27.3 billion in 1969 to $26.2 billion in 1970.
Refunds,—In 1970, 55.3 million taxpaying entities received a refund check from the Service. The number of refunds increased 11.4
percent over 1969.
I n total, the Service returned $16.1 billion in tax overpayments and
paid out interest of $112.9 million (down 6.0 percent). Interest per
dollar refunded was reduced from 0.9 cent (9 mills) to 0.7 cent (7
mills), a decrease of 22.9 percent.
Approximately 70 percent of form 1040 filers, representing 54.4
million refunds, received an average refund of $248. The Nation's individual taxpayers received $13.5 billion in refund principal. Interest
paid by the Service in 1970 for individual refunds declined $4.5 million (13.8 percent) to $28 million.
Corporation income tax refunds (principal only) amounted to $2.2
billion, an increase of 33.0 percent over 1969. Interest of $70.9 million
paid on corporation refunds decreased 5.5 percent from the preceding
year.
Receipt and processing of returns
Number of retums fled.—More than 113 million retums were filed
in 1970, reflecting the continued substantial growth of recent years.
This represents an increase of about 3 million returns over the previous
year.
The Service completed implementation of direct filing authorized
by legislation in 1966. Direct filing of retums with service centers has
provided benefits for both taxpayers and the Service. Taxpayers have
benefited from accelerated processing and refunding and the Service
has reduced handling and processing costs associated with transshipment of returns between outlying offices and service centers.
Mathematical verification.—A total of 77.1 million form 1040 returns were filed in 1970. Taxpayers made errors which would have
cost them a total $212.3 million, had the Service through its computerized math-verification program not detected their errors. Correction
of 4.2 million other taxpayers' mistakes resulted in upward adjustment
of tax liabilities totaling $507 million.
Including both upward and downward adjustments of tax liability,
about one in every 12 returns contained a mathematical error (im-
118
11970 REPORT OF THE SECRETARY OF THE TREASURY
proper arithmetic or use of inapplicable tax rates, etc.). On balance, the
Government realized $294.7 million from mathematical verification of
88.4 million form 1040 returns.
The total number of returns verified increased 22.5 million or 34
percent over last year. The increase was caused by 5.4 million more
retums carried over from June 1969 to be processed in fiscal 1970,
and processing practically all returns filed during the January to June
1970 period.
Enforcement activities
The enforcement activities of the Service are directed toward assuring that tax liabilities are properly determined and paid according
to law, and that neither unintentional error nor willful intent shall
result in overpayment or underpayment of tax.
Examination of retums,—^The examination function is a major role
in the Service's enforcement effort and a necessary ingredient to
effective taxpayer compliance. Preliminary data indicate that in 1970
1.9 million returns were examined resulting in recommendations that
an additional $3.2 billion in tax and penalties be assessed. I n some cases,
the examining officers find that the taxpayer has overstated his liability. Claims for refund generally result from discoveries by taxpayers of errors made in reporting their tax liabilities. However, there
are a number of other sources, such as carry-overs and carry-backs of
credits or net operating losses, which are provided for in the Internal
Eevenue Code.
When claims and Service records are sufficiently complete to permit allowance of the claims, they are reviewed and disposed of
promptly without contacting the taxpayers. Form 1040X, (Amended
U.S. Individual Income Tax E e t u m ) introduced in 1969 provides
more complete documentation of the basis for refunds to taxpayers
and permits more expeditious processing.
The Discriminant Function System ( D I F ) , inaugurated last year,
became fully operational this year for all individual returns except
those under jurisdiction of the Office of International Operations.
Under the D I F system, proven mathematical formulas are programed
into the computer to score and rank individual returns in numeric
sequence—highest to lowest—according to audit potential. The highest
scored returns are delivered to district offices based on workload needs.
The most significant aspect of D I F is the uniformity in selecting retums. Other benefits derived from the system include reduction in
the number of audits that result in little or no tax change, and savings
in manpower previously required to manually screen retums prior to
assignment for examination.
Expanded exempt organization program.—Plans for an intensified
exempt organization enforcement effort reached fruition during 1970.
A coordinating committee chaired by the Commissioner and consisting of three Assistant Commissioners (compliance, data processing,
and technical) was established to provide Service policy and direct
the exempt organization enforcement effort.
The Service has centralized all exempt organizations work in 16
key district offices throughout the United States. Each key district
has at least one group of specially trained agents to conduct examina-
ADMINISTRATIVE REPORTS
119
tions of exempt organizations and to assist in the processing of applications for exemption.
An Exempt Organizations Examination Branch established in the
National Office Audit Division oversees and coordinates the efforts of
each key district. The branch develops the broad nation-wide exempt
organization audit program and specifications for the annual work
plan for field activity. I t is involved in the planning and directing
of examinations of certain large, complex organijzations whose activities have national impact. This includes a review -of the audit plan
for each case and monitoring the progress of the audit.
Field support functions include research and analysis into program
effectiveness, long-range problem solving, perfection of examination
procedures and teclmiques, identification of needs for training courses
and materials, and liaison with other units of the Service on exempt
organization matters.
Collection of past-due accounts,—^The Service must make every reasonable effort to collect taxes due. The first step involves sending notices
to taxpayers requesting payment. If the taxpayer does not comply,
past-due accounts are established and enforcement personnel take
over.
Over 2.6 million past-due accounts were established in 1970, some
140,000 or 6 percent higher than last year. Eeflecting this increase,
the amount of delinquent tax rose some $506 million, or 18 percent,
to $3.3 billion in 1970.
The Service closed 2.6 million past-due accounts in 1970. This was
an increase of 275,000 accounts or 12 percent, over 1969 disposals. The
value rose to $3.3 billion, a marked jump of $846 million over 1969.
Changes in the economy, particularly when adverse, have a direct
impact on collection of taxes. This year, inflation pressures and
higher interest rates have increased the tendency of some employers to
"borrow" withheld or employment taxes as working capital. Use of
these moneys as working capital amounts to misappropriation of
funds. The Service has devoted special attention to these delinquent
taxpayers and accelerated enforcement actions to collect these accounts. The Government 6 percent interest rate charge is low compared with the going rate of commercial loans and may have influenced enforcement success. Congress recognized this problem and
provided a penalty in the Tax Eeform Act of 1969 for failure to pay
taxes when due.
Delinquent r e t u m s , ^ K l t h o x x ^ the vast majority of taxpayers fulfill their filing obligations timely and voluntarily, there are those who
do not. Searching out those who are delinquent filers has been a painstaking and time consuming task, particularly since the Nation's population is highly mobile and the geography involved is vast. In recent
years, however, and increasingly so in 1970, enforcement efforts directed towards coping with the delinquent filer have been greatly
aided by increased use of the automatic data processing system.
The rise in past due account workload prevented the same level of
personnel deployment as last year to delinquent returns activities.
Nevertheless, there was still a significant dollar return compared to
the manpower invested. A total of ^671,000 returns reflecting assessments aggregating $311.2 million were secured through various estab-
120
11970 REPORT OF THE SECRETARY OF THE TREASURY"^
lished delinquent returns programs. Preliminary data indicate that
an additional 48,000 delinquent returns valued at $41.7 million were
secured through the returns examination program.
Automatic data processing files trigger delinquency leads,—Three
automatic data processing files, the Business Master File ( B M F ) , the
Individual Master File ( I M F ) , and the Exempt Organization Master
File ( E O M F ) , are today at the heart of a large portion of the Service's
delinquent returns activities. Because tax regulations and filing periods
vary, each file works differently to check for delinquent taxpayers.
The aim and result, however, are the same—to trigger a delinquency
notice or investigation in any apparent nonfiler situation.
Overall benefits and results of the delinquency check computer programs are impressive. For example, approximately 50 percent of all
apparent nonfiler cases, regardless of program, are resolved through
computer generated issuances. Paper processing and other clerical savings in these A D P operations justify the Service's objective of complete automatic data processing control and maintenance for all
delinquent returns programs.
Tax fraud investigations., indictments., and convictions,—A total of
8,068 fraud investigations were completed during the year, with prosecution recommended in 1,118 cases. More than 122,000 allegations of
fraud were screened and evaluated in selecting the investigative
caseload.
Indictments were returned against 933 defendants in tax fraud cases
in fiscal 1970. Pleas of guilty or nolo contendere were entered for 472
defendants in cases reaching the courts; 77 defendants were convicted
after trial, 26 were acquitted and cases against 76 were nol-prossed
or dismissed.
Fight against organized crime,—The Internal Eevenue Service's
participation in the war against organized crime is accorded highest
priority. The application of resources to the racketeer segment of the
Service's overall program has steadily increased. The expertise which
the Service has built in its tax investigations of racketeers has enabled
it to move readily in any area singled out by the Department of Justice
for strike force activity.
Strike forces active,—The strike force concept, which melds the
energies and expertise of several Federal law enforcement authorities
under the direction of the Department of Justice, has been validated
by the results obtained in several major crime centers across the Nation.
Additional units are scheduled for deployment to other areas of significant organized crime influence.
Strike force energies are generally concentrated on criminal combines in specific geographical areas. The Service continually seeks to
improve its intelligence gathering and retention system, an essential
tool for the efficient and expeditious investigation of tax fraud cases
involving top echelon racketeers whose personal activities are usually
deeply cloaked in secrecy and often extend beyond State and national
borders. The bits and pieces of intelligence that surface periodically
in scattered areas are maintained in a common depository where they
can be put together, evaluated and made available to the field forces
for comprehensive investigaton.
ADMINISTRATIVE REPORTS
121
I n connection with the strike force effort, there were 1,472 examinations in progress by the Audit Division, 896 investigations being pursued by the Intelligence Division, and 161 cases being worked by the
Alcohol, Tobacco, and Firearms Division as of the fiscal yearend.
Alcohol and tobacco tax administration.—The traffic in illicit liquor
remains centered in the southeastern portion of the United States,
accounting for over 90 percent of the illicit distillery seizures in the
Nation. The heavy concentration of investigative officers in the principal problem areas has proven extremely effective. Available manpower resources were spread thin in current "Operation Dry-Up" target areas, but progress justified continued priority emphasis on this
program.
Increased revenue accruals to the States as well as to the Federal
Government in the three States directly affected by Operation Dry-Up
have increased substantially. Dry-Up has also made a tangible contribution to social and health benefits.
I t is estimated that Operation Dry-Up produced more than $46
million in additional revenue by changing the purchasing pattern of
alcoholic beverages from illicit to legal markets.
A survey conducted in the southeastern region during the early
spring of 1970, resulted in the seizure of 1,611 illicit distilleries and
6,427 gallons of non-taxpaid distilled spirits.
The Forensic Group of the National Office Laboratory is engaged in
the analysis of physical evidence connected with iUicit distilled spirits
seizures, firearms violations, destructive device controls, tax depletion
allowances, organized crime investigations, document examinations
from intelligence cases, and specialized examinations for State and
local governments and Federal agencies. I n fiscal 1970, 560 cases involving 5,300 specimens were examined compared with 390 cases involving 2,700 specimens examined in fiscal 1969.
I n the area of resiearch and development, manpower was devoted to
development of techniques for dating ballpoint, writing and felt tip
inks. Work in bomb residue detection was given high priority because
of its importance and the large number of samples submitted for
examination.
Fi/rearms laio enforcemevd,—^The Service is responsible for enforcing the Nation's Federal gun laws. This responsibility was initially
given to the Service with the enactment of the National Firearms Act
in 1934, designed to control gangster-type weapons, and was increased
with passage of the Federal Firearms Act in 1938 and the Gun Control
Act of 1968.
I n 1970 a total of 627 investigator man-years were used on firearm
activities compared with 442 in 1969. Investigations conducted under
the firearm program in 1970 led to completion of 2,975 criminal cases,
arrests of 1,957 violator and seizure of 3,037 firearms. These figures
compare with 1,595 criminal cases, 715 arrests and 4,152 firearms
seized in 1969. I n the regulatory area, 54,369 investigations of the
activities and operations of licensees were completed leading to the
discovery of 300 purchasers who had used fictitious names or addresses.
I n its second year of administering the provisions of the Gun Control Act of 1968 relating to importation of firearms and ammunition,
the Service received 24,360 applications for permits to import firearms
122
1'970 REPORT OF THE SECRETARY OF THE TREASURY
and ammunition. During the same period 1,054,282 sporting firearms
were imported, and 1,128 applications were disapproved covering^ imports totaling 12,412 firearms not meeting the importation criteria.
Administrative appeals system
Taxpayer has opportunity for independent administrative review,—
In the examination of about 21^ million tax returns each year it is inevitable that some taxpayers will disagree with proposed adjustments
to their tax liability. It has been a long-standing policy of the Service
to provide an administrative appeals procedure to enable taxpayers to
settle these unagreed cases promptly, without litigation, on a basis
which is fair and impartial to both taxpayer and Govemment. The
success of the procedure is evidenced by the fact that during the last
5 years over 98 percent of all disputed cases were closed without trial.
The appeals function operates at both district and regional levels
through 58 district conference staffs, 40 regional appellate division
offices, and at other locations where full-time conference staffs are
not maintained. These offices cpnsider issues relating to all internal
revenue taxes except those on alcohol, tobacco, firearms, narcotics and
wagering.
Taxpayer has other options available,—If agreement is not reached
at either the district or regional office, the taxpayer can, in most cases,
file an appeal with the Tax Court. Even though this is done, and the
case is docketed for trial, the taxpayer may still try to reach a basis
of settlement with the regional appellate office. As an alternative
to trial in the Tax Court the taxpayer can take his case to the Court of
Claims or a U.S. District Court, but this requires payment of the proposed deficiency in tax, followed by the filing of a claim for refund.
For 1970, the appeals function disposed of 52,324 cases by agreement
compared to 946 cases decided in the Tax Court and 367 cases decided
in district courts and the Court of Claims. About half of the cases
closed by agreement were at the district level and half at the regional
level. District conference staffs obtained agreements in about 65 percent of the cases they closed.
The major portion (over 80 percent) of the appellate workload consists of nondocketed cases. These are cases in which taxpayers have
electied to try to settle their tax disputes with the Service rather than
go direct to court. In 1970, 82 percent of these cases were closed by
agreement with the taxpayer. Agreements on cases of this kind have
averaged 82 percent over the past 5 years.
International activities
The Service has a broad overseas program consisting of three functions: (1) Administration of tax laws as they apply to U.S. citizens
living abroad, nonresident aliens, and foreign corporations; (2) providing assistance when requested to developing countries in improving
their systems of tax administration; and (3) participation in the negotiation of tax conventions or treaties with foreign countries to prevent
economic double taxation.
Intemational operations.—The Service maintains foreign posts in
Bonn, London, Manila, Mexico City, Ottawa, Paris, Eome, Saigon,
Sao Paulo, and Tokyo.
ADMINISTRATIVE REPORTS
123
The functions of the foreign posts include district type activities
such as audit, collection, informal conference, locating and interviewing witnesses, assisting with depositions, serving summonses, and
arranging contacts. Compliance is promoted by assisting U.S. taxpayers residing abroad. This year, 20 agents were sent throughout the
free world, stopping in 97 cities in 50 countries to assist more than 29,000 taxpayers in filing their U.S. tax returns. Tax seminars were conducted in 73 cities, attended by more than 5,000 taxpayers. Nearly 900
servicemen stationed abroad were given basic income tax instruction
by Service piersonnel to provide the military community with its own
tax assistors.
Tax conventions,—The Office of the Chief Counsel, as representatives of the Commissioner of Internal Eevenue, assisted the Treasury
Department in negotiations with Trinidad and Tobago, Norway, and
Turkey concerning bilateral income tax conventions. Negotiations also
took place with France concerning a bilateral estate tax convention and
a protocol to the income tax convention which would have the effect of
extending the dividend tax credit to certain U.S. residents.
An estate tax convention was signed with the Netherlands on J u l y
15, 1969. On January 9,1970, a new income tax convention with Trinidad and Tobago was signed, and on March 6, 1970, an income tax convention with Finland was signed.
Foreign tax assistance.—Starting its eighth year, the foreign tax assistance program continues to provide technical assistance and training in tax administration to developing countries upon request. I t is a
joint effort with the Agency for International Development ( A I D ) ,
which provides funds and overall development policy, and the Service,
which provides the technical program, direction and staffing. International and private organizations are continually consulted to insure
consistency and prevent duplication of effort. Those contacted are
the Organization of American States, the Inter-American Development Bank, the International Monetary Fund, the United Nations
and others. Technical assistance and technical training are provided
in the host countries while the orientation and training of supervisory and managerial tax officials is done in the United States, normally in English, Spanish, or Portuguese. One management course was
presented this year in Korean. During fiscal 1970, 513 tax administration and finance ministry officials from 67 countries visited the Service
for orientation and training. A total of 2,206 officials from 97 foreign
countries and four U.S. dependencies have received orientation or
training by the Service since the start of the program. An average of
53 long-term advisors staffed advisory teams active in 18 foreign
countries.
The In ter-American Center of Tax Administration (CIAT),, a regional self-help institution composed of the principal tax administrators of Western Hemisphere countries, continues to grow. Jamaica became the 22d member just prior to the Fourth General Assembly in
Montevideo, Uruguay in May 1970. The U.S. Delegation to the Assembly was led by Commissioner Thrower, who presented a paper entitled, "Eegulations and Eulings—Their Contribution to Improved
Tax Administration in the United States."
I3i97-7i0(2 O — 7 , 1 — 1 0
124
1'970 REPORT OF THE SECRETARY OF THE TREASURY
Earlier, C I A T had sponsored a technical seminar for managers of
automatic data processing systems which was held in Bogota, Colombia. Deputy Commissioner Smith presented the opening paper on the
"Internal Organization of A D P " and Vito Natrella, Director of
Statistics Division made a presentation on the "Tax Eeturn as a
Statistical Document: The U.S. Experience."
Planning activities
Although planning occurs at every level of an organization, the
Service, through its Planning and Eesearch Staff provides full-time
professional planners to conduct studies, prepare analyses, and develop
forecasts.
The Service played an important role in initiating several provisions
of the Tax Eeform Act of 1969 which were designed to minimize overwithholding of tax from wages, and to eliminate millions of nontaxable returns from low-income taxpayers.
Improvement in withholding.—A study completed in early fiscal
1970 showed that the chief cause of overpayment of individual income
taxes was voluntary overwithholding arranged by employees with
their employers. Voluntary overwithholding is estimated to be a cause
of overpayment on 42 percent of the returns covered by the study, and
accounts for 39 percent of the total amount of overpayment. Itemized
deductions contributed to overpayment on 33 percent of the retums and
accounted for 22 percent of the total overpayment. Intermittent employment also was an overpayment cause on 33 percent of the returns
but accounted for only 11 percent of the overpayments.
Developments in tax administration—^^Other research activities in
fiscal 1970 have focused on three areas—providing assistance to payers
of annuities and pensions; questionnaire surveys of taxpayer reactions
to certain tax returns; and compliance studies.
Two surveys of taxpayer reaction are underway. I n one, individual
income tax return filers are being requested to give their reactions to
the consolidation of the form 1040 and form 1040A. The other survey,
still in the preliminary state, is a fact-finding study on how well the
system of paying estimated individual income tax is working.
The information document matching program has centered on new
special surveys of taxpayer compliance. These relate to casino gambling payments, lottery winnings, and health care payments.
Design of advanced autornatic data processing system progresses.—
The long term program to develop an adavnced automatic data processing system to carry out tax administration functions over the next
decade was continued. Detailed requirements for support are now being analyzed, to form the basis for the development of alternative system designs. The designs will be evaluated by an independent
consultant from the standpoint of cost and performance, using advanced simulation techniques. The benefits associated with the alternatives will be determined, so that decisions regarding the implementation of the new system including equipment acquisition, will be based
on the best available information.
Taxpayer compliance measurement program,—The Taxpayer Compliance Measurement Program ( T C M P ) , established in 1962, is the
major long-range scientific research program of the Service. Since its
ADMINISTRATIVE REPORTS
125
inauguration, TCMP has been expanded to cover four major tax enforcement areas: (1) Individual income tax returns filed, (2) corporation income tax returns filed, (3) delinquent accounts, and (4)
delinquent returns. Planning or implementation efforts were undertaken in each of these four areas during 1970.
Planning-Programing-Budgeting System continues analyses of
major service programs,—The Service continued to conduct a number
of major analytical studies as part of its Planning-Programing-Budgeting System (PPBS) in order to develop the most effective programs
to meet Service objectives. Alternatives are being evaluated b;^ comparing their relative benefits and costs. Among the most significant
current PPBS special studies are:
1. An evaluation of alternative methods for achieving the objectives
of the past-due accounts and delinquent returns programs.
2. In-depth cost-benefit analyses to determine alternative ways of
correcting more tax returns with small manpower increases. Alternatives are being evaluated to correct statutorily unallowable items identified on individual returns during regular code and edit processing.
3. A study of compliance characteristics in employment tax accounting and withholding.
4. A study of Service organization to analyze and evaluate the longrange effectiveness of Service structure.
5. A field evaluation of Centralized Telephone Taxpayer Service
(Centiphone), designed to test the cost and efficiency of Centiphone
on taxpayer service. In test districts, Centiphone enables taxpayers
from every area within the district to call district headquarters without a toll charge.
6. A major study is being undertaken, with Treasury participation,
to look at alternate audit strategies. Methods and procedures to increase
the effectiveness of audit resources will be sought by this investigation.
Service planning starts icith projection of workload items,—One
of the first steps in the development of the Service's plans for budget,
allocation of manpower, and facilities is the projection of the major
returns to be filed in future years.
For the first time since 1958, the number of returns to be filed is
expected to decline in calendar years 1971 and 1972. This is due principally to the Tax Eeform Act of 1969, which eliminated the requirement for about 6 million individual taxpayers to file. By 1973, the
natural increase will have compensated for this drop and the number
of tax returns is expected to continue growing through this decade.
Although the number of retums will decrease temporarily, the
trend toward more complex returns will continue. For example, individual returns with incomes over $10,000 will probably double between
1970 and 1980, while those with incomes under $10,000 will decline 11.6
million returns, 21 percent. A similar although less spectacular trend
is expected in corporation returns where the smaller corporations with
assets under $50,000 will increase by 185,000 returns, 28 percent, while
those with assets between $50,000 and $100,000 will rise by 269,000
returns, 37 percent.
The tax models in 1970,—Originally developed 7 years ago to meet
the Treasury's need for timely estimates of the revenue effect of pro-
126
l!970 REPORT OF THE SECRETARY OF THE TREASURY
posed tax legislation, the individual and corporation tax models have
proved to be valuable planning and economic tools.
These models utilize generalized computer programs in conjunction
with specially prepared magnetic tape files, containing randomly
selected samples of taxpayer records. The models are capable of measuring the effects of tax law changes on each tax record and projecting
the results to represent the entire taxpayer population.
During consideration of the Tax Eeform Act of 1969, the 1967 individual tax model was used to project and forecast the effect of many
provisions of that law. Tax model tabulations provided data on the
classes of taxpayers affected, the revenue effect, and the workload
requirements of the Service.
Increase in Federal-State agreements,—Agreements on coordination
of tax administration were concluded by the Service with 45 States
and the District of Columbia, including the addition of Ehode Island
this year.
Over the years the program has been extended beyond the original
arrangements for the physical inspection of returns and the manual
exchange of audit information. To reflect this broader scope and the
application of computer technology to tax administration, a model
agreement has been prepared for use as a guide in revising existing
agreements or the drafting of new ones.
One of the most impressive developments in the program has been
the furnishing of selected standard data elements from the Service's
individual master file to State tax administrators. Thirty States and
the District of Columbia received such data from 1968 tax retums.
The cooperative audit program is now in operation in six States.
Under this program, the cooperating State devotes a significant portion of its audit activity to performing audits of the State returns of
taxpayers whose Federal returns cannot be audited by the Service
because of limited audit resources. The results of a State audit are
used by the Service in making additional assessments on Federal
returns; audit results of the Service are similarly transmitted to the
States for their use in adjusting assessments on State returns. Thus,
Federal and 'State tax administrators benefit.
Automated certification of credit for State Unemployment Tax
Contributions.—Developmental work has begun on a computerized
system for certification by State unemployment insurance agencies of
the credit which employers claim on their Federal unemployment tax
returns for contributions paid under State unemployment tax laws.
The new system will effect substantial cost savings over the existing
manual procedure under which about 1.6 million return schedules are
shipped annually to State agencies for verification and then shipped
back to Internal Eevenue Service Centers for manual recomputation
of any Federal tax adjustments.
Inspection activities.—^The confidence of the taxpaying public in
the objectivity and integrity of the Internal Eevenue Service is vital
to the success of our tax system. To gain this confidence and to insure
th^t it is not violated, the Service conducts continuing inspection into
questions concerning the integrity and effectiveness of operations.
Management officials are furnished facts and data developed through
ADMINISTRATIVE REPORTS
127
internal audits and investigations with the responsibility for taking
corrective action.
Although all operations are examined, emphasis is placed on those
most directly related to the collection of tax revenues and enforcement
of tax laws, these being the areas most susceptible to breaches of
integrity. Data processing activities at the seven regional service centers are examined on a continuing basis by auditors stationed at the
centers.
Management's actions on reported deficiencies, problems, and internal audit recommendations result in significant improvements in
programs, procedures, and controls. Many involve investigations or
examinations in individual cases. The results of these actions are often
measurable in terms of their impact on the revenue or on savings of
manpower or other resources. I t is estimated that actual or potential
additional revenue and savings during fiscal 1970 exceeded $28.5
million.
Security investigations are made of applicants to weed out the poor
risks and of irregularities or complaints which involve Service
employees. Included in these activities are the investigations of persons
outside the Service who attempt to corrupt Service employees through
bribery or other means.
Since January 1, 1961, a total of 743 Service employees have reported attempts to bribe them. These reports were submitted by tax
collectors, employees who audit tax retums, clerks, stenographers,
attorneys, and persons involved in training programs. Since 1961 a
total of 189 persons have been arrested or indicted for attempting
to bribe I E S employees; as of June 30, 1970, 111 of these persons
have been convicted and another 55 are still awaiting trial.
During the year 58 defendants were brought to trial because of
inspection activities. Thirty-seven were taxpayers or tax practitioners,
and 21 were employees or former employees. Trial or indictment was
still pending on 88 taxpayers and 45 employees or former employees.
Internal security inspectors completed 10,107 investigations during
the year, an increase of about 13 percent over last year's total of 8,950.
An additional 5,248 checks of police records were made on persons
being considered for temporary short-term appointments or for positions under special economic and education opportunity programs.
Internal Security conducted 1,146 investigations for other Treasury
components during the year. As in prior years, assistance was also
furnished to the Secret Service in the protection of the President and
other persons.
B u r e a u of the Mint^
The principal functions of the Bureau of the Mint are the manufacture of coins of the United States and their distribution to the
Federal Eeserve banks and branches. Other functions include the safeguarding, processing, and movement of gold and silver bullion for
the Treasury; the manufacture of medals of a national character;
the production and sale of proof coins and uncirculated coin sets;
1 Additional Information Is contained in the separate "Annual Report of the Director
of the Mint."
128
l9 7 0 REPORT OF THE SECRETARY OF THE TREASURY
!
and, as scheduling permits, the manufacture of foreign coins and
coinage blanks on a reimbursable basis.
The headquarters for the Bureau of the Mint is located in Washington, D.C. The operations involved in performing the functions
of the Mint are transacted in the several field offices. Mints are located
in Philadelphia, Pa., and Denver, Colo.; assay offices are in New
York, N.Y., and San Francisco, Calif.;' bullion depositories are in
Fort Knox, Ky. (for gold) and in West Point, N.Y. (for silver).
The silver depository at West Point is an adjunct of the New York
Assay Office.
Operations of the Bureau of the Mint, fiscal years 1969 and 1970
Fiscal year
Selected items
Coins manufactured (millions of pieces):
Domestic regular issue
Domestic special coins L. _
Foreign coins
Total
-
1969
-
--.
-
7,663. 6
12.2
222.1
7,897.9
5.345
.319 .
1.170
.338
.100
--
5.566
.636
.885
.422
.080
7.272
-
Domestic coinage dies manufactured
Foreign coinage dies manufactured
Medals and distinguishing devices manufactured
Electrolytic refinery production—gold, fine ouncesElectrolytic refinery production—silver, fine ounces. - Balance of gold bullion in mint at yearend, fine ounces
Balance of silver bullion in mint at yearend, fine ounces
Visitors touring the Philadelphia and Denver mints
7,018.1
17.3
247.4
7,282. 8
--..
Newly minted coins issued (billions of pieces): 2
1-cent piece
5-cent piece
Dimes
Quarter dollars
-.---Half dollars
-Total
1970
--
-
7.589
53,498
4,423
315,555
1,753,192
2,855,030
283,890,122
97,404,186
289,722
49,173
2,670
101,467
1,561,779
2,312,299
289,671,968
65,217,218
576,813
1 Proof coins.
2 Excludes proof coins.
Domestic coinage
During fiscal 1970 the three coinage facilities processed approximately 28,833 short tons of coinage metal into 7.7 billion finished
coins with a face value of nearly $329 million dollars. These amounts
include 1,235,125 proof coin sets dated 1969, and 1,200,132 proof coin
sets dated 1970, consisting of 12,176,275 individual coins with a face
value of $2,216,082.05.
The Bureau of the Mint delivered 7.589 billion new coins to the
Federal Eeserve banks and branches in fiscal 1970. I n addition, over
68 million clad quarters and 416 million clad dimes were returned to
the Federal Eeserve banks and branches for redistribution after they
had been separated from the mixed silver and clad coins.
Proof coins were produced at the San Francisco Assay Office with
all coins bearing the " S " mint mark. The Bureau of the Mint began
accepting orders for the 1970 proof coin sets November 1, 1969, and
by December 31, 1969, orders had been received to fill the planned
production of approximately 2.6 million sets.
2 The San Francisco Assay Office also operates as a mint.
ADMINISTRATIVE
REPORTS
129
Each of the last 3 fiscal years, including 1970, established, in turn,
a new high for the production of 1-cent coins. The fiscal 1970 output
of 5.565 billion pieces surpassed fiscal 1969 production by more than
216 million pieces. The total production of this denomination for
these 3 record years was approximately 14.7 billion pieces, which is
more than 22 percent of all 1-cent coins produced since 1793. A
comparison of the production of selected denominations since 1793
follows.
U.S. COIN PRODUCTIONJ793
JUNE 30,1970
(BILLIONS OF PIECES)
HALF DOLLAR . . .
QUARTER DOLLAR
DIME
5-CENT
1-CENT.
TOTAL .
17.9
I
27.9 BILLION
1901-1950
(50 Years)
Foreign coinage
Finished coins produced for foreign governments, fiscal 1970
(Millions
of pieces)
Costa Rica:
6 centimos
10 centimos
25 centimos
--.
El Salvador:
1 centavo
10 centavos .
Israel:
15,600 proof, 10-pound (Pidyon HaBen)
Liberia:
6,058 proof sets containing one each of the following
denominations: 1 dollar; 50 cents; 25 cents; 10
cents; 5 cents; and, 1 cent.
Panama:
14,000 proof sets containing one each of the following denominations: 1 balboa; }4 balboa; K
balboa; Mo balboa; 6 centesimos; and, 1
centesimo.
PhUippines:
1 sentimo
-. 10 sentimos
26 sentimos
Total foreign coinage, fiscal 1970
75 percent copper, 25 percent niclcel
do
do
96 percent copper, 5 percent zinc
75 percent copper, 25 percent nickel...
90 percent silver, 10 percent copper
20.00
10.00
4.00
5.00
3.00
0.02
0.03
0.08
95 percent aluminum, 5 percent magnesium.
70 percent copper, 18 percent zinc, 12
percent nickel.
do
130.00
40.00
10.00
222.13
130
11970 REPORT OF THE SECRETARY OF THE TREASURY
In addition to the finished coins produced for foreign governments,
the Bureau of the Mint manufactured and delivered coinage blanks
for the Governments of Brazil, Israel, and Mexico. For Brazil, deliveries were made of two sizes of coinage blanks, each of a 75 percent
copper-25 percent nickel alloy. Approximately 68.2 million were of
the 23 mm. size for the 10-centavos coin, and 49.9 million were of the
25 mm. size for the 20-ceiitavos coin. For the Government of Israel,
the mint produced 25,000 blanks of a 90 percent silver-10 percent copper alloy, for the 10-pound coin. The mint manufactured 120 million
50-centavos blanks of a 75 percent copper-25 percent nickel alloy for
the Mexican Government.
Silver activities
The General Services Administration continued as agent for the
Department of the Treasury in the sale of Treasury silver for industrial use, as provided in 1967 amendments to the silver regulations
(31 CFE, Pt. 56). Most of the 75.4 million fine troy ounces contracted
for sale during fiscal 1970 was obtained as a result of the silver coin
melting program, concluded in fiscal 1970. The preparation of bars,
storage, and processing for delivery of this silver was accomplished
by the Bureau of the Mint.
During fiscal 1970 the Bureau of the Mint recovered 50.5 million
fine ounces of silver from the melting of $12.6 million of silver quarters and $57.7 million of silver dimes which had been separated from
inventories of coins not recirculated by the Federal Eeserve System.
This program, initiated in fiscal 1968, has provided a total recovery
of 212.3 million fine ounces of silver.
ADMINISTRATIVE REPORTS
131
New Philadelphia Mint
During fiscal 1970 finishing details on the new mint structure were
completed and official opening ceremonies were held on August 14,
1969, with Cabinet officials, members of Congress, and officials from
mints throughout the world in attendance.
The new mint is capable of producing 4.0 billion coins annually,
based on two-shift operations and a program balanced as to denomination. Even though the mint was not in production for the full year,
and, despite the problems of moving and reinstalling production
equipment from the old mint, the new mint still managed to produce
1.9 billion coins during fiscal 1970.
The visitor accommodations provide opportunity for a clear view
of all coinage operations, including melting, rolling, and stamping.
Through June 30, 1970, more than 337,000 visitors had taken the
self-guided tour of the building. This is more than toured both the
Denver and old Philadelphia mints during the entire fiscal year 1969.
U.S. Savings Bondsi Division
The U.S. Savings Bonds Division promotes the sale and retention
of U.S. savings bonds and U.S. savings notes. The sale of savings
stamps, sold primarily through school systems, was discontinued as of
June 30, 1970, because of rising administrative costs. Savings notes
were first issued in May 1967 and sales terminated as of June 30,1970.^
This medium of investment provides for the widespread distribution
of the national debt through its ownership by a substantial part of the
Nation's citizenry; it provides a stabilizing influence on the economy
insofar as the average life of the E and H bonds is about 7 years and
therefore constitutes a long term underwriting of the Nation's economy. Through its efforts the Division endeavors to sell enough bonds
to offset current redemptions and to lessen the need for refunding
other Treasury marketable issues.
The program is carried out by a relatively small Government staff
assisted by a large corps of sales promotion volunteers. Liaison is
maintained with all types of financial, business, labor, agricultural,
and educational institutions, and with community groups of all kinds.
Their volunteer services are enlisted to sell savings bonds through
banks, savings and loan associations, credit unions, certain post offices,
and thousands of business establishments and other employers
operating payroll savings plans.
Sales of series E and H savings bonds and savings notes totaled
$4,772 million in fiscal 1970.
Promotional activities
During fiscal 1970 the payroll savings plan was vigorously promoted among industrial employees; Federal, State, and local government employees; and the military services. Campaign efforts resulted
in the enrollment of 1,939,000 new savers under the payroll savings
plan. Participants in the payroll savings plan, as of June 30, 1970,
totaled more than 10 milliom Over $52 billion of savings bonds and
•
1 See exhibit 3.
V
132
119 70 REPORT OF THE SECRETARY OF THE TREASURY
savings notes were held at the close of fiscal 1970, 24 percent of all of
the privately held Federal debt. I t is estimated that some 13 million
families own these bonds and shares so that the average holdings for
each such family unit would amount to $4,000. During fiscal 1970 these
savers received $2.2 billion in interest.
Mr. Gordon M. Metcalf, chairman of the board. Sears, Eoebuck &
Co., directs the 1970 payroll savings campaign in industry, which was
launched with the annual meeting of the U.S. Industrial Payroll Savings Committee in Washington, D . C , on January 14, 1970. As chairman, Mr. Metcalf heads the Committee which includes seven former
(ihairmen and 45 top executives of the Nation's key corporations.
Twenty-two members of this Committee are responsible for organizing
the industrial campaign in major business centers; 23 Committee
mem'bers represent major industries. Industry members have traveled
to other parts of the country to bring fellow industrialists together to
win support for the program, while geographic members of the Committee launched the payroll savings campaign at luncheon meetings
of the business, labor and community leaders of their areas. Mr. Metcalf has addressed 14 top management meetings in various parts of
the country, helping the geographic chairmen get their campaigns
underway. On April 8, 1970, he appeared on NBC national television
network "Today" show. More than 60 stations also presented their
local volunteer campaign leaders to further publicize savings bonds.
Mr. Metcalf also provided a number of sales tools for the Committee
and savings bonds staff, including an audio-visual presentation which
was shown to top executives who were being encouraged to join the
campaign.
Under the direction of Interdepartmental Chairman Eobert H.
Finch, the then Secretary of Health, Education, and Welfare, and
Vice Chairman Maurice H. Stans, Secretary of Commerce, a successful spring campaign was conducted among both civilian and military
personnel in the Federal Government. Polly Bergen, motion picture
and television personality, participated as honorary chairman of the
1970 Federal Payroll Savings Campaign, in the April 9 "Kick-Off
Eally" for key workers. During the spring campaign approximately
112,000 civilian employees, a number equal to that of the previous
year, signed new bond allotments. New bond allotments were signed
by 109,000 members of the Armed Forces, and 83,000 civilian employees increased their allotments. The total civilian and military participants, as of June 30, 1970, amounted to better than 3,200,000. For
the fourth consecutive year sales to Federal personnel exceeded $1
billion.
Volunteer State chairmen of State savings bonds committees met
with Treasury officials and members of the American Bankers' Association savings bonds committee in a national conference in Washington, D . C , April 1 and 2. Mr. Douglas E. Smith, president of the
National Savings & Trust Co., Washington, D . C , was appointed national chairman of the savings bonds committee of the American
Bankers' Association in September 1969. The committee sponsored
resolutions favoring active participation in the savings bonds program
which were adopted at the annual spring convention of many State
bankers' associations. Chairman Smith personally traveled extensively
ADMINISTRATIVE REPORTS
133
to meet with businessmen and bankers to explain the important role
of savings bonds in the full spectrum of modern banking services.
The national organizations program instituted in calendar year
1969-70 provided a "grass roots" approach whereby participatmg
organizations mailed materials and order cards promoting the savings bonds program directly to their local unit presidents. An executive committe for the national organizations program was appointed
and met for the first time in March 1970 under the chairmanship of
Hugh H. Cranford, executive secretary of Optimist International.
The savings bonds program has continued to enjoy the support of
organizedl labor.. Mr. George Meany, president of the AFL-CIO,
participated in the meeting of the U.S. Industrial Payroll Savings
Committee on January 14, 1970, and was honored for his many years
of service on behalf of the program by the presentation of the Secretary's gold Award of Merit. In his remarks, Mr. Meany reaffirmed
labor's support for the bond program, and urged its expansion, saying
"The payroll savings plan must be extended to an increasing number
of employers and the value of the plan must be explained to an increasing number of workers." He noted that wage and salary workers are the major buyers of U.S. savings bonds.
The Advertising Council, aided by volunteer taskforce agencies,
continued to provide top-flight materials for the bond program. An
estimated $60 million in time and space was contributed h j the advertising media during the fiscal year. Daily newspapers carried 20,500
ads and magazines published 130,400 lines on savings bonds. A human
interest TV commercial "Haircut" won four professional national
awards in the media; an outdoor poster design, "Take Stock in
America," received a third-place award for artistic excellence from the
Institute of Outdoor Advertising.
Bob Hope, Apollo 11 astronauts Armstrong and Collins, Eaquel
Welch, Barbara McNair, and Glen Campbell starred in a new short
subject for theatres, "Stars and Bonds," produced by Paramount
through the generosity of Charles Bluhdorn of Gulf & Western Industries, motion picture chairman of the U.S. Industrial Payroll Savings Committee. Eobert Young starred in a bond film for payroll
savings solicitors, "Eally 'Eound the Flag," produced by Universal;
and other stars and studios continued their support with theatre trailers and TV film messages.
The National Panel on Public Eelations for Savings Bonds was
headed again this year by James T. Coleiman, director of public
relations for Tupperware. Members of the panel met informally in
Miami in January 1970, in conjunction with the Orange Bowl Parade.
The International Cheerleading Foundation, Inc., sponsored a
savings bonds segment in its 90 minute "Spirit of '70" show presented
at 18 colleges and universities. The program, featuring commentary,
music and pompon routines, geared to today's youth market, is available for youth groups, special bond events, and radio and television
appearances.
Management improvement
As a result of the study by a team from the Office of the Assistant
Secretary for Administration, a major reorganization of field operations became effective January 1, 1970. The former regional structure
134
11970 REPORT OF THE SECRETARY OF THE TREASURY
was abolished and 12 marketing offices were established Which represented a State or group of States having geographic and economic
homogeneity.
Through the incorporation of six class I States in the 12 markets
which now constitute the field organization, the Division has eliminated the former regional layer of supervisory authority insofar as
these States now report to the Director of Marketing at headquarters.
Concomitant with the reorganization has been the redeployment
of positions to market areas needing better manpower coverage and
reducing coverage in offices which did not merit it because of low sales
potential. Pursuant to this, offices in Nevada and Alaska were closed
in fiscal 1970.
The fiscal 1969 curtailment of the direct mail bank letter program
generated reportable savings in fiscal 1970 of an additional $45,000.
Internal audit program
During fiscal 1970 operational surveys were made in six States:
Illinois, Indiana, Oklahoma, Iowa, New Jersey, and Virginia. Surveys
were also conducted in the Southwest market office and the Midwest
market office, as well as the distribution center in Chicago. Increased
coverage of field activities was made possible by the assumption of the
fiscal audit by the staff of the Bureau of the Public Debt's Internal
Audit Service. As a result of the first annual fiscal audit by the
Bureau's team, it was recommended that the Division install new accounting equipment to facilitate timely preparation of essential financial budgetary and internal cost-based budgetary reports. The new
equipment was delivered shortly before the close of the fiscal year
and is being programed to meet the accounting system needs of the
Division.
EDP operations
During fiscal 1970 the Office of Program Planning produced a comprehensive EDP Procedural Manual and conducted a series of seminars in field offices and at headquarters to better acquaint the Division's
staff with the purpose and usage of the statistical data garnered
under the program. The number of reporting units on the EDP tapes
is 38,416 which represents 18,113 intrastate companies and 20,303 interstate companies (including branches of companies) or approximately
22,000 individual companies. The output data on these companies
comprises printouts broken down into marketing units, plus summaries by size groups, printouts by industries and listings by interstate company units. These reports are disseminated to field offices
and utilized by headquarters for evaluating sales performance and
assigning work load.
Staff development
During fiscal 1970 the staff development program was bolstered by
giving members of our professional staff exposure to the principles
of professional salesmanship (POPS), an American Management Association in-house training course.
In surveying its manpower needs the Division has recognized the
need for an infusion of younger blood to assure the continuity and
vigor of the program. In fiscal 1970 the Division has turned to the
ADMINISTRATIVE REPORTS
135
Federal Service Entrance Examination Eegister to recruit for the filling of vacancies in our professional positions.
U.S. Secret Service
The major responsibilities of the U.S. Secret Service defined by section 3056, title 18, United States Code, are to protect the President of
the United States, the members of his immediate family, the Presidentelect, the Vice President or other officer next in the order of succession
bo the office of the President, and the Vice-President-elect; to protect
the person of a former President and his wife during his lifetime, the
person of the widow of a former President until her death or remarriage, and minor children of a former President until they reach 16
years of age, unless such protection is declined; to protect persons
who are determined from time to time by the Secretary of the Treasury, after consultation with the advisory committee, as being major
presidential or vice presidential candidates, unless such protection is
declined; the detection and arrest of persons committing any offenses
against the laws of the United States relating to coins, obligations,
and securities of the United States and of foreign govemments; and
the detection and arrest of persons violating certain laws relating to
the Federal Deposit Insurance Corporation, Federal land banks, and
Federal land bank associations.
Management improvement
During fiscal 1970, the names of all persons arrested by the Secret
Service, the type of violation involved, and other pertinent related
arrest data have been processed into an automated information storage and retrieval system. This system was operated throughout the
year on a parallel basis with an existing manual arrest information
system.
The machine processable data base of the Counterfeit Money Information System was expanded during fiscal 1970 to include all data
originated prior to fiscal 1968. The data base now provides a full history of all counterfeit notes up to the current reporting period. It also
includes "parent" note identifications for each circular numbered
counterfeit note. The "parent" note is used to associate notes that have
common origins. The date of counterfeit plant seizures as identified to
particular notes was also entered. These changes to the system provided a much more comprehensive data base from which to draw information concerning counterfeit activities. The expanded data base
permitted the use of the computer to manipulate counterfeit data
heretofore requiring considerable manual effort.
Personnel
During fiscal 1970, the Secret Service increased its total permanent
personnel strength by 364, including 100 Executive Protective Service
officers.
The most significant development in Secret Service personnel management activity was Public Law 91-217 enacted on March 19, 1970,
which established the Executive Protective Service. This bill raised
the legislative limit from 250 to 850 police officers in the White House
Police Force and made it necessary to initiate a nation-wide recruitment effort.
136
1'970 REPORT OF THE SECRETARY OF THE TREASURY
During the fiscal year, the Secret Service Training Division moved
to new space which made it possible to increase its training program
significantly. There were 81,520 manhours of training completed by
personnel engaged in investigative, protective, and administrative
functions. I n addition, 25,612 manhours of interagency training and
5,096 manhours of nongovernment training were completed. A total
of 112,228 manhours of training was completed by the Service during
fiscal 1970.
The Training Division developed and presented an in-service training program for senior special agents, to bring them up-to-date on
various Service activities.
During fiscal 1970, the Secret Service provided protective training
to members of the U.S. Marshals' Office, and the North Carolina and
Maryland State Police. The most significant development affecting
training during the year was that the additional function of protecting embassies was assigned to the Secret Service. This necessitated
training new personnel in basic police duties. A new program of training had to be developed since the officers had previously received
their basic training from the Metropolitan Police Department in
Washington, D . C
Inspection and audit
Evaluation methods and procedures for comprehensive inspections
of every area of the Service were updated and improved during fiscal
1970.
Inspections resulted in improvements in training procedures, weapons policies, and other areas. Inspectors represented the Director in
many special top-level projects and surveys, some of which were related to assisting State governments in the development or improvement of their inspection and security programs.
Protective responsibilities
The protection of the First Family, the Vice President, former
Presidents and their wives, and the minor children of a former President until they reach 16 years of age continued to be the primary
responsibility of the Secret Service.
The Executive Protective Service was established when President
Nixon signed Public Law 91-217 on March 19, 1970. The new legislation expanded the responsibilities and size of what was formerly the
White House Police. The new security force will continue to protect
the White House; buildings in which Presidential offices are located;
the President and his immediate family, and now protects foreign diplomatic missions located in the metropolitan area of the District of
Columbia.
Investigative responsibilities
The Secret Service had one of its most successful years during fiscal
1970. While counterfeiters were producing more counterfeits than
ever before, they were less successful in passing their product than in
the preceding 2 years.
The Service seized a record high of $16.3 million in counterfeits
with only a little over $2 million being passed on the public. This
ADMINISTRATIVE REPORTS
137
means that for every 9 counterfeit dollars made, 8 were seized from
the counterfeiters before they could pass them.
The following summaries represent the current trend in the investigation of counterfeiting cases by this Service.
I n April 1970, the Secret Service learned from an informant that
a group of four conspirators had met in Denver, Colo., to decide how
to distribute over $600,000 in counterfeit money they had produced.
As one of the men was a pilot, they decided to use an airplane to transport the notes to various distribution areas.
On May 1, 1970, agents began a series of arrests which resulted in
the seizure of over $600,000 in counterfeit $20 Federal Eeserve notes
in Gilbert, Ariz., and the plant which produced them in Denver, Colo.
All of the conspirators were apprehended; two in a motel room in
E l Paso while in the act of using narcotics. Few of the counterfeits
ever reached the public.
Another case originating in a bar in San Mateo, Calif., illustrates
the importance of a citizen promptly reporting a violation.
A man who passed a counterfeit $20 note in a bar fled when the bartender became suspicious. The bartender noted his car license number
and immediately notified the local Secret Service office. Agents found
the man in his home burning about $27,000 in counterfeits. I t was
determined that he had made the notes himself and had passed only
the one note before being arrested.
I n March 1970, the victim of a counterfeit note pass in Sacramento
recorded a partial license number from the fleeing passer. A check
on combinations of the number led agents to a printer. On March 27,
1970, agents observed the suspect passing two counterfeit notes and
immediately arrested him. They found $1,404,625 in counterfeits in the
printing shop in which he was employed. Agents seized negatives,
plates, and other equipment the counterfeiter had used in printing
the notes. Over $15,000 in these notes had been passed in Califomia
during the previous several months. Following the arrest the note
passing ceased.
I n another case originating in the Philadelphia district, an undercover agent met two brothers in a motel room to purchase a quantity
of counterfeit notes. The suspects arrived at the room armed, one with
a machinegun, to deliver $45,000 of counterfeit notes. Both were arrested without a shot being fired.
During fiscal 1970 there were an increasing number of incidents
in which Secret Service agents investigating counterfeiting cases were
confronted by persons carrying firearms. Earlier in the year an individual in a Chicago investigation was shot and killed by agents during
a shoot-out following a sale of counterfeit notes. I n January, a Boston
counterfeiter was wounded when resisting arrest. I n almost every
significant counterfeiting case weapons are being carried by the counterfeiter. One counterfeiter explained this by stating, "If we thought
we were selling notes to an agent, we just wouldn't show up. We need
the guns to protect our property from a stickup." I n January and
February, the Secret Service held four seminars in Washington, D . C ,
for field office supervisors, in order to focus on this problem.
Gains were also made in the investigation of forged checks and
bonds. The Secret Service arrested 3,032 persons for the forgery and
138
l!970 REPORT OF THE SECRETARY OF THE TREASURY
cashing of Government checks. This represents a 43-percent increase
over the 2,119 arrested the previous year. Although the actual number
of Government checks stolen, forged and cashed increased 6 percent
during the fiscal year, the total Government checks paid during this
same period increaseci from 584,796,854 to 625,717,567, or 7 percent
over the previous year. The slight increase in the number of forged
checks was consistent with the increase in checks actually paid, while
the substantial increase in the number of forgers arrested appears to
indicate that many of the new forgers were unsuccessful in their efforts.
From 1965 through 1969, a husband and wife team traveled throughout 20 States stealing, forging and cashing Government checks. Although they were eventually identified, their mobility and ability to
convince merchants and banks of their legitimacy aided them in avoiding arrest.
On November 4, 1969, a bank teller in Eichmond, Va., recognized
the man who was attempting to negotiate a check from photographs
the Secret Service had distributed throughout the country. After he
left the bank, the teller called the Secret Service and agents were
dispatched to the area. The couple was arrested in the vicinity of the
bank and later identified as having cashed forged Government checks.
Tlie husband and wife were sentenced to 15 years and 10 years,
respectively.
Early in 1969, an inmate who owed 25 years in Federal sentences to
the Government for previous forgery of Govemment obligations, escaped from a Mississippi prison. Following his escape, he stole and
cashed checks in Louisiana, Florida, Georgia, Virginia, Tennessee,
Oklahoma, and Texas. I n addition to stealing checks from mailboxes,
he burglarized post offices in Tampa, Fla., Nashville, Tenn., and Dallas,
Tex. I t is estimated that he stole between and 400 and 500 checks during this period. I n January, the escapee was arrested following the
burglary of a post office in Dallas, with 200 stolen checks and approximately $10,000 in cash in his possession. Within a week he and
three other prisoners escaped; three weeks later he was arrested in
New Orleans and returned to Dallas where he was awaiting prosecution at the end of the fiscal year.
There was an 18-percent decrease in the number of forged Government bonds received by the Service for investigation, from 19,848 in
fiscal 1969 to 16,236 in fiscal 1970. During this same period the Service
arrested 123 persons for bond forgery, an increase of 9 percent over the
previous year. A number of those arrested were members of organized
groups.
The growth of this criminal activity is evidenced by the Bureau of
the Public Debt's report of May 31, 1970. At that time, there were
312,499 stolen bonds of record, representing over $34 million. These
figures only include reported thefts amounting to $1,000 or more.
I n September 1969, an informant advised the Secret Service office
in Buffalo that four individuals, three of whom he identified, planned
to travel to New York City, obtain stolen savings bonds and proceed to
Atlantic City, N.J., to negotiate them. With the cooperation of the
Atlantic City Police Department, a surveillance was maintained in
several banks. As a result, one of the men was arrested when he attempted to cash five of the bonds. He then identified his associates
ADMINISTRATIVE REPORTS
139
and each was arrested upon his return to Buffalo. Fifty-six additional
bonds were recovered.
Another bond forgery investigation involved a female forger who
was a member of an interstate burglary ring. She forged and cashed
258 savings bonds registered to five individuals, each living in a different major city—San Francisco, Minneapolis, Phoenix, Portland
(Oregon), and Oklahoma City. She was eventually arrested and sentenced to a 3 year prison term.
The following table shows the number of criminal and noncriminal
investigation arrests made by the Secret Service in fiscal years 1969
and 1970.
Number of arrests, fiscal years 1969 and 1970
Offenses
Counterfeiting
Forged Government checks
Forged Government bonds
Protective intelligence
MisceUaneous
-Total
-
1969
1970
.-.
.--
--
1,394
2,119
113
337
56
1,390
3,032
123
304
96
.-
4,019
4,944
-
Offenses investigated by the Secret Service resulted in the conviction of 3,470 persons, 95.4 percent of the cases brought to trial
during fiscal 1970.
Treasury Security Force
The newly designated Treasury Security Force (formerly named
the Treasury Guard Force), completed an intensive in-service training program during fiscal 1970 conducted by Secret Service agents.
The improved quality of performance is evidenced by their record of
30 felony arrests of individuals attempting to cash forged Government obligations at the main Treasury cash room during the fiscal
year.
Cooperation
The 'Secret Service is also involved in the Organized Crime Strike
Force efi'ort of the Department of Justice. There are 15 special agents
assigned to the 12 operating Strike Force units. They are involved
in 91 separate investigations designated as organized crime cases and
during fiscal 1970, expended 44,000 manhours in this category.
The Secret Service appreciates the outstanding assistance it
continues to receive from law enforcement at all levels, and from
interested citizens in behalf of its protective and investigative
responsibilities.
397-702 0 ^ 7 1 — ^ 1 1
EXHIBITS
Public Debt Operations, Regulations, and Legislation
Treasury Notes Offered and Allotted
During fiscal year 1970 there were no offerings of marketable Treasury certificates of indebtedness or Treasury bonds.
Exhibit 1.—^Treasury n^tes
Two Treasury circulars, one containing an exchange offering and the other
containing a cash offering, are reproduced in this exhibit. Circulars pertaining
to the other note offerings during the fiscal year 1970 are similar in form and
therefore are not reproduced in this report. However, essential details for each
offering are summarized in the first table following the circulars and the allotment of the new notes will be shown in table 36 in the Statistical Api)endix.
DEPARTMENT CIRCULAR NO. 8-69. PUBLIC DEBT
TEEASUEY DEPARTMENT,
Washvngton, Septemher 18, 1969.
I. OFFERING OF NOTES
1. The Secretary of the Treasury, pursuant to the authority of the Second
Liberty Bond Act, as amended, offers notes of the United States, designated IVz
percent Treasury Notes of Series C-1976, at 99.50 percent of their face value, in
exchange for the following securities, singly or in combinations aggregating
$1,000 or multiples thereof:
(1) iy2 percent Treasury Notes of Series EO-1969, due October 1, 1969;
(2) 4 percent Treasury Bonds of 1969, due October 1, 1969; or
(3) 21/^ percent Treasury Bonds of 1964-69, due December 15, 1969, with
a cash payment of $2.20 per $1,000 to subscribers.
Interest will be adjusted on the bonds of 1964r-69 as of December 15, 1969. Payments on account of accrued interest and cash adjustments will be made as set
forth in Section IV hereof. The amount of this offering will be limited to the
amount of eligible securities tendered in exchange. The books will be open only
on September 22 through September 24, 1969, for the receipt of subscriptions.
2. In addition, holders of the securities enumerated in Paragraph 1 of this
section are offered the privilege of exchanging all or any part of them for 8
percent Treasury Notes of Series E-1971, or 7% percent Treasury Notes of
Series A-1973, which offerings are set forth in Department Circulars, Public
Debt Series—Nos. 6-69 and 7-69, issued simultaneously with this circular.
n . DESCRIPTION OP NOTES
1. The notes will be dated October 1,1969, and will bear interest from that date
at the rate of 7^/^ percent per annum, payable on a semiannual basis on February 15 and August 15, 1970, and thereafter on February 15 and August 15 in
each year until the principal amount becomes payable. They will mature August 15, 1976, and will not be subject to call for redemption prior to maturity.
2. The income derived from the notes is subject to all taxes imposed under the
Internal Revenue Code of 1954. The notes are subject to estate, inheritance, gift
or other excise taxes, whether Federal or State, but are exempt from all taxation
now or hereafter imposed on the principal or interest thereof by any State, or
any of the possessions of the United States, or by any local taxing authority.
3. The notes will be acceptable to secure deposits of public moneys. They will
not be acceptable in payment of taxes.
4. Bearer notes with interest coupons attached, and notes registered as to principal and interest, will be issued in denominations of $1,000, $5,000, $10,000,
143
144
1970 REPORT OF THE SECRETARY OF THE TREASURY
$100,000, $1,000,000, $100,000,000 and $500,000,000. Provision will be made for the
interchange of notes of different denominations and of coux>on and registered
notes, and for the transfer of registered notes, under rules and regulations prescribed by the Secretary of the Treasury.
5.i T'he notes will be subject to the general regulations of the Treasury Department, now or hereafter prescribed, goveming United States notes.
in.
S U B S C R I P T I O N AND A L L O T M E N T
1. ^Subscriptions accepting the offer made by this circular will be received at
the Federal Reserve Banks and Branches and at the OflSce of the Treasurer of
the United States, Washington, D.C. 20220. Banking institutions generally may
submit subscriptions for account of customers, but only the Federal Reserve
Banks and the Treasury Department are authorized to act as oflScial agencies.
2. Under the Second Liberty Bond Act, as amended, the Secretary of the
Treasury has the authority to reject or reduce any subscription, and to allot less
than the amount of notes applied for when he deems it to be in the public interest;
and any action he may take in these respects shall be final. Subject to the exercise
of that authority, all subscriptions will be allotted in full.
IV. P A Y M E N T
1. Payment for the face amount of notes allotted hereunder must be made on
or before October 1, 1969, or on later allotment, and may be made only in a like
face amount of securities of the issues enumerated in paragraph 1 of section I
hereof, which should accompany the subscription. Payment will not be deemed
to have been completed where registered notes are requested if the appropriate
identifying number as required on tax retums and other documents submitted to
the Internal Revenue Service (an individual's social security number or an employer identification number) is not fumished. Cash payments due to subscribers
will be made by check or by credit in any account maintained by a banking
institution with the Federal Reserve Bank of its district following acceptance
of the securities surrendered. In the case of registered bonds, the payment will
be made in accordance with the assignments thereon.
2. iy2-percent notes of Series EO-1969 and 4 percent honds of 1969.—When
payment is made with securities in bearer form, coupons dated October 1, 1969,
should be detached and cashed when due. When payment is made with registered
bonds, the final interest due on October 1, 1969, will be paid by issue of interest
checks in regular course to holders of record on August 29, 1969, the date the
transfer books closed. A cash payment of $5.00 per $1,000 on account of the
issue price of the new notes will be niade to subscribers.
3. 2y2-percent honds of i^^^-^^-^When payment is made with bonds in bearer
form, coupons dated December 15, 1969, must be attached to the bonds when
surrendered. Accrued interest from June 15 to December 15, 1969 ($12.50 per
$1,000), the payment on account of the issue price of the new notes ($5.00 per
$1,000) and the cash payment due subscriber ($2.20 per $1,000) win be credited,
and accrued interest from October 1 to December 15, 1969 ($15.28533 per $1,000)
on the new notes will be charged, and the difference ($4.41467 per $1,000) will be
paid to subscribers.
V. A S S I G N M E N T OF REGISTERED BONDS
1. Registered bonds tendered in payment for notes offered hereunder should
be assigned by the registered payees or assignees thereof, in accordance with the
general regulations of the Treasury Department governing assignments for transfer or exchange, in one of the forms hereafter set forth, and thereafter should
be surrendered with the subscription to a Federal Reserve Bank or Branch or to
the OflSce of the Treasurer of the United States, Washington, D.C. 20220. The
bpnds must be delivered at the expense and risk of the holder. If the new notes
are desired registered in the same name as the bonds surrendered, the assignment should be to "The Secretary of the Treasury for exchange for 7^^ percent
Treasury Notes of Series C-1976"; if the new notes are desired registered in
another name, the assignment should be to "The Secretary of the Treasury for
exchange for 7% percent Treasury Notes of Series C-1976 in the name of
"; if new notes in coupon form are desired, the assignment should be to
EXHIBITS
145
"The Secretary of the Treasury for exchange for 7 ^ percent Treasury Notes of
Series C-1976 in coupon form to be delivered to
".
VI. GENERAL
PROVISIONS
1. As fiscal agents of the United States, Federal Reserve Banks are authorized
and requested to receive subscriptions, to make such allotments as may be prescribed by the Secertary of the Treasury, to issue such notices as may be necessary, to receive payment for and make delivery of notes on full-paid subscriptions allotted, and they may issue interim receipts pending delivery of the
definitive notes.
2. The Secretary of the Treasury may at any time, or from time to time, prescribe supplemental or amendatory rules and regulations goveming the off'ering,
which will be communicated promptly to the Federal Reserve Banks.
DAVID M. KENNEDY,
Secretary of the Treasury.
DEPARTMENT CIRCULAR NO. 6-70. PUBLIC DEBT
TREASURY DEPARTMENT,
Washvngton, April SO, 1910.
I . OFFERING O F NOTES
1. The Secretary of the Treasury, pursuant to the authority of the Second Liberty Bond Act, as amended, offers $3,500,000,000, or thereabouts, of notes of the
United States, designated 7% percent Treasury Notes of Series G-1971, at 99.95
pe]*cent of their face value and accrued interest, if any. In addition to the
amount offered for public subscription, the Secretary of the Treasury reserves
the right to allot an additional amount of these notes to Government accounts
and Federal Reserve Banks. The following securities, maturing May 15, 1970, will
be accepted at par in payment or exchange, in whole or in part, to the extent
subscriptions are allotted by the Treasury :
(1) 5% percent Treasury Notes of Series B--1970; or
(2) 6% percent Treasury Notes of Series C-1970.
Tho books will be open only on May 5, 1970, for the receipt of subscriptions.
II. DESCKEPTION OF NOTES
1. The notes will be dated May 15, 1970, and will bear interest from that date
at the rate of 7% percent per annum, payable semiannually on November 15,1970,
and on May 15 and November 15, 1971. They mil mature November 15, 1971, and
will not be subject to call for redemption prior to maturity.
2. The income derived from the notes is subject to all taxes imposed under the
Internal Revenue Code of 1954. The notes are subject to estate, inheritance,
gift or other excise taxes, whether Federal or State, but are exempt from all
taxation now or hereafter imposed on the principal or interest thereof by any
State, or any of the possessions of the United States or by any local taxing
authority.
3. The notes will be acceptable to secure deposits of public moneys. They will
not be acceptable in payment of taxes.
4. Bearer notes with interest coupons attached, and notes registered as to
principal and interest, will be issued in denominations of $1,000, $5,(X)0, $10,000,
$100,000 and $1,000,000. Provision will be made for the interchange of notes of
different denominations and of coupon and registered notes, and for the transfer
of registered notes, under rules and regulations prescribed by the Secretary of the
Treasury.
5. The notes will be subject to the general regulations of the Treasury Department, now or hereafter prescribed, governing United States notes.
in.
S U B S C R I P T I O N AND
ALLOTMENT
1. Subscriptions accepting the offer made by this circular will be received
at the Federal Reserve Banks and Branch^ and at the Ofiice of the Treasurer of
146
1970 REPORT OF THE SECRETARY OF THE TREASURY
the United States, Washington, D.C. 20220. Only the Federal Reserve Banks and
the Treasury Department are autliorized to act as oflScial ageneies. Commercial
banks, which for this purpose are defined as banks accepting demand deposits, may
submit subscriptions for account of customers provided the names of the customers are set forth in such subscriptions. Others than commercial banks will not
be permitted to enter subscriptions except for their own account. Subscriptions
from commercial banks for their own account will be restricted in eaeh case to an
amount not exceeding 50 percent of the combined capital (not including capital
notes or debentures), surplus and undivided profits of the subscribing bank. Subscriptions. will be received without deposit from banking institutions for their
own account, Federally-insured savings and loan associations. States, political
subdivisions or instrumentalities thereof, public pension and retirement and other
public funds, intemational organizations in which the United States holds membership, foreign central banks and foreign States, and dealers who make primary
markets in Govemment securities and report daily to the Federal Reserve Bank of
New York their positions with respect to Govemment securities and borrowings
thereon. Subscriptions from all others must be accompanied by payment (in cash
or in notes of the issues enumerated in Paragraph 1 of Section I hereof, which
will be accepted at par) of 10 percent of the amount of notes applied for, not
subject to withdrawal until after aHotment. Registered notes submitted as deposits should be assigned as provided in Section V hereof. Following allotment,
any portion of the 10 percent payment in excess of 10 percent of the amount of
notes allotted may be released upon the request of the subscribers.
2. All subsicribers are required to agree not to purchase or to seU, or to make
any agreements with respect to the purchase or sale or other disposition of any
notes of this issue at a specific rate or price, until after midnight May 5,1970.
3. Commercial banks in submitting subscriptions will be required to certify that
they have no beneficial interest in any of the subscriptions they enter for the
account of their customers, and that their customers have no beneficial interest
in the banks' subscriptions for their own account.
4. Under the Second Liberty Bond Act, as amended, the Secretairy of the
Treasury has the authority to reject or reduce any subscription, to allot less
than the amount of notes applied for, and to make different percentage allotments to various classes of subscribers when he deems it to be in the public interest ; and any action he may take in these respects shall be final. Subject to the
exercise of that authority, subscriptions will be allotted:
(1) in full if the subscription is for $200,000 or less ; and
(2) on a percentage basis to be publicly announced, but not less than
$200,000.
Allotment notices will be sent out promiptly upon allotment.
IV. PAYMENT
1. Payment at 99.95 percent of their face value and accrued interest, if any,
for notes allotted hereunder must be made or completed on or before May 15,1970,
or on later allotment. Payment will not be deemed to have been completed where
registered notes are requested, if the appropriate identifying number as required
on tax returns and other documents submitted to the Internal Revenue Service
(an individual's social security number or an employer identification number) is
not furnished. In every case where full payment is not completed, the payment
with application up to 10 percent of the amount of notes allotted shall, upon declaration made by the Secretary of the Treasury in his discretion, be forfeited to
the United States. Payment may be made for any notes allotted hereunder in
cash or by exchange of notes of the issues enumerated in Paragraph 1 of Section
I hereof, which will be accepted at par. A cash adjustment will be made for the
difference ($0.50 per $1,000) between the par value of the niaturing notes accepted in exchange and the issue price of the new notes. The payment will be
made by check or by credit in any account maintained by a banking institution
with the Federal Reserve Bank of its District, following acceptance of the notes.
In the case of registered notes, the payment will be made in accordance with the
assignments on the notes surrendered. Any qualified depositary will be permitted
to make payment by credit in its Treasury Tax and Loan Account for not more
than 50 percent of the amount of notes allotted to it for itself and its customers.
When payment is made with notes in bearer form, coupons dated May 15, 1970,
EXHIBITS
147
should be detached and cashed when due. When payment is made with registered
notes, the final interest due on May 15, 1970, will be paid by issue of interest
checks in regular course to holders of record on April 15, 1970, the date the
transfer books closed.
V. A S S I G N M E N T OF REGISTERED NOTES
1. Registered notes tendered as deposits and in payment for notes allotted hereunder should be assigned by the registered payees or assignees thereof, in accordance with the general regulations of the Treasury Department, in one of the forms
hereafter set forth. Notes tendered in payment should be surrendered to a Federal
Reserve Bank or Branch or to the OflSce of the Treasurer of the United States,
Washington, D.C. 20220. The maturing notes must be delivered at the expense
and risk of the holder. If the new notes are desired registered in the same name
as the notes surrendered, the assignment should be to "The Secretary of the
Treasury for 7% percent Treasury Notes of Series G-1971"; if the new notes
are desired registered in another name, the assignment should be to "The Secretary of the Treasury for 7% percent Treasury Notes of Series G-1971 in the name
of
" ; if new notes in coupon form are desired, the assignment should
be to "The Secretary of the Treasury for 7% percent Treasury Notes of Series
G-1971 in coupon form to be delivered to
".
VI. GENERAL PROVISIONS
1. As fiscal agents of the United States, Federal Reserve Banks are authorized
and requested to receive subscriptions, to make such allotments as may be prescribed by the Secretary of the Treasury, to issue such notices as may be necessary, to receive payment for and make delivery of notes on full-paid subscriptions
allotted, and they may issue interim receipts pending delivery of the definitive
notes.
2. The Secretary of the Treasury may at any time, or from time to time, prescribe supplemental or amendatory rules and regulations governing the offering,
which will be communicated promptly to the Federal Reserve Banks.
DAVID M. KENNEDY,
Secretary of the Treasury.
•1^
00
CO
o
O
o
*^
Summary of information pertaining to Treasury notes issued during fiscal year 1970
W
Date of
prelimDepartment
inary
circular
an- nounce- No.
Date
ment
Concurrent
offering
circular No.
Treasury notes issued for exchange or for cash
AUotment
Date payment
Date of Date of subscrip- date on
or before
tion
issue maturity
(or on
books
later
closed
aUotment)
CQ
O
?d
July 30
1969
5-69 July 31
Sept. 17
6-69 Sept. 18
1969
7 ^ percent Series D-1971 at 99.90 in exchange for
6 percent Series C-1969 notes maturing Aug. 15,1969.
7-69,8-69 8 percent Series E-1971 at par in exchange for
IM percent Series EO-1969 notes maturing Oct. 1,1969.
4 percent bonds maturing Oct. 1, 1969.
2M percent bonds maturing Dec. 15,1969.*
1971
19S9
1969
Aug. 15 Feb. 15 Aug. 6 Aug. 15
. Oct.
1 May 15 Sept. 24 Oct.
1
o
Sept. 17
7-69 Sept. 18
6-69,8-69 7H percent Series A-1973 at par in exchange for
l}4 percent Series EO-1969 notes maturing Oct. 1,1969.
4 percent bonds maturing Oct. 1, 1969.
2K percent bonds maturing Dec. 15, 1969.2
. Oct.
1973
1 May 15 Sept. 24 Oct.
1
Sept. 17
8-69 Sept. 18
6-69,7-69 7}4 percent Series C-1976 at 99.50 in exchange for
IJ?^ percent Series EO-1969 notes maturing Oct. 1,1969.
4 percent bonds maturing Oct. 1,1969.
2)^ percent bonds maturing Dec. 15,1969.3
Oct.
1976
1 Aug. 15 Sept. 24 Oct.
1
1970
Jan. 28
1970
1-70 Jan. 29
Jan. 28
2-70 Jan. 29
1-70,3-70 8M percent Series B-1973 at par in exchange for
4 percent bonds maturing Feb. 15, 1970.
2M percent bonds maturingMar. 15, 1970.5
Jan. 28
3-70 Jan. 29
1-70,2-70 8 percent Series A-1977 at par in exchange for.
4 percent bonds maturing Feb. 15,1970.
2J^ percent bonds maturingMar. 15,1970.6
Apr. 29
4-70 Apr. 30
5-70,6-70 7 ^ percent Series A-1973 at 99.40 in exchange for
b% percent Series B-1970 notes maturingMay 15,1970.
& s percent Series C-1970 notes maturingMay 15,1970.
Y
7 Oct. 1 May 15 May
Apr. 29
5-70 Apr. 30
4-70,6-70 8 percent Series A-1977 at par in exchange for
b% percent Series B-1970 notes maturingMay 15,1970.
6H percent Series C-1970 notes maturingMay 15, 1970.
Apr. 29
6-70 Apr. 30
4-70,5-70 75^ percent Series G-1971 at 99.95 for cash 8
1970
2-70,3-70 8K percent Series F-1971 at par in exchange for
4 percent bonds maturing Feb. 15, 1970.
2H percent bonds maturingMar. 15, 1970.4
1970
16
1973Feb. 15 Aug. 15 Feb.
4 Feb.
16
1977
Feb. 15 Feb. 15 Feb.
4 Feb.
16
6 May
15
7 Feb. 15 Feb. 15 May
6 May
15
1971
May 15 Nov. 15 May
5 May
15
1970
1970
4 Feb.
1969
1 Subscribers exchanging these bonds were credited with interest on the bonds from
June 15 to Dec. 15,1969 ($12.50 per $1,000) plus a cash payment of $2.70 per $1,000 and
charged interest on the notes from Oct. 1 to Dec. 15, 1969 ($16.41244 per $1,000).
2 Subscribers exchanging these bonds were credited with interest on the bonds from
June 15 to Dec. 15, 1969 ($12.50 per $1,000) plus a cash payment of $2.35 per $1,000 and
charged interest on the notes from Oct. 1 to Dec. 15. 1969 ($15.89955 per $1,000).
3 See Department Circular No. 8-69 in this exhibit for provisions for subscription and
payment.
* Subscribers exchanging these bonds were credited with interest on the bonds from
Sept. 15,1969, to Mar. 15,1970 ($12.50 per $1,000) plus a cash payment of $1.14 per $1,000
and charged interest on the notes from Feb. 15 to Mar. 15,1970 ($6.38122 per $1,000).
1971
Feb. 15 Aug. 15 Feb.
1973
1977
5 Subscribers exchanging these bonds were credited with interest on the bonds from
Sept. 15,1969, to Mar. 15,1970 ($12.50 per $1,000) plus a cash payment of $1.04 per $1,000
and charged interest on the notes from Feb. 15 to Mar. 16, 1970 ($6.28453 per $1,000).
6 Subscribers exchanging these bonds were credited with interest on the bonds from
Sept. 15,1969, to Mar. 15,1970 ($12.50 per $1,000) plus a cash payment of $0.95 per $1,000
and charged interest on the notes from Feb. 15 to Mar. 15, 1970 ($6.18785 per $1,000).
7 Interest was payable from May 15,1970.
8 Holders of notes maturing on May 15, 1970, were not offered preemptive rights to
exchange their holdings for the new notes. See Department Circular No. 6-70 in this
exhibit for provisions for subscription and payment.
CO
150
1970 REPORT OF THE SECRETARY OF THE TREASURY
Treasury Bills Offered and Tenders Accepted
Exhibit 2.—Treasury bills
During the fiscal year there were 52 weekly issues of 13-week and 26-week
bills (the 13-week bills represent additional amounts of bills with an original
maturity of 26 weeks), 12 monthly issues of 9-month and 1-year bills (the 9-month
bills represent additional amounts of bills with an original maturity of 1 year), 8
issues of tax anticipation series and one issue of a strip of additional amounts of
outstanding issues. Two press releases inviting tenders are reproduced in this
exhibit. The release of May 6, 1970, is representative of releases for regular
weekly, regular monthly, and tax anticipation series issues while the release of
August 14, 1969, is for the strip of issues. Also reproduced is the press release of
May 11, 1970, which is representative of releases announcing the results of the
offerings. Following the press releases is a table of data for each issue during the
fiscal year.
PRESS RELEASE OF MAY 6, 1970
The Treasury Department, by this public notice, invites tenders for two series
of Treasury bills to the aggregate amount of $3,100,000,000, or thereabouts, for
cash and in exchange for Treasury bills maturing May 14, 1970, in the amount
of $2,993,940,000, as foUows:
91-day bills (to maturity date) to be issued May 14, 1970, in the amount of
$1,800,000,000, or thereabouts, representing an additional amount of bills dated
February 13, 1970, and to mature August 13,1970, originally issued in the amount
of $1,200,664,000, the additional and original bills to be freely interchangeable.
182-day biUs, for $1,300,000,000, or thereabouts, to be dated May 14, 1970, and
to mature November 12,1970.
The bills of both series will be issued on a discount basis under competitive and
noncompetitive bidding as hereinafter provided, and at maturity their face amount
will be payable without interest. They will be issued in bearer form only, and
in denominations of $10,000, $50,000, $100,000, $500,000, and $1,000,000 (maturity
value).
Tenders will be received at Federal Reserve Banks and Branches up to the
closing hour, 1: 30 p.m., eastern daylight saving time, Monday, May 11, 1970.
Tenders will not be received at the Treasury Department, Washington. Each
tender must be for an even multiple of $10,000, and in the case of competitive
tenders the price offered must be expressed on the basis of 100, with not more
than three decimals, e.g., 99.925. Fractions may not be used. It is urged that
tenders be made on the printed forms and forwarded in the special enveloi)es
which will be supplied by Federal Reserve Banks or Branches on application
therefor.
Banking institutions generally may submit tenders for account of customers
provided the names of the customers are set forth in such tenders. Others than
banking institutions will not be permitted to submit tenders except for their own
account. Tenders will be received without deposit from incorporated banks and
trust companies and from responsible and recognized dealers in investment securities. Tenders from others must be accompanied by payment of 2 percent of the
face amount of Treasury bills applied for, unless the tenders are accompanied
by an express guaranty of payment by an incorporated bank or trust company.
Immediately after the closing hour, tenders will be opened at the Federal
Reserve Banks and Branches, following which public announcement will be
made by the Treasury Department of the amount and price range of accepted
bids. Only those submitting competitive tenders will be advised of the acceptance or rejection thereof. The Secretary of the Treasury expressly reserves the
right to accept or reject any or all tenders, in whole or in part, and his action
in any such respect shall be final. Subject to these reservations, noncompetitive
tenders for each issue for $200,000 or. less without stated price from any one bidder will be accepted in full at the average price (in three decimals) of accepted
competitive bids for the respective issues. Settlement for accepted tenders in
accordance with the bids must be made or completed at the Federal Reserve
Bank on May 14, 1970, in cash or other immediately available funds or in a like
face amount of Treasury bills maturing May 14, 1970. Cash and exchange
tenders will receive equal treatment. Cash adjustments will be made for dif-
EXHIBITS
151
ferences between the par value of maturing bills accepted in exchange and the
issue price of the new bills.
The income derived from Treasury bills, whether interest or gain from the
sale or other disposition of the bills, does not have any exemption, as such, and
loss from the sale or other disposition of Treasury bills does not have any special treatment, as such, under the Internal Revenue Code of 1954. The bills are
subject to estate, inheritance, gift or other excise taxes, whether Federal or
State, but are exempt from all taxation now or hereafter imposed on the principal or interest thereof by any State, or any of the possessions of the United
States, or by any local taxing authority. For purposes of taxation the amount
of discount at which Treasury bills are originally sold by the United States is
considered to be interest Under Sections 454(b) and 1221(5) of the Internal
Revenue Code of 1954 the amount of discount at which bills issued hereunder
are sold is not considered to accrue until such bills are sold, redeemed or otherwise disposed of, and such bills are excluded from consideration as capital
assets. Accordingly, the owner of Treasury bills (other than life insurance companies) issued hereunder need include in his income tax retum only the difference between the price paid for such bills, whether on original issue or on
subsequent purchase, and the amount actually received either upon sale or
redemption at maturity during the taxable year for which the return is made,
as ordinary gain or loss.
Treasury Department Circular No. 418 (current revision) and this notice
prescribe the terms of the Treasury bills and govern the conditions of their issue.
Copies of the circular may be obtained from any Federal Reserve Bank or Branch.
PRESS RELEASE OF AUGUST 14, 1969
The Treasury Department, by this public notice, invites tenders for additional
amounts of seven series of Treasury bills to an aggregate amount of $2,100,(X)0,(X)0,
or thereabouts, for cash. The additional bills will be issued August 25, 1969, wiU
be in the amounts, and will be in addition to the bills originally issued and
maturing, as follows:
Amount of
additional
issues
Original issue dates
$300,000,000 Mar. 2 0 . . .
300,000,000 M a r . 2 7 - . . .
300,000,000 Apr.3
Maturity dates
Sept. 18.
Sept 25.
Oct. 2 . . .
300,000,000 Apr. 10
300,000,000 Apr. 17
300,000,000 Apr. 24.
24
31
38
45
52
59
66
Oct. 9...
Oct. 16..
Oct. 23..
300,000,000 M a y l
Oct. 30..
2,100,000,000
Days from
Amount
Aug.25, 1969 currently
to maturity outstanding
(in millions)
Average..
$2, 701
2,701
2,701
2,701
2,703
2,703
2,701
45
The additional and original bills will be freely interchangeableBach tender submitted must be in the amount of $7,030, or an even multiple
thereof, and one-seventh of the amount tendered will be applied to each of the
above series of bills.
The bills offered hereunder wiU be issued on a discount basis under comi)etitive
and noncompetitive bidding as hereinafter provided, and at maturity their face
amount will be payable without interest. They will be issued in bearer form only,
and in denominations of $1,000, $5,000, $10,000, $50,000, $100,000, $500,000 and
$1,000,000 (maturity value).
Tenders will be received at Federal Reserve Banks and Branches up to the
closing hour, 1:30 p.m., eastern daylight saving time, Wednesday, August 20, 1969.
Tenders will not be received at the Treasury Department, Washington. In the
case of competitive tenders the price offered must be expressed on the basis of 100,
with not more than three decimals, e.g., 99.925. Fractions may not be used. A single
price must be submitted for each unit of $7,000, or even multiple thereof. A unit
152
1970 REPORT OF THE SECRETARY OF THE TREASURY
represents $1,000 face amount of each issue of bills offered hereunder, as previously described. It is urged that tenders be made on the printed forms and forwarded in the special envelopes which will be supplied by Federal Reserve Banks
and Branches on application therefor.
Banking institutions generally may submit tenders for account of customers
provided the names of the customers are set forth in such tenders. Others than
banking institutions will not be permitted to submit tenders except for their own
account. Tenders will be received without deposit from incorporated banks and
trust companies and from responsible and recognized dealers in investment
securities. Tenders from others must be accompanied by payment of 2 percent of
the face amount of Treasury bills applied for, unless the tenders are accompanied
by an express guaranty of payment by an incorporated bank or trust company.
All bidders 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 any bills
of these additional issues at a specific rate or price, until after 1:30 p.m., eastern
daylight saving time, Wednesday, August 20, 1969.
Immediately after the closing hour, tenders will be opened at the Federal
Reserve Banks and Branches, following which public announcement will be made
by the Treasury Department of the amount anJd price range of accepted bids.
Those submitting tenders will be advised of the acceptance or rejection thereof.
The Seciietary of the Treasury expressly reserves the right to accept or reject any
or all tenders, in whole or in part, and his action in any such respect shall be
final. Noncompetitive tenders for $210,000 or less (in even multiples of $7,000)
without stated price from any one bidder will be accepted in full at the average
price (in three decimals) of accepted competitive'bids. Settlement for accepted
tenders in accordance with the bids must be made or completed at the Federal
Reserve Bank or Branch in cash or other immediately available funds on
August 25, 1969. Any qualified depositary will be permitted to make settlement by
credit in its Treasury tax and loan account for Treasury bills allotted to it for
itself and its customers.
The income derived from Treasury bills, whether interest or gain from the
sale or other disposition of the bills, does not have any exemption, as such, and
loss from the sale or other disposition of Treasury bills does not have any
special treatment, as such, under the Intemal Revenue Code of 1954. The bills
are subject to estate, inheritance, gift or other excise taxes, whether Federal or
State, but are exempt from all taxation now or hereafter imposed on the principal or interest thereof by any State, or any of the possessions of the United
States, or by any local taxing authority. For purposes of taxation the amount
of discount at which Treasury bills are originally sold by the United States is
considered to be interest.
Under Sections 454(b) and 1221(5) of the Internal Revenue Code of 1954 the
amount of discount at which bills issued hereunder are sold is not considered
to accrue until such bills are sold, redeemed or otherwise disposed of, and such
bills are excluded from consideration as capital assets. Accordingly, the owner of
Treasury bills (other than life insurance companies) issued hereunder need include in his income tax return only the difference between the price paid for such
biUs, whether on original issue or on subsequent purchase, and the amount ac-.
tually received either upon sale or redemption at maturity during the taxable
year for which the return is made, as ordinary gain or loss. Purchasers of a strip
of the bills offered hereunder should, for tax purposes, take such bills on to their
books on the basis of their purchase price prorated to each of the seven outstanding issues using as a basis for proration the closing market prices for each of
the issues on August 25, 1969. (Federal Reserve Banks will have available a
list of these market prices, based on the mean between the bid and asked quotations fumished by the Federal Reserve Bank of New York.)
Treasury Department Circular No. 418, Revised, and this notice, prescribe the
terms of the Treasury bills and govern the conditions of their issue. Copies of
the circular may be obtained from any Federal Reserve Bank or Branch.
153
EXHIBITS
PRESS RELEASE OF MAY 11, 1970
The Treasury Department announced that the tenders for two series of
Treasury bills, one series to be an additional issue of the bills dated February 13,
1970, and the other series to be dated Miay 14, 1970, which were offered on
May 6, 1970, were opened at the Federal Reserve Banks today. Tenders were invited for $1,800,000,000, or thereabouts, of 91-day bills and for $1,300,000,000, or
thereabouts, of 182-day bills. The details of the two series are as follows:
91-day Treasury bills
maturing Aug. 13, 1970
Range of accepted
competitive bids
Approximate
equivalent
annual
rate
Price
High....
Low
Average.
1 $98. 292
3 98. 203
98. 232
Percent
6.757
7.109
5 6.994
182-day Treasury bUls
maturing Nov. 12, 1970
Price
Approximate
equivalent
annual
rate
Percent
6.895
7.291
«7.202
2 $96. 614
* 96.314
96. 359
1 Excepting 1 tender of $850,000.
2 Excepting 1 tender of $10,000.
3 21% of the amount of 91-day bills bid for at the low price was accepted.
* 69% of the amount of 182-day biUs bid for at the low price was accepted.
5 These rates are on a bank discount basis. The equivalent coupon issue yields are 7.22% for the 91-day
bills, and 7.58% for the 182-day bills.
Total tenders applied for and accepted by Federal Reserve districts
Applied for
District
Boston
New York
Philadelphia
Cleveland
Richmond...
Atlanta
Chicago
St. Louis
Minneapolis
KansasCity
Dallas
SanFrancisco...
-
Total
...
Accepted
$32,530,000
2,181,360,000
42,760,000
38,400,000
29,760,000
44,270,000
200,630,000
38,950,000
22,310,000
35,580,000
28,750,000
169,760,000
$22,530,000
1,258,360,000
27,760,000
37,550,000
21,680,000
30,870,000
160,730,000
36,350,000
12,520,000
30,030,000
18,250,000
144,840,000
Applied for
218, 050, 000
$11,160,000
895,680,000
11, 770,000
27, 730,000
13,020,000
21,120,000
132,290,000
21,290,000
6,450,000
20,260,000
17,640,000
121,750,000
2,865,060,000 ' 1,800,470,000 2,595,800,000
21,300,160,000
$23,160,000
1,962,180,000
11, 770,000
50,830,000
21, 520,000
34, 520, 000
184, 790,000
24, 910, 000
13,650, 000
23,480,000
26,940,000
»Includes $386,920,000 noncompetitive tenders accepted at the average price of 98.232.
2 Includes $219,680,000 noncompetitive tenders accepted at the average price of 96.359.
Accepted
Summary of information pertaining to Treasury hills issued during the fiscal year 1970
[DoUar amounts in thousandsl
Maturity value
Prices and rates
Tenders accepted
Date of
issue
Date of
maturity
Days
to
maturity I
Total
applied
for
Total
accepted
On
competitive basis
Total bids accepted
On noncompetitive basis
Average
price
per
hundred
Equivalent
average
rate
(percent)
Competitive bids accepted
High
Price
per
hundred
Low
Equivalent
Price
rate
per
(percent) hundred
Equivalent
rate
(percent)
Amount
maturing
on issue
date of
new
offering
• ^
O
O
REGULAR WEEKLY
1969
July
3
3
10
10
17
17
24
24
31
31
Aug.
7
7
14
14
21
21
Oct.
Jan.
Oct.
Jan.
Oct.
Jan.
Oct.
Jan.
Oct.
Jan.
Nov.
Feb.
Nov.
Feb.
Nov.
Feb.
2,1969
2,1970
9,1969
8,1970
16,1969
15,1970
23,1969
22,1970
30,1969
29,1970
6,1969
5,1970
13,1969
13,1970
20,1969
19,1970
91
183
91
182
91
182
91
182
91
182
91
182
91
183
91
182
1969
Sept. 18
Sept. 25
Oct. 2
253 Oct. 9
Oct. 16
Oct. 23
Oct. 30
28 Nov. 28
28 Feb. 26,1970
24
31
38
45
52
59
66
92
182
$2,404,391
1, 937, 868
2,424,132
2,192,369
2,610, 651
2,481, 932
2, 591,328
2, 285, 216
2, 643, 536
2,146, 722
2, 705,008
2,444, 938
2, 689,302
2,127, 707
2, 628,374
2,168, 916
$1,600,180
1,099, 668
1, 599, 732
1,102, 021
1, 601, 561
1,100, 863
1, 600, 718
1,101, 212
1, 601,313
1,100, 720
1, 602,140
1, 203, 246
1, 589, 729
1,199,449
1, 601, 668
1, 202,422
$1,228,367
894,428
1, 225, 994
848,626
1,159,881
815,628
1,192,987
826, 671
1, 208, 712
837,383
1, 212,101
971,016
1, 204, 636
983,029
1, 253,083
992, 554
$371, 813
205, 240
373, 738
253, 395
441, 680
285, 235
407, 731
274, 541
392, 601
263, 337
390, 039
232, 230
385, 093
216,420
348, 585
209, 868
98. 368
96.470
98. 213
• 96.305
98.204
96. 259
98.175
96. 229
98.187
96. 303
98. 232
96. 418
98. 210
96. 301
98. 267
96. 400
6.456
6.944
7.069
7.308
7.105
7.400
7.218
7.460
7.172
7.313
6.993
7.086
7.083
7.277
6.855
7.121
98.400
2 96. 512
2 98. 241
2 96. 352
2 98. 223
2 96. 287
2 98.190
2 96. 248
2 98.194
96. 319
2 98. 247
96.444
2 98. 220
2 96. 316
98. 280
2 96. 415
6.330
6.862
6.959
7.216
7.030
7.344
7.160
7.422
7.145
7.281
6.935
7.034
7.042
7.247
6.804
7.091
98. 328
96. 422
98.202
96. 289
98.194
96. 246
98.170
96. 224
98.182
96. 295
98. 226
96. 411
98. 206
96. 290
98. 255
96. 388
6.615
7.039
7.113
7.340
7.145
7.425
7.240
7.469
7.192
7.329
7.018
7.099
7.097
7.298
6.903
7.145
3, 251, 377
2,120, 538
2, 027, 907
92, 631
99.307
5.643
99. 346
5.232
99.284
5.728
2,413,410
2, 243, 259
1, 600, 219
1, 201, 022
1,263,353
1, 018, 378
336, 866
182, 644
98.186
96. 313
7.099
7.292
2 96. 328
7.012
7.263
98.176
96. 298
7.137
7.323
$1,601, 962
1,102,883
1, 602,105
1,101, 815
1, 601,030
1,100, 670
1,600,980
1,097, 452
1,603,353
1,103, 254
1, 700,279
1,100, 483
1, 701, 597
1,100, 498
1, 700,472
1,104,142
o
S3
o
• ^
>
SJ
Hi
1,701,307
1,100, 827
Sept.
4
4
11
11
18
18
25
Dec.
Mar.
Dec.
Mar.
Dec.
Mar.
Dec.
4,1969
5,1970
11,1969
12,1970
18,1969
19,1970
26,1969
91
182
91
182
91
182
92
2, 684,106
2,104, 474
2, 568, 988
2, 084,197
2, 671,286
2,132, 873
2, 767, 867
1, 602,411
1, 201, 020
1, 600, 2161, 201, 360
1, 801,038
1, 200, 698
1,800, 570
1, 288, 387
1, 023, 981
1,189, 242
988,497
1,419, 455
985, 200
1,406, 535
314, 024
177, 039
410, 974
212, 863
381, 583
215, 498
394, 036
98. 227
96. 377
98.184
96. 256
98.191
96. 295
98.170
7.012
7.167
7.183
7.407
7.156
7.329
7.162
2 98. 244
96.406
2 98. 200
2 96. 268
98. 201
2 96. 306
98.181
6.947
7.111
7.121
7.382
7.117
7.307
7.118
98. 222
96. 360
98.176
96.240
98.185
96. 289
98.164
7.034
7.200
7.216
7.437
7.180
7.340
7.184
1, 700, 954
1,101, 660
1, 700,145
1,100,151
1, 600, 291
4 1,100,321
1, 600, 338
986,888
214, 227
96. 278
7.361
2 96 288
7.342
96. 274
7.370
* 1,100, 689
417, 939
236,862
450, 535
270,005
384, 750
210, 359
421,018
259,985
368, 075
215, 969
371, 592
211, 396
363,801
225,329
340,858
204.187
337, 676
225,140
345,880
259,909
406,793
287,814
396, 206
263,873
348, 605
210, 705
98.184
96. 289
98. 219
96. 315
98. 220
96. 296
98. 237
96. 327
98. 223
96. 328
98. 231
96. 319
98.171
93. 241
98.195
96.199
98.131
95.964
98.116
96.161
98. 053
96. 055
97.998
95. 995
98.049
96. 071
7.106
7.340
7.047
7.290
7.041
7.327
6.973
7.265
7.028
7.263
6.999
7.281
7.157
7.435
7.142
7.619
7.477
8.028
7.462
7.613
7.701
7.803
7.920
7.921
7.805
7.815
2 98.196
96. 306
98.238
2 96. 334
98.231
2 96.304
2 98. 255
96. 341
98.231
96.336
2 98.245
2 96. 341
2 98.190
2 96. 250
98.206
2 96.212
2 98.178
2 96.968
98.132
2 96.182
2 98. 068
2 96. 078
3 98.033
2 96. 030
98. 060
96.094
7.063
7.307
6.971
7.261
6.998
7.311
6.903
7.238
6.998
7.247
6.943
7.238
7.083
7.418
7.097
7.493
7.288
8.019
7.390
7.562
7.643
7.768
7. 782
7.853
7.760
7.769
98.173
96. 282
98. 213
96. 300
98.215
96.292
98.231
96. 321
98. 220
96. 322
98.224
96. 310
98.163
96.236
98.184
96.192
98.119
96. 962
98.109
96.132
98. 041
96.032
97. 988
95. 980
98. 041
96. 067
7.149
7.364
7.069
7.319
7.062
7.335
6.998
7.277
7.042
7.275
7.026
7.299
7.188
7.447
7.184
7.532
7.624
8.031
7.481
7.661
7.750
7.849
7.960
7.952
7.836
7.842
1, 600,180
« 1,100, 404
1, 699, 732
4 1,101,261
1,601,661
4 1,100,975
1,600, 718
4 1,102, 578
1, 601,313
4 1,099, 921
1,602,140
1,300,282
1,589, 729
1,300, 474
1, 601,668
1, 300, 740
1, 600,219
1, 300,016
1, 602,411
1,301,356
1, 600,216
1, 300, 610
1,801, 038
1,100, 761
1,800, 570
1,100,270
1970
25 Mar. 26
2
2
9
9
16
16
23
23
30
30
Nov. 6
6
13
13
20
20
28
28
Dec. 4
4
11
11
18
18
26
26
Oct.
Jan.
Apr.
Jan.
Apr.
Jan.
Apr.
Jan.
Apr.
Jan.
Apr.
Feb.
May
Feb.
May
Feb.
May
Feb.
May
Mar.
June
Mar.
June
Mar.
June
Mar.
June
2
2
8
9
15
16
22
23
29
30
5
7
13
14
19
21
26
28
5
4
12
11
19
18
26
25
182
2, 329, 900
1, 201,115
92
182
91
182
91
182
91
182
91
182
91
182
92
182
91
182
90
181
91
182
91
182
91
182
90
181
2, 506, 684
2,211,157
2, 689,946
2, 021, 550
2, 577, 554
2, 292, 771
2,830, 645
2, 490,155
2, 945,889
2,879, 717
2, 994,349
2,294, 491
2,778, 648
2, 693, 044
2, 655, 443
2,265,239
2,733, 416
3,392, 301
2,867, 269
2,151,865
2,379,947
2, 097,331
2, 666, 351
2,176,320
2, 441, 468
1,872, 455
1,811,541
1,208, 450
1,800, 650
1,200, 584
1,804, 670
1,203,109
1,798,980
1,200, 393
1, 799, 921
1,200, 988
1,801,682
1, 201,387
1,800, 358
1,204,069
1,801,152
1,200, 408
1,800, 624
1, 201,189
1, 799, 794
1,200, 237
1,799, 973
1,200, 323
1,801, 446
1,200,879
1,809,348
1,209,135
1,393, 602
971, 698
1, 350,115
930, 679
1, 419, 920
992,760
1,377, 962
940, 408
1,431.846
985, 019
1,430, 090
989, 991
1, 436, 567
978, 740
1,460,291
996, 221
1,462, 948
976,049
1, 453,914
940, 328
1, 393,180
912, 509
1,405,240
937,006
1, 460,743
998,430
I—(
See footnotes at end of table.
Ol
Or
CO
o
Summary of information pertaining to Treasury bills issued during the fiscal year 1970—Continued
O
SI
[DoUar amounts in thousands]
H3
Maturity value
Prices and rates
Tenders accepted
Date of
issue
Date of
maturity
Days
to
maturity!
Total
applied
for
Total
accepted
O
On noncompetitive basis
On
competitive basis
Amount
maturing
on issue
Equivalent
High
Low
average
date of
Equivalent
Equivalent
Price
new
Price
rate
rate
per
rate
per
offering
(percent)
(percent)
hundred
(percent) hundred
Total bids accepted
Average
price
per
hundred
Competitive bids accepted
w
ZP
O
SJ
REGULAR WEEKLY
>
1970
Jan.
Feb.
2
2
8
8
15
15
22
22
29
29
5
5
13
13
19
19
26
26
Apr.
July
Apr.
July
Apr.
July
Apr.
July
Apr.
July
May
Aug.
May
Aug.
May
Aug.
May.
Aug.
2
2
9
9
16
16
23
23
30
30
7
6
14
13
21
20
28
27
90
181
91
182
91
182
91
182
91
182
91
182
90
181
91
182
91
182
2,426,370
2,216, 501
2,720,023
2, 613, 799
2,875, 904
3,169,202
3,159,906
2, 532,320
2, 774, 430
2,263,922
2,824,443
2,649, 392
2, 896,356
2, 367,821
2,693, 715
2, 092, 740
2, 673,164
1,968, 087
1,802,265
1,201,671
1,804,029
1,207,360
1,802,010
1,206,324
1,802,069
1,204,197
1,800, 648
1,200,395
1,800, 962
1,202, 619
1,789, 871
1,200, 664
1,802, 684
1,197, 686
1,801,104
1,300, 775
1,402,808
937,895
1,286. 724
720,408
1,234, 670
612,032
1,263,278
760,604
1, 308, 080
870,880
1, 301,613
874,221
1,313,347
873,158
1,374,914
911,145
1,487,416
1,113, 522
399, 457
263,776
618, 305
486,952
567,340
593,292
538,791
443, 593
492,468
329, 515
499, 349
328, 398
476, 524
327, 506
427, 670
286, 440
313, 689
187,253
97. 976
95.927
97. 988
96. 960
98. 019
96. 066
98. 031
96.126
98. 006
96.069
98.040
96.098
98.172
96.286
98.287
96. 503
98.278
96. 474
8.096
8.101
7.960
7.991
7.837
7.783
7.788
7.663
7.890
7.776
7.754
7.719
7.311
7.387
6.776
6.917
6.813
6.974
98. 025
2 95.966
2 98.012
2 95. 966
2 98.029
2 96.076
98.041
2 96.158
2 98. 018
2 96.090
98. 049
96.101
2 98.186
2 96.294
2 98. 310
2 96. 531
98.289
96.497
7.900
8.023
7.865
7.979
7.797
7.762
7.750
7.600
7.841
7.734
7.718
7.712
7.266
7.371
6.686
6.862
6.769
6.929
97. 963
96.904
97. 982
95. 966
98.009
96. 064
98.027
96.120
97. 998
96.061
98.036
96. 096
98.164
96.278
98. 273
96. 470
98.268
96. 450
8.188
8.147
7.983
7.999
7.876
7.785
7.805
7.675
7.920
7.791
7.770
7.722
7.344
7.403
6.832
6.982
6.862
7.022
1,811,641
1,099,668
1,800,650
1,102,021
1,804,670
1,100,863
1,798,980
1,101,212
1,799,921
1,100,720
1,801, 682
1,203,246
1,800,368
1,199,449
1,801,152
1,202,422
1,800,624
1,201,022
O
>
5
5
12
12
19
19
26
26
June 4
Sept. 3
June 11
Sept. 10
June 18
Sept. 17
June 26
Sept. 24
91
182
91
182
91
182
91
182
2,458,800
2,192,130
2,986,060
2,831, 730
3,060, 790
2,684,820
3,837,970
2,383,180
1,801,470
1,301, 680
1,798,040
1,301,270
1,802, 640
1,303, 370
1,804,070
1,302,370
1,463,140
1,088, 730
1,436, 090
1,102,430
1,434,760
1,123,860
1,442,230
1,127, 430
338,330
212,960
362,960
198,840
367,780
179, 610
361,840
174, 940
98.264
96. 576
98.262
96. 598
98. 272
96. 609
98. 417
96.874
6.868
6.773
6.877
6.729
6.837
6.707
6.264
6.184
98.283
96. 602
98.267
96. 608
98.285
96. 613
98.421
96. 896
6.793
6.721
6.866
6.709
6.785
6.700
6.247
6.140
98. 249
96.564
98.266
96. 694
98.268
96. 598
98. 415
96.868
6.927
6.796
6.899
6.737
6.862
6.729
6.270
6.215
1,799, 794
1,201,020
1,799, 973
1,201,360
1,801,446
1,200,698
1,809, 348
1,201,115
2
2
9
9
16
16
23
23
30
30
May
7
7
14
14
21
21
28
28
June 4
4
11
11
18
18
25
25
July 2
Oct: 1
July 9
Oct. 8
July 16
Oct. 15
July 23
Oct. 22
July 30
Oct. 29
Aug. 6
Nov. 6
Aug. 13
Nov. 12
Aug. 20
Nov. 19
Aug. 27
Nov. 27
Sept. 3
Dec. 3
Sept. 10
Dec. 10
Sept. 17
Dec. 17
Sept. 24
Dec. 24
91
182
91
182
91
182
91
182
91
182
91
182
91
182
91
182
91
183
91
182
91
182
91
182
91
182
2,603,640
2,097, 920
2, 617, 630
2,695,860
3,087, 680
2, 446, 620
2, 768,360
2,272, 430
2,445, 320
2, 905, 790
2,869, 470
2,846,030
2,866, 620
2, 597, 320
2, 966, 990
2, 605, 710
2, 853, 750
3,216, 420
2, 743, 440
2, 809,000
3,002,230
2, 210, 680
3, 064, 406
2,114, 930
2,838, 400
2, 412,170
1,800,270
1, 301,180
1,801,980
1, 304, 990
1,802, 360
1, 300, 760
1,802, 710
1,302,560
1,801,200
1, 301,300
1,800, 730
1, 301,030
1,802,030
1,301, 680
1,789, 770
1,303, 530
1,801, 900
1,300, 780
1,800, 910
1, 306, 400
1,803,040
1,302,860
1,802, 670
1, 302, 670
1,801,070
1, 302, 670
1, 482, 410
1,139,340
1,411,580
1, 087, 740
1,403,210
1,094,270
1, 383,450
1,106, 540
1,414, 740
1,118,920
1, 423,060
1,088, 470
1,413,550
1,080,480
1,423,480
1,096,400
1,481, 700
1,107, 060
1, 463,030
1,091, 590
1, 428,090
1,083,280
1, 434, 740
1,085,130
1,439,070
1,071,220
317,860
161,840
390,400
217,250
399,140
206, 490
419,260
196,010
386, 460
182,380
377, 670
212, 660
388,480
221, 200
366,290
208,130
320,200
193, 720
347,880
214,810
374, 950
219, 680
367,830
217, 640
362, 000
231, 350
98.400
96. 769
98.380
96. 737
98.405
96.842
98. 363
96. 717
98. 262
96. 333
98.184
96.212
98. 232
96. 359
98.274
96. 463
98.197
96.261
98. 275
96. 633
98.285
96. 614
98. 298
96.488
98. 325
96. 497
6.329
6.392
6.408
6.455
6.310
6.247
6.476
6.494
6.876
7.253
7.184
7.493
6.994
7.201
6.827
6.996
7.133
7.366
6.773
6.858
6.729
6.896
6.732
6.946
6.626
6.929
98. 435
2 96. 779
2 98.393
2 96. 760
98.418
2 96 849
2 98. 382
2 96. 764
2 98. 306
96. 398
2 98. 243
2 96.294
2 98.292
2 96. 614
98. 294
96. 496
a 98.230
. 2 96.294
98.294
96. 555
98.299
2 96. 542
98. 312
2 96. 524
2 98. 338
2 96.620
6.191
6.371
6.357
6.409
6.258
6.233
6.401
6.401
6.702
7.125
6.961
7. 331
6.757
6.895
6.749
6.931
7.002
7.290
6.749
6.814
6.729
6.840
6.678
6.876
6.676
6.884
98. 390
96.740
98. 366
96. 733
98.402
96. 837
98. 357
96. 700
98.225
96. 324
98.168
96.188
98.203
96. 314
98.268
96. 450
98.185
96. 266
98.266
96. 530
98. 282
96. 496
98. 296
96. 466
98. 318
96. 491
6.369
6.448
6.464
6.462
6.322
6.266
6.500
6.527
7.022
7.271
7.247
7.540
7.109
7.291
6.852
7.022
7.180
7.365
6.860
6.864
6.796
6.931
6.745
6.990
6.654
6.941
1,802,265
1,208, 450
1,804,029
1,200,684
1,802,010
1,203,109
1,802,069
1,200,393
1,800,548
1,200,987
1,800,962
1,201,387
1,789,871
1,204,069
1,802,584
1,200,408
1,801,104
1,201,189
1,801,470
1,200,237
1,798,040
1,200,323
1,802, 640
1,200,879
1,804,070
1,209,135
Mar.
Apr.
H
H9
CO
Ol
CX)
CO
<I
o
Summary of information pertaining to Treasury hills issued during the fiscal year 1970—Continued
O
[Dollar amounts in thousands]
Maturity value
Date of
issue
Date of
maturity
Days
to
maturity 1
Prices and rates
Tenders accepted
Total
applied
for
Total
accepted
On
competitive basis
Amount
maturing
Equivalent
High
Low
on issue
average
date of
rate
Price
Equivalent
Price
Equivalent
new
(percent)
per
rate
per
rate
offering
hundred
(percent) hundred
(percent)
Total bids accepted
On noncompetitive basis
Average
price
per
hundred
Competitive bids accepted
o
^
H
W
H
ZP
R E G U L A R MONTHLY
1969
31 Apr. 30
31 July 31
2 May 31
2<5 Aug. 31
30 June 30
30 Sept. 30
Oct. 31 July 31
31 Oct. 31
Dec. 1 Aug. 31
1<5 Nov. 30
31 Sept. 30
31 Dec. 31
July
Sept.
1970
Feb. 2
Oct.
Jan.
Nov.
2 6 Feb.
31 Dec.
26
Mar. 2
>
1970
31
31,1971
30,1970
28,1971
31,1970
273
365
271
366
273
365
273
366
273
366
273
365
1,609,582
2,204,364
1,312,487
1, 982,248
1,257, 527
1, 950,309
1,212, 714
2,291,136
1, 522,192
2,249,496
1,003,321
1, 646,031
500,151
1,202,063
500,319
1,200,516
500,267
1,006,264
600,254
1,002, 637
600, 666
1,001,199
500,218
1,002,063
486,108
1,157,667
482,036
1,143,096
483,998
948, 634
479,843
927,627
480, 663
939,120
476, 600
939,740
14, 043
44,406
18,283
57,420
16,269
66, 630
20,411
74,910
20,103
62,079
24, 618
62, 323
94.383
92.686
94.439
92. 558
94.421
92. 648
94. 607
92. 774
94.102
92. 303
94.084
92.334
7.407
7.313
7.387
7.340
7.357
7.350
7.244
7.127
7.777
7.591
7.801
7.561
94.422
92.649
94. 478
92. 599
2 94.464
92. 660
94. 551
92. 786
94.167
2 92. 347
94.127
92. 384
7.366
7.250
7.335
7.300
7.300
7.239
7.185
7.115
7.692
7.548
7.745
7.612
94.372
92. 659
94.414
92.531
94.408
92. 630
94.483
92. 763
94.085
92.274
94. 047
92.289
7.422
7.339
7.421
7.367
7.374
7.368
7.275
7.138
7.800
7.620
7.860
7.605
501,533
5 1,000,963
606,256
«1,000,387
600,400
1,000,607
600,110
1,002,199
500,061
1,000,940
500,560
999,152
271
365
273
366
275
1,344,331
1,697,921
1,227,974
1,884,016
1,613,500
501,831
1,003,046
500,074
1,200,147
500,400
474,897
866,502
476,752
1,096,017
480,440
26,934
136,544
23,322
104,130
19,960
94.185
92.362
94. 696
92.971
95.340
7.724
7.633
6,995
6.932
6.101
94.211
2 92.421
2 94.724
2 93.056
96.427
7.690
7.476
6.957
6.849
5.986
94.151
92.300
94.658
92.925
95.326
7.770
7.596
7.044
6.978
6.119
600,489
1,000,177
500,164
1,000,376
500,821
SJ
§
>
1971
Mar. 31
Jan. 31
Apr. 30
Feb. 28
16 May 31
30 Mar. 31
30 June 30
31
Apr. 30
30
June 1
366
276
365
272
365
274
366
1,903,830
1,000,710
1,724, 780
1,292,760.
2, 401,050
1,243,190
1,774,040
1,201,060
500,310
1,199,980
499,960
1,200,170
600,660
1,201,430
1,132,330
484,330
1,146,450
480, 630
1,146,370
479,110
1,126,230
68,730
15,980
64,530
19,330
53,800
21, 450
75,200
93. 783
94. 753
93.091
94. 445
92. 622
94. 620
92. 823
6.132
6.843
6.814
7.353
7.277
7.068
7.079
93.866
2 94.844
2 93.268
2 94. 618
2 92.670
2 94.695
92. 923
6.050
6.725
6.660
7.256
7.230
6.970
6. 980
93.694
94.637
92.908
94.407
92.599
94.604
92. 766
6.220
6.995
6,995
7.403
7.300
7.090
7.136
1,000,536
500,161
1,000,634
600,319
1,000,225
500,267
1,201,406
TAX ANTICIPATION
1969
July
1969
18 Dec. 22
157
3,389,846
1, 762, 646
1,605,600
157,046
97.045
6.775
97.144
6.549
96. 996
6.888
248
190
236
147
208
3,386,338
3,179,905
4,262,430
2,493,530
2,913,675
1,752,433
2,006, 704
3,004,380
1,007,472
1,503, 570
1,622,900
1,897,350
2, 792, 460
890, 047
1,398,247
129,533
109,354
211,920
117,425
105,323
95.039
96.156
95.277
96.809
95. 392
7.202
7.284
7.204
7.814
7.976
2 95.143
96.200
95.398
2 96.869
2 95. 484
7.050
7.200
7.020
7.668
7.816
95.000
96.133
95.234
96. 782
96. 349
7.258
7.327
7.270
7.881
8.050
50
180
3,404,308
6, 627,570
1, 753,068
1, 768,200
1, 628,309
1, 598,330
124,759
159,870
99.090
96.911
6.649
6.177
2 99.132
96. 947
6.250
6.106
99.068
96. 900
6.710
S
6.200
fi
1970
18
14
29
N o v . 26
26
Oct.
Mar. 23
Apr. 22
June 22
Apr. 22
June 22
1970
Mar. 3 Apr. 22
26 Sept. 22
1 The 13-week bUls are additional issues of bills with an original maturity of 26 weeks
except that when the date of maturity of either a 13-week or 26-week issue is on the last
day of a month the biUs are additional issues of biUs with an original maturity of 1
year. The 9-month bills are additional issues of bills with an original maturity of 1 year.
2 Relatively small amounts of bids were accepted at a price or prices somewhat above
the high shown. However, the higher price or prices are not shown in order to prevent
an appreciable discontinuity in the range (covered by the high to the low prices shown)
which would make it misrepresentatlve.
3 An additional $302,934,000 of each of the issues issued as a strip.
' 4 An additional $302,934,000 of the strip of bUls issued Aug. 25, 1969, matured.
«In addition $200,365,000 of a strip of bUls issued Mar. 3,1969, matured.
* Issue date on biUs is last day of previous month.
NOTE.—The usual timing with respect to weekly issues of Treasury biUs is: Press
release inviting tenders, 8 days before date of issue, and closing date for the receipt of
tenders and press release announcing results of auction, 3 days before date of issue.
Figures are final and may differ from those shown in the press release announcing
preliminary results.
For each issue of regxilar weekly (13-week and 26-week bills) and regular monthly
(9-month and 1-year) bills noncompetitive tenders for $200,000 or less from any 1 bidder
were accepted in fuU at the a v e r s e price of accepted competitive bids. For tax anticipation bills the maximum amount for noncompetitive tenders was $300,000 for the July 18
issues, $400,000 for the Oct. 14 and 29 issues, and $200,000 for the Nov. 26, Mar. 3 and
Mar. 26 issues. The maximum amount for noncompetitive tenders for the strip of biUs
issued Aug. 25 was $210,000.
All equivalent rates of discount are on a bank-discount basis.
Qualified depositaries were permitted to make payment by credit in Treasury tax
and loan accounts for aU of the tax anticipation series issues, except that for the Oct. 14
issue credit was limited to 50 percent, and the strip issue aUotted to them for themselves and their customers. Payment by credit in Treasury tax and loan accounts for
the regular weekly and regular monthly bills was not permitted.
O
Q
Ol
CO
160
1970 REPORT OF THE SECRETARY OF THE TREASURY
Reflations
Exhibit 3.—Department Circular No. 3-67, December 5, 1969, Revised, Notice
of T e r m i n a t i o n of Sale of United S t a t e s Savings N o t e s
TREASURY
DEPARTMENT,
Washington, Decemher 5, 1969.
NOTICE O F TERIVIINATION O F SALE
The sale of United States Savings Notes, offered p u r s u a n t to D e p a r t m e n t of
the T r e a s u r y Circular, Public Debt Series No. 3-67, dated F e b r u a r y 22, 1967, as
revised (31 C F R P a r t 342), is hereby t e r m i n a t e d effective a t the close of business
J u n e 30,1970.
JOHN
K.
CARLOCK,
Fiscal Assistant Secretary of the Treasury.
Exhibit 4.—Department Circular No. 653, December 12, 1969, E i g h t h Revision,
offering of United S t a t e s savings bonds, Series E
TREASURY
DEPARTMENT,
Washington, Decemher 12, 1969.
P A R T 316—OFFERING OF U N I T E D STATES SAVINGS BONDS, S E R I E S E
T h e regulations set forth in T r e a s u r y Department Circular No. 653, Seventh
Revision, dated March 18, 1966, and the tables incorporated therein, a s revised,
amended a n d supplemented (31 C F R P a r t 316), have been further revised and
amended a s shown below. The changes were effected under authority of section
22 of the Second Liberty Bond Act, a s amended (49 Stat. 21, as amended; 31
U.S.C. 757c) and 5 U.S.C. 301. This revision w a s originally published in Volume
34, F e d e r a l Register, P a r t I I , December 6, 1969, a n d is republished to include
table 1, a n d subsequent tables, which were not included in the original publication. Notice a n d public procedures thereon a r e unnecessary a s public property
and contracts a r e involved.
D a t e d : December 12, 1969.
[SEAL]
J O H N K . CARLOCK,
Fiscal Assistant Secretary.
T r e a s u r y D e p a r t m e n t Circular No. 653, Seventh Revision, dated IVIarch 18,
1966, and the tables incorporated therein (31 CFR P a r t 316), a s amended, revised
a n d supplemented, a r e hereby further amended a n d issued as the Eighth Revision, a s follows, effective December 1, 1969.
Sec.
316.1
Offering of bonds.
316.2
Description of bonds.
316.3
Goveming regulations.
316.4
Registration.
316.5
Limitation on holdings.
316.6
P u r c h a s e of bonds.
316.7
Delivery of bonds by mail.
316.8
Extended terms and improved yields for outstanding bonds.
316.9
Taxation.
316.10 P a y m e n t or redemption.
316.11 Reservation a s to issue of bonds.
316.12 Preservation of rights.
316.13 Fiscal agents.
316.14 Reservations as to terms of offer.
Tables of redemption values a n d investment yields.
Appendix. ,
AUTHORITY : The provisions of this Part 316 issued under authority of Sec. 22 of the
Second Liberty Bond Act, as amended, 49 Stat. 21, as amended (31 U.S.C. 757c).
§ 316.1 Offering of bonds.
The Secretary of the T r e a s u r y hereby offers for sale to t h e people of the United
States, U.S. Savings Bonds of Series E, hereinafter generally referred to as
"Series E bonds" or **bonds." This offer will continue until terminated by the
Secretary of t h e Treasury.
EXHIBITS
161
§ 316.2 Description of bonds.
(a) General. Series E bonds bear a facsimile of the signature of the Secretary
of the Treasury and of the Seal of the Department of the Treasury. They are
issued only in registered form and are nontransferable.
(b) Denominations and prices. Series E bonds are issued on a discount basis.
The denominations and purchase prices a r e :
Denomination
$25
;
$50
$75
—
$100
$200
$500
$1,000
$10,000^
$100,000^
Purchase price
——
$18. 75
37. 50
56. 25
75. 00
150. 00
375.00
750. 00
7, 500. 00
75, 000. 00
1 The $10,000 and $100,000 denominations are available only for purchase by trustees of
employees' savings and savings and vacation plans (see sec. 816.5(b)).
(c) Inscription and issue. At the time of issue the issuing agent will (1) inscribe on the face of each bond the name and address of the owner, and the name
of the beneficiary, if any, or the name and address of the first-named coowmer
and the name of the other coowner, (2) enter in the upper right-hand portion of
the bond the issue date, and (3) imprint the agent's dating stamp in the lower
right-hand portion to show the date the bond is actually inscribed. A bond shall
be valid only if an authorized issuing agent receives payment therefor and duly
inscribes, dates, stamps, and delivers it in accordance with the purchaser's instructions. The Department of the Treasury may require, without prior notice,
that the appropriate taxpayer identifying number^ be furnished for inclusion
in the inscription.
(d) Term. A Series E bond shall be dated as of the first day of the month
in which payment of the purchase price is received by an agent authorized to
issue the bonds. This date is the issue date and the bond will mature and be
payable at the original maturity value, shown in table 1 hereof, 5 years and 10
months from the issue date. The bond may not be called for redemption by the
Secretary of the Treasury prior to maturity or the end of any authorized extension period (see § 316.8(a) (1)). The bond may be redeemed at the owner's
option at any time after 2 months from issue date at fixed redemption values.
However, the Department of the Treasury may require reasonable notice of
presentation for redemption prior to maturity or any extended maturity period.
(e) Investment yield (interest). The investment yield (interest) on a Series
B bond will be approximately 5 percent per annum, compounded semiannually,
if the bond is held to maturity, but the yield will be less if the bond is redeemed
prior thereto. The interest will be paid as a part of the redemption value. For
the first 6 months from issue date the bond will be redeemable only at issue price.
Thereafter, its redemption value will increase at the beginning of each successive half-year period (see table 1).
(f) Outstanding honds with issue dates June 1, 1969, or thereafter. Series E
bonds with issue dates of June 1, 1969, or thereafter, and outstanding on the
effective date of the regulations in this part, are deemed to be Series E bonds
issued under the terms of this part and the investment yield and shorter term
of maturity provided for in paragraphs (d) and (e) of this section are applicable
to such bonds. Series E bond stock on sale prior to June 1, 1969, will be used for
issue under this part until such time as new stoclc is printed and supplied to
issuing agents. Such bonds have the new investment yield and all other privileges as fully as if expressly set forth in the text of the bonds. It will be unnecessary for owners to exchange bonds issued on the old stock for bonds on'
the new stock as all paying agents will redeem the bonds in accordance with the
schedule of redemption values set forth in table 1. However, when the new stock
becomes available, issuance on the new stock may be obtained by presentation
i|The number required to be used on tax retums and other documents submitted to the
Internal Revenue Service (an individual's social security account number or employer
identification number). Until it becomes mandatory, issuing agents for Series E bonds
under any payroll savings plan desiring to place taxpayer identifying numbers on bonds
should obtain instructions from the Bureau of the Public Debt, Washington, D.C. 20220.
162
19 70 REPORT OF THE SECRETARY OF THE TREASURY
for that purpose of bonds issued on the old stock to any Federal Reserve Bank
or Branch, or to the Treasurer of the United States, Securities Division, Washington, D.C. 20220.
§ 316.3 Governing regulations.
Series E bonds are subject to the regulations of the Treasury Department, now
or hereafter prescribed, governing U.S. Savings Bonds, contained in Department
Circular No. 530, current revision (Part 315 of this subchapter) .^
§ 316.4 Registration.
(a) General. Generally, only residents of the United States, its territories and
possessions, the Commonwealth of Puerto Rico, the Canal Zone, and citizens of
the United States temporarily residing abroad are eligible to be named as owners
of Series E bonds. The bonds may be registered in the names of natural persons
in their own right as provided in paragraph (b) of this section, and in the names
and titles or capacities of fiduciaries and organizations as provided in paragraph
(c) of this section. Full information regarding authorized forms of registration
and restrictions with respect thereto will be found in the goveming regulations.
(b) Natural persons in their own right. The bonds may be registered in the
names of natural persons (whether adults or minors) in their own right, in single ownership, coownership, and beneficiary forms.
(c) Others. The bonds may be registered in single ownership form in the
names of fiduciaries and private and public organizations, as follows:
(1) Fiduciaries. In the names of and showing the titles or capacities of any
persons or organizations, public or private, as fiduciaries (including trustees,
legal guardians or similar representatives and certain custodians), buit not where
the fiduciary would hold the bonds merely or principally as security for the
performance of a duty, obligation, or service.
(2) Private and puhlic organizations. In the names of private Oir x>ublic organizations (including private corporations, partnerships, and unincorporated
associations, and States, counties, public corporations, and other public bodies)
in their own right, but not in the names of commercial banks.^
§ 316.5 Limitation on holdings.
The amount of Series E bonds originally issued during any 1 calendar year
that may be held by any one person, at any one time, computed in accordance
with the governing regulations, is limited, as follows:
(a) General Umitation. $5,000 (issue price) for the calendar year 1969^ and
each calendar year thereafter.*
(b) Special limitation for employees' savings plans. $2,000 (face amount)
multiplied by the highest number of participants in any employees' savings plan,
Q defined in subparagraph (1) of this paragraph, at any time duiring the year in
S
which the bonds are issued.^
(1) Definition of plan and conditions of eligihility. (i) The employees' savings
plan must have been established by the employer for the exclusive and irrevocable
benefit of his employees or their beneficiaries, afford employees the ineans of
making regular saving from their wages throngh payroll deductions, and provide
for employer contributions to be added to such savings.
(ii) The entire assets thereof must be credited to the individual accounts of
participating employees and assets credited to the account of an employee may
be distributed only to him or his beneficiary, except as otherwise provided herein.
^Copies may be obtained from any Federal Reserve Bank or Branch, o r the Bureau of
t h e Public Debt, Washington, D.C. 20220, or its Chicago Office, 536 South Clark Street,
Chicago, 111. 60605.
2 Coimmercial banks, as defined in § 315.7(c)i(l) of D e p a r t m e n t Circular No. 530, current
revision, for this purpose are those accepting demand deposits.
3 Investors who purchased less t h a n $.5,OOO (issue price) of the bonds prior t o the
eifective date of these regulations will be entitled only to purchase enough to bring t h e i r
total for t h e year to t h a t amount. Investors who purchased more t h a n t h a t amount prior
to the effective dJaite wUl not be entitled t o purchase addiitionial bonds during the calendar
year.
4 3?he proceeds of redemption of bonds of Series F , G, J, and K, ail now matured, may
be used by owners for the purchase of Series E bonds w i t h o u t regard to the limitation
under the conditions and restrictions set forth in § 316.5(b), of the seventh revision of this
circular.
P .Savings a n d vacation plams may be eligible for this special limitation. Questions concerning eligibility of such p l a n s should be addressed to t h e Bureau of Public Debt, Division of
Loans and Currency Branch, 5i36 South Clark Street, Chicago, 111. 60605'.
EXHIBITS
163
(iii) Series E bonds may be purchased only with assets credited to the accounts
of participating employees and only if the ainount taken from any account at any
time for that purpose is equal to the purchase price of a bond or bonds in 'an
authorized denomination or denominations, and shares therein are credited to
the accounts of the individuals from which the purchase price thereof was
derived, in amounts corresponding w^ith their shares. For example, if $37.50
credited to the account of John Jones is commingled with funds credited to the
accounts of other employees to make a total of $7,500, with which a Series' E bond
in the denomination of $10,000 (face amount) is purchased in February 1966
and registered in the name and title of the trustee, the plan must provide, in
effect, that John Jones' account shall be credited to show that he is the owner of
a Series E bond in the denomination of $50 (face amount) bearing issue date of
February 1,1966.
(iv) Each participating employee shall have an irrevocable right at any time
to demand and receive from the trustee all assets credited to his account, or
the value thereof, if he so prefers, without regard to any condition other than
the loss or suspension of the privilege of participating further in the plan.
However, a plan will not be deemed to be inconsi;sitent herewith if it limits
or modifies the exercise of any such right by providing that the employer's
contribution does not vest absolutely until the employee shall have made contributions under the plan in each of not more than 60 calendar months succeeding the month for which the employer's contribution is made.
(v) Upon the death of an employee, his beneficiary shall have the absolute
and unconditional right to demand and receive from the trustee all assets
credited to the account of the employee, or the value thereof, if he so prefers.
(vi) When settlement is made with an employee or his beneficiary with respect
to any Series E bond registered in the name and title of the trustee in which
the employee has a share (see subdivisions (ii) 'and (iii) of this subparagraph ), the bond must be submitted for redemption or reissne to the extent of
such share. If an employee or his beneficiary is to receive dis/tribution in kind,
bonds bearing the same issue dates as those credited to the employee's account
will be reissued in the name of the distributee to the extent to which he is
entitled, in authorized denominations, in any authorized form of registration,
upon the request and certification of the trustee in accordance wtih the goveming regulations.
(2) Definition of terms used in this suhsection—related provisions, (i) The
term ''savings plan" includes any regulations issued under the plan with regard
to Series B bonds. A trustee desiring to purchase bonds in excess of the general
limitation in any calendar year should submit to the Federal Reserve Bank of
the District, a copy of (a) the plan, (&) any such regulations, and (c) the trust
agreement, all certified to be true copies, in order to establish its eligibility.
(ii) The term "assets" means all funds, including the employees' contributions
and employer's contributions and assets purchased therewith as well as accretions
thereto, such as dividends on stock, the increment in value on bonds and all other
income; but, notwithstanding any other provision of this subsection, the right
to demand and receive "all assets" credited to the account of an employee shall
not be construed to require the distribution of assets in kind when it would not
be possible or practicable to make snch disitribution; for example. Series E bonds
may not be reissued in unauthorized denominations, and fractional shares of
stock are not readily distributable in kind.
(iii) The term "beneficiary" means the person or persons, if any, designated
by the employee in accordance with the terms of the plan to receive the benefits
of the trust upon his death or the estate of the employee, and the term "distributee" means the employee or his beneficiary.
§ 316.6 Purchase of bonds.
Series E bonds may be purchased, as follows:
(a) Over-the-counter for cash—(1) Bonds registered in narnies of natural
persons in their own right only. At such incorporated banks, trust companies,
and other agencies as have been duly qualified as issuing agents and at selected
United States post offices.
(2) Bonds registered in names of trustees of employees' savings plans. At
such incorporated bank, trust comp_any, or other agency, duly qualified a s an
issuing agent, provided the agent is trustee of an approved employees' savings
164
1970 REPORT OF THE SECRETARY OF THE TREASURY
plan eligible for the special limitation in § 316.5(b) and prior approval to issue
the bonds is obtained from the Federal Reserve Bank of the agent's district.
(3) Bonds registered in all authorized forms. At Federal Reserve Banks and
Branches and at the Office of the Treasurer of the United States, Securities
Division, Washington, D.C. 20220.
(b) On mail order. By mail upon application to any Federal Reserve Bank
or Branch or to the Oflice of the Treasurer of the United States, Securities
Division, Washington, D.C. 20220, accompanied by a remittance to cover the issue
price. Any form of exchange, including personal checks, will be accepted subject
to collection. Checks or other forms of exchange should be drawn to the order
of the Federal Reserve Bank or the Treasurer of the United State®, as the
case may be. Checks payable by endorsement are not acceptable. Any depositary
qualified pursuant to the provisions of Treasury Department Circular No. 92,
current revision (Part 203 of this chapter), will be permitted to make payment
by credit for bonds applied for on behalf of its customers up to any amount for
which it shall be qualified in excess of existing deposits, when so notified by the
Federal Reserve Bank of its district.
(c) Savings stamps. Savings stamps, in authorized denominations, may be
purchased at most post oflSces and at such other agencies as may be designated
from time to time. The stamps may be used for the purchase of Series E bonds.
Albums for aflfixing the stamps will be available without charge, and such
albums will be receivable by any authorized issuing agent in the amount of the
aflBxed stamps on the purchase price of the bonds.
§ 316.7 Delivery of bonds by mail.
Issuing agents are authorized to deliver Series E bonds by mail at the risk and
expense of the United States, at the address given by the purchaser, but only
within the United States, its territories and possessions, the Commonwealth of
Puerto Rico, and the Canal Zone. No mail deliveries elsewhere will be m'ade. If
purchased by citizens of the United States temporarily residing abroad, the bonds
will be delivered at such address in the United States as the purchaser directs.
§ 316.8 iExtended terms and improved yields for outstanding bonds.
(a) Extended maturity periods—(1) General. The terms "extended maturity
period" and "second extended maturity period," when used herein, refer to the
intervals after the maturity dates during w-hich owners may retain their bonds
and continue to earn interest on the maturity values, or the extended niaturity
values.^ No special action is required of owners desiring to take advantage of any
extensions heretofore or hereby granted. By continuing to hold their bonds after
maturity, or extended maturity, as the case may be, owners will continue to earn
further interest on their bonds.^
(2) Bonds with issue dates May 1, 19Jtl, through April 1, 1952. Owners of
Series E bonds with issue dates of May 1, 1941, through April 1, 1952, may retain
their bonds for a second extended maturity period of 10 years.
(3) Bonds with issue dates May 1, 1952, or thereafter. Owners of Series E
bonds w^ith issue dates of May 1, 1952, or thereafter, may retain their bonds for
an extended maturity period of 10 years.
(b) Improved yields^—(1) Outstanding honds. The investment yield on all
Series E bonds outstanding on the effective date of these regulations is hereby
increased to approximately 5 percent per annum, compounded semiannually, as
follows:
(i) Bonds with issue dates June 1, 1963, through May 1, 1969. For the remaining period to the maturity date.
(ii) Bonds unth issue dates June 1,1951, through May 1,1963. For any remaining period to the maturity date, extended maturity date, or second extended
maturity date, as the case may be.
liThe redemjption value of any bond a t t h e original m a t u r i t y d a t e is the base upon which
interest will accrue during t h e extended m a t u r i t y period. The redemption value of any
bond a t t h e extended m a t u r i t y d a t e is t h e base uix)n which interest will accrue during t h e
secoTid extended m a t u r i t y period.
'^rrhe tables incorporated herein, a r r a n g e d according to issue dates, show c u r r e n t
redemption values and investment yields.
3 See appendiix for maturities and sumimairy of investment yields to the maturity,
• extended malturity and second extendeid m a t u r i t y dates unider regulations heretofoi'e
prescribed for Series E bonds with issue d a t e s May 1, 1941, t h r o u g h May 1, 1969.
EXHIBITS
165
(iii) Bonds with issue dates June 1, 1949, through May 1, 1951. For any remaining period to the extended maturity date and for the second extended
maturity period.
(iv) Bonds with issue dates May 1, 1941, through May 1, 1949. For the remaining period to the second extended maturity date.
The increase in yield will be less if the bonds are redeemed earlier. The uicrease,
on a graduated basis, will begin with the first 6-month interest accrual period
starting on or after June 1,1969.
(2) Presently authorized extensions. The investment yield for any presentlyauthorized extension period for which tables of redemption values and investment yields are not announced and published herein will be at the rate in effect
for Series B bonds being currently issued on the maturity date or extended
maturity date, as the case may be.
§ 316.9 Taxation.
(a) General. For the purpose of determining taxes and tax exemptions, the
increment in value represented by the difference between the price paid for
Series E bonds (which are issued on a discount basis) and the redemption value
received therefor shall be considered as interest Such interest is subject to all
taxes imposed under the Intemal Revenue Code of 1954. The bonds are subject
to estate, inheritance, gift, or other excise taxes, whether Federal or State, but
are exempt from all taxation now or hereafter imposed on the principal or interest thereof by any State, or any of the possessions of the United States, or by
any local taxing authority.
(b) Federal income tax on honds. An owner of Series E bonds who is a cash
basis taxpayer may use either of two methods for reporting the increase in the
redemption value of the bonds for Federal income tax purposes, as follows:
(1) Defer reporting of the increase until the year of maturity, actual redemption, or other disposition, whichever is earlier; or
(2) Elect to report the increases each year as they accrue, in which case the
election will apply to all Series E bonds then owned by him and to those thereafter acquired, as well as to any other similar obligations sold on a discount
basis.
If method (1) is used, the taxpayer may change to method (2) without obtaining permission from the Internal Revenue Service. However, once the election
to use method (2) is made, the taxpayer may not change the method of reporting
unless he obtains permission to do so from the Intemal Revenue Service, Inquiries concerning further information on Federal taxes should be addressed to
the District Director, Intemal Revenue Service, of the taxpayer's district, or the
Internal Revenue Service, Washington, D.C. 20224.
§ 316.10 Payment or redemption.
(a) General. A Series E bond may be redeemed in accordance with its terms
at the appropriate redemption value as shown in the applicable tables hereof for
bonds bearing various issue dates back to May 1, 1941. The redemption values
of bonds in the denomination of $100,000^ (which was authorized as of January
1, 1954) are not shown in the tables. However, the redemption values of bonds
in that denomination will be equal to the total redemption values of ten $10,000
bonds bearing the same issue dates. A Series B bond in a denomination higher
than $25 (face amount) may be redeemed in part but only in the amount of an
authorized denomination or multiple thereof.
(b) Federal Reserve Banks and Branches and Treasurer of the United States.
Owners of Series E bonds may obtain payment upon presentation and surrender
of the bonds to a Federal Reserve Bank or Branch or to the OflSce of the Treasurer of the United States, Securities Division, Washinjgton, D.C. 20220, with
the requests for payment on the bonds duly executed and certified in accordance
. with the goveming regulations.
(c) Incorporated hanks, trust companies and other financial institutions.
An individual (natural person) whose name is inscribed on a Series E bond
either as owner or coowner in his own right may also present such bond to any
incorporated bank or trust company or other financial institution which is qualified as a paying agent under Department Circular No. 750, current revision (Part
i|The $10,000 amd $100,000 denominMions are available only for purchase by trustees
of employees' savings and savings and vacation plans (see sec. 31/&.5(b)).
166
1970 REPORT OF THE SECRETARY OF THE TREASURY
321 of this subchapter). If such bond is in order for payment by the paying agent,
the owner or coowner, upon establishing his identity to the satisfaction of the
agent and upon signing the request for payment and adding his home or business
address, may receive immediate payment of the current redemption value.
§ 316.11 Reservation as to issue of bonds.
The Secretary of the Treasury reserves the right to reject any application for
Series B bonds, in whole or in part, and to refuse to issue or permit to be issued
hereunder any such bonds in any case or any class or classes of cases if he deems
such action to be in the public interest, and his action in any such respect shall
be final.
§ 316.12 Preservation of rights.
Nothing contained herein shall limit or restrict rights which owners of Series
B bonds heretofore issued have acquired under offers previously in force.
§ 316.13 Fiscal agents.
Federal Reserve Banks and Branches, as fiscal agents of the United States, are
authorized to perform such services as may be requested of them by the Secretary
of the Treasury in connection with the issue, delivery, redemption, and payment
of Series B bonds.
§ 316.14 Reservations as to terms of offer.
The Secretary of the Treasury may at any time or from time to time supplement or amend the terms of this offering of bonds (this Part 316), or of any
aniendments or supplements thereto.
T A B L E S or REDEMPTION VALUES AND INVESTMENT Y I E L D S FOR U N I T E D STATES SAVINGS B O N D S OF S E R I E S E
Each table shows: (1) the redemption value for each successive half-year term of holding during the current maturity period and the authorized redemption values during any subsequent maturity period, on bonds bearing issue
dates covered by the table; (2) for each maturity period shown, the approximate investment yield on the redemption value at the beginning of such maturity period to the beginning of each half-year period thereafter; and (3) the
approximate investment yield on the current redemption value from the beginning of each half-year period to next
maturity. Yields are expressed in terms of rate percent per annum, compounded semiannually.
TABLE 1
B O N D S B E A R I N G ISSUE D A T E S B E G I N N I N G J U N E 1, 1969
Issue price
Denomination
Period after
issue date
$18.75 $37.50 $56.25 $75.00 $150.00 $375.00 $750.00 $7,500
25.00 50.00 75.00 100.00 200.00 500.00 1,000.00 10,000
Approximate investment yield
(1) Rederaption values during each half-year period i (values
increase on first day of period shown)
(2) On
(3) On curpurchase
rent reprice from demption
issue date value from
to begin- beginning
ning of
of each
each
half-year
half-year
period i to
period i
maturity
First J^ y e a r . .
.$18.75 !J37.50 556.25 $75.00 $150.00 5375.00 $750.00 $7,600
J^tOlyear
19.05 38.10 57.15 76.20 152.40 381.00
762.00 7,620
1 to IJ^ years
19.61 39.02 58.63 78.04 166.08 390.20
780.40 7,804
IJ^ to 2 years19.95 39.90 69.85 79.80 159.60 399.00
798.00 7,980
2tO 23^ years.20.40 40.80 61.20 81.60 163.20 408.00
816.00 8,160
2>^ to 3 years
20.88 41.76 62.64 83.52 167.04 417.60
835.20 8,362
3 to 3>^ years21.39 42.78 64.17 85.56 171.12 427.80
856.60 8,656
3J^ to 4 years
21.93 43.86 65.79 87.72 175.44 438.60
877.20 8,772
4 to 4 ^ years
22.63; 46.06 67.69 90.12 180.24 450.60
901.20 9,012
43^ to 5 years-23.16' 46.32 69.48 92.64 185.28 463.20
926.40 9,264
5 to 5>^ years
23.82 47.64 71.46 95.28 190.56 476.40
962.80 9,628
6J^ years co 6 yeai's
and 10 months
24.61 49.02 73.63 98.04 196.08 490.20
980.40 9,804
MATURITY VALUE
(5 years and 10
months from issue
date)- 25.01 50.02 75.03 100.04 200.08 500.20 1,000.40 10,004
1 4-month period in the case of the 5>^year to 5-year and 10-month period.
Percent
0.00
3.20
4.01
4.18
4.26
4.35
4.44
4.63
4.64
4.76
4.84
Percent
5 00
5.17
5.20
6.29
6.39
6.49
6.60
5.71
5.78
5.85
5.94
167
EXHIBITS
TABLE 2
B O N D S BEARING ISSUE DATE OF MAY 1, 1941
Issueprice
Denomination
$18.75 $37.50
25.00 50.00
$75.00
100.00
$375.00
500.00
$750.00
1,000.00
(1) Redemption values during each
half-year period (values increase on
first day of period shown)
Period after first extended maturity
(beginning 20 years after issue date)
SECOND E X T E N D E D
MATURITY PERIOD
First H year.
J^ to l y e a r . .
1 to IJ^ years
Wz to 2 years.
2 to 23/^ years
2M to 3 years
3 to 33^ years
zy2 to 4 years
4 to 4>^ years
4>^ to 6 years
5 to by2 years
63^ to 6 years
6 to 63^ years.
63^ to 7 years
7 to 7y2 years.„
73^ to 8 years
8 to 8 ^ years
83^ to 9 years
1 (5/1/61) $33.63 $67.26 $134. 62
(11/1/61) 34.26 68.52 137.04
(6/1/62) 34.90 69.80 139.60
(11/1/62) 36.66 71.12 142. 24
(5/1/63) 36.22 72.44 144.88
....(11/1/63) 36.90 73.80 147.60
(6/1/64) 37.60 76.20 150.40
(11/1/64) 38.30 76.60 163. 20
(6/1/65) 39.02 78.04 166.08
(11/1/66) 39.75 79.60 159.00
(6/1/66) 40.60 81.00 162.00
(11/1/66) 41.26 82.62 165. 04
(6/1/67) 42.06 84.12 168.24
(11/1/67) 42.90 86.80 171.60
(5/1/68) 43.76 87.52 176.04
(11/1/68) 44.66 89.32 178.64
-(5/1/69) 45.60 91.20 182.40
(11/1/69) 46.67 93.14 186. 28
$672.60 $1,346. 20
685. 20 1,370.40
698.00 1,396.00
711. 20 1,422.40
724.40 1,448.80
738.00 1,476.00
762.00 1,504.00
766.00 1,632.00
780.40 1,660.80
796.00 1,590.00
810.00 1,620.00
826.20 1,660.40
841.20 1,682.40
868.00 1,716.00
876. 20 1,750.40
893. 20 1,786.40
912.00 1,824.00
931.40 1,862.80
Approximate
investment yield
(2) On the
redemption (3) On current
redemption
value at start
value from
of the second
beginning
extended
of each
maturity
half-year
period to the
period
beginning
to second
of each
extended
half-year
maturity 2
period
thereafter
Percent
0.00
3.75
3.74
3.76
3.74
3.76
3.75
3.76
3.75
3.76
3.76
3.75
3.76
3.78
3.80
3.82
3.84
3.87
Percent
3.75
3.75
3.75
3.75
3.75
3.75
3.76
3.76
3.76
3.76
4.15
4.19
4.23
4.27
4.31
4.45
4.62
6.00
Redemption values and investment yields to second extended m a t u r i t y on basis of June 1,1969, revision
9 to 93^ years
(6/1/70)
93^ to 10 years
(11/1/70)
SECOND EXTENDED MATURITY VALUE (30 years from
issue date)
(5/1/71)
47.61
48.77
95.22
97.54
50.15 100.30
962. 20
975. 40
1,904.40
1,950.80
200.60 1,003.00
2,006.00
190.44
195.08
3.90
3.96
1 Month, day, and year on which issues of M a y 1,1941, enter each period.
2 Based on second extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to second extended maturity date is 3.31 percent.
5.27
6.66
168
19 70 REPORT OF THE SEGRETARY OF THE TREASURY^
TABLE 3
B O N D S BEARING ISSUE D A T E S F R O M J U N E 1 T H R O U G H N O V E M B E R 1, 1941
Issueprice
Denomination..
$18.75 $37.50
25.00 50.00
$75.00
100.00
$375.00
500.00
$750.00
1,000.00
(1) Redemption values during each halfyear period (values increase on• first
day of period shown)
Period after first extended maturity
(beginning 20 years after issue date)
SECOND E X T E N D E D
MATURITY PERIOD
First Vi year
3^ to l y e a r
I t o 13^ years
1 ^ to 2 years
2 to 23^ years
23^ to 3 years
3 to 33^ years
33^ to 4 years
4 to 43^ years
43^ to 5 years
5 to 53^ years
53^ to 6 years
6 to 6H years
63^ to 7 years
7 to 73^ years
73^ to 8 years.
8 to 83^ years
.
1 (6/1/61)
(12/1/61)
(6/1/62)
(12/1/62)
(6/1/63)
(12/1/63)
(6/1/64)
(12/1/64)
(6/1/65)
(12/1/65)
(6/1/66)
(12/1/66)
(6/1/67)
(12/1/67)
(6/1/68)
(12/1/68)
(6/1/69)
$33.73 $67.46 $134.92
34.36 68.72 137.44
35.01 70.02 140.04
36.66 71.32 142. 64
36.33 72.66 145. 32
37.01 74.02 148. 04
37.71 75.42 150.84
38.41 76.82 153. 64
39.13 78.26 156. 62
39.87 79.74 159.48
40.63 81.26 162. 62
41.41 82.82 165. 64
42.22 84.44 168.88
43.06 86.12 172. 24
43.95 87.90 176. 80
44.86 89.72 179. 44
46.80 91.60 183. 20
$674.60 $1,349. 20
687. 20 1,374.40
700. 20 1,400. 40
713.20 1, 426.40
726.60 1, 453. 20
740. 20 1, 480.40
754. 20 1,508.40
768. 20 1, 636. 40
782.60 1, 565. 20
797. 40 1, 594.80
812.60 1, 625. 20
828.20 1, 656. 40
844.40 1,688.80
861. 20 1,722.40
879. 00 1,758.00
897. 20 1,794.40
916. 00 1,832.00
Approximate
investment yield
(2) On the
(3) On current
redemption
redemption
value at start
value from
of the second
beginning
extended
of each
maturity
half-year
period to the
period
beginning
to second
of each
extended
half-year
maturity 2
period
thereafter
Percent
0.00
3.74
3.76
3.74
3.74
3.75
3.75
3.75
3.75
3.75
3.70
3.76
3.78
3.79
3.82
3.84
3.86
Percen
3.75
3.75
3.76
3.75
3.75
3.75
3.75
3.75
3.75
4.15
4.19
4.22
4.26
4.30
4.43
4.49
5.00
Redemption values and investment yields to second extended maturity on basis of Juue 1,1969, revision
83^ to 9 years
(12/1/69)
5.82 93.64
9 to 93^ years
(6/1/70)
r.91 95.82
93^ to 10 years
(12/1/70)
).ll
98.22
S E C O N D E X T E N D E D MATURITY VALUE (30 years from issue
date)
(6/1/71) 50.55 101.10
187. 28
191.64
196. 44
936.40
968. 20
982. 20
1,872.80
1,916.40
1,964.40
202.20 1,011.00
2,022.00
3.90
3.94
3.99
5.18
5.44
5.86
1 Month, day, and year on which issues of June 1, 1941, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on second extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to second extended maturity date is 3.33 percent.
169
EXHIBITS
TABLE 4
B O N D S BEARING ISSUE D A T E S F R O M D E C E M B E R 1, 1941, T H R O U G H APRIL 1, 1942
Issueprice
Denomination
$18.75 $37.50
25-00 50.00
$75.00
100.00
$375.00
500.00
$750.00
1,000.00
(1) Redemption values during each
half-year period (values increase on
first day of period shown)
Period after first extended maturity
(beginning 20 years after issue date)
SECOND E X T E N D E E
MATURITY PERIOD
»
First Yz year
3^ to 1 year
1 to Wi years
I H to 2 y e a r s . .
2 to 23^ years
23^ to 3 y e a r s . .
3 to 3 ^ y e a r s - .
33^ to 4 years
4 to 4>^ years
43^ to 5 y e a r s . .
6 to 63^ y e a r s . . .
63^ to 6 y e a r s . . .
6 to 63^ years
63^ to 7 y e a r s . .
7 to 7>^ years
73^ to 8 years
'(12/1/61)
(6/1/62)
(12/1/62)
(6/1/63)
(12/1/63)
.-(6/1/64)
(12/1/64)
(6/1/65)
(12/1/66)
(6/1/66)
(12/1/66)
(6/1/67)
(12/1/67)
(6/1/68)
(12/1/68)
..(6/1/69)
$33.83 - $67.66 $135.32
34.46 68.92 137.84
35.11 70.22 140.44
36.77 71.54 143.08
36.44 72.88 145. 76
37.12 74.24 148.48
37.82 76.64 151.28
38.53 77.06 154.12
39.25 78.60 157. 00
40.00 80.00 160.00
40.77 81.64 163.08
41.56 83.12 166. 24
42.39 84.78 169. 50
43.25 86.50 173.00
44.14 88.28 176. 56
45.07 90.14 180.28
$676.60 :$1,353. 20
689.20 1,378.40
702. 20 1,404.40
715. 40 1,430.80
728.80 1,457. 60
742.40 1,484.80
756.40 1, 512.80
770. 60 1, 541. 20
785.00 1, 570. 00
800. 00 1, 600. 00
815.40 1,630.80
831. 20 1, 662.40
847.80 1, 695. 60
865.00 1, 730.00
882.80 1, 765. 60
901.40 1,802.80
Approximate
investment yield
(2) On the
redemption (3) On current
redemption
value at start
value from
of the second
beginning
extended
of each
maturity
half-year
period to the
period
beginning
to second
of each
extended
half-year
maturity 2
period
thereafter
Percent
0.00
3.72
3.75
3.75
3.75
3.75
3.75
3.75
3.75
3.76
3.77
3.78
3.79
3.82
3.84
3.86
Percent
3.75
3.75
3.75
3.75
3.75
3.75
3.75
3.75
4.15
4.18
4.21
4.25
4.28
4.42
4.47
5.00
Redemption values and investment yields to second extended maturity on basis of June 1, 1969, revision
8 to 8>^ years
(12/1/69)
83^ to 9 years
(6/1/70)
9to93^years
(12/1/70)
9 ^ to 10 y e a r s . .
(6/1/71)
SECOND EXTENDED MATURITY VALUE (30 years from
issue date)
(12/1/71)
46.05
47.11
48.25
49.49
92.10
94.22
96.50
98.98
50.99 101.98
184.20
188.44
193.00
197.96
921.00
942.20
965.00
989.80
1,842.00
1,884.40
1,930.00
1,979.60
203.96 1,019.80
2,039.60
3.89
3.93
3.98
4.04
5.16
5.35
5.60
6.06
1 Month, day, and year on which issues of Dec. 1, 1941, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on second extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to second extended maturity date is 3.36 percent.
170
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 5
B O N D S BEARING I S S U E D A T E OF MAY 1, 1942
Issueprice
Denomination..:
$18.75 $37.50
25.00 50.00
$75.00
100.00
$750.00
1,000.00
$375.00
500.00
(1) Redemption values during each
half-year period (values increase on
first day of period shown)
Period after first extended maturity
(beginning 20 years after issue date)
SECOND E X T E N D E E
MATURITY PERIOD
)
First H year
3^ to l y e a r . .
1 to 13^ years
l3^to2years...
2 to 2 ^ years
23^ to 3 years.-.
3 to 3>^ y e a r s . .
33^ to 4 years
4 to 4>^ years
43^ to 5 years
5 to 63^ years
63^ to 6 years
6 to 63^ years
63^ to 7 y e a r s . . .
7 to 7 ^ y e a r s . . .
7K to 8 years
1 (6/1/62) $34.09 568.18 $136.36
(11/1/62) 34.73 69.46 138.92
(6/1/63) 35.38 70.76 141. 62
(11/1/63) 36.04 72; 08 144.16
(6/1/64) 36.72 73.44 146.88
(11/1/64) 37.41 74.82 149.64
.(5/1/65) 38.11 76.22 152.44
(11/1/65) 38.82 77.64 155. 28
(5/1/66) 39.55 79.10 158.20
(11/1/66) 40.30 80.60 161. 20
(6/1/67) 41.08 82.16 164.32
(11/1/67) 41.88 83.76 167. 62
.(5/1/68) 42.71 85.42 170. 84
(11/1/68) 43.58 87.16 174.32
(6/1/69) 44.49 88.98 177. 96
(11/1/69) 45.41 . 90.82 181.64
$681.80 $1,363.60
694.60 1,389. 20
707.60 1,415. 20
720.80 1,441. 60
734.40 1,468.80
748. 20 1,496.40
762. 20 1,624. 40
776. 40 1,652.80
791.00 1, 582. 00
806.00 1,612. 00
821.60 1,643.20
837.60 1,676.20
854. 20 1,708.40
871.60 1, 743. 20
889.80 1,779.60
908. 20 1,816.40
Approximate
investment yield
(2) On the
redemption (3) On current
redemption
value at start
value from
of the second
beginning
extended
of each
maturity
half-year
period to thc
period
beginning
to second
of each
extended
half-year
maturity 2
period
thereafter
Percent
0.00
3.75
3.75
3.74
3.75
3.75
3.75
3.75
3.75
3.75
3.77
3.78
3.79
3.81
3.84
3.86
Percent
3.75
3.75
3.75
3.75
3.76
3.75
3.76
3.75
4.15
4.18
4.22
4.26
4.29
4.42
4.46
6.00
Redemption values and investment yields to second extended maturity on basis of June 1, 1969, revision
8 to 83^ years
(5/1/70)
8>^ to 9 y e a r s . . . .
(11/1/70)
9 to 93^ years
...(5/1/71)
93^ to 10 years
-(11/1/71)
SECOND EXTENDED
M A T U R I T Y VALUE
(30 years from issue date).(5/1/72)
46.40
47.47
48.62
49.87
92.80
94.94
97.24
99.74
51.38 102.76
928.00
949. 40
972.40
997. 40
1,866.00
1,898.80
1,944.80
1,994.80
205.52 1,027.60
2,055.20
185.60
189.88
194.48
199. 48
3.89
3.93
3.98
4.04
1 Month, day, and year on which issues of M a y 1,1942, enter each period.
2 Based on second extended maturity value in eflect on the beginning date of the half-year period.
Yield on purchase price from issue date to second extended maturity date is 3.39 percent.
6.16
5.35
5.60
6.06
171
EXHIBITS
TABLE 6
B O N D S BEARING ISSUE D A T E S F R O M J U N E 1 T H R O U G H N O V E M B E R 1, 1942
Issueprice
Denomination
_
_
$18.75 $37.50
25.00 50.00
$75.00
100.00
$375.00
500.00
$750.00
1,000.00
(1) Redemption values during each
half-year period (values increase on
first day of period shown)
Period after first extended maturity
(beginning 20 years after issue date)
SECOND E X T E N D E D
MATURITY PERIOD
First 3^ yeaf
3^ to 1 y e a r . . . .
1 to VA years.
VA to 2 years
2 to 23^ years
23^ to 3 years.
3 to 33^ years..
^A to 4 years
4 to 43^ years
43^ to 5 years
5 to 63^ ye r s . . .
5A to 6 years
6 to 63^ years..
63^ to 7 years
7 to 7A years.
'(6/1/62) $34.17 $68.34 $136. 68
(12/1/62)
34.81 69.62 139. 24
...(6/1/63) 36.46 70.92 141.84
(12/1/63) 36.13 72.26 144. 52
(6/1/64) 36.81 73.62 147. 24
.(12/1/64)
37.50 75.00 150.00
(6/1/65) 38.20 76.40 152.80
-(12/1/66) 38.92 77.84 155.68
(6/1/66) 39.65 79.30 158.60
(12/1/66) 40.41 80.82 161.64
(6/1/67) 41.21 82.42 164.84
(12/1/67)
42.02 84.04 168.08
(6/1/68) 42.86 85. 72 171.44
...(12/1/68)
43.74 87.48 174. 96
(6/1/69) 44.65 89.30 178. 60
$683.40 ;$1,366.80
696. 20 1,392.40
709.20 1,418.40
722.60 1, 445. 20
736. 20 1,472. 40
750. 00 1, 500. 00
764.00 1, 528. 00
778.40 1, 656.80
793. 00 1, 586. 00
808.20 1, 616.40
824. 20 1, 648.40
840. 40 1, 680.80
857. 20 1,714.40
874.80 1, 749. 60
893. 00 1,786. 00
Approximate
investment yield
(2) On the
redemption (3) On current
redemption
value at start
value from
of the second
beginning
extended
of each
maturity
half-year
period to the
period
beginning
to second
of each
extended
half-year
maturity 2
period
thereafter
Percent
0.00
3.75
3.74
3.75
3.76
3.75
3.75
3.75
3.75
3.76
3.78
3.80
3.81
3.83
3.86
Percent
3.75
3.75
3.75
3.75
3.75
3.75
3.75
4.15
4.18
4.21
4.24
4.27
4.40
4.45
5.00
Redemption values and investment yields to second extended maturity on basis of June 1, 1969, revision
73^ to 8 years
(12/1/69)
8 to 83^ years
(6/1/70)
SA to 9 years
(12/1/70)
9 to 93^ years
(6/1/71)
9A to 10 years
(12/1/71)
SECOND
EXTENDED
MATURITY VALUE (30
yearsfrom issue date)
(6/1/72)
45.61 91.22
46.65 93.30
47.76 95.52
48.96 97.90
50.22 100. 44
912. 20
182. 44
933. 00
186. 60
955. 20
191.04
979. 00
195.80
200.88 1, 004. 40
1, 824. 40
1,866. 00
1,910.40
1,958.00
2, 008.80
51.78
207.12 1,035.60
5.14
6.29
6.46
5.70
6.21
2,071.20
103.56
3.89
3.93
3.98
4.03
4.09
1 M o n t h , day, and year on which issues of June 1,1942, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on second extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to second extended maturity date is 3.41 percent.
3.917-702 O—Cri-
-^1(3
172
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 7
B O N D S BEARING ISSUE D A T E S F R O M D E C E M B E R 1, 1942, T H R O U G H MAY
$18.75 $37.50
25.00 50.00
Issue price
Denomination
$75.00
100.00
$375.00
500.00
$750.00
1,000.00
(1) Redemption values during each
half-year period (values increase on
first day of period shown)
Period after first extended maturity
(beginning 20 years after issue date)
SECOND E X T E N D E D
MATURITY PERIOD
First A y e a r . . . .
A to 1 year
I t o 13^ years
13^ to 2 years
2 to 23^ years
23^ to 3 years
3 to 33^ years
33^ to 4 years
4 to 43^ y e a r s - . 43^ to 5 years
5 to 634 years
53^ to 6 years
6to6>$years-.
634 to 7 years
1 (12/1/62)
(6/1/63)
(12/1/63)
(6/1/64)
(12/1/64)
(6/1/66)
(12/1/65)
(6/1/66)
(12/1/66)
(6/1/67)
-..(12/1/67)
(6/1/68)
-(12/1/68)
(6/1/69)
$34.26 $68.52 $137.04
34.90 69.80 139. 60
35.66 71.12 142. 24
36.22 72.44 144.88
36.90 73.80 147.60
37.69 75.18 150.36
38.30 76.60 153.20
39.03 78.06 156.12
39.77 79.54 159.08
40.54 81.08 162.16
41.34 82.68 165.36
42.18 84.36 168.72
43.04 86.08 172.16
43.93 87.86 175. 72
$685. 20 $1,370.40
698.00 1,396.00
711. 20 1,422.40
724.40 1,448.80
738.00 1,476. 00
751.80 1, 603. 60
766.00 1, 532. 00
780. 60 1, 561. 20
795.40 1, 590.80
810.80 1, 621. 60
826.80 1,653.60
843.60 1, 687. 20
860.80 1,721.60
878. 60 1,767. 20
Approximate
investment yield
(2) O n t h e
redemption (3) On current
redemption
value at start
value from
of the second
beginning
extended
of each
maturity
half-year
period to the
period
beginning
to second
of each
extended
half-year
maturity 2
period
thereafter
Percent
0.00
3.74
3.76
3.74
3.75
3.75
3.75
3.76
3.76
3.78
3.79
3.82
3.84
3.86
Percent
3.75
3.75
3.75
3.75
3.75
3.75
4.15
4.18
4.21
4.24
4.27
4.40
4.44
5.00
Redemption values and investment yields to second extended maturity on basis of June 1,1969, revision
7 to 734 y e a r s . . .
-(12/1/69)
73^ to 8 years
(6/1/70)
8 to 834 years
(12/1/70)
8>4to9years
(6/1/71)
9to9>4years
(12/1/71)
9J4 years to 10 years
(6/1/72)
SECOND EXTENDED MATURITY VALUE (30 years from issue
date)
...(12/1/72)
44.87 89.74
45.86 91.72
46.93 93.86
48.07 96.14
49.29 98.68
50.60 101. 20
897.40
179.48
917.20
183.44
938.60
187.72
961.40
192.28
985.80
197.16
202.40 1,012.00
1,794.80
1,834.40
1,877.20
1,922.80
1,971.60
2,024.00
3.89
3.93
3.97
4.02
4.08
4.15
52.22 104.44
208.88 1.044.40
2.088.80
5.12
5.26
5.41
5.60
5.86
6.40
3 4.26
1 Month, day, and year on which issues of Dec. 1,1942, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on second extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to second extended maturity date is 3.44 percent.
173
EXHIBITS
TABLE 8
B O N D S BEARING ISSUE D A T E S F R O M J U N E 1 T H R O U G H N O V E M B E R ]
$18.75 $37.50
25.00 50.00
Issueprice
Denomination
$75.00
100.00
$375.00
500.00
$750.00
1,000.00
(1) Redemption valiles during each
half-year period (values increase on
first day of period shown)
Period after first extended maturity
(beginning 20 years after issue date)
SECOND E X T E N D E E
MATURITY PERIOD
First A year
A to 1 year
1 to 13^ years
13^ to 2 years
2 to 23^ years
23/^ to 3 years.
3 to 334 years
33^ to 4 years.
4 to 434 years.
43/^ to 5 years
5 to 634 years
63^ to 6 years.
6 to 634 years
' (6/1/63)
...(12/1/63)
-(6/1/64)
(12/1/64)
(6/1/65)
...(12/1/65)
(6/1/66)
(12/1/66)
(6/1/67)
.(12/1/67)
(6/1/68)
(12/1/68)
(6/1/69)
$34.34 $68.68 $137.36
34.98 69.96 139.92
35.64 71.28 142. 56
36.31 72.62 145. 24
36.99 73.98 147. 96
37.68 75.36 150. 72
38.40 76.80 153.60
39.13 78.26 156. 52
39.89 79.78 159. 56
40.68 81.36 162. 72
41.49 82.98 165.96
42.33 84.66 169.32
43.20 86.40 172.80
$686.80 $1,373. 60
699.60 1,399. 20
712.80 1,425. 60
726. 20 1, 452.40
739.80 1,479. 60
753. 60 1, 507. 20
768.00 1, 536. 00
782. 60 1, 565. 20
797.80 1, 595. 60
813. 60 1, 627. 20
829.80 1, 659. 60
846. 60 1,693.20
864.00 1,728. 00
Approximate
investment yield
(2) On the
redemption (3) On current
redemption
value at start
value from
of the second
beginning
extended
of each
maturity
half-year
period to thc
period
beginning
to second
of each
extended
half-year
maturity 2
period
thereafter
Percent
0.00
3.73
3.75
3.75
3.75
3.75
3.76
3.77
3.78
3.80
3.82
3.84
3.86
Percent
3.75
3.75
3.75
3.75
3.75
4.15
4.18
4.20
4.23
4.25
4.39
4.42
5.00
Redemption values and investment yields to second extended maturity on basis of June 1, 1969, revision
634 to 7 y e a r s . . . (12/1/69)
7 to 73^ years
(6/1/70)
73/^ to 8 years
(12/1/70)
8 to 83^ years
(6/1/71)
8}^ to 9 years
...(12/1/71)
9 to 9 ^ years
(6/1/72)
93^ to 10 years.
(12/1/72)
SECOND EXTENDED MATURITY VALUE (30 years from
issue date)
(6/1/73)
44.10 88.20
45.08 90.16
46.11 92.22
47.23 94.46
48.39 96.78
49.64 99.28
50.96 101.92
882.00
176.40
901.60
180.32
922.20
184.44
944. 60
188.92
967.80
193. 56
992.80
198. 56
203.84 1, 019. 20
1.764.00
1,803.20
1,844.40
1,889.20
1,935.60
1,985. 60
2,038.40
3.89
3.93
3.97
4.02
4.08
4.14
4.20
52.64
210.56 1.052.80
2.105.60
5.12
6.24
5.37
5.50
5.69
5.95
6.59
34.32
105.28
1 Month, day, and year on which issues of June 1, 1943, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on second extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to second extended maturity date is 3.47 percent.
174
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 9
B O N D S BEARING ISSUE D A T E S F R O M D E C E M B E R 1, 1943 T H R O U G H MAY I, 1944
Issueprice
Denomination
$18.75 $37.50
25.00 50.00
$75.00
100.00
$375.00
500.00
$750.00
1,000.00
(1) Redemption values during each
half-year period (values increase on
first day of period shown)
Period after first extended maturity
(beginning 20 years after issue date)
SECOND E X T E N D E D
MATURITY PERIOD
First A year
A to 1 year
1 to 13^ years
13^ to 2 years
2 to 23^ y e a r s . . .
23^ to 3 years
3 to 33^ years
3A to 4 years
4 to i A years
43^ to 5 years
5 to 534 years
534 to 6 years
1 (12/1/63) $34.43 $68.86 $137.72
(6/1/64) 35.08 70.16 140.32
(12/1/64) 35.73 71.46 142.92
..(6/1/65) 36.40 72.80 145.60
(12/1/65) 37.09 74.18 148.36
(6/1/66) 37.79 75.68 151.16
(12/1/66) 38.51 77.02 154.04
(6/1/67) 39.25 78.50 157.00
(12/1/67) 40.03 80.06 160.12
(6/1/68) 40.83 81.66 163.32
(12/1/68) 41.65 83.30 166.60
(6/1/69) 42.50 85.00 170.00
$688.60 $1,377; 20
701.60 1,403.20
714.60 1,429,20
728.00 l,45e.00
741.80 1,483.60
755.80 1, 511. 60
770.20 1, 540.40
785.00 1, 570.00
800.60 1, 601. 20
816.60 1,633.20
833.00 1, 666. 00
860.00 1,700.00
Approximate
investment yield
(2) On the
(3) On current
redemption
redemption
value at start
value from
of the second
beginning
extended
of each
maturity
half-year
period to thc
period
beginning
to second
of each
extended
half-year
maturity 2
period
thereafter
PercerU
0.00
3.78
3.74
3.74
3.76
3.76
3.77
3.78
3.80
3.82
3.84
3.87
Percent
3.75
3.75
3.75
3.75
4.15
4.17
4.20
4.23
4.25
4.37
4.41
5.00
Redemption values and investment yields to second extended maturity on basis of June 1, 1969, revision
6 to 634 years
634 to 7 years
7 to 73^ y e a r s . .
73^ to 8 years
8 to SA years
83^ to 9 years
9 to 93^ years
9A to 10 years
SECOND EXTENDED
MATURITY VALUE
(30 years from
issue date)
(12/1/69)
(6/1/70)
(12/1/70)
(6/1/71)
(12/1/71)
(6/1/72)
(12/1/72)
(6/1/73)
43.38 86.76 173.52
867.60
886.40
44.32 88.64 '177.28
906.80
45.34 90.68 181.36
928.00
46.40 92.80 185.60
950.80
47.64 95.08 190.16
975.00
48.75 97.60 195.00
60.02 100.04 200.08 1,000.40
51.37 102.74 205.48 1,027.40
1, 735. 20
1,772.80
1,813.60
1,866.00
1,901.60
1,950.00
2,000.80
2,054.80
(12/1/73)
53.08 106.16
2,123.20
212.32 1,061.60
3.89
3.92
3.97
4.02
4.07
4.13
4.19
4.26
5.11
5.22
5.32
5.45
5.59
5.75
6.03
1 Month, day, and year on which issues of Dec. 1, 1943, enter each period. For subsequent issue months add
the appropriate number of months.
2 Based on second extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to second extended maturity date is 3.60 percent.
175
EXHIBITS
TABLE 10
B O N D S BEARING ISSUE D A T E S F R O M J U N E 1 T H R O U G H N O V E M B E R 1, 1944
Issue price
Denomination..
. —.
$7.50 $18.75 $37.50
10.00 25.00 50.00
$75.00
100.00
$375.00
500.00
$750.00
1,000.00
Approximate investment
yield
(1) Redemption values during each half-year period
(values increase on first day of period shown)
(2) O n t h e
redemption
- value at start
of the second
Period after first extended matuextended marity (beginning 20 years after
turity period
. issue date)
S E C O N D E X T E N D E D M A T U R I T Y P E R I O D to the beginning of each
half-year
period thereafter
First A year
A to 1 year
1 to I A years
1 ^ to 2 years
2 to 2A years
23^ to 3 years
3 to 33^ y e a r s . . . . :
33^ to 4 years
4 to 434 years
i A to 5 years
5 to bA years
' (6/1/64)
(12/1/64)
(6/1/65)
(12/1/65)
(6/1/66)
(12/1/66)
(6/1/67)
(12/1/67)
(6/1/68)
(12/1/68)
(6/1/69)
?13.80 $34. 51 $69.02 $138.04
14.06 35.16 70.32 140.64
14.33 35.82 71.64 143.28
14.60 36.49 72.98 145.96
14.87 37.18 74.36 148.72
15.16 37.89 75.78 151. 66
15.45 38.62 77.24 154.48
15.75 39.37 78.74 157.48
16.06 40.16 80.32 160.64
16.38 40.96 81.92 163.84
16.72 41.79 83.58 167.16
$690. 20 $1,380.40
703.20 1,406.40
716.40 1,432.80
729.80 1,459.60
743.60 1,487.20
757.80 1,615.60
772.40 1,544.80
787.40 1, 574. 80
803. 20 1,606.40
819. 20 1,638.40
835.80 1,671.60
(3) On current redemption value
from beginning of each
half-year
period to second extended
maturity 2
Percent
0.00
3.77
3.76
3.75
3.76
3.77
3.79
3.80
3.83
3.84
3.87
Percent
3.75
3.75
3.75
4.15
4.17
4.20
4.22
4.25
4.37
4.40
5.00
Redemption values and investment yields to second extended maturity on basis of June 1,1969, revision
53^ to 6 years
(12/1/69)
6to6>4years
(6/1/70)
63^ to 7 years
(12/1/70)
7 to 7A years
(6/1/71)
734 to 8 years
(12/1/71)
8to8>4years
(6/1/72)
83^ to 9 years
(12/1/72)
9 to 934 years
(6/1/73)
93^ to 10 years
(12/1/73)
SECOND EXTENDED
M A T U R I T Y VALUE
(30 years from issue
date)
(6/1/74)
17.06
17.44
17.83
18.24
18.68
19.14
19.63
20.15
20.70
42.66 85.32
43.59 87.18
44.67 89.14
45.60 91.20
46.69 93.38
47.84 95.68
49.07 98.14
50.37 100.74
51.74 103.48
170.64
853.20
871.80
174.36
891.40
178. 28
912.00
182.40
933.80
186.76
956.80
191.36
196. 28 981.40
201.48 1,007.40
206.96 1,034.80
1,706.40
1,743.60
1,782.80
1,824.00
1,867.60
1,913.60
1,962.80
2,014.80
2,069.60
21.40
53.49 106.98
213.96 1,069.80
2,139.60
3.89
3.93
3.97
4.02
4.07
4.12
4.18
4.25
4.31
5.09
5.18
5.28
5.39
5.51
5.66
5.83
6.10
6.76
8 4.43 .....
1 Month, day, and year on which issues of June 1,1944, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on second extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to second extended maturity date is 3.53 percent.
176
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 11
B O N D S BEARING I S S U E D A T E S F R O M D E C E M B E R 1, 1944 T H R O U G H MAY
$7.50 $18.75 $37.50
10.00 25.00 50.00
Issueprice
Denomination
$75.00
100.00
$375.00
500.00
$750.00 Approximate investment
1,000.00
yield
(1) Redemption values during each half-year period (2) O n t h e
redemption (3) On cur(values increase on first day of period shown)
value at start rent redempof the second tion value
Period after first extended matuextended ma- from beginrity (beginning 20 years after
turity period ning of each
issue date)
half-year
S E C O N D E X T E N D E D M A T U R I T Y P E R I O D to the beginning of each period to sechalf-year
ond extended
period there- m a t u r i t y 2
after
First J4 year
3^ to l y e a r
1 to 134 years
134 to 2 years
2 to 2 ^ years
2 ^ to 3 years
3 to 33^ years
3>4to4years
4to4>4years...
434 to 6 years
1 (12/1/64)
(6/1/65)
(12/1/66)
(6/1/66)
(12/1/66)
(6/1/67)
(12/1/67)
(6/1/68)
(12/1/68)
(6/1/69)
$13.84 $34. 69 $69.18 $138.36
14.10 35.24 70.48 140.96
14.36 35.90 71.80 143. 60
14.63 36.58 73.16 146.32
14.91 37.28 74.56 149.12
15.20 38.00 76.00 152. 00
15.60 38.74 77.48 154.96
15.80 39.50 79.00 168.00
16.12 40.29 80.58 161.16
16.44 41.10 82.20 164.40
$691.80 $1,383. 60
704.80 1,409. 60
718.00 1,436.00
731.60 1,463.20
745.60 1,491.20
760.00 1,520.00
774.80 1, 549. 60
790.00 1,580.00
805.80 1, 611. 60
822.00 1, 644.00
Percent
0.00
3.76
3.75
3.76
3.78
3.80
3.81
3.83
3.85
3.87
Percent
3.75
3.75
4.15
4.17
4.19
4.21
4.24
4.36
4.39
6.00
Redemption values and investment yields to second extended maturity on basis of June 1, 1969, revision
6 to 534 years
(12/1/69)
63^ to 6 years.
(6/1/70)
6 to 6H years
(12/1/70)
6^to7ye&rs
(6/1/71)
7 to 734 years
(12/1/71)
734 to 8 years
(6/1/72)
8 to 834 years
(12/1/72)
8>^ to 9 years
(6/1/73)
9to93^years
(12/1/73)
9 ^ to 10 years
(6/1/74)
SECOND EXTENDED
MATURITY VALUE
(30 years from issue
date)
(12/1/74)
16.78
17.14
17.62
17.92
18.35
18.80
19.27
19.77
20.29
20.85
41.96 83.92
42.85 85.70
43.81 87.62
44.81 89.62
45.87 91.74
47.00 94.00
48.17 96.34
49.43 98.86
50.73 101.46
52.12 104.24
839.20
167.84
857.00
171.40
876.20
175. 24
896. 20
179. 24
917.40
183.48
940.00
188.00
963.40
192.68
988.60
197.72
202.92 1,014. 60
208.48 1,042.40
1, 678.40
1,714.00
1,752.40
1,792.40
1,834.80
1,880. 00
1,926.80
1,977.20
2,029. 20
2,084.80
3.90
3.93
3.98
4.02
4.07
4.13
4.18
4.24
4.30
4.36
21.57
53.93 107.86
215.72
1.078.60
2,157.20
34.49
6.08
5.18
5.26
5.36
5.47
5.58
5.73
5.89
6.21
6.95
1 Month, day. and year on which issues of Dec. 1, 1944, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on second extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to second extended maturity date is 3.65 percent.
177
EXHIBITS
TABLE 12
B O N D S BEARING I S S U E S D A T E S F R O M J U N E 1 T H R O U G H N O V E M B E R ] 1945
Issueprice
Denomination..
$7.50 $18.75 $37.50
10.00 25.00 50.00
$75.00 $150.00
100.00 200.00
$375.00
500.00
$750.00
1,000.00
(1) Redeinption values during each half-year period
(values increase on first day of period shown)
maturity (beginning 20
years after issue date)
SECOND E X T E N D E D MATURITY PERIOD
. 1 (6/1/65)
First 3^ year
..(12/1/66)
34 to l y e a r
I t o 134 y e a r s . . . ...(6/1/66)
134 to 2 y e a r s . . . ...(12/1/66)
2 to 234 y e a r s . . - .-.(6/1/67)
2 > 4 t o 3 y e a r s - . . . ..(12/1/67)
3 to 334 y e a r s . . . ...(6/1/68)
..(12/1/68)
33^ to 4 years
4 to 434 y e a r s . . . -..(6/1/69)
$13.87
14.13
14.40
14.68
14.96
15.25
15.65
15.86
16.18
$34.68 $69.36 $138.72 $277.44
35.33 70.66 141.32 282.64
36.00 72.00 144.00 288.00
36.69 73.38 146. 76 293. 52
37.40 74.80 149. 60 299.20
38.12 76.24 152.48 304.96
38.87 77.74 155.48 310.96
39.65 79.30 158.60 317.20
40.45 80.90 161.80 323.60
$693.60 $1,387.20
706.60 1,413. 20
720.00 1,440.00
733.80 1,467.60
748.00 1,496.00
762.40 1,524.80
777.40 1, 554.80
793.00 1, 586.00
809.00 1,618.00
Approximate investment yield
(2) On the
redemption
value at
start of
the second
extended
maturity
period to
the beginning of each
half-year
period
thereafter
(3) On current redemption
value from
beginning
of each
half-year
period to
second
extended
maturity 2
Percent
0.00
3.75
3.77
3.79
3.81
3.82
3.84
3.86
3.88
Percent
3.75
4.16
4.17
4.19
4.21
4.23
4.35
4.38
5.00
Redemption values and investment yields to second extended maturity onI basis of June 1,1969, revision
434 to 6 y e a r s . . - ..(12/1/69)
5 to 534 y e a r s . . - ...(6/1/70)
534 to 6 y e a r s . . . ..(12/1/70)
6 to 634 y e a r s . . . ...(6/1/71)
634 to 7 y e a r s . . . ..(12/1/71)
7 to 734 y e a r s . . . ...(6/1/72)
734 to 8 y e a r s . . . ..(12/1/72)
8 t o 8 > 4 y e a r s . . - -..(6/1/73)
834 to 9 y e a r s . . . ..(12/1/73)
9 t o 9 > 4 y e a r s . . . ...(6/1/74)
934 to 10 years.- ..(12/1/74)
SECOND EXTENDED
M A T U R I T Y VALUE
(30 years from issue
date)
...(6/1/75)
16.51
16.86
17.23
17.62
18.04
18.47
18.93
19.41
19.92
20.46
21.02
41.28 82.56
42.16 84.32
43.08 86.16
44.06 88.12
45.09 90.18
46.18 92.36
47.33 94.66
48.63 97.06
49.80 99.60
51.14 102.28
52.65 105.10
165.12
168.64
172.32
176.24
180.36
184.72
189.32
194.12
199.20
204.56
210. 20
330.24
825. 60
843.20
337.28
861. 60
344.64
881.20
352.48
901.80
360.72
923.60
369.44
946.60
378.64
970.60
388.24
996.00
398.40
409.12 1,022.80
420.40 1,051. 00
1,651.20
1,686.40
1,723.20
1,762.40
1,803.60
1,847.20
1,893.20
1,941.20
1,992.00
2,045.60
2,102.00
3.91
3.94
3.98
4.03
4.08
4.13
4.19
4.24
4.30
4.36
4.42
21.76
54.40 108.80
217.60
435.20 1,088.00
2,176.00
3 4.55
5.08
5.16
5.25
5.34
5.44
5.54
5.65
5.79
5.98
6.28
7.04
1 Month, day, and year on which issues of June 1,1946, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on second extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to second extended maturity date is 3.68 percent.
178
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 13
BONDS BEARING ISSUE D A T E S F R O M D E C E M B E R 1, 1945, T H R O U G H MAY 1. 1946
Issueprice
Denomination
$7.50 $18.75 $37.50
10.00 25.00 50.00
$75.00 $150.00
100.00 200.00
$375.00
500.00
$750.00
1,000.00
(1) Redemption values during each half-year period
(values increase on first day of period shown)
Period after first extended
maturity (beginning 20
years after issue date)
Fu-st 34 year....!
34 to l y e a r . .
1 to IM years
134 to 2 years
2 to 2K years
234 to 3 years
3 to 3>^ years
3>4t0 4years
SECOND E X T E N D E D MATURITY PERIOD
(12/1/66) $13.91 $34.77 $69.64 $139.08 $278.16
(6/1/66)
14.20 35.49 70.98 141.96 283.92
(12/1/66)
14.49 36.23 72.46 144.92 289.84
(6/1/67)
14.79 36.98 73.96 147.92 295.84
(12/1/67)
16.10 37.75 75.50 161.00 302.00
(6/1/68)
15.41 38.63 77.06 164.12 308.24
(12/1/68)
15.73 39.33 78.66 157.32 314.64
(6/1/69)
16.06 40.15 80.30 160.60 321.20
Approximate investment yield
(2) On the
redemption
value at
— start of
the second
extended
maturity
period to
the beginning of each
half-year
period
thereafter
$695.40 $1,390.80
709.80 1,419.60
724.60 1,449.20
739.60 1,479.20
755.00 1,610.00
770.60 1,641.20
786.60 1,673.20
803.00 1,606.00
(3) On current redemption
value from
beginning
of each
half-year
period to
second
extended
maturity 2
0.00
4.14
4.16
4.15
4.16
4.16
4.15
4.15
4.15
4.15
4.15
4.15
4.15
4.25
4.26
6.00
Redemption values and investment yields to second extended maturity on basis of June 1, 1969. revision
4 to 43^^ years
(12/1/69)
434 to 6 years
(6/1/70)
5 to 634 years
(12/1/70)
6>4to6years
(6/1/71)
6to6>4years
(12/1/71)
634 to 7 years
(6/1/72)
7 to 734 years
(12/1/72)
734 to 8 years
(6/1/73)
8 to SA years
(12/1/73)
834 to 9 years
(6/1/74)
9 to 934 years.-..(12/1/74)
9M to 10 years
(6/1/76)
SECOND EXTENDED
M A T U R I T Y VALUE
(30 years from issue
date)
(12/1/75)
16.40
16.75
17.12
17.51
17.92
18.35
18.79
19.26
19.76
20.27
20.81
21.38
81.98
40.99
83.76
41.88
85.62
42.81
87.54
43.77
44.80 89.60
91.74
45.87
93.96
46.98
96.32
48.16
49.40 98.80
50.68 101.36
62.03 104.06
63.46 106.92
163.96
167. 62
171. 24
175. 08
179. 20
183.48
187.92
192.64
197.60
202. 72
208.12
213.84
327.92
819.80
335.04
837.60
342. 48
856. 20
876.40
350.16
896.00
368.40
917.40
366.96
376.84
939. 60
963.20
385.28
395. 20
988.00
405.44 1, 013.60
416. 24 1,040. 60
427.68 1,069. 20
22.14
55.35
110.70
221.40
442.80
1,107.00
1, 639. 60
1, 676. 20
1, 712.40
1, 750.80
1, 792. 00
1,834.80
1,879. 20
1,926.40
1,976.00
2, 027. 20
2,081. 20
2,138.40
2,214.00
4.70
5.07
5.14
5.20
5.28
5.36
6.44.
6.54
5.64
5.77
5.96
6.28
7.07
4.16
4.18
4.20
4.23
4.27
4.31
4.36
4.39
4.44
4.48
4.53
4.58
—.
1 Month, day, and year on which issues of Dec. 1, 1946, enter each period. For subsequent issue months add
the appropriate number of months.
2 Based on second extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to second extended maturity date is 3.64 percent. •
179
EXHIBITS
TABLE 14
B O N D S BEARING ISSUE D A T E S F R O M J U N E 1 T H R O U G H N O V E M B E R 1, 1946
$7.50 $18.75 $37.50
10.00 25.00 50.00
Issueprice
Denomination
$75.00 $150.00
100.00 200. 00
$375.00
500.00
$750.00
1,000.00
(1) Redemption values during each half-year period
(values increase on first day of period shown)
Period after first extended
raaturity (beginning 20
years after issue date)
First 34 year
34tolyear
1 to 1>^ years
134 to 2 years
2 to 234 years
234 to 3 years
3 to 334 years
1 (6/1/66)
(12/1/66)
(6/1/67)
(12/1/67)
(6/1/68)
(12/1/68)
(6/1/69)
SECOND E X T E N D E D MATURITY PERIOD
$13.97 $34.92 $69.84 $139.68 $279.36
14.26 35.64 71.28 142.56 285.12
14.55 36.38 72.76 145.52 291.04
14.86 37.14 74.28 148.56 297.12
16.16 37.91 75.82 151.64 303.28
15.48 38.70 77.40 154.80 309.60
15.80 39.50 79.00 158.00 316.00
Approximate investment yield
(2) On thc
redemption
value at
start of
the second
extended
raaturity
period to
the beginning of each
half-year
period
thereafter
$698.40 $1,396.80
712.80 1,425.60
727.60 1,455.20
742.80 1,485.60
758.20 1,516.40
774.00 1,548.00
790.00 1,680.00
(3) On current redemption
value from
beginning
of each
half-year
period to
second
extended
maturity 2
Percent
0.00
4.12
4.14
4.15
4.15
4.15
4.15
Percent
4.15
4.15
4.15
4.15
4.25
4.26
5.00
Redemption values and investraent yields to second extended maturity on basis of June 1,1969, revision
334 to 4 years
4 to 434 years
434 to 5 years
6 to 634 years
634 to 6 years
6 to 634 years
634 to 7 years
7 to 734 years
73^ to 8 years
8 to 8M years8>^ to 9 years
9 to 9M years
9A to 10 years
(12/1/69)
(6/1/70)
(12/1/70)
(6/1/71)
(12/1/71)
-(6/1/72)
(12/1/72)
(6/1/73)
(12/1/73)
(6/1/74)
(12/1/74)
(6/1/75)
(12/1/75)
16.13
16.48
16.84
17.22
17.62
18.04
18.48
18.93
19.41
19.90
20.43
20.98
21.65
SECOND EXTENDED
MATURITY VALUE
(30 years from issue
date)
(6/1/76) 22.32
40.33
80.66
41.20 82.40
84.22
42.11
86.12
43.06
44.05
88.10
90.18
45.09
46.19
92.38
94.64
47.32
48.52 97.04
99.62
49.76
51.07 102.14
52.44 104.88
53.87 107. 74
161.32
164.80
168.44
172. 24
176. 20
180.36
184. 76
189.28
194.08
199.04
204.28
209. 76
216. 48
322.64
806. 60
824. 00
329.60
842. 20
336.88
344.48
861. 20
352.40
881.00
360. 72
901.80
369. 52
923.80
378. 56
946.40
970.40
388.16
995. 20
398. 08
408.66 1, 021. 40
419. 62 1, 048.80
430.96 1, 077. 40
111.62
223.24
446.48
55.81
1,116.20
1, 613. 20
1, 648. 00
1, 684.40
1,722.40
1, 762. 00
1,803. 60
1,847. 60
1,892.80
1,940.80
1,990. 40
2,042.80
2, 097. 60
2,154. 80
2,232. 40
4.16
4.18
4.20
4.23
. 4.27
.4.31
4.35
4.39
4.43
4.48
4.62
4.57
4. 62
5.06
5.12
6.19
6.26
5.33
5.40
5.48
6.58
5.68
5.82
6.01
6.33
7.20
34.74 — .
' Month, day, and year on which issues of June 1, 1946, enter each period. For subsequent issue raonths add the
appropriate number of months.
2 Based on second extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to second extended maturity date is 3.67 percent.
180
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 15
B O N D S BEARING ISSUE D A T E S F R O M D E C E M B E R 1, 1946, T H R O U G H MAY 1, 1947
e price
Denomination
$7.50 $18.75 $37.50
10.00 25.00 50.00
$75.00 $150.00
100.00 200.00
$375.00
500.00
$750.00
1,000.00
(1) Redemption values during each half-year period
(values increase on first day of period shown)
Period after first extended
maturity (beginning 20
years after issue date)
SECOND E X T E N D E D MATURITY PERIOD
First 34 year-...1(12/1/66) $14.03 $35.08 $70.16 $140.32 $280.64
34 to l y e a r
(6/1/67)
14.32 36.81 71.62 143.24 286.48
It0l3^yeai-s
(12/1/67)
14.62 36.65 73.10 146.20 292.40
134 to 2 years
(6/1/68)
14.92 37.31 74.62 149.24 298.48
2 to 234 years-.-.(12/1/68)
15.23 38.08 76.16 162.32 304.64
23^ to 3 years
(6/1/69)
16.55 38.87 77.74 156.48 310.96
$701.60 $1,403. 20
716. 20 1,432.40
731. 00 1,462.00
746.20 1,492.40
761.60 1, 623. 20
777.40 1,654.80
Approximate investment yield
(2) On the
redemption
value at
start of
the second
extended
maturity
period to
the beginning of each
half-year
period
thereafter
(3) On current redemption
value frora
beginning
of each
half-year
period to
second
extended
maturity 2
Percent
0.00
4.16
4.15
4.15
4.15
4.15
Percent
4.15
4.15
4.15
4.25
4.26
5.00
Redemption values and investment yields to second extended maturity on basis of June 1,1969, revision
3 to 334 years....(12/1/69)
33^to4yeai-s
(6/1/70)
4 to 4>4 years--..(12/1/70)
434 to 5 years
(6/1/71)
5 to 5>4 years..-.(12/1/71)
534 to 6 years- ....(6/1/72)
6 to 634 y e a r s . . . . (12/1/72)
634 to 7 years
(6/1/73)
7 to 7H years...-(12/1/73)
734 to 8 years
(6/1/74)
8 to8>^ years....(12/1/74)
834 to 9 years
(6/1/75)
9 to 9A years
(12/1/75)
934 to 10 years
(6/1/76)
S E C O N D EXTENDED
MATURITY
VALUE (30
years from
issue date)
(12/1/76)
15.88
16.22
16.57
16.94
17.34
17.74
18.16
18.61
19.07
19.56
20.06
20.69
21.14
21.72
39.69
40.64
41.43
42.36
43.34
44.35
45.41
46.53
47.68
48.90
60.16
51.48
52.86
64.31
79.38
81.08
82.86
84.72
86.68
88.70
90.82
93.06
95.36
97.80
100.32
102.96
105.72
108.62
168.76
162.16
166.72
169.44
173.36
177.40
181.64
186.12
190.72
195.60
200.64
205.92
211.44
217. 24
317. 52
324.32
331.44
338.88
346.72
354.80
363.28
372.24
381.44
391. 20
401.28
411.84
422.88
434.48
22.52
56.30
112.60
225.20
450.40 1,126.00
793.80
810.80
828.60
847.2Q
866.80
887.00
908.20
930.60
963.60
978.00
1,003. 20
1,029.60
1,067. 20
1,086.20
1,587.60
1,621.60
1,667.20
1,694.40
1,733.60
1,774.00
1,816.40
1,861. 20
1,907.20
1,966.00
2,006.40
2,059.20
2,114.40
2,172. 40
4.16
4.18
4.20
4.23
4.27
4.31
4.35
4.39
4.43
4.48
4.62
4.66
4.61
4.65
5.06
5.12
5.18
6.24
5.30
6.37
5.45
6.62
5.62
5.72
5.86
6.06
6.41
7.33
2,252.00
1 Month, day, and year on which issues of Dec. 1,1946, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on second extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to second extended maturity date is 3.70 percent.
181
EXHIBITS
TABLE 16
B O N D S BEARING ISSUE D A T E S F R O M J U N E 1 T H R O U G H N O V E M B E R 1, 1947
Issueprice..
Denomination
$7.50 $18.75 $37.50
10.00 25.00 50.00
$75.00 $150.00
100.00 200.00
$375.00
500.00
$750.00
1,000.00
(1) Redemption values during each half-year period
(values increase on first day of period shown)
Period after first extended
raaturity (beginning 20
years after issue date)
SECOND E X T E N D E D MATURITY PERIOD
FirstMyear
34 to l y e a r
1 to IM years
I M t o 2years
2 to 2M years
' (6/1/67)
(12/1/67)
(6/1/68)
(12/1/68)
(6/1/69)
$14.09 $35.23 $70.46 $140.92 $281.84
14.38 35.96 71.92 143.84 287.68
14.68 3a 71 73.42 146.84 293.68
14.99 37.47 74.94 149.88 299.76
15.30 38.25 76.60 153.00 306.00
$704.60 $1,409.20
719.20 1,438.40
734.20 1,468.40
749.40 1,498.80
765.00 1,530.00
Approximate investment yield
(2) On the
redemption
- value at
start of
the second
extended
maturity
period to
the beginning of each
half-year
period
thereafter
(3) On current redemption
value from
beginning
of each
half-year
period to
second
extended
maturity 2
Percent
0.00
4.14
4.16
4.15
4.15
Percent
4.16
4.15
4.25
4.26
5.00
Redemption values and investment yields to second extended maturity on basis of June 1,1969, revision
2M to 3 years
(12/1/69)
3 to 3M years
.(6/1/70)
3M to 4 years
(12/1/70)
4 to 4M years
(6/1/71)
4 M t o 5 years
(12/1/71)
5 to 6M years
(6/1/72)
5M to 6 years
(12/1/72)
6 to 6M years
(6/1/73)
6M to 7 years
(12/1/73)
7 to 7M years
(6/1/74)
7M to 8 years
(12/1/74)
8 to 8M years
(6/1/75)
8M to 9 years
(12/1/75)
9 to 9M years
(6/1/76)
9M to 10 years
(12/1/76)
SECOND EXTENDED
M A T U R I T Y VALUE
(30 years from
issue date)
(6/1/77)
15.62
15.96
16.30
16.67
17.05
17.44
17.86
18.29
18.74
19.22
19.70
20.22
20.75
21.32
21.90
39.05
39.89
40.76
41.67
42.62
43.61
44.65
45.73
46.86
48.04
49.26
60.65
51.88
53.29
64.75
78.10
79.78
81.52
83.34
85.24
87.22
89.30
91.46
93.72
96.08
98.52
101.10
103.76
106.58
109.50
156. 20
159. 56
163.04
166.68
170.48
174.44
178. 60
182.92
187.44
192.16
197.04
202. 20
207. 62
213.16
219. 00
312.40
319.12
326.08
333.36
340.96
348.88
357. 20
365.84
374.88
384.32
394.08
404.40
415.04
426.32
438.00
22.71
56.78 113.56
227.12
454.24 1,135.60
781.00
797.80
815. 20
833.40
852.40
872.20
893.00
914. 60
937.20
960.80
985.20
1, Oil. 00
1,037. 60
1, 065.80
1,095. 00
1, 562. 00
1,695.60
1,630.40
1,666.80
1,704.80
1,744.40
1,786. 00
1,829. 20
1,874.40
1,921. 60
1,970.40
2, 022. 00
2, 076. 20
2,131. 60
2,190. 00
2,271.20
4.16
4.18
4.21
4.24
4.28
4.31
4.36
4.40
4.44
4.48
4.52
4.56
4.61
4.65
4.70
5.05
5.11
5.17
5.22
5.28
5.35
5.41
5.48
5.66
5.65
5.76
5.90
6.11
6.45
7.42
3 4.83 — .
1 Month, day, and year on which issues of June 1, 1947, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on second extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to second extended maturity date is 3.73 percent.
182
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 17
B O N D S BEARING ISSUE D A T E S F R O M D E C E M B E R I, 1947, T H R O U G H MAY 1, 1948
Issueprice
Denomination
$7.50 $18.75 $37.50
10.00 25.00 50.00
$75.00 $150.00
100.00 200.00
$375.00
500.00
$750.00
1,000.00
(1) Redemption values durtng each half-year period
(values increase on first day of period shown)
Period after first extended
maturity (beginning 20
years after issue date)
SECOND E X T E N D E D MATURITY PERIOD
FirstMyear
Mto lyear
1 to IM years
I M t o 2 years
'(12/1/67) $14.16 $35.39 $70.78 $141.66 $283.12
(6/1/68) 14.45 36.12 72.24 144.48
(12/1/68) 14.75 36.87 73.74 147.48 294.96
(6/1/69) 15.06 37.64 76.28 160.66 301.12
$707.80 $1,415.60
722.40 1,444.80
737.40 1,474.80
762.80 1,505.60
Approximate investment yield
(2) on the
redemption
value at
start of
the second
extended
maturity
period to
the beginning of each
half-year
period
thereafter
(3) On current redemption
value from
beginning
of each
half-year
period to
second
extended
maturity 2
Percent
0.00
4.13
4.14
4.15
Percent
4.15
4.25
4.26
5.00
Redemption values and investment yields to second extended maturity on basis of June 1,1969, revision
2 to 2M years
(12/1/69)
2M to 3 years
(6/1/70)
3 to 3M years
(12/1/70)
3M to 4 years
(6/1/71)
4 to 4M years
(12/1/71)
4M to 5 years
(6/1/72)
5 to 6M years
(12/1/72)
5M to 6 years
(6/1/73)
6 to 6M years
(12/1/73)
6M to 7 years
(6/1/74)
7 to 7M years
(12/1/74)
7M to 8 years
(6/1/76)
8 to 8M years
(12/1/76)
8M to 9 years.-....(6/1/76)
9 to 9M years
(12/1/76)
9M to 10 years
(6/1/77)
SECOND EXTENDED
M A T U R I T Y VALUE
(30 years from issue
date)
(12/1/77)
15.37
16.70
16.04
16.40
16.77
17.16
17.56
17.99
18.43
18.88
19.36
19.86
20.38
20.92
21.49
22.08
38.43
39.25
40.11
41.00
41.93
42.91
43.91
44.97
46.07
47.21
48.41
49.65
60.96
52.31
63.72
65.20
76.86
78.60
80.22
82.00
83.86
85.82
87.82
89.94
92.14
94.42
96.82
99.30
101.92
104.62
107.44
110.40
153.72
157.00
160.44
164.00
167.72
171.64
175.64
179.88
184.28
188.84
193.64
198.60
203.84
209.24
214.88
220.80
307.44
314.00
320.88
328.00
335.44
343.28
351.28
359.76
368.66
377.68
387.28
397.20
407.68
418.48
429.76
441.60
768.60
786.00
802.20
820.00
838.60
858.20
878.20
899.40
921.40
944.20
968.20
993.00
1,019.20
1,046.20
1,074.40
1,104.00
1,537. 20
1,670.00
1,604.40
1,640.00
1,677.20
1,716.40
1,756.40
1,798.80
1,842.80
1,888.40
1,936.40
1,986.00
2,038.40
2,092.40
2,148.80
2,208.00
4.16
4.18
4.22
4.25
4.28
4.33
4.36
4.40
4.44
4.48
4.53
4.57
4.61
4.65
4.69
4.73
22.91
57.27 114.54
229.08
458.16 1,145.40
2,290;80
4.87 . . .
5.05
5.10
6.15
5.21
6.26
5.32
5.38
5.45
5.52
5.60
5.68
6.79
5.92
6.13
6.60
7.50
1 Month, day, and year on which issues of Dec. 1,1947, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on second extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to second extended maturity date is 3.76 percent.
183
EXHIBITS
TABLE 18
B O N D S BEARING ISSUE D A T E S F R O M J U N E 1 T H R O U G H N O V E M B E R 1, 1948
Issueprice
Denomination
$7.50 $18.75 $37.50
10.00 25.00 50.00
$75.00 $150.00
100.00 200.00
$375.00
500.00
$750.00
1,000.00
(1) Redemption values during each half-year period
(values increase on first day of period shown)
Period after first extended
maturity (beginning 20
years after issue date)
SECOND E X T E N D E D MATURITY PERIOD
FirstMyear
'(6/1/68) $14.22 $35.65 $71.10 $142.20 $284.40
A to 1 year
(12/1/68)
14. 62 36.29 72. 58 146.16 290.32
1 to IM years'".-"-(6/1/69)
14.82 37.04 - ' "-^ 148.16 296.32
-^-^
74*. 08
$711.00 $1,422.00
725.80 1,451. 60
740.80 1,481. 60
Approximate investment yield
(2) On the
redemption
- value at
start of
the second
extended
maturity
period to
the beginning of each
half-year
period
thereafter
(3) On current redemption
value from
beginning
of each
half-year
period to
second
extended
maturity 2
Percerit
0.00
4.16
4.15
Percent
4.25
4.25
5.00
Redemption values and investment yields to second extended maturity on basis of June 1, 1969, revision
I M t o 2 years
(12/1/69)
2 to 2M years
(6/1/70)
2M to 3 years
(12/1/70)
3 to 3M years
(6/1/71)
3M to 4 years
(12/1/71)
4 to 4M years
(6/1/72)
4M to 5 years
(12/1/72)
6 to 6M years
-(6/1/73)
5M to 6 years
(12/1/73)
6 to 6M years
(6/1/74)
6M to 7 years
(12/1/74)
7 to 7M years
(6/1/75)
7M to 8 y e a r s . - . . (12/1/75)
8 to 8M years
(6/1/76)
8M to 9 years
(12/1/76)
9 to 9M years
(6/1/77)
9M to 10 years—-(12/1/77)
15.13
15.45
16.78
16.14
16.60
16.88
17.28
17.69
18.12
18.66
19.03
19.61
20.02
20.64
21.09
21.67
22.26
37.82
38.62
39.46
40.34
41.26
42.20
43.19
44.22
46.29
46.41
47. 57
48.78
60.05
61.36
62.73
54.17
65.66
75.64
77.24
78.92
80.68
82.62
84.40
86.38
88.44
90.68
92.82
96.14
97.66
100.10
102. 72
106.46
108.34
111.32
151.28
154.48
157.84
161.36
165.04
168.80
172.76
176.88
181.16
185.64
190.28
195.12
200.20
205. 44
210.92
216.68
222.64
302. 56
308.96
316.68
322.72
330.08
337.60
346. 62
363.76
362.32
371. 28
380. 56
390. 24
400.40
410.88
421.84
433.36
445. 28
766.40
772. 40
789. 20
806.80
825.20
844.00
863.80
884.40
905.80
928.20
961.40
975. 60
1,001.00
1, 027. 20
1,054. 60
1,083.40
1,113. 20
1, 512.80
1,544.80
1, 678.40
1, 613.60
1,660.40
1,688.00
1,727.60
1,768.80
1,811.60
1,866.40
1,902.80
1,961. 20
2,002.00
2,054.40
2,109. 20
2,166.80
2,226.40
4.17
4.18
4.22
4.26
4.30
4.33
4.37
4.41
4.45
4.49
4.53
4.57
4.61
4.65
4.69
4.74
4.78
SECOND EXTENDED
M A T U R I T Y VALUE
(30 years from issue
date)
(6/1/78)
23.11
57.77 115.54
231.08
462.16 1.155.40
2.310.80
34.91 . . .
5.05
5.10
6.15
5.20
5.25
5.30
5.36
5.42
5.48
6.65
5.63
6.72
5.82
5.97
6.18
6.54
7.68
1 Month, day, and year on which issues of J u n e 1,1948, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on second extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to second extended maturity date is 3.79 percent.
184
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 19
B O N D S B E A R I N G I S S U E D A T E S F R O M D E C E M B E R 1, 1948, T H R O U G H MAY 1, 1949
$7.50 $18.75 $37.50
10.00 25.00 50.00
Issueprice
Denomination-
$75.00 $150.00
100.00 200.00
$375.00
500.00
$750.00
1,000.00
(1) Redemption values during each half-year period
(values increase on first day of period shown)
Period after first extended
maturity (beginning 20
years after issue date)
SECOND E X T E N D E D MATURITY PERIOD
First M year
Mto lyear
» (12/1/68) $14.29 $35. 72 $71.44 $142.88 $285. 76
(6/1/69) 14.58 36.46 72.92 145.84 291.68
$714.40
729.20
$1,428.80
1,468,40
Approximate investment yield
(2) On the
redemption
value at
start of
the second
extended
maturity
period to
the beginning of each
half-year
period
thereafter
(3) On current redemption
value from
beginning
of each
half-year
period to
second
extended
maturity 2
Percent
0.00
4.14
Percent
4.25
5.00
Redemption values and investment yields to second extended maturity on basis of June 1,1969, revision
1 to IM years
(12/1/69)
IM to 2 years
(6/1/70)
2 to 2M years
(12/1/70)
2M to 3 years
(6/1/71)
3 to 3M years
(12/1/71)
3M to 4 years
(6/1/72)
4 to 4M years
(12/1/72)
434 to 5 years
(6/1/73)
5 to 5M years
(12/1/73)
6M to 6 years
(6/1/74)
6 to 6M years
(12/1/74)
6M to 7 years
(6/1/76)
7 to 7M years
(12/1/76)
7M to 8 years
(6/1/76)
8 to 8M years
(12/1/76)
8M to 9 years
-- (6/1/77)
9 to 9M years
(12/1/77)
9M to 10 years
(6/1/78)
SECOND EXTENDED
MATURITY
VALUE
(30 years from issue
date)
(12/1/78)
744.60
760.40
777.00
794.00
811. 80
830.60
850.00
870.00
891.00
912.80
935.40
969. 20
983.80
1,009.40
1,036.20
1,064.00
1,093.00
1,123.00
14.89
15.21
15.64
15.88
16.24
16.61
17.00
17.40
17.82
18.26
18.71
19.18
19.68
20.19
20.72
21.28
21.86
22.46
74.46
37.23
76.04
38.02
77.70
38.85
79.40
39.70
40.69
81.18
83.06
41.53
85.00
42.50
87.00
43.60
89.10
44.55
45.64
91.28
93.54
46.77
95.92
47.96
49.19
98.38
50.47 100. 94
61.81 103. 62
53.20 106. 40
54.65 109.30
66.15 112.30
148.92
152. 08
165. 40
168. 80
162. 36
166. 12
170.00
174. 00
178. 20
182. 56
187.08
191. 84
196. 76
201.88
207. 24
212.80
218.60
224.60
297.84
304.16
310. 80
317.60
324. 72
332.24
340.00
348.00
356. 40
365.12
374.16
383. 68
393. 52
403. 76
414.48
425.60
437. 20
449. 20
23.32
58.29
233.16
466.32 1,165.80
116.58
1,489.20
1,520.80
1, 654.00
1,688.00
1,623. 60
1,661.20
1, 700.00
1, 740.00
1, 782.00
1,825. 60
1,870.80
1,918. 40
1,967.60
2,018.80
2,072.40
2,128.00
2,186.00
2,246.00
2,331.60
4.96
5.04
5.09
5.14
5.19
5.24
5.28
5.34
5.39
5.45
5.51
5.68
5.65
5.74
5.85
5.98
6.19
6.55
7.62
4.18
4.20
4.24
4.27
4.31
4.35
4.39
4.43
4.47
4.51
4.54
4.58
4.62
4.66
4.70
4.74
4.78
4.82
— .
1 Month, day, and year on which issues of Dec. 1, 1948, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on second extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to second extended maturity date is 3.82 percent.
185
EXHIBITS
TABLE 20
B O N D S BEARING I S S U E D A T E S F R O M J U N E 1 T H R O U G H N O V E M B E R 1, 1949
Issueprice
Denomination
$7.50 $18.75 $37.50
10.00 25.00 60.00
$75.00 $150.00
100.00 200.00
8375.00
500.00
$750.00 Approximate investment
1,000.00
yield
(1) Redemption values during each half-year period
(values increase on flrst day of period shown)
Period after original
maturity (beginning 10
years after issue date)
_
FIRST E X T E N D E D MATURITY PERIOD
(2) On the redemption
value at
start of each
extended
maturity
period to the
beginning
of each halfyear perioa
thereafter
(3) On current redemption
value from
beginning
of each
half-year
period (a)
to flrst
extended
maturity 2
Percent
First A y e a r — . 1 (6/1/69) $10.00 $25.00 $60.00 $100.00
Mto lyear
(12/1/69) 10.18 25.44 50.88 101. 76
1 to IM years
(6/1/60) 10.36 26.89 61.78 103.66
134 to 2 years
(12/1/60) 10.64 26.36 52.70 106.40
2 to 21/^ years
(6/1/61) 10.73 26.83 53.66 107.32
2M to 3 years
(12/1/61) 10.92 27.31 64.62 109.24
3 to 3M years
(6/1/62) 11.12 27.81 65.62 111. 24
66.64
28.32
113.28
11.33
3M to 4 years
(12/1/62)
4 to 434 years
(6/1/63) 11.64 28.84 67.68 115.36
117. 62
68.76
29.38
11.76
434 to 6 years
(12/1/63)
6 to 6M years
(6/1/64) 11.97 29.93 69.86 119. 72
121.96
60.98
)2.20 30.49
634 to 6 years
(12/1/64)
6 to 6M years
(6/1/66) 12.43 31.07 62.14 124. 28
6M to 7 years
(12/1/66) 12.66 31.66 63.32 126.64
7 to 7M years
(6/1/66) 12.91 32.27 64.64 129. 08
7M to 8 years
(12/1/66) 13.17 32.93 66.86 131.72
8 to 8M years
(6/1/67) 13.45 33.62 67.24 134.48
13.74 34.34
137.36
68.68
8M to 9 years
(12/1/67)
9 to 9M years
(6/1/68) 14.04 35.10 70.20 140. 40
143.64
71.82
14.36
36.91
9M to 10 years--.(12/1/68)
EXTENDED MATURITY VALUE (20 years
from issue date).(6/l/69)
14.72
Period after flrst extended
maturity (beginning 20
years after issue date)
First M y e a r - — - . (6/1/69)
36.80
73.60
147.20
$200.00
203.62
207.12
210.80
214.64
218.48
222.48
226.56
230.72
236.04
239.44
243.92
248. 66
253.28
268.16
263.44
268.96
274.72
280.80
287.28
294.40
$500.00 $1,000.00
1,017.60
608.80
517.80
1,035. 60
527.00
1,054.00
536.60
1,073. 20
1,092.40
646.20
666. 20 1,112.40
1,132.80
566.40
576.80
1,153.60
687.60 1,176.20
698. eo 1,197.20
1,219. 60
609.80
621.40 1,242.80
633.20 1,266.40
1.290.80
646.40
668. 60 1,317.20
672.40
1,344.80
1,373.60
686.80
1,404. 00
702.00
718. 20 1,436.40
736.00
Percent
0.00
3.62
3.53
3.54
3.66
3.57
3.58
3.59
3.60
3.62
3.63
3.64
3.66
3.67
3.68
3.71
3.74
3.77
3.81
3.85
3.75
3.76
3.77
3.79
3.80
3.81
3.82
3.83
3.85
3.86
3.87
3.88
3.89
4.31
4.39
4.45
4.61
4.59
4.79
4.96
1,472.00
(b)to
second
extended
maturity 2
SECOND E X T E N D E D MATURITY PERIOD
14.72
5.80
73.60
147.20
294.40
736.00
1,472.00
Redemption values and investment yields to second extended maturity on basis of June 1,1969, revision
Mto lyear
(12/1/69)
1 to IM years.....(6/1/70)
I M t o 2 years
(12/1/70)
2 to 2M years
(6/1/71)
2M to 3 years
(12/1/71)
3 to 3M years
(6/1/72)
3M to 4 years---.(12/1/72)
4 to 4M years
(6/1/73)
4M to 6 years
(12/1/73)
6 to 6M years
(6/1/74)
6M to 6 years
(12/1/74)
6 to 6M years
(6/1/76)
6M to 7 years
(12/1/76)
7 to 7M years
(6/1/76)
7M to 8 years
(12/1/76)
8to8Myears
(6/1/77)
8M to 9 years
(12/1/77)
9 to 9M years
(6/1/78)
9M to 10 years--.(12/1/78)
15.09
16.46
15.86
16.25
16.66
17.07
17.60
17.94
18.38
18.84
19.31
19.80
20.29
20.80
21.32
21.85
22.40
22.96
23.63
37.72
38.66
39.63
40.62
41.64
42.68
43.74
44.84
46.96
47.11
48.28
49.49
60.73
62.00
63.30
64.63
56.99
67.39
68.83
75.44
77.32
79.26
81.24
83.28
85.36
87.48
89.68
91.92
94.22
9a 56
98.98
101.46
104.00
106.60
109.26
111.98
114.78
117.66
160.88
164.64
158.62
162.48
166.66
170.72
174.96
179.36
183.84
188.44
193.12
197.96
202.92
208.00
213.20
218.62
223.96
229.66
235.32
301.76
309.28
317.04
324.96
333.12
341.44
349.92
368.72
367.68
376.88
386.24
395.92
406.84
416.00
426.40
437.04
447.92
459.12
470.64
754.40
773.20
792.60
812.40
832.80
863.60
874.80
896.80
919.20
942.20
966.60
989.80
1,014.60
1,040.00
1,066.00
1,092.60
1,119.80
1,147.80
1,176.60
1,608.80
1,546.40
1,685.20
1,624.80
1,666.60
1,707.20
1,749.60
1,793.60
1,838.40
1,884.40
1,931.20
1,979.60
2,029.20
2,080.00
2,132.00
2,185.20
2,239.60
2,295.60
2,353.20
6.00
4.99
5.00
5.00
6.00
5.00
5.00
5.00
6.00
6.00
5.00
5.00
6.00
6.00
5.00
5.00
5.00
5.00
6.00
SECOND EXTENDED
M A T U R I T Y VALUE
(30 years from issue
date)
(6/1/79)
24.12
60.30 120.60
241.20
482.40 1,206.00
2,412.00
35.00
6.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
6.00
6.00
6.00
6.00
5.00
5.00
6.00
5.00
5.01
6.01
5.00
' Month, day, and year on which issues of June 1, 1949, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on first extended maturity value (or second extended maturity value) in effect on the beginning date of
the half-year period.
3 Yield on purchase price from issue date to first extended maturity date is 3.40 percent; to secohd extended
maturity date is 3.93 percent.
186
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 21
B O N D S BEARING ISSUE D A T E S F R O M D E C E M B E R 1, 1949, T H R O U G H MAY 1, 1950
Issueprice
Denomiriation
$7.50 $18.75 $37.50
10.00 25. 00 50.00
$75.00 $150.00
100.00 200.00
$375.00
500. 00
$750.00 Approximate investment
1,000.00
yield
(1) Redemption values during each half-year period
(values increase on flrst day of period shown)
Period after original
maturity (beginning 10
years after issue date)
FIRST E X T E N D E D MATURITY PERIOD
F i r s t M y e a r . — 1 (12/1/59) $10.03 $25.08 $50.16 $100.32 $200.64
M to 1 year
- (6/1/60)
10.21 25.62 61.04 102.08 204.16
1 to IM years
(12/1/60) 10.39 25.97 61.94 103.88 207. 76
I M t o 2 years
(6/1/61)
10.68 26.44 52. 88 105.76 211. 62
2 to 2M years
(12/1/61)
10.76 26.91 63.82 107.64 215. 28
2M to 3 years
(6/1/62)
10.96 27.40 64.80 109. 60 219. 20
3 to 3M years
(12/1/62) 11.16 27.90 65.80 111.60 223.20
3M to 4 years
(6/1/63)
11.36 28.41 66.82 113.64 227. 28
4 to 4M years
(12/1/63)
11.57 28.93 67.86 115. 72 231. 44
4M to 5 years
(6/1/64)
11.79 29.47 68.94 117. 88 235. 76
5 to 6M years
(12/1/64) 12.01 30.02 60.04 120.08 240.16
6M to 6 years
(6/1/65)
12.24 30.59 61.18 122.36 244. 72
6 to 6M years
(12/1/66) 12.46 31.16 62.32 124.64 249. 28
6M to 7 years
(6/1/66)
12.71 31.77 63.64 127.08 254.16
7 to 7M years
(12/1/66) 12.96 32.40 64.80 129.60 259. 20
7M to 8 years
(6/1/67)
13.22 33.06 66.12 132. 24 264.48
8 to 8M years
(12/1/67) 13.60 33.76 67.62 135. 04 270. 08
8M to 9 years
(6/1/68) 13.80 34.60 69.00 138.00 276.00
9 to 9M years
(12/1/68) 14.11 36.27 70.64 141.08 282.16
9M to 10 years
(6/1/69)
14.44 36.10 72.20 144. 40 288. 80
EXTENDED
M A T U R I T Y VALUE
(20 years from issue
date)
(12/1/69) 14.80 37.00 74.00 148.00 296.00
Period after first extended
maturity (beginning
20 years after issue date)
F i r s t M y e a r . . . -(12/1/69)
_
$601.60 $1,003.20
510.40 1,020.80
619.40 1,038.80
528.80 1,057.60
538.20 1,076.40
648.00 1,096.00
658.00 1,116.00
668.20 1,136. 40
578.60 1,157.20
689. 40 1,178.80
600.40 1,200.80
611.80 1,223. 60
623. 20 1,246.40
635.40 1,270.80
648.00 1,296.00
661.20 1,322.40
676. 20 1,360. 40
690.00 1,380.00
706.40 1,410.80
722. 00 1,444.00
740.00
(2) On the re- (3) On curdemption
rent redemption
value at
start ofeach value from
beginning
extended
of each
maturity
period to the half-year
beginnirig
period (a)
of each half- to flrst
year period extended
thereafter
maturity 2
Percent
0.00
3.61
3.62
3.55
3.66
3.57
3.68
3.59
3.60
3.62
3.63
3.64
3.65
3.67
3.69
3.72
3.76
3.79
3.82
3.87
1,480.00
(b)to
second
extended
maturity 2
SECOND E X T E N D E D M A T U R I T Y PERIOD
14.80
37.00
74.00
148.00
296.00
740. 00
Percent
3.75
3.76
3.77
3.78
3.80
3.81
3.82
3.83
3.85
3.86
3.87
3.88
4.30
4.35
4.42
4.49
4.65
4.72
4.85
4.99
1,480.00
0.00
5.00
Redemption values and investment yields to second extended maturity on basis of June 1, 1969, revision
M t o 1 year
— (6/1/70)
1 to IM y e a r s . . -(12/1/70)
IM to 2 yeai-s. - - - ( 6 / 1 / 7 1 )
2 to 2M years- - -(12/1/71)
2Mto3yeai-S--.— (6/1/72)
3 to 3M y e a r s . . ..(12/1/72)
3M to 4 y e a r s . . . - ( 6 / 1 / 7 3 )
4 to 4M years. - ..(12/1/73)
4M to 6 y e a r s . . --(6/1/74)
6 to 6M y e a r s . . -(12/1/74)
6M to 6 y e a r s - . ...(6/1/76)
6 to 6M yeai-s. - -(12/1/76)
6Mto 7 years.- . - ( 6 / 1 / 7 6 )
7 to 7M y e a r s . . -(12/1/76)
7M to 8 y e a r s . . --(6/1/77)
8 to 8M y e a r s . . -(12/1/77)
8M to 9 y e a r s . . . - ( 6 / 1 / 7 8 )
9 to 9M y e a r s - . -(12/1/78)
9M to 10 years. ..-(6/1/79)
SECOND EXTENDED
M A T U R I T Y VALUE
(30 years from issue
date)
-(12/1/79)
16.17
15.66
16.94
16.34
16.74
17.16
17.69
18.03
18.48
18.94
19.42
19.90
20.40
20.91
21.44
21.97
22.62
23.08
23.66
37.92
38.87
39.84
40.84
41.86
42.91
43.98
45.08
46.21
47.36
48.66
49.76
61.00
62.28
53.59
54.93
56.30
67.71
69.15
76.84
77.74
79.68
81.68
83.72
85.82
87.96
90.16
92.42
94.72
97.10
99.62
102.00
104. 66
107.18
109. 86
112.60
116.42
118. 30
161. 68
155. 48
169.36
163.36
167. 44
171.64
176.92
180.32
184. 84
189.44
194. 20
199. 04
204. 00
209.12
214.36
219. 72
226. 20
230. 84
236.60
303.36
310.96
318. 72
326. 72
334.88
343. 28
351. 84
360.64
369. 68
378. 88
388. 40
398.08
408.00
418. 24
428. 72
439.44
450.40
461. 68
473.20
24.25
60.63 121.26
242.52
485.04 1,212.60
768.40
777.40
796. 80
816.80
837. 20
868. 20
879.60
901.60
924.20
947. 20
971.00
996.20
1,020.00
1,046.60
1,071.80
1,098. 60
1,126.00
1,164.20
1,183.00
1,616.80
1,654.80
1, 693. 60
1,633. 60
1,674.40
1,716.40
1,769. 20
1,803. 20
1,848.40
1,894.40
1,942.00
1,990.40
2,040.00
2,091. 20
2,143. 60
2,197. 20
2,262.00
2,308.40
2,366.00
4.97
4.99
4.99
6.00
5.00
5.00
6.00
6.00
6.00
6.00
6.00
5.00
5.00
5.00
5.00
5.00
6.00
5.00
5.00
2,425.20
35.00
5.00
5.00
5.00
5.00
6.00
5.00
6.00
5.00
6.00
6.00
5.00
5.00
6.00
6.00
6.00
5.00
5.00
6.00
6.00
» Month, day, and year on which issues of Dec. 1, 1949, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on first extended maturity value (or second extended maturity value) in effect on the beginning date of
the half-year period.
3 Yield on purchase price from issue date to first extended maturity date is 3.43 percent; to second extended maturity date is 3.96 percent.
187
EXHIBITS
TABLE 22
B O N D S BEARING I S S U E D A T E S F R O M J U N E 1 T H R O U G H N O V E M B E R 1, 1950
Issueprice
Denomination
$18.75 $37. 50
25.00 50.00
$75.00 $150. O $375. 00
D
100. 00 200. 00
500. 00
$750. 00
1,000.00
(1) Rederaption values during each half-year period
(values increase on first day of period shown)
Period after original
raaturity
(beginning 10
years after issue date)
FIRST EXTENDED MATURITY PERIOD
FirstMyear
'(6/1/60) $25.15 $50. 30 $100. 60 $201. 20
Mto lyear.
(12/1/60) 26.69 51.18 102. 36 204. 72
1 to IM years
(6/1/61) 26.05 52.10 104. 20 208. 40
I M t o 2 years-..-(12/1/61) 26.51 53.02 106. 04 212. 08
2 to 2M years
(6/1/62) 26.99 63.98 107. 96 215. 92
2M to 3 years.--(12/1/62) 27.48 54.96 109. 92 219. 84
3 to 3M years
(6/1/63) 27.98 55.96 111.92 223. 84
3M to 4 years--..(12/1/63) 28.49 56.98 113. 96 227. 92
4 to 4M years
(6/1/64) 29.01 58.02 116. 04 232. 08
4M to 5 years
(12/1/64) 29.55 59.10 118. 20 236. 40
5 to 6M years
(6/1/65) 30.10 60.20 120. 40 240. 80
5M to 6 years....(12/1/65) 30.67 61.34 122. 68 245. 36
6 to 6M years
(6/1/66) 31.26 62.52 126. 04 250. 08
6M to 7 years
(12/1/66) 31.88 63.76 127. 62 255. 04
7 to 7M years
(6/1/67) 32.53 65.06 130.12 260. 24
7M to 8 years
(12/1/67) 33.20 66.40 132. 80 265.60
8 to 8M years
(6/1/68) 33.92 67.84 136. 68 271. 36
8M to 9 years---(12/1/68) 34.67 69.34 138. 68 277. 36
9 to 9M years
(6/1/69) 35. 44 70.88 141. 76 283. 52
$503. 00 $1,006.00
511.80 1,023. 60
521.00 1,042. 00
530. 20 1,060.40
539. 80 1,079. 60
549. 60 1,099.20
559.60 1,119. 20
569. 80 1,139. 60
680. 20 1,160. 40
591. 00 1,182.00
602.00 1,204.00
613. 40 1,226.80
625. 20 1,260.40
637.60 1, 275. 20
650. 60 1,301. 20
664.00 1,328.00
678. 40 1,356. 80
693. 40 1,386. 80
708.80 1,417. 60
Approximate investment
yield
(2) On the re- ( 3 ) 0 n c u r demption
rent revalue at
demption
start of each value frora
_ extended
beginning
raaturity
of each
period to the half-year
beginning period (a)
of each halfto flrst
year period extended
thereafter raaturity 2
Percent
3.75
3.76
3.77
3.79
3.80
3.81
3.82
3.84
3.85
3.86
3.88
4.29
4.34
4.40
4.45
4.61
4.67
4.75
4.99
^ercent
0.00
3.50
3.55
3.54
3.56
3.58
3.69
3.59
3.60
3.62
3.63
3.64
3.66
3.68
3.71
3.74
3.77
3.81
3.85
Rederaption values and investment yields to first and second extended maturity on basis of June 1,
M t o 10 years—(12/1/69)
36.27 72.54 145.08 290.16
EXTENDED
MATURITY
VALUE (20
years from
issuedate)
(6/1/70) 37.23 74.46 148.92 297.84
Period after first extended
' maturity (beginning 20
years after issue date)
First M year..-.— (6/1/70)
M to 1 year
-(12/1/70)
1 to IM years. ---(6/1/71)
I M t o 2 y e a r s . . . -(12/1/71)
2 to 2M y e a r s . . . - (6/1/72)
2 M t o 3 y e a r s - . - -(12/1/72)
3 to 3M y e a r s . . . - (6/1/73)
3M to 4 years. - - -(12/1/73)
4 t o 4 M y e a r s - - - - (6/1/74)
4M to 5 years. _ --(12/1/74)
5 to 6M y e a r s - . - -(6/1/75)
6M to 6 y e a r s - . . -(12/1/75)
6 to 6M y e a r s . - - -(6/1/76)
6 M t o 7 y e a r s - . - -(12/1/76)
7 to 7M y e a r s . . - -(6/1/77)
7M to 8 y e a r s . . - .(12/1/77)
8 to 8M y e a r s - . . -(6/1/78)
8M to 9 y e a r s . . . -(12/1/78)
9 t o 9 M y e a r s . - - -(6/1/79)
9M to 10 years.- -.(12/1/79)
SECOND EXTENDED
M A T U R I T Y VALUE
(30 years from issue
date)
.-(6/1/80)
725.40
744.60
1,450.80
1,489.20
3.89
33.96...
SECOND E X T E N D E D MATURITY PERIOD
•
74.46
76.32
78.22
80.18
82.18
84.24
86.34
88.60
90.72
93.00
95.32
97.70
100.14
102.64
105. 22
107. 84
110. 54
113.30
116.14
119. 04
148.92
152. 64
166. 44
160.36
164.36
168. 48
172. 68
177. 00
181. 44
186.00
190. 64
195. 40
200. 28
205. 28
210. 44
215. 68
221. 08
226.60
232. 28
238. 08
297. 84
305. 28
312. 88
320. 72
328. 72
336. 96
345.36
354. 00
362. 88
372. 00
381. 28
390. 80
400. 66
410. 56
420. 88
431. 36
442. 16
453. 20
464. 56
476.16
744. 60
763. 20
782. 20
801. 80
821. 80
842. 40
863.40
885. 00
907. 20
930. 00
953. 20
977. 00
1, 001. 40
1, 026. 40
1, 052. 20
1,078.40
1,105. 40
1,133. 00
1,161. 40
1,190. 40
1,489. 20
1, 626. 40
1, 664. 40
1,603. 60
1, 643. 60
1, 684; 80
1, 726. 80
1, 770. 00
1,814. 40
1,860. 00
1,906. 40
1,954. 00
2, 002. 80
2,052. 80
2,104. 40
2,156. 80
2, 210. 80
2,266. 00
2,322. 80
2,380. 80
0.00
5.00
4.99
5.00
4.99
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
.5.00
5.00
5.00
5.00
5.00
61.01 122.02
244.04
488.08 • 1,220.20
2,440.40
(b) to second
extended
raaturity 2
35.00
37.23
38.16
30.11
40.09
41.09
42.12
43.17
44.25
45.36
46.50
47.66
48.85
60.07
61.32
52.61
53.92
55.27
56.65
58.07
59.52
5.00
5.00
5.00
6.00
6.00
5.00
5.00
5.00
6.00
5.00
6.00
5.00
6.00
5.00
6.00
6.00
5.00
5.00
5.00
6.01
1 Month, day, and year on which issues of June 1, 1950, enter each period. For subsequent issue raonths add the
appropriate nuraber of raonths.
2 Based on first extended maturity value (or second extended maturity value) in effect on the beginning date of.
the half-year period.
3 Yield on purchase price from issue date to first extended m a t u i i t y date is 3.46 percent; to second extended maturity
pate is 3.97 percent.
307-702 O—71-
-14
188
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 23
B O N D S BEARING ISSUE D A T E S F R O M D E C E M B E R 1. 1950, T H R O U G H MAY 1, 1951
Issue price
Denomination..
$18.75 $37.50
25.00 50.00
$75.00 $150.00
100.00 200.00
$375.00
500.00
$750.00
1,000.00
(1) Redemption values during each half-year period
(values increase on first day of period shown)
Period after original
maturity (beginning 10
years after issue date)
FIRST EXTENDED MATURITY PERIOD
F i r s t M y e a r - - - ' (12/1/60) $26. 22 $50.44 $100.88 $201.76
Mto lyear
(6/1/61) 26.66 51.32 102.64 205.28
1 to IM years
(12/1/61) 26.12 52.24 104.48 208.96
I M t o 2 years
(6/1/62) 26.68 53.16 106.32 212.64
2 to 2M years---(12/1/62) 27.06 64.12 108.24 216. 48
2M to 3 years
(6/1/63) 27.65 65.10 no. 20 220.40
3 to 3M years
(12/1/63) 28.05 66.10 112. 20 224. 40
3M to 4 years
(6/1/64) 28.67 67.14 114. 28 228.66
4 to 4M years
(12/1/64) 29.00 58.18 116.36 232.72
4 M t o 6 years
(6/1/66) 29.63 69.26 118. 62 237.04
6 to 6M years
(12/1/65) 30.19 60.38 120.76 241. 62
6M to 6 years
(6/1/66) 30.77 61.54 123.08 246.16
6 to 6M years
(12/1/66) 31.37 62.74 126.48 250.96
6M to 7 years
(6/1/67) 32.00 64.00 128.00 266.00
7 to 7M years
(12/1/67) 32.65 65.30 130. 60 261. 20
7M to 8 years
(6/1/68) 33.35 66.70 133.40 266. 80
8 to 8M years
(12/1/68) 34. 06 68.12 136. 24 272.48
8M to 9 years
(6/1/69) 34.82 69.64 139. 28 278. 66
$604.40 $1,008.80
513. 20 1,026.40
522. 40 1,044.80
531. 60 1,063.20
641. 20 1,082.40
561.00 1,102.00
661.00 1,122. 00
671.40 1,142.80
581.80 1,163. 60
592. 60 1,186. 20
603.80 1,207. 60
615.40 1,230.80
627.40 1, 254.80
640.00 1,280.00
653.00 1,306.00
667. 00 1,334. 00
681. 20 1,362.40
696.40 1,392.80
Approximate investment
yield
(2) On the re- (3) On current redemption
value at
demption
start of each
value from
beginning
extended
of each
maturity
period to the half-year
period (a)
beginning
to first
of each halfextended
year period
maturity 2
thereafter
Percent
0.00
3.49
3.54
3.63
3.65
3.57
3.68
3.60
3.60
3.61
3.63
3.65
3.67
3.70
3.72
3.76
3.79
3.83
Percent
3.76
3.76
3.77
3.79
3.80
3.81
3.83
3.83
3.85
3.86
4.27
4.32
4.38
4.43
4.49
4.64
4.73
6.00
Redemption values and investment yields to first and second extended maturity on basis of June 1, 1969, revision
9 to 9M years
(12/1/69)
9M to 10 years
(6/1/70)
EXTENDED MATURITY VALUE (20
years from issue date)
(12/1/70)
Period after first extended
raaturity
(beginning 20
years after issue date)
35.62
36.47
71.24
72.94
142.48
145.88
284.96
291.76
712.40
729.40
1,424.80
1,468.80
37.50
75.00
150.00
300.00
750.00
5.21
6.65
1,500.00
3.87
3.92
(b) to second
extended
maturity 2
SECOND E X T E N D E D MATURITY PERIOD
FirstMyear
(12/1/70)
Mto lyear
(6/1/71)
1 to IM years
(12/1/71)
IM to 2 years-- —(6/1/72)
2 to 2M years
(12/1/72)
2M to 3 years
(6/1/73)
3 to 3M years
(12/1/73)
3M to 4 years
(6/1/74)
4 to 4M years
(12/1/74)
4M to 6 years
(6/1/75)
5 to 6M years
(12/1/75)
5M to 6 years
(6/1/76)
6 to 6M years
(12/1/76)
6M to 7 years
(6/1/77)
7 to 7M years
(12/1/77)
7M to 8 years
(6/1/78)
8 to 8M years
(12/1/78)
8M to 9 years
(6/1/79)
9 to 9M years
(12/1/79)
9M to 10 years
(6/1/80)
37.50
38.43
39.40
40.38
41.39
42.43
43.49
44.58
45.69
46.83
48.00
49.20
50. 43
51.69
52.99
54.31
55.67
57.06
58.49
59.95
75.00
76.86
78.80
80.76
82.78
84.86
86.98
89.16
91.38
93.66
96.00
98.40
100.86
103.38
105.98
108. 62
111.34
114.12
116. 98
119.90
150. 00
153.72
157. 60
161. 52
165. 66
.169.72
173.96
178.32
182.76
187.32
192.00
196.80
201. 72
206. 76
211. 96
217. 24
222.68
228.24
233.96
239. 80
300. 00
307.44
316. 20
323.04
331.12
339.44
347.92
366.64
366. 52
374.64
384.00
393. 60
403.44
413. 62
423.92
434. 48
445. 36
456.48
467.92
479. 60
750.00
768.60
788.00
807. 60
827.80
848. 60
869.80
891. 60
913.80
936. 60
960.00
984. 00
1, 008. 60
1,033.80
1, 059.80
1,086. 20
1,113.40
1,141. 20
1,169.80
1,199. 00
1, 500.00
1, 637.20
1, 676. 00
1, 616. 20
1, 656. 60
1, 697. 20
1,739. 60
1, 783. 20
1,827. 60
1,873. 20
1,920.00
1,968. 00
2, 017.20
2,067. 60
2,119. 60
2,172.40
2, 226.80
2, 282.40
2, 339. 60
2,398. 00
SECOND EXTENDED
M A T U R I T Y VALUE
(30 years from issue
date)
(12/1/80)
61.45 122.90
245.80
491.60
1,229.00
2,458.00
0.00
4.96
5.00
4.99
6.00
6.00
5.00
6.00
5.00
5.00
6.00
5.00
5.00
6.00
5.00
5.00
5.00
5.00
6.00
6.00
5.00
5.00
5.00
6.00
5.00
6.00
5.00
6.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
6.00
5.00
1 Month, day, and year on which issues of Dec. 1, 1960, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on first extended maturity value (or second extended maturity value) in effect on the beginning date of
the half-year period.
3 Yield on purchase price from issue date to first extended maturity date is 3.50 percent; to second extended maturity
date is 4.00 percent.
189
EXHIBITS
TABLE 24
B O N D S BEARING ISSUE D A T E S F R O M J U N E 1 T H R O U G H N O V E M B E R 1, 1951
Issueprice
Denomination
-
Period after original maturity
(beginning 10 years after
issue date)
FirstMyear
Mto lyear
1 to IM years - IM to 2 years
2 to 2M years
2M to 3 years
3 to 3M years - 3M to 4 years4 to 4M years. - —
4M to 6 years
5 to 5M years-5M to 6 years
6 to 6M years
6M to 7 years
7 to 7M years-7M to 8 years
8 to 8M years
$18.75 $37.50
25.00 50.00
$75.00 $150.00 $375.00
100.00 200.00 500.00
$750.00
1,000.00
Approximate investment
yield
(1) Redemption values during each half-year period (2) On the re- (3) On current
redemption
demption
(values increase on first day of period shown)
value from
value at start
oftheextended beginning of
maturity pe- each half-year
period to
riod to the beEXTENDED MATURITY PERIOD
extended
ginning of each
maturity 2
half-year period thereafter
' (6/1/61) $25.30 $50.60 $101. 20 $202. 40 $506.00 $1,012.00
(12/1/61) 25.75 51.50 103.00 206.00 515.00 1,030.00
(6/1/62) 26.20 52.40 104.80 209.60 524.00 1,048.00
(12/1/62) 26.67 53.34 106. 68 213.36 533. 40 1,066.80
(6/1/63) 27.15 64.30 108.60 217.20 643.00 1,086,00
(12/1/63) 27.64 55.28 110. 56 221.12 552. 80 1,105. 60
(6/1/64) 28.14 56.28 112. 66 225.12 562. 80 1,125. 60
(12/1/64) 28.66 57.32 114.64 229.28 673.20 1,146. 40
- (6/1/65) 29.19 68.38 116. 76 233. 62 583. 80 1,167. 60
(12/1/65) 29.73 59.46 118. 92 237.84 594.60 1,189.20
(6/1/66) 30.29 60.58 121.16 242.32 606.80 1,211.60
(12/1/66) 30.87 61.74 123.48 246.96 617.40 1,234.80
(6/1/67) 31.49 62.98 125. 96 251. 92 629. 80 1,259. 60
(12/1/67) 32.13 64.26 128. 52 257. 04 642.60 1,286. 20
(6/1/68) 32.80 65.60 131.20 262. 40 656.00 1,312.00
(12/1/68) 33.50 67.00 134.00 268.00 670.00 1,340.00
(6/1/69) 34.23 68.46 136.92 273.84 684.60 1,369.20
Percent
0.00
3.56
3.63
3.55
3.66
3.57
3.68
3.69
3.61
3.62
3.63
3.65
3.68
3.71
3.74
3.78
3.81
Percent
3.75
3.76
3.77
3.78
3.80
3.81
3.82
3.83
3.84
4.26
4.31
4.36
4.40
4.45
4.60
4.67
6.00
Redemption values and investment yields to extended maturity on basis of June 1, 1969, revision
8M to 9 years
(12/1/69)
9 to 9M years
(6/1/70)
9M to 10 years
(12/1/70)
EXTENDED MATURITY
VALUE (20 years from
issue date)
(6/1/71)
35.00
35.83
36.72
70.00
71.66
73.44
140.00
143.32
146.88
280.00
286.64
293. 76
700.00
716.60
734.40
1,400.00
1,433. 20
1,468.80
37.78
75.56
151.12
302.24
755.60
1,511.20
3.85
3.90
3.96
5.16
5.37
5.77
» Month, day, and year on which issues of June 1, 1951, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to extended maturity date is 3.53 percent.
190
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 25
B O N D S BEARING ISSUE D A T E S F R O M D E C E M B E R 1, 1951. T H R O U G H APRIL 1, 1952
Issueprice
Denomination
Period after original maturity
(beginning 10 years after
issue date)
$18.75 $37.50 $75.00
25.00 50.00 100.00
$150.00 $375.00
200.00 500.00
$750.00
1,000.00
Approximate investment
yield
(1) Rederaption values during each half-year period (2) On the re- (3) Ori current
redemption
demption
(values increase on first day of period shown)
value from
value at start
oftheextended beginnmg of
maturity pe- each half-year
period to
riod to the beEXTENDED MATURITY PERIOD
extended
ginning of each
maturity 2
half-year period thereafter
FirstMyear
1 (12/1/61) $25.37 $50.74 $101.48 $202.96 $507.40 $1,014.80
M to 1 year
(6/1/62) 26.82 61.64 103.28 206.56 516.40 1,032.80
1 to IM years
(12/1/62) 26.27 52.54 105.08 210.16 525.40 1,050.80
IM to 2 years(6/1/63) 26.74 53.48 106.96 213.92 534.80 1,069. 60
2 to 2M years(12/1/63) 27.22 54.44 108.88 217.76 544.40 1,088.80
2M to 3 years
(6/1/64) 27.72 56.44 110.88 221.76 554.40 1,108.80
3 to 3M years
(12/1/64) 28.22 56.44 112.88 225.76 564.40 1,128.80
3M to 4 years
(6/1/65) 28.74 57.48 114.96 229.92 574.80 1,149. 60
4 to 4M years
(12/1/66) 29.27 68.54 117.08 234.16 585.40 1,170.80
4M to 5 years
(6/1/66) 29.82 59.64 119.28 238.56 596.40 1.192.80
5 to 6M years(12/1/66) 30.39 60.78 121. 66 243.12 607.80 1,216.60
5M to 6 years
(6/1/67) 30.99 61.98 123.96 247.92 619.80 1,239. 60
6 to 6M years
(12/1/67) 31.60 63.20 126.40 252.80 632.00 1,264.00
6M to 7 years
(6/1/68) 32.26 64.62 129.04 258.08 645.20 1,290.40
7 to 7M y e a r s - . . . - ( 1 2 / 1 / 6 8 ) 32.94 65.88 131.76 263.52 658.80 1,317. 60
7M to 8 years
(6/1/69) 33.64 67.28 134. 66 269.12 672.80 1,345. 60
Percent
0.00
3.65
3.52
3.64
3.55
3.68
3.58
3.60
3.61
3.62
3.64
3.67
3.69
3.73
3.77
3.80
PercerU
3.75
3.76
3.78
3.79
3.80
3.81
3.82
3.84
4.25
4.29
4.34
4.39
4.44
4.58
4.64
5.00
Redemption values and investment yields to extended maturity on basis of June 1,1969, revision
8 to 8M years
(12/1/69)
8M to 9 years
.(6/1/70)
9 to 9M years
(12/1/70)
9M to 10 years
(6/1/71)
EXTENDED MATURITY
VALUE (20 years from
issue date)
(12/1/71)
34.39
35.20
36.05
36.96
68.78
70.40
72.10
73.92
137. 56
140.80
144.20
147.84
275.12
281.60
288.40
295.68
687.80
704.00
721.00
739.20
1,375.60
1,408.00
1,442.00
1,478. 40
38.06
76.12 152.24
304.48
761.20
3.84
3.89
3.94
4.00
1,522.40
5.13
5.28
5.50
5.95
1 Month, day, and year on which issues of Dec. 1, 1951, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on extended maturity value in effect on the beginning date of the half-year period.,
3 Yield on purchase price from issue date to extended maturity date is 3.57 percent.
191
EXHIBITS
TABLE 26
BONDS BEARING ISSUE DATE OF MAY 1. 1952
$18.75 $37.50
25.00 50.00
Issueprice
Denomination
$75.00 $150.00 $375.00
100.00 200.00 500.00
$750.00
1,000.00
$7,500
10,000
(1) Redemption values during each half-year period
(values increase on flrst day of period shown)
Period after original maturity (beginning 9 yeare
8 months after issus
date)
First M y e a r
A t o l year
1 to IM years
IM to 2 years
2 to 2M years
2M to 3 years
3 to3M years
3M to 4 years
4 to 4M years
4M to 5 years
5 to 5M years
6M to 6 yeat-s
6to6Myeai-s
6M to 7 years
7 to 7M years
7Mto8yeai-s
EXTENDED MATURITY PERIOD
Approximate investment yield
(2) On the
redemption
value at
start of the
extended
maturity
period
tothe
beginning
of each halfyear period
thereafter
(3) On
current
redemption
value from
beginning
of each
half-year
period
to
extended
maturity 2
Percent
0.00
3.48
3.53
3.55
3.56
3.57
3.58
3.69
3.60
3.62
3.64
3.67
3.70
3.73
3.77
3.80
Percen
3.75
3.76
3.77
3.79
3.80
3.81
3.82
3.84
4.25
4.30
4.34
4.38
4.44
4.58
4.64
6.00
'I (1/1/62) $25. 27 $50.54 $101.08 $202.16 $505. 40 $1,010.80 $10,108
-(7/1/62) 25.71 61.42 102.84 206. 68 514. 20 1,028.40 10,284
-(1/1/63) 26.17 62.34 104.68 209.36 523.40 1,046. 80 10,468
-(7/1/63) 26.64 63.28 106. 56 213.12 532. 80 1,065. 60 10,656
-(1/1/64) 27.12 54.24 108.48 216. 96 542. 40 1,084.80 10,848
-(7/1/64) 27.61 55.22 110.44 220. 88 652. 20 1,104.40 11,044
-(1/1/65) 28.11 66.22 112.44 224. 88 562. 20 1,124.40 11,244
-(7/1/65) 28.62 57.24 114.48 228. 96 672. 40 1,144.80 11,448
-(1/1/66) 29.15 58.30 116.60 233. 20 583.00 1,166.00 11,660
. -(7/1/66) 29.70 69.40 118.80 237.60 594.00 1,188.00 11,880
-(1/1/67) 30.27 60.54 121.08 242.16 605.40 1,210. 80 12,108
-(7/1/67) 30.87 61.74 123.48 246. 96 617. 40 1,234. 80 12,348
-(1/1/68) 31.48 62.96 125.92 251. 84 629.60 1, 269. 20 12,592
-(7/1/68) 32.13 64.26 128. 52 257. 04 642.60 1,285. 20 12,852
-(1/1/69) 32.81 65.62 131. 24 262. 48 656. 20 1,312.40 13,124
-(7/1/69) 33.51 67.02 134. 04 268. 08 670. 20 1,340. 40 13,404
Rederapt ion values and investment yields to extended raaturity on basis of June 1, 1969, revision
-(1/1/70) 34.26
8 to 8M years
-(7/1/70) 35.06
8M to 9 years
-(1/1/71) 36.91
9 to 9M years
-(7/1/71) 36.81
9M to 10 years
EXTENDED
M A T U R I T Y VALUE
(19 years and 8 months
from issue date) -(1/1/72) 37.91
68.52
70.12
71.82
73.62
137. 04
140. 24
143. 64
147. 24
274.08
280.48
287. 28
294. 48
685. 20
701.20
718.20
736. 20
1,370. 40
1,402.40
1,436.40
1,472. 40
13,704
14,024
14,364
14, 724
3.84
3.89
3.94
4.00
75.82
151.64
303.28
758.20
1.516.40
15,164
3 4.10
1 Month, day, and year on which issues of May 1,1952, enter each period.
2 Based on extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to extended maturity date is 3.61 percent.
5.13
6.28
6.49
• 5.98
192
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 27
BONDS BEARING ISSUE DATES FROM JUNE 1 THROUGH SEPTEMBER 1, 1952
$18.75 $37.50
25.00 50.00
Issueprice
Denomination
$75.00 $150.00 $375.00
100.00 200.00 500.00
$750.00
1,000.00
$7,500
10,000
(1) Redemption values during each half-year period
(values increase on first day of period shown)
Period after original maturity (beginning 9 years
8 months after issue
date)
First Myear
Mto lyear
1 to IM years
IM to 2 years
2 to 2M years
2M to 3 years
3 to 3M years
3M to 4 years
4 to 4M years
4M to 5 years
5 to 5M years
6M to 6 years
6 to 6M years
6M to 7 years
7 to 7M years
7M to 8 years
EXTENDED MATURITY PERIOD
.1(2/1/62) $25.33 $50. 66 $101.32 $202. 64 $506. 60 $1, 013. 20 $10,132
-(8/1/62) 25.78 51.66 103.12 206. 24 515. 60 1, 031. 20 10,312
-(2/1/63) 26.23 52.46 104.92 209. 84 524. 60 1, 049. 20 10, 492
.-(8/1/63) 26.70 53.40 106.80 213.60 534.00 1, 068. 00 10,680
-(2/1/64) 27.18 54.36 108.72 217.44 543. 60 1, 087. 20 10,872
-(8/1/64) 27.67 65.34 110.68 221. 36 553.40 1,106.80 11,068
-(2/1/65) 28.18 56.36 112.72 225.44 563.60 1,127. 20 11,272
-(8/1/65) 28.69 57.38 114.76 229. 52 573.80 1,147. 60 11,476
-(2/1/66) 29.22 68.44 116.88 233. 76 584. 40 1,168.80 11,688
-(8/1/66) 29.77 69.54 119. 08 238.16 595.40 1,190.80 11,908
.-(2/1/67) 30.34 60.68 121.36 242. 72 606.80 1, 213. 60 12,136
.-(8/1/67) 30.94 61.88 123. 76 247. 52 618.80 1, 237. 60 12,376
.-(2/1/68) 31.56 63.12 126. 24 252.48 631.20 1, 262. 40 12, 624
-(8/1/68) 32.20 64.40 128.80 257. 60 644.00 1,288.00 12,880
-(2/1/69) 32.89 65.78 131. 56 263.12 657. 80 1,315.60 13,166
-(8/1/69) 33.59 67.18 134. 36 268. 72 671. 80 1,343. 60 13,436
Approximate investraent yield
(2) On the
(3) On
rederaption current
value at redemption
start of the value from
beginning
extended
of each
maturity
half-year
period
period
tothe
to
beginning
of each half- extended
year period maturity 2
thereafter
Percent
0.00
3.55
3.62
3.54
3.56
3.57
3.69
3.59
3.60
3.62
3.64
3.67
3.70
3.73
3.77
3.80
Percent
3.75
3.76
3.78
3.79
3.80
3.81
3.82
3.84
4.26
4.30
4.34
4.39
4.43
4.59
4.64
6.00
Redemptio n values and investment yields to extended maturity on basis of June 1, 1969, revision
-(2/1/70) 34.34
8 to 8M years
-(8/1/70) 36.14
8M to 9 years
-(2/1/71) 35.99
9 to 9M years
-(8/1/71) 36.90
9M to 10 years
EXTENDED MATURITY VALUE (19 years
and 8 months from issue
date)
-(2/1/72) 38.00
68.68
70.28
71.98
73.80
137.36
140. 56
143.96
147. 60
274.72
281.12
287.92
295.20
686.80
702.80
719.80
738.00
1,373. 60
1,406.60
1,439.60
1,476. 00
13,736
14,066
14,396
14, 760
3.84
3.89
3.94
4.00
76.00
152.00
304. 00
760. 00
1,520.00
15,200
34.10
5.13
6.29
6.51
5.96
1 Month, day, and year on which issues of June 1, 1952, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to extended maturity date is 3.62 percent.
193
EXHIBITS
TABLE 28
BONDS BEARING ISSUE DATES FROM OCTOBER 1 THROUGH NOVEMBER 1. 1952
Issueprice
$18.75 $37.50
25.00 50.00
$75.00 $150.00 $375.00
100.00 200.00 500.00
$750.00
1,000.00
$7,500
10,000
(1) Redemption values during each half-year period
(values increase on first day of period shown)
Period after original maturity (beginning 9 years
8 months after issue
date)
EXTENDED MATURITY PERIOD
-1 (6/1/62)
FirstMyear
.-(12/1/62)
M to 1 year
1 to IM years--..— (6/1/63)
-(12/1/63)
IM to 2 years
— (6/1/64)
2 to 2M years
.-(12/1/64)
2M to 3 years
.-(6/1/65)
3 to 3M years
.-(12/1/65)
3M to 4 years
..-(6/1/66)
4 to 4M years
.-(12/1/66)
4M to 5 years
.-(6/1/67)
5 to 6M years
.-(12/1/67)
5Mto 6 years
.-(6/1/68)
6 to 6M years
..(12/1/68)
6M to 7 years
-(6/1/69)
7 to 7M years
$25.33 $60.66 $101.32 $202. 64 $606. 60 $1,013.20 $10,132
25.78 51.66 103.12 206. 24 616. 60 1,031.20 10,312
26.23 52.46 104.92 209. 84 524.60 1,049. 20 10,492
26.70 53.40 106.80 213.60 634.00 1,068.00 10,680
27.18 54.36 108. 72 217. 44 543.60 1,087. 20 10,872
27.67 55.34 110.68 221. 36 553.40 1,106. 80 11,068
28.18 66.36 112. 72 225. 44 563.60 1,127. 20 11,272
28.69 57.38 114. 76 229. 52 573.80 1,147. 60 11,476
29.23 68.46 116.92 233.84 684.60 1,169. 20 11, 692
29.78 59.66 119.12 238. 24 595.60 1,191.20 11,912
30.36 60.72 121.44 242. 88 607.20 1,214. 40 12,144
30.97 61.94 123.88 247. 76 619. 40 1,238.80 12,388
31.60 63.20 126.40 252. 80 632.00 1,264.00 12,640
32.25 64.50 129. 00 258.00 645.00 1,290.00 12,900
32.94 65.88 131. 76 263.52 65a 80 1,317.60 13,176
Approximate investment yield
(2) On the
redemption
value at
start of the
extended
maturity
period
to the
beginning
of each halfyear period
thereafter
(3) On
current
redemption
value frora
beginning
of each
half-year
period
to
extended
maturity 2
Percent
0.00
3.55
3.62
3.64
3.66
3.67
3.59
3.59
3.61
3.63
3.66
3.69
3.72
3.75
3.79
Percent
3.75
3.76
3.78
3.79
3.80
3.81
3.82
4.24
4.28
4.32
4.37
4.41
4.55
4.61
5.00
Redempt ion values and investment yields to extended maturity on basis of June 1, 1969, revision
.(12/1/69)
7M to 8 years
.-(6/1/70)
8 to 8M years
-(12/1/70)
8M to 9 years
-(6/1/71)
9 to 9M years
9M to 10 years - - ..-(12/1/71)
EXTENDED MATURITY
VALUE (19 years a n d
8 months from issue
date)
-(6/1/72)
33.66
34.43
35.25
36.13
37.06
67.32
68.86
70.60
72.26
74.12
134.64
137. 72
141.00
144.52
148. 24
269. 28
275.44
282.00
289.04
296. 48
673.20
688.60
705.00
722.60
741. 20
1,346.40
1,377.20
1,410.00
1,445.20
1,482.40
13,464
13,772
14,100
14,452
14,824
3.83
3.87
3.93
3.99
4.05
38.20
76.40
152.80
305.60
764.00
1,528.00
15,280
34.15
5.13
5.26
5.43
5.65
6.15
' Month, day, and year on which issues of Oct. 1, 1952, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to extended maturity date is 3.65 percent.
194
19 70 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 29
BONDS BEARING ISSUE DATES FROM DECEMBER 1, 1952 THROUGH MARCH 1, 1953
$18.75 $37.50
25.00 50.00
Issueprice
Denomination
$75.00 $150.00 $375.00
100.00 200.00 500.00
$750.00
1,000.00
$7,500
10,000
(1) Redemption values during each half-year period
(values increase on first day of period shown)
Period after original raaturity (beginning 9 years
8 raonths after issue
date)
First Myear
M t o 1 year.1 to IM years
I M t o 2years
2 to 2M years
2M to 3 years
3 to 3M years
3M to 4 years
4 to 4M years
4M to Syears
5 to 6M years
5M to 6 years
6 to 6M years
6M to 7 years
7 to 7M years
1 (8/1/62)
.-(2/1/63)
.-(8/1/63)
.-(2/1/64)
..(8/1/64)
..(2/1/65)
..(8/1/65)
..(2/1/66)
..(8/1/66)
.-(2/1/67)
.-(8/1/67)
..(2/1/68)
.-(8/1/68)
..(2/1/69)
..(8/1/69)
EXTENDED MATURITY PERIOD
$25.39 $50.78 $101. 66 $203.12 $507.80 $1, 015. 60 $10,156
25.84 51.68 103.36 206. 72 516.80 1,033. 60 10,336
26.29 52.58 105.16 210.32 625.80 1,051. 60 10, 516
26.76 53.52 107. 04 214.08 535.20 1,070.40 10,704
27.24 54.48 108.96 217.92 544.80 1,089. 60 10,896
27.74 55.48 110.96 221. 92 654.80 1,109. 60 11,096
28.24 56.48 112.96 225. 92 664.80 1,129. 60 11, 296
28.76 67.52 116.04 230. 08 575. 20 1,150.40 11,604
29.30 58.60 117.20 234.40 586. 00 1,172. 00 11,720
29.85 69.70 119.40 238.80 597.00 1,194. 00 11,940
30.43 60.86 121.72 243.44 608.60 1, 217. 20 12,172
31.04 62.08 124.16 248.32 620.80 1, 241. 60 12,416
31.67 63.34 126.68 253.36 633.40 1, 266.80 12,668
32.33 64.66 129.32 258. 64 646.60 1, 293. 20 12,932
33.02 66.04 132.08 264.16 660.40 1,320.80 13, 208
Approximate investment yield
(2) On the
redemption
value at
start of the
extended
raaturity
period
tothe
beginning
of each halfyear period
thereafter
(3) On
current
redemption
value from
beginning
of each
half-year
period
to
extended
maturity 2
Percent
0.00
3.64
3.61
3.53
3.55
3.57
3.58
3.59
3.61
3.63
3.65
3.69
3.72
3.75
3.79
Percent
3.75
3.76
3.77
3.79
3.80
3.81
3.82
4.23
4.27
4.32
4.36
4.40
4.55
4.60
6.00
Rederapt ion values and investment yields to extended maturity on basis of June 1, 1969, revision
.-(2/1/70)
7M to 8 years
.-(8/1/70)
8 to 8M years
.-(2/1/71)
8M to 9 years
.-(8/1/71)
9 t o 9 M .sears
.-(2/1/72)
9M to 10 years
EXTENDED MATURITY VALUE (19 years
and 8 months from issue
date)
.-(8/1/72)
33.74
34.61
35.33
36.22
37.16
67.48
69.02
70.66
72.44
74.32
134.96
138.04
141.32
144.88
148.64
269.92
276.08
282.64
289.76
297.28
674.80
690. 20
706.60
724.40
743. 20
1,349. 60
1,380.40
1,413.20
1,448.80
1,486.40
13,496
13,804
14,132
14,488
14,864
3.83
3.87
3.92
3.99
4.05
38.29
76.58
153.16
306.32
765.80
1,531.60
15,316
3 4.15
6.12
5.27
6.44
5.64
6.08
1 Month, day, and year on which issues of Dec. 1, 1952, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price frora issue date to extended raaturity date is 3.66 percent.
195
EXHIBITS
TABLE 30
BONDS BEARING ISSUE D A T E S F R O M APRIL 1 T H R O U G H MAY 1, 1953
Issueprice
Denomination
$18.75 $37.50
25.00 50.00
$75.00 $150. 00 $375. 00
100.00 200.00 500.00
$750.00
1,000.00
$7,500
10,000
(1) Redemption values during each half-year period
(values mcrease on first day of period shown)
Period after original maturity (beginning 9 years
8 months after issue
date)
EXTENDED MATURITY PERIOD
F i r s t M y e a r — 1 (12/1/62) $25.39 $50. 78 $101. 56 $203.12 $507.80 $1, 015. 60 $10,166
Mto lyear
-(6/1/63) 25.84 51.68 103.36 206.72 616.80 1, 033. 60 10,336
1 to IM years
(12/1/63) 26.29 52.68 105.16 210.32 625.80 1, 051. 60 10, ."iie
I M t o 2 years
(6/1/64) 26.76 63.52 107.04 214. 08 635.20 1, 070.40 10,704
2 to 2M years
(12/1/64) 27.24 54.48 108.96 217. 92 644.80 1.089.60 10,896
2M to 3 years
(6/1/65) 27.74 65.48 110.96 221. 92 654.80 1,109. 60 11,096
3 to 3M years
(12/1/65) 28.24 56.48 112.96 225. 92 564.80 1,129. 60 11,296
3M to 4 years
(6/1/66) 28.77 67.64 115.08 230.16 675.40 1,150.80 11, 508
4 to 4M years
(12/1/66) 29.31 58.62 117.24 234. 48 686.20 1,172.40 11,724
4M to 5 years
(6/1/67)
29.87 69.74 119.48 238.96 697.40 1,194.80 11,948
5 to 5M years
(12/1/67) 30.46 60.92 121.84 243.68 609.20 1, 218.40 12,184
5M to 6 years
(6/1/68) 31.07 62.14 124.28 248. 66 621.40 1, 242.80 . 12,428
6 to 6M years
(12/1/68) 31.71 63.42 126.84 253.68 634.20 1, 268.40 12,684
6M to 7 years
(6/1/69) 32.38 64.76 129. 52 259.04 647.60 1, 296. 20 12,962
Approximate investment yield
(2) On the
redemption
value at
start of the
extended
maturity
period
tothe
beginning
of each halfyear period
thereafter
(3) On
current
redemption
value from
beginning
of each
half-year
period
to
extended
maturity 2
Percent
0.00
3.54
3.61
3.63
3.55
3.67
3.68
3.60
3.62
3.64
3.67
3.70
3.74
3.78
Percent
3.75
3.76
3.77
3.79
3.80
3.81
4.22
4.26
4.30
4.35
4.39
4.53
4.68
5.00
Redemption values and investment yields to extended maturity on basis of June 1,1969, revision
7 to 7M years-.-(12/1/69)
8M to 8 years-- — (6/1/70)
8 to 8M years
(12/1/70)
^M to 9 years
(6/1/71)
y to 9M years..-(12/1/71)
9 M to 10 years
(6/1/72)
E X T E N D E D MATURITY VALUE (19 years
and 8 months from issue
date)
(12/1/72)
33.08
33.82
34.62
35.46
36.36
37.31
66.16
67.64
69.24
70.92
72.72
74.62
132.32
135. 28
138.48
141.84
145.44
149. 24
264.64
270.66
276.96
283.68
290.88
298.48
661. 60
676.40
692.40
709.20
727. 20
746. 20
1,323. 20
1,352.80
1,384.80
1,418.40
1,454.40
1, 492. 40
13, 232
13,528
13,848
14,184
14,544
14,924
3.82
3.86
3.91
3.97
4.03
4.09
38.49
76.98
153.96
307.92
769.80
1,539.60
15,396
5.11
5.24
6.37
5.54
5.77
6.33
4.20 —
Month, day, and year on which issues of Apr. 1,1953, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on extended maturity value in effect on the beginning date of the half-year period,
3 Yield on purchase price from issue date to extended raaturity date is 3.69 percent.
196
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 31
BONDS BEARING ISSUE DATES FROM JUNE 1 THROUGH SEPTEMBER 1, 1953
Issueprice
Denomination.
$18.75 $37.50
25.00 50.00
$75.00 $150.00 $375.00
100.00 200.00 500.00
$750.00
1,000.00
$7,500
10,000
(1) Redemption values during each half-year period
(values increase on first day of period shown)
Period after original maturity (beginning 9 years
8 months after issue
date)
Approximate investment yield
(3) On
(2) On the
current
rederaption
value at redemption
start of the value from
beginning
extended
of each
raaturity
period
half-year
tothe
period
to
beginning
of each half- extended
year period maturity 2
thereafter
EXTENDED MATURITY PERIOD
F i r s t M y e a r - , - ' (2/1/63) $25.45 $50.90 $101.80 $203. 60 $509. 00 $1,018. 00 $10,180
25.90 61.80 103. 60 207. 20 518. 00 1, 036. 00 10.360
.—(8/1/63)
M t o 1 year
26.36 52.72 105.44 210.88 527. 20 1.054.40 10, 544
1 to IM years... . - ( 2 / 1 / 6 4 )
26.83 53.66 107.32 214.64 536.60 1, 073. 20 10, 732
IM to 2 years.-....(8/1/64)
27.31 54.62 109. 24 218. 48 546.20 1,092.40 10,924
2 to 2M years......(2/1/65)
27.80 65.60 111. 20 222. 40 556. 00 1,112. 00 11,120
2M to 3 years...-.-(8/1/65)
28.31 66.62 113. 24 226. 48 566. 20 1,132. 40 11.324
3 to 3M years.. . - ( 2 / 1 / 6 6 )
28.84 67.68 116.36 230. 72 576. 80 1,153. 60 11,536
3M to 4 years....-.(8/1/66)
29.38 58.76 117. 62 235.04 587.60 1.175. 20 11, 752
4 to 4M years....-.(2/1/67)
29.94 69.88 119. 76 239.52 698.80 1,197. 60 11,976
4M to 5 years.. . - ( 8 / 1 / 6 7 )
30.53 61.06 122.12 244. 24 610. 60 1, 221. 20 12, 212
6 t o 6 M y e a r s - - ....(2/1/68)
31.15 62.30 124. 60 249. 20 623. 00 1, 246. 00 12,460
5M to 6 years.....-(8/1/68)
31.78 63.56 127.12 254.24 635.60 1, 271. 20 12, 712
6 to 6M years..,...(2/1/69)
32.46 64.92 129.84 259.68 649.20 1, 298. 40 12,984
6M to 7 years..— (8/1/69)
Percent
0.00
3.54
3.64
3.66
3.56
3.56
3.68
3.60
3.62
3.64
3.67
3.71
3.74
3.78
Percent
3.75
3.76
3.77
3.78
3.80
3.81
4.22
4.26
4.30
4.35
4.39
4.63
4.59
5.00
Redemption values and investment yields to extended maturity on basis of June 1,1969, revision
7 to 7M years......(2/1/70)
7M to 8 years......(8/1/70)
8 to 8M years-..--(2/1/71)
8 M t o 9 years...-..(8/1/71)
9 to 9M years...-..(2/1/72)
9M to 10 years. .-.(8/1/72)
EXTENDED MATURITY VALUE (19 years
and 8 months from issue
date)
— (2/1/73)
33.15
33.91
34.70
35.65
36.44
37.40
66.30
67.82
69.40
71.10
72.88
74.80
132. 60
135.64
138.80
142. 20
146.76
149. 60
265. 20
271.28
277.60
284.40
291. 52
299. 20
663.00
678. 20
694.00
711. 00
728.80
748. 00
1,326. 00
1, 366. 40
1,388.00
1,422. 00
1, 467. 60
1,496. 00
13, 260
13,664
13,880
14, 220
14, 676
14,960
3.81
3.86
3.91
3.97
4.03
4.09
38.58
77.16
154.32
308. 64
771. 60
1,543.20
15,432
6.12
5.23
5.37
5.63
5.79
6.31
3 4.20
1 Month, day, and year on which issues of June 1, 1953, enter each period. For subsequent issue raonths add the
appropriate number of months.
2 Based on extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price frora issue date to extended maturity date is 3.70 percent.
197
EXHIBITS
TABLE 32
B O N D S BEARING ISSUE D A T E S F R O M O C T O B E R 1 T H R O U G H N O V E M B E R 1, 1953
Issueprice
Denomination
Period after original maturity (beginning 9 years
8 months after issue date)
$18.75 $37.50
25.00 50.00
$75.00 $150.00 $375.00
100.00 200.00 500.00
$750.00
1,000.00
$7,500
10,000
(1) Redemption values during each half-year period
(values increase on flrst day of period shown)
EXTENDED MATURITY PERIOD
FirstMyear
'(6/1/63) $25.45 $50.90 $101.80 $203.60 $609.00 $1,018.00 $10,180
Mto lyear
(12/1/63)
25.90 61.80 103.60 207.20 618.00 1,036.00 10.360
1 to IM y e a r s - - — (6/1/64)
26.36 62.72 105.44 210.88 527.20 1,054.40 10,544
I M t o 2 years
(12/1/64)
26.83 53.66 107.32 214.64 636.60 1,073.20 10.732
2 to 2M years
(6/1/65)
27.31 54.62 109.24 218.48 646.20 1,092.40 10,924
2M to 3 years
(12/1/65)
27.80 66.60 111.20 222.40 556.00 1,112.00 11,120
3 to 3M years
(6/1/66)
28.32 56.64 113.28 226.66 666.40 1,132.80 11,328
3M to 4 years
(12/1/66)
28.85 67.70 116.40 230.80 577.00 1,154.00 11.540
4 to 4M years
(6/1/67)
29.40 68.80 117.60 235.20 588.00 1,176.00 11.760
4M to 5 years
(12/1/67; 29.96 69.92 119.84 239.68 599.20 1,198.40 11.984
5 to 5M years
(6/1/68)
30.66 61.12 122.24 244.48 611.20 1,222.40 12,224
6M to 6 years
(12/1/68)
31.19 62.38 124.76 249.52 623.80 1,247.60 12,476
6 to 6M years
(6/1/69)
31.83 63,66 127.32 2M.64 636.60 1,273.20 12,732
Approximate investment yield
(2) On the
redemption
(3) On
current
value at
start of the redemption value
extended
maturity
from
period
beginning
to the
of each
beginning
half-year
period to
of each
extended
half-year
maturity 2
period
thereafter
0.00
3.64
3.54
3.55
3.66
3.56
3.59
3.61
3.64
3.66
3.69
3.73
3.76
3.75
3.76
3.77
3.78
3.80
4.21
4.24
4.28
4.32
4.37
4.51
4.55
5.00
Redemption values and investment yields to extended maturity on basis of June 1,1969, revision
6M to 7 years
(12/1/69)
7 to 7M years
(6/1/70)
7M to 8 y e a r s . . - ( 1 2 / 1 / 7 0 )
8 to 8M years
(6/1/71)
8M to 9 years-.-(12/1/71)
9 to 9M years
(6/1/72)
9M to 10 years-.-(12/1/72)
EXTENDED MATURITY VALUE (19 years
and S months from issue
date)
(6/1/73)
32.62
33.22
34.00
34.81
35.68
36.60
37.67
65.04
66.44
68.00
69.62
71.36
73.20
75.14
130.08
132.88
136.00
139.24
142. 72
146.40
150.28
260.16
265. 76
272.00
278.48
285.44
292.80
300.66
650.40
664.40
680.00
696. 20
713.60
732.00
761.40
1,300.80
1,328.80
1,360.00
1,392.40
1.427.20
1,464.00
1, .502.80
13.008
13,288
13.600
13,924
14.272
14,640
15,028
38.78
77.56
155.12
310.24
775.60
1,551.20
15,512
3.81
3.84
3.90
3.95
4.01
4.08
4.14
5.09
5.23
5.33
5.47
5.63
.5.87
6.44
3 4.26 . . . .
1 Month, day, and year on which issues of Oct. 1,1953, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on extended m a t u r i t y value in effect on the beginning date of the half-year period,
3 Yield on purchase price from issue date to extended m a t u r i t y date is 3.73 percent.
198
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 33
BONDS BEARING ISSUE DATES FROM DECEMBER 1, 1953, THROUGH MARCH 1. 1954
Issueprice
Denomination.
$18.75 $37.50
25.00 50.00
$75.00 $150.00 $375.00
100.00 200.00 500.00
$750.00
1,000.00
$7,500
10,000
(1) Redemption values during each half-year period
(values increase on first day of period shown)
Period after original maturity (beginning 9 years
8 months ;after issue date)
EXTENDED MATURITY PERIOD
First M y e a r . ....1(8/1/63) $26. 52 $61.04 $102.08 $204.16 $510. 40 $1,020.80 $10.208
25.97 51.94 103.88 207. 76 619. 40 1,038.80 10,388
M t o l y e a r . . - .-..(2/1/64)
26.43 52.86 105. 72 211.44 528.60 1.057,20 10, 672
1 to IM years - .-..(8/1/64)
26.90 63.80 107.60 216. 20 538.00 1,076.00 10.760
I M t o 2 years. ....(2/1/65)
27.38 54.76 109.62 219.04 647.60 1.096.20 10,962
2 t o 2 M years- ....(8/1/65)
27.88 55. 76 111.52 223. 04 557.60 1.115. 20 11,162
2M to 3 years.,....(2/1/66)
28.40 56.80 113.60 227. 20 568.00 1.136.00 11.360
3 to 3M years. ....(8/1/66)
28.93 57.86 115.72 231.44 578.60 1,157. 20 11, 572
3M to 4 years - .-..(2/1/67)
29.48 58.96 117.92 235.84 589.60 1.179. 20 11,792
4 to 4M years - ....(8/1/67)
30.05 60.10 120.20 240. 40 601.00 1, 202.00 12,020
4M to 5 years - ....(2/1/68)
30.65 61.30 122. 60 245. 20 613.00 1. 226. 00 12, 260
5 to 6M y e a r s . .-..(8/1/68)
31.27 62.54 125.08 250.16 625.40 1.250.80 12, 508
6 M t o 6 y e a r s - .-..(2/1/69)
6 to 6M years - . — (8/1/69) 31.92 63.84 127.68 255.36 638.40 1,276.80 12.768
Approximate investment yield
(2) On the
(3) On
redemption
current
value at
start of the redempextended tion value
from
maturity
beginning
period
of each
to the
half-year
beginning
period to
of each
extended
half-year
maturity 2
period
thereafter
Percent
0.00
3.53
3.53
3.54
3.65
3.67
3.60
3.62
3.64
3.66
3.70
3.73
3.76
Percent
3.75
. 3.76
3:7.7
3.79
3.80
4.21
4.25
4.29
4.33
4.37
4.61
4.56
5.00
Redemption values and investment yields to extended maturity on basis of June 1,1969, revision
6M to 7 ycars- .-..(2/1/70)
7 to 7M years - — (8/1/70)
7M to 8 years - .-..(2/1/71)
8 to 8M years- - . . ( 8 / 1 / 7 1 )
8M to 9 years- -...(2/1/72)
9 to 9M years - .-..(8/1/72)
9M to 10 years .-..(2/1/73)
E X T E N D E D MATURITY VALUE (19 years
and 8 months from issue
date)
—(8/1/73)
32.61
33.33
34.09
34.90
35.77
36.70
37.67
65.22
66.66
68.18
69.80
71.54
73.40
75.34
130.44
133.32
136.36
139.60
143.08
146.80
150.68
260.88
266.64
272. 72
279. 20
286.16
293.60
301.36
652. 20
666.60
681.80
698.00
715.40
734.00
753.40
1.304.40
1,333.20
1.363.60
1,396.00
1,430.80
1,468.00
1, 506.80
13,044
13.332
13.636
13.960
14,308
14.680
15,068
3.81
3.85
3.90
3.95
4.01
4.08
4.14
38.89
77.78
155.56
311.12
777.80
1,555.60
15,556
3 4.26
5.10
5.21
5.34
5.49
5.65
5.88
6.48
1 Month, day, and year on which issues of Dec. 1,1953, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to extended maturity date is 3.74 percent.
199
EXHIBITS
TABLE 34
B O N D S BEARING ISSUE D A T E S F R O M APRIL 1 T H R O U G H MAY 1, 1954
3 price
Denomination
$18.75 $37.50
25.00 50.00
$75.00 $150.00 $375.00
100.00 200.00 500.00
$750.00
1,000.00
$7,500
10.000
(1) Redemption values during each half-year period
(values increase on first day of period shown)
Period after original maturity (beginning 9 years
8 months after issue date)
EXTENDED MATURITY PERIOD
First M year - . . 1 (12/1/63)
Mto lyear
(6/1/64)
1 to IM years
(12/1/64)
I M t o 2 years
(6/1/65)
2 to 2M years
(12/1/65)
2M to 3 years
(6/1/66)
3 to 3M years
(12/1/66)
3M to 4 years
(6/1/67)
4 to 4M years
(12/1/67)
43^ to 5 years
(6/1/68)
5 to 5M years
(12/1/68)
5M to 6 years
(6/1/69)
$25. 52
25.97
26.43
26.90
27.38
27.89
28.41
28.94
29.50
30.08
30.69
31.31
$51. 04 $102.08 $204.16 $510.40 $1,020.80 $10, 208
51.94 103.88 207.76 519.40 1,038.80 10.388
52.86 105.72 211.44 528.60 1,057.20 10,672
53.80 107.60 215.20 538.00 1.076:00 10.760
64.76 109,52 219.04 547.60 1.095.20 10.952
65.78 111,56 223.12 657.80 1.115.60 11.156
56.82 113.64 227 28 568.20 1.136.40 11..364
57.88 115,76 231..52 578.80 1.157.60 11.576
59.00 118.00 236.00 590.00 1.180.00 11,800
60.16 120.32 240.64 601.60 1.203.20 12.032
61.38 122.76 245.52 613.80 1.227.60 12,276
62.62 125.24 250.48 626.20 1.252.40 12,624
Approximate investment yield
(2) On the
redemption
value at
start of the
extended
maturity
period
tothe
beginning
of each
half-year
period
thereafter
/ (3) On
' current
redemption value
from
beginning
of each
half-year
period to
extended
maturity 2
Percent
0.00
3.53
3.63
3.54
3.65
3.68
3.61
3.63
3.66
3.69
3.72
3.75
Percent
3.75
3.76
3.77
3.79
4.20
4.23
4.27
4.31
4.35
4.48
4.53
5.00
Redemptiori values and investment yields to extended maturity on basis of June 1, 1960, revision
6 to 6M years-...(12/1/69)
6M to 7 years
(6/1/70)
7 to 7M years.-..(12/1/70)
7M to 8 years
(6/1/71)
8 to 8M years....(12/1/71)
8M to 9 years
(6/1/72)
9 to 9M years....(12/1/72)
9M to 10 years
(6/1/73)
E X T E N D E D MATURITY VALUE (19 years
and 8 months from issue
date)
(12/1/73)
31.97
32.68
33.42
34.20
35.04
35.92
36.86
37.85
63.94
65.36
66.84
68.40
70.08
71.84
73.72
75.70
127.88
130. 72
133.68
136.80
140.16
143.68
147.44
151.40
255. 76
261. 44
267.36
273.60
230.32
287.36
294.88
302.80
639.40
653.60
668.40
684.00
700.80
718.40
737.20
757. 00
1,278.80
1,307.20
1.336.80
1.368.00
1,401.60
1,436.80
1,474.40
1,514.00
12,788
13. 072
13.368
13.680
14.016
14.368
14.744
15.140
3.79
3.84
3.89
3.94
4.00
4.06
4.13
4.19
39.10
78.20
156.40
312.80
782.00
1,564.00
15,640
4.31 . . . .
5.10
5.19
5.30
5.43
5.66
5.74
5.99
6.61
I Month, day, and year on which issues of Apr. 1, 1954, enter each period. For subsequent issue months add the
appropriate number of months.
- Based on extended maturity value in effect on thc beg.inning date of thc half-year period.
"Yield on purchase price frora issue date to extended maturity date is 3.77 percent.
200
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 35
B O N D S BEARING ISSUE D A T E S F R O M J U N E 1 T H R O U G H S E P T E M B E R 1, 1954
$18.75 $37.50
25.00 50.00
Issueprice
Denomination
$75.00 $150.00 $375.00
100.00 200.00 500.00
$750.00
1,000.00
$7,500
10,000
(2) On the
redemption
(3) On
current
value at
start of the redempextended tion value
from
maturity
beginning
period
tothe
of each
beginning
half-year
period to
of each
extended
half-year
maturity 2
period
thereafter
(1) Redemptiion values during each half-•year period
(values increase on first day of period shown)
Period after original maturity (beginning 9 years
8 months after issue date)
EXTENDED MATURITY PERIOD
FirstMyear-.
M to l y e a r - - 1 to IM years.
IM to 2 years.
2 to 2M years.
2M to 3 years.
3 to 3M years.
3M to 4 years4 to 4M years4M to 5 years.
6 to 5M years.
5M to 6 years.
Approximate investment yield
'(2/1/64) $25.68 $51.16 $102.32 $204.64 $511.60 $1,023.20 $10,232
(8/1/64) 26.03 52.06 104.12 208.24 520.60 1,041.20 10,412
(2/1/65) 26.49 52.98 105.96 211.92 529.80 1,059.60 10, 596
(8/1/65) 26.96 53.92 107.84 215.68 539.20 1.078.40 10,784
(2/1/66) 27.45 54.90 109.80 219. 60 549.00 1.098.00 10. 980
(8/1/66) 27.95 55.90 111.80 223.60 669.00 1.118.00 11.180
(2/1/67) 28.47 56.94 113.88 227. 76 569.40 1,138.80 11.388
(8/1/67) 29.01 58.02 116.04 232. 08 580. 20 1.160.40 11.604
(2/1/68) 29.57 59.14 118.28 236. 66 591.40 1,182.80 11.828
(8/1/68) 30.15 60.30 120.60 241. 20 603.00 1.206.00 12,060
(2/1/69) 30.76 61.52 123.04 246. 08 615.20 1,230.40 12.304
(8/1/69) 31.39 62.78 125. 56 251.12 627.80 1,255. 60 12, 566
Percent
0.00
3.62
3.53
3.53
3.56
3.58
3.60
3.63
3.66
3.69
3.72
3.76
Percent
3.75
3.76
3.77
3.79
4.20
4.24
4.27
4.31
4.35
4.49
4.63
5.00
Redemption values and investment yields to extended raaturity on basis of June 1, 1969, revision
6 to 6M years
(2/1/70)
6M to 7 years
(8/1/70)
7 to 7M years
(2/1/71)
7M to 8 years
(8/1/71)
8 to 8M years
(2/1/72)
8M to 9 years
(8/1/72)
9 to 9M years
(2/1/73)
9M to 10 years
(8/1/73)
EXTENDED MATURITY VALUE (19 years
and 8 months from issue
date)
-(2/1/74)
32.05
32.75
33.49
34.28
35.12
36.00
36.94
37.94
64.10
65.60
66.98
68.56
70.24
72.00
73.88
75.88
128.20 •256.40
131.00 262.00
133.96 267.92
137.12 274.24
140.48 280.96
144.00 288.00
147.76 295. 62
151.76 303. 62
641.00
656.00
669.80
685.60
702.40
720.00
738.80
758.80
1,282.00
1,310.00
1,339.60
1,371.20
1,404.80
1,440.00
1.477.60
1,517.60
12,820
13,100
13.396
13,712
14,048
14,400
14,776
15,176
3.79
3.84
3.89
3.94
4.00
4.06
4.13
4.19
39.20
78.40
156.80
784.00
1,568.00
15,680
4.31 — .
313.60
5.10
5.20
5.32
5.44
5.57
5.76
6.03
6.64
1 Month, day, and year on which issues of June 1,1954, enter each period. For subsequent issue months add the
appropriate nuraber of months.
2 Based on extended raaturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to extended maturity date is 3.79 percent.
201
EXHIBITS
TABLE 36
B O N D S BEARING ISSUE D A T E S F R O M O C T O B E R 1 T H R O U G H N O V E M B E R 1, 1954
Issueprice
Denomination
$18.75 $37.50
25.00 50.00
$75.00 $150.00 $375.00
100.00 200.00 500.00
$750.00
1,000.00
$7,500
10,000
(1) Redemption values during each half-year period
(values increase on first day of period shown)
Period after original maturity (beginning 9 years
8 months after issue
date)
EXTENDED MATURITY PERIOD
Fkst Myear
Mto lyear
1 to IM years
I M t o 2 years
2 to 2M years
2M to 3 years
3 to 3M years
3 M t o 4 years
4 to 4M years
4M to 5 years
5 to 5M years
' (6/1/64)
(12/1/64)
(6/1/65)
(12/1/65)
(6/1/66)
(12/1/66)
(6/1/67)
(12/1/67)
(6/1/68)
(12/1/68)
(6/1/69)
$25.58 $61.16 $102.32 $204.64 $511.60 $1,023.20 $10,232
26.03 52.06 104.12 208.24 620.60 1,041.20 10,412
26.49 52.98 105.96 211.92 529.80 1,059.60 10,596
26.96 53.92 107.84 215.68 639.20 1,078.40 10,784
27.46 54.92 109.84 219.68 649.20 1,098.40 10,984
27.96 65.92 111.84 223.68 659.20 1,118.40 11,184
28.48 56.96 113.92 227.84 669.60 1,139.20 11,392
29.03 58.06 116.12 232.24 580.60 1,161.20 11,612
29.60 59.20 118.40 236.80 692.00 1,184.00 11,840
30.19 60.38 120.76 241.52 603.80 1,207.60 12,076
30.80 61.60 123.20 246.40 616.00 1,232.00 12,320
Approximate investment yield
(2) On the
redemption
(3) On
current
value at
start of the redempextended tion value
from
maturity
beginning
period
of each
to the
half-year
beginning
period to
of each
extended
half-year
maturity 2
period
thereafter
0.00
3.62
3.63
3.53
3.58
3.69
3,61
3.65
3.68
3.72
3.75
3.75
3.76
3.77
4.19
4,22
4.26
4,30
4.33
4.47
4.51
5.00
Redemption values and investment yields to extended maturity on basis of June 1,1969, revision
5M to 6 years
(12/1/69)
6 to 6M years
(6/1/70)
6M to 7 years
(12/1/70)
7 to 7M years
(6/1/71)
7M to 8 years ....(12/1/71)
8 to 8M years
(6/1/72)
8M to 9 years
(12/1/72)
9 to 9M years
(6/1/73)
9M to 10 years....(12/1/73)
EXTENDED MATURITY VALUE (19 years
and 8 months from issue
date)
(6/1/74)
31.44
32.12
32.83
33.60
34.41
35.25
36.16
37.11
38.14
62.88
64.24
65.66
67.20
68.82
70.50
72.32
74.22
76.28
125.76
128.48
131.32
134.40
137.64
141.00
144.64
148.44
152.56
251.52
256.96
262.64
268.80
275.28
282.00
289.28
296.88
305.12
628.80
642.40
656.60
672.00
688.20
705.00
723.20
742.20
762.80
1,257.60
1,284.80
1,313.20
1,344.00
1,376.40
1,410.00
1,446.40
1,484.40
1,525.60
12, 576
12,848
13,132
13,440
13, 764
14,100
14,464
14,844
15,256
3.79
3.83
3.88
3.93
3.99
4.05
4.11
4.18
4.25
39.43
78.86
157.72
315.44
788.60
1,577.20
15,772
4.37 .-.
5.10
5.19
5.30
5.41
5.52
5.68
5.86
6.16
6.76
1 Month, day, and year on which issues of Oct. 1,1954, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to extended maturity date is 3.82 percent.
202
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 37
BONDS BEARING ISSUE DATES FROM DECEMBER 1, 1954, THROUGH MARCH
Issueprice
Denomination.
$18.75 $37.50
25.00 50.00
$75.00 $150.00 $375.00
100.00 200.00 500.00
$750.00
1,000.00
$7,500
10,000
(1) Redemption values during each half-year period
(values increase on first day of period shown)
Period after original maturity (beginning 9 years
8 months after issue date)
EXTENDED • MATURITY PERIOD
First M year.. . . ' (8/1/64) $25.64 $51.28 $102.56 $205.12 $512.80 $1,025.60 $10,266
26.09 52.18 104.36 208.72 521.80 1,043.60 10,436
M to 1 y e a r . . . . - . ( 2 / 1 / 6 5 )
26.55 53.10 106.20 212.40 531.00 1,062.00 10,62
1 to IM years...---(8/1/65)
27.03 54.06 108.12 216. 24 540.60 1, 081.20 10,812
I M t o 2 years...-..(2/1/66)
27.52 55.04 110.08 220.16 550.40 1,100.80 11,008
2 to 234 years....-.(8/1/66)
28.03 56.06 112.12 224.24 560.60 1,121.20 11,212
234 to 3 years.....-(2/1/67)
28.55 57.10 114.20 228.40 571.00 1,142. 00 11,420
3 to 3M years..- . . ( 8 / 1 / 6 7 )
29.09 58.18 116.36 232. 72 581. 80 1,163.60 11,636
3M to 4 years..- . - ( 2 / 1 / 6 8 )
29.67 59.34 118.68 237.36 693.40 1,186.80 11,868
4 to 434 years......(8/1/68)
30.26 60.62 121.04 242.08 605.20 1,210.40 12,104
434 to 5 years.....-(2/1/69)
30.87 61.74 123.48 246. 96 617. 40 1,234.80 12,348
5 to 5M years..- - . ( 8 / 1 / 6 9 )
Approximate investment yield
(2) On the
(3) On
redemption
current
value at
start of the redemption value
extended
from
maturity
beginning
period
of each
tothe
beginning
half-year
period to
of each
extended
half-year
maturity 2
period
thereafter
Percent
0.00
3.51
3.62
3 55
3.57
3.60
3.62
3.64
3.68
3.72
3.75
Percent
3.76
3.76
3.78
4 19
4.22
4.26
4.29
4.33
4.46
4.51
5.00
Redemption values and investraent yields to extended raaturity on basis of June 1,1969, revision
534 to 6 years-..-.-(2/1/70)
6 to 6M years-..--.(8/1/70)
6M to 7 years...--.(2/1/71)
7 to 7M years..---(8/1/71)
7M to 8 years... - - ( 2 / 1 / 7 2 )
8 to 8M years..- . - ( 8 / 1 / 7 2 )
8M to 9 years.....-(2/1/73)
9 to 9M years... - - ( 8 / 1 / 7 3 )
9M to 10 years.....(2/1/74)
EXTENDED MATURITY VALUE (19 years
and 8 months from issue
date)
...-(8/1/74)
31.52
32.19
32.91
33.68
34.49
35.33
36.25
37.20
38.21
63.04
64.38
65.82
67 36
68.98
70.66
72.50
74.40
76.42
126.08
128.76
131.64
134.72
137.96
141.32
145.00
148.80
152.84
252.16
257. 52
263.28
269.44
275.92
282.64
290 00
297.60
305.68
630.40
643.80
658.20
673.60
689.80
706.60
725.00
744.00
764.20
1,260.80
1,287.60
1,316.40
1,347.20
1,379.60
1,413.20
1,450. 00
1,488.00
1, 528.40
12,608
12,876
13,164
13,472
13,796
14,132
14, 600
14,880
15, 284
3.79
3.83
3.88
3.93
3.99
4.05
4.12
4.18
4.24
39.52
79.04
158.08
316.16
790.40
1,580.80
15,808
3 4.37
5.09
5.20
5.30
5.40
5.62
5.68
5.84
6.14
6,86
Mouth, day, and year on which issues of Dec. 1, 1954, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to extended maturity date is 3.83 percent.
203
EXHIBITS
TABLE 38
B O N D S BEARING ISSUE D A T E S F R O M APRIL 1 T H R O U G H MAY 1, 1955
Issueprice
Denomination.
$18.75 $37.50
25.00 50.00
$75.00 $150.00 $375.00
100.00 200.00 500.00
$750.00
1,000.00
$7,500
10,000
(1) Redemption values during each half-year period
(values increase on first day of period shown)
Period after original maturity (beginning 9 years
8 months after issue date)
EXTENDED MATURITY PERIOD
First M year.. - ' (12/1/64) $25.64 $51. 28 $102.56 $205.12 $512.80 $1,025.60 $10, 256
26.09 52.18 104.36 208. 72 521.80 1,043.60 10, 436
M to 1 y e a r . . . ...-(6/1/65)
26.55 53.10 106.20 212.40 531.00 1,062.00 10,620
1 t o l M years...-.(12/1/65)
27.04 54.08 108.16 216.32 540.80 1,081.60 10, 816
IM to 2 years...-..(6/1/66)
27.53 55.06 110.12 220.24 550.60 1,101.20 11,012
2 to 2M years.....(12/1/66)
28.04 56.08 112.16 224.32 660.80 1,121.60 11,216
2M to 3 years-.. . - ( 6 / 1 / 6 7 )
28.57 57.14 114.28 228.56 571.40 1,142.80 11,428
3 to3M years...-.(12/1/67)
29,12 58.24 116.48 232. 96 582.40 1,164.80 11,648
3M to 4 years-..-..(6./1/68)
29. 70 59.40 118. 80 237.60 594.00 1,188. 00 11,880
4 to 4M years ....(12/1/68)
30.29 60.68 121.16 242. 32 605.80 1,211.60 12,116
4 M t o 5 years......(6/1/69)
Approximate investment yield
(2) On the
(3) On
redemption
current
value at
start o f t h e redemption value
extended
from
maturity
beginning
period
of each
to the
beginning
half-year
period to
of each
extended
half-year
maturity 2
period
thereafter
Percent
0.00
3.51
3.62
3.58
3.59
3.61
3.64
3.67
3.71
3.74
Percent
3.75
3.76
4.18
4.21
4.24
4.28
4.31
4.45
4.49
5.00
Redemption values and investment yields to extended maturity on basis of June 1,1969, revision
5 to 5M years....-(12/1/69)
5M to 6 years...-.-(6/1/70)
6 to 6M years-...-.(12/1/70)
6M to 7 years...---(6/1/71)
7 to 7M years-.-.(12/1/71)
7M to 8 years ..---(6/1/72)
8 to 8M years-.-.(12/1/72)
8M to 9 years...--.(6/1/73)
9 to 934 years....-(12/1/73)
934 to 10 years...--(6/1/74)
EXTENDED MATURITY VALUE (19 years
and 8 months from issue
date)
— (12/1/74)
30.92
31,58
32.27
33.02
33. 79
34.61
35.49
36,41
37.38
38.40
61,84
63.16
64.54
66.04
67.58
69.22
70.98
72.82
74.76
76.80
123.68
126.32
129.08
132.08
135.16
138.44
141.96
145.64
149.52153.60
247.36
252.64
258.16
264.16
270.32
276.88
283.92
291. 28
299.04
307. 20
618.40
631.60
645.40
660.40
675.80
692.20
709.80
728.20
747.60
768.00
1, 236. 80
1,263.20
1,290.80
1,320.80
1,351.60
1,384.40
1,419.60
1, 456.40
1, 495.20
1,536. 00
12,368
12,632
12,908
13,208
13,516
13,844
14,196
14, 564
14,952
15, 360
3.78
3.82
3.87
3.93
3.98
4,04
4.11
4.17
4.23
4.30
39.74
79.48
158.96
317.92
794.80
1,589.60
15,896
3 4.43
5.08
5.17
5.27
5.36
5,48
5.61
5.74
5.92
6.22
6.98
1 Month, day, and year on which issues of Apr. 1, 1955, enter each period. For subsequent issue raonths add the
appropriate number of months.
2 Based on extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to extended maturity date is 3.86 percent.
1397-7012 O—71-
-li5
204
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 39
BONDS BEARING ISSUE DATES FROM JUNE 1 THROUGH SEPTEMBER 1
Issueprice
Denomination!
$18.75 $37.50
25.00 50.00
$75.00 $150.00 $375.00
100.00 200.00 500.00
$750.00
1,000.00
$7,500
10,000
(1) Redemption values during each half-year period
(values increase on first day of period shown)
Period after original maturity (beginning 9 years
8 months after issue •
date)
EXTENDED MATURITY PERIOD
First M y e a r . ....1 (2/1/65)
M to 1 y e a r - - . ....(8/1/65)
1 to IM years. -...(2/1/66)
IM to 2 years. -...(8/1/66)
2 t o 2 M y e a r s - -...(2/1/67)
2M to 3 years. -...(8/1/67)
3 to 3M years...-..(2/1/68)
3M to 4 years. -...(8/1/68)
4 to 4M years. -...(2/1/69)
4M to 5 years- -...(8/1/69)
$25.71 $51. 42 $102.84 $205. 68 $514. 20 $1, 028. 40 $10, 284
26.16 52.32 104.64 209.28 523.20 1,046. 40 10, 464
26.63 53.26 106. 52 213. 04 532. 60 1, 065. 20 10, 652
27.11 54.22 108.44 216. 88 542.20 1,084. 40 10, 844
27.61 55.22 110.44 220. 88 552. 20 1,104. 40 11, 044
28.12 56.24 112.48 224. 96 562. 40 1,124. 80 11,248
28.65 57.30 114.60 229. 20 573.00 1,146. 00 11, 460
29.20 58.40 116.80 233.60 584. 00 1,168. 00 11,680
29.78 69.66 119.12 238.24 695. 60 1,191.20 11,912
30.37 60.74 121. 48 242. 96 607. 40 1, 214. 80 12,148
Approximate investment yield
(2) On the
(3) On
redemption
current
value at
start of the redemption value
extended
from
maturity
beginning
period
of each
tothe
beginning
half-year
period to
of each
extended
half-year
maturity 2
period
thereafter
Percent
0.00
3.50
3.55
3.57
3.60
3.62
3.64
3.67
3.71
3.74
Percent
3.76
3.76
4.17
4.21
4.24
4.28
4.31
4.45
4.49
5.00
Redemption values and investment yields to extended maturity on basis of June 1, 1969, revision
5 to 6M years. ....(2/1/70)
5M to 6 years. -..-(8/1/70)
6 to 6M years- --..(2/1/71)
6M to 7 years. . - . ( 8 / 1 / 7 1 )
7 to 7M years. -...(2/1/72)
7M to 8 years. - . . ( 8 / 1 / 7 2 )
8 t o 8 M y e a r s - -...(2/1/73)
8M to 9 years. - - . ( 8 / 1 / 7 3 )
9 t o 9 M y e a r s - .-..(2/1/74)
9M to 10 years --..(8/1/74)
EXTENDED MATURITY VALUE (19 years
and 8 months from issue
date)
—(2/1/75)
31.00
31.66
32.36
33.11
33.88
34.72
35.59
36.61
37.48
38.60
62.00
63.32
64.72
66.22
67.76
69.44
71.18
73.02
74.96
77.00
124.00
126.64
129. 44
132.44
135.52
138.88
142.36
146.04
149.92
154.00
248.00
253.28
258.88
264.88
271.04
277.76
284.72
292.08
299.84
308.00
620. 00
633. 20
647.20
662. 20
677. 60
694.40
711. 80
730.20
749. 60
770.00
1,240.00
1,266.40
1,294.40
1,324.40
1,355.20
1,388.80
1,423.60
1,460.40
1,499.20
1,540.00
12,400
12, 664
12,944
13,244
13, 652
13,888
14,236
14,604
14, 992
15,400
3.78
3.82
3.87
3.93
3.98
4.05
4.11
4.17
4.23
4.30
39.85
79.70
159.40
318.80
797.00
1,594.00
15,940
5.09
5.18
5.27
5.36
5.48
5.59
5.73
5.92
6.23
7.01
3 4.43
1 Month, day, and year on which issues of June 1, 1955, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to extended maturity date is 3.87 percent.
205
EXHIBITS
TABLE 40
B O N D S BEARING ISSUE D A T E S F R O M O C T O B E R 1 T H R O U G H N O V E M B E R 1. 1955
$18.75 $37.50
25.00 50.00
Issueprice
Denomination
$75.00 $150.00 $375.00
100.00 200.00 500.00
$750.00
1,000.00
$7,500
10,000
(1) Redemption values during each half-year period
(values increase on first day of period shown)
Period after original maturity (beginning 9 years
8 months after issue date)
'
EXTENDED MATURITY PERIOD
FirstMyear
Mto lyear
1 to IM years
I M t o 2 years
2 to 2M years
2M to 3 years
3 to 3M years
3M to 4 years
4 to 4M years
'(6/1/65)
(12/1/65)
(6/1/66)
(12/1/66)
(6/1/67)
(12/1/67)
(6/1/68)
(12/1/68)
(6/1/69)
$25.71 $51.42 $102.84 $205.68 $514.20 $1,028.40 $10,284
26.16 62.32 104.64 209.28 523.20 1,046.40 10,464
26.64 53.28 108.56 213.12 532.80 1,065.60 10, 656
27.12 54.24 108.48 216.96 542.40 1, 084. 80 10, 848
27.62 55.24 110.48 220.96 652.40 1,104.80 11,048
28.14 56.28 112.56 225.12 562.80 1,125. 60 11, 256
28.68 57.36 114.72 229.44 573.60 1,147. 20 11,472
29.23 58.46 116.92 233.84 584.60 1,169. 20 11, 692
29.81 69.62 119.24 238.48 696.20 1,192. 40 11. 924
Approximate investraent yield
(2) On the
redemption
(3) On
current
value at
start of the redemption value
extended
from
maturity
beginning
period
of each
to the
half-year
beginning
period to
of each
extended
half-year
maturity 2
period
thereafter
3.75
4.16
4.19
4.23
4.26
4.29
4.43
4.47
5.00
0.00
3.60
3.59
3.59
3.62
3.65
3.68
3.70
3.73
Redemption values and investment yields to extended maturity on basis of June 1,1969, revision
4M to 5 years
(12/1/69)
5 to 5M years
(6/1/70)
5M to 6 years
(12/1/70)
6 to 6M years
(6/1/71)
6M to 7 years
(12/1/71)
7 to 7M years
(6/1/72)
7M to 8 years
(12/1/72)
8 to 8M years
(6/1/73)
8M to 9 years
(12/1/73)
9 to 9M years
(6/1/74)
9Mto 10 years--.(12/1/74)
EXTENDED MATURITY VALUE (19 years
and 8 months from issue
date)
(6/1/75)
30.42
31.05
31.74
32.46
33.21
34.01
34.86
35.75
36.68
37.67
38.71
60.84
62.10
63.48
64.92
66.42
68.02
69.72
71.60
73.36
75.34
77.42
121. 68
124. 20
126. 96
129. 84
132. 84
136.04
139.44
143.00
146. 72
150. 68
154. 84
243.36
248. 40
253. 92
259. 68
265. 68
272. 08
278. 88
286. 00
293.44
301.36
309. 68
608.40
621. 00
634.80
649. 20
664. 20
680. 20
697. 20
715, 00
733. 60
753. 40
774. 20
1,216. 80
1, 242. 00
1, 269. 60
1, 298. 40
1,328.40
1,360.40
1,394. 40
1, 430. 00
1,467. 20
1, 506. 80
1, 548.40
12,168
12, 420
12,696
12, 984
13, 284
13.604
13,944
14,300
14, 672
15,068
15,484
3.77
3.81
3.87
3.92
3.98
4.04
4.10
4.16
4.22
4.29
4.35
40.09
80.18
160.36
320.72
801.80
1,603.60
16,036
M.49
5.08
5.18
5.26
5.35
5.45
6:66
6.67
5.81
6.02
6.32
7.13
—.
»Month, day, and year on which issues of Oct. 1, 1955, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to extended maturity date is 3.90 percent.
206
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 41
B O N D S BEARING ISSUE D A T E S F R O M D E C E M B E R 1, 1955, T H R O U G H M A R C H 1,1956
$18.75 $37.50
25.00 50.00
Issueprice
Denomination
$75.00 $150.00 $375.00
100.00 200.00 500.00
$750.00
1,000.00
$7,500
10,000
(1) Redemption values during each half-year period
(values increase on flrst day of period shown)
Period after original maturity (beginning 9 years
8 months after issue date)
EXTENDED MATURITY PERIOD
FirstMyear
Mto lyear
1 to IM years
I M t o 2 years
2 to 2M years
2M to 3 years
3 to 3M years
3M to 4 years
4 to 4M years
1 (8/1/65)
(2/1/66)
(8/1/66)
(2/1/67)
(8/1/67)
(2/1/68)
(8/1/68)
(2/1/69)
(8/1/69)
$25.77 $51.54 $103.08 $206.16 $515.40 $1,030.80 $10,308
26.22 52.44 104.88 209.76 524.40 1,048.80 10,488
26.70 53.40 106.80 213.60 534.00 1,068.00 10,680
27.18 54.36 108.72 217.44 543.60 1,087.20 10,872
27.68 55.36 110.72 221.44 553.60 1,107.20 11,072
28.20 66.40 112.80 226.60 564.00 1,128.00 11,280
28.74 67,48 114.96 229.92 574.80 1,149.60 11,496
29.30 58.60 117.20 234.40 586.00 1,172.00 11,720
29.88 59.76 119.62 239.04 597.60 1.195.20 11,952
Approximate investment 5deld
(2) On the
redemption
(3) On
current
value at
start of the redempextended tion value
from
maturity
beginning
period
of each
to the
half-year
beginning
period to
of each
extended
half-year
maturity 2
period
thereafter
0.00
3.49
3.58
3.58
3.61
3.64
3.67
3.70
3.73
3.75
4.17
4.19
4.23
4.26
4.30
4.43
4.47
5.00
Redemption values and investment yields to extended maturity on basis of June 1, 1969, revision
4M to 5 years
(2/1/70)
5 to 5M years
(8/1/70)
5M to 6 years
(2/1/71)
6 to 6M years
(8/1/71)
6M to 7 years
(2/1/72)
7 to 7M years
(8/1/72)
7M to 8 years
(2/1/73)
8 to 8M years
(8/1/73)
8M to 9 years
(2/1/74)
9 to 9M years
(8/1/74)
9M to 10 years
(2/1/75)
E X T E N D E D MATURITY VALUE (19 years
and 8 months from issue
date)
(8/1/75)
30.49
31,13
31.82
32.53
33.28
34.09
34.94
35.83
36.76
37.76
38.81
60.98
62.26
63.64
65.05
66.66
68,18
69.88
71.66
73.52
75.52
77.62
121.96
124. 52
127.28
130.12
133.12
136.36
139. 76
143.32
147.04
151.04
165. 24
243. 92
249.04
254.56
250.24
266.24
272.72
279. 52
286.64
294. 08
302.08
310.48
609.80
622.60
636.40
650.60
665.60
681,80
698.80
716.60
735.20
755.20
776. 20
1,219.60 12,196
1,245.20 12,452
1, 272.80 12, 728
1,301.20 •• 13,012
1,331.20 13,312
1.363.60 13,636
1.397.60 13,976
1,433.20 14,332
1,470. 40 14,704
1, 510. 40 15,104
1, 662. 40 15,524
40.19
80.38
160.76
321.52
803.80
1,607.60
16,076
3.77
3.82
3.87
3.92
3.97
4.04
4.10
4.16
4.22
4.29
4.36
5.09
5.17
5.26
5.36
5.46
5.56
5.68
5.82
6.04
6.34
7.11
4.49 — .
> Month, day, and year on which issues of Dec. 1, 1955, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on extended maturity value in effect on the beginning date of the half-year period,
3 Yield on purchase price from issue date to extended maturity date is 3.91 percent.
207
EXHIBITS
TABLE 42
BONDS BEARING ISSUE DATES FROM APRIL 1 THROUGH MAY 1, 1956
Issueprice
Denomination.
$18.75 $37.50
25.00 50.00
$75.00 $150.00 $375.00
100.00 200.00 500.00
$750.00
1,000.00
$7,500
10,000
(1) Redemption values during each half-year period
(values increase on first day of period shown)
Period after original maturity (beginning 9 years
8 months after issue •
date)
EXTENDED MATURITY PERIOD
First M y e a r - ..-1 (12/1/65)
M to 1 year - - . . . - ( 6 / 1 / 6 6 )
I t o IMyeai-s. .-.(12/1/66)
IM to 2 years. - — (6/1/67)
2 t o 2 M y e a r s - --(12/1/67)
2M to 3 years. - — (6/1/68)
3 to 3M y e a r s . --(12/1/68)
3M to 4 years. -...(6/1/69)
$25. 77 $51. 54 $103.08 $206.16 $515. 40 $1,030.80 $10,308
26.30 62.60 105.20 210, 40 526. 00 1,052,00 10, 520
26.85 63.70 107.40 214.80 637. 00 1,074.00 10,740
27.41 64.82 109,64 219. 28 548.20 1, 096.40 10,964
27.98 55.96 111.92 223. 84 669. 60 1,119. 20 11,192
28.56 57.12 114. 24 228, 48 671. 20 1,142.40 11,424
29.15 68.30 116.60 233.20 683.00 1,166, 00 11,660
29.76 59.50 119,00 238.00 595. 00 1,190,00 11,900
Approximate investment yield
(2) On the
(3) On
redemption
current
value at
start of the redempextended tion value
from
maturity
beginning
period
of each
to the
beginning
half-year
period to
of each
extended
half-year
maturity 2
period
thereafter
Percent
0.00
4.11
4.15
4.16
4.16
4.15
4.15
4.16
Percent
4.15
4.15
4.15
4.15
4.15
4.25
4.26
5.00
Redemption values and investment yields to extended maturity on basis of June 1,1969, revision
4 to 4M years. --.(12/1/69)
4 M t o 5 y e a r s - -...(6/1/70)
5 to 5M years - -..(12/1/70)
5M to 6 years. . — (6/1/71)
6 to 6M years - ...(12/1/71)
6M to 7 years - ....(6/1/72)
7 to 7M years - ...(12/1/72)
7M to 8 years - . — (6/1/73)
8 t o 8 M y e a r s - --.(12/1/73)
8M to 9 years. -..-(6/1/74)
9 to 9M years - -..(12/1/74)
9M to 10 years.....(6/1/76)
E X T E N D E D MATURITY VALUE (19 years
and 8 months from issue
date)
—(12/1/75)
30.38
31.03
31.73
32.44
33.20
34.00
34.82
35.69
36.61
37.56
38.66
39.61
60.76
62.06
63.46
64.88
66.40
68.00
69.64
71.38
73.22
75.12
77.12
79.22
121, 52
124.12
126.92
129.76
132.80
136. 00
139. 28
142. 76
146.44
150.24
154.24
168,44
243.04
248. 24
253. 84
259. 62
265. 60
272.00
278. 56
285. 52
292. 88
300.48
308.48
316. 88
607.60
620.60
634.60
648.80
664.00
680.00
696.40
713. 80
732, 20
751.20
771.20
792. 20
1,215.20
1, 241. 20
1,269. 20
1, 297. 60
1,328.00
1,360. 00
1,392.80
1,427.60
1,464. 40
1,602.40
1, 642, 40
1, 584. 40
12,162
12,412
12,692
12, 976
13,280
13,600
13,928
14,276
14,644
15, 024
15,424
15,844
4.16
4.17
4.20
4.23
4.27
• 4.31
4.35
4.39
4.44
4.48
4.53
4.58
41.01
82.02
164.04
328.08
820.20
1,640.40
16.404
3 4.70
6,06
5.14
6,20
5,28
5.35
5.43
5.53
5,64
5,76
6.95
6.26
7.07
1 Month, day, and year on which issues of Apr. 1, 1966, enter each period. For subsequent issue months add the
appropriate nuraber of raonths.
2 Based on extended raaturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to extended maturity date is 4.02 percent.
208
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 43
B O N D S BEARING ISSUE D A T E S F R O M J U N E 1 T H R O U G H S E P T E M B E R 1, 1956
Issueprice
Denomination
$18.75 $37.50
25.00 60.00
$75.00 $150.00 $375.00
100.00 200.00 500.00
$750.00
1,000.00
$7,500
10,000
(1) Redemption values during each half-year period
(values increase on first day of period shown)
Period after original maturity (beginning 9 years
8 months after issue date)
EXTENDED MATURITY PERIOD
FirstMyear
Mto lyear
1 to IM years
I M t o 2 years
2 to 2M years
2M to 3 years
3 to 3M years
3M to 4 years
'(2/1/66) $25.83 $51.66 $103.32 $206.64 $516.60 $1,033.20 $10,332
(8/1/66)
26.37 52.74 105.48 210.96 627.40 1,054.80 10,648
(2/1/67)
26,91 63,82 107.64 215.28 638.20 1,076.40 10,764
(8/1/67)
27.47 64.94 109.88 219.76 549.40 1,098.80 10,988
(2/1/68)
28,04 56.08 112.16 224.32 660.80 1,121.60 11,216
(8/1/68)
28.62 57.24 114.48 228.96 672.40 1,144.80 11,448
(2/1/69)
29.22 58.44 116.88 233.76 584.40 1,168.80 11,688
(8/1/69)
29.82 59.64 119.28 238,66 696,40 1,192.80 11,928
Approximate investment yield
(2) On the
(3) On
redemption
current
value at
start of the redempextended tion value
from
maturity
begirining
period
of each
tothe
half-year
beginning
period to
of each
extended
half-year
maturity 2
period
thereafter
Percent
0.00
4.18
4.14
4.15
4.15
4.15
4.15
4.15
Percent
4.15
4,15
4,15
4.15
4.15
4.25
4.26
5.00
Redemption values and investment yields to extended maturity on basis of June 1, 1969, revision
4 to 4M years
(2/1/70)
4M to 5 years
(8/1/70)
5 to 5M years
(2/1/71)
5M to 6 years
(8/1/71)
6 to 6M years
(2/1/72)
6M to 7 years
(8/1/72)
7 to 7M years
(2/1/73)
7M to 8 years
(8/1/73)
8 to 8M years
(2/1/74)
8M to 9 years
(8/1/74)
9 to 9M years
(2/1/75)
9M to 10 years
(8/1/75)
EXTENDED MATURITY VALUE (19 years
and 8 months from issue
date)-—1
(2/1/76)
30.45
31.10
31.80
32.52
33.28
•34. 07
34.90
35.78
36.69
37.64
38.65
39.70
60.90
62.20
63.60
65.04
66.66
68.14
69.80
71.56
73.38
75.28
77.30
79.40
121.80
124. 40
127. 20
130.08
133.12
136.28
139.60
143.12
146.76
150. 56
154.60
158.80
243.60
248.80
254.40
260.16
266.24
272. 66
279. 20
286. 24
293. 52
301.12
309.20
317.60
609. 00
622.00
636.00
650.40
665.60
681.40
698.00
715.60
733.80
752.80
773.00
794. 00
1,218.00
1,244.00
1, 272. 00
1,300.80
1,331.20
1,362.80
1,396.00
1,431.20
1,467.60
1, 605.60
1, 546.00
1, 688. 00
12.180
12,440
12, 720
13,008
13,312
13,628
13,960
14,312
14,676
15,056
15,460
15,880
4.16
4.17
4.20
4.23
4.27
4.31
4.35
4.39
4.44
4.48
4.53
4.58
41.11
82.22
164.44
328.88
822.20
1,644.40
16,444
4.70 — .
5.07
5.14
5.20
6.28
6.35
5.44
5,63
6,63
6.77
6.97
6.27
7.10
» Month, day, and year on which issues of June 1, 1956, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on extended maturity value in effect on the beginning date of the half-year period..
3 Yield on purchase price from issue date to extended maturity date is 4.03 percent.
209
EXHIBITS
TABLE 44
BONDS BEARING ISSUE D A T E S F R O M O C T O B E R 1 T H R O U G H N O V E M B E R 1, 1956
$18.75 $37.50
25.00 50.00
Issue price
Denomination
$75.00 $150.00 $375.00
100.00 200.00 500.00
$750.00
1,000.00
$7,500
10,000
(1) Redemption values during each half-year period
(values increase on first day of period shown)
Period after original maturity (beginning 9 yeai-s
8 raonths after issue date)
EXTENDED MATURITY PERIOD
FirstMyear....
Mto lyear
1 to IM years
I M t o 2 years
2 to 2M years
2M to 3 years
3to3M'years
1 (6/1/66) $25.83 $51.66 $103.32 $206,64 $516,60 $1,033.20 $10,332
(12/1/66)
26.37 62.74 105,48 210,96 627,40 1,054,80 10,548
(6/1/67)
26.91 63.82 107.64 215.28 538,20 1,076.40 10,764
(12/1/67)
27.47 64.94 109,88 219.76 549.40 1,098.80 10,988
(6/1/68)
28.04 66,08 112.16 224,32 560.80 1,121.60 11,216
(12/1/68)
28.62 67.24 114.48 228.96 672.40 1,144.80 11,448
(6/1/69)
29.22 58.44 116.88 233.76 684.40 1,168.80 11,688
Approximate investment yield
(2) On the
(3) On
i-edemption
current
value at
start of the redempextended tion value
from
maturity
beginning
period
of each
tothe
half-year
beginning
period to
of each
extended
half-year
maturity 2
period
thereafter
0.00
4.18
4.14
4,15
4.15
4.15
4.15
4.15
4.15
4.15
4.15
4.15
4.25
5.00
Redemption values and investment yields to extended maturity on basis of June 1, 1969, revision
3M to 4 y e a r s . . ...(12/1/69)
4 to 4M years....--(6/1/70)
4M to 5 years.-.-(12/1/70)
5 to 5M years......(6/1/71)
6M to 6 years....-(12/1/71)
6 to 6M years.... - ( 6 / 1 / 7 2 )
6M to 7 years...-(12/1/72)
7 to 7M years.... - ( 6 / 1 / 7 3 )
7M to 8 years....-(12/1/73)
8 to 8M years......(6/1/74)
8M to 9 years....,(12/1/74)
9 to 9M years.....-(6/1/75)
9M to 10 years..-(12/1/75)
EXTENDED MATURITY VALUE (19 years
and 8 months from issue
date)
.-(6/1/76)
29.83
30.47
31.14
31.85
32.69
33.36
34.16
35.01
35.90
36.82
37.79
38.80
39.87
59.60
60.94
62.28
63.70
65.18
66.72
68,32
70,02
71,80
73,64
75,58
77.60
79.74
119.32
121.88
124. 56
127.40
130.36
133.44
136.64
140.04
143.60
147. 28
151.16
155. 20
159. 48
238.64
243.76
249.12
254.80
260.72
266.88
273.28
280.08
287. 20
294.56
302.32
310.40
318,96
596. 60
609. 40
622.80
637. 00
651.80
667.20
683. 20
700.20
718.00
736.40
755.80
776. 00
797.40
1,193. 20
1,218.80
1,246.60
1,274.00
1,303. 60
1,334.40
1,366.40
1,400. 40
1,436. 00
1,472. 80
1,511.60
1, 552. 00
1, 594. 80
11,932
12,188
12,456
12,740
13,036
13,344
13,664
14,004
14,360
14,728
15,116
15, 520
16,948
4.16
4.17
4.20
4.23
4.27
4.31
4.35
4.39
4.44
4.48
4.63
4.57
4.62
41.29
82.58
165.16
330.32
825.80
1,651.60
16,516
54.75 — .
5.06
5.13
5.20
6.26
6.33
5.40
5.49
5.68
6.67
5.81
5.99
6.32
7.12
» Month, day, and year on which issues of Oct. 1, 1966, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on extended maturity value in eflect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to extended maturity date is 4.05 percent.
210
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 45
B O N D S BEARING ISSUE D A T E S F R O M D E C E M B E R 1, 1956. T H R O U G H JANUARY 1, 1957
$18.75 $37.50
25.00 50.00
Issueprice
Denomination..
$75.00 $150.00 $375.00
100.00 200.00 500.00
$750.00
1,000.00
(1) Redemption values during each half-year period
(values increase on first day of period shown)
Period after original maturity (beginning 9 years
8 months after issue date)
EXTENDED MATURITY PERIOD
FirstMyear
Mto lyear
1 to IM years
I M t o 2 years
2 to 2M years
2M to 3 years
3 to 3M years--
Approximate investment yield
$7,500
10,000
(2) On the
(3) On
redemption
current
value at
start of the redempextended tion value
from
maturity
beginning
period
of each
to the
half-year
beginning
period to
of each
extended
half-year
maturity 2
period
thereafter
'(8/1/66) $25.97 $61.94 $103,88 $207.76 $519.40 $1,038.80 $10,388
(2/1/67) 26.51 53.02 106.04 212.08 530.20 1,060.40 10,604
(8/1/67) 27.06 54.12 108,24 216.48 641.20 1,082.40 10,824
(2/1/68) 27.62 65.24 110.48 220.96 552.40 1,104.80 11,048
. . (8/1/68) 28.19 66,38 112,76 225, 62 663,80 1,127,60 11,276
(2/1/69) 28.78 67,66 116,12 230,24 675.60 1,161.20 11,612
(8/1/69) 29.38 58,76 117,52 235.04 687.60 1,176.20 11,752
Percent
4.16.
4.16
4.15
4.15
4.25
4.26
5.00
Percent
0.00
4.16
4.15
4.15
4.14
4.15
4.15
Rederaption values and investment yields to extended raaturity on basis of June 1, 1969, revision
3M to 4 years
(2/1/70)
4 to 4M years
(8/1/70)
4M to 6 years(2/1/71)
6 to 6M years
(8/1/71)
6M to 6 years
(2/1/72)
6 to 6M years
(8/1/72)
6M to 7 years
(2/1/73)
7 to 7M years
(8/1/73)
7M to 8 years
(2/1/74)
8 to 8M years
(8/1/74)
8M to 9 years
(2/1/75)
9 to 9M years
(8/1/75)
9M to 10 years
(2/1/76)
EXTENDED MATURITY VALUE (19 years
and 8 months from issue
date)
(8/1/76)
30.00
30.64
31.31
32.02
32.76
33.54
34.35
35.20
36.09
37.01
37.99
39.01
40.08
60.00
61.28
62,62
64.04
65.62
67. 08
68.70
70.40
72.18
74.02
76.98
78.02
80.16
120.00
122. 56
125.24
128. 08
131.04
134.16
137.40
140.80
144.36
148.04
161.96
166.04
160.32
240.00
245.12 .
250.48
256.16
262. 08
268.32
274.80
281.60
288.72
296.08
303.92
312.08
320.64
600. 00
612.80
626. .20
640. 40
655. 20
670.80
687.00
704.00
721. 80
740. 20
759.80
780.20
801.60
1,200. 00 12,000
1,225.60
12,256
1,252.40
12, 624
1,280.80
12,808
13,104
1,310.40
1,341.60
13,416
1,374.00
13,740
14,080
1,408.00
1,443.60
14,436
14,804
1,480.40
15,196
1,519.60
1, 660.40 15,604
16,032
1,603.20
4.16
4.18
4.20
4.23
4,27
4.31
4.36
4.39
4.44
4.48
4.63
4.67
4.62
41.51
83.02-
166.04
332.08
830.20
1,660.40
4.75
16,604
6.06
6.13
5.19
5.26
5.33
5.40
5.48
5.67
6.68
6,82
6.00
6,31
7.14
—
1 Month, day, and year on which issues of Dec: 1, 1956, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to extended maturity date is 4.08 percent.
211
EXHIBITS
TABLE 46
BONDS BEARING ISSUE D A T E S F R O M FEBRUARY 1 T H R O U G H MAY 1, 1957
Issueprice...
Denomination
Period after original maturity (beginning 8 years
11 months after issue date)
$18.75 $37.50
25.00 50.00
$75.00 $150.00 $375.00
100.00 200.00 500.00
$750.00
1,000.00
$7,500
10,000
(1) Redemption values during each half-year period
(values Increase on first day of period shown)
EXTENDED MATURITY PERIOD
First M y e a r . . . . 1 (1/1/66) $25.80 $61.60
Mto lyear
(7/1/66)
26.34 52.68
1 to IM years
(1/1/67)
26.88 53.76
I M t o 2 years
(7/1/67)
27.44 64.88
2 to 2M years
(1/1/68)
28.01 56.02
2M to 3 years
(7/1/68)
28.59 67.18
3 to 3M years
(1/1/69)
29.18 58.36
3M to 4 years.
(7/1/69)
29.79 69.58
1,20 $206,40 $516.00 $1,032.00 $10,320
105.36 210.72 526.80 1,053.60 10,636
107.52 215.04 637.60 1,075.20 10,762
109.76 219.62 648 80 1,097.60 10,976
112.04 224.08 560.20 1,120.40 11,204
114.36 228.72 671.80 1,143.60 11,436
116.72 233.44 683.60 1,167.20 11,672
119.16 238.32 595.80 1,191,60 11,916
Approximate investraent yield
(2) On the
redemption
(3) On
current
value at
start of the redempextended tion value
from
maturity
beginning
period
of each
to the
half-year
beginning
period to
of each
extended
half-year
maturity 2
period
thereafter
Percent
4.16
4,15
4.15
4.15
4.15
4.25
4.26
6.00
0.00
4,19
4.14
4,16
4.15
4.15
4,16
4,15
Redemption values and investraent yields to extended maturity on basis of June 1,1969, revision
4 to 4M years
(1/1/70)
4 M t o 5 years
(7/1/70)
5 to 6M years
(1/1/71)
5M to 6 years
(7/1/71)
6 to 6M years
(1/1/72)
6M to 7 years
(7/1/72)
7 to 7M years
(1/1/73)
7M to 8 years
(7/1/73)
8 to 8M years
(1/1/74)
8M to 9 years
(7/1/74)
9 to 9M years
(1/1/75)
9M to 10 years
(7/1/75)
EXTENDED MATURITY VALUE (18 years
and 11 months from
issue date)
(1/1/76)
30.42
31.07
31.76
32.48
33.24
34.04
34.86
36.73
36.65
37.60
38.61
39.65
60.84
62.14
63.62
64.96
66.48
68.08
69.72
71.46
73.30
75.20
77.22
79.30
121.68
124.28
127.04
129.92
132.96
136.16
139.44
142.92
146.60
150.40
154,44
158. 60
243.36
248.66
254.08
259.84
265.92
272.32
278.88
285.84
293.20
300.80
308.88
317.20
608.40
621.40
635.20
649.60
664.80
680.80
697.20
714.60
733.00
762. 00
772.20
793.00
1,216,80
1,242,80
1,270,40
1,299.20
1,329.60
1,361.60
1,394.40
1,429.20
1,466.00
1,604.00
1,544.40
1,686,00
12,168
12,428
12,704
12,992
13,296
13,616
13,944
14,292
14,660
15,040
15,444
15,860
4.16
4.17
4.20
4,23
4.27
4.31
4.35
4.39
4.44
4.48
4.53
4.67
41.07
82.14
164.28
328.56
821.40
1,642.80
16,428
4.70
5.07
5,14
5.21
5.28
6.36
5.44
5.54
5.65
5.78
5,97
6.27
7.16
—
1 Month, day, and year on which issues of Feb, 1, 1957, enter each period. For subsequent issue months add the
appropriate number of raonths.
2 Based on extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to extended raaturity date is 4,19 percent.
212
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 47
B O N D S BEARING ISSUE D A T E J U N E 1, 1957
Issueprice.
Denomination
$18.75 $37.50
25.00 50.00
$75.00 $150.00 $375.00
100.00 200.00 500.00
$750.00
1,000.00
$7,500
10,000
Approximate inve stment yield
(2) On the
redemption
(3) On
current
value at
start of the redemption value
extended
from
maturity
beginning
period
of each
to the
half-year
beginning
period to
of each
extended
half-year
maturity 2
period
thereafter
(1) Redemption values during each half-year period
(values increase on first day of period shown)
Period after original maturity (beginning 8 years
11 months after issue date)
EXTENDED MATURITY PERIOD
JPcTCCTlt
FirstMyear
Mto lyear
1 to IM years
I M t o 2 years
2 to 2M years
2M to 3 years
3 to 3M years
3M to 4 years
'(6/1/66) $25.91 $51.82 $103.64 $207.28 $518.20 $1,036.40 $10,364
(11/1/66)
26.45 52.90 105,80 211.60 629.00 1,058.00 10,680
(5/1/67)
27.00 54.00 108.00 216.00 540.00 1,080.00 10,800
(11/1/67)
27.66 65.12 110.24 220.48 651.20 1,102.40 11,024
(5/1/68) 28.13 56.26 112.52 225.04 562.60 1,125.20 11,252
(11/1/68)
28.71 67.42 114.84 229.68 574.20 1,148.40 11,484
(6/1/69)
29.31 58.62 117.24 234.48 586.20 1,172.40 11,724
(11/1/69)
29.92 69.84 119.68 239.36 698.40 1,196.80 11,968
PCTCETlt
0.00
4,17
4.16
4.16
4.16
4.15
4.15
4.15
4.15
4.15
4.15
4.15
4.25
4.26
4.26
6.00
Redemption values and investment yields to extended maturity on basis of J u n e 1,1969, revision
4 to 4M years
(5/1/70)
4M to 5 years
(11/1/70)
5 to 5M years
(5/1/71)
5M to 6 years
(11/1/71)
6 to 6M years
(5/1/72)
6M to 7 years
(11/1/72)
7 to 7M years
(5/1/73)
7M to 8 years
(11/1/73)
8 to 8M years
(5/1/74)
8M to 9 years
(11/1/74)
9 to 9M years
(5/1/75)
9M to 10 years...(11/1/76)
EXTENDED
MATURITY VALUE
(18 years and 11 months
from issue date).(5/l/76)
30.55
31.20
31.90
32.62
33.38
34.18
36.01
35.88
36.80
37.76
38,76
39,82
41.25
61.10
62.40
63,80
65.24
66.76
68.36
70,02
71.76
73.60
75.62
77.52
79.64
82.50
122.20
124. 80
127. 60
130.48
133. 52
133. 72
140.04
143. 52
147.20
161.04
155.04
159. 28
244.40
249.60
256.20
260.96
267.04
273.44
280.08
287.04
294.40
302.08
310.08
318. 66
165.00
330.00
611.00
624.00
638.00
652.40
667.60
683.60
700.20
717.60
736.00
755.20
775.20
796.40
825.00
1,222.00
1,248.00
1,276.00
1,304.80
1,335.20
1,367.20
1,400.40
1,435.20
1,472.00
1, 510. 40
1, 550.40
1, 592.80
1,650.0C1
12,220
12,480
12,760
13,048
13,352
13,672
14,004
14,352
14, 720
15,104
15,504
15,928
16,500
> Month, day, and year on which issues of June 1,1957, enter each period.
2 Based on extended maturity value in effect on the begirining date of the half-year period.
3 Yield on purchase price from issue date to extended maturity date is 4.21 percent.
4,16
4.17
4.20
4.23
4.27
4.31
4.35
4,39
4.43
4.48
4.63
4.68
34.70 .-
5.07
6.14
6.21
5.28
5.36
6.44
5.54
5.66
5.79
5.98
6.32
7.18
213
EXHIBITS
TABLE 48
BONDS BEARING ISSUE DATES FROM JULY 1 THROUGH NOVEMBER 1, 1957
Issueprice
Denomination.
$18.75 $37.50
25.00 50.00
$75.00 $150.00 $375.00
100.00 200.00 500.00
$750.00
1,000.00
$7,500
10,000
(1) Redemption values during each half-year period
(values increase on first day of period shown)
Period after original maturity (beginning 8 years
11 months after issue date)
EXTENDED MATURITY PERIOD
Fii-st M y e a r . . ..-'(6/1/66)
M t o l y e a r - - . ....(12/1/66)
1 to IM years -..-..(6/1/67)
I M t o 2 years-....(12/1/67)
2 to 2M years....-(6/1/68)
2M to 3 years-....(12/1/68)
3 to 3M years-.....(6/1/69)
$25.91 $51. 82 $103.64 $207. 28 $518. 20 $1,036.40 $10,364
26.45 52.90 105.80 211.60 629. 00 1,058.00 10,580
27.00 64.00 108.00 216.00 640. 00 1,080.00 10,800
27.66 65.12 110.24 220.48 651. 20 1,102.40 11,024
28.13 66.26 112. 52 225. 04 562. 60 1,125.20 11,252
28.71 57.42 114.84 229. 68 574. 20 1,148.40 11, 484
29,31 68.62 117.24 234.48 586.20 1,172. 40 11,724
Approximate investment yield
(2) On the
(3) On
rederaption
current
value at
start of the redempextended tion value
from
raaturity
beginning
period
tothe
of each
half-year
beginning
period to
of each
extended
half-year
maturity 2
period
thereafter
Percent
0.00
4.17
4.16
4.16
4.16
4.15
4.15
Percent
4.15
4.15
4.15
4.15
4.25
4.26
5.00
Redemption values and investment yields to extended maturity on basis of June 1, 1969, revision
3M to 4 years-....(12/1/69)
4 to 4M y e a r s . .....(6/1/70)
4M to 6 years-....(12/1/70)
6 to 5M years -.....(6/1/71)
5M to 6 years-....(12/1/71)
6 to 6M years -.. — (6/1/72)
6M to 7 y e a r s . ....(12/1/72)
7 to 7M y e a r s . .....(6/1/73)
7M to 8 y e a r s . .,..(12/1/73)
8 to 8M y e a r s . ...-(6/1/74)
8M to 9 y e a r s . ....(12/1/74)
9 to 9M y e a r s . .....(6/1/75)
9M to 10 years. -.(12/1/75)
EXTENDED MATURITY VALUE (18 years
and 11 months from
issue date).......(6/1/76)
29,93
30,57
31.24
31,95
32.69
33.46
34.27
35.11
36.00
36.93
37.90
38.91
39.98
69.86
61.14
62.48
63.90
65.38
66.92
68.54
70.22
72.00
73.86
75.80
77.82
79.96
119. 72
122,28
124.96
127. 80
130.76
133,84
137,08
140,44
144.00
147. 72
151.60
155. 64
159. 92
239. 44
244. 56
249. 92
255.60
261. 62
267.68
274.16
280.88
288,00
295. 44
303.20
311.28
319.84
598.60
611.40
624.80
639.00
653.80
669.20
685,40
702. 20
720.00
738,60
758,00
778.20
799.60
1,197. 20
1, 222.80
1, 249. 60
1, 278. 00
1,307. 60
1,338.40
1,370.80
1,404.40
1,440. 00
1, 477.20
1, 516.00
1, 556.40
1, 699. 20
11,972
12,228
12, 496
12, 780
13, 076
13,384
13,708
14,044
14, 400
14,772
15,160
15, 664
15,992
4.16
4.18
4.20
4.24
4.27
4.31
4.35
4.39
4.43
4.48
4.62
4.57
4.62
41.41
82.82
165.64
331.28
828.20
1,656.40
16,564
3 4.74
5.06
5.12
5.19
5.25
5.32
5.40
6.48
5.58
5.68
5.81
5.99
6.33
7,15
1 Month, day, and year on which issues of July 1, 1957, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to extended maturity date is 4.23 percent.
214
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 49
B O N D S BEARING ISSUE DATE D E C E M B E R 1, 1957
Issueprice.
Denomination
$18.75 $37.50
25.00 50.00
$75.00 $150.00 $375.00
100.00 200.00 500.00
$750.00
1,000.00
$7,500
10,000
(1) Redemption values during each half-year period
(values increase on flrst day of period shown)
Period after original maturity (beginning 8 years
11 months after issue date)
EXTENDED MATURITY PERIOD
Approximate investment yield
(2) On the
redemption
(3) On
value at
current
start of the redempextended tion value
maturity
from
beginning
period
of each
tothe
half-year
beginning
period to
of each
extended
half-year
maturity 2
period
thereafter
First Myear....1(11/1/66) $26.03 $52.06 $104,12 .
^
,
24 $520,60 $1,041.20 $10,412
Mto lyear
(5/1/67)
26.67 53,14 106.28 212.56 531.40 1,062.80 10,628
1 to IM years
(11/1/67)
27.12 54.24 108.48 216.96 642.40 1,084.80 10,848
I M t o 2 years
(5/1/68)
27.68 55.36 110.72 221.44 653.60 1,107.20 11,072
2 to 2M years
(11/1/68)
28.26 56.52 113,04 226.08 565.20 1,130.40 11,304
2M to 3 years
(5/1/69)
28.85 57.70 115.40 230.80 577.00 1,154.00 11,640
3 to 3M years
(11/1/69)
29.44 58.88 117.76 235,52 588.80 1,177.60 11,776
Percent
0.00
4.15
4.14
4.14
4.15
4.16
4.15
4.15
4.15
4.15
4.25
4.26
4.26
6.00
Redemption values and investment yields to extended maturity on basis of June 1,1969, revision
3M to 4 years
(5/1/70)
4 to 4M years
(11/1/70)
4M to 5 years
(5/1/71)
5 to 5M years
(11/1/71)
5M to 6 years
(5/1/72)
6 to 6M years
(11/1/72)
6M to 7 years
(5/1/73)
7 to 7M years
(11/1/73)
7M to 8 years
(5/1/74)
8 to 8M years
(11/1/74)
8M to 9 years
(5/1/75)
9 to 9M years
(11/1/75)
9M to 10 years
(5/1/76)
EXTENDED MATURITY VALUE (18 years
and 11 months from
issuedate)
(11/1/76)
30.06
30.71
31.38
32.09
32.84
33.61
34.43
35.27
36.16
37.09
38.06
39.07
40.14
60.12
61.42
62.76
64.18
66.68
67.22
68.86
70.54
72.32
74.18
76.12
78.14
80.28
120.24
122.84
126.52
128.36
131.36
134.44
137.72
141.08
144.64
148.36
152.24
156.28
160.56
240. 48
245.68
251.04
256.72
262. 72
268.88
275.44
282.16
289.28
296.72
304.48
312.56
321.12
601.20
614.20
627.60
641.80
656.80
672.20
688.60
705.40
723.20
741.80
761.20
781.40
802.80
1,202 40
1,228.40
1,266.20
1,283.60
1,313.60
1,344.40
1,377.20
1,410.80
1,446.40
1,483.60
1,522.40
1,562.80
1,605.60
12,024
12,284
12,552
12,836
13,136
13,444
13,772
14,108
14,464
14,836
15,224
15,628
16,056
41.60
83.20
166.40
332.80
832.00
1,664.00
16,640
1 Month, day, and year on which issues of Dec. 1,1957, enter each period.
2 Based on extended maturity value in effect on the beginning date of the half-year period.
» Yield on purchase price from issue date to extended maturity date is 4.26 percent.
4 16
4.18
4.20
4.23
4.27
4.31
4.35
4.39
4.43
4.48
4.52
4.56
4.61
34.74 ....
6.06
5.12
5.19
5.26
5.32
5.40
5.48
5.68
5.69
5.82
6.02
6.37
7.27
215
EXHIBITS
TABLE 50
B O N D S BEARING ISSUE D A T E S F R O M JANUARY 1 T H R O U G H MAY 1, 1958
$18.75 $37.50
25.00 50.00
Issueprice
Denomination...
$75.00 $150.00 $375.00
100.00 200.00 500.00
$750.00
1,000.00
$7,500
10,000
(1) Redemption values during each half-year period
(values increase on first day of period shown)
Period after original maturity (beginning 8 years
11 months after issue date)
EXTENDED MATURITY PERIOD
FirstMyear
M to 1 year
1 to IM years
I M t o 2 years
2 to 2M years
2M to 3 years
i(12/l/66)
(6/1/67)
(12/1/67)
(6/1/68)
(12/1/68)
(6/1/69)
$26.03 $52.06 $104.12 $208.24 $520.60 $1,041.20 $10,412
26.57 53.14 106.28 212.66 631.40 1,062.80 10,628
27.12 64.24 108.48 216.96 542.40 1,084.80 10,848
27.68 55.36 110.72 221.44 553.60 1,107.20 11,072
28.26 56.62 113.04 226.08 665.20 1,130.40 11,304
28.85 67.70 115.40 230.80 577.00 1,164.00 11,540
Approximate investment yield
(2) On the
(3) On
redemption
current
value at
start of the redempextended tion value
from
maturity
beginning
period
of each
tothe
half-year
beginning
period to
of each
extended
half-year
maturity 2
period
thereafter
Percent
0.00
4.15
4.14
4,14
4.15
4.16
Percent
4.15
4.15
4.15
4.25
4.26
5.00
Rederaption values and investment yields to extended raaturity on basis of June 1,1969, revision
3 to 3M years
(12/1/69)
3M to 4 years
(6/1/70)
4 to 4M years
(12/1/70)
4M to 6 years
(6/1/71)
5 to 5M years
(12/1/71)
5M to 6 years
(6/1/72)
6 to 6M years
(12/1/72)
6Mto7yeai-s
(6/1/73)
7 to 7M years
(12/1/73)
7M to 8 years
(6/1/74)
8 to 8M years
(12/1/74)
8M to 9 years
(6/1/76)
9 to 9M years
(12/1/76)
9M to 10 years
(6/1/76)
EXTENDED MATURITY VALUE (18 years
and 11 months from
issue date)
(12/1/76)
29.45
30.08
30.75
31.43
32.15
32.91
33.70
34.53
35.38
36.28
37.23
38.21
39.24
40.31
58,90
60.16
61.50
62.86
64.30
65.82
67.40
69.06
70.76
72.56
74.46
76.42
78.48
80.62
117.80
120.32
123.00
125. 72
128,60
131.64
134.80
138,12
141. 52
145.12
148. 92
162.84
156. 96
161.24
235. 60
240.64
246. 00
251. 44
257.20
263. 28
269. 60
276.24
283.04
290.24
297. 84
305.68
313. 92
322.48
589. 00
601. 60
615. 00
628. 60
643. 00
658.20
674. 00
690. 60
707. 60
725. 60
744. 60
764. 20
784.80
806.20
1,178.00
1,203.20
1,230. 00
1,257.20
1,286. 00
1,316.40
1,348. 00
1,381.20
1,416.20
1,461.20
1, 489. 20
1, 628.40
1,569.60
1, 612. 40
11,780
12,032
12,300
12, 572
12,860
13,164
13,480
13,812
14,152
14,512
14,892
15, 284
15,696
16,124
41.78
83.56
167.12
334.24
835.60
1.671.20
16.712
4.16
4.17
4.21
4.23
4.27
4.31
4.35
4.39
4.43
4.48
4.52
4.57
4.61
4.66
5.06
5.12
6.17
5.24
5.31
5.37
5.45
5.52
5.62
5.73
5.85
6.04
6.37
7.29
3 4.79 ....
1 Month, day, and year on which issues of Jan. 1, 1958, enter each period. For subsequent issue months add the
appropriate nuraber of months.
2 Based on extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to extended maturity date is 4.28 percent.
216
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 51
B O N D S BEARING ISSUE DATE J U N E 1. 1958
Issueprice
Denomination
$18.75 $37.50
25.00 50.00
$75.00 $150.00 $375.00
100.00 200.00 500.00
$750.00
1,000.00
$7,500
10,000
(1) Redemption values during each half-year period
(values increase on flrst day of period shown)
Period after original maturity (beginning 8 years
11 months after issue date)
EXTENDED MATURITY PERIOD
Approximate investment yield
(2) On the
redemption
(3) On
current
value at
start o f t h e redemption value
extended
from
maturity
beginning
period
of each
to the
half-year
beginning
period to
of each
extended
half-year
maturity 2
period
thereafter
F i r s t M y e a r . . . . ! (5/1/67) $26.14 $52.28 $104.56 $209.12 $522.80 $1,045.60 $10,456
Mto lyear
(11/1/67) 26.68 53.36 106.72 213.44 633.60 1,067.20 10,672
1 to IM years
(5/1/68) 27.24 54.48 108.% 217.92 544.80 1,089.60 10,896
I M t o 2 years
(11/1/68) 27.80 55.60 111.20 222.40 656.00 1,112.00 11,120
2 to 2M years
(5/1/69) 28.38 56.76 113.62 227.04 667.60 1,136.20 11,352
28.97 57.94 115,88 231.76 679.40 1,168.80 11,688
2M to 3 years
(11/1/69)
Percent
0.00
4.13
4.16
4.15
4.15
4.16
Percent
4.15
4.15
4.25
4.26
4.26
6.00
Redemption values and investment yields to extended maturity on basis of June 1,1969, revision
3 to 3M years.....(5/1/70)
3M to 4 years
(11/1/70)
4 to 4M years
(6/1/71)
4M to 6 years
(11/1/71)
5 to 5M years
(5/1/72)
5M to 6 years
(11/1/72)
6 to 6M years
(5/1/73)
6M to 7 years
(11/1/73)
7 to 7M years
(5/1/74)
7M to 8 years
(11/1/74)
8 to 8M years
(5/1/75)
8M to 9 years
(11/1/75)
9 to 9M years
(5/1/76)
9M to 10 years...(11/1/76)
EXTENDED MATURITY VALUE (18 years
and 11 months from
issue date)
(5/1/77)
29.58
30.21
30.88
31. 67
32.29
33.05
33.84
34.66
35.63
36.43
37.37
38.35
39.38
40.47
59.16
60.42
61.76
63,14
64.68
66.10
67.68
69.32
71.06
72.86
74.74
76.70
78.76
80.94
118.32
120.84
123.62
126.28
129.16
132.20
135.36
138.64
142.12
145.72
149.48
153.40
157. 52
161.88
236.64
241.68
247.04
252. 56
268.32
264.40
270.72
277.28
284. 24
291.44
298.96
306.80
315.04
323.76
591.60
604,20
617.60
631.40
645.80
661.00
676.80
693.20
710.60
728.60
747.40
767.00
787.60
809.40
1,183.20
1,208.40
1,235. 20
1,262,80
1,291.60
1,322.00
1,353.60
1,386.40
1,421.20
1,457.20
1,494.80
1,534.00
1, 575. 20
1,618.80
11,832
12,084
12,352
12,628
12,916
13,220
13,536
13,864
14, 212
14, 672
14,948
15,340
15,752
16,188
41.96
83.92
167.84
335.68
839.20'
1,678.40
16,784
» Month, day, and year on which issues of J u n e 1,1958, enter each period.
2 Based on extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to extended maturity date is 4.30 percent.
4.16
4.18
4.21
4.24
4.27
4.31
4.35
4.39
4.43
4.48
4.62
4.56
4.61
4.65
34.79 ....
5.06
5.12
5.18
5.24
6.31
5.38
5.45
5.54
5.62
5.73
5.88
6.09
6.45
7.36
217
EXHIBITS
TABLE 52
BONDS BEARING ISSUE DATES FBOM JULY 1 THROUGH NOVEMBER 1. 1958
Issue price
Denomination.
$18.75 $37.50
25.00 50.00
$75.00 $150.00 $375.00
100.00 200.00 500.00
$750.00
1,000.00
$7,500
10,000
(1) Redemption values during each half-year period
(values increase < flrst day of period shown)
on
Period after original maturity (beginning 8 years
11 months after issue
date)
EXTENDED MATURITY PERIOD
F i r s t M y e a r . . - ' (6/1/67) $26.14 $52.28 $104. 56 $209.12 $522.80 $1,045.60 $10,456
26.68 53.36 106.72 213.44 533.60 1, 067. 20 10,672
M t o l y e a r . . . —(12/1/67)
27.24 64.48 108.96 217.92 544.80 1,089.60 10,896
1 to IM years......(6/1/68)
27.80 55.60 111. 20 222.40 556.00 1,112.00 11,120
I M t o 2 years.....(12/1/68)
28,38 66.76 113. 52 227.04 567. 60 1,135.20 11,352
2 to 2M years.....-(6/1/69)
Approximate investment yield
(2) On the
(3) On
redemption
current
value at
start of the redempextended tion value
from
maturity
beginning
period
of each
tothe
beginning
half-year
period to
of each
extended
half-year
maturity 2
period
thereafter
Percent
0.00
4.13
4.16
4.15
4.16
Percent
4,15
4.15
4.25
4.26
5.00
Redemption values and investment yields to extended maturity on basis of June 1,1969, revision
2M to 3 years...--(12/1/69)
3 to 3M years-.. — (6/1/70)
3M to 4 years...-.(12/1/70)
4 to 4M years-.....(6/1/71)
4M to 5 years-....(12/1/71)
5 to 5M years......(6/1/72)
5M to 6 years.....(12/1/72)
6 to 6M years... . - ( 6 / 1 / 7 3 )
6M to 7 years.....(12/1/73)
7 to 7M years... . - ( 6 / 1 / 7 4 )
7M to 8 years.....(12/1/74)
8 to 8M years......(6/1/76)
8M to 9 years.....(12/1/75)
9 to 9M years......(6/1/76)
9M to 10 years.,..(12/1/76)
EXTENDED MATURITY VALUE (18 years
and 11 months from
issue d a t e ) . . ..-.(6/1/77)
28.98
29.60
30.24
30.92
31.63
32.36
33.13
33.94
34.77
35.64
36.65
37.61
38.60
39.54
40.63
57.96
59.20
60.48
61.84
63.26
64.72
66.26
67.88
69.54
71.28
73.10
75.02
77.00
79.08
81.26
115.92
118.40
120.96
123.68
126. 52
129.44
132. 62
135. 76
139.08
142.56
146.20
150.04
154.00
158.16
162. 52
231.84
236. 80
241.92
247.36
253.04
258:88
266.04
271. 52
278.16
285.12
292. 40
300.08
308.00
316.32
325.04
679,60
592,00
604,80
618,40
632.60
647.20
662,60
678.80
695.40
712.80
731.00
760,20
770,00
790.80
812.60
1,159. 20
1,184,00
1,209.60
1,236,80
1,265.20
1, 294. 40
1,325.20
1,357,60
1,390.80
1,425,60
1, 462, 00
1, 600, 40
1, 540. 00
1, 681. 60
1,625.20
11,592
11,840
12,096
12,368
12,652
12,944
13,252
13, 576
13,908
14,256
14,620
1.5,004
15,400
16,816
16,252
4.17
4.19
4.21
4.24
4.28
4.32
4.36
4.40
4.44
4.48
4.62
4.57
4.61
4.65
4.70
42.13
84.26
168.52
337.04
842.60
1,685.20
16,852
3 4.83
5.05
5.11
5.17
5.22
5.28
5.35
5.41
5.48
6.66
5.65
6.76
5.89
6.10
6.45
7,38
» Month, day, and year on which issues of July 1, 1958, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to extended maturity date is 4.33 percent.
218
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 53
BONDS BEARING ISSUE DATE DECEMBER 1, 1958
Issueprice.
Denomination..
$18.75 $37.50
25.00 50.00
$75.00 $150.00 $375.00
100.00 200.00 500.00
$750.00
1,000.00
$7,500
10,000
(1) Redemption values during each half-year period
(values increase on first day of period shown)
Period after original maturity (beginning 8 years
11 months after issue date)
EXTENDED MATURITY PERIOD
Approximate investment yield
(2) On the
(3) On
redemption
current
value at
start of the redemption value
extended
from
maturity
beginning
period
tothe
of each
half-year
beginning
period to
of each
extended
half-year
maturity 2
period
thereafter
Fii-st M y e a r . . . ' (11/1/67) $26.26 $52. 52 ' $105.04 $210.08 $525. 20 $1,050.40 $10,604
-(5/1/68)
M t o 1 year
26.80 53.60 107.20 214.40 636.00 1,072.00 10,720
1 to M y e a r s . . - ..-(11/1/68)
27.36 54.72 109.44 218.88 647.20 1,094.40 10,944
I M t o 2 y e a r s - - .- ( 5 / 1 / 6 9 )
27.93 56.86 111.72 223.44 658.60 1,117.20 11,172
2 to 2M y e a r s - - . .(11/1/69)
28.51 67.02 114.04 228.08 570. 20 1,140.40 11,404
Percent
4.15
4.25
4.26
4.26
5.00
Percent
0.00
4.11
4.15
4.15
4.15
Redeniption values and investment yields to extended maturity on basis of June 1, 1969, revision
2M to 3 y e a r s - . ..-(5/1/70)
3 to 3M y e a r s . . ..-(11/1/70)
3 M t o 4 y e a r s - . ...:(5/1/71)
4 to 4M y e a r s . . ..-(11/1/71)
4M to 5 y e a r s . . .— (5/1/72)
6 to 5M y e a r s . . ..-(11/1/72)
6M to 6 y e a r s . - .— (5/1/73)
6 to 6M y e a r s - - . -(11/1/73)
6M to 7 y e a r s - - .— (5/1/74)
7 to 7M years. - .,.(11/1/74)
7M to 8 y e a r s - - .- ( 5 / 1 / 7 5 )
8 to 8M y e a r s - - . -(11/1/75)
8 M t o 9 y e a i - s - . .- ( 5 / 1 / 7 6 )
9 to 9M y e a r s - - . -(11/1/76)
9M to 10 y e a r s - . -(5/1/77) •
EXTENDED MATURITY VALUE (18 years
and 11 months from
issue date)
.-(11/1/77)
29.11
29.73
30.38
31.06
31.77
32.61
33.28
34.08
34.92
35.80
36.71
37.67
38.66
39.71
40.78
58.22
69.46
60,76
62,12
63.54
65,02
66.66
68.16
69.84
71.60
73.42
75.34
77.32
79.42
81.58
116.44
118.92
121. 52
124.24
127. 08
130.04
133.12
136.32
139.68
143.20
146.84
150,68
154, 64
168.84
163.12
232.88
237.84
243.04
248.48
254.16
260.08
266.24
272. 64
279. 36
286.40
293.68
301.36
309.28
317.68
323. 21
582.20
594. 60
607. 60
621. 20
635.40
650. 20
665.60
681.60
698.40
716. 00
734. 20
753.40
773. 20
794. 20
815. 60
1,164.40
1,189.20
1,215.20
1,242.40
1, 270.80
1,300.40
1,331.20
1,363,20
1,396,80
1,432.00
1,468.40
1,606.80
1,646.40
1,588.40
1,631. 20
,11,644
11,892
12,152
12,424
12,708
13,004
13,312
13,632
13,968
14,320
14,684
15,068
15,464
15,884
16,312
4.16
4.18
4.21
4.24
4.28
4.32
. 4.35
4.39
4.43
4.48
4.52 .
4.56
4.60
4.65
4.69
42.32
84:64
169.28
338.56
846.40
1,692.89
16,928
3 4.83 .
1 Month, day, and year on which issues of Dec. 1, 1968, enter each period.
2 Based on extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to exterided maturity date is 4.35 percent.
.
5.05
5.11
6.17
5.22
5.28
6.34
5.41
5.49
5.57
5.66
5.77
5.91
6.12
6.47
7.55
219
EXHIBITS
TABLE 54
BONDS BEARING ISSUE DATES FROM JANUARY 1 THROUGH MAY 1, 1959
Issueprice
Denomination
$18.75 $37.50
25.00 50.00
$75.00 $150.00 $375.00
100.00 200.00 500.00
$750.00
1,000.00
$7,500
10,000
(1) Redemption values during each half-year period
(values increase on first day of period shown)
Period after original maturity (beginmng 8 years
n months after issue
date)
EXTENDED MATURITY PERIOD
First M year.. -.'(12/1/67)
....(6/1/68)
M to 1 year
1 to IM years-- ..(12/1/68)
IM to 2 years.....-(6/1/69)
$26.26 $52. 52 $105.04 $210,08 $525. 20 $1,050. 40 $10,504
26,80 53.60 107.20 214.40 536.00 1,072.00 10,720
27.36 54.72 109.44 218,88 547.20 1,094.40 10,944
27,93 55.86 111.72 223.44 558.60 1,117. 20 11,172
Approximate investment yield
(2) On the
redemption
(3) On
current
value at
start of the redempextended tion value
from
maturity
beginning
period
tothe
of each
half-year
beginning
period to
of each
extended
half-year
maturity 2
period
thereafter
Percent
0.00
4.11
4.15
4.15
Percent
4.15
4.25
4.26
5.00
Redemption values and investment yields, to extended maturity on basis of J u n e 1, 1969, revision
2 t o 2 M y e a i - s . . --(12/1/69)
2Mto3yeai'S-. ---(6/1/70)
3to3Myeai-S-. ..(12/1/70)
3M t o 4 yeare-. ...(6/1/71)
4 to 4M years-. ..(12/1/71)
4M to 5 years-. ...(6/1/72)
6 to 5M years-. ..(12/1/72)
5Mto 6 years.. ...(6/1/73)
6 to 6M years.. ..(12/1/73)
6 M t o 7 y e a i - s . . ...(6/1/74)
7 to 7M years.. -.(12/1/74)
7M to 8 years.. ---(6/1/75)
8 to 8M years..- ( 1 2 / 1 / 7 5 )
8M to 9 years-..--.(6/1/76)
9 to 9M years-..--(12/1/76)
9M to 10 years- -.-(6/1/77)
E X T E N D E D MATURITY VALUE (18 years
and 11 months from
issue date)—.—(12/1/77)
28.52
29.12
29. 76
30.42
31.11
31.83
32.69
33,37
34.18
35.03
35.92
36,84.
37,81
38.81
39.86
40,95
57.04
58.24
59.62
60.84
62.22
63.66
65.18
66.74
68.36
70.06
71.84
73.68
75,62
77,62
79,72
81.90
114.08
116.48
119.04
121,68
124.44
127,32
130,36
133.48
136.72
140.12
143,68
147. 36
151.24
155. 24
159.44
163.80
228.16 570. 40 1,140.80
232.96 582.40 1,164.80
238.08 • 595. 20 1,190.40
243.36 608.40 1,216.80
248.88 622. 20 1,244.40
254.64 636.60 1,273.20
260.72 • 651,80 1,303.60
266, 96 667, 40 1,334,80
273.44 683.60 1,367,20
280.24 700,60 1,401.20
287.36 718.40 1,436.80
294, 72 736.80 1,473.60
302,48 756.20 1,612.40
310.48 776,20 1,652.40
318.88 797,20 1,594.40
327.60 819.00 1,638.00
11,408
11,648
11,904
12,168
12,444
12, 732
13,036
13,348
13,672
14,012
14,368
14,736
15,124
15, 624
15,944
16,380
4.17
4.18
4.21
4.25
4.28
4.32
4,37
4.40
4.44
.4,48
4,63
4.57
4,61
4.65
4.69
4.73
42.50
85.00
170.00
340.00
1,700.00
17,000
5.05
5,11
5.16
5,21
5.27
5.33
5,38
5,45
6,62
5.60
5,69
5.80
5,93
6.15
6.52
7.57
3 4.87
850.00
1 Month, day, and year ori which issues of Jan. 1, 1959, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to extended raaturity date is 4.37 percent.
397-702 O—71
16
220
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 55
BONDS BEARING ISSUE DATES FROM JUNE 1 THROUGH AUGUST 1. 1959
Issueprice
Denomination.
$18.75 $37.50
25.00 50.00
$75.00 $150.00 $375.00
100.00 200.00 500.00
$750.00
1,000.00
$7,500
10,000
(1) Redemption values during each half-year period
(values increase on first day of period shown)
Period after original raaturity (beginning 7 years
9
raonths after issue •
date)
EXTENDED MATURITY PERIOD
First M y e a r . . ....'(3/1/67)
M t o l y e a r - - ...-..(9/l,'67)
1 to IM years.. ....(3/1/68)
IM to 2 years.. --.(9/1/68)
2 to 2M years.- -.-.(3/1/69)
2M to 3 years-. .--.(9/1/69)
$25.13 $60.26 $100.52 $201. 04 $502. 60 $1,005. 20 $10,062
25.65 61.30 102. 60 205, 20 613. 00 1,026.00 10,260
26.18 62.36 104.72 209.44 523.60 1,047. 20 10,472
26.73 53.46 106.92 213.84 534. 60 1,069.20 10,692
27.28 64.66 109.12 218.24 545. 60 1, 091. 20 10,912
27.85 55.70 111.40 222, 80 557, 00 1,114. 00 11,140
Approximate investment yield
(2) On the
(3) On
redemption
current
value at
start of the redemption value
extended
from
maturity
beginning
period
of each
tothe
beginning
half-year
period to
of each
extended
half-year
maturity 2
period
thereafter
Percent
0.00
4.14
4.14
4.16
4.15
4.16
Percent
4.15
4,15
4.25
4.25
4.26
6.00
Redemption values and investment yields to extended maturity on basis of June5 1, 1969, revision
3 to 3M years....-.(3/1/70)
3M to 4 years-.....(9/1/70)
4 to 4M years-.....(3/1/71)
4M to 5 years-.....(9/1/71)
5 to 5M years......(3/1/72)
5M to 6 years......(9/1/72)
6to6Myeai-s.. ....(3/1/73)
6M to 7 years......(9/1/73)
7 to 7M years......(3/1/74)
7M to 8 years......(9/1/74)
8 to 8M years......(3/1/75)
8M to 9 years......(9/1/75)
9 to 9M years......(3/1/76)
9M to 10 years.....(9/1/76)
EXTENDED MATURITY VALUE (17 years
and 9 months from issue
date)
....(3/1/77)
28.44
29.05
29.68
30,35
31.04.
31,77
32,63
33,32
34.15
35.03
35.93
36.87
37.87
38.90
66.88
58.10
69.36
60.70
62.08
63.64
65.06
66,64
68.30
70.06
71.86
73.74
76.74
77.80
113.76
116.20
118.72
121,40
124,16
127, 08
130.12
133.28
136.60
140.12
143.72
147.48
151,48
165.60
227. 52 568,80
232,40 581,00
237.44 693. 60
242.80 607. 00
248.32 620.80
254.16 635.40 .
260. 24 650.60
266. 56 666.40
273. 20 683.00
280.24 700,60
287.44 718,60
294.96 737.40
302.96 .757.40
311, 20 778. 00
40.34
80.68
161.36
322.72
806.80
1,137.60
1,162. 00
1,187.20
1,214.00
1,241. 60
1,270.80
1,301.20
1,332.80
1,366.00
1,401.20
1,437.20
1,474.80
1,614,80
1,556, 00
11,376
11,620
11,872
12,140
12,416
12,708
13,012
13,328
13,660
14,012
14,372
14,748
16,148
15,660
4.17
4.18
4.20
4.24
4.27
4.31
4.35
4.39
4,43
4.48
4.52
4.66
4,61
4.65
1,613.60
16,136
5.06
5.12
5.18
6.24
5.31
5.38
6.45
6.54
6.63
5.73
5.87
6.09
6.42
7.40
3 4.79
1 Month, day, and year on which issues of June 1, 1959, enter each period. For subsequent issue months add
the appropriate number of months.
2 Based on extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to extended maturity date is 4.36 percent.
221
EXHIBITS
TABLE 56
BONDS BEARING ISSUE DATES FROM SEPTEMBER 1 THROUGH NOVEMBER 1, 1959
Issueprice
Denomination
$18.75 $37.50
25.00 50.00
$75.00 $150.00 $375.00
100.00 200.00 500.00
$750.00
1,000.00
$7,500
10,000
(1) Redemption values during each half-year period
(values increase on flrst day of period shown)
Period after original maturity (beginning 7 years
9 months after issue date)
EXTENDED MATURITY PERIOD
F i r s t M y e a r . . . ..1(6/1/67)
Mto lyear
-(12/1/67)
1 to IM y e a r s . . ....(6/1/68)
I M t o 2 y e a r s . . . -(12/1/68)
2 to 2M y e a r s . . .- ( 6 / 1 / 6 9 )
$25.13 $50.26 $100.52 $201.04 $502.60 $1,005.20 $10,952
25.65 51.30 102.60 205.20 513.00 1,026.00 10,260
26.18 52.36 104.72 209.44 523.60 1,047.20 10,472
26.73 63.46 106.92 213.84 534.60 1,069.20 10,692
27.28 54.56 109.12 218. 24 .'>45.60 1,091. 20 10,912
Approximate investment yield
(2) On the
(3) On
redemption
current
value at
start of the redempextended tion value
from
maturity
beginning
period
of each
tothe
beginning half-year
period to
of each
extended
half-year
maturity 2
period
thereafter
Percent
0.00
4.14
4.14
4.16
4.15
Percent
4.15
4.15
4.25
4.25
6.00
Redemption values and investment yields to extended maturity on basis of June 1, 1969, revision
2M to 3 y e a r s . . . -(12/1/69)
3 t o 3 M y e a r s . . - .-(6/1/70)
3 A t o 4 y e a r s . . . .(12/1/70)
4 to 4M y e a r s . . .- ( 6 / 1 / 7 1 )
4 M t o 5 y e a r s . . . .(12/1/71)
5 to 5M y e a r s . . .- ( 6 / 1 / 7 2 )
5 M t o 6 y e a r s . . . .(12/1/72)
6 t o 6M y e a r s . . . -.(6/1/73)
6 M t o 7 y e a r s . . . .(12/1/73)
7 t o 7 M y e a r s . . .-(6/1/74)
7 M t o 8 y e a r s . . . .(12/1/74)
8 to8M y e a r s . . . ..(6/1/75)
8 M t o 9 y e a r s . . . -(12/1/76)
9 to9M y e a r s . . . ..(6/1/76)
9M to 10 y e a r s . . -(12/1/76)
EXTENDED MATURITY VALUE (17 years
and 9 months from issue
date)
-(6/1/77)
27.86 55.72 111.44
28.46 56.92 113.84
29.08 68.16 116.32
29.73 69 46 118.92
30.40 60.80 121.60
31.11 62.22 124.44
31.85 63.70 127.40
32.62 65.24 130.48
33.42\ 66.84 133.68
34.26 \ 6 8 . 5 2 137.04
35.15 70-30 140.60
36.06 72>12 144.24
37.01 74.02N\148.04
38.01 76.02 152.04
39.05 78; 10 156.20
222.88
227. 68
232.64
237.84
243. 20
248.88
254.80
260.96
267.36
274.08
281.20
288.48
296.08
304.08
312.40
557. 20
669.20
581.60
594.60
608.00
622.20
637.00
652.40
668.40
685.20
703.00
721.20
740.20
760.20
781.00
1.114.40
1,138.40
1,163.20
1,189.20
1,216.00
1,244.40
1,274.00
1,304.80
1,336.80
1.370.40
1,406.00
1,442.40
1,480. 40
1,520.40
1, 562.00
11,144
11,384
11,632
11,892
12.160
12,444
12,740
13,048
13,368
13,704
14,060
14,424
14,804
15,204
15,620
4.17
4.19
4.21
4.25
4.28
4.32
4.36
4.40
4.43
4.48
4.52
4.67
4.61
4.65
4.69
162.00
324.00
810.00
1,620.00
16,200
3 4.83
40.50
81.00
5.05
5.10
5.16
5.22
5.28
5.35
5.41
5.48
5.67
5.66
5.75
5.89
6.10
6.45
7.43
» Month, day, and year on which Issues of Sept. 1,1959, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on extended maturity value in effect on the beginning date of the half-year period,
3 Yield on purchase price from issue date to extended maturity date is 4,39 percent.
222
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 57
B O N D S BEARING ISSUE D A T E S F R O M D E C E M B E R 1, 1959, T H R O U G H FEBRUARY 1, 1960
$18.75 $37.50
25.00 50.00
Issueprice
Denomination
$75.00 $150.00 $375.00
100.00 200.00 500.00
$750.00
1,000.00
$7,500
10,000
(1) Redemption values during each half-year period
(values increase on first day of period shown)
Period after original maturity (beginning 7 years
9 months after issue •
date)
EXTENDED MATURITY PERIOD
FirstMyear
Mto lyear
1 to IM years
I M t o 2 years
2 to 2M years
' (9/1/67) $25.18 $50.36 $100.72 $201.44 $603.60 $1,007.20 $10,072
(3/1/68) 25.70 61.40 102.80 205.60 514.00 1,028.00 10,280
(9/1/68) 26.24 52.48 104.96 209.92 524.80 1,049.60 10.496
(3/1/69) 26.78 63.66 107.12 214.24 635.60 1,071.20 10,712
(9/1/69) 27.34 54.68 109.36 218.72 546.80 1,093.60 10.936
Approximate investment yield
(2) On the
redemption
(3) On
current
value at
start of the redempextended tion value
from
maturity
beginning
period
tothe
of each
half-year
beginning
of each
period to
half-year
extended
maturity 2
period
thereafter
Percent
0.00
4.13
4.17
4.15
4.16
Percent
4.15
4.25
4.26
4.26
5.00
Redemption values and investment yields to extended maturity on basis of J u n e 1,1969, revision
2M to 3 y e a r s . . . - ( 3 / 1 / 7 0 )
3 to 3M years
(9/1/70)
3M to 4 years
(3/1/71)
4 to 4M years
(9/1/71)
4M to 5 years
(3/1/72)
6 to 6M years
(9/1/72)
5M to 6 years
(3/1/73)
6 to 6M years
(9/1/73)
6M to 7 years
(3/1/74)
7 to 7M years
(9/1/74)
7M to 8 years
(3/1/75)
8 to 8M years
(9/1/75)
8M to 9 years
(3/1/76)
9 to 9M years
(9/1/76)
OM to 10 years
(3/1/77)
EXTENDED MATURITY VALUE (17
years and 9 months
from issue date).(9/l/77)
27.91
28.61
29.13
29.79
30.46
31.17
31.91
32.68
33.49
34.33
35.20
36.12
37.08
38.07
39.12
65.82
57.02
58,26
69.58
60.92
62.34
63.82
65,36
66.98
68.66
70.40
72.24
74.16
76.14
78.24
111.64
114.04
116. 62
119.16
121.84
124.68
127.64
130.72
133.96
137.32
140.80
144.48
148.32
152.28
156.48
223.28
228.08
233.04
238.32
243.68
249.36
255.28
261.44
267.92
274. 64
281.60
288.96
296.64
304.66
312.96
658.20
570.20
682. 60
596.80
609.20
623.40
638,20
663.60
669.80
686.60
704.00
722.40
741.60
761.40
782.40
1,116.40
1,140.40
1,165.20
1,191. 60
1,218 40
1,246.80
1,276.40
1,307.20
1,339.60
1,373.20
1,408.00
1,444.80
1,483.20
1.622.80
1,664.80
11.164
11,404
11,652
11,916
12,184
12,468
12,764
13.072
13,396
13.732
14,080
14,448
14.832
15,228
15,648
40.59
81.18
162.36
324.72
811.80
1.623.60
16.236
4.16
4.18
4.21
4.25
4.28
4.31
4.35
4.39
4.44
4.48
4.62
4.56
4.61
4.65
4.69
5.06
5.11
6.17
5.22
5.29
5.35
5.42
5.49
5.57
5.66
5.78
5.92
6.12
6.51
7.52
3 4.83 .--.
1 Month, day, and year on which issues of Dec. 1, 1959, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to extended maturity date is 4.40 percent.
223
EXHIBITS
TABLE 58
B O N D S BEARING ISSUE D A T E S F R O M M A R C H 1 T H R O U G H MAY 1. 1960
Issueprice
Denomination
$18.75 $37.50
25.00 50.00
$75.00 $150.00 $375.00
100.00 200.00 500.00
$750.00
1,000.00
$7,500
10,000
(1) Redemption values during each half-year period
(values increase on flrst day of period shown)
Period after original maturity (beginning 7 years
9 months after issue date)
EXTENDED MATURITY PERIOD
F i r s t M y e a r - . . . 1(12/1/67)
M to 1 year
(6/1/68)
1 to IM years
(12/1/68)
I M t o 2 years
(6/1/69)
Approximate investment yield
(2) On the
(3) On
redemption
current
value at
start of the redemption value
extended
from
maturity
beginning
period
of each
tothe
half-year
beginning
period to
of each
extended
half-year
maturity 2
period
thereafter
$26.18 $60.36 $100.72 $201.44 $503.60 $1,007.20 $10,072
25.70 51.40 102.80 205.60 514.00 1,028.00 10,280
26.24 52.48 104.96 209. 92 624.80 1,049.60 10,496
26.78 63,66 107.12 214.24 536.60 1,071.20 10,712
Percent
0.00
4.13
4.17
4.15
Percent
24,15
4,25
4.26
6.00
Redemption values and investraent yields to extended raaturity on basis of June 1,1969, revision
2 to 2M y e a r s - - . .(12/1/69)
2M to 3 y e a r s . - . ..(6/1/70)
3 to 3M y e a r s - - . -(12/1/70)
3M to 4 y e a r s - - .- ( 6 / 1 / 7 1 )
4 to 4M y e a r s . . . -(12/1/71)
4M to 5 y e a r s - - .- ( 6 / 1 / 7 2 )
5 to 5M y e a r s . . . -(12/1/72)
5M to 6 y e a r s . . . -(6/1/73)
6 t o 6 M y e a r s . . .•-(12/1/73)
6M to 7 y e a r s . . . -(6/1/74)
7 to 7M y e a r s . . . -(12/1/74)
7M to 8 y e a r s . . . -(6/1/76)
8 to 8M y e a r s . . . -(12/1/75)
8M to 9 y e a r s . . . -(6/1/76)
9 to 9M y e a r s . . . .(12/1/76)
9M to 10 y e a r s . . -(6/1/77)
EXTENDED MATURITY VALUE (17 years
and 9 months from
issue date)
-(12/1/77)
27.35 54.70
27.92 55.84
28.53 57.06
29.17 58.34
29.84 59.68
30.52 61.04
31.24 62,48
31.99 63.98
32.78 65.66
33.69 67.18
34.44 , 68,88
35.32 70.64
36.26 72,62
37.21 74.42
38.22 76.44
39.27 78.64
40.75
81.50
109.40
111.68
114,12
116,68
119.36
122,08
124. 96
127.96
131,12
134,36
137. 76
141,28
146.04
148.84
162.88
157.08
218.80
223.36
228.24
233,36
238,72
244.16
249.92
256.92
262.24
268.72
275.62
282.66
290.08
297.68
305.76
314.16
547.00
568.40
570.60
683.40
696.80
610.40
624,80
639,80
656.60
671.80
688.80
706.40
725.20
744.20
764.40
785.40
1,094.00
1,116.80
1,141.20
1,166,80
1,193,60
1,220.80
1,249.60
1,279,60
1,311.20
1,343,60
1,377.60
1,412.80
1,460.40
1,488,40
1,528.80
1,670.80
10,940
11,168
11,412
11,668
11,936
12,208
12,496
12,796
13,112
13,436
13,776
14,128
14,604
14,884
15,288
15,708
4,18
4.17
4.21
4,25
4,29
4,32
4,36
4.40
4.44
4.48
4.62
4.56
4.61
4,65
4.69
4,73
163.00
326.00
815.00
1,630.00
16,300
14.87 . . . .
5.05
6.11
6.16
6.21
5.26
5.33
5.39
6,45
5.62
6.60
5,69
5.80
6.92
6.15
6,51
7.54
1 Month, day, and year on which issues of Mar. 1, 1960, enter each period. For subsequent issue raonths add the
appropriate number of months.
2 Based on extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to extended maturity date is 4.42 percent.
224
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 59
B O N D S BEARING ISSUE D A T E S F R O M J U N E 1 T H R O U G H AUGUST 1, 1960
$18.75 $37.50
25.00 50.00
Issue price.
Denomination
$75.00 $150.00 $375.00
100.00 200.00 500.00
$750.00
1,000.00
$7,500
10,000
(1) Redemption values during each half-year period
(values increase on first day of period shown)
Period after original maturity (beginning 7 years
9 months after issue date)
EXTENDED MATURITY PERIOD
FirstMyear
Mto lyear
1 to IM years
I M t o 2 years
Approximate investment yield
(2) On the
(3) On
redemption
current
value at
start of the redemption value
extended
from
maturity
beginning
— period
of each
tothe
half-year
beginning
period to
of each
extended
half-year
maturity 2
period
thereafter
'(3/1/68) $25.23 $50.46 $100.92 $201.84 $504.60 $1,009. 20 $10,092
(9/1/68) 25.75 51. 60 103. 00 206. 00 615.00 1,030. 00 10,300
(3/1/69) 26. 29 52. 68 105.16 210. 32 625.80 1,051. 60 10, 516
(9/1/69) 26.83 53,66 107. 32 214.64 536. 60 1,073.20 10, 732
Percent
0.00
4.12
4.16
4.14
Percent
4.25
4.26
4.26
6.00
Redemption values and investment yields to extended maturity on basis of June 1,1969, revision
2 to 2M years-.....(3/1/70)
2M to 3 years-....,(9/1/70)
3 to 3M years-.— (3/1/71)
3M to 4 years......(9/1/71)
4 to 4M years......(3/1/72)
4M to 6 years......(9/1/72)
6 to 5M years......(3/1/73)
6M to 6 years......(9/1/73)
6 to 6M years... — (3/1/74)
6M to 7 years......(9/1/74)
7 to 7M years..— (3/1/75)
7M to 8 years.....-(9/1/75)
8 to 8M years......(3/1/76)
8M to 9 years......(9/1/76)
9 to 9M years......(3/1/77)
9M to 10 years.. — (9/1/77)
EXTENDED MATURITY VALUE (17 years
and 9 months from
issue date) ....(3/1/78)
27.40
27.98
28.59
29.23
29.90
30.58
31.30
32.05
32.83
33.65
34.60
35.39
36.32
37.28
38.28
39.33
54.80
65.96
57.18
58.46
69.80
61.16
62.60
64.10
65.66
67.30
69.00
70.78
72.64
74.56
76.66
78.66
109,60
111,92
114.36
116.92
119, 60
122.32
126.20
128,20
131.32
134.60
138.00
141. 56
145.28
149.12
163.12
157. 32
219. 20
223. 84
228. 72
233.84
239.20
244.64
250.40
256.40
262.64
269.20
276.00
283.12
290. 56
298.24
306.24
314, 64
648.00
659. 60
571.80
584. 60
598.00
611.60
626.00
641.00
656.60
673.00
690.00
707.80
726.40
745. 60
765.60
786. 60
1,096. 00
1,119,20
1,143.60
1,169.20
1,196.00
1,223.20
1,252.00
1,282.00
1,313.20
1,346.00
1,380.00
1,415,60
1.452.80
1,491.20
1, 531,20
1. 673.20
10,960
11,192
11.436
11,692
11,960
12,232
12,620
12.820
13.132
13,460
13.800
14,156
14, .528
14,912
15,312
15,732
4.17
4.18
4.21
4.25
4.29
4.32
4.36
4.40
4.44
4.48
4.52
4.56
4.61
4.65
4.69
4.73
40.83
81.66
163.32
326.64
816.60
1,633.20
16,332
3 4.87
5.05
5,10
6.16
6.21
5.26
6.33
6.39
6.45
6.53
6,60
5.69
6.80
5,94
6.16
6.55
7,63
1 Month, day, and year on which issues of June 1, 1960, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to extended maturity date is 4,43 percent.
225
EXHIBITS
TABLE 60
BONDS BEARING ISSUE DATES FROM SEPTEMBER 1 THROUGH NOVEMBER 1, 1960
Issue price.
Denomination..
$18.75 $37.50
25.00 50.00
$75.00 $150.00 $375.00
100.00 200.00 500.00
$750.00
1,000.00
$7,500
10,000
(1) Redemption values during each half-year period
(values increase on first day of period shown)
i
Period after original maturity (beginning 7 years
9 months after issue •
date) •
EXTENDED MATURITY PERIOD
FirstMyear
..1(6/1/68)
Mto lyear
-(12/1/68)
1 to IM y e a r s . . . -(6/1/69)
$25.23 $50.46 $100,92 $201.84 $504. 60 $1,009. 20 $10,092
25.75 51.60 103,00 206. 00 516.00 1,030.00 10.300
26.29 52.58 105,16 210. 32 625.80 1,061. 60 10, 616
Approximate investment yield
(2) On the
(3) On
redemption
current
value at
start of the redemption value
extended
from
maturity
period
beginning
tothe
of each
half-year
beginning
period to
of each
extended
half-year
maturity 2
period
thereafter
Percent
0.00
4.12
4.16
Percent
4,25
4.26
5.00
Redemption values and investment yields to extended maturity on basis of June 1, 1969, revision
I M t o 2 y e a r s . . . -(12/1/69)
2 to 2M y e a r s . . . ..(6/1/70)
2M to 3 y e a r s . . . .(12/1/70)
3 to 3M y e a r s . . . -(6/1/71)
3M to 4 y e a r s . . . .(12/1/71)
4 to 4M y e a r s . . . -(6/1/72)
4 M t o 5 y e a r s . . . .(12/1/72)
5 to 5M y e a r s . . . ..(6/1/73)
5M to 6 y e a r s . . . -(12/1/73)
6 to 6M y e a r s . . . -(6/1/74)
6M to 7 y e a r s . . . . (12/1/74)
7 to 7M y e a r s . . . ..(6/1/75)
7M to 8 y e a r s . . . .(12/1/75)
8 to 8M y e a r s . . . ..(6/1/76)
8M to 9 y e a r s . . . .(12/1/76)
9 to 9M y e a r s . . . ..(6/1/77)
9M to 10 years...(12/1/77)
EXTENDED MATURITY VALUE (17 years
and 9 months from
issue date)
...(6/1/78)
26.84
27.41
28.01
28.63
29. 28
29.96
30.65
31.38
32.14
32.94
33.76
34.62
35.52
36.46
37.43
38.44
39.50
53.68
64,82
56,02
57.26
68. 56
69.92
61.30
62.76
64.28
65.88
67.62
69.24
71.04
72.92
74.86
76.88
79,00
107.36 214. 72
109.64 219.28
112.04 224.08
114. 62 229.04
117.12 234. 24
119.84 239.68
122.60 245.20
125. 62 • 251,04
128. 56 257,12
131, 76 263. 52
135.04 270. 08
138.48 276.96
142.08 284.16
145.84 291. 68
149.72 299.44
153. 76 307. 52
168.00 316. 00
636.80
648.20
660. 20
672. 60
585. 60
699. 20
613.00
627.60
642.80
658.80
675.20
692.40
710. 40
729. 20
748. 60
768.80
790, 00
1,073. 60
1,096.40
1,120.40
1,145. 20
1,171. 20
1,198.40
1,226.00
1,255. 20
1, 285. 60
1.317. 60
1,350.40
1,384.80
1.420.80
1,458.40.
1.497.20
1, 637, 60
1. 580.00
10, 736
10.964
11,204
11,452
11.712
11,984
12,260
12, 652
12.856
13,176
13,504
13.848
14,208
14.584
14,972
15,376
16,800
4.17
4,19
4.23
4.26
4.30
4,34
4,37
4.41
4,45
4.49
4.53
4.67
4.61
4.66
4.69
4.73
4,77
41.00
82.00
164.00
328.00
820.00
1,640.00
16,400
4.91
6,06
5.10
5.15
5.20
5.25
6.30
5,36
5,42
6,48
5.55
6.63
6,72
6.82
5.95
6.17
6.55
7.69
1 Month, day, and year on which issues of Sept. 1, 1960 enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purcha?«} price from issue date to extended maturity date is 4.46 percent.
226
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 61
BONDS BEARING ISSUE DATES FBOM DECEMBER 1, 1960, THROUGH FEBRUARY 1,1961
Issue price
Denomination.
$18.75 $37.50
25.00 50.00
$75.00 $150.00. $375.00
100.00 200.00 500.00
$750.00
1,000.00
$7,500
10,000
(1) Redemption values during each half-year period
(values iincrease on first day of period shown)
Period after original maturity (beginning 7 years
9 months after issue date)
EXTENDED MATURITY PERIOD
Fii-st M y e a r . . ...'(9/1/68)
M t o 1 year
...(3/1/69)
1 to IM y e a r s . ..-..(9/1/69)
$25. 28 $50. 56 $101.12 $202.24 $505.60 $1,011.20 $10,112
25.80 61.60 103.20 206.40 616.00 1.032.00 10,320
26.34 52.68 105.36 210.72 526.80 1,053.60 10,636
Approximate investment yield
(2) On the
(3) On
redemption
current
value at
start of the redemption value
extended
from
maturity
beginning
period
of each
tothe
beginning
half-year
period to
of each
extended
half-year
maturity 2
period
thereafter
Percent
0.00
4.11
4.15
Percent
4.25
4.26
5.00
Redemption values and investraent yields to extended maturity on basis of June 1,1969, revision
IM to 2 y e a r s . .....(3/1/70)
2 to 2M y e a r s . .....(9/1/70)
2M to 3 years-....-(3/1/71)
3 to 3M years-....-(9/1/71)
3M to 4 years-.,...(3/1/72)
4 to 4M years-.....(9/1/72)
4M to 5 yeai-s......(3/1/73)
5 to 5M years.....-(9/1/73)
5M to 6 years..— (3/1/74)
6 to6M years......(9/1/74)
6M to 7 years......(3/1/75)
7 to 7M years.....-(9/1/76)
7M to 8 years.,. . - ( 3 / 1 / 7 6 )
8 to 8M years.....-(9/1/76)
8M to 9 years-....-(3/1/77)
9 to 9M years-,....(9/1/77)
9M to 10 years..—(3/1/78)
EXTENDED MATURITY VALUE (17 years
and 9 months from
issue date) ....(9/1/78)
26.90
27.47
28,06
28,69
29.34
30.01
30.71
31,44
32,21
33.00
33.83
34.69
35.69
36.62
37.50
38.52
39,69
63.80
54.94
56.12
57.38
68.68
60.02
61.42
62.88
64.42
66,00
67,66
69.38
71.18
73,04
75.00
77.04
79.18
107.60
109,88
112,24
114.76
117.36
120.04
122.84
125,76
128.84
132.00
135.32
138,76
142,36
146,08
150.00
154.08
168.36
216.20
219,76
224.48
229. 52
234.72
240.08
245, 68
251,52.
267.68
264.00
270.64
277. 62
284.72
292.16
300. 00
308.16
316.72
538.00
549.40
561,20
573.80
686.80
600.20
614.20
628.80
644,20
660.00
676.60
693.80
711.80
730.40
750.00
770.40
791.80
1,076.00
1,098.80
1,122.40
1,147.60
1,173.60
1,200.40
1,228.40
1,257.60
1,288.40
1,320.00
1,353.20
1,387.60
1,423.60
1,460.80
1, 600. 00
1, 540.80
1, 683.60
10,760
10,988
11,224
11,476
11,736
12,004
12,284
12, 676
12,884
13,200
13,632
13,876
14,236
14.608
16,000
15,408
15,836
4.18
4.20
4.22
4.26
4.30
4.33
4.37
4.41
4.45
4.49
4.53
4.67
4.61
4.65
4.69
4.73
4.78
41.08
82.16
164.32
328.64
821.60
1,643.20
16,432
3 4.91
5.04
5.09
6.15
5.19
5.25
6.30
5.36
5.42
6.48
5.55
5.63
5.72
5.82
5.97
6.17
6.54
7.63
1 Month, day, and year on which issues of Dec. 1, 1960, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on extended maturity value in effect on the beginning date of the half-year period.
3 Yield on purchase price from issue date to extended maturity date is 4.47 percent.
227
EXHIBITS
TABLE 62
B O N D S BEARING ISSUE D A T E S F R O M M A R C H 1 T H R O U G H MAY 1, 1%1
Issueprice
Denomination
$18.75 $37.50
25.00 50.00
$75.00 $150.00 $375.00
100.00 200.00 500.00
$750.00
1,000.00
$7,500
10,000
(1) Redemption values during each half-year period
(values increase on first day of period shown)
Period after original maturity (beginning 7 years
9 months after issue date)
EXTENDED MATURITY PERIOD
F i r s t M y e a r - - . ' (12/1/68)
Mto lyear
(6/1/69)
$25.28 $50.56 $101.12 $202.24 $506.60 $1,011.20 $10,112
25.80 61.60 103.20 206.40 616.00 1,032.00 10,320
Approximate invest^
ment yield
(2) On the
(3) On
redemption
current
value at
start of the redempextended tion value
from
maturity
beginning
period
of each
tothe
half-year
beginning
period to
of each
extended
half-year
maturity 2
period
thereafter
Percent
0.00
4.11
Percent
4.25
5.00
Rederaption values and investment yields to extended maturity on basis of June 1, 1969, revision
i t o l M y e a r s - . ...(12/1/69)
IM to 2 years - . ....(6/1/70)
2 to 2M y e a r s - . ...(12/1/70)
2M to 3 years--.— (6/1/71)
3 t o 3 M years--...(12/1/71)
3M to 4 y e a r s . . .— (6/1/72)
4 to 4M y e a r s . . ...(12/1/72)
4 M t o 5 y e a r s . . ...-(6/1/73)
5 to 5M y e a r s . . ...(12/1/73)
5 M t o 6 y e a r s . . ....(6/1/74)
6 to 6M y e a r s . . ...(12/1/74)
6 M t o 7 y e a r s . . ....(6/1/75)
7 t o 7 M y e a r s . . ...(12/1/76)
7 M t o 8 y e a r s . . ....(6/1/76)
8 t o 8 M y e a r s . . ...(12/1/76)
8 M t o 9 y e a r s . . ....(6/1/77)
9 t o 9 M y e a r s . . .-(12/1/77)
9M to 10 years.....(6/1/78)
EXTENDED MATURITY VALUE (17 years
and 9 months from
issuedate)
..(12/1/78)
' 26.35
26.91
27.49
28.10
. 28.74
29.39
30.07
30.79
31.53
32.30
33.11
33,94
34,81
35.72
36.66
37.64
38.67
39.74
41.25
62.70
53.82
54.98
56.20
57.48
58.78
60.14
61.68
63.06
64.60
66.22
67.88
69.62
71.44
73.32
75.28
77.34
79. 48 •
106.40
107.64
109.96
112.40
114.96
117.66
120.28
123.16
126.12
129.20
132.44
135.76
139.24
142.88
146.64
150.56
154.68
158.96
210.80
215.28
219. 92
224.80
229.92
235.12
240.56
246.32
252.24
258.40
264.88
271. 52
278.48
285.76
293.28
301.12
309.36
317.92
527.00
538.20,«
649.80
562.00
574.80
587.80
601.40
615.80
630.60
646.00
662.20
678.80
696.20
714.40
733.20
752.80
773.40
794.80
1, 054.00
1,076.40
1,099.60
1,124.00
1,149.60
1,175.60
1,202.80
1,231.60
1,261.20
1,292.00
1,324.40
1,357.60
1,392.40
1,428.80
1,466.40
1,606.60
1, 546.80
1, 689.60
10,540
10,764
10,996
11,240
11,496
11,766
12,028
12,316
12,612
12,920
13,244
13,676
13,924
14,288
14.664
15,056
15,468
15,896
4.19
4.21
4.23
4.28
4.32
4.35
4.39
4.43
4.47
4.61
4.55 .
4.58
4.62
4.66
4.70
4.74
4.78
4.82
82.50
165.00
330.00
825.00
1,650.00
16,500
4.96 . . . .
5.04
5.09
5.14
5.18
5.23
6.28
5.34
5.39
5.45
5.51
5.57
5.65
.5.74
5.84
5.99
6.20
6.56
7.60
1 Month, day, and year on which issues of Mar. 1, 1961, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on extended maturity value in effect on the beginning date of the half-year period.,
3 Yield on purchase price from issue date to extended maturity date is 4.49 percent.
228
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 63
B O N D S BEARING ISSUE D A T E S F R O M J U N E 1 T H R O U G H AUGUST 1, 1961
Issueprice
Denomination
$18.75 $37.50
25.00 50.00
$75.00 $150.00 $375.00
100.00 200.00 500.00
$750.00
1,000.00
$7,500
10,000
(1) Redemption values during each half-year period
(values increase on first day of period shown)
Period after original mat u r i t y (beginning 7 years
9 months after issue date)
EXTENDED MATURITY PERIOD
First Vi year 1 . . -(3/1/69)
A t o l year
...(9/1/69)
$25.34 $60.68 $101,36 $202. 72 $506.80 $1,013.60
25.87 51.74 103,48 206,96 517.40 1,034.80
10,136
10,348
Approximate investment yield
(2) O n t h e
(3) On
redemption
current
value at
start of the redempextended tion value
from
maturity
beginning
period
of each
tothe
half-year
beginning
period to
of each
extended
half-year
maturity 2
period
thereafter
Percent
0.00
4,18
Percent
4.25
6.00
Redemption values and investment yields to extended maturity on basis Of June 1, 1969, revision
1 to IM y e a r s . . .— (3/1/70)
I M t o 2 y e a r s . . .- ( 9 / 1 / 7 0 )
2 to 2M y e a r s . . .— (3/1/71)
2M to 3 y e a r s . . -— (9/1/71)
3 to 3M y e a r s . . .— (3/1/72)
3M to 4 y e a r s . . .— (9/1/72)
4 to4M y e a r s . . -.-(3/1/73)
4M to 5 y e a r s . . ..-(9/1/73)
5 to 5M y e a r s . . ....(3/1/74)
5M to 6 y e a r s . . ..-(9/1/74)
6 to6M y e a r s . . ....(3/1/75)
6M to 7 y e a r s . . ....(9/1/75)
7 to 7M y e a r s . . ....(3/1/76)
7M to 8 y e a r s . . ..-(9/1/76)
8 to 8M y e a r s . . ..-(3/1/77)
8M to 9 y e a r s . . ..-(9/1/77)
9 to 9M y e a r s . . .— (3/1/78)
9 M t o 10 y e a r s . ..-(9/1/78)
EXTENDED MATURITY VALUE (17 years
and 9 months from
issue date) . . .- ( 3 / 1 / 7 9 )
26.41
26.97
27.66
28.17
28.80
29.46
30.15
30,86
31.61
32.38
33.19
34.03
34.90
35.81
36.76
37.75
38.77
39,84
52.82
53.94
55.12
56.34
57.60
58.92
60.30
61.72
63.22
64.76
66.38
68.06
69.80
71.62
73.62
75.50
77.54
79,68
105,64
107.88
110.24
112.68
115.20
117.84
120.60
123,44
126.44
129.52
132,76
136.12
139.60
143.24
147.04
151.00
155.08
159,36
211.28
215.76
220.48
225. 36
230.40
235.68
241.20
246, 88
252, 88
259.04
265. 62
272. 24
279. 20
286,48
294.08
302.00
310.16
318.72
528.20
539.40
561. 20
563.40
676.00
589.20
603, 00
617.20
632.20 '
647.60
663.80
680.60
698.00
716.20
735.20
755. 00
775.40
796.80
1,056.40
1,078.80
1,102.40
1,126.80
1,152.00
1,178.40
1,206.00
1,234.40
1,264.40
1,295.20
1,327.60
1,361.20
1,396.00
1,432.40
1,470.40
1,610.00
1,550.80
1,593.60
10,664
10,788
11.024
11,268
11,620
11,784
12,060
12,344
12,644
12,962
13,276
13,612
13,960
14,324
14,704
15,100
15,608
15,936
41.36
82.72
165.44
330.88
827.20
1,654.40
16,544
4.18
4.20
4.24
4,28
4.31
4,35
4.39
4.43
4.47
4.61
4.55
4.59
4.63
4.66
4.70
4.74
4.78
4.82
6.05
5.09
6.14
6.19
6.24
5.29
5.34
5,40
5.45
5.61
5. .58
6.65
5.74
6.86
6.98
6.18
6.67
7.63
3 4.96 . . . .
1 Month, day, and year on which issues of June 1,1961, enter each period. For subsequent issue months add the appropriate number of months.
2 Based on extended maturity value In effect on the beginning date of the half-year period.
sYield on purchase price from issue date to extended maturity date is 4.51 percent.
229
EXHIBITS
TABLE 64
BONDS BEARING ISSUE DATES FROM SEPTEMBER 1 THROUGH NOVEMBER 1, 1961
Issue price
Denomination.
Period after issue date
First M year 2......(9/1/61)
....(3/1/62)
Mto lyear
1 to IM y e a r s . . ..-(9/1/62)
I M t o 2 y e a r s . . ...(3/1/63)
2 to 2M y e a r s . . ...(9/1/63)
2M to 3 y e a r s . . ...(3/1/64)
3 to 3M y e a r s . . ...(9/1/64)
3M to 4 y e a r s . . ...(3/1/65)
4 to 4M y e a r s . . ...(9/1/66)
4M to 6 y e a r s . . .-.(3/1/66)
5 to 5M y e a r s . . . - ( 9 / 1 / 6 6 )
5M to 6 y e a r s . . ...(3/1/67)
6 to 6M y e a r s . . ...(9/1/67)
6M to 7 y e a r s . . ...(3/1/68)
7 to 7M y e a r s . . ...(9/1/68)
7M years to 7 years and 9
months
— (3/1/69)
M A T U R I T Y VALUE
(7 years and 9 months
from issue date).(6/l/69)
$18.75 $37.50
25.00 50.00
$750.00
1,000.00
$7,500
10,000
(1) Redemption values during each half-year period '
(values increase on flrst day of period shown)
$18.75 $37.50
18.91 37.82
19.19 38,38
19.51 39.02
19.90 39.80
20.28 40.56
20.66 41.32
21.07 42.14
21.50 43.00
21.95 43.90
22.41 44,82
22.89 45,78
23.38 46.76
23.91 47.82
24,46 48.92
Approximate investment yield
(2) On the
(3) On
redemption
current
value at
redempstart of
each ma- tion value
from
turity or
beginning
extended
of each
maturity
half-year
period to
period 1
beginning
(a) to
of each
half-year maturity 3
period 1
thereafter
$75.00 $150.00 $375,00
75,64 151.28 378.20
76.76 153.52 383.80
78.04 156.08 390.20
79.60 159.20 398.00
81.12 162.24 405.60
82.64 165.28 413.20
84.28 168.66 421.40
86.00 172.00 430,00
87.80 175.60 439,00
89.64 179.28 448,20
91.56 183.12 457,80
93,52 187 04 467,60
95,64 191.28 478,20
97.84 196.68 489,20
$750.00
756.40
767.60
780.40
796.00
811.20
826.40
841.80
860.00
878.00
896.40
916.60
935.20
956.40
978,40
$7,500
7,664
7,676
7,804
7,960
8,112
8,264
8,428
8,600
8,780
8,964
9,166
9,352
9,564
9,784
Percent
0.00
1.71
2.33
2.67
3.00
3.16
3.26
3.36
3.45
3.63
3.60
3,66
3.71
3.78
3.83
Percent
3.75
3,89
3.96
4.01
4.01
4.03
4,05
4,06
4.06
4.44
4.49
4.53
4.61
4.64
.
4.77
600.40
1,000.80
10,008
3.88
5.15
1.013.60
10,136
25.02
60.04
100,08
200.16
25.34
50.68
101.36
202.72
506.80
3.92
(b) to extended
maturity 3
EXTENDED MATURITY PERIOD
Period after maturity date
TR^'rst M y e a r . . . ...(6/1/69)
$75.00 $150.00 $375.00
100.00 200.00 500.00
$25.34 $60.68 $101.36 $202.72 $506.80 $1,013.60 $10,136
5.00
0.00
Redemption values and investment yields to extended maturity on basis of June 1,1969, revision
Mto lyear
..(12/1/69)
1 to IM y e a r s . . ...(6/1/70)
IM to 2 y e a r s . . -.(12/1/70)
2 to 2M y e a r s . . - - ( 6 / 1 / 7 1 )
2M to 3 y e a r s . . --(12/1/71)
3 to 3M y e a r s . . --(6/1/72)
3M to 4 y e a r s . . .-(12/1/72)
4 to4M y e a r s . . .--(6/1/73)
4M to 6 y e a r s . . ..(12/1/73)
5 to 5M y e a r s . . - . ( 6 / 1 / 7 4 )
5M to 6 years.....(12/1/74)
6 to 6M y e a r s . . ...(6/1/75)
6M to 7 y e a r s . . ..(12/1/76)
7 to 7M years...— (6/1/76)
7M to 8 y e a r s . . .-(12/1/76)
8 to 8M y e a r s . . .— (6/1/77)
83^ to 9 years..:..(12/1/77)
9 to 9M y e a r s . . ...-(6/1/78)
9M to 10 years...-(12/1/78)
EXTENDED MATURITY VALUE (17 years
and 9 months from
issue d a t e ) . . . - . ( 6 / 1 / 7 9 )
25.97
26.62
27,29
27.97
28.67
29.39
30.12
30.87
31.65
32.44
33,25
34,08
34.93
35.80
36.70
37.62
38.56
39.52
40.51
61.94
53,24
64,68
65,94
67,34
58,78
60,24
61.74
63.30
64.88
66,50
68.16
69.86
71.60
73.40
75.24
77.12
79.04
81.02
103.88
106.4b
109.16
111.88
114.68
117.66
120.48
123.48
126.60
129.76
133.00
136.32
139.72
143.20
146.80
160.48
154.24
158.08
162.04
207. 76
212.96
218.32
223.76
229.36
235.12
240.96
246.96
253.20
269. 62
266.00
272,64
279.44
286.40
293.60
300.96
308.48
316.16
324,08
519.40
532.40
545,80
569. 40
573,40
687.80
602.40
617.40
633.00
648,80
666.00
681.60
698.60
716.00
734.00
752.40
771.20
790.40
810.20
1,038.80
1,064.80
1,091.60
1,118.80
1,146.80
1,175.60
1,204.80
1,234.80
1,266.00
1,297.60
1,330.00
1,363.20
1,397.20
1,432.00
1,468.00
1,604.80
1,642.40
1,580.80
1,620.40
10,388
10,648
10,916
11,188
11,468
11,756
12,048
12,348
12,660
12,976
13,300
13,632
13,972
14,320
14,680
15,048
15,424
15,808
16,204
4.97
4.99
5.00
5.00
6.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
6.00
6.00
5.00
41.52
83.04
166.08
332.16
830.40
1,660.80
16,608
< 5.00 .
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
6.00
5.00
5.00
4.99
4.99
.
5;oo
4.99
13-month period in the case of the 7M-year to 7-year and 9-month period.
2 Month, day, and year on which issues of Sept. 1,1961, enter each period. For subsequent issue months add the
appropriate number of months.
3 Based on maturity value (or extended maturity value) in eflect on the beginning date of the half-year period.
* Yield on purchase price from issue date to extended maturity date is 4.53 percent.
230
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 65
B O N D S BEARING ISSUE D A T E S F R O M D E C E M B E R 1, 1961, T H R O U G H MAY 1, 1962
Issue price
Denomination
-
$18.75 $37.50
25.00 50.00
FirstMyear
2(12/1/61) $18.75 $37.50
Mto lyear
(6/1/62)
18.91 37.82
1 to IM years
(12/1/62)
19.19 38.38
I M t o 2 years.
(6/1/63)
19.51 39.02
2 to 2M y e a r s . . . . (12/1/63)
19.90 39.80
2M to 3 years
(6/1/64)
20.28 40.66
3 to 3M years
(12/1/64)
20.66 41.32
3M to 4 years
(6/1/66)
21.07 42.14
4 to 4M years
(12/1/66)
21.50 43.00
4M to 5 years
(6/1/66)
21,96 43.92
6 to 6M years
(12/1/66)
22,42 44,84
5M to 6 years
(6/1/67)
22.91 45,82
6 to 6M years
(12/1/67)
23.42 46,84
6M to 7 years
(6/1/68)
23.95 47.90
7 to 7M years
(12/1/68)
24.60 49.00
7M years to 7 years and 9
raonths
(6/1/69) 25.07 50.14
M A T U R I T Y VALUE
(7 years and 9 months
from issue date).(9/l/69) 25.41 50.82
Period after raaturity date
(9/1/69)
$750.00
1,000.00
$7,500
10,000
(1) Redemption values during each half-year period
(values increase on flrst day of period shown)
Period after issue date
FirstMyear
$75.00 $150.00 $375.00
100.00 200.00 500.00
$75,00 $150.00 $375.00
76.64 161.28 378.20
76.76 153.62 383.80
78.04 156.08 390.20
79.60 159.20 398.00
81,12 162.24 405.60
82.64 165.28 413,20
84.28 168.56 421.40
86,00 172,00 430.00
87.84 176.68 439,20
89.68 179.36 448.40
91,64 183.28 458,20
93,68 187.36 468,40
95.80 191.60 479, 00
98.00 196.00 490,00
Approximate investment yield
(2) On the
(3) On
redemption
current
value at
redempstart of
each ma- tion value
from
turity or
beginning
extended
maturity
of each
period to
half-year
beginning
period '
(a) to
of each
half-year raaturity 3
period'
thereafter
$750.00
756.40
767.60
780.40
796.00
811.20
826.40
842.80
860.00
878.40
896.80
916. 40
936.80
958,00
980,00
$7,600
7,564
7,676
7,804
7,960
8,112
8,264
8,428
8,600
8,784
8,968
9,164
9,368
9,680
9,800
Percent
0.00
1.71
2.33
2.67
3,00
3.16
3.26
3.36
3.45
3,54
3.61
3.68
3.74
3,80
. 3,86
Percent
3.75
3.89
3.96
4.01
4.01
4,03
4.05
4.06
4,46
4.49
4.55
4,68
4.62
4.79
4.92
3.91
6.46
100.28
200,56
501.40
1,002.80
10,028
101.64
203.28
508.20
1,016.40
10,164
(b) to extended
maturity 3
EXTENDED MATURITY PERIOD
25.41
60.82
101,64
203.28
608.20
1,016.40
10,164
0.00
Redemption values and investment yields to extended maturity on basis of June 1, 1969, revision
...(3/1/70)
M t o 1 year
1 to IM years- - .— (9/1/70)
IM to 2 years--..-(3/1/71)
2 to 2M years--..-(9/1/71)
2M to 3 y e a r s . - .— (3/1/72)
3 to 3M y e a r s . . .— (9/1/72)
3M to 4 years--..-(3/1/73)
4 to4M y e a r s . . ..-(9/1/73)
4M to 6 y e a r s . . .— (3/1/74)
6 to 6M y e a r s . . ..-(9/1/74)
6Mto6years..--(3/1/75)
6 to 6M y e a r s . . ....(9/1/76)
6M to 7 y e a r s . . .- ( 3 / 1 / 7 6 )
7 to 7M y e a r s . . .— (9/1/76)
7M to 8 y e a r s . . ..-(3/1/77)
8 to 8M y e a r s . . .— (9/1/77)
8M to 9 y e a r s . . .— (3/1/78)
9 to 9M y e a r s . . ....(9/1/78)
9M to 10 y e a r s . .— (3/1/79)
EXTENDED MATURITY VALUE (17 years
and 9 months from
i s s u e d a t e ) . . . --(9/1/79)
26.04
26.69
27.36
28.05
28.75
29.47
30.20
30.96
31.73
32.63
33.34
34.17
35.03
35,90
36,80
37.72
38,66
39.63
40,62
62,08
63,38
64.72
66.10
57.60
68.94
60.40
61.92
63.46
66.06
66.68
68.34
70.06
71.80
73.60
76.44
77.32
79.26
81.24
104,16
106, 76
109.44
112,20
116,00
117.88
120.80
123.84
126.92
130.12
133.36
136.68
140.12
143.60
147.20
150.88
154.64
158.52
162.48
208.32
213. 52
218.88
224. 40
230.00
236. 76
241. 60
247. 68
253.84
260,24
266. 72
273.36
280,24
287.20
294, 40
301. 76
309.28
317. 04
324.96
520.80
633.80
547. 20
561, 00
576.00
689.40
604.00
619.20
634.60
660. 60
666.80
683.40
700.60
718.00
736.00
754.40
773.20
792.60
812. 40
1,041.60
1,067, 60
1,094.40
1.122.00
1,160. 00
1,178.80
1,208.00
1,238.40
1,269. 20
1,301.20
1,333.60
1,366.80
1,401.20
1,436.00
1,472.00
1,508.80
1, 546.40
1,585.20
1,624.80
10,416
10,676
10.944
11,220
11,500
11, 788
12,080
12,384
12,692
13,012
13,336
13,668
14,012
14,360
14,720
15,088
15,464
15,852
16,248
4,96
4.98
4.99
6.00
5.00
6,00
5.00
5.00
5,00
5.00
5.00
5.00
5.00
6.00
5,00
5.00
5.00
5.00
5.00
41.64
83.28
166.56
333.12
832.80
1,665.60
16,656
5.00 . . . .
6.00
5.00
5.00
5,00
5,00
5,00
5,00
5.00
5.00
5,00
6.00
6.00
5.00
5.01
5.00
5.01
5.01
5.01
5.02
1 3-month period in the case of tho 7M-year to 7-year and 9-month period.
2 Month, day, and year on which issues of Dec. 1, 1961, enter each period. For subsequent issue months add the
appropriate number of months.
3 Based on maturity value (or extended maturity value) in efiect on the beginning date of the half-year period,
4 Yield on purchase price from issue date to extended maturity date is 4.55 percent.
EXHIBITS
231
TABLE 66
B O N D S BEARING ISSUE D A T E S F R O M J U N E 1 T H R O U G H N O V E M B E R 1. 1962
Issueprice...
Denomination
$18.75 $37.50
25.00 50.00
Period after issue date
First M y e a r . . . .
Mto lyear
1 to IM years
I M t o 2 years
2 to 2M years
2M to 3 years
3 to 3M years
3Mto4yeai-s
4 to 4M years
4M to 6 years
5to5Myeai-s
6Mto6yeai-s
6 to 6M years
6Mto7yeai-s
7to7Myeai-s
$75.00
100.00
$150.00 $375.00
200.00 500.00
$750.00
1,000.00
$7,500
10,000
(1) Redemption values during each half-year period'
(values increase on first day of period shown)
2 (6/1/62) $18.75 $37.60
(12/1/62)
18.91 37.82
(6/1/63)
19.19 38.38
(12/1/63)
19.51 39.02
(6.a/64)
19.90 39.80
(12/1/64)
20.28 40.56
(6/1./65)
20.66 41.32
(12/1/65)
21.07 42.14
(6/1/66)
21.61 43,02
(12/1/66)
21.97 43.94
(6/1/67)
22.45 44.90
(12 a/67)
22.95 45.90
(6/1/68)
23.46 46.92
(12/1/68)
23.99 47.98
(6/1/69)
24.55 49,10
$76.00 $150.00 $375.00
75.64 151.28 378.20
76.76 153.62 383.80
78.04 166.08 390.20
79.60 169.20 398.00
81.12 162.24 405.60
82.64 165.28 413.20
84.28 168.66 421.40
86.04 172.08 430.20
87,88 175.76 439.40
89.80 179.60 449.00
91.80 183,60 469,00
93.84 187.68 469.20
95.96 191.92 479.80
98.20 196.40 491.00
$760.00
756.40
767.60
780.40
796.00
811.20
826.40
842.80
860.40
878.80
898.00
918,00
938.40
959.60
982.00
$7,600
7,564
7,676
7,804
7,960
8,112
8,264
8,428
8,604
8,788
8,980
9,180
9,384
9,596
9,820
Approximate investment yield
(2) On the
redemption
(3) On
value at
current
start of
redempeach ma- tion value
turity or
from
extended
beginning
maturity
of each
period to
half-year
beginning
period'
of each
(a) to
half-year maturity 3
period >
thereafter
Percent
0.00
1.71
2.33
2.67
3.00
3.16
3.26
3.36
3.46
3.55
3.63
3,71
3.77
3.83
3.89
Percent
3.76
3.89
3.96
4.01
4.01
4.03
4.05
4.47
4.60
4.64
4.57
4,60
4.75
4.85
4,97
Redemption values and investment yields to original maturity on basis of June 1, 1969, revision
7M years to 7 years and
9
raonths
(12/1/69)
M A T U R I T Y VALUE
(7 years and 9 months
from issue date).(3/l/70)
25.13
50.26
100.62
201.04
602.60
1,005.20
10,052
3,94
25.47
50.94
101.88
203.76
509.40
1,018.80
10,188
4.00
Period after raaturity date
Fii-st M y e a r
(3/1/70)
Mto lyear
(9/1/70)
1 to IM years
(3/1/71)
I M t o 2 years
(9/1/71)
2to2Myeai-s
(3/1/72)
2Mto3yeai-s
(9/1/72)
3to3Myeai-s
(3/1/73)
3Mto4yeai-s
(9/1/73)
4 to 4M years
(3/1/74)
4Mto6yeai-s
(9/1/74)
5to6Myeai-s
(3/1/75)
5M to 6 years
(9/1/76)
6 to 6M years
(3/1/76)
6M to 7 years
(9/1/76)
7 to 7M years
(3/1/77)
7M to 8 years
(9/1/77)
8to8Myeai-s
(3/1/78)
8M to 9 years
(9/1/78)
9 to 9M years
(3/1/79)
9Mtol0yeai-s
(9/1/79)
EXTENDED MATURITY VALUE (17 years
and 9 months from
issuedate)
(3/1/80)
(b) to extended
maturity 3
EXTENDED MATURITY PERIOD
25.47
26,10
26.76
27.43
28.11
28.82
29.54
30,28
31.03
31,81
32.60
33.42
34.25
35.11
35.99
36.89
37.81
38,76
39,72
40.72
50.94
52,20
63. 52
54.86
56.22
57,64
59,08
60.56
62,06
63,62
65,20
66.84
68.60
70.22
71.98
73.78
75.62
77.52
79,44
81,44
101.88 203.76
104.40 208,80
107. 04 214.08
109,72 219.44
112.44 224.88
115.28 230.66
118,16 236.32
121.12 242.24
124,12 248,24
127,24.254,48
130.40 260.80
133.68 267.36
137.00 274.00
140.44 280.88
143.96 287.92
147.56 295.12
151,24 302,48
155.04 310.08
158,88 317.76
162,88 325.76
509,40
622.00 .
635.20
648.60
662, 20
676, 40
590,80
605.60
620,60
636.20
652, 00
668,40
685, 00
702,20
719,80
737.80
756.20
775.20
794.40
814, 40
1,018.80
1,044,00
1,070.40
1, 097. 20
1,124. 40
1,152.80
1,181.60
1,211.20
1, 241. 20
1,272. 40
1,304.00
1,336.80
1,370.00
1,404.40
1,439,60
1,475,60
1, 512, 40
1, 650.40
1,588.80
1,628.80
12, 412
12.724
13.040
13,368
13.700
14.044
14,396
14, 766
15,124
15,604
15,888
16,288
41.74
83.48
166.96
834.80
1.669.60
16.696.
333.92
5,45
10.188
10. 440
10. 704
10. 972
11,244
11,628
11,816
12,112
0.00
4.95
5,00
5,00
4,99
5.00
5.00
5.00
5.00
5,00
5,00
6,00
5,00
5,00
6,00
5,00
.'),00
5,00
5.00
5.00
6.00
5.00
6,00
6,00
6.00
6,00
5.00
6.00
6.00
6.00
5.00
5.00
5,01
5,00
5.00
6.00
6.01
5.00
5,02
5.01
45.00 ....
1 3-month period in the case of the 7M-year to 7-year and 9-month period.
2 Month, day, and year on which issues of June 1, 1962, enter each period. For subsequent issue months add the
appropriate number of months.
3 Based on raaturity value (or extended maturity value) in effect on the beginning date of the half-year period.
* Yield on purchase price from issue date to extended maturity date is 4.56 percent.
232
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 67
BONDS BEARING ISSUE DATES FROM DECEMBER 1, 1962, THROUGH MAY 1, 1963
Issue price
Denomination..
$18.75 $37.50 $75.00
25.00 50.00 100.00
$750.00
1,000.00
$7,500
10,000
(1) Rederaption values during each half-year period '
(values increase on first day of period-shown)
Period after issue date
F i r s t M y e a r - - . ,2(12/1/62)
...(6/1/63)
M to 1 year
1 to IM y e a r s . . ...(12/1/63)
I M t o 2 y e a r s . - ....(6/1/64)
2 to 2M years. -...(12/1/64)
2M to 3 y e a r s . . ,. . (6/1/65)
3 to 3M y e a r s . . ..(12/1/65)
3M to 4 years, - ..-(6/1/66)
4 t o 4 M years-- ..(12/1/66)
4M to 5 years. -....(6/1/67)
5 to 5Myeai-s.- ..(12/1/67)
6M to 6 years. - ...(6/1/68)
6 to 6M y e a r s . . ..(12/1/68)
6 M t o 7 years-- ...(6/1/69)
$150.00 $375.00
200.00 500.00
$18,75 $37. 60
18.91 37.82
19.19 38.38
19.51 39.02
19.90 39.80
20.28 40.66
20.66 41.32
21.08 42.16
21.52 43.04
21.99 43.98
22.48 44.96
22.98 45.96
23.50 47.00
24.04 48.08
$75.00 $150.00
75.64 151. 28
76,76 153. 52
78.04 156. 08
79.60 159, 20
81.12 162, 24
82,64 166. 28
84.32 168. 6486,08 172.16
87.96 175. 92
89.92 179. 84
91.92 183. 84
94.00 188.00
96.16 192. 32
$375.00
378. 20
383.80
390. 20
398, 00
405,60
413,20
421, 60
430. 40
439.80
449. 60
459. 60
470. 00
480.80
$750. 00
756, 40
767, 60
780. 40
796.00
811.20
826. 40
843. 20
860. 80
879.60
899. 20
919. 20
940.00
961. 60
$7, 500
7,564
7,676
7,804
7,960
8,112
8,264
8,432
8,608
8,796
8,992
9,192
9,400
9,616
Approximate investment yield
(2) On the
(3) On
redemption
current
value at
redempstart of
each ma- tion value
from
turity or
beginning
extended
of each
maturity.
half-year
period to
period '
beginning
(a) to
of each
half-year maturity 3
period'
thereafter
Percent
0,00
1.71
2.33
2,67
3,00
3,16
3,26
3,37
3.47
3,57
3,66
3,73
3,80
3,86
Percent
3.75
3.89
3.96
4.01
4.01
4.03
4.46
4.50
4.54
4.57
4.59
4.73
4.79
5.00
Redemption values and investment yields to original maturity, on basis of June 1, 1969, revision
7 to 7M y e a r s . - ,..(12/1/69)
7M years to 7 years and 9
raonths
— (6/1/70)
M A T U R I T Y VALUE
(7 years and 9 months
from issue date)-(9/l/70)
24.61
49.22
98.44
196, 88
492.20
984. 40
9,844
3.92
5.17
25.20
50.40
100. 80
201.60
504. 00
1, 008. 00
10,080
3.98
5.92
25.57
51.14
102.28
204.56
511.40
1,022.80
10,228
4.04 .
Period after m a t u r i t y date
First M year
— (9/1/70)
M to 1 year
.-(3/1/71)
1 to IM y e a r s - - .- ( 9 / 1 / 7 1 )
I M t o 2 y e a r s . . ..-(3/1/72)
2 to 2M y e a r s . . ..-(9/1/72)
2M to 3 y e a r s . . .•-(3/1/73)
3 to 3M years - -..-(9/1/73)
3M to 4 years - . ..-(3/1/74)
4 to 4M y e a r s . . ..-(9/1/74)
4M to 5 y e a r s . . .— (3/1/75)
5 to 5M y e a r s . . ....(9/1/75)
6M to 6 y e a r s . . ..-(3/1/76)
6 to 6M y e a r s . . ....(9/1/76)
6M to 7 y e a r s . . ..-(3/1/77)
7 to 7M y e a r s . . .- ( 9 / 1 / 7 7 )
7M to 8 y e a r s . . ....(3/1/78)
8 to 8M y e a r s . . ...-(9/1/78)
8M to 9 y e a r s . . ....(3/1/79)
9 to 9M y e a r s . . ....(9/1/79)
9M to 10 y e a r s . .,.-(3/1/80)
EXTENDED MATURITY VALUE (17 years
and 9 months from
issue date)
...(9/1/80)
(b) to extended
raaturity 3
EXTENDED MATURITY PERIOD
25.57
26.20
26.86
27.53
28.22
28.93
29.65
30.39
31.15
31.93
32.73
33.55
34.39
35,25
36,13
37,03
37,96
38.91
39.88
40.88
61.14
62.40
63.72
55.06
56.44
67.86
69.30
60.78
62.30
63.86
65.46
67.10
68.78
70.60
72.26
74.06
75.92
77.82
79.76
81,76
102. 28
104.80
107.44
110.12
112. 88
116.72
118,60
121, 56
124.60
127.72
130.92
134. 20
137. 56
141. 00
144. 52
148.12
151.84
155. 64
159. 52
163. 52
204.56
209.60
214.88
220. 24
225. 76
231. 44
237. 20
243,12
249. 20
255. 44
261. 84
268. 40
275.12
282. 00
289. 04
296. 24
303.68
311.28
319. 04
327. 04
611.40
624. 00
637. 20
550. 60
564.40
678.60
693. 00
607.80
623.00
638. 60
664.60
671. 00
687. 80
705. 00
722.60
740. 60
759. 20
778. 20
797. 60
817.60
1, 022.80
1,048. 00
1, 074. 40
1,101. 20
1,128.80
1,157, 20
1,186, 00
1,215,60
1,246. 00
1, 277, 20
1,309, 20
1,342. 00
1,375. 60
1,410. 00
1,445.20
1,481, 20
1, 518. 40
1, 556, 40
1, 595, 20
1,635. 20
10, 228
10,480
10,744
11,012
11,288
11, 572
11,860
12.156
12,460
12,772
13, 092
13,420
13,756
14,100
14,452
14,812
16,184
16, 564
15,952
16,352
0.00
4.93
4.98
4.98
4.99
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
6.00
6,00
6,00
5.00
41.90
83.80
167.60
335.20
838.00
1,676.00
16,760
4 5.00 .
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
4.99
1 3-raonth period in the case of the 7M-year to 7-year and 9-month period.
2 Month, day, and year on which issues of Dec. 1, 1962, enter each period. For subsequent issue months add the
appropriate number of months.
i Based on maturity value (or extended maturity value) in effect on the beginning date of the half-year period.
* Yield on purchase price from issue date to extended maturity date is 4.68 percent.
233
EXHIBITS
TABLE 68
B O N D S BEARING ISSUE D A T E S F R O M J U N E 1 T H R O U G H N O V E M B E R 1, 1963
Issueprice
Denomination
Period after issue date
F i r s t M y e a r . . . . . 2 (6/1/63)
..(12/1/63)
M t o 1 year
1 to IM years--....(6/1/64)
IM to 2 years--...(12/1/64)
2 to 2M years--....(6/1/65)
2M to 3 years--.-(12/1/65)
3 to 3M y e a r s . . .— (6/1/66)
3M to 4 y e a r s . . ...(12/1/66)
4 to 4M y e a r s . . ....(6/1/67)
4M to 5 y e a r s . . .-(12/1/67)
5 to 6M y e a r s . . ....(6/1/68)
5M to 6 y e a r s . . .-(12/1/68)
6 to 6M y e a r s - . ....(6/1/69)
$18.75 $37.50 $75.00 $150.00 $375.00
25.00 50.00 100.00 200.00 500.00
$750.00 $7,500
1,000.00 10,000
(1) Redemption values during each half-•year period '
(values increase on first day of period shown)
$18.75 $37, 60 $75. 00 $150. 00 $376.00
18.91 37.82 75.64 151. 28 378.20
19.19 38.38 76.76 163.62 383.80
19.61 39.02 78.04 156. 08 390, 20
19.90 39.80 79.60 159 20 398,00
20.28 40.56 81.12 162. 24 405,60
20.67 41.34 82.68 165.36 413,40
21.09 42.18 84.36 168.72 421.80
21.54 43.08 86.16 172.32 430.80
22.02 44.04 88.08 176.16 440.40
22.51 45.02 90.04 180.08 450. 20
23.02 46.04 92.08 184.16 460.40
23,54 47.08 94.16 188.32 470.80
$760.00 $7, 500
756.40 7,664
767. 60 7,676
780.40 7,804
796. 00 7,960
811. 20 8,112
826.80 8,268
843, 60 8,436
861. 60 8,616
880.80 8,808
900.40 9,004
920.80 9,208
941,60 9,416
Approximate investment
yield
(2) 0• n pur- (3) On curchase price rent redempfrom 1 issue tion value
from bedate to beginning of
ginning of
each halfeach halfyear period 1 year period '
to maturity 3
Percent
0.00
1.71
2.33
2.67
3.00
3.16
3.28
3.39
3.60
3.60
3.69
3.77
3.83
Percent
3.75
3,89
3.96
4.01
4.01
4.43
4.49
4.54
4.67
4.59
4.72
4.76
4.99
Redemption values and investment yields to maturity on basis of June 1,1969, revision
6Mto7yeai-s
(12/1/69)
7 to 7M years
(6/1/70)
7M years to 7 years and 9
months
(12/1/70)
MATURITY VALUE
(7 years and 9 months
from issue date).(3/l/71)
24.09
24.66
48,18
49,32
96,36
98,64
192. 72
197.28
481.80
493,20
9,864
3.89
3.95
25.27
50.54 101.08
202.16
506.40 1,010.80 10,108
4.02
25.66
51.32 102.64
205.28
513.20
4.09 .
963. 60
986.40
1,026.40 10,264
5.12
5.37
1 3-month period in the case of the 7M-year to 7-year and 9-month period.
2 Month, day, and year on which issues of June 1,1963, enter each period. For subsequent issue months add the
appropriate number of months.
3 Based on maturity value in effect on the beginning date of the half-year period.
234
19 70 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 69
B O N D S BEARING ISSUE D A T E S F R O M D E C E M B E R 1, 1963, T H R O U G H MAY 1, 1964
Issueprice
Denomination
$18.75 $37.50 $56.25 $75.00 $150.00 $375.00 $750.00 $7,500
25.00 50.00 75.00 100.00 200.00 500.00 1,000.00 10,000
Approximate investment yield
(1) Redemption values during each half-year period »
(values increase on first day of period shown)
(3) On
(2) On
current
purchase
redempprice
from issue tion value
from
date to
beginning beginning
of each
of each
half-year
half-year
period • period i to
maturity 3
Period after issue date
First M year - (12/1/63)
A t o l year.- -(6/1/64)
1 to IM years. (12/1/64)
I M t o 2years..-(6/1/65)
2 to 2M years. (12/1/65)
2M to 3 years. -(6/1/66)
3to3Myears- (12/1/66)
3Mto4years- -(6/1/67)
4to4Myears- (12/1/67)
4Mto6years- -(6/1/68)
6 to 6M years. (12/1/68)
5M to 6 years. -(6/1/69)
$18.75 $37,50 $66. 25 $75.00 $150,00 $375.00
18.91 37,82 66.73 75.64 151.28 378.20
19.19 38,38 57.57 76.76 153.52 383,80
19.51 39.02 58.63 78.04 156,08 390, 20
19.90 39.80 59.70 79.60 159.20 398,00
20.29 40.58 60.87 81.16 162,32 405,80
20.68 41.36 62.04 82.72 165.44 413.60
21.10 42.20 63.30 84.40 168,80 422,00
21.56 43.12 64.68 86.24 172.48 431, 20
22.05 44.10 66.16 88.20 176, 40 441, 00
22.64 45.08 67.62 90.16 180.32 45 .80
23.05 46.10 69.15 92.20 184.40 461,00
$750.00 $7,500
756. 40 7,664
767.60 7,676
780.40 7,804
796.00 7,960
811.60 8,116
827.20 8,272
844.00 8,440
862.40 8,624
882.00 8,820
901.60 9,016
922.00 9,220
0.00
1.71
2.33
2.67
3.00
3.18
3,29
3,40
3.62
3.64
3,72
3,79
3.76
3.89
3.96
4.01
4.41
4.45
4.52
4,57
4,60
4,72
4.77
6,00
Redemption values and investment yields to maturity on basis of June 1,1969, revision
6 to 6M years. (12/1/69)
6Mto 7 years.. (6/1/70)
7 to 7M years. (12/1/70)
7M years to 7 years
and 9 months(6/l/71)
MATURITY VALUE
(7 years and 9
months from issue
date)...
(9/1/71)
23,69
24,15
24.73
47.18
48.30
49.46
70.77
72.45
74.19
94.36
96.60
98.92
188,72
193.20
197,84
471.80
483.00
494.60
25.35
50.70
76.05 101.40
202.80
507.00 1,014.00 10,140
25.76
51.52
77.28 103.04
206.08
515.20 1,030.40 10,304
943.60
966.00
989. 20
9,436
9,660
9,892
3.86
3.93
3.99
6.09
5.23
5.52
1 3-month period in the case of the 7M-year to 7-year and 9-month period.
2 Month, day, and year on which issues of Dec. 1, 1963, enter each period. For subsequent issue months add the
ap|propriate number of months.
3 Based on maturity value in effect on thc beginning date of the half-year period.
235
EXHIBITS
TABLE 70
BONDS BEARING ISSUE DATES FROM JUNE 1 THROUGH NOVEMBER 1, 1964
Issue price
Denomination
$18.75 $37.50 $56.25 $75.00 $150.00 $375.00 $750.00 $7,500
25.00 50.00 75.00 100.00 200.00 500.00 1,000.00 10,000
Approximate investment yield
(1) Redemption values during each half-year period
(values increase on first day of period shown)
(3) On
(2) On
current
purchase
redempprice
from issue tion value
from
date to
beginning beginning
of each
of each
half-year
half-year
period 1 period I to
maturity 3
Period after issue date
First M year 2 (6/1/64) $18.75 $37.50 $56.25 $75.00 $150.00 $376,00
18.91 37.82 66.73 75.64 151. 28 378.20
M t o lyear..(12/1/64)
1 to IM years. (6/1/65) 19.19 38.38 67.57 76.76 153. 52 383.80
19.61 39.02 68.53 78.04 156.08 390.20
I M t o 2 years.(12/1/65)
19.91 39.82 59. 73 79.64 169.28 398.20
2 to 2M years. (6/1/66)
2M to 3 years.(12/1/66) 20.30 40.60 60.90 81.20 162.40 406.00
3 t o 3 M y p a r s . (6/1/67) 20.69 41.38 62.07 82.76 165. 52 413.80
3 M t o 4 years. (12/1/67) 21.12 42.24 63.36 84.48 168 96 422.40
4 to 4M years. (6/1/68) 21.59 43.18 64.77 86.36 172.72 431.80
4M to 5 years. (12/1/68) 22,08 44.16 66.24 88.32 176. 64 441.60
6 to 6M years. (6/1/69) 22.58 45.16 67.74 90.32 180.64 461.60
$750.00 $7,500
766.40 7,664
767.60 7,676
780.40 7,804
796.40 7,964
812. 00 8,120
827.60 8,276
844.80 8,448
863.60 8,636
883.20 8,832
903.20 9,032
Percent
0.00
1.71
2.33
2.67
3.02
3.20
3.31
3.43
3.56
3.67
3.75
Percent
3.75
3.89
3.96
4.41
4.43
4.48
4.56
4.60
4.72
4.75
4.99
Redemption values and investment yields to maturity on basis of June 1, 1969, revision
5M to 6 years. (12/1/69)
6 to 6M years. (6/1/70)
6M to 7 years. (12/1/70)
7 to 7M years. (6/1/71)
7M years to 7 years and
9 months..(12/1/71)
M A T U R I T Y VALUE
(7 years and 9
months from issue
date)
(3/1/72)
23.10
23,64
24,21
24,81
46.20
47.28
48.42
49.62
69,30
70.92
72,63
74.43
92.40
94.66
96.84
99.24
184.80
189.12
193.68
198.48
462.00
472. 80
484.20
496.20
924 00
945.60
968.40
992.40
9,240
9,456
9,684
9,924
3.83
3.90
3.97
4.04
6.08
5.20
5.34
5.60
25.44
60.88
76.32 101.76
203, 52
508.80 1,017.60 10,176
4.11
6.66
25.86
51.72
77.58 103.44
206.88
517.20 1,034.40 10,344
4.19
1 3-month period in the case of the 73^year to 7-year and 9-month period.
2 Month, day, and year on which issues of June 1, 1964, enter each period. For subsequent issue months add the
appropriate number of months.
3 Based on maturity valuo in effect on the beginning date of the half-year period.
397-702 0—71-
-17
236
1970 REPORT OF THE SECRETARY OF THE TREASURY
I
TABLE 71
B O N D S BEARING ISSUE D A T E S F R O M D E C E M B E R 1, 1964, T H R O U G H MAY 1, 1965
Issueprice
Denomination.
$18.75 $37.50 $56.25 $75.00 $150.00 $375.00 $750.00 $7,500
25.00 50.00 75.00 100.00 200.00 500.00 1,000.00 10,000
Approximate investraent yield
(1) Redemption values during each half-year period i
(values increase on first day of period shown)
(3) On
(2) On
current
purchase
redempprice
from issue tion value
from
date to
beginning beginning
of each
of each
half-year
half-year
period i period i to
maturity 3
Period after issue date
First M year.:1(12/1/64)
M to 1 y e a r . . (6/1/66)
1 to IM years. (12/1/66)
IM to 2 years. -(6/1/66)
2 to 21^^ years. (12/1/66)
2J/$to3years. .(6/1/67)
3 to 3M years. (12/1/67)
3M to 4 years. -(6/1/68)
4 to 4M years. (12/1/68)
4M to 6 years. .(6/1/69)
$18.75 $37. 50 $56.25 $7.5.00 $150.00 $375.00
18.91 37.82 66.73 75.64 161.28 378.20
19.19 38.38 67.67 76.76 163. 62 383 80
19.62 39.04 68.56 78.08 156.16 390.40
19.92 39.84 59.76 79.68 159. 36 398. 40
20.31 40.62 60.93 81.24 162.48 406.20
20.71 41.42 62.13 82.84 165.68 414.20
21.16 42.30 63.45 84.60 169.20 423.00
21.61 43.22 64.83 86.44 172.88 432.20
22.11 44.22 66.33 88.44 176.88 442. 20
$750.00 $7.500
766.40 7.664
767. 60 7,676
780.80 7,808
796.80 7,968
812.40 8.124
828.40 8,284
846.00 8.460
864.40 8.644
884.40 8,844
Percent
0.00
1.71
2.33
2.70
3.05
3.22
3.34
3.47
3.58
3.70
Percen
3.75
3.89
4.36
4.43
4.46
4.51
4.67
4.71
4.76
5.00
Redemption values and investment yields to maturity on basis of June 1. 1969, revision
5 to 6M years. (12/1/69)
5M to 6 y e a r s . . (6/1/70)
6 to 6M years. (12/1/70)
6M to 7 y e a r s . . (6/1/71)
7 to 7M years. (12/1/71)
7M years to 7 years and
9 m o n t h s . . . (6/1/72)
M A T U R I T Y VALUE
(7 years and 9
months from issue
date)
(9/1/72)
9.048
9,260
9,484
9,712
9,956
22.62
23.15
23.71
24.28
24.89
46.24
46.30
47.42
48.56
49.78
67.86
69.45
71.13
72.84
74.67
90.48
92.60
94.84
97.12
99.56
180.96
185.20
189.68
194.24
199.12
462.40
463.00
474.20
485.60
497.80
26.62
51.04
76.56 102.08
204.16
25.96
51.92
77.88 103.84
207.68
5.07
5.16
5.25
5.42
5.69
610.40 1,020.80 10,208
519.20 1,038.40 10,384
904.80
926.00
948.40
971. 20
995.60
3.79
3.87
3 95
4.02
4.09
1 3-month period in the case of the 7M-year to 7-year and 9-month period.
2 Month, day, and year on which issues of Dec. 1, 1964, enter each period. For subsequent issue months add the
appropriate number of months.
3 Based on maturity value in effect on thc beginning date of the half-year period.
237
EXHIBITS
TABLE 72
B O N D S BEARING I S S U E D A T E S F R O M J U N E 1 T H R O U G H N O V E M B E R 1, 1965
Issueprice
Denomination.
$18.75 $37.50 $56.25 $75.00 $150.00 $375.00
25.00 50.00 75.00 100.00 200.00 500.00
$750.00 $7,500
1,000.00 10,000
(2) On
purchase
price fro tn
issue date
to beginning of
each halfyear period '
(1) Redemption values during each half-year period '
(values increase on first day of period shown)
Period after issue date
First M year.2(6/1/65) $18.75 $37.50 $56.25 $75.00 $160,00 $375.00
18.91 37 82 56.73 76.64 151.28 378.20
M t o l y e a r .-(12/1/65)
.''
19.20 38.40 67.60 76.80 163,60 384,00
s-(6/1/66)
1 to IM years
19.63 39.06 58.69 78.12 166.24 390,60
.(12/1/66)
IM to 2 years.
2 to 2M years - (6/1/67) 19,93 39.86 59.79 79.72 169.44 398.60
i-(12/1/67) 20 32 40.64 60.96 81.28 162. 66 406.40
2M to 3 years.
20.73 41.46 62.19 82.92 166.84 414.60
3 to 3M years -(6/1/68)
1.
3M to 4 years. (12/1/68) 21.17 42.34 63.61 84.68 169.36 423.40
60 173.20 433.00
21.65 43.30 64.95
4 to 4M years. -(6/1/69)
Approximate investraent yield
$750.00 $7,500
766,40 7,564
768,00 7,680
781,20 7.812
797. 20 7,972
812,80 8,128
829,20 8,292
846,80 8,468
866, 00 8,660
0,00
1.71
2.39
2.74
3.08
3,24
3,37
3.60
3,63
(3) On
current
redemption value
frora
beginning
of each
half-year
period '
to
maturity 3
3.75
4,29
4.38
4.45
4.49
4.M
4.69
4.75
6.00
Rederaption values and investment yields to maturity on basis of June 1, 1969, revision
4M to 6 years. (12/1/69)
5 to 5M years.. (6/1/70)
5M to 6 years. (12/1/70)
6 to 6M years.. (6/1/71)
6'/^ to 7 years. (12/1/71)
7 to 7M years.. (6/1/72)
7M years to 7 years
and 9 months
(12/1/72)
M A T U R I T Y VALUE
(7 years and 9
months from issue
date)
(3/1/73)
26.05
44.30
45.34
46.42
47.54
48,70
49.94
66.45
68.01
69.63
71.31
73.05
74.91
88.60
90.68
92.84
95.08
97.40
99.88
177.20
181.36
185.68
190.16
194.80
199,76
443. 00
463.40
464.20
475,40
487, 00
499. 40
61.20
22.15
22.67
23.21
23.77
24,35
24.97
76.80
102.40
204.80
612.00
52.10
78.15 104.20
208.40
3.74
3,83
3,92
3,99
4,06
4.13
5.05
5,12
5.20
5.30
5.47
5.73
521.00 1,042.00 10,420
886. 00
906.80
928.40
950. 80
974. 00
998.80
9,068
9,284
9,508
9,740
9.988
1.024.00 10,240
7.09
1 3-month period in the case of the 7M-year to 7-ycar and 9-month period.
2 Month, day, and year on which issues of June 1, 1965, enter each period. For subsequent issue months add the
appropriate number of raonths.
3 Based on maturity value in effect on the beginning date of the half-year period.
238
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 73
BONDS BEARING ISSUE D A T E S F R O M D E C E M B E R 1, 1965, T H R O U G H MAY 1, 1966
$18.75 $37.50 $56.25 $75.00 $150.00 $375.00 $7.50.00 $7,500
25.00 50.00 75.00 100.00 200.00 500.00 1,000.00 10,000
Issueprice
Denomination
Approximate investment yield
(1) Redemption values during each half-year period
(values increase on first day of period shown)
(3) On
(2) On
current
purchase
redempprice
from issue tion value
from
date to
beginning beginning
of each
of each
half-year
half-year
period to
period
maturity 2
Period after issue date
First Myear 1(12/1/65)
M t o l y e a r . . . . (6/1/66)
1 to IM years. (12/1/66)
I M t o 2.vears.. (6/1/67)
2 to 2M years. (12/1/67)
2M to 3 years.. (6/1/68)
3 to 3M years. (12/1/68)
3Mto4 years.. (6/1/69)
$18.75 $37.50 $56.25 $75.06 $150.00 $376.00
18.96 37.92 66.88 75 84 151. 68 379.20
19.32 38.64 57.96 77.28 154.66 386.40
19.70 39.40 59.10 78.80 157. 60 394.00
20.10 40.20 60.30 80.40 160. 80 402. 00
20.52 41.04 61.56 82.08 164.16 410.40
20.96 41.92 62.88 83.84 167.68 419. 20
21.42 42.84 64.26 85.68 171.36 428.40
$750.00 $7,500
758.40 7.584
772.80 7.728
788.00 7.880
804.00 8,040
820.80 8,208
838.40 8,384
856.80 8,568
Percent
0.00
2.24
3.02
3.32
3.51
3.64
3.75
3.84
Percent
4.15
4.30
4.34
4.38
4.41
4.55
4.68
5.00
Redempt ion values and investment yields to maturity on basis of June 1, 1969, revision
4 to 4M years. (12/1/69)
4M to 5 y e a r s . . (6/1/70)
5 to 6M years. (12/1/70)
6M to 6 y e a r s . . (6/1/71)
6 to 6M years. (12/1/71)
6M to 7 years. (6/1/72)
MATURITY VALUE
(7 years from issue
date)
. .(12/1/72)
21.90
22.39
22.92
23.46
24.05
24.66
43.80
44.78
4.5 84
46.92
48.10
49.32
65.70
67.17
68.76
70.38
7il5
73,98
87.60
89.66
91.68
93.84
96.20
98.64
175,20
179.12
183,36
187.68
192.40
197.28
438.00
447.80
458.40
469. 20
481.00
493.20
8,760
8.956
9.168
9.384
9.620
9,864
3.92
3.98
4.06
4.12
4.19
4.26
25.46
50.92
76.38 101.84
203.68
509.20 1,018.40 10,184
6.08
5.21
5.32
5.53
5.78
6.49
4.42
876.00
895.60
916.80
938.40
902.00
986.40
1 Month, day, and year on which issues of Dec. 1, 1965, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on maturity value in effect on the beginning date of tho half-year period.
TABLE 74
B O N D S BEARING ISSUE D A T E S F R O M J U N E 1 T H R O U G H N O V E M B E B 1, 1966
Issueprice
Denomination.
$18.75 $37.50 $56.25 $75.00 $150.00 $375.00
25.00 50.00 75.00 100.00 200.00 500.00
Period after issue date
$750.00 $7,500
1,000.00 10,000
(2) On
(3) On
purchase
current
price
redempfrom issue tion value
date to
from
beginning beginning
of each
of each
half-year
half-year
period to
period
maturity 2
(1) Redemption values during each half-year period
(values increase on first day of period shown)
First M year. 1 (6/1/66) $18.75 $37,60 $56.25 $75,00 $160.00 $375.00
M to 1 y e a r . . .(12/1/66) 18.96 37.92 66.88 75,84 151. 68 379,20
1 to IM years ..(6/1/67) 19,32 38.64 67.96 77.28 154.56 386.40
I M t o 2 years. .(12/1/67) 19,70 39.40 59.10 78.80 157.60 394.00
2 to 2M years. -.(6/1/68) 20.10 40.20 60.30 80.40 160,80 402.00
2M to 3 years. .(12/1/68) 20.52 41.04 61.56 82.08 164.16 410.40
3 to 3M years .. (6/1/69) 20.96 41.92 62.88 83.84 167.68 419.20
Approximate investraent yield
.$760.00 $7, 600
$7,600
"58.40 7,684
772.80 7,728
788.00 7,880
804.00 8,040
820.80 8,208
838,40 8,384
Percent
0,00
2,24
3,02
3,32
3.61
3,64
3.75
Percent
4.15
4.30
4,34
4.38
4.62
4.55
6.00
Redemption values and investment yields to maturity on basis of June 1, 1969, revision
3M to4 years.. (12/1/69)
4 to4M y e a r s . . . (6/1/70)
4M to 6 years.. (12/1/70)
5 to 5M y e a r s . . (6/1/71)
5M to 6 years. .(12/1/71)
6 to6M years..(6/1/72)
6M to 7 y e a r s . . (12/1/72)
M A T U R I T Y VALUE
(7 years from issue
date)
(6/1/73)
21.43
21.91
22.42
22.95
23.61
24.10
24.72
42.86
43.82
44 84
45. 90
47.02
48.20
49.44
64.29
6.'). 73
67.26
68.85
70.53
72.30
74.16
85.72
87.64
89.68
91.80
94.04
96.40
98.88
171.44
175.28
179.36
183.60
188.08
192,80
197.76
428.60
438.20
448,40
469. 00
470. 20
482.00
494.40
25.54
51.08
76.62 102.16
204.32
510.80 1,021.60 10,216
857.20
876.40
896.80
918.00
940.40
964.00
988.80
8,572
8,764
8,968
9,180
9,404
9,640
9,888
3.85
3.93
4.01
4.08
4.16
4.23
4.30
5.08
5.18
5.28
5.42
5.60
.5.89
6,63
1 Month, day. and year on which issues of June 1, 1966, enter each period. For subsequent issue raonths add the
appropriate number of months.
2 Based on maturity value in effect on the beginning date of the half-year period.
239
EXHIBITS
TABLE 75
B O N D S BEARING ISSUE D A T E S F R O M D E C E M B E R 1, 1966. T H R O U G H MAY 1. 1967
Issueprice
Denomination
$18.75 $37.50 $56.25 $75.00 $150.00 $375.00 $750.00 $7,500
25.00 50.00 75.00 100.00 200.00 500.00 1,000.00 10,000
Approximate investment yield
(1) Redemption values during each half-year period
(values increase on first day of period shown)
(3) On
(2) On
current
purchase
rederapprice
from issue tion value
frora
date to
beginning beginning
of each
of each
half-year
half-year
period to
period
raaturity 2
Period after issue date
First M year 1 (12/1/66)
M t o l y e a r . . .-(6/1/67)
.
1 to IM years. (12/1/67)
(
IM to 2 y e a r s ,.(6/1/68)
..
2 to 2M y e a r s .(12/1/68)
'
2M to 3 years. -(6/1/69)
$18.76 $37.60 $56.25
18.96 37.92 66.88
19,32 38.64 67.96
19.70 39.40 69.10
20.10 40.20 60.30
20.62 41.04 61,56
$75.00 $160.00 $375.00
75,84 161.68 379.20
77.28 154.66 386,40
78,80 157. 60 394. 00
80.40 160,80 402.00
82,08 164,16 410.40
$760.00 $7,500
758.40 7,584
772.80 7,728
788. 00 7,880
804.00 8,040
820.80 8,208
2.24
3.02
3.32
3.51
3,64
4.16
4.30
4.34
4.48
4.53
5.00
Rederaption values and investraent yields to raaturity on basis of June 1, 1969, revision
3 to 3M years. (12/1/69)
3M to 4 y e a r s . . (6/1/70)
4 to 4M years. (12/1/70)
4M to 5 y e a r s . . (6/1/71)
5 to 5M years. (12/1/71)
5M to 6 y e a r s . . (6/1/72)
6 to 6M years. (12/1/72)
6M to 7 y e a r s . . (6/1/73)
M A T U R I T Y VALUE
(7 years from issue
date)
(12/1/73)
20.97
21.44
21.94
22.46
23.00
23.56
24.16
24.79
41.94
42.88
43.88
44.92
46.00
47.12
48.32
49,58
62,91
64.32
66.82
67.38
69.00
70.68
72.48
74,37
25.63
51.26
76.89 102.52
83,88
85.76
87.76
89.84
92.00
94.24
96.64
99.16
167.76
171, 52
175. 52
179.68
184,00
188.48
193,28
198.32
419,40
428,80
438,80
449.20
460.00
471.20
483.20
496.80
205.04
512.60
838.80
857.60
877,60
898.40
920.00
942.40
966.40
991.60
8,388
8,576
8.776
8.984
9,200
9,424
9,664
9,916
3,76
3,87
3.97
4.06
4.13
4.20
4.27
4,34
1,025.20 10,252
5.08
5.17
5.25
6.35
5.49
5.69
5.99
6.78
4.52
1 Month, day, and year on which issues of Dec. 1, 1966, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on maturity value in effect on the beginning date of the half-year period.
TABLE 76
B O N D S BEARING ISSUE D A T E S F R O M J U N E 1 T H R O U G H N O V E M B E R 1, 1967
Issue price
Denomination
$18.75 $37.50 $56.25 $75.00 $150.00 $375.00
25.00 50.00 75.00 100.00 200.00 500.00
Period after issue date
First M year. 1(6/1/67)
M t o l y e a r . . . (12/1/67)
1 to IM years.. (6/1/68)
I M t o 2 years. (12/1/68)
2 to 2M years.. (6/1/69)
$750.00 $7,500
1,000.00 10,000
(3) On
(2) On
current
purchase
redempprice
from issue tion value
from
date to
beginning beginning
of each
of each
half-year
half-year
period to
period
maturity 2
(1) Redemption values during each half-year period
(values increase on flrst day of period shown)
$18.75 $37.50 $56.25 $75.00 $150.00 $375.00
18.96 37.92 56.88 75.84 161.68 379.20
19.32 38.64 57.96 77.28 154.56 386.40
19.70 39.40 59.10 78.80 157.60 394.00
20.10 40.20 60.30 80.40 160.80 402.00
Approximate investment yield
$750.00 $7,500
758.40 7,584
772.80 7,728
788.00 7,880
804.00 8,040
Percent
0.00
2.24
3.02
3.32
3.61
Percent
4.15
4.30
4.44
4.49
.5.00
Redemptior I values and investment yields to maturity on basis of June 1,1969, revision
2M to 3 years. (12/1/69)
3 to 3M years.. (6/1/70)
3M to 4 years. (12/1/70)
4 to 4M years.. (6/1/71)
4M to 5 years. (12/1/71)
5 to 5M years.. (6/1/72)
5M to 6 years. (12/1/72)
6 to 6M years.. (6/1/73)
6M to 7 years. (12/1/73)
MATURITY VALUE
(7 years from issue
date)
(6/1/74)
20.63
20.98
21.46
21.97
22.50
23.05
23.62
24.23
24.88
41.08
41.96
42.92
43.94
45.00
46.10
47.24
48.46
49.76
25.73
51.46
61.69
62.94
64.38
65.91
67.50
69.15
70.86
72.69
74.64
82.12
83.92
85.84
87.88
90.00
92.20
94.48
96.92
99.52
77.19 102.92
164.24
167.84
171.68
175.76
180.00
184.40
188.96
193.84
199.04
205.84
410.60
419.60
429.20
439.40
450.00
461.00
472.40
484.60
497.60
821.20
839.20
858.40
878.80
900.00
922.00
944.80
969.20
995.20
8,212
8,392
8,584
8,788
9,000
9,220
9,448
9,692
9,952
514.60 1,029.20 10,292
3.66
3.78
3.89
4.00
4.09
4.17
4.24
4.32
4.40
5.08
5.17
5.25
5.34
5.44
5.58
5.79
6.10
6.83
4v57.
1 Month, day, and year on which issues of June 1,1967, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on maturity value in effect on the beginning date of the half-year period.
240
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 77
B O N D S BEARING ISSUC D A T E S F R O M D E C E M B E R 1, 1967, T H R O U G H MAY 1, 1968
$18.75 $37.50 $56.25 $75.00 $150.00 $375.00 $750.00 $7,500
25.00 50.00 75.00 100.00 200.00 500.00 1,000.00 10,000
Issueprice
Denomination
Approximate investment yield
(1) Redemption values during each half-year period
(values increase on first day of period shown)
(3) On
(2) On
current
purchase
redempprice
from issue tion value
from
date to
beginning beginning
of each
of each
half-year
half-year
period lo
period
maturity 2
Period after issue date
First Myear 1(12/1/67) $18.75 $37.60 $66.25 $75.00 $150.00 $375.00
M t o l y e a r . . . . (6/1/68)
18.96 37.92 56.88 75.84 151.68 379. 20
1 to IM years. (12/1/68) 19.32 38.64 57.96 77.28 154.66 386.40
I M t o 2 years.. (6/1/69) 19.70 39.40 69.10 78.80 167.60 394.00
$750.00 $7,500
758.40 7,584
772.80 7,728
788.00 7,880
Percent
0.00
2.24
3.02
3.32
Percent
4.15
4.40
4.45
.5.00
Redemption values and investment yields to maturity on basis of June 1,1969, revision
2 to 2M years. (12/1/69)
2M to 3 years.. (6/1/70)
3 to 3M years. (12/1/70)
3M to 4 years.. (6/1/71)
4 to 4M years. (12/1/71)
4M to 5 years.-(6/1/72)
5 to 5M years. (12/1/72)
5M to 6 years-(6/1/73)
6 to 6M years. (12/1/73)
6M to 7 y e a r s . . (6/1/74)
M A T U R I T Y VALUE
(7 years from issue
date)
(12/1/74)
20.11
20.64
21.00
21.50
22.01
22.55
23.11
23.70
24.32
24.97
40.22
41.08
42.00
43.00
44.02
45.10
46.22
47.40
48.64
49.94
60.33
61.62
63.00
64.50
66.03
67.65
69.33
71.10
72.96
74,91
80.44
82.16
84.00
86.00
88.04
90.20
92.44
94,80
97.28
99.88
160.88
164.32
168.00
172.00
176.08
180.40
184.88
189.60
194.66
199.76
402.20
410.80
420.00
430.00
440.20
451.00
462.20
474.00
486.40
499.40
25.85
51.70
77.55 103.40
206.80
517.00 1.034.00 10.340
804.40
821.60
840.00
860.00
880.40
902.00
924.40
948.00
972.80
998.80
8,044
8,216
8,400
8,600
8,804
9,020
9,244
9,480
9,728
9,988
3.53
3.68
3.81
3.95
4.05
4.14
4.23
4.31
4.38
4.46
5.09
5.18
5.26
5.33
5.43
5.64
5.68
5.87
6.20
7.05
4.64 . . .
1 Month, day, and year on which issues of Dec. 1, 1967, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on maturity value in effect on the beginning date of the half-year period.
241
EXHIBITS
TABLE 78
B O N D S BEARING ISSUE D A T E S F R O M J U N E 1 T H R O U G H N O V E M B E R :
$18.75 $37.50 $56.25 $75.00 $150.00 $375.00
25.00 50.00 75.00 100.00 200.00 500.00
Issue price
Denomination.
$750.00 $7,500
1,000.00 10,000
:i) Redemption values during'each half-year period
( (values increase on first day of period shown)
Period after issue date
First Myear..i (6/1/68) $18.75 $37.50 $66.25 $76.00 $160.00 $375.00
18.96 37.92 56.88 75.84 161.68 379.20
M t o l y e a r . . (12/1/68)
1 to IM years. (6/1/69) 19.32 38.64 67.96 77.28 154.56 386.40
$760.00 $7,600
758.40 7,684
772.80 7,728
Approximate investment yield
(3) On
(2) On
current
purchase
redempprice
frora issue tion value
from
date to
beginning beginning^
of each
of each
half-year
half-year
period to
period
maturity 2
Percent
0.00
2.24
3.02
Percent
4.25
4.40
5.00
Redemption values and investment yields to maturity on basis of June 1, 1969, revision
I M t o 2 years. (12/1/69)
2 to 2M years-(6/1/70)
2M to 3 years. (12/1/70)
3 to 3M years. (6/1/71)
3M to 4 years. (12/1/71)
4 to 4M years. (6/1/72)
4M to 5 years. (12/1/72)
5 to 5M years. (6/1/73)
6M to 6 years. (12/1/73)
6 to 6M years. (6/1/74)
6M to 7 years. (12/1/74)
M A T U R I T Y VALUE
(7 years from issue
date)
(6/1/75)
19.71
20.12
20.66
21.03
21.54
22.07
22.62
23.19
23.79
24.42
25.09
39.42
40.24
41.12
42.06
43.08
44.14
45.24
46.38
47.58
48.84
50.18
59.13 78.84
60.36 80.48
61.68 82.24
63.09 84.12
64.62 86.16
66.21 88.28
67.86 90.48
69.57 92.76
71.37 95.16
73.26 97.68
75.27 100.36
157.68
160.96
164.48
168.24
172.32
176.56
180.96
185. 52
190.32
196.36
200.72
788.40 7,884
394.20
804.80 8,048
402.40
822.40 8,224
411.20
841.20 8,412
420.60
861.60 8,616
430.80
882.80 8,828
441.40
904.80 9,048
452.40
927.60 9,276
463.80
951.60 9,516
475.80
976.80 9,768
488.40
501.80 1,003.60 10,036
3.36
3.56
3.72
3.86
4.00
4.12
4.21
4.30
4.38
4.45
4.53
25.98
51.96
77.94 103.92
207.84
519.60 1,039.20 10,392
5.09
5.18
5.27
5.35
,5.43
5.51
6.62
5.76
5.96
6.29
7.09
4.71
1 Month, day and year on which issues of June 1, 1968, enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on maturity value in effect on the beginning date of the half-year period.
APPENDIX
Maturities and summary of investment yields to maturity, extended maturity and second extended maturity
dates under regulations heretofore prescribed for Series E Savings Bonds with issue dates May 1, 1941, through
May 1,1969 (rates percent per annum, compounded semiannually).
I s s u e date.s
May 1941April 1942.
Terra to
original
maturity
Yields
To o r i g i n a l m a t u r i t y
date
lOyears
2.90%
May 1942-May 1949. 10 years
2.90%
June 1949-April
1952.
10 years
2.90%
-1-0.6 June 1,1959
May 1952-March
1956.
9 yeare 8
montlis.
3.00%
-f 0.5 June 1, 1959
See footnotes at end of table.
To e x t e n d e d m a t u r i t y
date (10 years)
2.90%
-fO. 6 June 1,1959..
T o second e x t e n d e d
maturity date
(10 years)
3.75%.
-f-O. 4 December 1,1965.
-f 0.1 June 1,1968.
3.00%
3.75%.
-fO. 5 June 1,1959
. H-O. 4 December 1,1965.
-f 0.4 December 1,1965.. . -f-O. 1 June 1, 1968.
-fO. U u n e 1,1968
: 4.25%.
3.75%
-f-O. 4 December 1,1965..
-fO. 1 June 1,1968
3.75%
-f-O. 4 December 1,1965..
-f 0.1 June 1,1968
242
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 79
B O N D S BEARING I S S U E D A T E S F R O M D E C E M B E R 1, 1968 T H R O U G H MAY 1, 1969
$18.75 $37.50 $56.25 $75.00 $150.00 $375.00
25.00 50.00 75.00 100.00 200.00 500.00
Issueprice.....
Denomination
Period after issue date
FirstMyear.i(12/l/68)
M t o l y e a r . . . (6/1/69)
$750.00 $7,500
1,000.00 10,000
(3) On
(2) On
current
purchase
redempprice
from issue tion value
from
date to
beginning beginning
of each
of each
half-year
half-year
period to
period
maturity 2
(1) Redemption values during each half-year period
(values increase on first day of period shown)
$18.75 $37.50 $66.25 $75.00 $160.00 $375.00
18.96 37.92 66.88 75.84 151.68 379.20
Approximate investment yield
$760.00 $7,500
758.40 7,584
Percent
0.00
Percent
4.25
6.00
Redemption values and investment yields to maturity on basis of June 1, 1969, revision
1 to IM years. (12/1/69)
I M t o 2 years.-(6/1/70)
2 to 2M years. (12/1/70)
2M to 3 y e a r s . . (6/1/71)
3 to 3M years. (12/1/71)
3M to 4 y e a r s . . (6/1/72)
4 to 4M years. (12/1/72)
4M to 6 y e a r s . . (6/1/73)
5 to 5M years. (12/1/73)
5Mto 6 years.-(6/1/74)
6 to 6M years- (12/1/74)
6M to 7 y e a r s . . (6/1/75)
M A T U R I T Y VALUE
(7 years from issue
date)
(12/1/75)
19.33
19.72
20.14
20.59
21.08
21.69
22.13
22.70
23.28
23.89
24.54
25.23
38.66
39.44
40.28
41.18
42.16
43.18
44.26
45.40
46.56
47.78
49.08
50. 46
67.99 77.32
69.16 78.88
60.42 80.56
61.77 82.36
63.24 84.32
64.77 86.36
66.39 88.52
68.10 90.80
69.84 93.12
71.67 95.56
73.62 98.16
75.69 100.92
154.64
157.76
161.12
164.72
168.64
172.72
177.04
181.60
186. 24
191.12
196.32
201.84
773.20 7,732
386.60
788.80 7,888
394.40
805.60 8,056
402.80
823.60 8,236
411.80
843.20 8,432
421.60
431.80 . 863.60 8,636
885.20 8,852
442.60
908.00 9,080
454.00
931. 20 9,312
465.60
955.60 9,556
477.80
981.60 9,816
490.80
504. 60 1,009. 20 10,092
26.14
52.28
78.42
104.56
209.12
522.80
1.045.60
10.456
3.07
3.39
3.61
3.78
3.94
4.07
, 4.19
4.29
4.38
4.45
, 4.54
• 4.62
5.09
5.19
5.28
5.37
5.45
5.54
5.63
. 5.72
5.88
6.09
6.42
7.21
4.80 . . .
1 Month, day and year on which issues of Dec. 1, 1968 enter each period. For subsequent issue months add the
appropriate number of months.
2 Based on maturity value in effect on the beginning date of the half-year period.
APPENDIX—Continued
Yields
Issue dates
T e r m to
original
maturity
April 1956November 1956.
December 1956January 1957.
9 years 8
months.
9 years 8
months.
February 1957May 1959.
8 years 11
months.
June 1959November 1965.
7 years 9
months.
December 1965May 1968.
June 1968-May
r 7 years7 years.
To original m a t u r i t y
date
3.00%
-hO.5 June 1, 1959
3.00%
-fO.5 June 1, 1959
4-0.4 December 1,1965
3.25%
-fO.5 J u n e 1,19.59
-fO.4 December 1,1965
3.75%
-fO.4 December 1,1965....
-f-0.1 June 1,1968..
. 4.15%
-f-0.1 J u n e l , 1968
4.25%
To extended m a t u r i t y
d a t e (10 y e a r s )
To second extended
maturity date
(10 years)
4.15%
-fO.l June 1, 1968—
4.15%
-f-0.1 June 1, 1968...
4.16%.--^0.1 J u n e 1,1968...
4.15%
+ 0 . 1 June 1, 1968 1..
4.25%
4.25%....
> Prior to maturity, the Secretary of the Treasury could prescribe a different yield for extended raaturity period
for bonds for which Tables of Redemption Values for the extension had not been previously published. Tables of
Redemption Values were published for extended raaturity period for bonds with issue dates through May 1,1962.
[P.R. Doc. 70-724; Piled, J a n . 16,1970; 8:50 a.m. 1
EXHIBITS
243
Exhibit 5.—Department Circular No. 905, December 12, 1969, Fifth Revision,
oflfering of United States savings bonds. Series H
TREASURY DEPARTMENT,
Washington, Decemher 12,1969.
PART 332—OFFERING OF UNITED STATES SAVINGS BONDS, SERIES H
The regulations set forth in Treasury Department Circular No. 905, Fourth Revision, dated April 7, 1966, and the tables incorporated therein, as revised and
amended (31 OFR Part 332), have been further revised and amended as shown
below. The changes were effected under authority of section 22 of the Second
Liberty Bond Act, as amended (49 Stat. 21, as amended; 31 U.S.C. 757c), and 5
U.S.C. 301. This revision was originally published in Volume 34, FEDERAL REGISTER, Part III, December 6, 1969, and is republished to include table 2, and subsequent tables, which were not included in the original publication. Notice and
public procedures thereon are unnecessary as public property and contracts are
involved.
Dated: December 12, 1969.
[SEAL]
JOHN K. CARLOCK,
Fiscal Assistant Secretary.
Treasury Department Circular No. 905, Fourth Revision, dated April 7, 1966,
and the tables incorporated therein (31 CFR Part 332), as amended and revised,
are hereby further amended and revised, and issued as the Fifth Revision, as
follows, effective December 1,1969.
Sec.
332.1 Offering of bonds.
332.2 Description of bonds.
332.3 Governing regulations.
332.4 Registration.
332.5 Limitation on holdings.
332.6 Purchase of bonds.
332.7 Delivery of bonds.
332.8 Extended term and improved yields for outstanding bonds.
332.9 Taxation.
332.10 Redemption or payment.
332.11 Reservation as to issue of bonds.
332.12 Preservation of rights.
332.13 Fiscal agents.
332.14 Reservation as to terms of offer.
Tables of checks issued and investment yields.
Appendix.
A U T H O R I T Y : The provisions of t h i s P a r t 332 issued under authority of sec. 22 of the
Second Liberty Bond Act, as amended, 4j9 S t a t . 2.1, as a m e n d e d ; 3 1 U.S.C. 757c.
§332.1 Offiering of bonds.
The Secretary of the Treasury hereby offers for sale to the people of the
United States, U.S. Savings Bonds of Series H, heireinafter generally referred
to as "Series H bonds" or **bonds." This offer will continue until terminated by
the Secretary of the Treasury.
§332.2 Description of bonds.
(a) General. Series H bonds bear a facsimile of the signature of the Secretary
of the Treasury and of the Seal of the Department of the Treasury. They are
issued only in registered form and are nontransferable.
(b) Denominations and prices. Series H bonds are issued at face (par)
amount and are available in denominations of $500, $1,000, and $5,000.
(c) Inscription and issue. At the time of issue the issuing agent will (1) inscribe on the face of each Series H bond the name, taxpayer identifying number,^
and address of the owner, and the name of the beneficiary, if any, or the name
and address of the first-named coowner and the taxpayer identifying number*
1 The number required to be used on tax r e t u r n s and other documents submitted to t h e
I n t e r n a l Revenue Service (an individual's social security account number or employer
identification n u m b e r ) . If the coowners are husband and wife, t h e husiband's number should
be furnished. If the coowners are a minor and an adult, the adult's number should be
furnished.
244
1970 REPORT OF THE SECRETARY OF THE TREASURY
of one coowner, (2) enter in the upper righthand portion of the bond the issue
date, and (3) imprint the agent's dating stamip in the lower right-hand portion
to show the date the bond is actually inscribed. A Series H bond shall be valid
only if an authorized issuing agent receives payment therefor and duly inscribes,
dates, stamps, and delivers it in accordance with the purchaser's instructions.
(d) Term. A Series H bond will be dated as of the first day of the month in
which payment therefor is received by an agent authorized to issue the bonds.
This date is the issue date and the bond will mature and be payable 10 years
from the issue date. The bond may not be called for redemption before the maturity date or any authorized extended maturity date, but may be redeemed at par
after 6 months from the issue date. However, the Department may require
reasonable notice of presentation for redemption before the maturity date or
any authorized extended maturity date.
(e) Interest {investment yield). The interest on a Series H bond will be paid
semiannually by check drawn to the order of the registered owner or coowners,
beginning 6 months from issue date. Interest payments will be on a graduate
scale, fixed to produce an investment yield of approximately 5 percent per annum,
comi)ounded semiannually if the bond is held to maturity but the yield will be less
if the bond is redeemed prior thereto (see table 1). Interest will cease at maturity, or at the end of the extension period for bonds for which an extension has
been granted, or in the case of redemption before maturity, at the end of the
interest period next preceding the date of redemption, except that if the date of
redemption falls on an interest payment date, interest will cease on that date.
(f) Outstanding honds unth issue dates June 1, 1969, or thereafter. Series
H bonds with issue dates of June 1, 1969, or thereafter, and outstanding on the
effective date of the regulations in this part, are deemed to he Series H bonds
issued under the terms of this part and the interest provided for in paragraph
(e) of this section is applicable to such bonds. Series H bond stock on sale prior
to June 1, 1969, will be used for issue under this part until such time as new stock
is printed and supplied to issuing agents. Such bonds have the new interest
rate as fully as if expressly set forth in the text of the bonds. It will be unnecessary for owners to exchange bonds issued on old stock for bonds on new
stock as the Department of the Treasury will issue interest checks for the
bonds in the appropriate amounts as set forth in Table 1. However, when the
new stock becomes available, issuance on the new stock may be obtained by
presentation for that purpose of bonds issued on the old stock to any Federal
Reserve Bank or Branch, or to the Treasurer of the United States, Securities
Division, Washington, D.C. 20220.
§ 352.3 Governing regulations.
Series H bonds are subject to the regulations of the Treasury Department,
now or hereafter prescribed, governing U.S. Savings Bonds, contained in Department Circular No. 530, current revision (Part 315 of this subchapter) .^
§ 332.4 Registration.
(a) General. Generally, only residents of the United States, its territories
and possessions, the Commonwealth of Puerto Rico, the Canal Zone and citizens
of the United States temporarily residing abroad are eligible to be named
as owners of Series H bonds. The bonds may be registered in the names of natural
persons in their own right as provided in paragraph (b) of this section, and in
the names and titles or capacities of fiduciaries and organizations as provided
in paragraph (c) of this section. Full information regarding authorized forms
of registration and restrictions with respect thereto will be found in the
governing regulations.
(b) Natural persons in their own right. The bonds may ibe registered in the
names of natural persons (whether adults or minors) in their own right, single
ownership, coownership, and beneficiary forms.
(c) Others. The bonds may be registered in single ownership form in the
names of fiduciaries and private and public organizations, as follows:
(1) Fiduciaries. In the names of and showing the titles or capacities of any
persons or organizations, public or private, as fiduciaries (including trustees,
legal guardians or similar representatives, and certain custodians) but not
1 Coipies may be obtained on application to any Federal Reserve Bank or Branch or the
Bureau of the Public Debt, Washington, D.C. 20220, or its Chicago Offlce, 536 South Clark
Street, Chicago, 111. 60605.
EXHIBITS
245
where the fiduciary would hold the bonds merely or principally as security for
the performance of a duty, obligation, or service.
(2) Private and puhlic organizations. In the names of private or public organizations (including private corporations, jxartnerships, and unincorporated associations, and States, counties, public corporations, and other public bodies), in their
own right, but not in the names of commercial banks.^
§ 332.5 Limitation on holdings.
The amount of 'Series H bonds originally issued during any 1 calendar year
that may be held by any one person, at any one time, computed in accordance
with the governing regulations, is limited, as follows :
(a) General limitation. $5,000 (face amount) for the calendar year 1969^ and
each calendar year thereafter.^
(b) Special Umitation for gifts to exempt organizations under 26 CFR 1.501
(c) {3)-l. $200,000 (face amount) for the calendar year 1969 and each calendar
year thereafter for bonds received as gifts by an organization which at the time
of purchase was an exempt organization under the terms of 26 CFR 1.501(c)
(3)-l.
(c) Exchanges pursuant to Department Circular No. 1036, as amended. Series
H bonds issued in exchange for bonds of Series E* under the provisions of
Department Circular No. 1036, as amended (Part 339 of this subchapter), are
exempt from the annual limitation.
§332.6 Purchase of bonds.
(a) Agents. Only the Federal Reserve Banks and Branches and the Treasury
Department are authorized to act as oflicial issuing agents for the sale of Series
H bonds. However, financial institutions may forward applications for purchase
of the bonds. The date of receipt of the application and payment to an issuing
agent will govern the issue date of the bonds purchased.
(b) Application for purchase and remittance. The applicant for purchase of
Series H bonds should furnish (1) instructions for registration of the bonds to
be issued, which must be in authorized form, (2). the appropriate taxpayer identifying number,^ (3) the post office address of the owner or first-named coowner,
and (4) the address for delivery of the bonds and for mailing checks in payment
of interest, if other than that of the owner or first-named coowner. The application should be forwarded to a Federal Reserve Bank or Branch or the Oflice of the
Treasurer of the United States, Securities Division, Washington, D.C. 20220,
accompanied by a remittance to cover the purchase price. Any form of exchange
including personal checks will be accepted subject to collection. Checks or other
forms of exchange should be drawii to the order of the Federal Reserve Bank or
Treasurer of the United States, as the case may be. Checks payable by endorsement are not acceptable. Any depositary qualified pursuant to Treasury Department Circular No. 92, current revision (Part 203 of this chapter), will be permitted
to make payment by credit for bonds applied for on behalf of its customers up to
any amount for which it shall be qualified in excess of existing deposits, when so
notified by the Federal Reserve Bank of its district.
§ 332.7 Delivery of bonds.
Authorized issuing agents will deliver the Series H bonds either in person, or
by mail at the risk and expense of the United States, at the address given by
the purchaser, but only within the United States, its territories and possessions.
1 Commercial banks, as defined in § 315.7(c) ( 1 ) , D e p a r t m e n t Circular No. 530, current
revision, for this purpose are those accepting demand deposits.
2 Investors who purchased less t h a n $5,000 (face a m o u n t ) of t h e bonds prior to the
effective date of these regulations will be entitled only to purchase enough to bring their
total for the year to t h a t amount. Investors who purchased more t h a n t h a t amount prior
to t h e effective d a t e will not be entitled to purchase additional bonds during the calendar
year.
3 The proceeds of redemption of bonds of Series F , G, J, and K, all now matured, may
be used by owners to purchase Series H bonds without regard to the limitation under the
conditions a n d restrictions set fonth in § 332.5(b) of t h e F o u r t h Revision of this circular.
* Series J bonds became ineligible for exchange under D e p a r t m e n t Circular No. 1036, as
amended, on Nov. 1, 1969.
^ The number required to be used on tax r e t u r n s and other documents submitted to the
I n t e r n a l Revenue Service (an individual's social security account number or employer
identification n u m b e r ) . If the coowners are husiband and wife, the husband's number should
be furnished. If the coowners are a minor a n d an adult, t h e a d u l t ' s number should be
fumisihed.
246
1970 REPORT OF THE SECRETARY OF THE TREASURY
the Commonwealth of Puerto Rico, and the Canal Zone. No mail deliveries elsewhere will be made. If purchased by citizens of the United States temporarily residing abroad, the bonds will be delivered at such address in the United States
as the purchaser directs.
§ 332.8 Extended term and improved yields for outstanding bonds.
(a) Extended maturity period—(1) General. The term "extended maturity
period," when used herein, refers to the interval after the maturity dates during
which owners may retain their bonds and continue to earn interest thereon. No
special action is required of owners desiring to take advantage of any extensions
heretofore or hereby granted. Merely by continuing to hold their bonds after maturity, owners will continue to earn further interest.^
(2) Bonds with issue dates June 1, 1952, through Novemher 1, 1965. Owners
of Series H bonds with issue dates of June 1, 1952, through November 1, 1965,
may retain their bonds for an extended maturity period of 10 years.
(b) Improved yields^—(1) Outstamding honds. The investment yield on all
Series H bonds outstanding on the effective date of these regulations is hereby
increased to approximately 5 percent per annum, compounded semiannually, as
follows:
(i) Bonds with issue dates June 1,1961, through May 1,1969. For the remaining
period to the maturity date.
(ii) Bonds with issue dates Decemher 1,1959, through May 1,1961. For any remaining period to the maturity date, and for the extended maturity period.
(iii) Bonds with issue dates June 1, 1952, through Novemher 1, 1959. For any
remaining period to the extended maturity date.
The yield will be less if the bonds are redeemed earlier. The increase, on a graduated basis, will begin with the first interest period starting on or after June 1,
1969.
(2) Presently authorized extensions. The investment yield for any presently
authorized extension period for which tables of redemption values and investment
yields are not announced and published herein will be at the rate in effect for
Series H bonds currently issued on the maturity date.
§332.9 Taxation.
The income derived from Series H bonds is subject to all taxes imposed under
the Intemal Revenue Code of 1954. The bonds are subject to estate, inheritance,
gift, or other excise taxes, whether Federal or State, but are exempt from all
taxation now or hereafter imposed on the principal or interest thereof by any
State, by any of the possessions of the United States, or by any local taxing
authority.
§ 332.10 Redemption or payment.
Prior to maturity, or extended maturity for bonds having an extended maturity
period, a Series H bond will be redeemed at par at the option of the owner, in
whole or in part, in the amount of an authorized denomination or multiple
thereof, after 6 months from issue date, upon presentation and surrender of the
bond with a duly executed request for payment to (a) a Federal Reserve Bank
or Branch, (b) the Office of the Treasurer of the United States, Securities
Division, Washington, D.C. 20220 or (c) the Bureau of the Public Debt, Division
of Loans and Currency Branch, 536 South Clark Street, Chicago, 111. 60605. However, a bond received for redemption or payment by an agency during the calendar
month preceding an interest payment date will not be redeemed or paid until that
date. At or after maturity, or extended maturity for bonds having an extended
maturity period, a bond presented for redemption will be paid at par.
§ 322.11 Reservation as to issue of bonds.
The Secretary of the Treasury reserves the right to reject any appUcation for
Series H bonds, in whole or in part, and to refuse to issue or permit to be issued
hereunder any such bonds in any case or any class or classes of cases if he deems
such action to be in the public interest, and his action in any such respect shall
be final.
^The tables incorporated herein, arranged according to issue dates, show the current
schedules of interest payments and investment yields.
^ See appendix for maturities and summary of invesited yields to maturity and
extended maturity dates under regulations heretofore prescribed for Series H bonds with
issue dates June 1,1952, through May 1, 1969.
247
EXHIBITS
T A B L E S OF CHECKS ISSUED AND INVESTMENT Y I E L D S FOR UNITED STATES SAVINGS B O N D S OF SERIES H
Each tabic shows: (1) The amounts of interest check payments during the current maturity period and during any
authorized subsequent maturity period, on bonds bearing issue dates covered by the table;. (2) for each maturity
period shown, the approximate investment yield on thc face value from the beginning of such maturity period to
each subsequent interest payment date; and (3) the approximate investment yield on the face value from each interest payment date to next maturity. Yields are expressed in terms of rate percent per annum, compounded semiannually.
TABLE 1 .
B O N D S BEARING I S S U E D A T E S B E G I N N I N G J U N E 1, 1969
{
Maturity value
Redemption value i
Issueprice
$500
500
500
$5,000
5,000
5,000
(1) Amounts of interest
checks for each denomination
Period of time bond is held after issue date
J^year
1 year
IH years2 years
23^ years
3 years
3A years
4 years
4A years
5 years
5J^ years
6 years
6J^ years
7years
7A years
Syears
SA years
Oyears
9H years
10 years (maturity)
$1,000
1,000
1,000
i
$8.75
12.75
12.75
12.75
12.75
12.75
12.75
12.75
12.75
12.75
12.75
12.75
12.75
. 12.75
12.75
12.75
12.75
12.75
12.75
12.75
$17.50
25.60
25.50
25.60
25.60
25.50
25. 50
25.50
25.60
25.50
25.60
25.60
26.60
25.60
25.50
25.50
25.50
25.60
26.50
25.50
Approximate investment
yield on face value
(2) From issue (3) From each
date to each
interest payinterest pay- ment date to
ment date
maturity
$87.50
127.60
127.50
127. 60
127.60
127. 50
127.50
127. 50
127.50
127.50
127.60
127.50
127.60
127.60
127.50
127.60
127.50
127.50
127.60
127.50
Percent
3.50
4.29
4.65
4.69
4.76
4.82
4.85
4.88
4.90
4.92
4.94
4.95
4.96
4.97
4.97
4.98
4.99
4.99
5.00
5.00
Percent
6.10
6.10
6.10
5.10
5.10
5.10
5.10
5.10
5.10
5.10
6.10
5.10
5.10
5.10
5.10
6.10
5.10
5.10
5.10
1 At all times, except that bond is not redeemable during first 6 months.
TABLE 2
B O N D S BEARING ISSUE D A T E S F R O M J U N E 1 T H R O U G H S E P T E M B E R 1, 1952
$500
500
Face value/^^"® P"*^®
IRedemption and maturity value.
Period of time bond is held after maturity
date
$1,000
1,000
$5,000
5,000
$10,000 Approximate investment yield
10,000
on face value
(1) Amounts of interest checks for
each denomination
EXTENDED MATURITY
PERIOD
Hyear
lyear
IM years
2 years
2H years
3 years...
3H years
4 years...4Hycai-s
Syears
5M years
6 years
6K years
7 years
7H years
i(8/l/62)
(2/1/63)
(8/1/63)
(2/1/64)
(8/1/64)
(2/1/66)
(8/1/65)
(2/1/66)
(8/1/66)
(2/1/67)
(8/1/67)
(2/1/68)
(8/1/68)
(2/1/69)
(8/1/69)
$9.37
9.37
9.37
9.37
9.37
9.37
9.37
9.37
9.55
9.55
9.66
10.15
10.15
10.15
10.60
$18. 75
18.75
18.75
18.75
18.75
18.76
18.76
18.75
19.10
19.10
19.10
20.30
20.30
20.30
21.20
$93.75
93.75
93.75
93.76
93.76
93. 75
93.75
93.75
96.60
' 95. 50
95.50
101.60
101.60
101.50
106.00
$187. 50
187.50
187. 50
187.60
187. 60
187.50
187.50
187.60.
191.00
191.00
191.00
203.00
203.00
203.00
212. 00
(2) From
beginning of
(3) From
extended
each interest
maturity
payment date
period to each to extended
interest paymaturity 2
raent date
Percent
3.76
3.75
3.75
3.75
3.76
3.75
3.75
3.75
3.76
3.70
3.77
3.70
3.81
3.82
3.85
Percent
3.75
3.75
3.75
3.75
3.76
3.75
3.75
4.15
4.19
4.23
4.28
4.31
4.44
4.51
6.00
Amounts of interest checks and investment yields to extended maturity on basis of June 1, 1969, revision
Syears
SH years
Oyears
OH years
10 years (exiended maturiiy) »
(2/1/70) .
(8/1/70)
(2/1/71)
(8/1/71)
(2/1/72)
10.80
11.26
12.60
12.96
15.30
21.60
22. 50
25.00
25.90
30.60
108.00
112. 50
125. 00
129.60
153.00
216. 00
225.00
250.00
259. 00
306.00
3.87
3.00
3.06
4.01
M.09
5.18
5.42
5.64
6.12
» Month, day, and year on which interest check is payable on issues of June 1,1052. For subsequent issue months
add the appropriate number of months.
2 Based on schedule of interest checks in effect on thc interest payment date from which the yield is computed.
310 years and 8 months after issue date.
* Yield on purchase price from issue date to extended maturity is 3.63 percent.
248
1970 REPORT OF THE SEGRETARY OF THE TREASURY
TABLE 3
B O N D S BEARING ISSUE DATES F R O M O C T O B E R 1, 1952 T H R O U G H M A R C H 1, 1953
r a c e va'ue^jj^^^pjj^jj^ ^^^ maturity value.
$500
500
$1,000
1,000
$5,000
5,000
$10,000 Approximate investment yield
on face value
10,000
(1) Amounts of iinterest checks for
each denomination
Period of time bond is held after maturity
date
A year...
lyear
I H years...
2 years
2H years
Syears
3H years
4 years
4H y e a r s . . . .
5 years
5H years
6 years
6H y e a r s . . .
7 years
« (12/1/62)
.(6/1/63)
(12/1/63)
(6/1/64)
(12/1/64)
(6/1/65)
(12/1/65)
(6/1/66)
(12/1/66)
(6/1/67)
..(12/1/67)
(6/1/68)
(12/1/68)
(6/1/69)
EXTENDED MATURITY
PERIOD
$9.37
9.37
9.37
9.37
9.37
9.37
9.37
9.66
9.65
9.65
10.05
10.05
10.05
10.60
$18.75
18.75
18.75
18.75
18.75
18.75
18.75
19.10
19.10
19.10
20.10
20.10
20.10
21.20
$93.75
93.75
93.75
93. 75
93.75
93.75
93.75
96.50
95.60
95.60
100.50
100.60
100.60
106.00
$187.60
187.60
187:50
187.50
187.50
187.50
187.50
191.00
191.00
191.00
201.00
201.00
201.00
212. 00
(2) From
(3) From
beginning of
each interest
extended
payment date
maturity
period to each to extended
maturity 2
interest payment date
Percent
3.75
3.75
3.75
3.76
3.75
3.75
3.75
3.76
3.76
3.77
3.79
3.81
3.82
3.85
Percent
3.75
3.75
3.75
3.75
3.75
3.75
4.16
4.18
4.22
4.26
4.29
4.43
4.60
5.00
Amounts of interest checks and investment yields to extended m a t u r i t y on basis of June 1,1969, revision
7H years
Syears
SH years
Oyears..
9H years
10 years (extended maturity) »
(12/1/69)
(6/1/70)
(12/1/70)
(6/1/71)
(12/1/71)
(6/1/72)
10.80
11.20
11. 55
12.80
13.20
15.80
21.60
22.40
23.10
25.60
26.40
31.60
108.00
112.00
116.60
128.00
132.00
158.00
216.00
224.00
231.00
256.00
.264.00
316.00
3.88
3.91
3.94
4.00
4.05
M.15
5.14
5.32
5.56
5.79
6.32
»Month, day, and year on which interest check is payable on issues of Oct. 1,1962. For subsequent issue months add
the appropriate nuraber of raonths.
2 Based on schedule of interest checks in effect on tho interest payment date frora which the yield is coraputed.
319 years and 8 raonths after issue date.
* Yield frora issuo date to extended raaturity date on bonds dated: Oct. 1 and Nov. 1,1952 is 3.56 percent; Dec. 1,
1952 through Mar. 1,1953 is 3.56 percent.
249
EXHIBITS
TABLE 4
BONDS BEARING ISSUE D A T E S F R O M APRIL 1 T H R O U G H S E P T E M B E R ]
Pace value ^'^"^P"*^®
r a c e vaiue^jj^gj^p^.^jj^ ^^^ maturity value.
Period of time bond is held after maturity
date
$500
500
$1,000
1,000
$5,000
5.000
$10,000 Approxiraate investment yield
10,000
on face value
(1) Amounts of interest checks for
each denomination
EXTENDED MATURITY
PERIOD
Hyear
lyear
I H years
2 years
2H years
3 years
3H years
4 years
4H years
6 years
6H years
6 years
6H years
» (6/1/63)
(12/1/63)
(6/1/64)
(12/1/64)
(6/1/66)
(12/1/66)
(6/1/66)
. ' . . . (12/1/66)
(6/1/67)
(12/1/67)
(6/1/68)
(12/1/68)
(6/1/69)
$9.37
9.37
9.37
9.37
9.37
9.37
9.65
9.55
9.55
10.00
10.00
10.00
10.50
$18. 75
18.75
18.75
18.75
18.75
18.75
19.10
19.10
19.10
20.00
20.00
20.00
21.00
$93. 76
93.76
93.75
93.75
93. 75
93.75
96.60
95.50
95.50
100.00
100.00
100.00
105.00
$187. 60
187.60
187.50
187.50
187.60
187.60
191.00
191.00
191.00
200.00
200.00
200.00
210. 00
(2) From
(3) From .
beginning of
extended
each interest
payraent date
maturity
period to each to extended
raaturity 2
interest payment date
Percent
3.75
3.76
3.75
3.76
3.75
3.75
3.76
3.77
3.77
3.79
3.81
3.82
3.86
Percent
3.75
3.75
3.75
3.76
3.75
4.15
4.18
4.21
4.26
4.28
4.42
4.48
5.00
Amounts of interest checks and investment yields to extended maturity on basis of June 1,1969, revision
7 years
7H years
Syears
SH years
9 years
9H years
10 years (extended maturity) 3
(12/1/69)
(6/1/70)
(12/1/70)
(6/1/71)
(12/1/71)
(6/1/72)
(12/1/72)
10.65
11.00
11.35
12.60
12.95 .
13.30
16.15
21.30
22.00
22.70
26.20
25. 90
26.60
32.30
106.50
110.00
113. 50
126.00
129.60
133.00
161.50
213.00
220.00
227.00
252.00
259.00
266.00
323.00
3.88
3.91
3.94
3.99
4.05
4.10
M.20
5.13
6.29
5.49
5.64
5.88
6.46
> Month, day, and year on which interest check is payable on issues of Apr. 1,1953. For subsequent issue months
add the appropriate number of raonths.
2 Based on schedule of interest checks in effect on the interest payraent date frora which the yield is computed.
319 years and 8 raonths after issue date.
4 Yield frora issuo date to extended maturity date on bonds dated: Apr. 1 and May 1, 1953 is 3.59 percent; June
1 through Sept. 1,1953 is 3.60 percent.
250
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 5
B O N D S BEARING ISSUE D A T E S F R O M O C T O B E R 1. 1953 T H R O U G H M A R C H 1, 1954
F»rov»luP /Issueprice
r a c e value ^ Redemption and maturity value.
Period of time bond is held after inaturity
date
$500
500
$1,000
1,000
$5,000
5.000
$10,000 Approximate investment yield
10,000
on face value
(1) Amounts of interest checks for
each denoraination
EXTENDED MATURITY
PERIOD
Hyear..
1 year
I H years
2 years
2H years
3 years
3H years
4 years..
4H years
5y(Bars
5H years
6 years
»(12/l/63)
:(6/l/64)
:....(12/1/64)
(6/1/65)
(12/1/65)
(6/1/66)
-(12/1/66)
(6/1/67)
(12/1/67)
(6/1/68)
.(12/1/6S)
(6/1/69)
$9.37
9.37
9.37
9.37
9.37
9. 55
9.55
9.65
9.95
9.95
9.95
10.45
$18. 75
18.75
18.75
18.75
18.75
19.10
19.10
19.10
19.90
19.90
19.90
20.90
$93. 75
93.75
93.75
93.75
93.76
96.60
95.50
95.60
99.50
99.50
99.60
104.60
$187. 50
187.60
187.50
187.50
187.60
191.00
191.00
m.oo
199.00
199.00
199.00
209.00
(2) Frora
(3) From
beginning of
each interest
extended
maturity
payraent date
period to each to extended
maturity 2
interest payment date
Percent
3.75
3.75
3.75
3.75
3.75
3.76
3.77
3.78
3.80
3.81
3.83
3.85
Percent
3.75
3.75
3.75
3.75
4.15
4.18
4.21
4.25
4.27
4.41
4.46
6.00
Amounts of interest checks and investment yields to extended raaturity on basis of June 1,1969, revision
6H years
(12/1/69)
7 years
(6/1/70)
7H years
(12/1/70)
Syears
:..
(6/1/71)
SH years
(12/1/71) •
9 years
:r6/l/72)
9H years
:
(12/1/72)
10 years (extended maturity) ».-..:(6/l/73)
10.60
10.90
11.25
11.55
12.90
13. 25
13.65
16.76
21. 20
21.80
22.60
23.10
25.80
26.60
27.10
33.50
106.00
109.00
112.60
116.50
129.00
132.50
135.60
167.50
212.00
218.00
225.00
231.00
258.00
265.00
271.00
335.00
3.88
3.91
3.94
3.98
4.04
4.10
4.15
«4.26 - . - - . .
5.12
6.25
6.42
5.63
• 5.79
6.05
6.70
»Month, day, and year on which interest check is payable on issues of Oct. 1,1953. For subsequent issue months
add the appropriate number of months.
2 Based on schedule of interest checks in effect on the interest payment date from which the yield is computed.
319 years and 8 months after issue date.
* Yield from issue date to extended maturity date on bonds dated: Oct. 1 and Nov. 1,1953 is 3.62 percent; Dec. 1,
1953 through Mar. 1,1954 is 3.64 percent.
251
EXHIBITS
TABLE 6
B O N D S BEARING ISSUE D A T E S P R O M APRIL 1 T H R O U G H S E P T E M B E R I. 1954
Face v a l u e / ' ^ " ® P"*^®
(Redemption and maturity value.
$500
500
$1,000
1,000
$5,000
5,000
$10,000 Approxiraate investraent yield
10,000
on face value
(1) Amounts of interest checks for
each denomination
Period of time bond is held after maturity
date
EXTENDED MATURITY
PERIOD
Hyear
lyear
iHyears
2 years
2H years
3 years....
3H years
4 years
4H years
5 years
6H years
•....
» (6/1/64)
(12/1/64)
(6/l'65)
(12/1/65)
(6/1/66)
(12/1/66)
(6/1/67)
(12/1/67)
(6/1/68)
(12/1/68)
(6/1/69)
$9.37
9.37
9.37
9.37
9.66
9.56
9.55
9.55
10.15
10.15
10.15
$18.75
18.75
18.75
18.75
19.10
19.10
19.10
19.10
20.30
20.30
20.30
$93.75
93.75
93.75
93.75
95.5
-95.60
95.50
96.50
101.50
101.60
101.60
$187.50
187.50
187.60
187.50
191.00
191.00
191.00
191.00
203.00
203.00
203.00
(2) From
beginning of
extended
maturity
period to each
interest payraent date
Percent
3.75
3.75
3.75
3.75
3.76
3.77
3.78
3.78
3.81
3.83
3.85
(3) Frora
each interest
payment date
to extended
maturity 2
Percent
3.75
3.75
3.76
4.15
4.18
4.20
4.24
4.28
4.40
4.44
5.00
Amounts of interest checks and investment yields to extended maturity on basis of June 1,1969, revision
6 years
(12/1/69)
6 H years
(6/1/70)
7 years
(12/1/70)
7H years
(6/1/71)
8 years
(12/1/71)
SH years
(6/1/72)
9 years
(12/1/72)
9H years
(6/1/73)
10 years (extended maturity) K...(12/1/73)
10.30
11.05
11.30
11.60
11.90
13.10
13.40
13.70
17.15
20.60
22.10
22.60
23.20
23.80
26.20
26.80
27.40
34.30
103.00
110.50
113.00
116.00
119.00
131.00
134.00
137.00
171.50
206.00
221.00
226.00
232.00
238.00
262.00
268:00
274.00
343.00
3.87
3.91
3.95
3.99
4.03
4.09
4.15
4.21
M.31
5.12
5.23
5.36
• 5.52
5.72
5.89
6.16
6.86
»Month, day, and year on which interest check is payable on issues of Apr. 1, 1964. For subsequent issue raonths
add the appropriate nuraber of raonths.
2 Based on schedule of interest checks in effect on the interest payraent date frOm which the yield is computed.
319 years and 8 months after issue date.
* Yield frora issue date to exterided raaturity date on bonds dated: Apr. 1 and May 1,1954 is 3.66 percent; June 1
through Sept. 1,1954 is 3.68 percent.
3OT-762 O—71
252
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 7
. B O N D S BEARING ISSUE D A T E S F R O M O C T O B E R 1, 1954 T H R O U G H M A R C H 1, 1955
r a c e vaiue^j^^^g^p^j^j^ ^^^ maturity value.
Period of time bond is held after maturity
date
500
$1,000
1,000
$5,000
5,000
$10,000 Approximate investment yield
10,000
on face value
(1) Amounts of interest checks for
each denomination
EXTENDED MATURITY
PERIOD
Hyear
1 year..
IHyears
2 years
2H years
3 years
3H years-.
4 years
4H years
5 years
i (12/1/64)
...(6/1/65)
(12/1/65)
-(6/1/66)
(12/1/66)
(6/1/67)
..(12/1/67)
(6/1/68)
(12/1/68)
(6/1/69)
$9.37
9.37
9.37
9.55
9.55
9.56
9.65
10.10
10.10
10.10
$18.76
18.76
18.75
19.10
19.10
19.10
19.10
20.20
20.20
20.20
$93.75
93.75
93.76
05.60
95.60
96.60
96.60
101.00
101.00
101.00
$187.50
187.60
187.50
191.00
101.00
191.00
191.00
202.00
202.00
202.00
(2) Frora
(3) From
beginning of
each interest
extended
payment date
maturity
period to each to extended
raaturity 2
interest payment date
Percent
3.75
3.75
3.75
3.77
3.78
3.78
3.79
3.82
3.84
3.86
Percent
3.75
3.75
4.15
4.17
4.20
4.23
4.27
4.39
4.43
5.00
Amounts of interest checks and investraent yields to extended maturity on basis of June 1,1969, revision
6H years..
Oyears
6Hyeai-s
7 years
7H years
1
Syears
SH years
Oyears
OH years
10 years (extended maturity) 3
..(12/1/69)
(6/1/70)
(12/1/70)
(6/1/71)
(12/1/71)
(6/1/72)
(12/1/72)
(6/1/73)
(12/1/73)
(6/1/74)
10.25
10.95
11.20
11.60
11.75
12.06
13.35
13.65
13.95
17.70
20.50
21.90
22.40
23.00
23.60
24.10
26.70
27.30
27.90
35.40
102.50
109.60
112.00
115.00
117.50
120.60
133.60
136.50
139.50
177.00
206.00
219.00
224.00
230.00
235.00
241.00
267.00
273.00
279.00
354.00
3.88
3.92
3.95
4.00
4.04
4.08
4.14
4.20
4.26
M.37
6.11
6.22
5.33
5.46
6.63
5.85
6.02
6.32
7.08
> Month, day, and year on which interest check is payable on issues of Oct. 1,1954. For subsequent issue months
add the appropriate number of raonths.
2 Based on schedule of interest checks in efiect on the interest payment date frora which the yield is computed;
319 years and 8 months after issue date.
* Yield from issue date to extended maturity date on bonds dated: Oct. 1 and Nov. 1,1954 is 3.70 percent; Dec. 1,
1954 through Mar. 1, 1955 is 3.71 percent.
253
EXHIBITS
TABLE 8
BONDS BEARING ISSUE DATES FROM APRIL 1 THROUGH SEPTEMBER 1, 1955
PftcP vfllue/'^"® P ^ ^
**®
'"*^®^*'"®IRedemption and maturity value.
?500
500
$1,000
1,000
$5,1000
,000
5,i
$10,000 Approximate investment yield
10,000
on face value
(1) Amounts of interest checks for
each denomination
Period of time bond is held after maturity
date
Hyear
lyear.
IHyears
2 years
2H years
3 years
3H years
4 years
4H years
» (6/1/65)
(12/1/65)
(6/1/66)
(12/1/66)
(6/1/67)
(12/1/67)
(6/1/68)
(12/1/68)
(6/1/69)
EXTENDED MATURITY
PERIOD
$9.37
9.37
9.55
9.55
9.55
9.55
10.05
10.05
10.06
$18.75
18.75
19.10
19.10
19.10
19.10
20.10
20.10
20.10
$93.75
93.75
95.50
95.60
95.50
95.50
100.50
100.50
100.50
$187.50
187.60
191.00
191.00
191.00
191.00
201.00
201.00
201.00
(2) From
(3) From
beginning of
each interest
extended
payment date
maturity
period to each to extended
maturity 2
interest payraent date
Percent
3.75
3.76
3.77
3.78
3.79
3.80
3.83
3.85
3.87
Percent
3.75
4.15
4.18
4.20
4.23
4.27
4.39
4.42
5.00
Amounts of interest checks and investraent yields to extended raaturity on basis of June 1,1969, revision
5 years
6H years
6 years
6H years
7 years
7H years
8 years
SH-years
9 years
9H years
10 Years (extended maturity) 3..
(12/1/69)
(6/1/70)
(12/1/70)
(6/1/71)
(12/1/71)
(6/1/72)
(12/1/72)
(6/1/73)
(12/1/73)
(6/1/74)
(12/1/74)
10.16
10.40
11.30
11.55
11.85
12.10
12.35
13.45
13.75
14.05
18.10
20.30
20.80
22.60
23.10
23.70
24.20
24.70
26.90
27.60
28.10
36.20
101.50
104.00
113.00
115.50
118.50
121.00
123.50
134.50
137.60
140.60
181.00
203.00
208.00
226.00
231.00
237.00
242.00
247.00
269.00
276.00
281.00
362.00
3.88
3.91
3.95
4.00
4.04
4.09
4.13
4.20
4.26
4.31
<4.43.......
5.10
5.22
5.32
5.43
5.55
6.71
6.91
6.10
6.42
7.24
»Month, day, and year on which interest check is payable on Issues of Apr. 1,1955. For subsequent issue raonths
add the appropriate number of
raonths.
,
2 Based on schedule of Interest checks In effect on the interest payraent date frora which the yield Is coraputed.
319 years and 8 months after Issue date.
< Yield from issue date to extended maturity date on bonds dated: Apr. 1 and May 1,1955 Is 3.74 percent; June 1
through Sept. 1,1955 Is 3.75 percent.
254
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 9
B O N D S BEARING ISSUE DATES F R O M O C T O B E R 1, 1955 T H R O U G H M A R C H 1, 1956
n
I /Issueprice
I'ace valuej jjg^gj^pjj^j^ ^^-^ maturity value.
Period of time bond is held after maturity
date
$500
500
$1,000
1,000.
$5,000
5,000
$10,000 Approximate investment yield
10,000
on face value
(1) Araounts of interest checks for
each denomination
EXTENDED MATURITY
PERIOD
Hyear
lyear
IHyears
2 years
2H years.
3 years
3H years
4 years
« (12/1/65)
(6/1/66)
(12/1/66)
(6/1/67)
(12/1/67)
(6/1/68)
(12/1/68)
(6/1/69)
$9.37
9.65
9.65
9.65
9.65
10.00
10.00
10.00
$18.76
19.10
19.10
19.10
19.10
20.00
20.00
20.00
$93.76
96.60
O.^ 50
96.60
95: 60
100.00
100.00
100.00
$187.60
191.00
191.00
191.00
191.00
200.00
200.00
200.00
(2) From
(3) Frora
beginning of
each interest
extended
payment date
maturity
period to each to extended
maturity 2
interest payment date
Percent
3.75
3.78
3.80
3.80
3.81
3.84
3.86
3.87
Percent
4.15
4.17
4.20
4.23
4.26
4.38
4.42
5.00
Amounts of interest checks and investment yields to extended maturity on basis of June 1,1969, revision
4 H years
Syears
6H years
Oyears....
6H years
7 years..
7H years
Syears
SH years
Oyears
9H.years
10 years (extended maturity) »
(12/1/69)
(6/1/70)
(12/1/70)
(6/1/71)
(12/1/71)
(6/1/72)
(12/1/72)
(6/1/73)
(12/1/73)
(6/1/74)
(12/1/74)
(6/1/75)
10.10
10.35
11.25
11.45
11.70
11.95
12.20
13.25.
13.50
13.75
14.00
18.45
20.20
20.70
22.50
22.90
23.40
23.90
24.40
26.60
27.00
27.60
28.00
36.90
101.00
103.60
112. 60
114.60
117.00
119.50
122.00
132.60
136.00
137. 50
140.00
184.50
202.00
207.00
226.00
229.00
234.00
239.00
244.00
265.00
270.00
276.00
280.00
369.00
3.89
3.91
3.96
4.01
4.06
4.10
4.14
4.20
4.26
4.32
4.37
•4.49:
5.10
5.21
5.30
5.40
5.61
6.65
5.81
5.95
6.14
6.48
7.38
> Month, day, and year on which interest check is payable on Issues of Oct. 1, 1965. For subsequent issue months
add the appropriate number of months.
2 Based on schedule of interest checks in effect on the interest payment date from which the yield is computed.
319 years and 8 months after issue date.
< Yield frora Issue date to extended raaturity date on bonds dated: Oct. 1 and Nov. 1,1955 Is 3.78 percent; Dec. 1,
1965 through Mar. 1, 1956 Is 3.80 percent.
255
EXHIBITS
TABLE 10
B O N D S BEARING ISSUE D A T E S F R O M APRIL 1 T H R O U G H MAY 1, 1956
Tissue price
^
I Redemption and maturity value.
Period of time bond is held after maturity
date
$500
500
$1,000
1,000
$5,000
5,000
$10,000 Approximate investment yield
10,000
on face value
(1) Amounts of interest checks for
each denomination
EXTENDED MATURITY
PERIOD
Hyear
lyear
IHyears
2 years
2H years
3 years
3H years...
1 (6/1/66)
..(12/1/66)
(6/1/67)
(12/1/67)
--(6/1/68)
(12/1/68)
(6/1/69)
$10. 37
10.37
10.37
10.37
10.37
10.37
10.37
$20. 75
20.75
20. 75
20.76
20.75
20.75
20.75
$103. 75
103.75
103. 75
103. 75
103. 75
103. 76
103. 76
$207.,60
207.60
207.60
207. 50
207. 60
207. 60
207. 60
(2) From
beginning of
extended
maturity
period to each
interest payment date
(3) From
each interest
payment date
to extended ,
maturity 2
Percent
4.15
4.15
4.16
4.15
4.15
4.15
4.15
Percent
4.16
4.15
4.16
4.16
4.25
4.26
5.00
Amounts of interest checks and investment yields to extended maturity on basis of June 1, 1969, revision
4 years
...-(12/1/69)
4H years...
...-(6/1/70)
6 years
(12/1/70)
6H y e a r s . . . .
(6/1/71)
Oyears
(12/1/71)
6H years
(6/1/72)
7 years
(12/1/72)
7H years
(6/1/73)
Syears
(12/1/73)
SH years
(6/1/74)
Oyears
(12/1/74)
9H years
(6/1/75)
10 years (extended maturity) »
(12/1/75)
10.50
10.80
11.10
11.40
11.65
11.95
12.30
12.60
12.90
13.20
13.65
13.85
18.70
21.00
21.60
22.20
22.80
23.30
23.90
24.60
25.20
26.80
26.40
27.10
27.70
37.40
106.00
108.00
111.00
114.00
116. 50
119. 50
123. 00
126.00
129.00
132.00
135. 60
138.60
187.00
210.00
216.00
222. 00
228.00
233.00
239.00
246.00
262.00
258.00
264.00
271.00
277.00
374.00
4.16
4.17
4.20
4.23
4.26
4.29
4.33
4.37
4.41
4.46
4.50
4.54
<4.66
5.08
5.16
6.24
6.32
5.41
6.61
5.62
6.75
5.91
6.13
6.49
7.48
1 Month, day, and year on which interest check is payable on issues of Apr. 1, 1956. For issues of May 1, 1956 add 1
month.
2 Based on schedule of interest checks in effect on the interest payment date from which the yield is computed.
319 years and 8 months after issue date.
< Yield on purchase price from issue date to extended maturity is 3.86 percent.
256
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 11
B O N D S BEARING ISSUE D A T E S F R O M J U N E 1 T H R O U G H S E P T E M B E R 1. 1956
FacevaIue('®^"®P"<^®-IRedemption and maturity value.
$500
500
$1,000
1,000
$5,000
5,000
$10,000 Approximate investment yield
10,000
on face value
(1) Amounts of interest checks for
each denomination
Period of time bond is held after maturity
date
Hyear
1 year.
IHyears
2 years
2H years
3 years
3H years
i (8/1/66)
(2/1/67)
(8/1/67)
(2/1/68)
(8/1/68)
(2/1/69)
(8/1/69)
EXTENDED MATURITY
PERIOD
$10.37
).37
).37
).37
).37
).37
).37
$20.75
20.75
20. 76
20.75
20.75
20.75
20.76
$103.75
103. 75
103. 75
103. 75
103. 75
103. 75
103. 75
$207.60
207. 60
207. 60
207. 60
207. 60
207. 50
207. 50
(2) From
(3) From
beginning of
each interest
e.xtended
payment date
maturity
period to each to extended
maturity 2
interest payment date
Percent •
4.16
4.16
4.16
4.16
4.16
4.15
4.15
Percent
4.15
4.15
4.15
4.15
4.25
4.26
6.00
Amounts of interest checks and investment yields to extended maturity on basis of June 1, 1969, revision
4 years
4H years
5 years
6H years
Oyears
6H years
7 years
7H years...
Syears
SHycars...
9 years
9H y e a r s 10 years (extended maturity) 3
(2/1/70)
(8/1/70)
(2/1/71)
(8/1/71)
(2/1/72)
(8/1/72)
(2/1/73)
(8/1/73)
(2/1/74)
-(8/1/74)
(2/1/75)
(8/1/76)
(2/1/76)
10.60
10.80
11.10
11.40
11.65
11.95
12.30
12.60
12.90
13.20
13.65
13.85
18.70
21.00
21.60
22.20
22.80
23.30
23.90
24.60
25.20
25.80
26.40
27.10
27.70
37.40
105. 00
108. 00
111.00
114.00
116. 50
119. 60
123. 00
126. 00
129.00
132. 00
135. 50
138. 60
187.00
210. 00
216.00
222. 00
228. 00
233.00
239. 00
246. 00
262.00
258. 00
264.00
271. 00
277. 00
374.00
4.16
4.17
4.20
4.23
4.26
4.29
4.33
4.37
4.41
4.46
4.50
4.54
M.66
5.08
5.16
5.24
6.32
5.41
6.51
6.62
6.75
6.91
6.13
6.49
7.48
1 Month, day, and year on which interest check is payable on issues of June 1. 1956. For subsequent issue months
add the appropriate number of months.
2 Based on schedule of interest checks in effect on the interest payment date from which the yield is computed.
319 years and 8 n onths after issue date.
* Yield on purchase price from issue date to extended maturity is 3.88 percent.
257
EXHIBITS
TABLE 12
B O N D S BEARING ISSUE D A T E S F R O M O C T O B E R 1 T H R O U G H N O V E M B E R 1, 1956
F.ceva.„e{g^-Pjion and maturity value.
$500
500
$1,000
1,000
$5,000
5,000
$10,000 Approximate investment yield
10,000
on face value
(1) Amounts of interest checks for
each denomination
Period of time bond is held after maturity
date
Hyear
lyear
IHyears
2 years
2H years
3 years
..-.
'(12/1/66)
(6/1/67)
(12/1/67)
(6/1/68)
(12/1/68)
(6/1/69)
EXTENDED MATURITY
PERIOD
$10.37
10.37
10.37
10.37
10.37
10.37
$20. 75
20. 76
20. 75
20. 76
20. 75
20.75
$103. 75
103. 75
103. 76
103. 75
103. 75
103.75
$207. 50
207. 50
207. 60
207. 60
207. 50
207.50
(2) From
beginning of
(3) From
extended
each interest
maturity
payment date
period to each to extended
interest paymaturity 2
ment date
Percent
4.15
4.15
4.16
4.16
4.15
4.15
Percent
4.16
4.15
4.15
4.25
4.26
5.00
Amounts of interest checks and investment yields to extended maturity on basis of June 1, 1969, revision
3H years
(12/1/69)
4 years....
(6/1/70)
4H years
(12/1/70)
Syears
(6/1/71)
5H years
(12/1/71)
6 years
(6/1/72)
6H years
(12/1/72)
7 years
(6/1/73)
7H years
(12/1/73)
Syears
(6/1/74)
SH years
..(12/1/74)
9 years
(6/1/75)
9H years
(12/1/75)
10 years (extended maturity) 3
(6/1/76)
10.60
10.75
11.06
11.30
11.60
11.85
12.15
12.46
12.70
13.00
13.30
13.60
13.95
19.10
21.00
21.50
22.10
22.60
23.20
23.70
24.30
24.90
25.40
26.00
26.60
27.20
27.90
38.20
105.00
107.60
110.60
113.00
116.00
118.50
121.60
124.50
127.00
130.00
133.00
136.00
139.50
191.00
210.00
215. 00
221. 00
226. 00
232. 00
237. 00
243. 00
249.00
264.00
260.00
266.00
272. 00
279.00
382.00
4.16
4.17
4.20
4.23
4.26
4.30
4.33
4.37
4.41
4.46
4.50
4.54
4.58
<4.70
6.07
5.14
5.22
6.30
5.38
5.47
5.57
5.68
6.81
6.97
6.20
6.59
7.64
» Month, day, and year on which interest check is payable on issues of Oct. 1, 1956. For issues of Nov. 1, 1956 add
1 raonth.
2 Based on schedule of interest checks in effect on the interest payment date from which the yield is computed.
319 years and 8 months after issue date.
4 Yield on purchase price from issue date to extended maturity is 3.89 percent.
258.
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 13
BONDS BEARING ISSUE D A T E S P R O M D E C E M B E R 1, 1956 T H R O U G H JANUARY 1, 1957
Face valuejjjgjgj^pjj^^ ^^^ maturity value.
$500
500
$1,000
1,000
$5,000
5,000
$10,000 Approximate investment yield
10,000
on face value
(1) Amounts of interest checks for
each denomination
Period of time bond is held after maturity
date
Hyear
lyear.
I H years
2 years
2H years.
3 years
'(2/1/67)
(8/1/67)
(2/1/68)
(8/1/68)
(2/1/69)
(8/1/69)
EXTENDED MATURITY
PERIOD
$10.37
10.37
10.37
10.37
10.37
10.37
$20.75
20. 75
20.75
20.75
20.75
20.76
$103. 75
103.76
103. 75
103.75
103.76
103. 75
$207. 60
207;60
207.60
207. 60
207.60
207. 60
(2) From
beginning of
extended
maturity
period to each
interest payment date
Percent
4.15
4.16
4.16
4.15
4.15
4.15
(3) From
each interest
payment date
to extended
maturity 2
Percent
4.15
4.16
4.15
4.26
4.26
6.00
Amounts of interest checks and investment yields to extended maturity on basis of June 1, 1969, revision
3H years
4 years
4H years.
6 years.
6H years6 years
6H years
7 years
7H years
8 years
SH years
9 years
9H years.
10 years (extended maturity) 3
(2/1/70)
(8/1/70)
(2/1/71)
(8/1/71)
(2/1/72)
(8/1/72)
(2/1/73)
(8/1/73)
(2/1/74)
(8/1/74)
(2/1/76)
(8/1/76)
(2/1/76)
(8/1/76)
10.60
10.75
11.05
11.30
11.60
11.86
12.15
12.45
12.70
13.00
13.30.
13.60
13.95
19.10
21.00
21.50
22.10
22.60
23.20
23.70
24.30
24.90
25.40
26.00
26.60
27.20
27.90
38.20
105.00
107.50
110. 60
113.00
116.00
118.60
121.50
124.50
127.00
130.00
133.00
136.00
139.60
191.00
210.00
215.00
221.00
226.00
232.00
237.00
243.00
249.00
254.00
260.00
266.00
272.00
279.00
382.00
4.16
4.17
4.20
4.23
4.26
4.30
4.33
4.37
4.41
4.46
4.50
4.54
4.58
44.70
6.07
5.14
5.22
5.30
6.38
5.47
5.67
5.68
6.81
5.97
6.20
6.69
7.64
> Month, day, and year on which interest check is payable on issues of Dec. 1, 1956. For issues of Jan. 1, 1957 add
1 month.
2 Based on schedule of interest checks in effect on the interest payment date from which the yield is computed.
319 years and 8 months after issue date.
* Yield on purchase price from issue date to extended maturity is 3.92 percent.
259
EXHIBITS
TABLE 14
B O N D S BEARING ISSUE D A T E S F R O M FEBRUARY 1 T H R O U G H MAY 1, 1957
„„^^ „ „ , „ J I s s u e price
'"*^®^*'"nRedemption and maturity value.
$500
500
$1,000
1,000
$5,000
5.000
$10,000 Approximate investment yield
on face value
10,000
(1) Amounts of interest checks for
each denomination
Period of time bond is held after maturity
date
EXTENDED MATURITY
PERIOD
Hyear..
lyear
IHyears
2 years
2H years
•
K8/1/67)
(2/1/68)
....(8/1/68)
(2/1/69)
....(8/1/69)
$10.37
10.37
10.37
10.37
10.37
$20.75
20.75
20.75
20.75
20.75
$103.75
103.75
103.76
103.75
103.75
$207.50
.207.60
207.60
207.50
207.50
(2) Frora
beginning of
(3) From
extended
each interest
maturity
payment date
period to each to extended
interest paymaturity 2
ment date
Percent
4.15
4.15
4.15
4.16
4.15
Percent
4.15
4.15
4.25
4.26
5.00
Araounts of interest checks and investraent yields to extended raaturity on basis of June 1, 1969, revision
Syears
(2/1/70)
3 H years
(8/1/70)
4 years..-.
(2/1/71)
4H years
(8/1/71)
5 years
(2/1/72)
5H years
(8/1/72)
6 years
(2/1/73)
6H years
(8/1/73)
7 years
(2/1/74)
7H years
(8/1/74)
Syears
:
....(2/1/75)
SH years
(8/1/75)
Oyears
(2/1/76)
9 H years
(8/1/76)
10 years (extended maturity) »
(2/1/77)
10.60
10.75
11.00
11.26
11.60
11.75
12.05
12.30
12.55
12.85
13.10
13.40
13.70
14.00
19.55
105.00
21.00
107.60
21.50
110.00
22.00
112.50
. 22.60
115.00
23.00
117.50
23.60
24.10 . 120.50
123.00
24.60
125.50
25.10
128.60
25. 70
131.00
26.20
134.00
26.80
137.00
27.40
140.00
28.00
195.50
39.10
210.00
215.00
220.00
225.00
230.00
236.00
241.00
246.00
251.00
267.00
262.00
268.00
274.00
280.00
391.00
4.16
4.18
4.20
4.23
4.27
4.30
4.34
4.38
4.42
4.46
4.50
4.64
4.68
4.63
M.75
6.07
5.14
6.21
5.28
5.36
5.44
5.53
5.63
5.74
5.87
6.04
6.28
6.69
7.82
»Month, day, and year on which Interest check Is payable on Issues of F e b . 1,1957. For subsequent issue raonths
add the appropriate nuraber of months.
2 Based on schedule of interest checks in effect on the interest payraent date frora which the yield is computed.
3 20 years after Issue date.
.
.
< Yield on purchase price frora issue date to extended maturity Is 4.09 percent.
260
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 15
B O N D S BEARING ISSUE D A T E S P R O M J U N E 1 T H R O U G H N O V E M B E R 1, 1957
Pace value ^'^^"®P"*^®
-(Redemption and maturity value.
$500
500
$1,000
1,000
$5,000
5,000
$10,000 Approximate investment yield
10,000
on face value
(1) Amounts of interest checks for
each denomination
Period of time bond is held after maturity
date
Hyear
lyear
IHyears
2years
...'(12/1/67)
..(6/1/68)
(12/1/68)
(6/1/69)
EXTENDED MATURITY
PERIOD
$10.37
10.37
10.37
10.37
$20.75
20.75
20.76
20.76
$103.75
103.75
103.75
103.75
$207.60
207.60
207.60
207.50
(2) From
beginning of
extended
raaturity
period to each
interest payment date
Percent
4.15
4.15
4.15
4.15
(3) F r o m
each interest
payment date
to extended
maturity 2
Percent
4.15
4.25
4.26
5.00
Amounts of interest checks and investment yields to extended maturity on basis of June 1,1969, revision
2H years
.(12/1/69).
3 years
--(6/1/70)
3H years
...(12/1/70)
4 years
(6/1/71)
4H years
(12/1/71)
5 years
(6/1/72)
6H years
(12/1/72)
6 years
(6/1/73)
6H years
.(12/1/73)
7 years
(6/1/74)
7H years
(12/1/74)
Syears
(6/1/75)
SH years
(12/1/75)
Oyears
(6/1/76)
OH years
(12/1/76)
10 years (extended maturity) '
(6/1/77)
10.60
10.70
10.95
11.20
11.45
11.70
11.96
12.20
12.45
12.70
12.95
13.20
13.60
13.75
14.06
19.95
21.00
21.40
21.90
22.40
22.90
23.40
23.90
24.40
24.90
26.40
25.90
26.40
27.00
27.50
28.10
39.90
106.00
107.00
109.50
112.00
114.50
117.00
119.60
122.00
124.50
127.00
129.60
132.00
135.00
137.50
140.50
199.50
210.00
214.00
219.00
224.00
229:00
234.00
239.00
244.00
249.00
264.00
259.00
264.00
270.00
275.00
281.00
399.00
4.16
4.18
4.21
4.24
4.27
4.31
4.35
4.39
4.43
4.47
4.51
4.55
4.69
4.63
4.67
M.80
6.07
5.13
5.20
5.27
5.34
5.42
5.50
5.59
5.68
5.79
5.92
6.10
6.34
6.78
7.98
' Month, day, and year on which interest check is payable on issues of June 1,1957. For subsequent issue raonths
add the appropriate nuraber of raonths.
2 Based on schedule of interest checks in effect on the interest payraent date from which the yield is coraputed.
3 20 years after issuo date.
* Yield on purchase price frora Issue date to extended maturity Is 4.13 percent.
261
EXHIBITS
TABLE 16
BONDS BEARING ISSUE DATES PROM DECEMBER 1, 1957 THROUGH MAY 1, 1958
F.cev.lue(gS«Py----i~,
aturity value.
$500
500
$1,000
1,000
$5,000
5,000
$10,000 Approximate investment yield
10,000
on face value
(1) Amounts of interest checks for
each denomination
Period of tirae bond is held after maturity
date
Hyear
1 year
IHyears
...«(6/l/68)
...(12/1/68)
....(6/1/69)
EXTENDED MATURITY
PERIOD
$10.37
10.37
10.37
$20. 75
20.75
20.75
$103. 75
103.75
103. 75
$207.50
207.50
207.50
(2) From
beginning of
extended
maturity
period to each
interest payraent date
Percent
4.15
4.16
4.15
(3) Frora
each interest
payraent date
to extended
raaturity 2
Percent
4.25
4.26
5.00
Amounts of interest checks and investment yields to extended maturity on basis of June 1, 1969, revision
...(12/1/69)
2 years
....(6/1/70)
2H years
...(12/1/70)
3 years
....(6/1/71)
3H years
...(12/1/71)
4 years
....(6/1/72)
4H years
...ri2/l/72)
5 years....:
....(6/1/73)
5Jt years
...(12/1/73)
6 years
....(6/1/74)
6H years
...(12/1/74)
7 years
....(6/1/75)
7H years
...(12/1/75)
Syears
. — (6/1/76)
SH years
...(12/1/76)
9 years
- — (6/1/77)
9H years
10 years (extended .maturity) «. . - ( 1 2 / 1 / 7 7 )
10.50
10.70
10.90
11.15
11.36
11.60
11.85
12.05
12.30
12.55
12. SO
13.05
13.30
13.55
13.85
14.10
20.40
21.00
21.40
21.80
22.30
22.70
23.20
23.70
24.10
24.60
25.10
25.60
26.10
26.60
27.10
27.70
28.20
40.80
106.00
107.00
109.00
111.60
113.50
116.00
118. 50
120.50
123.00
125.50
128.00
130.50
133.00
135. 50
138.50
141.00
204.00
210.00
214.00
218.00
223.00
227.00
232.00
237.00
241.00
246.00
251.00
256.00
261.00
266.00
271.00
277.00
282.00
408.00
4.16
4.18
4.21
4.26
4.28
4.32
4.35
4.39
4.43
4.47
4.51
4.65
4.59
4.63
4.67
4.71
* 4.85 .
5.06
5.12
5.19
5.25
5.32
5.39
5.47
5.55
5.64
5.73
5.85
6.98
6.16
6.42
6.88
8.16
1 Month, day, and year on which interest check Is payable on Issues of Dec. 1,1957. For subsequent issue raonths
add the appropriate nuraber of raonths.
2 Based on schedule of Interest checks in effect on the interest payment date frora which the yield Is computed.
3 20 years after Issue date.
* Yield on purchase price frora issue date to extended maturity Is 4.17 percent.
262
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 17
B O N D S BEARING ISSUE D A T E S F R O M J U N E 1 T H R O U G H N O V E M B E R 1, 1958
'°*^®^"'"® I Redemption'and maturity value
500
$1,000
1,000
$5,000
5,000
$10,000 Approximate investment yield
10,000
on face value
(1) Amounts of interest checks for
each denomination
Period of time bond is held after maturity •
date
EXTENDED MATURITY
PERIOD
H year..
1 year...
1 (12/1/68)
- (6/1/69)
.$10.37
10.37
$20. 75
20. 76
$103. 75
103.75
$207. 50
207. 60
(2) Frora
beginning of
extended
, raaturity
period to each
interest payment date
Percent
4.15
4.15
(3) From
each interest
payment date
to extended
maturity 2
Percent
4.26
6.00
Amounts of interest checks and investment yields to extended maturity on basis of June 1, 1969, revision
IHyears
2 years
2H years
3 years
3H years
4 years...
.'
4H years
6 years
6H years
6 years
6H years
7 years.
7H years
8 years
SH years.
9 years
9 H years
10 years (extended maturity) 3
(12/1/69)
(6/1/70)
(12/1/70)
(6/1/71)
(12/1/71)
(6/1/72)
(12/1/72)
(6/1/73)
(12/1/73)
(6/1/74)
(12/1/74)
(6/1/76)
(12/1/75)
(6/1/76)
(12/1/76)
(6/1/77)
(12/1/77)
(6/1/78)
10.50
10.70
10.90
11.10
11.30
11.65
11.75
12.00
12.20
12.45
12.65
12.90
13.15
13.40
13.65
13.90
14.16
20.85
21.00
21.40
21.80
22.20
22.60
. 23.10
23.60
24.00
24.40
24.90
25.30
25.80
26.30
26.80
27.30
27.80
28.30
41.70
105.00
107.00
109.00
111.00
113.00
116. 60
117. 60
120.00
122.00
124.60
126. 60
129.00
131. 50
134.00
136.50
139.00
141.60
208.50
210.00
214.00
218.00
222.00
226.00
231.00
235.00
240.00
244.00
249.00
253.00
258.00
263.00
268.00
273.00
278.00
283.00
417.00
4.17
4.19
4.23
4.26
4.29
4.33
4.37
4.41
4.45
4.49
4.52
4.56
4.60
4.64
4.68
4.72
4.76
M.90
6.06
6.12
5.18
5.24
6.31
5.37
5.45
5.62
5.60
5.69
6.79
5.90
6.04
6.22
6.49
6.98
8.34
» Month, day, and year on which interest check is payable on issues of June 1, 1958. For subsequent Issue months
add the appropriate number of months.
2 Based on schedule of interest checks in effect on the interest payment date from which the yield is computed.
3 20 years after Issue date.
< Yield on purchase price from issue date to extended maturity is 4.22 percent.
263
EXHIBITS
TABLE 18
B O N D S BEARING ISSUE D A T E S F R O M D E C E M B E R 1, 1958 T H R O U G H MAY 1. 1959
F a r P v a l u e / ' ^ " ^ P"*^®
?500
'^*'^®^"'"® IRedemption and'maturityvalue.
$1,000
500
1,000
$5,000
5,000
$10,000
10,000
(1) Amounts of interest checks for
each denomination
Period of time bond is held after maturity
date
^year...
» (6/1/69)
EXTENDED MATURITY
PERIOD
$10.37
).76
$103.75
$207.50
Approximate investment yield
on face value
(2) From
beginning of
(3) From
extended
each interest
maturity
payment date
period to each to extended
interest paymaturity 2
ment date
Percent
4.15
Percent
5.00
Amounts of interest checks and investment yields to extended maturity on basis of June 1,1969 revision
lyear
IHyears.
2 years
2H years
3 years
3H years
4 years...
4H years
6 years...
6H y e a r s 6 years
6H years...
7 years
7H years
Syears
SH years
Oyears
OH y e a r s 10 years (extended maturity) »
(12/1/69)
(6/1/70)
(12/1/70)
(6/1/71)
(12/1/71)
(6/1/72)
(12/1/72)
(6/1/73)
(12/1/73)
(6/1/74)
(12/1/74)
(6/1/76)
(12/1/76)
(6/1/76)
.(12/1/76)
(6/1/77)
(12/1/77)
(6/1/78)
(12/1/78)
10.46
10.66
10.85
11.06
11.30
11.60
11.70
11.90
12.10
12.35
12.66
12.80
18.00
13.25
13.60
13.75
14.00
14.25
20.95
20.90
21.30
21.70
22.10
22.60
23.00
23.40
23.80
24.20
24.70
25.10
25.60
26.00
26.50
27.00
27.60
28.00
28.50
41.90
104. 60
209.00
213.00
106. 60
217.00
108.60
221.00
110. 60
226.00
113.00
230.00
115.00
234. 00
117.00
238.00
119.00
121.00
242.00
123. 50
247.00
251.00
125. 50
256.00
128.00
130.00
260.00
265.00
132.60
270.00
135.00
276.00
137.50
140.00 . 280.00
142. 50
286.00
419.00
209.50
4.16
4.20
4.23
4.27
4.31
4.35
4.38
4.42
4.46
4.50
4.54
4.58
4.61
4.65
4.69
4.73
4.77
4.81
M.95
6.06
5.11
5.17
6.23
5.29
5.36
5.42
5.49
6.66
5.64
5.73
5.83
5.94
6.08
6.26
6.63
7.02
8.38
' Month, day, and year on which interest check is payable on issues of Dec. 1, 1958. For subsequent Issuo raonths
add the appropriate nuraber of raonths.
2 Based on schedule of interest checks In effect on the interest payment date from which the yield is computed.
3 20 years after issue date.
* Yield on purchase price from issue date to extended m a t u r i t y is 4.27 percent.
264
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE 19
BONDS BEARING ISSUE DATES P R O M J U N E 1 T H R O U G H N O V E M B E R 1, 1959
P
, /Issueprice
'"'^^^^'"^IRedemption'and maturiiy value.
Period of time bond is held after issue date
Hyear
lyear
IHyears
2 years...
2H years
3 years
3H years.
4 years.
4H years
Syears
6H years
6 years
6H years..
7 yeans
7H years
Syears.
8H years...
Oyears
OH years...
10 years (maturity)
2(12/1/60)
(6/1/60)
(12/1/60)
(6/1/61)
(12/1/61)
(6/1/62)
(12/1/62)
(6/1/63)
(12/1/63)
(6/1/64)
..(12/1/64)
(6/1/65)
(12/1/65)
(6/1/66)
-(12/1/66)
(6/1/67)
(12/1/67)
(6/1/68)
(12/1/68)
(6/1/69)
Period of time bond is held after maturity
date
$500
500
$1,000
1,000
$5,000
5,000
$10,000 Approximate investment yield
10,000
on face value
(1) Amounts of interest checks for
each denomination
$4.00
7.26
8.00
10.00
10.00
10.00
10.00
10.00
10.00
10.00
10.00
10.00
10.00
10.20
10.20
10.00
10.00
11.70
11.70
12.21
$8.00
14.60
16.00
20.00
20.00
20.00
20.00
20.00
20.00
20.00
20.00
20.00
20.00
20.40
20.40
21.80
21.80
23.40
23.40
24.42
$40.00
72.60
80.00
100.00
100.00
100. 00
100. 00
100. 00
100. 00
100.00
100.00
100.00
100. 00
102. 00
102.00
100.00
100.00
117. 00
117.00
122.10
$80.00
146. 00
160.00
200.00
200. 00
200. 00
200.00
200.00
200. 00
200.00
200.00
200. 00
200.00
204.00
204.00
218.00
218.00
234.00
234. 00
244.20
(2) From issue
date or maturity date to
each interest
payment date
thereafter
Percent
1.60
2.26
2.66
2.01
3.12
3.26
3.36
3.44
3.40
3.54
3.68
3.61
3.64
3.66
3.69
3.72
3.76
3.80
3.84
3.88 ,
(3) From each
interest payment date (a)
to maturity ^
Percent
3.88
3.96
4.00
4.00
4.00
4.00
4.00
4.00
4.00
4.00
4.00
4.00
4.41
4.47
4.55
4.60
4.68
4.78
4.88
(b) To extended
maturity 3
EXTENDED MATURITY
PERIOD
Amounts of interest checks and investment yields to extended maturity on basis of June 1, 1969, revision
Hyear
(12/1/69)
lyear...
(6/1/70)
IHyears
(12/1/70)
2 years..
(6/1/71)
2H years
(12/1/71)
3 years
(6/1/72)
3H years
(12/1/72)
4 years
(6/1/73)
4H years
(12/1/73)
6 years
(6/1/74)
6H years.
(12/1/74)
6 years
(6/1/75)
6H years
(12/1/75)
7 years
(6/1/76)
7H years.
(12/1/76)
Syears...
(6/1/77)
SH years
....(12/1/77)
9 years
(6/1/78)
9H years.
(12/1/78)
10 years (extended maturity) *
(6/1/79)
12.50
12.50
12.50
12.50
12.60
12.50
12.50
12.50
12.50
12. 50
12.50
12.50
12.50
12.60
12.60
12.60
12.50
12.60
12.50
12.50
25.00
25.00
25.00
25.00
25.00
25.00
25.00
25.00
25.00
25.00
25.00
25.00
25.00
25.00
25.00
25. 00.
25.00
25.00
25.00
25.00
125. 00
125.00
125. 00
126.00
125.00
126. 00
125.00
125.00
125. 00
125. 00
126. 00
125.00
125. 00
125.00
125. 00
125.00
126.00
125.00
125.00
125.00
250.00
250.00
260.00
260.00
250. 00
250.00
250. 00
250. 00
250.00
250.00
250.00
250.00
250.00
250.00
250.00
260.00
250. 00
260.00
260.00
250.00
6.00
5.00
6.00
5.00
5.00
6.00
5.00
5.00
6.00
5.00
6.00
6.00
5.00
6.00
5.00
5.00
5.00
5.00
6.00
55.00
5.00
5.00
5.00
6.00
5.00
6.00
6.00
5.00
5.00
5.00
6.00
5.00
6.00
5.00
6.00
6.00
5.00
5.00
5.00
' At all times, except that bond was not redeemable during first 6 months.
2 Month, day, and year on which interest check is payable on issues of June 1, 1959. For subsequent issue months
add the appropriate number of months.
3 Based on schedule of interest checks in effect on the interest payment date from which the yield is computed.
4 20 years after issue date.
5 Yield on purchase price from issue date to extended maturity is 4.32 percent.
265
EXHIBITS
TABLE 20
B O N D S BEARING I S S U E D A T E S P R O M D E C E M B E R 1, 1959 T H R O U G H MAY 1. 1960
(
Issue price. Redemption'
value
maturity
Period of time bond is held after issue
date
Hyear
lyear
IHyears
2 years
2Hyears
3 years...
3H y e a r s . . .
4 years..
4H years
6 years
6H years
:
Oyears
6H years
7 years
7H years
Syears
SH years
Oyears
OH years
10 years (maturity)
2(6/1/60)
....(12/1/60)
(6/1/61)
(12/1/61)
(6/1/62)
(12/1/62)
(6/1/63)
(12/1/63)
(6/1/64)
(12/1/64)
(6/1/65)
(12/1/65)
..(6/1/66)
....(12/1/66)
(6/1/67)
(12/1/67)
(6/1/68)
(12/1/68)
..(6/1/69)
(12/1/69)
Period of time bond is held after
maturity date
$500
$1,000
$5,000
$10,000
500
and
1.000
5.000
Approximate investment
yield on face value
10.000
(1) Amounts of interest checks for
each denomination
$4.00
7.25
8.00
10.00
10.00
10.00
10.00
10.00
10.00
10.00
10.00
10.00
10.20
10.20
10.80
. 10.80
10.80
11.85
11.85
12.62
$8.00
14.50
16.00
20.00
20.00
20.00
20.00
20.00
20.00
20.00
20.00
20.00
20.40
20.40
21.60
21.60
21.60
23.70
23.70
25.24
$40.00
72.60
80.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
102.00
102.00
108.00
108.00
108.00
118.50
118.60
126.20
$80.00
146.00
160.00
200.00
200.00
200.00
200.00
200.00
200.00
200.00
200.00
200.00
204.00
204.00
216.00
216.00
216.00
237.00
237.00
252.40
(2) From issue
date or maturity date to
each interest
payment date
thereafter
Percent
1.60
2.25
2.56
2.91
3 12
3.26
3.36
3.44
3.49
3.54
3.58
3.61
3.64
3.67
3.71
3.74
3.77
3.81
3.85
3.90
EXTENDED MATURITY
PERIOD
(3) From each
interest payment date (a)
to maturity 3
Percent
3.88
3.95
4.00
4.00
4.00
4.00
4.00
4.00
4.00
4.00
4.00
4.41
4.46
4.52
4.57
4.63
4.84
4.80
5.05
(b) T o
extended
maturity 3
Amounts of interest checks and investment yields to extended m a t u r i t y on basis of June 1, 1969, revision
Hyear..
(6/1/70)
lyear
(12/1/70)
IHyears
(6/1/71)
2 years
(12/1/71)
2H years
(6/1/72)
3 years
(12/1/72)
3H years
(6/1/73)
4 years
(12/1/73)
4H yeans
(6/1/74)
5 years
..(12/1/74)
5H years
(6/1/75)
6 years
(12/1/75)
6H years
..(6/1/76)
7 years
(12/1/76)
7Hyear.s
(6/1/77)
Syears...
(12/1/77)
SH years
(6/1/78)
Oyears
(12/1/78)
9H years
(6/1/79)
10 years (extended maturity) «....(12/1/79)
12.50
12.60
12.60
12.50
12.50
12.50
12.60
12.50
12.50
12.50
12.50
12.60
12.60
12.50
12.60
12.50
12.50
12.50
12.50
12.50
25.00
25.00
25.00
25.00
25.00
25.00
26.00
25.00
25.00
25.00
25.00
25.00
25.00
25.00
26.00
25.00
25.00
25.00
25.00
25.00
125. 00
125. 00
125.00
125. 00
126. 00
126. 00
125. 00
125. 00
125.00
126.00
126.00
126. 00
125. 00
125.00
125.00
125.00
125. 00
126.00
12.5. 00
125.00
260.00
250. 00
250.00
260. 00
250.00
260. 00
250. 00
250. 00
250.00
250. 00
250.00
250.00
250.00
260.00
260.00
250.00
260.00
260.00
250.00
250.00
6.00
5.00
5.00
5.00
5.00
6.00
5.00
6.00
5.00
5.00
6.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
55.00
6.00
5.00
6.00
5.00
6.00
6.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
6.00
' At all times, except that bond was not redeemable during first 6 months.
2 Month, day, and year on which interest check is payable on issues of Dec. 1, 1959. For subsequent Issue months
add the appropriate number of raonths.
3 Based on schedule of Interest checks in effect on the interest payraent date from which the yield is computed.
* 20 years after issue date.
5 Yield on purchase price from issue date to extended maturity is 4.33 percent.
266
1 9 7 0 REPORT OF T H E SECRETARY OF T H E
TREASURY
TABLE 31
B O N D S BEARING ISSUE DATES F R O M J U N E 1 T H R O U G H N O V E M B E R 1, 1960
rlssue price
Face value< Redemption ' and maturity
I value
-
Period of time bond is held after issue
date
Hyear.
lyear
IHyears
2 years
2H years
3 years..
3Hyeai-s
4yeai-s
4Hyeai-s.
5 years
5H years
6 years
6H years.
7 years.
7Hyeai-s.
Syeai-s
SH years.
9years
9H years
10 years (maturity)....
2 (12/1/6O)
(6/1/61)
(12/1/61)
(6/1/62)
(12/1/62)
...(6/1/63)
(12/1/63)
(6/1/64)
(12/1/64)
..(6/1/66)
(12/1/65)
(6/1/66)
(12/1/66)
(6/1/67)
(12/1/67)
(6/1/68)
(12/1/68)
(6/1/69)
(12/1/69)
(6/1/70)
Period of time bond is held after
maturity date
$500
$1,000
$5,000
$10,000
500
1,000
5,000
Approximate investment
yield on face value
10,000
(1) Amounts of interest checks for
each denomination
$4.00
7.25
8.00
10.00
10.00
10.00
10.00
10.00
10.00
10.00
10.00
10.20
10.20
10.70
10.70
10.70
10.70
12.05
12.05
13.09
$8.00
14.50
16.00
20.00
20.00
20.00
20.00
20.00
20.00
20.00
20.00
20.40
20.40
21.40
21.40
21.40
21.40
24.10
24.10
26.18
$40.00
$80.00
72.50
145.00
80.00
160.00
100.00
200.00
100.00
200.00
100.00
200.00
100.00
200.00
100.00
200.00
100.00 . 200.00
100.00
200.00
100.00
200.00
102.00
204.00
102.00
204.00
107.00
214.00
107.00
214.00
107.00
214.00
107.00
214.00
120.50
241.00
120.50
241.00
130.90
261.80
(2) From issue
date or matu- (3) From each
rity date to
interest payeach interest raent date (a)
paynient date to maturity 3
thereafter
rcent
1.60
2.25
2.56
2.91
3.12
3.26
3.36
3.44
3.49
3.54
3.58
3.62
3.66
3.69
3.72
3.75
3.78
3.83
3.87
3.93
Percent
3.88
3.95
4.00
4.00
4.00
4.00
4.00
4.00
4.00
4.00
4.40
4.44
4.60
4.54
4.60
4.78
4.96
5.03
6.24
(b) To
extended
maturity 3
EXTENDED MATURITY
PERIOD
Amounts of interest checks and investment yields to extended maturity on basis of June 1,1969, revision
Hyear
(12/1/70)
lyear
(6/1/71)
IHyears
(12/1/71)
2 years..-.
(6/1/72)
2Hyeai-s..
(12/1/72)
3 years
(6/1/73)
3H years
(12/1/73)
4 years..
(6/1/74)
4H years
(12/1/74)
5 years..
(6/1/75)
6Hyeai-s
(12/1/75)
6 years
-(6/1/76)
6H years...
(12/1/76)
7 years....
...(6/1/77)
7H years
(12/1/77)
Syears
(6/1/78)
SH years...
(12/1/78)
9 years
(6/1/79)
9H
(12/1/79)
10 years (extended maturity) *
(6/1/80)
12.60
12.60
12.60
12.60
12.60
12.60
12.60
12.60
12.60
12.50
12.50
12.50
12.50
12.60
12.50
12.60
12.60
12.50
12.50
12.50
25.00
26.00
25.00
25.00
26.00
25.00
25.00
26.00
26.00
25.00
25.00
25.00
25.00
26.00
25.00
25.00
25.00
25.00
25.00
25.00
125.00
125.00
125.00
125.00
125. 00
125.00
126.00
125.00
126.00
125.00
126.00
125.00
125.00
125. 00
125. 00
126.00
126. 00
125.00
125.00
125.00
250. 00
250.00
260.00
260.00
250. 00
250. 00
250.00
260.00
250. 00
250.00
260. 00
260.00
260. 00
260.00
250.00
250.00
250.00
250.00
250.00
250.00
5.00
5.00
6.00
6.00
5.00
5.00
5.00
5.00
5.00
5.00
6.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
6.00
55.00
6.00
5.00
5.00
5.00
6.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
6.00
5.00
5.00
5.00
5.00
6.00
5.00
' At all times, except that bond was not redeemable during first 6 months.
2 Month, day, and year on which interest check is payable on issues of June 1,1960. For subsequent issue months
add the appropriate number of months.
3 Based on schedule of interest checks in effect on the interest payment date from which the yield is computed.
« 20 years after issue date.
5 Yield on purchase price frora issue date to extended raaturity is 4.34 percent.
267
EXHIBITS
TABLE 22
B O N D S BEARING ISSUE DATES F R O M D E C E M B E R 1, 1960 T H R O U G H MAY 1, 1961
Facevalue'|L^^"*^P"f.^-T and maturity value.
I Redemption'
Period of time bond is held after issue date
Hyear
lyear
IHyears....
2 years
2H years
3 years..
3H years...
4 years..
4H years
6 years..
5H years
Oyears.
6H years
7 years.....
7H years
Syears...
SHycars
2 (e/i/ei)
...(12/1/61)
(6/1/62)
...(12/1/62)
(6/1/63)
(12/1/63)
.(6/1/64)
(12/1/64)
(6/1/65)
(12/1/65)
(6/1/66)
(12/1/66)
(6/1/67)
(12/1/67)
(6/1/68)
....(12/1/68)
...(6/1/69)
-..
-
$500
500
$1,000
1,000
$5,000
5,000
$10,000 Approximate investment yield
10,000
on face value
(1) Amounts of interest checks for
each denomination
$4.00
7.25
8.00
10.00
10.00
10.00
10.00
10.00
10.00
10.00
10.20
10.20
10.20
11.00
11.00
11.00
11.00
$8.00
14.50
16.00
20.00
20.00
20.00
20.00
20.00
20.00
20.00
20.40
20.40
20.40
22.00
22.00
22.00
22.00
$40.00
72.50
80.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
102.00
102.00
102.00
110.00
110.00
110.00
110.00
$80.00
145.00
160.00
200.00
200.00
200.00
200.00
200.00
200.00
200.00
204.00
204.00
204.00
220.00
220.00
220.00
220.00
(2) From issue
date or maturity date to
each interest
payment date
thereafter
(3) From each
interest payment date (a)
to m a t u r i t y '
Percent
1.60
2.25
2.56
2.91
3.12
3.26
3.36
3.44
3.49
3.54
3.58
3.62
3.66
3.70
3.74
3.78
3.81
Percent
3.88
3.95
4.00
4.00
4.00
4.00
4.00
4.00
4.00
4.40
4.44
4.49
4.56
4.58
4.72
4.81
5.00
Amounts of interest checks and investment yields to maturity on basis of June 1, 1969, revision
9 years.
9H years
10 years (maturiiy)
(12/1/69)
.(6/1/70)
(12/1/70)
Period of time bond is held after maturity
date
Hyear....
(6/1/71)
lyear
(12/1/71)
IHyears
...(6/1/72)
2 years..
(12/1/72)
2H years.
(6/1/73)
3 years
(12/1/73)
3H years
(6/1/74)
4 years
(12/1/74)
4H years
(6/1/75)
Syears....
(12/1/75)
5H years
(6/1/76)
6 years
(12/1/76)
6H years
(6/1/77)
7 years
(12/1/77)
7H years
-(6/1/78)
Syears
(12/1/78)
SH years
(6/1/79)
Oyears
(12/1/70)
OH years
(6/1/80)
10 years (extended maturity) *
(12/1/80)
12.00
12.05
13.45
24. 00
24.10
26.90
120. 00
120. 50
134.50
240. 00
241. 00
269.00
EXTENDED MATURITY
PERIOD
12.60
12.50
12.60
12.60
12.50
12.60
12.50
12.50
12.50
12.50
12.50
12.60
12.60
12.60
12.60
12.50
12.50
12.50
12.50
12.50
25.00
25.00
25.00
26.00
26.00
26.00
25.00
25.00
25.00
26.00
26.00
25.00
25.00
25.00
25.00
25.00
26.00
25.00
26.00
25.00
125. 00
125. 00
125. 00
125.00
125. 00
126. 00
125. 00
125. 00
126.00
126. 00
125. 00
125. 00
125. 00
125. 00
125. 00
125. 00
125. 00
125.00
125.00
125.00
250. 00
250. 00
260. 00
260. 00
250 00
260. 00
260. 00
260. 00
260. 00
250. 00
250. 00
250. 00
250.00
260. 00
250. 00
250. 00
260. 00
250. 00
250. 00
250.00
3.86
3.80
3.96 .
6.10
6.38
(b) To extended
maturity 3
5.00
5.00
5.00
6.00
5.00
5.00
6.00
6.00
6.00
5.00
6.00
5.00
6.00
5.00
5.00
6.00
5.00
6.00
5.00
5 5.00 .
6.00
5.00
5.00
6.00
6.00
5.00
5.00
6.00
6.00
6.00
5.00
6.00
6.00
6.00
5.00
5.00
6.00
6.00
5.00
' At all times, except that bond was not redeemable during first 6 months.
2 Month, day, and year on which interest check is payable on issues of Dec. 1,1960. For subsequent issue months
add the appropriate number of months.
3 Based on schedule of interest checks in effect on the interest payment date from which the yield is computed.
< 20 years after issue date.
5 Yield on purchase price from issue date to extended maturity is 4.36 precent.
3^7-702 0—71-
-vl9
268
1970
REPORT OF T H E SECRETARY OF T H E
TREASURY
TABLE 23
BONDS BEARING ISSUE DATES F R O M J U N E 1 T H R O U G H N O V E M B E R 1, 1961
I
Issue price
Redemption'
value
maturity
Period of time bond is held after issue
date
H year
lyear
IHyears
2 years..
2H years...
3 years..
3H years
4 years.
4H years
5 years
.5H years...
6 years
6H years
7 years...
7H years...
Syears...
2 (12/1/6I)
(6/1/62)
(12/1/62)
(6/1/63)
(12/1/63)
(6/1/64)
(12/1/64)
(6/1/65)
(12/1/65)
(6/1/66)
(12/1/66)
(6/1/67)
(12/1/67)
(6/1/68)
(12/1/68)
(6/1/69)
$500
$1,000
$5,000
$10,000
500
and
1,000
5,000
10,000
(1) Amounts of interest checks for
each denomination
$4.00
7.26
8.00
10.00
10.00
10.00
10.00
10.00
10.00
10.20
10.20
10.20
10.85
10.85
10.85
11.35
$8.00
14.50
16.00
20.00
20.00
20.00
20.00
20.00
20.00
20.40
20.40
20.40
21.70
21.70
21.70
22.70
$40. 00
72.50
80.00
100. 00
100. 00
100. 00
100. 00
100. 00
100. 00
102. 00
102. 00
102. 00
108. 50
108. 60
108. 50
113. 50
$80.00
145.00
160. 00
200.00
200. 00
200. 00
200. 00
200. 00
200. 00
204. 00
204. 00
204. 00
217. 00
217. 00
217. 00
227. 00
Approxiraate investment
yield on face value
(2) From issue (3) From each
date to each
interest payinterest payment date to
ment date
maturity 3
Percent
1.60
2.25
2.66
2.01
3.12
3.26
3.36
3.44
3.40
3.65
3.69
3.63
3.68
3.72
3.76
3.80
Percent
3.88
3.95
4.00
4.00
4.00
4.00
4.00
4.00
4.40
4.44
4.48
4.64
4.67
4.71
4.79
5.00
Amounts of interest checks and investment yields to raaturity on basis of June 1,1060, revision
8H years.
Oyears
OH years...
10 years (maturity)....
(12/1/69)
(6/1/70)
(12/1/70)
(6/1/71)
11.45
11.65
12.60
14.40
22.00
23.30
25.20
28.80
114. 50
116. 50
126. 00
144.00
229. 00
233.00
252. 00
288.00
3.84
3.87
3.92
4.00
6.14
6.40
6.76
' At all times, except that bond was not redeemable during first 6 months.
2 Month, day, and year on which interest check is payable on issues of June 1, 1961. For susbequent issue months
add the appropriate number of months.
3 Based on schedule of interest checks in effect on the interest payment date from which thc yield is computed
TABLE 24
B O N D S BEARING ISSUE D A T E S F R O M D E C E M B E R 1, 1961 T H R O U G H MAY 1, 1962
(
$500
and
-
-
$5,000
$10,000
1,000
5,000
10,000
maturity
Period of time bond is held after issue
date
H year..
lyear
IHyears
2 years
2H years
3 years
3H years
4 years
4H years
5 years
5H years
6 years
6H years
7 years
7H years.
$1,000
500
Issue price
Redemption'
value
2 (6/1/62)
(12/1/62)
-(6/1/63)
(12/1/63)
(6/1/64)
(12/1/64)
(6/1/65)
(12/1/66)
...(6/1/66)
(12/1/66)
(6/1/67)
(12/1/67)
(6/1/68)
(12/1/68)
(6/1/69)
(1) Amounts of interest checks for
each denomination
$4.00
7.25
8.00
10.00
10.00
10.00
10.00
10.00
10.20
10.20
10.20
10.75
10.76
10.76
11.25
$8.00
14.50
16.00
20.00
20.00
20.00
20.00
20.00
20.40
20.40
20.40
21.60
21.50
21.60
22.50
$40.00
72.60
80.00
100. 00
100. 00
100.00
100. 00
100.00
102.00
102. 00
102.00
107.60
107. 50
107. 60
112. 60
$80. 00
146.00
160. 00
200.00
200.00
200. 00
200. 00
200. 00
204. 00
204. 00
204.00
216. 00
216. 00
215. 00
225. 00
Approximate investment
yield on face value
(2) From issue (3) From each
date to each
interest payinterest payment date to
ment date
raaturity
3
Percent
1.60
2.25
2.56
2.91
3.12
3.26
3.36
3.44
3.50
3.56
3.60
3.65
3.69
3.73
3.78
Percent
3.88
3.06
4.00
4.00
4.00
4.00
4.00
4.40
4.43
4.47
4.62
4.66
4.69
4.76
5.00
Araounts of interest checks and investraent yields to maturity on basis of June 1,1969, revision
Syears
SH years.
Oyears
9H years
10 years (maturity)
(12/1/69)
(6/1/70)
(12/1/70)
(6/1/71)
(12/1/71)
11.35
11.60
12.45
12.65
14.75
22.70
23.00
24.90
25.30
29.50
113. 60
116.00
124. 60
126. 60
147.50
227. 00
230. 00
249.00
253. 00
295.00
3.82
3.86
3.91
3.96
4.04
5.12
6.31
5.47
5.90
1 At all times, except that bond was not redeemable during first 6 months.
2 Month, day, and year on which interest check is payable on issues of December 1, 1961. For subsequent issue
months add the appropriate number of raonths.
3 Based on schedule of Interest checks in effect on the interest payment date from which the yield is computed
269
EXHIBITS
TABLE 25
B O N D S BEARING ISSUE DATES P R O M J U N E 1 T H R O U G H N O V E M B E R 1, 1962
I
$500
Period of time bond is held after issue
date
Hyear
lyear...
IHyears
2 years....
2H years..
3 years
3H years
4 years
4H years..
6 years
6H years
6 years
6H years
7 years
.2(12/1/62)
...(6/1/63)
(12/1/63)
(6/1/64)
(12/1/64)
(6/1/65)
(12/1/66)
(6/1/66)
(12/1/66)
(6/1/67)
....(12/1/67)
(6/1/6S)
...(12/1/68)
(6/1/69)
$1,000
$5,000
$10,000
500
Issue p r i c e . . .
Redemption ' and
value...
1,000
5,000
Approximate investment
yield on face value
10,000
(1) Amounts of interest checks for
each denomination
$4.00
7.25
8.00
10.00
10.00
10.00
10.00
10.20
10.20
10.20
10.65
10.65
10.65
11.25
$8.00
14.50
16.00
20.00
20.00
20.00
20.00
20.40
20.40
20.40
21.30
21.30
21.30
22.50
$40. 00
72.50
80.00
100.00
100. 00
100. 00
100. 00
102. 00
102. 00
102. 00
106. 60
106. 50
106. 50
112. 50
$80. 00
145.00
160.00
200. 00
200.00
200.00
200. 00
204. 00
204. 00
204. 00
213. 00
213.00
213. 00
225. 00
(2) Frora issue (3) From each
date to each
interest payinterest payment date to
ment date
maturity 3
1.60
2.25
2.66
2.91
3.12
3.26
3.36
3.45
3.51
3.56
3.62
3.67
3.71
3.76
3.88
3.95
4.00
4.00
4.00
4.00
4.40
4.43
4.47
4.61
4.54
4.68
4.75
5.00
Amounts of interest checks and investment yields to maturity on basis of June 1, 1960, revision
7H years
Syears...
SH years
Oyears
OH years
10 years (maturity)
..(12/1/60)
(6/1/70)
(12/1/70)
(6/1/71)
(12/1/71)
(6/1/72)
11.35
11.50
11.70
12.66
12.85
15.25
22.70
23.00
23.40
25.30
25.70
30.50
113. 50
115.00
117. 00
126. 50
128. 50
152.50
227. 00
230.00
234. 00
263. 00
257. 00
305.00
3.80
3.85
3.89
3.94
3.99
4.08
5.10
5.23
5.42
5.61
6.10
' A t all times, except that bond was not redeemable during first 6 months.
2 Month, day, and year on which interest check is payable on issues of June 1, 1962. For subsequent issue months
add the appropriate number of months.
3 Based on schedule of interest checks in effect on the interest payment date from which the yield is computed.
TABLE 26
B O N D S BEARING ISSUE D A T E S F R O M D E C E M B E R 1, 1962 T H R O U G H MAY 1, 1963
{
Issue price
Redemption'
value
Period of time bond is held after issue
date
Hyear...
lyear
IHyears
2 years
2H years
3 years
3H years..
4 years
4H years
5 years
6H years
6 years
6H years
-
2 (6/1/63)
(12/1/63)
--(0/1/64)
...(12/1/64)
(6/1/65)
(12/1/65)
(6/1/66)
...(12/1/66)
..-(6/1/67)
(12/1/67)
(6/1/6S)
...(12/1/6S)
(6/1/69)
$500
$1,000
$5,000
$10,000
500
and
1,000
5,000
10,000
(1) Amounts of interest checks for
each denomination
$4.00
7.25
8.00
10.00
10.00
10.00
10.20
10.20
10.20
10.60
10.60
10.60
11.15
$8.00
14.50
16.00
20.00
20.00
20.00
20.40
20.40
20.40
21.20
21.20
21.20
22.30
$40. 00
72.50
80.00
100. 00
100. 00
100. 00
102. 00
102. 00
102. 00
106. 00
106. 00
106. 00
111. 50
$80. 00
145. 00
160.00
200. 00
200. 00
200. 00
204. 00
204. 00
204. 00
212. 00
212.00
212. 00
223. 00
Approximate investment
yield on face value
(2) From issue (3) From each
date to each
interest payinterest pay- ment date to
ment date
maturity 3
1.60
2.25
2.56
2.91
3.12
3.26
3.37
3.45
3.52
3.58
3.64
3.68
3.74
3.88
3.95
4.00
4.00
4.00
4.40
4.43
4.46
4.60
4.53
4.67
4.73
5.00
Amounts of interest checks and investment yields to maturity on basis of June 1, 1969, revision
7 years
7H y e a r s . . . .
Syears
8H years
Oyears
OH years
10 years (maturity)
(12/1/69)
(6/1/70)
...(12/1/70)
(6/1/71)
(12/1/71)
(6/1/72)
(12/1/72)
11.25
11.40
11.55
12.55
12.70
12.00
15.55
22.50
22.80
23.10
25.10
25.40
25.80
31.10
112. 50
114. 00
115. 50
125. 60
127. 00
129. 00
155.50
225. 00
228.00
231. 00
251. 00
254. 00
258. 00
311.00
3.78
3.83
3.87
3.03
3.08
4.03
4.12
5.00
5.20
5.36
5.48
5.68
6.22
' At all times, except that bond was not redeemable during first 6 months.
2 Month, day, and year on which interest check is payable on issues of Dec. 1, 1062. For subsequent issue months
add the appropriate number of months.
3 Based on schedule of interest checks in effect on the interest payment date from which the yield is computed.
270
19 7 0
REPORT
OF T H E
SECRETARY
OF T H E
TREASURY
TABLE 27
B O N D S BEARING ISSUE D A T E S P R O M J U N E 1 T H R O U G H N O V E M B E R 1, 1963
(
$500
and
$5,000
$10,000
1,000
5,000
2(i2/i/63)
(6/1/64)
(12/1/64)
(6/1/65)
(12/1/65)
(6/1/66)
(12/1/66)
(6/1/67)
...(12/1/67)
(6/1/68)
(12/1/63)
(6/1/69)
Approximate investraent
yield on face value
10,000
maturity
Period of time bond is held after issue
date
Hyear..
lyear
IHyears
2 years.
2H years
3 years
3H years
4 years
4H years...
5 years
5H years...
6 years
$1,000
500
Issue price
Redemption'
value
(1) Amounts of interest checks for
each denomination
$4.00
7.25
8.00
10.00
10.00
10.20
10.20
10.20
10.65
10.65
10.55
11.10
$8.00
14.60
16.00
20.00
20.00
20.40
20.40
20.40
21.10
21.10
21.10
22.20
$40. 00
72.60
80.00
100.00
100.00
102.00
102. 00
102. 00
105. 50
105. 50
105. 50
111.00
$80.00
145. 00
160.00
200.00
200.00
204.00
204.00
204. 00
211.00
211.00
211.00
222.00
(2) From issue (3) Frora each
date to each
interest payinterest payment date to
ment date
raaturity
3
Percent
1.60
2.25
2.56
2.91
3.12
3.27
3.38
3.46
3.54
3.60
3.66
3.71
Percent
3.88
3.95
4.00
4.00
4.40
4.43
4.46
4.49
4.52
4.66
4.71
6.00
Amounts of interest checks and investment yields to maturity on basis of June 1, 1969, revision
6H years
7 years
7H years
Syears
SH years
Oyears
OH years
10 years (maturity)
(12/1/69)
(6/1/70)
(12/1/70)
(6/1/71)
(12/1/71)
(6/1/72)
-(12/1/72)
(6/1/73)
11.20
11.35
11.60
11.65
12.80
12.95
13.10
16.10
22.40
22.70
23.00
23.30
25.60
25.90
26.20
32.20
112. 00
113. 50
115. 00
116. 50
128. 00
129. 60
131.00
161.00
224. 00
227. 00
230.00
233.00
256.00
259.00
262.00
322.00
3.77
3.81
3.86
3.90
3.96
4.02
4.07
4.16
6.08
5.18
5.31
5.48
5.61
6.83
6.44
' At all times, except that bond was not redeeraable during first 6 months.
2 Month, day, and year on which interest check is payable on issues of June 1, 1963. For subsequent issue raonths
add the appropriate nuraber of raonths.
3 Based on schedule of interest checks in effect on the interest payment date from which the yield is computed.
TABLE 28
B O N D S BEARING ISSUE DATES F R O M D E C E M B E R 1, 1963 T H R O U G H MAY 1, 1964
I
Issue price
Redemption'
value
maturity
Period of time bond is held after issue
date
Hyear
lyear
IHyears
2 years
2H years
3 years..
3H years
4 years
4H years
5 years
6H years
2 (6/1/64)
(12/1/64)
(6/1/65)
(12/1/66)
(6/1/66)
(12/1/66)
-(6/1/67)
(12/1/67)
(6/1/68)
(12/1/68)
(6/1/69)
-
$500
$1,000
$5,000
$10,000
500
and
1,000
5,000
10,000
(1) Amounts of interest checks for
each denomination
$4.00
7.26
8.00
10.00
10.20
10.20
10.20
10.20
10.76
10.75
10.76
$8.00
14.60
16.00
20.00
20.40
20.40
20.40
20.40
21.60
21.60
21.50
$40.00
72.60
80.00
100.00
102.00
102.00
102.00
102.00
107. 60
107. 50
107. 60
$80.00
145.00
160.00
200.00
204.00
204.00
204.00
204.00
215. 00
215.00
215. 00
Approximate investment
yield on face value
(2) From issue (3) Frora each
date to each
interest payinterest pay- raent date to
raent date
raaturity
3
Percent
1.60
2.26
2.56
2.91
3.14
3.29
3.39
3.47
3.66
3.63
3.68
Percent
3.88
3.95
4.00
4.40
4.43
4.46
4.49
4.63
4.65
4.69
5.00
Amounts of interest checks and investment yields to maturity on basis of June 1, 1969, revision
6 years
:
6H years
7 years
7H years
Syears
SH years
Oyears
OH y e a r s . . .
10 years (maturity)
-
(12/1/69)
(6/1/70)
(12/1/70)
(6/1/71)
(12/1/71)
...(6/1/72)
(12/1/72)
(6/1/73)
(12/1/73)
10.80
11.45
11.60
11.75
11.90
12.90
13.05
13.20
16.55
21.60
22.90
23.20
23.50
23.80
25.80
26.10
26.40
33.10
108.00
114.60
116.00
117. 50
119. 00
129.00
130. 50
132.00
165.50
216.00
229.00
232.00
235.00
238.00
268.00
261.00
264.00
331.00
3.73
3.79
3.84
3.89
3.94
4.00
4.05
4.10
4.21
6.09
5.17
6.27
6.39
5.55
5.69
6.94
6.62
' At all tiraes, except that bond was not redeeraable during first 6 raonths.
2 Month, day, and year on which Interest check is payable on issues of Dec. 1, 1963. For subsequent Issue raonths
add the appropriate number of months.
3 Based on schedule of interest checks in effect on the interest payraent date frora which the yield is computed.
271
EXHIBITS
TABLE 29
BONDS BEARING ISSUE DATES P R O M J U N E 1 T H R O U G H N O V E M B E R 1, 1964
I
Issue p r i c e . . .
Redemption' and
value
$500
maturity
Period of time bond is held after issue
date
$1,000
$5,000
$10,000
500
1,000
5,000
Approximate investment
yield on face value
10,000
(1) Amounts of interest checks for
each denomination
(2) From issue (3) From each
date to each
interest payinterest payment date to
ment date
maturity 3
Percent
Hyear
lyear
IHyears
2 years..
2H y e a r s . . . .
3 years
3H years
4 years
4H years.
5 years
.....2(12/1/64)
(6/1/65)
(12/1/65)
....(6/1/66)
(12/1/66)
(6/1/67)
(12/1/67)
(6/1/68)
....(12/1/68)
(6/1/69)
$4.00
7.25
8.00
10.20
10.20
10.20
10.20
10.70
10.70
10.70
$8.00
14.50
16.00
20.40
20.40
20.40
20.40
21.40
21.40
21.40
$40. 00
72.60
80.00
102. 00
102.00
102.00
102. 00
107.00
107. 00
107. 00
$80.00
145.00
160. 00
204.00
204.00
204.00
204.00
214. 00
214.00
214. 00
Percent
1.60
2.25
2.66
2.93
3.15
3.30
3.41
3.51
3.69
3.65
3.88
3.96
4.40
4.42
4.46
4.48
4.52
4.64
4.68
5.00
Amounts of interest checks and investment yields to maturity on basis of June 1, 1969, revision
6H years
6 years
6H years
7 years
7H years
Syears
SH years
Oyears
OH y e a r s - . 10 years (maturity)
--
(12/1/69)
...(6/1/70)
(12/1/70)
-(6/1/71)
(12/1/71)
--(6/1/72)
(12/1/72)
--(6/1/73)
(12/1/73)
(6/1/74)
10.75
11.40
11.55
11.70
11.85
12.00
13.10
13.25
13.40
17.00
21.60
22.80
23.10
23.40
23.70
24.00
26.20
26.60
26.80
34.00
107. 50
114.00
115. 60
117. 00
118. 60
120.00
131.00
132. 50
134.00
170.00
215.00
228.00
231.00
234.00
237.00
240.00
262.00
266.00
268.00
340.00
3.70
3.77
3.82
3.88
3.03
3.07
4.04
4.00
4.15
4.25
6.00
5.16
6.24
5.35
5.48
5.66
6.81
6.07
6.80
1 At all tunes, except that bond was not redeemable during first 6 raonths.
2 Month, day, and year on which interest check is payable on issues of June 1,1064. For subsequent issue months
add the appropriate nuraber of raonths.
3 Based on schedule of interest checks in eflect on the interest payraent date frora which the yield is coraputed.
TABLE 30
B O N D S BEARING ISSUE D A T E S F R O M D E C E M B E R 1, 1964 T H R O U G H MAY 1, 1965
Pacevalue{L««MeP"ce
Redemption' and maturity value.
Period of time bond is held after issue date
$500
500
$1,000
1,000
$5,000
5.000
$10,000 Approxiraate investraent yield
10,000
on face value
(1) Amounts of interest checks for
each denomination
(2) From issue (3) From each
date to each
interest payinterest pay- raent date to
raent date
maturity'
Percent
A year.
lyear
IHyears...
2 years
2H years
3 years
3H years
4 years
4H years
2 (6/1/65)
(12/1/65)
(6/1/66)
(12/1/66)
(6/1/67)
(12/1/67)
(6/1/68)
(12/1/68)
(6/1/60)
$4.00
7.25
8.20
10.20
10.20
10.20
10.65
10.65
10.65
$8.00
14.60
16.40
20.40
20.40
20.40
21.30
21.30
21.30
$40.00
72.60
82.00
102.00
102.00
102.00
106. 60
106. 60
106. 60
$80.00
146.00
164.00
204.00
204.00
204.00
213.00
213. 00
213.00
1.60
2.26
2.60
2.95
3.17
3.31
3.44
3.54
3.61
Percent
3.88
4.36
4.42
4.45
4.48
4.61
4.63
4 67
5.00
Amounts of interest checks and investment yields to maturity on basis of June 1, 1969, revision
5 years
6H years
Oyears...
.6H years..
7 years
7H years
Syears
SH years
Oyears....
OH y e a r s - . . .
10 years (maturity)...
(12/1/69)
(6/1/70)
(12/1/70)
(6/1/71)
(12/1/71)
(6/1/72)
(12/1/72)
--(6/1/73)
(12/1/73)
(6/1/74)
....(12/1/74)
10.70
10.85
11.70
11.80
11.05
12.10
12.26
13.20
13.35
13.60
17.45
21.40
21.70
23.40
23.60
23.90
24.20
24.60
26.40
26.70
27.00
34.90
107.00
108.60
117.00
118.00
119.50
121. 00
122. 60
132.00
133. 50
136.00
174.50
214. 00
217.00
234.00
236. 00
239.00
242. 00
245.00
264.00
267.00
270.00
349.00
3.67
3.73
3.80
3.86
3.92
3.97
4.02
4.08
4.14
4.19
4.30
5.08
6.18
5.25
5.33
5.43
5.66
6.73
6.89
6.18
6.98
' At all times, except that bond was not redeemable during first 6 months.
2 Month, day, and year on which interest check Is payable on issues of Dec. 1,1964. For subsequent issue raonths
add the appropriate nuraber of raonths.
3 Based on schedule of Interest checks in effect on the interest payment date from which the yield is computed.
272
1970
REPORT OF T H E SECRETARY OF T H E
TREASURY
TABLE 31
BONDS BEARING ISSUE DATES F R O M J U N E 1 T H R O U G H N O V E M B E R 1, 1965
[Issue price..
Pace valuei Redemption'
1 value
$500
and
Period of time bond is held after issue
date
Hyear
lyear
IHyears...
2 years
2H years
3 years
3H years
4yeai-s..
$1,000
$5,000
$10,000
500
1,000
5,000
2(12/1/66)
(6/1/66)
(12/1/66)
(6/1/67)
(12/1/67)
(6/1/68)
(12/1/68)
(6/1/69)
Approximate investraent
yield on face value
10,000
maturity
(1) Amounts of interest checks for
each denomination
$4.00
7.45
8.20
10.20
10.20
10.60
10.60
10.60
$8.00
14.90
16.40
20.40
20.40
21.20
21.20
21.20
$40. 00
74.60
82.00
102. 00
102. 00
106.00
106. 00
106. 00
(2) From issue (3) Frora each
date to each
interest payinterest pay- raent date to
raent date
raaturity
3
Percent
1.60
2.29
2.61
2.97
3.18
3.35
3.47
3.56
$80. 00
149.00
164. 00
204. 00
204.00
212. 00
212. 00
212. 00
Percent
4.28
4.37
4.45
4.47
4.61
4.63
4.66
5.00
Amounts of interest checks and investment yields to maturity on basis of June 1, 1969, revision
4Hyeai-s...
5 years
5H years
Oyears
6H years
7 years
7H years
Syears
.'
8H years
9yeai-s
9H years
10 years (maturiiy)
(12/1/69)
(6/1/70)
(12/1/70)
(6/1/71)
.(12/1/71)
(6/1/72)
(12/1/72)
(6/1/73)
(12/1/73)
(6/1/74)
..(12/1/74)
...(6/1/75)
10.65
10.80
11.60
11.76
11.86
12.00
12.15
13.05
13.15
13.30
13.45
17.75
21.30
21.60
23.20
23.50
23.70
24.00
24.30
26.10
26.30
26.60
26.90
35.50
106. 60
108. 00
116. 00
117. 50
118. 50
120.00
121. 50
130. 50
131. 50
133.00
134. 50
177.50
213. 00
216.00
232.00
235.00
237.00
240.00
243. 00
261.00
263.00
266.00
269.00
355.00
^
3.63
3.70
3.77
3.84
3; 90
3.96
4.01
4.07
4.13
4.19
4.24
4.35
5.08
5.16
6.23
5.30
6.39
5.50
5.63
5.75
6.92
6.23
7.10
' At all times, except that bond was not redeemable during first 6 months.
2 Month, day, and year on which interest check is payable on issues of June 1, 1966. For subsequent issue months
add the appropriate number of months.
3 Based on schedule of interest checks in effect on the interest payment date from which the yield is computed.
TABLE 32
B O N D S BEARING ISSUE D A T E S P R O M D E C E M B E R 1, 1965 T H R O U G H MAY 1, 1966
(Issue price
Pace value< Redemption'
I vdlue
$500
and
Period of time bond is held after issue
date
Hyear
lyear
IHyears
2 years
2H years
3 years
3H years
$1,000
$5,000
$10,000
500
1,000
5,000
10,000
maturity
...2(6/1/66)
(12/1/66)
(6/1/67)
(12/1/67)
(6/1/68)
..(12/1/68)
(6/1/60)
(1) Amounts of interest checks for
each denomination
$5.60
0.70
10.75
10.75
10.76
10.75
10.75
$11.00
10.40
21.60
21.60
21.60
21.50
21.60
$56.00
07.00
107. 60
107. 60
107. 50
107.60
107. 50
$110.00
104.00
216.00
215.00
215.00
215.00
215.00
Approximate investraent
yield on face value
(2) From issue (3) From each
date to each
interest payinterest payment date to
ment date
maturity 3
Percent
2.20
3.03
3.46
3.65
3.78
3.86
3.02
Percent
4.27
4.30
4.30
4.30
4.40
4.41
6.00
Amounts of interest checks and investment yields to maturity on basis of June 1, 1969, revision
4 years
4H years
5 years
6H years
6 years
6H years
7 years
7H years
Syears
SH years
Oyears
OH years
10 years (maturity)
(12/1/69)
(6/1/70)
(12/1/70)
(6/1/71)
(12/1/71)
--(6/1/72)
(12/1/72)
(6/1/73)
(12/1/73)
(6/1/74)
(12/1/74)
(6/1/76)
.(12/1/75)
10.85
11.10
11.30
11.55
11.80
12.00
12.25
12.50
12.76
13.00
13.25
13.50
18.30
21.70
22.20
22.60
23.10
23.60
24.00
24.60
25.00
25.50
26.00
26.60
27.00
36.60
108.60
111.00
113.00
115.50
118.00
120.00
122. 50
125.00
127.50
130.00
132. 50
135.00
183.00
217.00
222.00
226.00
231.00
236.00
240.00
245.00
250.00
255.00
260.00
265.00
270.00
366.00
3.97
4.02
4.06
4.11
4.15
4.20
4.24
4.28
4.33
4.37
4.41
4.46
4.57
5.06
6.13
5.20
5.27
5.34
5.43
5.63
5.64
5.78
5.99
6.36
7.32
' At all times, except that bond was not redeemable during first 6 months.
2 Month, day, and year on which interest check is payable on issues of December 1, 1965. For subsequent issue
raonths add the appropriate number of raonths.
3 Based on schedule of Interest checks in effect on the interest payment date from which the yield is computed.
273
EXHIBITS
TABLE 33
BONDS BEARING ISSUE DATES F R O M J U N E 1 T H R O U G H N O V E M B E R 1, 1966
I
Issue p r i c e . . .
Redemption'
value
$500
and
maturity
Period of time bond is held after issue
date
Hyear
lyear
IHyears
2 years
2H years..
3 years
.2(12/1/66)
(6/1/67)
(12/1/67)
(6/1/68)
(12/1/68)
..(6/1/69)
$1,000
$5,000
$10,000
500
1,000
5,000
Approximate investment
yield on face value
10,000
(1) Amounts of interest checks for
each denomination
$5.60
9.70
10.75
10.75
10.76
10.75
$11.00
19.40
21.60
21.50
21.50
21.60
$55. 00
97.00
107. 50
107. 50
107. 50
107. 50
$110. 00
194. 00
216. 00
215. 00
215.00
215. 00
(2) From issue (3) From each
date to each
interest payinterest payment date to
ment date
raaturity
3
Percent
2.20
3.03
3.45
3.65
3.78
3.86
Percent
4.27
4.30
4.30
4.40
4.41
5.00
Amounts of interest checks and investment yields to maturity on basis of June 1, 1969, revision
3H years
4 years
4H years
5 years
5H years.
6 years
6H years
7 years....
7H years
Syears
8H years
Oyears
9H years
10 years (maturity)
(12/1/69)
(6/1/70)
(12/1/70)
(6/1/71)
(12/1/71)
(6/1/72)
(12/1/72)
(6/1/73)
(12/1/73)
..(6/1/74)
(12/1/74)
(6/1/75)
-(12/1/75)
(6/1/76)
10.85
11.06
11.30
11.60
11.70
11.96
12.15
12.40
12.60
12. 85
13.10
13.36
13.60
18.70
21.70
22.10
22.60
23.00
23.40
23.90
24.30
24.80
25.20
25.70
26.20
26.70
27.20
37.40
108. 50
110. 50
113.00
115.00
117.00
119. 50
121. 50
124.00
126. 00
128. 50
131.00
133. 60
136.00
187.00
217. 00
221. 00
226. 00
230. 00
234. 00
239.00
243.00
248.00
252.00
257.00
262. 00
267. 00
272. 00
374.00
3.93
3.98
4.04
4.09
4.14
4.18
4.23
4.27
4.32
4.36
4.40
4.45
4.49
4.61
5.06
5.12
6.19
6.25
5.33
5.40
5.49
5.58
5.70
5.85
6.07
6.44
7.48
1 At all times, except that bond was not redeeraable during first 6 months.
2 Month, day, and year on which interest check is payable on issues of June 1, 1966. For subsequent issue months
add the appropriate number of months.
3 Based on schedule of interest checks in effect on the interest payment date from which the yield is computed.
TABLE 34
B O N D S BEARING ISSUE D A T E S F R O M D E C E M B E R 1, 1966 T H R O U G H MAY 1. 1967
{
Issueprice...
Redemption'
value..
5500
$5,000
$10,000
1,000
5,000
10,000
maturity
Period of time bond is held after issue
date
Hyear...
lyear...
IHyears
2 years....
2H y e a r s . . . .
$1,000
500
and
2(6/1/67)
(12/1/67)
(6/1/68)
..(12/1/68)
(6/1/69)
(1) Amounts of interest checks for
each denomination
$5.50
9.70
10.75
10.76
10.75
$11. 00
19.40
21.50
21.50
21.50
$56. 00
97.00
107. 50
107. 50
107. 60
$110. 00
194. 00
215.00
215. 00
215. 00
Approximate investment
yield on face value
(2) From issue (3) From each
date to each
interest payinterest payment date to
ment date
maturity 3
Percent
2.20
3.03
3.45
3.65
3.78
Percent
4.27
4.30
4.40
4.41
5.00
Amounts of interest checks and investment yields to maturity on basis of June 1, 1969, revision
3 years.
3H years
4 years
4H years
6 years
6H years
6 years-.
6H years
7 years
7H years
Syears
SH years
Oyears
OH years
10 years (maturity)
(12/1/69)
(6/1/70)
(12/1/70)
(6/1/71)
(12/1/71)
(6/1/72)
(12/1/72)
(6/1/73)
(12/1/73)
....(6/1/74)
(12/1/74)
(6/1/75)
(12/1/75)
(6/1/76)
(12/1/76)
10.85
11.05
11.26
11.45
11.65
11.85
12.05
12.30
12.50
12.70
12.95
13.16
13.40
13.60
19.10
21.70
22.10
22.50
22.90
23.30
23.70
24.10
24.60
25.00
25.40
25.90
26.30
26.80
27.20
38.20
108. 60
110. 60
112. 50
114.60
116. 50
118.50
120. 60
123.00
125.00
127. 00
129. 50
131. 50
134.00
136.00
191.00
217. 00
221. 00
225. 00
229. 00
233. 00
237. 00
241. 00
246. 00
250. 00
254.00
259.00
263.00
268.00
272. 00
382.00
3.87
3.94
4.01
4.06
4.12
4.17
4.22
4.26
4.31
4.35
4.40
4.44
4.48
4.62
4.64
5.06
5.11
5.17
6.24
6.30
5.37
6.45
5.53
5.63
6.75
6.90
6.12
6.62
7.64
1 At all times, except that bond was not redeemable during first 6 months.
2 Month, day, and year on which interest check is payable on issues of Dec. 1, 1966. For subsequent issue months
add the appropriate number of raonths.
3 Based on schedule of interest checks in effect on the interest payraent date from which the yield is computed
274
1970
REPORT
OF T H E
SECRETARY
OF T H E
TREASURY
TABLE 35
BONDS BEARING ISSUE D A T E S F R O M J U N E 1 T H R O U G H N O V E M B E R 1, 1967
I
Issue price
Redemption'
value.
$500
and
maturity
Period of time bond is held after issue
date
Hyear
lyear.:
IHyears
2 years
2 (i2/i/67)
(6/1/68)
(12/1/68)
(6/1/69)
$1,000
$5,000
$10,000
500
1,000
5,000
Approximate investment
yield on face value
10,000
(1) Amounts of interest checks for
each denomination
$5.50
9.70
10.75
10.75
$11.00
19.40
21.60
21.50
$55.00
97.00
107.50
107.50
$110.00
194.00
215.00
215.00
(2) From issue (3) From each
date to each
interest payinterest payment date to
ment date
maturity 3
Percent
2.20
3.03
3.45
3.65
Percent
4.27
4.40
4.41
6.00
Amounts of interest checks and investment yields to maturity on basis of June 1, 1969, revision
2H years.
3 years
3H years...
4 years
4H years
5 years
5H years...
6 years
6H years
7 years...
7H years
Syears
SH years
Oyears
9H years—
10 years (maturity)
...(12/1/69)
(6/1/70)
(12/1/70)
...(6/1/71)
(12/1/71)
(6/1/72)
..(12/1/72)
(6/1/73)
(12/1/73)
(6/1/74)
(12/1/74)
(6/1/75)
(12/1/75)
--(6/1/76)
(12/1/76)
(6/1/77)
10.85
11.05
11.20
11.40
11.60
11.80
12.00
12.20
12.40
12.60
12.80
13.00
13.25
13.45
13.65
19.50
21.70
22.10
22.40
22.80
23.20
23.60
24.00
24.40
24.80
26.20
25.60
26.00
26.50
26.90
27.30
39.00
108. 50
110. 50
112.00
114.00
116.00
118.00
120.00
122.00
124.00
126.00
128.00
130.00
132.60
134. 60
136. 50
195.00
217.00
221.00
224.00
228.00
232.00
236.00
240.00
244.00
248.00
252. 00
256.00
260.00
265.00
269.00
273.00
390.00
3.79
3.89
3.97
4.03
4.10
4.15
4.21
4.25
4.30
4.35
4.39
4.43
4.48
4.62
4.56
4.68
5.05
5.11
5.17
6.22
6.29
6.35
5.42
5.49
5.68
5.68
5.80
6.96
6.19
6.61
7.80
' At all times, except that bond was not redeemable during first 6 months.
2 Month, day, and year on which interest check is payable on issues of June 1, 1967. For subsequent issue raonths
add the appropriate nuraber of raonths.
3 Based on schedule of interest checks in effect on the interest payment date from which the yield is computed.
TABLE 36
B O N D S BEARING ISSUE D A T E S P R O M D E C E M B E R 1, 1967 T H R O U G H MAY I, 1968
(
Issue price
Redemption '
value
and
Period of time bond is held after issue
date
mo
$1,000
$5,000
$10,000
500
maturity
1,000
5,000
Approxiraate investraent
yield on face value
10,000
(1) Amounts of interest checks for
each denomination
(2) From issue (3) From each
date to each
interest payinterest pay- ment date to
ment date
maturity 3
Percent
A year
lyear
IHyears....
2 (6/1/68)
(12/1/68)
(6/1/69)
$5.50
9.70
10.76
$11.00
19.40
21.50
$55.00
97.00
107. 50
$110.00
194.00
215. 00
Percent
2.20
3.03
3.45
4.37
4.41
6.00
Amounts of interest checks and investment yields to maturity on basis of June 1,1969, revision
2yeai-s..
2H years
3 years
3H years
4 years
4H years
5 years.
6H years
6 years
6H years
7 years
7H years
Syears
SH years
Oyears
9H years
10 years (maturity)
(12/1/69)
(6/1/70)
(12/1/70)
(6/1/71)
(12/1/71)
(6/1/72)
(12/1/72)
...(6/1/73)
(12/1/73)
(6/1/74)
(12/1/74)
(6/1/75)
(12/1/75)
(6/1/76)
(12/1/76)
(6/1/77)
(12/1/77)
10.85
11.00
11.20
11.35
11.66
11.75
11.90
12.10
12.30
12.50
12.70
12.90
13.10
13.30
13.50
13.70
19.95
21.70
22.00
22.40
22.70
23.10
23.50
23.80
24.20
24.60
25.00
25.40
26.80
26.20
26.60
27.00
27.40
39.90
108. 50
110.00
112.00
113. 60
115. 50
117. 60
119.00
121. 00
123.00
125.00
127.00
129.00
131.00
133.00
135.00
137.00
199.50
217. 00
220. 00
224.00
227.00
231.00
235.00
238.00
242.00
246.00
260. 00
264.00
258.00
262.00
266. 00
270.00
274.00
399.00
3.66
3.81
3.91
4.00
4.07
4.13
4.19
4.24
4.29
4.34
4.38
4.43
4.47
4.61
4.65
4.59
4.72
5.05
5.10
5.16
5.21
5.27
5.33
5.40
5.47
5.54
5.63
5.73
6.85
6.02
6.26
6.71
7.98
1 A t all tiraes, except that bond was not redeemable during first 6 months.
2 Month, day, and year on which interest check is payable on issues of Dec. 1, 1967. For subsequent issue months
add the appropriate number of months.
3 Based on schedule of interest checks in effect on t h e interest payraent date frora which t h e yield is computed.
275
EXHIBITS
TABLE 37
B O N D S BEARING ISSUE D A T E S P R O M J U N E 1 T H R O U G H N O V E M B E R 1,1968
Facevaluei*^"®P"<^®- '^^ IRedemption ' a n d maturiiy value.
Period of time bond is held after issue date
$500
500
$1,000
.1.000
$5,000
5,000
$10,000 Approximate investment yield
10,000
on face value
(1) Amounts of interest checks for
each denomination
(2) From issue (3) Frora each
date to each
interest payinterest payment date to
ment date
maturity 3
Percent
Hyear..
lyear
2 (12/I/68)
(6/1/69)
$6.50
9.70
$11.00
19.40
$55.00
97.00
$110.00
194. 00
Percent
2.20
3.03
4.38
6.00
Amounts of interest checks and investment yields to maturity on basis of June 1, 1969, revision
IHyears
2 years.
2H years..
3 years
3H years
4 years
4H years
5 years..
6H years
6 years
6H years
7 years
7H years
Syears
8H years
Oyears
OH years
10 years (maturity)
(12/1/69)
....(6/1/70)
(12/1/70)
(6/1/71)
(12/1/71)
(6/1/72)
(12/1/72)
(6/1/73)
(12/1/73)
(6/1/74)
(12/1/74)
....(6/1/75)
(12/1/76)
(6/1/76)
(12/1/76)
(6/1/77)
(12/1/77)
(6/1/78)
10.86
11.00
11.16
11.35
11.50
11.65
11.85
12.00
12.20
12.40
12.55
12.75
12.05
13.15
13.35
13.56
13.75
20.45
21.70
22.00
22.30
22.70
23.00
23.30
23.70
24.00
24.40
24.80
25.10
26.60
26.00
26.30
26.70
27.10
27.50
40.90
108. 50
110.00
111. 60
113.50
115.00
116.60
118.50
120.00
122.00
124.00
125.50
127.50
120.60
131. 50
133. 60
135.60
137.60
204.50
217.00
220.00
223.00
227.00
230.00
233.00
237.00
240.00
244.00
248.00
251.00
256. 00
259.00
263.00
267.00
271.00
275.00
409.00
3.46
3.69
3.84
3.95
4.04
4.11
4.17
4.23
4.28
4.33
4.38
4.42
4.46
4.51
4.65
4.68
4.62
4.76
6.05
6.10
5.15
5.20
6.26
5.31
6.37
6.44
5.51
5.58
5.67
5.78
5.91
6.08
6.34
6.82
8.18
' At all times, except that bond was not redeemable during first 6 months.
2 Month, day, and year on which interest check is payable on issues of June 1,1968. For subsequent Issue months
add the appropriate number of months.
3 Based on schedule of interest checks in effect on the interest payment'date from which the yield Is computed.
TABLE 38
B O N D S BEARING ISSUE D A T E S P R O M D E C E M B E R 1, 1968 T H R O U G H MAY 1, 1969
I
Issue price
Redemption'
value
$500
and
maturity
Period of time bond is held after issue
date
2(6/1/69)
H year.
$1,000
$5,000
$10,000
500
1,000
5,000
10,000
(1) Amounts of interest checks for
each denomination
$5.50
$11.00
$56.00
$110.00
Approximate investment
yield on face value
(2) From issue (3) From each
date to each
interest payinterest payment date to
ment date
maturity 3
Percent
2.20
Percent
5.00
Amounts of interest checks and investment yields to maturity on basis of June 1,1969, revision
lyear
IHyears.
2 years
2H years.
3 years
3H years
4 years
4H years..
5 years
5H years
6 years....
6H years
7 years
7H years
Syears.
SH y e a r s . . .
Oyears
9H years
10 years (maturity)
(12/1/69)
(6/1/70)
(12/1/70)
(6/1/71)
(12/1/71)
....(6/1/72)
...(12/1/72)
...(6/1/73)
..(12/1/73)
(6/1/74)
(12/1/74)
(6/1/75)
(12/1/75)
(6/1/76)
(12/1/76)
(6/1/77)
(12/1/77)
(6/1/78)
.(12/1/78)
9.80
11.00
11.15
11.35
11.50
11.65
11.85
12.05
12.20
12.40
12.60
12 76
12.96
13.15
13.36
13.65
13.75
13.96
20.70
19.60
22.00
22.30
22.70
23.00
23.30
23.70
24.10
24.40
24.80
25.20
26.60
25.90
26.30
26.70
27.10
27.50
27. 90
41.40
98.00
110. 00
111. 60
113. 50
115.00
116.50
118.50
120. 60
122.00
124. 00
126. 00
127. 60
129.60
131. 50
133. 60
135. 60
137. 60
139. 50
207.00
196.00
220.00
223.00
227. 00
230. 00
233.00
237.00
241.00
244.00
248. 00
252. 00
266. 00
259. 00
263.00
267.00
271. 00
275. 00
279. 00
414.00
3.06
3.49
3.73
3.88
4.00
4.09
4.16
4.23
4.29
4.34
4.39
4.44
4.48
4.53
4.57
4.61
4.65
4.69
4.83
5.07
5.12
6.17
5.22
5.28
5.33
5.39
6.45
5.62
6.59
6.66
5.75
5.86
5.99
6.16
6.42
6.91
8.28
> At all times, except that bond was not redeemable during first 6 months.
2 Month, day, and year on which interest check is payable on issues of D o c 1,1968. For subsequent issue months
add the appropriate number of raonths.
3 Based on schedule of interest checks in effect on the interest payment date from which the yield is computed.
276
1970 REPORT OF THE SECRETARY OF THE TREASURY
APPENDIX
Maturities and siunmary of investment yields to maturity and extended maturity dates under regulations heretofore prescribed for Series H bonds with issue dates June 1,1952, through May 1,1969 (rates percent per annum, compounded seraiarmually).
Yields
Issue dates
Term to original
raaturity
To original maturity date
June 1952-January 1957-
9 years, 8 months .
February 1957-May 1959
10 years
June 1959-November 1966
10 years
December 1965-May 1968
10 years
June 1968-May 1969..
10 years
3.00%..
4-0.5 June 1,1959
-1-0.4 December 1,1966
3.25%..
+0.6 June 1,1959..
+0.4 December 1,1965
+0.1 June 1,1968
3.75%
+0.4 December 1,1966
+0.1 June 1,1968.
4.16%
+0.1 June 1,1968
4.25%
To extended maturity date
(10 years)
3.75%.
-fO.4 December 1,1966.
-f-0.1 June 1,1968.
4.15%.
-f 0.1 June 1, 1968.
4.26%.
Exhibit 6.—Second amendment, December 31, 1%9, to Department Circular
No. l-63> regulations governing United States retirement plan bonds
TREASURY DEPARTMENT,
Washington, Decemher Sl, 1969.
Section 341.1(a) of Department Circular, Public Dept Series No. 1-63, dated
January 10, 1963, as amended (31 CFR, Part 341), is hereby further amended
to read as follows:
Sec. 341.1. Description of honds.— (a) Investment yield (interest).—United
States Retirement Plan Bonds, hereinafter sometimes referred to as Retirement
Plan Bonds, will be issued at par. The investment yields (interest) are as follows :
(1) Bonds with issue dates of January 1, 1963, through May 1, 1966—3% percent per annum, compounded semiannually, as set forth in the table of redemption
values api)ended to the circular;
(2) Bonds with issue dates of June 1,1966, through December 1,1969—4.15 percent per annum, compounded semiannually, as set forth in the table, identified as
Table A, appended to the First Amendment of the circular; and
(3) Bonds with the issue date of January 1, 1970, or thereafter—5 percent per
annum, compounded semiannually, as set forth in the table, identified as Table B,
appended to this amendment.
The interest will be paid only upon redemption of the bonds. The accrual of interest will continue until the bonds have been redeemed or have reached maturity,
whichever is earlier, in accordance with these regulations.
JOHN K. CARLOCK,
Fiscal Assistant Secretary of the Treasury.
EXHIBITS
277
TABLE B.—Table of redemption values providing an investment yield of 5.00 percent
per annum for honds bearing issue dates heginning Jan. 1, 1970
Table shows the increase in redeinption value for each successive half-year term of holding following the
date of issue on Retirement Plan Bonds bearing issue dates beginning January 1, 1970. The redemption
values have been determined to provide an investment yield of approximately 5.00 percent • per annum,
compounded semiannually, on the purchase price from issue date to the beginning of each half-year period.
The period to maturity is indeterminate in accordance with the provisions of section 341.1(b) of this
circular.2
Issueprice...
$50.00
Period after issue date
First Hyear
J^to lyear
1 to IHyears
I H t o 2years
2 to 2H years
2H to 3 years
3 to 3H years
3H to 4 years..
4 to 4H years.
4Hto5years-._
5to 5 H y e a r s . . .
SHto 6 years.
6 to 6H years
6Hto7years
7 t o 7 H years..
7H to 8 years
8 to 8H years
8H to 9 years
9 to 9H years
9 H t o lOyears
lOto 103^ years
lOHto 11 years
11 to l l H years
l l H t o 12years
12to 12H years
12Hto 13years...
13 to 13H years.
13H to 14 years
14 to 14H years
14Hto 15 years
15 to 15H years
15H to 16 years
16 to 16H years
16Htol7years
17 to 17H years
17H to 18 years.
18to 18Hyears
18H to 19 years..
19 to 19H years
19Hto20years
20 to20Hyears2....
$100.00
$500.00
$1,000.00
Redemption values during each half-year period
(values increase on first day of period shown)
..:
.-
50.00
51.25
52.53
53.84
55.19
56.57
57.98
59.43
60.92
62.44
64.00
65.60
67.24
68.93
70.65
72.42
74.22
76.08
77.98
79.93
81.93
83.98
86.08
88.23
90.44
92.70
95.02
97.39
99.82
102.32
104.88
107.50
110.19
112.94
115.77
118.66
121.63
124.67
127.78
130.98
134.25
100.00
102. 50
105. 06
107. 69
110. 38
113.14
115. 97
118. 87
121. 84
124.89
128.01
131. 21
134. 49
137. 85
141. 30
144. 83
148.45
152.16
165. 97
159. 86
163. 86
167. 96
172.16
176. 46
180. 87
185. 39
190. 03
194. 78
199. 65
204. 64
209. 76
215. 00
220. 38
225. 88
231. 53
237. 32
243. 25
249. 34
255. 57
261. 96
268. 51
600.00
512. 50
525. 31
638.45
551. 91
565. 70
579. 86
594. 34
609.20
624.43
640.04
656. 04
672. 44
689. 26
706. 49
724.15
742. 26
760. 81
779. 83
799. 33
819. 31
839. 79
860. 79
882. 31
904. 36
926. 97
950.15
973. 90
998. 25
1,023. 20
1,048. 78
1,076.00
1,101. 88
1,129. 43
1,167. 66
1,186. 60
1,216. 27
1, 246. 67
1,277. 84
1,309. 79
1,342. 63
1,000.00
1,026.00
1,050. 62
1.076.89
1,103.81
1,131. 41
1,169.69
1,188. 69
1,218.40
1,248. 86
1,280.08
1,312. 09
1,344. 89
1,378. 61
1,412.97
1,448. 30
1,484. 61
1,621. 62
1,669. 66
1,698. 65
1,638. 62
1,679. 68
1, 721. 67
1, 764. 61
1,808. 73
1,863.94
1,900. 29
1,947. 80
1,996. 50
2,046. 41
2.097. 67
2,160. 01
2, 203. 76
2, 268. 85
2,315. 32
2,373. 21
2,432. 64
2,493. 35
2,555. 68
2,619. 67
2,686. 06
1 Based on redemption values of $1,000 bond.
2 At a future date prior to Jan. 1,1990 (20 years after issue date of the first bonds) this table will be extended
to show redemption values for periods of holding of 20H years and beyond.
Exhibit 7.—Fourth Amendment, May 20, 1970, to Department Circular No. 300,
general regulations vidth respect to United States securities
TREASURY
DEPARTMENT,
Washington, May 20, 1970.
Effective June 1, 1970, Section 306.25(b) of Department of the Treasury Circular No. 300, Third Revision, dated December 23, 1964, as amended (31 CFR
Part 306), is further amended to read as follows :
Sec. 306.25. Presentation and surrender. * * *
(b) ''Overdue'' securities. If a bearer security or a registered security assigned in blank, or to bearer, or so assigned as to become, in effect, payable to
bearer, is presented and surrendered for redemption after it has become overdue,
the Secretary of the Treasury may require satisfactory proof of ownership.
278
1970 REPORT OF THE SECRETARY OF THE TREASURY
(Form FD 1071 may be used.) A security shall be considered to be overdue after
the lapse of the following periods of time from its face maturity:
(1) One month for securities issued for a term of one year or less.
(2) Three months for securities issued for a term of more than one year but
not in excess of seven years.
(3) Six months for securities issued for a term of more than seven years.
JOHN K. CARLOCK,
Fiscal Assistant Secretary of the Treasury.
Legislation
Exhibit 8.—An act to increase the public debt limit set forth in section 21 of the
Second Liberty Bond Act
[Public Law 91-301, 91st Congress, H.R. 17802, June 30,1970]
Be it enacted hy the Senate and House of Representatives of the
United States of America in Congress assembled. That the first
sentence of section 21 of the Second Liberty Bond Act (31 U.S.C.
757b) is amended by striking out "$365,000,000,000" and inserting
in lieu thereof "$380,000,000,000".
SEC. 2. During the period ending on June 30, 1971, the public
debt limit set forth in the first sentence of section 21 of the
Second Liberty Bond Act shall be temporarily increased by
$15,000,000,000.
SEC. 3. This Act shall take effect on July 1, 1970.
Approved June 30,1970.
f ^ ^ ^^^^
^^^
increase.
83 Stat. 7.
Temporary
c ? S ^ "^
^^ ^.
^^te
Economic and Financial Policy
Exhibit 9.—Statement by Secretary Kennedy, February 19, 1970, before the
Joint Economic Committee
It gives me great pleasure to appear again before your distinguished committee. You have heard testimony earlier this week from the Council of Economic
Advisers, the Bureau of the Budget, and the Federal Reserve. There is no need,
therefore, for me to review the past year's developments in great detail. My prepared statement is relatively brief. It gives my own general appraisal of the
current situation and the prospects for the future. Under Secretary Volcker will
follow with a statement pointed more specifically to intemational matters.^
We are now entering a crucial period in the domestic economic adjustment.
There are multiplying signs that the policy of restraint has taken hold. But final
success in the form of a much better price performance is yet to come. Too sharp
a turn toward expansion could cancel the progress made to date. Our policies
must not feed a resurgence of demand or of infiationary expectations.
A close watch must be .kept on this adjustment process. There are risks on both
sides, and we must remain alert to them.
Monetary and fiscal restraint have successfully moderated the growth of total
spending. Gross national product in current prices rose at a rate in excess of 9
percent in 1968. By mid-1969, the rate was down to 7 percent. In the final quarter
of the year, total spending was rising at only a 4-percent rate.
We begin this year against the background of a slower pace of total spending
in the economy. The reduction in the growth of total spending is a necessary precondition for the control of inflation. It creates an economic environment within
which cost and price increases will not continually feed upon themselves.
There can be little doubt, however, that inflationary pressures are still very
strong. Present price statistics make that fact uncomfortably clear. And, the
coming calendar of wage negotiations may keep the pressures on costs. To this
point, restraint has had. its major effect upon output. A further period of comparative stability in real output—extending perhaps through the first half of
the year—is to be expected. During the course of the year, more tangible results
1 See exhibit ^ .
EXHIiBITS
279
on the price front should appear. But this relief from rising prices has certainly
been slow in coming.
We must still work our way through a period this year in which increases in
gross national product v^ll, to a considerable extent, reflect higher prices. Then,
as the rate of inflation drops, real output can safely resume a moderate rise.
Even by the end of the year, however, price increases may make up as much as
half or more of the rise in the value of national output. But, if all goes according to our expectations, we should by then be firmly on a path where growth in
real output can rise toward its longer range potential while prices move toward
stability.
I see no substitute in an infiationary situation, for working to restrain total
spending. Detailed intervention into the wage-price decisionmaking process was
tried but abandoned by the previous Administration as the economy overheated.
Nor can direct controls do the job when there are heavy strains on labor and
product markets. There" is no quick or easy cure for the cost imbalances and
distortions that follow in the wake of inflation. But we can look forward this
year to some gradual improvement.
Last year the productivity gain on a national basis was well below normal and
productivity may actually have declined a bit during the first half of the year.
Money wages, on the other hand, rose rapidly, partly in response to the rising cost
of living. The combination of little growth in productivity and a strong rise in
hourly compensation resulted in more than a 6-percent increase in labor costs
per unit of output. Resumption of productivity growth would permit a much
better overall record. Gradually a better balance can and must be restored between productivity, costs and prices. This better balance is essential for our
domestic stability and our international competitive position.
In its essentials, the Administration's economic strategy remains unchanged.
Maximum reliance will be placed upon the established stabilization tools—fiscal
and monetary policy. In the long run, this course is most compatible with the
maintenance of a strong free enterprise system.
We do recognize that the burden of restraint can fall unevenly and cause real
hardship. Therefore, we have taken steps to alleviate some effects of the adjustment now underway. The proposed manpower training act will forge a new link
between manpower programs and economic conditions by linking appropriations
to the unemployment rate. Federal agencies have pumped large sums of money
into housing and other measures are under consideration. Social security benefits are to be increased substantially. Special legislation has been introduced to
liberalize unemployment benefits.
Some change in the relative contributions of fiscal and monetary policy may be
required. In this respect, this year's budget planning has been particularly important. Close restraint on Federal expenditures was essential to insure the
effectiveness and credibility of the anti-infiationary program. After rising by an
average 13 percent annually during the past 5 years. Federal outlays are projected
to rise by only about iy2 percent in fiscal 1971. Hard decisions have been made,
and they are reflected in the current budget.
The risk of a destabilizing shift toward fiscal ease, further complicating the
already diflacult task of the monetary authorities, has been avoided, for now at
least. When there is a need for some modest lifting of restraint, there is a strong
case for its coming on the monetary side, which has been stretched so tightly. If,
in the months to come, the economy should begin to slide off too far, a degree of
fiscal support would, of course, be supplied automatically through the operation
of the so-called built-in stabilizers. There is also a range of discretionary steps
which could be taken if and when they are clearly required.
On the domestic financial side, we have to recognize that, directly or indirectly,
some of the programs of the Federal Government—whether aimed at housing, or
public facilities, or small business—result in heavy demands on the credit markets.
This will remain true in the next fiscal year. We must make sure that these
necessary demands are not further increased by a budget deficit. Fortunately, the
Treasury is not currently in that position.
Private demands for long-term credit continue to be strong. The potential
demand for mortgage credit far exceeds the supply. There is a large backlog of
State and local borrowing temporarily postponed during the period of rapidly
rising interest rates and, in some cases, reflecting the operation of legal ceilings
at the state level now raised or removed. All told, prospective demands on the
280
1970 REPORT OF THE SECRETARY OF THE TREASURY
capital markets are not likely to diminish, although some shading down of business requirements might be expected as the pace of economic expansion moderates.
The size of these prospective demands suggests that we may have to live with
relatively high interest rates during the period just ahead. But some beginnings
of an easing trend are appearing. A somewhat lower level of interest rates was,
in fact, assumed in drawing up the estimate for interest on the public debt in
fiscal 1971. It will take a shift away from inflationary expectations—in keeping
with the underlying realities of the economic situation—for this to materialize
and to bring lasting relief from high interest rates and credit shortages.
In our own refunding operations, under present circumstances and at current
interest rate levels, we could not contemplate any massive reshaping of the debt
structure. But the existing 4% percent interest rate ceiling has the effect of confining the Treasury entirely to 7-year maturities and under. This has contributed in recent years to an excessive pileup of debt at the shorter end of the
maturity range, a trend that has tended to aggravate the problems associated
with disintermediation and made us excessively vulnerable to higher interest
costs. Our debt management operations could be harmonized much more effectively with general economic objectives if the 4 ^ percent interest rate ceiling
were removed or further modified.
Despite the small projected reduction in Federal debt held by the public in
1970 and 1971, an increase in the debt ceiling will be required by the end of this
fiscal year. This reflects the expansion in debt obligations held by the trust funds,
as well as the need to accommodate seasonal swings between receipts and
expenditures. A decision on the amount of the increase in the debt ceiling will
not be made until we see the actual figures on budget receipts and expenditures
over the next few months. I might add that the current congressional ceiling on
budget expenditures tends to reduce whatever rationale the public debt ceiling
may have had in the past as a deterrent to spending.
A year ago your committee*s report urged that a longer-range look be taken
at our national goals and priorities, along with the implications in terms of the
Federal fiscal position. Your report pointed out that, "Too often public policy
has been formed in an ad hoc fashion because of an absence of clearly stated
national objectives and priorities." A forward look has been taken in both the
Economic Report and the Budget. Broad projections are made for the economy
and the budget out to 1975. This implements another of the recommendations of
the 1967 Presidential Commission on Budget Concepts of which I had the honor
to be chairman. Quite aside from any feelings of personal satisfaction, the provision of these forward estimates seems useful and long overdue.
In and of themselves, the projections cannot do much to insure that better
decisions are made. And the specific arithmetic is open to revision and modification. But such estimates do provide a more informed and objective basis for
discussion of our national priorities and goals. Too often in the past we have
stumbled into the future without a clear idea of where we were going or how
much it would cost over a period of time. Now at least we have made a beginning toward a more rational appraisal of future prospects.
The clear lesson that emerges from the 5-year forward projections is the very
limited degree of fiscal freedom that is, in fact, available. On the basis of present
estimates, there is little, if any, margin available in fiscal 1972 for new Federal
budgetary programs. And even by 1975, when new initiatives of about 1 percent
of GNP might be accommodated, the overwhelming impression is the lack of
budgetary resources relative to potential claims. While the present period of
Federal expenditure restraint is a particularly diflScult one, there will be a continuing need for eflScient direction and control of Federal expenditures.
There is also a need to make a comprehensive forward looking appraisal of
our financial structure and its regulation. The past decade brought profound
changes and created new problems. As we look forward in this decade, the
yolume of potential demand for savings is impressive. It will be increasingly
important to insure that our financial structure can adapt fiexibly and eflficiently.
Therefore, the President will shortly be appointing a commission of distinguished citizens to study these matters.
As Mr. Volcker will review more fully, our balance-of-payments position continues to be a cause for concern. On the other hand, the strength of the dollar
abroad, despite our large balance-of-payments deficit on the liquidity basis, has'
been well maintained. On the oflficial settlements basis, we actually ran a large
surplus last year—the largest in many years. But this reflected some temporary
EXHIBITS
281
factors and a degree of monetary tightness here that we would not expect to
continue indefinitely.
While some improvement has recently been registered, our trade balance
remains far too small. Over the longer run, we must restore a much stronger
current account position if we are to reach a satisfactory payments equilibrium.
This requires the early establishment of a reasonable degree of cost-price stability in this country—the same stability which our domestic situation requires.
But elimination of domestic infiation is not all we need to do to strengthen our
balance-of-payments position. We are seeking a more equitable distribution of
the burden of mutual defense expenditures. We are seeking the reduction abroad
of nontariff barriers which shut out many U.S. exports. We are trying to heighten
the export consciousness of our business community, and to back their efforts
with adequate export credit. And we are investigating tax avenues which might
help equalize our competitive position relative to exports from other countries.
This past year has seen progress toward relieving the domestic economy and
the balance of payments from inflationary strains and distortions. Certainly
that progress is incomplete, and some diflBcult times may still be ahead. But we
are moving in the right direction and using the correct policy tools, in my opinion.
The task this year will be to keep the economy moving at a moderate pace while
the current inflation is brought more securely under control. This will provide
the essential foundation for a gradual resumption of growth along a noninflationary path in the years ahead.
Exhibit 10.—Remarks by Assistant Secretary Weidenbaum, March 13,1970, before
the National Planning Association, Washington, D.C, on the post Vietnam
economy
An analysis of the impacts on the United States of achieving peace in Vietnam
needs to be made in the context of the economic environment in which these
events will occur. It is useful to distinguish between the short-term economic
outlook and the prospects for the longer term.
The short term outlook
In the period immediately ahead—1970 and 1971—the American economy will
be undergoing an adjustment. As we all know, the substantial inflationary pressures which developed during the Vietnam buildup were accentuated by large
Federal budget deficits and a liberal monetary policy. For more than a year
now, the Federal Government has pursued a policy of economic restraint, designed
to dampen the inflation and to do so without precipitating a major downturn in
the economy as a whole.
The means for pursuing this anti-inflationary effort have been primarily to
operate the Federal Government at a modest surplus and to reduce the growth
of the money supply. The results thus far are mainly a clear slowing down of
what was an overheated economy. Inflation is continuing, but not at the accelerating rate that characterized earlier periods. It is our expectation that the
rate of inflation will decline measurably in the coming year and that this will
set the stage for the subsequent real and sustainable growth in production,
employment and living standards.
But in the short run, the proper national economic policy still is one of responsible restraint. Hence, reductions in military demand resulting from winding
down the Vietnam War will, in addition to obvious social beneflts, reinforce our
economic capabilities. The lessened U.S. participation in Vietnam will tend both
to reduce the Government's demand for military goods and services and, as
servicemen are returned to civilian life, to increase the labor force available to
produce goods and services for nonmilitary purposes. To some extent, the pressures on our balance of international payments will diminish as the scope of U.S.
activities in Southeast Asia is reduced.
Projections of the American economy for the calendar year 1970 show that
the Federal Government's own purchases of goods and services are being cut
back substantially and that new housing construction is expected to continue to
feel the effects of a fairly tight monetary policy. In contrast, the other sectors
of the economy are projected to grow in real terms but at a much slower rate
than in recent years.
282
1970 REPORT OF THE SECRETARY OF THE TREASURY
The longer term outlook
As we look beyond 1970, to the middle of the decade of the 1970's, we get a
better picture of what a nonwar economy may look like. The fc^llowing analysis
of longer term trends in the American economy in a more peacetime environment
is based on a joint research effort by the economic staffs of the Bureau of the
Budget, the Council of Economic Advisers, and the Department of the Treasury
(see Table I ) . The analysis assumes a flscal posture of present tax laws and
present nondefense Federal Govemment programs.
Clearly, after Vietnam, a larger proportion of our resources is likely to be
devoted to civilian purposes, and particularly through the private sector. By
1975 Government purchases are estimated to take only 19 percent of the national
output—down from the 23 percent in 1969. I would like to examine briefly the
prospects for each major sector of our economy.
The consumer sector
Total personal consumption exx)enditures are estimated to rise from $576
billion in 1969 to $777 billion in 1975, in terms of dollars of 1969 purchasing
power. This does not mean that we do not expect any increases at all in the
general price level. Rather, this analysis will be focusing on real rather than
merely flnancial changes in the Anierican economy.
The total income of individuals is anticipated to grow substantially between
now and 1975. This will result from the rising employment necessary to produce
the national output and, in turn, will make possible very signiflcant increases
in the average standard of living of the American consumer.
It is also assumed that, on the average, individuals will save Q 2 percent of
V
their aftertax incomes and spend the remainder on (1) automobiles, home furnishings, and other durable goods; (2) food, clothing, and other nondurable commodities ; and (3) recreation, medical care, housing, and numerous other services.
The total impact of all consumer spending should raise the personal consumption
share of our total national output from about 62 percent in 1969 to 65 percent
in 1975. This move is what would be expected in a nonwar environment. To be
sure, one percentage point or so may not sound like very much, but—in a trillion
dollar economy 1 percent means an extra $10 billion a year. Incidentally, we
soon will begin talking about trillions as well as billions when discussing the
American economy. I suspect that we may reach the trillion dollar rate for GNP
later this year.
Housing
For a number of reasons, the number of new housing starts is likely to rise
considerably in the early 1970's. There is likely to be a very substantial increase
in the rate of family formation in the next 5 years. Also, a backlog of need has
been created by the housing declines in 1966 and 196^70, by the rate of demolition and obsolescence, and because of the increased demand for housing generated by new families. The housing share of GNP, a rather low 3 percent in
1970, should rise to a more normal 4 percent by the mid-1970's.
In the Housing and Urban Development Act of 1968, the Congress stated a
goal of 26 million new housing units to be built during the 10-year period ending
TABLE I.-—Distrihution of GNP, 1969 and 1976
[Dollar amounts in billions of 1969 dollars]
1969
Category
Personal consumption expenditures
Housing construction
_
Business investment
__
Federal Govemment purchases
State and local government purchases
Total
-
Amount
1975
Percent
Amount
Percent
$676
32
109
102
113
___
._
62
3
12
11
12
$777
49
144
87
143
66
4
12
7
12
932
100
1,200
100
NOTE.—These estimates contain no allowance for increases above the 1969 level of prices. The figures
are based on the "Economic Report" for 1970 with adjustments to equate total claims on output with total
resources available.
EXHIBITS
283
June 1978. In order to achieve that goal, about 2^^ million new homes would be
built each year during the 1975 time period. On that basis, expenditures for new
residential construction will rise from $32 billion in 1969 to $49 billion in 1975.
Business investment
Large amounts of investment in new plant, equipment, and inventories will
be necessary just to produce the GNP we are projecting. About 11 percent to 12
percent of the GNP will have to be invested each year in new capital stock in
order to maintain reasonable capital-output ratios. In addition, inventory
investment and net exports are projected to grow roughly in line with the gross
national product between 1969 and 1975. This would maintain an approximately
constant ratio of inventory to final sales. Net exports are expected to rise from
the 1969 low as the U.S. trade position improves.
All these formis of business investment, taken as a whole, are projected to expand from the 1969 level of $109 billion to $144 billion in 1975.
Federal Government purchases
As the Nation returns to a more peacetime situation. Federal purchases of
goods and services (the great bulk of which is devoted to national defense) are
expected to decline significantly between 1969 and 1975, falling from $102 billion
to $87 billion. A large defense effort, of course, will most likely need to be maintained in order to meet the continuing requirements of protecting the national
security.
'In contrast, however, proportionially small amounts of F'ederal civilian expenditures are devoted to direct purchases. Rather, civilian agency budgets
mainly take the form of transfer payments to individuials (such as social
security), grants-in-aid to State and local governments, and interest payments.
These show up directly or indirectly in the GNP subsequently as consumer
exi>enditures or business investment or state and local purchases, as the ultimate
recipients of the F'ederal funds respend them^ Hence, the direct importance of
the Federial Government in the American economy, when we look at its role as
a direct user of resources, is likely to decline substantially between 1970 and
1975.
All of the likely future increases in Federal spending probably will occur in
these other categories (seetable II)—income transfer payments, grants-in-aid,
subsidies, etc. Transfer payments will be rising sharply from $56 billion in 1970
to $75 billion in 1975. Tliis movement will be due to expanded coverage and
population, as more people receive checks for social security, disability insurance,
and so forth. Part of the growth will also come about from higher real benefits.
Much of the increase in grants--from $22 billion in 1970 to $27 billion in 1975—
will come in essentially open-ended programs, such as medicare, in which the
Federal Government must provide matching funds if the States choose to spend
money for the designated activities.
These figures include the new initiatives already recommended by President
Nixon (such as the family assistance program and revenue sharing vrith State
TABLE II.—Projections of Federal expenditures, 1970-75
[In billions of 1969 dollars. National income accounts basis]
Category
1970
Existing programs:
Purchases
Transfer payments
Grants-in-aid
Other...
1972
1973
1974
1976
92
56
22
19
88
69
22
16
87
62
22
16
86
65
23
14
85
68
23
14
84
70
24
14
188
186
186
188
190
191
1
Total existing programs
New initiatives:
Purchases
Transfer payments
Grants-in-aid
1971
1
3
2
1
6
3
1
6
5
2
5
6
2
6
7
_
Total new initiatives...
Total Federal expenditures
307-702 0—^71 2S>
_
1
6
10
12
14
16
189
192
196
200
204
206
284
1970 REPORT OF THE SECRETARY OF THE TREASURY
and local governments). Outlays for these new program® are estimated to rise
substantially as they are put into effect, to $15 billion in 1975.
However, the addition of still other new programs in the years ahead would
result in the relatively tight budgetary situation that we are currently
experiencing.
State and local government purchases
Purchases of goods and services by State and local governments are projected
to grow with the GNP, population, and Federal grants-in-aid. Of the $30 billion
increase in State and local purchases—from $113 billion in 1969 to $143 billion in
1975—only about $10 billion will be due to population increases. This will leave
an anticipated increase of approximately $20 billion over and above the cost of
providing State and local services at the present per capita level. This will permit
an average annual increase of 2.8 percent in the real per capita quantity of the
services provided by this category of State and local spending.
Gross national product
The GNP of the United States is projected to rise more than 4 percent each
year during the post-Vietnam time period, reaching a total of $1.2 trillion in
1975, in terms of 1969 prices. The figure would be ^about $1.4 trillion if we allow
for price changes. Productivity (output per man-hour) is estimated to grow
about 2.8 percent a year, on the average. These calculations, when viewed in
conjunction with reasonable forecasts of population and the labor force, yield
an employment rate of over 96 percent of the civilian labor force iand a rising
real living standard for the average American worker and his family.
Like any set of long tenn economic estimates, these projections are illustrative;
they are not meant to be precise forecasts. Rather, they indicate reasonable orders
of magnitude and interrelationships for the period following the achievement of
peace in Vietnam. Changes in public policy—^as well as future private actions—
could substantially alter the size and the composition of the GNP in future
years. Yet, such statistical analyses are useful in demonstrating how the American economy can quite successfully adjust to a peacetime environment.
Most public and private studies of the relationship between military spending
and the Aonerican economy reach two common conclusions:
(1) The United States can afford to maintain within reasonabile limits the
level of defense spending that is required for the national security, and
(2) The economy is not dependent on military demand in order to maintain
prosperity. Rather, the long term level of income and output is likely to be
higher in a more civilian-oriented economy because of additionis to the civilian
labor force and higher productivity of civilian activities.
A final note
As a Nation, we will have very considerable discretion over the use of the
tremendous amount of resources that will be available to us during the years
following the end of the Vietmam War. These resources, in effect, will also come
with a challenge—that we use them wisely. If we do not, we may find that economic growth, rather than being translated into improved well-being, may be
devoted increasingly merely to ameliorating continuing physical and social ills.
This miay be the essence of our concern to shift national priorities—to make the
necessary investments now in improving the quality of our physical and social
environment to permit real improvement in our national welfare in the years to
come. Perhaps this will be a case where abstinence makes the heart grow fonder.
Exhibit 11.—Remarks by Assistant Secretary Weidenbaum, March 24,1970, before
the American Bankers Association, National Installment Credit Conference,
Chicago, Illinois, on consumer spending, credit, and taxes
I would like to provide some economic perspective to the subject of consumer
spending and credit, which is the important concem of this conference. It is a
particular pleasure to have the opportunity to discuss some aspects of fiscal
policy here in Chicago.
In this presentation, I would like to cover both long term and short term
aspects of the outlook for the consumer sector. There are some differences in
these prospects.
EXHIBITS
285
Longer term trends: taxes and income
Some of the good news first. In the longer term, we as a Nation are taking important actions which will tend to expand the consumer segment of the American
economy. This is part and parcel of the shift that we are trying to accomplish to
a less governmental and to a more private sector orientation in our economy.
I would like to offer just a few numbers for purposes of illustration. Last year
consumer spending accounted for 62 percent of the gross national product. This
year it may rise to 63 percent. By 1975, perhaps 64 percent of the GNP will be
devoted to personal consumption expenditures.
One percent may not sound like much. However, in an economy which is likely
to reach a trillion dollar rate later this year, it means about $10 billion more
sales to consumers in a 12-month period. In absolute terms, the magnitudes are
quite striking—personal consumption expenditures may rise from $576 billion
in 1969 to $900 billion in 1975.
In part, of course, this shift in favor of the consumer is coming about as a
result of the substantial cutbacks in Federal Govemment purchases, particularly for military and space programs. More fundamentally, however, consumer
purchasing power is being bolstered through tax relief and reform, as well as
economic growth. The comprehensive tax bill enacted by the Congress late in
1969 contained many important changes in specific tax provisions, ranging from
less generous oil depletion allowances to tightening the treatment of capital
gains. On balance, however, the Act provided for a schedule of substantial tax
reductions for individuals.
In the fiscal year 1971, individuals (in contrast to corporations whose overall
tax requirements were increased) will be paying about $2.3 billion less Federal
income tax than they would have if -the law had not been passed. With a reasonable pattern of economic growth, the tax savings for individuals could rise to
$6 billion in fiscal 1972 and to over $12 billion in the fiscal year 1975.
As you may know, there has been some question as to the effect of changes in
taxation on ^the economy as a whole and on the pattern of consumer spending
and saving, specifically. Of course, tax changes are just one item in a very complicated economy; and, therefore, it is not easy to identify separately the changes
in economic activity that they may induce.
Nevertheless, a careful analysis of the experience in the United States in recent
years shows that changes in taxation have a visible impact on the allocation of
personal income among consumption, taxation, and saving. Available data show
that increases in income taxes, temporary or permanent, tend as would be expected, to depress both personal consumption expenditures and personal saving.
The precise proportions, of course, may vary according tO' many factors, including consumer expectations concerning the future. Hence, the repercussions
may be more modest than had been expected, at least by some analysts, but the
results seem quite clear. A complicating consideration in analyzing the repercussions may be the swamping of effects from tax changes because other factors
were operating. This does not mean that the tax changes, per se, were not effective : they may merely be hidden under the surface of more dramatic events.
For example, consumer spending averaged 78.2 percent of personal income in
the 18 months before the Federal income tax surcharge was enacted in July 1968,
and 77.4 percent in the 18 months after that tax increase became effective (see
table I ) . If we make what often is the heroic assumption that all other factors
were held constant, it would appear that the 10-percent surcharge caused the proportion of personal income which was devoted to consumption to decline by
eight-tenths of 1 percentage point. Similarly, the proportion of income saved
dropped by 1.3 percentage points.
A somewhat more sophisticated analysis would make some allowance for the
lags that may occur between (1) the time that personal income is changed and
(2) a shift in consumer spending patterns is evident. The authoritative study at
the University of Michigan by George Kattona and Eva Mueller of the 1964 tax
legislation revealed a lag between tax action and personal sx)ending of perhaps
6 months or more. For purposes of (illustration, let us assume a more modest 3month lag.
Hence, let us analyze the relationship between consumer spending and saving
in a given quarter of a year and the income received in the preceding quarter. On that basis, the imposition of the income tax surcharge was followed
by a drop of 1.2 percentage points in the proportion of personal income devoted
286
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE I.—Relationships of personal income, personal consumption expenditures
and personal saving
[Percentage distributions]
With immediate tax impact
Period
January-March
April-June
July-September
October-December
1967
With lagged tax impact
Consumption
Saving as
Consumption
Savings in
as percent of
percent of
in next quarter next quarter
current income current income as percent of
as percent of
current income current income
78.2
78.7
78.1
77.8
6.6
6.1
6.4
6.7
79.7
79.7
80.6
6.5
6.8
6.2
78.4
78.0
6.0
6.2
79.8
80.1
6.4
4.9
78.3
77.4
4.8
6.3
79.1
79.0
6.6
4.6
77.6
77.4
76.6
76.8
4.6
4.6
6.7
6.4
79.1
78.3
77.9
4.6
6.8
6.6
1968
January-March
April-June
Passage of income tax surcharge
1968
July-September...
October-December...
January-March
April-June
July-September
October-December
1969
NOTE.—Saving is exclusive of personal interest and transfer payments used in the national income
accounts.
to personal consumption expenditures and a decline of 1 percentage point in
the savings ratio for the time periods under study. As I pointed out earlier, in
an economy the size of dur own, a 1 percentage point shift is quite striking when
we translate it into dollars.
We need to bear in mind that this type of analysis does not take account of the
effects that tax-induced changes in consumer spending and saving have on
business investment. Presumably, as a result of an income tax increase, the
resultant decline in consumer saving would mean less funds available for private investment. However, the simultaneous expiansion of governmental revenues—and the resultant reduction in the Government's budget deficit or rise in
the surplus—would augment the total pool of saving available for investment.
Thus, it is not obvious what is the net impact of personal income tax changes
on investment, although these two factors may tend to offset each other, at least
in part.
Although our recent experience tends to demonstrate that a personal income tax increase, even a temporary one, may have some significant dampening
effect both on consumer spending and saving, a more definitive conclusion will
have to await the results of more detailed studies. Such studies, of course, would
have to take proper account of accompanying changes in monetary policy and
fiows of funds to the various sectors.
I do believe that it is useful for professional economists to study these questions in the present environment, rather than in a period when actual changes in
tax rates are being considered.
Shorter term trends: the economic outlook
Having examined both future economic prospects in the longer run as well
as some past history, it may be appropriate for us now to turn to the present.
I think that it is safe to say that 1970 is not likely to be a vintage year. It
clearly is going to be a year of transition. The American economy is going
through a period of adjustment—from an overheated economy which was characterized by substantial infiationary pressures built up for 5 years to an economic environment which is returning to a more sustainable pace of growth.
It is quite natural that at such a time we should encounter what may be
called the pains of decompression or reentry. Industrial production has declined
EXHIBITS
287
in the last several months, and the unemployment rate has risen. In a sense,
these developments are the perhaps inevitable side effects accompanying the
necessary efforts to reduce what has been a most substantial infiation.
The President's recent message on construction m'akes it quite clear that the
Administration is taking great care to accomplish this change in the economic
environment without tipping the balance too far in one direction or another.
iWith the continued use of a proper combination of monetary and fiscal measures, we should be able to achieve that reduction in the rate of infiation which
will set the stage for the subsequent expansion of real output, employment, and
living standards which is our fundamental economic objective. Thus, the economic medicine that we have been taking should yield many vintage years later
in the decade of the 1970's.
Credit controls
I have been asked to discuss the subject of consumer credit controls. I am
pleased ito do so, although I am not sure that I will be adding anything to what
other Administration spokesmen already have said. We are trying to avoid takin'g a doctrinaire attitude toward such questions of economic policy as the proper
measures at any point in time which are necessary in order to achieve a desired
degree of monetary or credit availability.
It does appear, at the present time, that there is no especial need for additional
restraints on consumer credit, either of the compulsory or voluntary variety.
Total retail sales have been holding quite steady for the past several months.
In physical volume terms, a slight decline may have occurred recently.
Certainly, when we look at consumer credit itself, a slowing down pattern is
clearly in evidence. The expansion in total consumer credit reached a peak annual
rate of over $13 billion in the July-September quarter of 1968. Subsequent expansions generally have been at a slower pace. By the end of 19619, the annual
rate of growth in outstanding consumer credit was down to $7i% billion. The
growth in consumer credit in January of this year was the smallest since December 1967—an annual rate of about $7 billion.
A similar cooling down pattern is visible when we examine the more specific
category of installment credit. From a peak growth rate of $10 billion in the
second half of 1968, net new extensions were running at a $7 billion yearly rate by
late 1969. The January figure indicated an annual rate of about $41/^ billion.
These trends in consumer indebtedness would hardly seem to constitute pressing reasons for beginning a new program of consumer credit controls at the
present time. Of course, we will continue to watch closely this as well as other
sectors of the American economy. A continuing and openminded examination of
economic trends and developments is necessary in order tp assure that our policies are as consistent as is reasonably possible with the changing needs of the
economy.
Exhibit 12.—Remarks by Assistant Secretary Weidenbaum, April 16, 1970, before
the National Association of Business Economists, Cleveland, Ohio, on Government, investment, and economic grow^th
I am going to try to cover some substantial amount of terrain today, ranging
from how to avoid a new tradeoff between environmental improvement and
inflation to the frequently overlooked role of Government as a direct investor
in capital goods.
I propose a single analytical framework to bring together these seemingly
diverse considerations. Thus, I will be discussing the various alternative methods
whereby the Federal Government can influence the level and composition of
investment and, hence, of economic growth.
In a simple causal relationship, investment may be looked upon as the means
and economic growth as the end. However, if we step back and look at the
whole process with a bit for perspective, we are likely to flnd that economic
growth itself is an intermediate goal or at best a proxy for a broader concept of
general welfare. Certainly, it has been brought home to us quite strikingly that
increases in the GNP which yield corresponding additions to environmental
pollution may not truly represent increases in welfare—^compared to so rearranging our activities as to avoid the creation of pollution.
In any event, the conditions conducive to that rate of economic growth which
could yield the resources permitting real improvements in welfare are manifold.
288
1970 REPORT OF THE SECRETARY OF THE TREASURY
These conditions may include, in addition to capital investment itself, the social
climate of the Nation, the business climate of the economy, the political climate
of the society, and, of course, the international climate of which we are just a
part. Although this paper will be limited to the relationship of Government
activities to investment and economic growth, these other considerations need
to be taken into account in a more comprehensive analysis.
Investment and the economy
Investment occupies a central role in every economy. Investment represents
that portion of current economic output which is not consumed, but instead is
channeled into some productive use designed to yield a flow of future beneflts.
In other words, we can view investing as the act of foregoing current benefits in
return for the receipt of future benefits.
From a macro-economic viewpoint, the significant feature of investment spending is its direct relationship to economic growth and full employment. Unless
some portion of current economic output is invested productively, an economy
forfeits its chances for future growth. Indeed, when all output is consumed, a
country begins to draw down its capital stock, ultimately experiencing actual
declines in total production. Furthermore, investment spending not only leads
to future economic returns, but also contributes to total spending—and hence
total employment of resources—during the period in which the investment takes
place. This "double-barreled" impact of investment, its contribution to future
productivity as well as to current spending, explains its significance to the
economy in both the short run and the long run.
While we can describe in general the concept of investment and its role in
the economy, there are still some major gaps in our knowledge of investment.
For one thing, investment is diflacult to measure accurately. This is not surprising when we consider that we are dealing \Yith current expenditures designed
to yield future benefits. Certainly many types of purchases come to mind which
involve combinations of both present and future benefits. The separation between
consumption and investment may not be obvious.
A related diflSculty involves our desire to know the full impact of Govemment
activities on the level of investment outlays and, hence, on economic growth.
When we examine investment in this light, we find that there are many ways
in which the public sector can and does influence both the level and the composition of investment, and not all in ways that necessarily will augment investment
or economic growth.
Taxes and investment
The tax system is an obvious area of governmental influence on the level of
investment. For example, although it may have been justifled on such other
grounds as equity and income redistribution, the Tax Reform Act of 1969 had
important effects on investment. It seems quite clear to me that its cumulative
impact was both to dampen the incentive to make new private investment as well
as to diminish somewhat the growth of the savings available to flnance such
investment.
The 1969 legislation is commonly looked upon as a tax reduction and relief act,
and that certainly is the case for the average individual taxpayer. However, for
the corporate sector as a whole, it increased the tax burden substantially—by
$3^/^ billion in the fiscal year 1971 and, assuming a reasonable pattern of economic growth, by as much as $5 billion in 1975. Since corporations play the
major role in the investment activities of the private economy, the direct and
adverse relationship between the Tax Reform Act and investment and economic
growth is apparent.
Of course, numerous preexisting sections of the tax code do continue to serve
as incentives to investment. Most notable are the provisions for liberalized depreciation of physical assets and the differential treatment of capital gains compared to ordinary income.
Government expenditures and physical investment
Perhaps it is on the expenditure side of the budget that the public sector may
make a most important and yet generally overlooked contribution to investment.
Conventionally, of course, the national income accounts report "gross investment"
as the sum of two relatively private categories—gross private domestic investment and net foreign investment.
EXHIBITS
289
Nevertheless, in any real sense, considerable portions of Govemment purchases are in the nature of investment outlays. To me at least, some of the most
obvious examples are the direct counterparts to private investment—hydroelectric power plants, office buildings, scientiflc research laboratories, schools,
inventories of industrial metals, etc. In the very common case of Govemment
contractors using Government-owned plant and equipment, the Govemment investment directly obviates the need for private investment. All of these types
of capital equipment, of course, show up in private investment when purchased
by a business flrm, but are not recorded as investment when acquired by a Government unit. Little justification seems to exist for the inclusion or exclusion
of these and similar items in an economic classiflcation of investment outlays solely on the basis of the legal status of the purchaser. The complete exclusion of
Governnient purchases results undoubtedly in an understatement of the actual
investment of the American economy and in faulty intemational comparisons.
Of course, a too all-encompassing concept of Federal investment may create
difficult conceptual issues. This could be the case if we include military durables
such as aircraft, nuclear submarines, tanks, and other military weapon systems.
From a purely technical point of view, perhaps those items could be viewed in
an analogous manner to consumer durables.
In the consumer area, we readily agree that there are items which provide a
long-term flow of services, but we do not ordinarily include that flow of services
in an aggregate accounting of the total investment of the economy—the Federal
Reserve flow of funds accounts are an exception.
Government investment-type expenditures can be estimated directly from some
of the supplementary tabulations prepared for the national income accounts.
The results are rather significant. In 1968 approximately $26 billion of Federal
purchases of goods and services consisted of durable goods and structures. This
came to about one-fourth of total Federal purchases. In addition. State and local
investment-type purchases were approximately $31 billion, or about 30 percent of
their total purchases. Hence, all levels of government combined accounted for
$57 billion of investment-type outlays in 1968 (see table I) oir about 6% percent
of the GNP. However, the national income accounts do not include these Govemment outlays in any investment category.
Were we to add these governmental purchases of durables and structures to
the gross investment conventionally reported in the National income accounts,
the total investment of the American economy would have been $183 billion for
1968 instead of the $126 billion actually reported, or a 45-percent increase (see
table I I ) .
As pointed out earlier, however, the inclusion of military durables may overstate the matter. Hence, table II also contains the results of a statistical analysis
limited to civilian Government investment-type outlays. These can be estimated
approximately by adjusting the National income accounts figures in line with the
proportion of military to civilian durables as recorded in budgetary data. The
results are not up to the standards of accuracy achieved in the national income
TABLE I.—Governmental physical investment outlays
[In billions of dollars]
Category
Federal Govemment investment:
Durables
Structures
Subtotal
(Civilian only)
State and local investment:
Durables
Structures
Subtotal
Total Govermnent investment
(Civilian only)
1966
-
1967
14
4
J
1966
16
4
21
3
23
3
18
(6)
20
(4)
24
(4)
26
(3)
4
21
6
23
6
26
3
19
22
26
28
31
40
(28)
46
(29)
62
(32)
57
(34)
SOURCE.—Oflice of Business Economics and annual Federal budget documents for data.
1968
290
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE II.—Total physical investment outlays
[In billions of dollars]
Category
1966
Gross private domestic investment
Net foreign investment
_
Subtotal conventional investment
Government investment
(CiviUan only)..
_
_
1966
1967
1968
108
4
124
46
118
62
(28)
Total investment outlays
(Civilian only)
116
112
40
__
121
2
(29)
(32)
162
(140)
126
2 ..
169
(153)
170
(160)
126
67
(34)
183
(160)
SOURCE.—Table I and "Survey of Current Business," U.S. Department of Commerce.
accounts but are of some interest nonetheless. The inclusion of civilian Government outlays in a measure of the total investment of the economy, although less
striking than the estimates which include military purchases, does yield an
impressive addition to the conventional measure.
Government investments in human resources
Adding Government purchases of durable goods and structures to private investment outlays represents only a partial adjustment. Perhaps the most important public sector investment does not show up in any measure of physical
asset accumulation. I have in mind here those vital investments in human
resources such as education, health, and manpower training and development.
As some economists have been pointing out, such outlays have apparently
been a major factor contributing to the growth rate of the American economy.
The rise in Government expenditures in these categories has been striking in
recent years. These investments (either public or private) do not show up in
identifiable form in the national income accounts. However, that is hardly reason
for ignoring them in our analysis, and budgetary data can be used to some
advantage.
I have defined governmental investment in human resources to include developmental expenditures in the fields of health, education, antipoverty, manpower
training and development, and closely related undertakings. The results of this
tabulation, shown in table III, point clearly to the growing importance of public
investment in human resources.
Government expenditures in the area of human resources have been expanding far more rapidly than aggregate economic measures such as physical investTABLE III.—Governmental investments in human resources, fiscal years 1965-71
[In billions of dollars]
Category
1965
1966
1967
1968
Estimated
1969
1970
Federal Government investment:
Health
Education
Antipoverty
Manpower training, etc
Subtotal
2
1
1
2
4
3
2
l
1
l
1
6
3
l
1
6
3
l
1
1971
7
4
7
4
1
3
13
14
l
1
12
4
6
9
11
5
23
6
27
6
31
7
34
NA
NA
NA
NA
NA
NA
Subtotal
28
32
37
41
NA
NA
NA
Total
32
38
46
52
NA
NA
NA
State and local investment:
Health and Hospitals
Education
NA—Not available.
SOURCE.—Annual Federal budget documents and Bureau of the Census, "Governmental Finances."
EXHIBITS
291
ment outlays, total government spending, or the GNP. State and local outlays
dominate this category, because of the primary role in public education. However, the most rapid growth in recent years has occurred in the Federal sector.
The trend toward Government investment in human resources is continued
in the most recent Federal budget, that for the fiscal year 1971. It is estimated
that Federal investments in human resources, as defined here, will expand from
$12 billion in 1969 to $14 billion by 1971. This latter figure would be more than
five times the actual level one decade earlier.
Thus, from an analysis of certain public expenditure categories it becomes
quite clear that Government infiuence on investment from the expenditure side
is a significant force, even though our conventional economic measures do not
treat such public outlays as investment spending. Furthermore, this public
sector contribution has undergone a measurable shift in emphasis from physical
to human capital outlays.
Government regulation and investment
A third area in which the Federal Government can influence the volume and
composition of investment is through its regulatory powers, which may either
encourage or discourage private investment. With the increase in attention being
given to improving the quality of Our environment, it is likely that Government
regulations increasingly will require or at least encourage many such specific
investments.
For example, the recent Presidential message to the Congress on environmental
quality pointed to a number of areas where investment—both public and
private—^will be encouraged or required :
—a capital investment of $10 billion over a 5-year period for municipal waste
treatment plants and interceptor lines.
—a seven-point program of measures to enforce control of water pollution
from industrial and municipal wastes.
—new and more stringent standards on exhaust emission from motor vehicles.
—nationwide air quality standards backed up by enforcement authority.
—greater emphasis on solid waste disposal.
A necessary digression on stabilization
Ih our concern with the obvious problem of controlling environmental pollution, it is important that we do not unintentionally engender problems of economic stabilization. It is possible that these stabilization problems could arise
merely because of existing inadequacies of measurement concepts and resultant
statistics.
Let me cite a specific possible future example. As industry spends rising
amounts to reduce pollution, these added outlays necessarily will be refiected in
future price increases. Hence, when we look at the price statistics, they are likely
to have an upward trend—everything else being equal—simply because the private
sector is assuming a larger responsibility for the control of pollution, refiected
in an upward shift in costs and prices. An alternative course which would not
engender this particular statistical problem, of course, would be rising governmental expenditures financed by direct taxation. I am certainly not advocating
that we abandon this private sector approach because of the price measurement
statistics.
Indeed, as an economist, I think it is highly desirable to move toward a closer
correspondence of social costs and private costs, particularly with respect to the
generation and elimination of pollution. To the extent that we can do so either
through tax policy, regulation or otherwise, we will be encouraging producers
and consumers to utilize products and processes which are less polluting than
at present. This strikes me as a far more attractive alternative than merely
increasing Government expenditures to clean up ever mounting amounts of
pollution.
But to conclude that we will have an economic stabilization problem, merely
because prices will be rising to reflect the private flnancing of antipollution
efforts, would be badly misleading. To the contrary, new extemal benefits will
have been created, some of which in the long run will increase total productivity in
the economy.
In a very real sense, we are describing a situation where two benefits are
being created simultaneously. One is the direct benefit that results from the
use of the private good, the basic product or service which is being sold in
292
1970 REPORT OF THE SECRETARY OF THE TREASURY
the market. The other is the social benefit, the improvement in the quality of the
environment.
In the short run, the achievement of the social benefit is likely to bring higher
costs and prices as initial outlays are made. However, some long-run efficiencies may develop from these investments in an improved environment. These
would occur to the extent that they reduce the unit costs of those other firms
that previously had suffered from the deteriorating environment (the classic
example of the factory smoke and the nearby laundry).
In other cases, such as putting power lines underground in order to maintain
an aesthetic environment, the increase in production efficiencies will be less
obvious and more indirect.
If we maintain that the cost of producing these highly desirable environmental benefits will not be recognized separately in the price indices, but will
be automatically added on to the price of producing the basic private product,
we will be in danger of adding a serious upward bias to our price indices. In a
sense, the concern here is analogous to the problem of allowing for product
quality changes in the price indices. The problem is compounded by the existence
of cost-of-living "escalator clauses" in certain collective bargaining agreements, whereby wages advance automatically with a price index increase.
Unless we recognize this changing institutional situation, we could conceivably be fighting inflation at times when there is no underlying excess demand
in the economy. We need to avoid creating a new but unnecessary tradeoff between environmental improvement and inflation. This area needs careful study.
It strikes me that a new look at existing price indices may be necessary.
Some concluding observations
Both the level and the composition of investment in the United States are
undergoing important changes as a result of governmental tax, expenditure,
and regulatory actions. The most dramatic change may be the shift in relative
importance from conventional, physical investments in plant and equipment to
expenditures which enhance the economic productivity of individuals in other
ways, such as raising the educational level of the labor force, training programs,
and improving individual health. However, governmental investments in physical
assets, although generally overlooked, are now of very substantial magnitude.
And now on the horizon, we see the prospect of a large expansion of governmentally-induced investment-type expenditures by the private sector either to
control pollution or avoid polluting the environment.
The shift toward investment in human resources can be viewed as a concerted effort to improve the quality of factor input. On the other hand, the
growing emphasis upon environmental aspects reflects an emphasis upon the
quality of output. Unfortunately, in neither case does the market mechanism tell
us just where to stop. Improvements in quality are surely a good thing, but
there are difficult but important choices among alternatives.
We need to keep in mind such basic economic concepts as the "opportunity
cost" of each new venture (that is, the foregone opportunity to devote the
resources to something else). Perhaps that comes down to nothing more fundamental than asking the right question of each proposed new investment—^public
or private, physical or human. Surely, the pertinent question is not whether it
is good; the typical proposed activity possesses some intrinsic merit. The right
question is, "Is it better, that is, better than available alternatives?" Therein
lies the path toward maximizing investment, economic growth, and the general
welfare.
Exhibit 13.—Remarks by Assistant Secretary Weidenbaum, May 12, 1970, before
the 50th Anniversary Meeting of the National Association of Savings Banks,
New York, New York, on the American economy in 1970
For me, it is a very personal pleasure to be here. It must be well over 35 years
ago that, as a school boy, I opened my first bank account with one of the member
banks of this distinguished association. That early relationship with a thrift
institution really had a lasting effect on my savings ratio. Ever since, I have
always made my personal contribution to combatting infiation.
I am also here to express our appreciation for the forthright anti-infiationary
EXHIBITS
293
stand that the National Association of Mutual Savings Banks consistently has
taken. That has been most welcome support.
Some economic perspective
I would like to offer some observations on the American economy. Perhaps
you will find that my remarks follow that old jingle—something old, something
new, something borrowed, something blue. To begin with, some perspective is
useful: the long-run economic objectives of the Administration are threefold—
reasonable price stability, high employment, and a healthy rate of growth. But
in the short run, the strength and persistence of infiation temporarily makes that
our number one economic problem.
Until prices are rising much less rapidly than they are now, the economy must
be kept under mild restraint, which is what we are doing. Output has been
declining, and there has been some rise in unemployment. These are unwanted,
but unavoidable, side effects of bringing inflation under control; I do not know
of any quick and easy cure once inflationary momentum has been allowed to
build up—and it certainly was allowed to during those critical years^l965, 1966,
1967, and 1968. But since 1969, we have been applying the fundamental corrections ;and they are beginning to work.
This Administration inherited a difficult economic situation, a sort of economic
hangover resulting from the spending spree that culminated in the massive $25
billion budget deflcit in 1968. We had some choices to make in setting our economic policy.
One solution—to let the inflation run its course—was really no solution at all.
Inflation had to be brought under control; it certainly would not cure itself.
Another solution—to aim deliberately for recession—had little to recommend it.
Even with expanded unemployment compensation and similar offsets, the cost of
unemployment would be high. Furthermore, a sharp contraction followed by
rapid expansion might still leave prices rising too rapidly.
The workable and sensible solution seemed to lie between the two extremes. A
policy of firm economic restraint was needed, but not one that would be carried
so quickly or so far as to cause deep recession. Instead, total demand for the
Nation's output would have to be held below our total productive capacity, and
for an extended period of time. Only then could a moderate expansion be resumed
without setting off renewed infiation. This is the undramatic and somewhat painful course that was chosen. I believe that it was, and is, the right and responsible
course to follow.
A progress report
What are the accomplishments to date? Let me be quite frank; they fall short
of our more optimistic expectations. We are running about on track in terms of
slowing down the economy, that is, the behavior of total spending and output.
But we are running behind schedule in terms of visible relief from inflation; yet,
we are making progress. First of all, the acceleration in the rate of price increases
has been stopped. That was a critical, although often overlooked, development in
the flght against inflation. Now there are signs of the important next stage—the
actual slowing down in the rate of inflation. There has been some progress, but
we are still plagued by rapidly rising costs and prices. Obviously, even though the
tide may be turning, the battle against inflation is hardly over nor yet has it been
won.
The fact that total demand is no longer excessive does mean that we have
passed through a vital first phase. The application of fiscal and monetary restraint
throughout last year was successful in slowing down the rate of total spending.
Until that occurred, there was little prospect of lasting relief from infiation.
In the first quarter of this year, there were rather clear signs that demand was
no longer excessive:
—In physical volume—what economists call "real terms," that is after correction for price changes—total production in the United States fell slightly in
the first 3 months of 1970; meanwhile, prices continued to rise at about the same
rate as in late 1969.
—Retail sales have moved up only moderately this year; industrial production
had been in a down-trend before edging up in March; and the unemployment rate
averaged 4.3 percent in the first 4 months of 1970, up from a low 3.6 percent in
the last 4 months of 1969.
But, even with the economy moving slowly, prices are still under strong upward
294
1970 REPORT OF THE SECRETARY OF THE TREASURY
pressure from the cost side. This is the natural sequence after a period of pro, longed infiation. Costs and prices continue to rise for a time on their own momentum. But this "operation bootstrap" cannot continue indefinitely if total spending
is kept in check.
Are we really better off now, having exchanged "demand-pull" infiation of 1968
for the "cost-push" infiation of 1970? I think that we are far better off. As long
as total demand was excessive, costs and prices were bound to continue rising.
Under those circumstances, no relief could be expected. However, once demand is
restrained, cost-price pressures could eventually diminish. There are lags in this
economic adjustment process, as we know all too well. But with demand restrained, the conditions have been established whereby infiation can recede.
What are the tangible signs that infiation is, in fact, coming under control?
They may not exactly overwhelm you, but here are some recent favorable signs:
—Although the consumer price index rose at a hefty 6 percent annual rate in
the first 3 months of 1970, on a seasonally adjusted basis, the rise was successively
less in each month so far this year.
—The wholesale price index rose at about a 5-percent annual rate in the first
3 months of 1970, but by successively less in each month. The preliminary report
for April shows an actual decline of one-tenth of 1 percent. Personally, I do not
attach nearly as much weight to the small fraction of 1 percent price decline in
just 1 month as I do to the cumulative slowing down pattern in the price indices.
Not all of the economic news is that favorable. For example, the productivity
and unit labor cost statistics for the first quarter of 1970 were somewhat less
encouraging:
—Output per man-hour apparently edged down fractionally, after rising in the
fourth quarter 1969.
—With compensation per man-hour rising at a 7.7 percent annual rate, unit
labor costs rose at nearly an 8V^ percent annual rate.
On the basis of past experience, however, we would expect sharp rises in productivity when the economy once again begins to expand. This would help to
dampen cost-price pressures.
It obviously is going to take awhile longer before the inflationary process can be
unwound. For a time, we may still flnd that there will be risks on either side:
excessive slowdown or premature speedup. It will be particularly important in
the period immediately ahead to keep the policy dials on a fairly steady setting.
This may mean something like an "even keel" for flscal policy. I do not believe
that it is wise to rush in with new policy proposals each time some erratic economic indicator turns for the worse or for the better.
The budgetary situation
In the present economic environment, the maintenance of a strong budgetary
position is extremely important. CJertainly in the absence of any sharp reversals
of the apparent trends in the private sector, the Federal budget should be kept
in the neighborhood of balance during the next few years. In order to achieve
that, the Administration is flnding it necessary to follow a policy of holding
the line on expenditures.
Now that does not mean that every single request for increasing spending is
automatically turned down. Economic policy is not set on automatic pilot. The
needs of economic stabilization inevitably must be reconciled with the pressing
needs of programs given high priority. The important element is to maintain the
overall posture of budgetary restraint, to make the hard choices which are
necessary in rejecting a good many of the available and attractive candidates for
Govemment spending. Thus, while there have been some well-publicized "pluses"
on the expenditure side, there will be some compensating "minuses" as well. For
example, the Administration intends to absorb a good part of the Federal pay
raise, keeping its full impact from raising expenditures.
Some lessons leamed from recent experience may help in keeping the economy
on a steadier path of expansion. Many of our present difficulties can be traced
to the large budget deficits which emerged after 1965. There is general agreement on the need to avoid large and destabilizing swings in the budget. But some
argue whether the swing of a few billion dollars from surplus into deficit really
matters in a trillion dollar economy.
Although I relish academic disputations as much as any other economist who
has eamed his Ph. D., frankly I just do not think that this is the pertinent
question in the present environment. As I see it, the key point now is the need
EXHIBITS
295
to maintain budgetary restraint in order to dampen down the continuing inflationary pressures. To the extent that the Federal Govemment can continue to
slow down the rise in Govemment spending, to that extent can we expect the
private sector to exercise similar restraint.
In contrast, if revenues do not come up to expectations because economic
restraint takes hold in some sectors more rapidly or fully than anticipated, this
in itself does not strike me as a cause for economic concern. This is the wellknown, built-in automatic stabilizers at work, a phenomenon which is welcomed
by economists of all political persuasions.
The present does not impress me as the appropriate time to relax the downward
pressure on the expenditure side of the budget. To be sure, no budget is ever
"set in concrete." A budget is an action document, modifled from time to time.
Even after taking account of the modifications which have occurred to date,
the Federal budget for the fiscal year 1970 is a restrictive one. In "real terms"—
adjusting the actual figures for the effects of inflation—Federal spending is
declining between the fiscal years 1969 and 1970. On the basis of present policy,
"real" spending will decline again in the fiscal year 1971.
In fact, some extremely capable economists outside of the Federal Government contend that a more sophisticated analysis—that using the so-called full
employment budget surplus concept—would show that the degree of economic
restraint may even become greater than they would care to see. While I do
not share their confidence in the exactness of such calculations, they do tend
to reinforce my own evaluation of continuing Federal fiscal restraint.
In recent days, I have been asked what, if any, is the impact of developments
in Southeast Asia on the budgetary outlook. My reply is that the Treasury
Department has been assured that the recently taken actions in Cambodia will
utilize existing and available forces and equipment. On that basis, the existing
budget estimates take account of these developments.
At this point, I think it might be useful if I report on an effort underway
which indicates our continuing concern with improving the effectiveness of
governmental budgeting and financial planning. A subcommittee of the Cabinet
Committee on Economic Policy has been studying the operation of the unified
budget—that budget concept which resulted from the recommendations of the
Commission on Budget Concepts.
An area of particular interest is the operation of the various types of Federal
credit programs. These programs include direct loans by Federal agencies, which
are in the budget, and federally-assisted credit extended either by Governmentsponsored (and now privately owned) institutions or by entirely private organizations with a Federal guarantee.
In recent years, the amount of federally-assisted credit, which is financed outside of the budget proper, has been expanding rapidly, particularly as agencies
(such as Fannie Mae) which had been partially federally owned became privately
owned, although with some continuing Federal involvement or relationship.
We are now at the point where the volume of borrowings to finance federallyassisted credit programs is roughly equal in size to the total corporate bond
market and is about twice as large as the municipal bond market. Thus, our
subcommittee is taking a fresh look at some of the implications for financial
markets as well as the overall impact of these programs on the economy.
As chairman of this activity, I would like to be in a position to report that
we have come up witli a sure-fire solution. However, that is not the case, at least
not yet. In a positive way, we have been exploring alternative methods whereby
the various forms of federally-assisted credit can be reviewed in a more comprehensive manner so as to permit more effective allocation of credit resources.
Certainly, it would be desirable to provide greater attention to these programs,
both those "in" and "out" of the budget, in the formulation of overall fiscal
and monetary policy.
The economic outlook
The first half of 1970 is not likely to be a period of any significant expansion
in the economy as a whole. Of course, in dollar terms, the economy is rising and
will likely continue to rise. The measures of personal income, money supply, gross
national product, etc., all are likely to continue going up all through 1970.
However, in physical volume terms, the economy is marking time right now
as inflationary pressures and psychology are being reduced.
Even though I would like to be obliging, I just cannot confldently predict the
296
1970 REPORT OF THE SECRETARY OF THE TREASURY
exact extent to which inflationary pressures will be brought down. In our society,
that will depend on actions in both the private sector as well as in the public
sector. To a major extent, the public sector itself was the basic source of the
current inflation. The Administration has taken important actions to put our
public sector house in order. The maintenance of fiscal restraint, of course, will
continue to be needed in order both to make further progress in bringing down
the rate of infiation and to demonstrate that we are serious about bringing
infiation under control.
Yet, there is a division of labor in the American economy. We are primarily a
private sector oriented economy. In good measure, the responsibility for fighting
infiation also now lies in the private sector, for business, labor, and consumers
alike to conduct their economic affairs in that manner characterized by enlightened self-interest which will avoid a new round of inflation.
The expectations for 1971 are somewhat brighter than those for 1970. However,
1971 is not likely to be a boom year. We do not want a repetition of the 1967
experience, when a pause in the economy led to overreaction by Washington
and then to another major burst of inflation.
In 1971, inflation should be rising more slowly than in 1970. In 1971 and the
years following, we should be obtaining the payoff for the necessary economic
medicine that we have been taking during the past year.
With the continued use of a proper combination of monetary and fiscal policies,
we should be able to achieve that reduction in the rate of infiation which will
set the stage for achieving our more fundamental economic objectives, which are
the expansion of production, employment, and living standards.
The slow going of the past several months will then appear in a somewhat
different perspective. But for the time being, we must complete the job of
reducing the rate of price increase to much more tolerable proportions. Thus, the
economic medicine that we have been taking should yield many vintage years
later in the decade of the 1970's.
Exhibit 14.—Statement by Assistant Secretary Weidenbaum, June 2, 1970, before
the Subcommittee on Economy in Government of the Joint Economic
Committee
It is always a pleasure to appear before the Joint Bconomic Committee. I
hope that you find my testimony useful. Basically, what I would like bo do is to
offer a mechanism for making more enlightened choices on national priorities.
In doing so, I will be drawing on work that I did as a professor of economics
before joining this Administration. As you will see, the methodology may be
useful for illuminating both current decisions on priorities as well as future
actions^. As you can appreciate, this will be a very personal statement.
A Government-wide program budget
In a sense, the following approach builds on the planning-^programingbudgeting (PPB) system and attempts to fill a major remaining gap. Despite
its accomplishments to date, the PPB approach is not coming to grips with the
larger choices in allocating Federal funds among different agencies and programs.
"Would a dollar be more wisely spent for education or for public works?" This
fundamental question is not raised in the budgetary process at the present time.
The current and, of course important, emphasis is on choosing among more
specific alternatives within the education and public works categories. Furthermore, the choices usually are restricted to those which can be made within each
of the many agencies involved in education or public works.
A program budget for the entire U.S. Government can be developed from
available budget materials. Such a Government-wide program analysis permits
comparing alternative programs of different agencies for fulfilling broad national
goals, rather than merely examining the alternatives available to a single Federal
agency.
The hypothetical program analysis for the entire Federal Government, which
I present here, is based on the fundamental end purposes for which the various
Government programs are carried out.^
^This analysis draws on Chapter VII of my recent book, "The IModern Public Sector,"
New York, Basic Books, Inc.
EXHIBITS
297
In a world of critical international tensions, the initial purpose that comes
to mind is the protection of the Nation against external aggression—to maintain,
the national security. A variety of Federal programs exists in this category, ranging from equipping and maintaining our own military establishment, to bolstering
the armed forces of other nations whom we consider actual or potential allies,
to various types of nonmilitary competition, and to negotiating arms control
agreements.
A second basic national purpose, one also going back to the Constitution,
is the promotion of the public welfare. Here, we find the Federal Government
operating in the fields of unemployment compensation, social security, veterans
pensions, and many other such activities.
A third major purpose of Government programs has received an increasing
amount of attention in recent years—the continued development of the American
economy. This area covers the various programs to develop our natural resources
and transportation facilities, as well as support of education, health, research
and development, and other attempts to increase economic growth.
Finally, there is the routine day to day operation of the Government, such as
the functioning of the Congress and the Federal courts, the collection of revenues,
and the payment of interest on the national debt.
Table I shows how the requested funds in the Federal budget for the fiscal year
1971 are allocated among the four major purposes sketched out above. It may
come as a surprise to many people to learn that public welfare programs,
rather than national security activities, receive the largest single share of the
budget.
A comparatively small portion is devoted to the economic development items,
such as education, research, natural resources, etc. An examination of the Federal budget and congressional appropriation hearings over the years reveals
little systematic attempt to appraise the wisdom or desirability of these overall
choices implicitly made in the allocation of Government resources among these
major alternative uses.
I t may be mere conjecture to conclude that, possibly, the allocation of funds
would have been somewhat different if the appropriation requests had been reviewed with an eye on the total picture, instead of examined as individual
appropriation items in relative isolation. Added insight to the possible program
choices that can be made, using the type of framework suggested here, may be
gained from a somewhat deeper analysis of the content of each of these
categories.
National security.—As would be expected, the hulk of the national security
budget is devoted to the U.iS. military forces. However, one-tenth of the total is
comprised of programs that would promote the national security through somewhat more indirect means, such as conducting nonmilitary forms of competition
(NAiSA and USIA) or increasing the military capabilities of friendly nations.
The data in table II can be used to indicate the types of "strategic" choices
that can be made—or are currently being made only indirectly—in allocating
funds for national security. First of all, these various defense-related programs
are not, to my knowledge currently brought together and viewed as a totality
anywhere in the budget process. The groupings, of course, are arbitrary and
illustrative; some, for example, may contend that NASA's contribution to
American economic development is greater than its national security role.
TABLE I.—Rudimentary program budget for the U.S. Government new obligational
authority plus loan authority, fiscal year 1971
[Dollar amounts in billions]
Broad purpose
Public welfare
National security
Economic development
Government operations, etc
Total
SOURCE.—Appendix A to this statement.
Amount
Percent
$95. 6
74.3
35.2
27.5
41.1
32.0
16.1
232.6
100.0
n.8
298
1970 REPORT OF THE SECRETARY OF THE TREASURY
TABLE II.—National security programs, fiscal year 1971
[Dollar amounts in billions]
Program category
.-
Amount
68.2
3.3
1.9
.6
.3
.1
U.S. military forces
Scientific competition (NASA)
Foreign nonmilitary a i d . . .
Foreign military forces
Psychological competition (USIA)
U.S. passive defense
Arms control and disarmament
(0
Total
74.3
Percent
91.8
4.6
2.6
.7
.4
(2)
(2)
100.0
1 Less than $50 million.
2 Less than J^ of 1 percent.
The approach suggested here could lend itself to first raising and then
answering questions such as the following:
—Wou^d national security be improved by shifting some or all of the $5.7
billion for foreign aid and nonmilitary competition to the U.S. military
establishment itself ?
—Conversely, would the national security be strengthened by moving a
proportionately small share of the direct military budget, say $500 million, to the
USIA or the arms control effort and thereby obtaining proportionately large
increases in these latter programs ?
—Are we putting too much into foreign economic aid and not enough into the
space program ? Or vice versa ?
—Would the Nation be better off if we shifted some of the funds now going
to passive (civil) defense to the U.S. Arms Control and Disarmament Agency?
Or vice versa?
The very existence of the type of information presented here may lead not
only to attempts to answer questions such as these, but, more fundamentally,
to widen the horizons of budget reviewers.
Puhlic welfare.—Over two-fifths of the 1971 budget is devoted to programs in
the general area of the public welfare. Again, these activities are nowhere
brought together so that the various spending programs can be compared against
each other. The tabulation of public welfare programs contained in table III
shows a rather large assortment.
The various quasi-life insurance, unemployment compens^^tion, and retirement
programs receive the great bulk of the funds for public welfare. However, this
may be hardly a conscious decision. The level of expenditure for these programs—
such as the old-age and survivors' insurance system—is predetermined by basic,
continuing statutes; they are financed by permanent, indefinite appropriations
which are not subject to review during the budget process because they do not
even appear in the annual appropriation bills. Hence, it is not surprising that
these programs have grown to dominate the nondefense budget, exceeding by far
the total outlays for the various economic development programs.
Likewise, the expenditures under the various agricultural price support proTABLE III.—Puhlic welfare programs, fiscal year 1971
[Dollar amounts in billions]
Program category
Life insurance and retirement (including Medicare)
Public assistance
Assistance to farmers and rm-al areas
Veterans' compensation and pensions
Unemployment insurance
Urban housing and facilities
Antipoverty programs
Specialized welfare programs
Total
Amount
$60.8
9.0
8.0
7.4
4.0
3.7
1.5
1.2
95.6
Percent
63.6
9.4
8.4
7.7
4.2
3.9
1.6
1.2
EXHIBITS
299
grams (which dominate the category of "Assistance to farmers and rural areas")
exceed all of the outlays for the programs of urban housing, antipoverty, and
other specialized welfare activities combined. Again, the farm subsidy program
is generally set by the substantive laws on price supports and farm aid, rather
than through annual appropriations.
Also, this level of detail permits some cross-comparisons of Govemment programs which are not currently made. For example, the $1.5 billion for formal
efforts to reduce poverty in the United States is less than the $1.9 billion for
foreign economic aid. Would some trade-off between the public welfare and
national security areas result in a net advantage? This type of analysis is
attempting to answer the fundamental question, "Would an extra dollar (a
billion, in the case of the Government) be more wisely spent for program A or for
program B?"
Economic Development.—In this exploratory categorization of Government
programs, a number of activities are listed under the heading, "Economic
Development." A good share of them, such as the development of needed natural
resources or the improvement of necessary transportation facilities, may contribute to the more rapid growth and development of the American economy. Others,
such as various subsidies, may be more questionable. Of course, it is inevitable
that any such classification will, contain many borderline cases.
A brief examination of the composition of the Economic Development category
is revealing (see table IV). Transportation facilities account for the largest
single share, and when combined with natural resource development and related
aids to business, account for almost two-thirds of the total. A Government-wide
program budget would focus attention on questions such as, "Would a shift of
funds between transportation and education be advisable? Between natural
resources and research?" Raising these questions need not be taken as expressing
value judgments, but rather as indicating a pattern for governmental
deci si onmaking.
Government operations.—The final category of Government programs represents the general cos^s of operating the Government, the relatively day-to-day
functions. More than 80 percent of the funds in this category cover the payment
of interest on the public debt. The bulk of the remaining outlays for Government
operations is devoted to collecting internal revenue and the housekeeping activities of the General Service Administration.
Implementation.—The incorporation in the President's budget message and the
annual budget document of the approach here suggested might result in growing
congressional and public concern and awareness of the problems of choosing
among alternative uses of Government funds. In the absence of an automatic market mechanism, such an approach might introduce a healthy degree of competition
in governmental resource allocation. In a sense, the adoption of a Governmentwide program budget would represent a logical expansion of the current program
budgeting effort to work across rather than only down the traditional departmental lines.
An alternative means of implementation would be for a congressional committee staff to rework the existing budget submissions within this framework
for review, say, by the entire Appropriations Committee prior to its detailed examination of individual appropriation requests. This would permit the parent
appropriation committees to set general guidelines and ground rules for the
detailed budgetary review performed by the specialized subcommittees. It would
also permit some improvement over the current situation, in which overall
Government policy often seems to be the accidental byproduct of budget decisions
TABLE IV.—Economic development programs, fiscal year 1971
[Dollar amoimts in billions]
Program category
Percent
Total
21
$13.0
10.1
5.3
4.2
1.7
.9
36.9
28.7
15.1
11.9
4.8
2.6
35.2
Transportation facilities
Natural resources and regional development
Health research and development
Education and general research
Manpower development...
Aids and subsidies to business...
397-702 0-—71
Amount
100.0
300
1970 REPORT OF THE SECRETARY OF THE TREASURY
on the various departmental requests, rather than the guiding hand behind those
decisions.
The underlying theme of this program approach to Government budgeting is
the need to array the alternatives so that deliberate choice may be made among
them. It has its counterpart in the private sector. Many families might rush out
and spend the Christmas bonus for a new car; a more prudent family may
carefully, although subjectively, consider the relative benefits of a new car, a
long summer vacation, or remodeling the basement. Similarly, a well-managed
company would not impulsively decide to devote an increase in earnings to raising
dividends, but would consider in detail the alternative uses of the funds—
embarking on a new research program, rebuilding an obsolescent manufacturing
plant, or developing a new overseas operation.
Application to the fiscal year 1971 budget
It might be useful to analyze the President's budget for the fiscal year 1971
using the framework here presented so as to see what changes in priorities are
implicit in it. The actual figures for the fiscal year 1969 are taken as the basis
for comparison; hence, the increases (and decreases) between 1969 and 1971 are
indicative of the revisions in priorities made thus far by the Nixon
Administration.
As shown in table V, the public welfare area is the major area of expansion;
it has received slightly more than one-half of the increased funds during the
2-year period. In contrast, national security has been reduced substantially. Both
economic development and Government operations show expansion between 1969
and 1971, but of considerably smaller magnitudes than public welfare.
The lower half of the table shows the more specific program categories which
have experienced gains or losses of $1 billion or more during the 2-year period.
They correspond by and large to the movements in the larger functional
categories.
Two shortcomings in the analysis
Any analysis of governmental priorities is inherently limited to the items
which are contained in the budget itself. At present two major types of governmentally-related activities are not included in the budget proper. Let us try to
identify these activities and attempt to incorporate them into the analysis.
Government credit programs.—The first category of items omitted from the
Federal budget consists primarily of uses of the credit of the Federal Government.
The bulk of Federal credit assistance programs is now financed outside the
budget by means of (1) various loan guarantee techniques and (2) loans made
by federally-sponsored but ostensibly privately-owned agencies.
Of the estimated $22.2 billion net increase in Federal and federally-assisted
loans outstanding for the fiscal year 1971, only $1.6 billion are direct loans whidh
show up in the budget. Table VI contains detail on the composition of the $20.6
billion of federally-assisted credit programs which are not contained in the
budget proi)er. There is little Govemment control over the expansion of these
federally-assisted loans outside the budget and, hence, little overall consideration
can be given to their impact on financial markets and on the economy.
TABLE V.—Major shifts in the Federal hudget, fiscal years 1969-71
[In billions of dollars]
Category
A. Basic goal:
Public welfare
Economic development
Government operations, etc
National security
B. Program area:
Life insurance and retirement (including Medicare)
Natural resources and regional development
Transportation facilities
Public assistance
Interest payments
Civilian and military pay increases
Contingencies
Manpower development
U.S. military forces
Amount of
• change
-{-15.9
-(-10.4
4-6. 6
—7.3
:
-1-12.8
-[-4.2
-1-3.6
-1-2.6
4-2.4
-1-1.4
-1-1.2
-1-1.0
-7.3
EXHIBITS
301
The largest single category of federally-assisted private credit is to the home
mortgage market. This is accomplished through a variety of mechanisms. The
Federal Housing Administration and the Veterans' Administration guarantee
and insure individual home mortgages. The now privately-owned Federal National Mortgage Association (Fannie Mafe) operates a secondary market for FHA
mortgage lenders. The Federal home loan banks raise and provide funds for
the savings and loan institutions which are important sources of mortgage credit.
Most recently, the wholly federally-owned Government National Mortgage Association (Ginny Mae) issues mortgage-backed securities, which is an attempt
to sell indirectly mortgages to investors who prefer other types of investment
instruments.
So long as federally-assisted loans and loan guarantees are excluded from the
budget and thus are not subject to effective controls, there are strong incentives
to convert from direct loans to these more indirect techniques. We need to
acknowledge that these indirect techniques possess important advantages
(particularly from the viewpoint of the program advocates) as well as
disadvantages.
Viewed objectively, these federally-assisted borrowings are absorbing a
rapidly increasing portion of the total of private credit fiows in the economy,
up from 13 percent in the fiscal year 1969 to perhaps 25 percent in fiscal 1971.
Because they are based on the credit standing of the U.S. Government, these programs are largely insulated from the credit rationing impact of monetary policy
and financial market restraints imposed on other private loans. Beyond that,
in many cases. Federal interest subsidies insulate these borrowers from increases
in market rates of interest.
As you may know, a subcommittee of the Cabinet Committee on Economic
Policy has been studying the operation of the unified budget, with special, attention to the treatment of Federal credit programs. As chairman of this activity, I would like to be in a position to report that we have come up with a sure
fire solution. However, that is not the case, at least not yet.
TABLE VI.—Net change in outstanding federally assisted private credit
[In millions of dollars]
1969-70
Selected programs
National defense:
Foreign military aid.
International affairs and finance:
Foreign economic aid
_.
Export-Import Bank
...
Agriculture and rural development:
Farmers Home Administration.
Banks for cooperatives.
Intermediate credit banks.
Federal land banks
Commerce and transportation:
Economic Development Administration
Maritime Administration
Small Business Administration
Interstate Commerce Commission
.. . ,
Community development and housing:
Urban renewal. _.
Public housing
rJomTnunit.ip,s loans
Federal Housing Administration
Mortgage-backed securities (GNMA)
Fannie Mae (FNMA)
Federal Home Loan Banks
Education and manpower:
Studentloans.
Academic facilities loans
College housing loans
Health: M edical facilities..
Veterans' benefits and services:
Veterans Administration
General government
Total
.
Deduct: double counting.
Net total
1970-71
Guaranteed Government Guaranteed Govemment
and insured sponsored and insured sponsored
90 .
25 .
366 .
1,179 .
513 .
1,301 .
587
97'
436 .
677 .
2,258 .
.
.
.
.
24
131
481
-10
.
.
.
.
371 .
1,043
40 .
6,202
500
466
1,426
66
7,877
1,000
.
.
.
.
.
713 .
100 .
50 .
704
200
200
92
.
.
.
.
130
-2 .
103
479
582
1,888 .
Ill .
14
23
365
-10
5,'648'.
4,487 .
4,600
2,400
10,761
6,648 .
11,246
18,731
6,938 .
8,164
4,213
11,246
12,793
8,164
302
1970 REPORT OF THE SECRETARY OF THE TREASURY
We have been exploring alternative methods whereby the various forms of
federally-assisted credit can be reviewed in a more comprehensive manner so
as to permit more effective allocation of credit resources. While the precise
economic impact of credit assistance is difficult to determine, certainly it would
be desirable to focus greater attention on these programs, both those "in" and
"out" of the budget, in the formulation of overall fiscal and monetary policy.
One method of providing some aggregate control over these "extra-budget"
credit programs would be to impose a ceiling on the total borrowing of Federal
and federally-sponsored credit agencies, both those "in" and "out" of the budget.
ALSO, such a ceiling could be enacted on the overall volume of debt created uncier
Federal loan insurance and guarantee activities.
Another alternative would be to establish quantitative controls over all Federal
credit programs, including Government-guaranteed and Government-sponsored
loans as well as on direct lending by Federal agencies.
Several steps in this direction were taken in the fiscal 1971 budget document.
For the first time, the basic summary table in the President's budget message
included a section on outstanding Federal and federally-assisted credit. Moreover, the companion volume of special analyses of the budget contains an expanded section on "Federal Credit Programs," which provides considerable
detail on Federal loan guarantees and Government-sponsored agency credit.
Any comprehensive analysis of governmental priorities needs to take account
of the operation of these federally-assisted credit programs. They can strongly
infiuence the allocation of credit and, hence, the distribution of real resources,
thus adding to the economic impact implied from an examination limited to the
budget proper.'
Tax aids.—There is a second type of governmentally-related activity which is
not included in the budget proper. Through special exemptions, deductions, and
credits, and through departures from general concepts of net income, the tax
system operates so as to affect the private economy in ways that might alternatively be accomplished by direct Government expenditures. For example, the
expenditure side of the budget properly records items for medical assistance.
However, nowhere in the budget is account taken of the $95 million a year foregone by the tax system by reason of the special exemption for sick pay paid
to employees. /
The natural resource agencies of the Federal Government, such as the Department of t^e Interior, dutifully record outlays for programs in those areas.
However, nO' mention is made of the substantial assistance to natural resource
industries through depletion allowances and other special tax provisions.
It may be useful, therefore, to attempt to quantify the expenditure equivalents
of at least the more obvious benefit provisions. To be sure, this is a difficult
undertaking involving, as in the other classifications presented in this statement,
many arbitrary categorizations. Just which tax measures can be said to fall in
the category of special provisions often require subjective decisions.
It is difficult to decide which tax rules are integral to a tax system in order to
provide a balanced tax structure and a proper measure of net income—as
opposed to those provisions which represent departures from that net income
concept to provide relief, assistance, or incentive to a particular group or activity.
Tax aids have the outward appearance of involving no Government costs.
They are, in effect, netted out of receipts by the taxpayers themselves so that
taxes paid by taxpayers, and hence taxes collected by the Government, are net
after adjustment for tax concessions. There is a real cost to the Government in
terms of foregone revenue and to the economy as a whole in terms of the increased share of current national output available to the beneficiary of the
particular tax aid.
In theory. Government accounting could take account of the explicit inclusion
of a noncash transaction such as tax aids. There is some precedent in business
accounting practices. One business item related to sales, sales discounts, is
explicitly measured. Sales discounts are similar to tax aids; both are nonmonetary
transactions.
The tax aid as measured in table VII is the difference between the tax actually
paid and the tax that would otherwise be paid in the absence of the tax aid
provision. The difference is solely the immediate revenue effect on the public
sector and hence the immediate, direct income effect on the private sector. No
induced or indirect effects are taken into account, although these could be
significant in some cases.
Table VII is an updated version of a Treasury Department analysis earlier
referred to as "Tax Expenditures." A few words of caution are essential. First
EXHIBITS
303
of all, the very phrase, "Tax Expenditures," is a contradiction in terms. In reviewing the staff work that underlies that earlier work, I found that the original
term was "Tax Aids." I believe that it is more useful to utilize that term.
My more fundamental concern is that a mere tabulation of tax aids should not
be labeled a listing of "loopholes." The purpose is informational, to illuminate
the cost of these provisions. As a general matter, I find the case rather persuasive
that tax incentives often can result in more of a private sector solution of some
pressing national problem than a direct Federal expenditure.
However, I see no need to beg the question as to whether direct expenditures
or tax aids are preferable in any given program area. Tax aids are one among
alternative uses of potential Federal revenues and any comprehensive analysis
needs to take account of them. Like the earlier attempt previously cited, the
current effort is not a complete listing of all the tax provisions which vary from
a strict definition of net income. In good measure, the purpose is to be illustrative
rather than exhaustive.
As shown in table VII, personal deductions and related tax benefits to individuals in the category of "income security" constitute by far the largest single
portion of tax aids—$16 billion out of $44 billion in the fiscal year 1969.
Tax provisions benefiting business in general—such as the since repealed investment credit and the continuing surtax exemption (shown under "Commerce
and transportation")—are the second largest type of tax aid. Their estimated
cost, in foregone revenue, came to $9 billion in the fiscal year 1969.
The third largest tax aid category benefits are directed to State and local
governments. The deductability of State and local taxes and related provisions
came to an estimated revenue cost of $6 billion in 1969.
As will be brought out more clearly in the following section, the implied priorities in the allocation of tax aid differs somewhat from that of direct budget
outlays.
A summing up
It may be useful to attempt to bring together in one analysis the direct outlays
of the Federal Government, the tax aids, and the various credit programs.
Frankly, I hesitate to do so for fear of adding the proverbial apples and oranges,
although those do add up to pieces or pounds of fruit. In this case, they all add
up in terms of dollars, but not necessarily in terms of total economic iinpact.
There are undoubtedly different effects on resource allocation among direct
Federal purchases, transfer payments, loans, tax aids and credit backing. Nevertheless, I believe that the results of a total "summing up" are helpful to any
comprehensive analysis of governmental priorities.
Table VIII shows, on the basis of the Federal Government's existing functional
classification, direct outlays as well as some of the related governmental programs that are not included in the budget.
In a number of cases, it can be seen that the direct Federal outlays constitute
a relatively small proportion of the total volume of governmentally-related financial activity affecting a given program area. The leading example may be community development and housing where only $2.0 billion, or 1 percent, of the
Federal expenditures were devoted to this area in the fiscal year 1969, but the
assistance through $4.8 billion of tax aids and $8.7 billion of credit programs
TABLE VII.—Summary of estimated tax aids, fiscal years 1968 and 1969
[In millions of dollars]
Tax aids by budget function
National defense
International affairs and
finance
Agriculture and rural development
Natural resources (e.g., depletion allowances)
Commerce and transportation (e.g., investment credit and surtax exemption)
Community development and housing (e.g., deduction of interest and taxes on residence)
.
Income security (e.g., personal deductions)
Health (e.g., deduction of medical expenses)
Education
Veterans' benefits and services...
Aid to State and local government (e.g., deduction of State-local taxes)
Total
SOURCE.—^Appendix B to this statement.
1968
1969
600
370
930
1,605
7,776
660
410
1,000
1,765
9,200
3,950
12,960
2,600
720
660
4,600
4,800
15,905
3,000
800
600
6,160
36,660
44,180
304
1970 REPORT OF THE SECRETARY OF THE TREASURY
came to over six times the budget amount. Other program areas where the extra
budget activities are substantial include commerce and transportation ($9 billion
of tax aids), income security ($16 billion of tax aids), and agriculture ($3 billion
of tax aids and credit assistance).
However, in the case of national defense, the direct outlays account for virtually all of the program area. For space, interest, and general government, no tax
aids or governmentally-assisted credit activities are shown.
In contrast, the category of general assistance to State and local governments
shows no direct Federal expenditures in the fiscal year 1969, but substantial
amounts of tax aids (mainly through the deductibility of State and local taxes
and the tax exemption of interest on State and local bonds). The proposed program of Federal revenue sharing would involve direct Federal expenditures for
unrestricted aid to States and localities.
Clearly, the implied ranking of priorities which is based on examining direct
Federal budget outlays is subject to considerable modification when account is
taken of those related Government activities which take the place of direct
expenditure. However, that implicit change in priorities is hardly drastic. At the
least, some attempts to more formally include tax aids and credit programs in an
analysis of Federal priorities would appear to be desirable.
Conclusion
This presentation has offered several analytical techniques for improving the
quality of decisionmaking on national priorities. As we enter the 1970's, filled
with a mixture of hope and uncertainty toward our national future, it seems
clear that many difficult and important decisions and choices will face national
policymaJjers.
Even in an economy as rich and productive as ours, resources are limited.
Claims on output must be balanced against the economy's capacity to produce.
As always, priorities vvill be established, either by design or by default, to permit
the satisfaction of some demands over others. But amy enlightened attempt to
reorder and establish priorities cannot take place until we possess a clear
understanding both of the existing general ordering of priorities and the nature
of the possible choices to be made.
Development of a Govemment-wide program budget, enabling us to evaluate
choices which cut across existing agency and program lines, would be a valuable
asset to our decisionmaking efforts. In addition, bringing such "extra-budgetary"
items as Federal credit assistance and Federal tax aids into the analytical
framework would enable us to have a more complete accounting of the existing
order of Federal priorities.
In this statement, I have tried to show how both of these analytical techniques
can assist Federal policymlakers. The pressure of competing demands and the
need for exercising hard choices makes this process difficult enough v^ithout
further complicating matters by the absence of adequate information. Hopefully,
improvement in the quality of our information can lead to improvement in the
quality of our decisions.
TABLE VIII.—Federal Government outlays and related activities, fiscal year 1969
[In millions of doUars]
Direct
outlays
Function
National defense..
International affairs and
finance
Space research and technology
Agriculture and rural development
Natural resources
Commerce and transportation
Community development and housing.
Education and manpower
Health
Income security..
_
Veterans benefits and services..
Interest
General government
Assistance to State and local govemments
Adjustments...
Total
_.
._
81,240
3,786
4,247
6,221
2,129
7,873
1,961
6,825
11,696
37,399
7,640
15,791
2,866
—5,117
184,556
Selected
tax aids
650
410
1,000
1,765
9,200
4,800
800
3,000.
16,905
600
6,160
44,180
Government
assisted
credit
115
490
Total
-2,244
81,905
4,686
4,247
9,629
3,894
17,293
15,417
8,267
14,696
63,304
9,798
15,791
2,866
6,150
-7,361
11,735
240,472
2,308
220
8,666
632
1,658
APPENDIX A
Hypothetical Government-wide program budget, fiscal year 1971
[In biUions of doUars]
Interior
Category
HEW
HUD
VA
AEC Defense State
National security:
U S mUitarv forces
U.S. passive defense.
Foreign mUitary aid
NonmiUtary aid
Scientific competition
Psychological competition
Arms control
1.2
67.0 .
1 .
9.0.
L2 .
61.1
3.0
7.3 --
3.2 .
_
4.0
1.3 .
0.3
0.6
""s'.h'.
2.0
2.8
74.3
1.9
60.8
4.0
9.0
7.4
8.0
3.7
1.2
L6
H
3.4
95.6
g
.6
""i'g'.
. .6
L2
........
8.0
4.9
n.3 .
.8
.8
11.3
2.3
1.3 .
L7
.6
.5
.
6.1
68.0
3.0
9.4
2.4
72.3
.2
20.5
.5
20.5
.6
L2
...
.4
1.3
.2
.8
.8
.3
.2
L6
.1
3.9
2.6
25.0
2.6
6.0
14.7
232.6
5.8
8.6
3.3
W
HH
19.0
.4
L3
.3
2.5
1.2
.3
19.0
'"'"0.'5"
H
M
36.3
.1
1.2
Q
10.1
1.7
13.1
4.2
5.3
.9
.6
.4
.4
2.0 .
6.8
68.2
.1
.5
1.9
3.3
.3
8.0
3.9.
1.2
."5'
1.9
.3
""To"
7 .
Operations:
Interest
Legislative
Judicial
Regulation
Housekeeping
Foreign relations
Revenue sharing
Total
3.3
67.1 .
7.3 .
3.0 .
6.1
6.1
Grand total
Other
0.1
3.2
50.9 .
Total
Total
AUowances
CSC
1.5
1.2
Total
Total
DOT
3.3
Public welfare:
Insurance and retirement
Unemployment benefits
Public assistance
Veterans benefits
Assistance to farmers
Urban housing
Specialized welfare
Antipoverty
Economic Development:
Natural resources .
Manpower.
Transportation
Education
Health
Business subsidies
Treas- Post Com- Labor Agri- NASA
ury
Office merce
culture
n.3
CO
0
01
306
1970 REPORT OF THE SECRETARY OF THE TREASURY
APPENDIX B
Explanation of tax aids
An important recent development in the effort to make the Federal budget a
more useful tool of economic policy has been an increasing awareness of the
growing magnitude of fiscal benefits accruing to various categories of taxpayers.
Over the years the Federal income tax structure has gradually accumulated a
host of special deductions, credits, exclusions, exemptions, and preferential rates
designed to achieve various social and economic objectives. It has been recognized
that these selective reductions in tax liabilities have the same fiscal impact on
the budget surplus or deficit as direct increases in expenditures. In this context
they have been termed "tax expenditures." A more appropriate term might be
"tax aids."
In the broadest sense a tax aid can be defined as any identifiable reduction in
tax liability by an individual or business compared to a tax base totally devoid
of any deduction from income or distinction of treatment of different kinds of
income. Such a definition of tax expenditures would include differences in tax
liability because the individual was married or single, old or young, healthy or
disabled, lived at home or abroad, was charitable or uncharitable, was a homeowner or renter, etc.
But to group together without distinction all deviations from a theoretically
neutral tax system would be hopelessly cumbersome and reduce the usefulness of
the tax expenditure concept as an added measure of the total fiscal impact of
the Federal budget. The more practical approach is to group by functional spending category those tax aids intended to encourage private action to resolve various social and economic problems or to give fiscal relief to those who might receive
an inadequate share of current productive resources under a completely neutral
tax system. In most cases these tax aids are clearly an alternative to am
equivalent increase in Federal expenditures that would otherwise be required.
The first compilation of tax aids under this approach was published in the
1968 Annual Report of the Secretary of the Treasury. This compilation helped
create public discussion and improved understanding of the program aspects of
tax aids. It also helped to stimulate program analysis of tax aids, an approach
which has received the endorsement of President Nixon. In his tax message to
the Congress of April 1969, the President stated:
"Tax dollars the Government deliberately waives should be viewed as a form
of expenditure, and weighed against the priority of other expenditures. When
the preference device provides more social benefit than Govemment collections
and spending, that 'incentive' should be expanded; when the preference is inefficient or subject to abuse, it should be ended."
In addition to its value as a catalyst for program analysis, the compilation
has value for economic analysis. Such compilations focus on tax aids as important determinants of the size of budget deficits and surpluses. The overall
magnitude of foregone revenues due to tax aids is substantial and, if the budget
is not balanced, the deficit and surplus is only a small fraction of that magnitude.
Year to year changes in tax aid magnitudes, either because of economic growth
or through legislative actions, affect substantially the size of the budget deficit
(or surplus) and the expansionary (or restrictive) course of the economy.
Table B presents an updating of data on estimated tax aids for the fiscal years
1968 and 1969 on the basis of the current functional breaJjdown of Federal
TABLE B.—Estimated tax aids, fiscal years 1968 and 1969
[In mUlions of dollars]
Tax aids by budget function
National defense:
Exclusion of benefits and aUowances to Armed Forces personnel
Intemational affairs and finance:
Exemption for certain income earned abroad by U.S. citizens
Western Hemisphere trade corporations
Exclusion of gross-up on dividends of less-developed country corporations...
Exclusion of controUed fof eign subsidiaries...
Exclusion ofincome eamed in U.S. possessions
Total
1968
1969
600
560
40
60
50
150
80
45
55
55
166
90
370
410
EXHIBITS
307
TABLE B.—Estimated tax aids, fiscal years 1968 and 1969—Continued
Tax aids by budget function
1968
Agriculture and rural development:
Farming: expensing and capital gain treatment
Timber: capital gain treatment for certain income
800
130
860
140
930
1,000
300
1,300
5
330
1,430
6
1,605
1,766
2,300
500
226
600
600
40
1,300
600
1,800
10
3,000
550
260
625
660
46
1,600
660
2,000
10
7,776
9,200
1,900
1,800
260
2,200
2,360
260
3,950
4,800
Total...
Natural resources:
Expensing of exploration and development costs
Excess of percentage over cost depletion
Capital gains treatment of royalties on coal and iron ore
Total
Commerce and transportation:
Investment credit
.
Excess depreciation on buildings (other than rental housing)
Dividend exclusion
Capital gains: corporation (other than agriculture and natural resources)
Excess bad debt reserves of financial institutions
Exemption of credit unions
.
Deductability of interest on consumer credit
Expensing of research and development expenditures
$25,000surtax exemption
.
Deferral of tax on shipping companies
Total
Community development and housing:
DeductibUity of interest on mortgages on owner-occupied homes
Deductibility of property taxes on owner-occupied homes
Excess depreciation on rental housing
Total
.
--
Income security:
Disability insurance benefits
Provisions relating to aged, blind, and disabled: Combined cost for additional
exemption for aged, retirement income credit, and exclusion of social security
payments
:.^.^
Additional exemption for blind
.\...
"Sick pay" exclusion
i
Exclusion of unemployment insurance benefits.
Exclusion of workmens' compensation benefits
-Exclusion ofpublic assistance benefits
Treatment of pension plans:
Plans for employees.-..
Plans for self-employed persons
Exclusion of other employee benefits:
Premiums on group term life insurance
Deductibility of accident and death benefits
Privately financed supplementary unemployment benefits
Meals and lodging
Exclusion of interest on life insurance savings
DeductibUity of charitable contributions (other than education)
Deductibility of child and dependent care expenses
Deductibility of casualty losses
Standard deduction
-
100
2,300
10
85
300
160
50
2,700
10
95
326
180
50
3,000
60
4,000
136
400
25
26
160
900
2,200
25
70
3,200
400
26
16
165
1,000
3,000
26
80
3,600
12,950
15,905
1,500
1,100
1,600
1,400
2,600
3,000
--
500
170
60
40
500
200
60
.-
720
800
650
600
Total..
Health:
DeductibUity of medical expenses
Exclusion of medical insurance premiums and medical care
Total
1969
_.
Education and manpower:
Educational expense deduction
Additional personal exemption for students
D eductibUity of contributions to educational institutions
Exclusion of scholarships and feUowships
Total
Veterans' benefits and services:
Exclusion of certain benefits
Aid to State and local government:
Exemption of interest on State and local debt
Deductibility of nonbusiness State and local taxes (other than on owner-occupied
homes)
Total
1,800
2,000
2,800
4,150
4,600
6,150
308
1970 REPORT OF THE SECRETARY OF THE TREASURY
expenditures. The present comipilation is not intended to provide a full and complete accounting in a theoretical sense of all tax aids in the income tax structure.
It is, in fact, a minimal selection of tax aids—minimal in the sense of including
only acceptable and practical choices. Certain tax provisions are omitted because
their inclusion would require controversial or highly theoretical justifications.
Others are omitted because the underlying data is difficult to compile and present
in understandable form or because the amounts involved are not quantitatively
significant. In short, the choice of the tax aids listed is largely governed by the
criteria of public acceptability and practicality.^
Exhibit 15.—Remarks by Assistant Secretary Weidenbaum, June 16, 1970, before
the McGraw-Hill Conference on Industry and Environment, on economics and
the environment
In any consideration of the environment and how to improve it, there seems
to be a division of labor. Ecologists and other scientists are supposed to dramatically and vividly get across the notion that we have a severe pollution problem.
Engineers and other more practical types are subsequently charged with coming
up with ways of cleaning up the pollution and thus improving the quality of our
environment. However, then the economists are expected to fill their unique role.
We are supposed to get up and say why we cannot afford to do any of these
desirable things.
I am going to try to depart from tradition today and not play the proverbial
role of the wet blanket Rather, my task is to attempt to show how we can—not
necessarily that we will—but how, using sensible solutions, we can very much
afford to clean up our environment.
First of all, some perspective is useful. The Federal Govemment currently is
embarking upon a major, increase in expenditures for reducing pollution and
otherwise improving the quality of the American environment. From a level of
$644 million last year, we anticipate that such outlays are running at the rate
of $785 million this year and will reach $1.1 billion in the fiscal year 1971. This
more than 50-percent expansion during a 2-year period is creating undoubtedly
one of the major growth areas of the American economy. The 1971 figure represents a more than fivefold increase from a decade ago.
All indications point to a long-term continuation of the growth of Govemment
spending in the area of the environment. However, candor requires me to point
out that very heavy pressures on the Federal budget are likely to dampen down
the growth rate of any Government spending program, no matter how worthy.
The Administration has announced revisions in the budget estimates for the
fiscal years 1970 and 1971 which show small deficits rather than the small surpluses indicated earlier. The budget situation is likely to remain relatively tight
for some time. Nevertheless, environmental planning is basically a long-term
affair. Hence, I believe that it would be useful to focus on the period beyond the
immediate shortrun.
As a starting point for any long-term economic and financial analysis, I find
it useful to refer to the innovative 5-year projections that the Admiaistration
economists prepared and which were included in the President's budget for the
fiscal year 1971. These projections show that, by the fiscal year 1975, Federal
revenues from the existing tax system will increase by about $64 billion from
the current level. Of course, these and the other figures that I will present are
based on a set of economic assumptions. Although I will not go into them, I think
that you will find that they are quite reasonable.
On the other side of the ledger, when we cost out the future impact of the
existing program structure of the Federal Government, we estimate that expenditures for all Government programs in the fiscal year 1975 would be about
$28 billion above the current level. The revenue growth of $64 billion, less the
expenditure increase of $28 billion, would seem to provide a comfortable cushion
of $36 billion for fiscal 1975.
I am afraid that, here, I am going to be, at least for awhile, the wet blanket.
The Federal budget is not set in concrete; changes will continue to be made in
it. For example, the 1971 budget itself contains new initiatives—such as welfare
*For a detailed explanation of the tax aids in table B, see 1968 annual report, pages
330-337.
EXHIBITS
309
reform and revenue sharing—which are estimated to cost $16 billion in the fiscal
year 1975. At this point, I, of course, do not know what new initiatives will be
undertaken in the fiscal year 1972, or 1973, or 1974, or 1975. But there is something that I can say with considerable assurance, and that is that there will be
new initiatives over these years.
Clearly, several more sets of $16 billion a year in new initiatives would more
than use up that $36 billion margin in the fiscal year 1975.
Hence, even though there is some room for flexibility in the Federal budget,
it is quite clear to me that the existing revenue structure, which is not a particularly low one, does not permit too great a variety of ambitious and costly
new undertakings in the years ahead. One rather simple reaction to this type
of analysis, of course, is to blithely come up with large new tax programs to
cover new expenditure recommendations (which I take to be quite a different
matter from raising revenues to meet expenditure commitments which already
have been made). New taxes may seem to be an easy financing approach for the
proponents of a new spending program. However, I have failed in recent years
to notice any ground swell of public opinion in favor of raising taxes substantially above their current levels. Indeed, while I have come across numbers of
people who think that the other fellow may be undertaxed, I do not recall many
complaining to the Treasury that their own tax bills were too low.
Hence, I think that we need to be thinking of some hard answers to the hard
question of how are we going to finance the necessary improvements in the
quality of our environment. Here I woiild think that an economist has something to say. It may not be pleasant, but I hope that it is useful.
As I survey the various estimates of the growing future costs of cleaning up
the pollution which has not yet been created, but which is likely to occur on the
basis of present practices, the economist in me is greatly stirred.
In a sense, I am offended by the prospect of our having to devote an ever
larger share of our national resources to cleaning up an even faster growing
mountain of pollution. Rather, I am impressed by the desirability of all of us
adopting methods of producing and consuming which are less polluting than our
present practices.
The President was getting at this point in his environmental message of February 10, 1970. In discussing one particular aspect of the pollution problem,
the disposal of solid waste, he said:
"One way to meet the problem of solid wastes is simply to surrender to it:
to continue pouring more and more public money into collection and disposal of
what happens to be privately produced and discarded."
However, President Nixon went on to state, "This is the old way; it amounts
to a public subsidy of waste pollution." He pointed to a more constructive
approach:
"If we are ever truly to gain control of the problem, our goal must be broader:
to reduce the volume of wastes and the difficulty of their disposal, and to encourage their constructive reuse instead."
in that vein, as an economist, I find one general approach particularly appealing—to make the act of polluting more expensive to the polluter than not polluting, and sufficiently more expensive that he, she, or it will change their current
vs-ays of doing things.
Let us face it. Far too frequently, polluting is more profitable, or cheaper, or
easier, than not polluting. The simple-minded solution that we hear far too
often these days seems to be to tear down that capitalistic structure which is
doing the polluting. To use the most scholarly and expressive language that I
can marshal, that is pretty stupid. It is certainly hardly necessary for the purpose. For one thing, I am not aware of any highly advanced noncapitalistic
society that has been able to avoid pollution on a large scale.
Here the economist, I think, does have a way out. The price system really does
work to allocate resources efficiently, whether the society is capitalistic or
socialistic. Hence, in order to make the price system work in the way that we
want it—to discourage pollution—we need to attach some form of economic disincentive to the creation of pollution.
In a sense, the social cost of pollution now home by society as a whole—
whether in the form of smog or contaminated rivers—needs to be shifted back
to the polluter himself. I do not mean this as a form of punishment but, rather,
as a direct incentive to change to less polluting ways of doing things. This is a
critical point. If instead we are going the eleemosynary route and have society
310
19 70 REPORT OF THE SECRETARY OF THE TREASURY
or the Treasury pick up the cost, we are not introducing any incentive to reduce
pollution.
Again, I would like to quote a pertinent section from the President's landmark
message on the environment:
"The fight against pollution * * * is not a search for villains. For the most part,
the damage done to our environment has not been the work of evil men. * * *
It results not so much from choices made, as from choices neglected; not from
malign intention, but from failure to take into account the full consequences of
our actions.
The next passage, again, is not taken from the works of an economist, although
many of us might like to be able to claim the authorship, but from the President's
message:
"Quite inadvertently, by ignoring environmental costs, we have given an economic advantage to the careless polluter over his more conscientious rival. While
adopting laws prohibiting injury to persons or property, we have freely allov^d
injury to our shared surroundings."
The basic idea is that a product should be valued partly in terms of its burden
on the environment. At present, much of the "cost" of pollution is borne by the
public at large. To the extent that individuals, business firms, or other
organizations whose actions contribute to pollution can be forced to absorb some
of these hitherto "external costs," the market can be made to work against,
rather than for, pollution. Thus, producers will have more incentive to "economize" on pollution, similar to their developing methods of reducing labor and
materiel costs.
There are a number of alternative ways of promoting this general approach.
For example, a tax could be levied upon the legal act of polluting. Alternatively,
regulatory actions could be instituted either separately or perhaps in connection
with a related tax payment. At the other end of the spectrum is legal action to
make certain types of pollution unlawful. Enforcement could include perhaps levying fines, or taking more drastic action if the polluting continues to be performed.
I do not mean to beg the question as to what level of pollution control or
reduction to aim for. I merely leave that most important determination to
others. However, I sense that, of necessity, we will have to stop substantially short
of any simple-minded notion of totally eliminating pollution. Let me cite a small,
personal example. I find that my office generally is cleaned once a day. I am
sure that it would be cleaner if that were done hourly; but the inconvenience
that it would cause me, plus the added cost, would not be worth it. In a crude
sense, I also find a parallel with the concern over obtaining the best possible
education. There used to be a running debate between some professional educators, who favored "the best possible education," and those of us more mercenary
types who advocate high quality education but would stop somewhat short of
devoting 100 percent ,of the GNP to education. In the case of environmental
pollution, as well as other potential objects of Government spending, we are
going to have to consider determining where the costs begin to exceed the benefits and even where the margin of benefits over costs is less than that for other
claims on our resources.
Getting back to taxes as an instrument for reducing pollution, I find an array
of alternatives available. The tax might well be high enough to cover the cost
of cleaning up the pollution. This would bring the social and private costs closer
together.
One possible application is to the junk automobile, which we are "producing"
in ever growing numbers. The rate of abandonment is increasing rapidly. Here
in New York City, 2500 cars were towed away as abandoned on the streets a
decade ago. In 1964, 25,(X)0 were towed away as abandoned; in 1969 the figure
was more than 50,000.
The way to provide the needed incentive is to apply to the automobile the principle that its price should include not only the cost of producing it, but also the
cost of disposing of it. The Council on Environmental Quality is now studying
methods such as the bounty payment (financed by a special tax on auto production) to promote the prompt scrapping of all junk autos.
In many other cases, however, the tax could be sufficiently high that it becomes a type of protective tariff. That is, it does not really bring in any substantial
amount of revenue. But by encouraging less polluting methods, the tax reduces the
need for Government expenditures to clean up the pollution. This latter approach,
of course, is reinforced by the budget outlook analysis that I presented here
EXHIBITS
311
earlier. But even if that were not the case—even if the budget situation were in a
happier one—I still would see great charm to a "birth control" approach to
pollution, to the extent possible.
Even though I find this approach instinctively attractive, I doubt whether it
will suffice. It is more likely to work on prospective new production and consumption facilities, which have not yet been built and paid for. However, it may
be inappropriate or highly inequitable in the case of facilities which are already
in existence and which were constructed in good faith under a different set of
ground rules.
Hence, the case for some direct Government expenditures and/or substantial
tax benefits, particularly during a long transition period, may be quite strong.
However, I doubt whether the tax and expenditure systems by themselves will
suffice as devices for achieving the desired level of improvement in the quality
of our physical environment. Despite our general distaste for governmental controls, pollution control appears to be one of the necessary exceptions.
In many areas, strict standards and strict enforcement will be necessary, not
only to insure compliance but also in fairness to those who have voluntarily
assumed the often costly burden while their competitors or neighbors have not.
Without effective Government standards, industrial firms that spend the necessary
money for pollution control may find themselves at a serious economic disadvantage as against their less conscientious competitors.
Similarly, without effective Federal standards, States and communities that
require such controls may find themselves at a disadvantage in attracting industry, as against more permissive rivals. Air pollution, particularly, is no
respecter of political boundaries. A community that sets and enforces strict
standards may still find its air polluted from sources in another community or
State.
To sum up, I do not believe that we will have available resources to clean up
all of the pollution that could possibly be generated in the United States in the
coming decade, much less in the period beyond that. The approach that is feasible and more economically desirable is to encourage business, government, and
consumers alike to so change their ways of producing and consuming as to reduce
the amount of pollution that is created in the first place.
As President Nixon stated in transmitting his message presenting a comprehensive program to reduce pollution, " * * * We at last will succeed in
restoring the kind of environment we deserve."
Public Debt and Financial Management
Exhibit 16.—Statement by Secretary Kennedy May 25, 1970, before the House
Ways and Means Committee, on the public debt limit
We greatly appreciate the prompt scheduling of these hearings on the debt
limit in view of the need to complete action before the end of the fiscal year.
As you will recall, in the debt limit hearings a year ago we requested a new
permanent statutory ceiling for the Federal debt on a basis which would be
more consistent with the unified budget concept than the present definition. As
I said on that occasion, the intent was to establish a ceiling which would meet
the Federal Government's needs indefinitely so long as we were successful in
maintaining a balance in the budget.
I am sure you are all aware of the announcement of May 19 that the unified
budget for fiscal year 1970 is now estimated to be in deficit by approximately $1.8
billion, compared with the surplus of $1.5 billion estimated in February. And,
similarly, the budget for fiscal year 1971, taking into account both our policies
to restrain expenditures and our requests for an additional $3.1 billion of taxes,
is expected to be in deficit by approximately $1.3 billion, compared with the
February estimate of a surplus of $1.3 billion.
The Budget Director will comment in more detail on the expenditure outlook.
I would emphasize, however, that the new estimates for outlays in both fiscal
year 1970 and fiscal year 1971, if held with the help of the Congress, demonstrate
the strength of our commitment to expenditure control. The projected spending
increase of $7.4 billion from fiscal 1970 to fiscal 1971 amounts, for instance, to
3.7 percent, which would be the lowest percentage increase in a number of
years.
312
19 70 REPORT OF THE SECRETARY OF THE TREASURY
Lower estimated revenues contribute to the small projected deficits in both
fiscal year 1970 and 1971. Apart from the effects of proposed legislation, revenues
have been reduced by $3 billion in the current year and $1.1 billion in fiscal 1971,
in both cases largely refiecting lower estimates of corporate profit tax receipts.
This slippage, in part at least, appears to refiect a lower than anticipated level
of corporate profits during the first part of this calendar year. It does not reflect
any relaxation of our continuing efforts to control inflation.
I might also emphasize that the changes in the estimates are relatively small.
Therefore, if the Congress had adopted our recommendation of a year ago for
a statutory debt limit consistent with the unified budget concept, it would probably not be necessary to reconsider the limit at this time. It is my continuing
judgment, indeed, that the interest of both the Congress and the public would
best be served if the debt subject to limit were brought more in accord with the
unified budget concept. At the very least, then, changes in the debt subject to
limit could be related more directly and more easily to the overall surplus or
deficit in the unified budget.
In view of the very heavy legislative burden which rests upon this committee
and upon the Congress at the present time, this may not be a timely occasion for
pursuing a basic revision in the concept of the debt limit. I recognize, for example, that this committee has had to put aside temporarily the very important
foreign trade hearings on which it had been focusing its attention to consider
the question of the debt limit. I am, therefore, providing the committee with
a table showing what will be required to permit an orderly financing of the
Federal Government's requirements during fiscal year 1971 based upon the
present definition of the debt subject to limit (see table I ) .
This table has been drawn on the assumption of a constant cash balance of
$6.0 billion with a further allowance for contingencies of $3.0 billion. In the
past, we have for these purposes usually assumed a cash balance of $4 billion.
That figure has become increasingly unrealistic in view of the greater size of
the Federal budget and unavoidable fiuctuations in the balance from day-to-day
and week-to-week. As shown in table II, our actual cash balance has averaged
more than $5 billion in recent years, and has declined in relation to expenditures, to little more than 1 week's outpayments. We cannot practicably plan on
reducing our balances further. To the contrary, prudent management of our
TABLE I.—Estimated debt subject to limit, fiscal year 1971
[In billions of dollars]
Debt with
6.0 cash
balance
June 30
July 15
31
Aug. 15
31
Sept. 15
30
Oct. 16
31
Nov.15
30
Dec. 15
31
Jan. 15
31
Feb. 15
29
1970
369.0
376.6
375.4
380.8
380.2
385.5
376.7
382.1
381.3
384.9
384.2
389.9
386.3
1971
Mar. 15"1^^'""""""'"""""'"I1
.'.
31
Apr. 16
30
May 16
30
June 16
30
With 3.0
margin for
contingencies
..
. . . .
'
;"...
'..'.
372.0
378.6
378.4
383.8
383.2
388.5
379.7
385.1
384.3
387.9
387.2
392.9
389.3
389.3
382.6
386.8
385.3
390.3
387.7
391.8
382.1
386.3
385.6
388.7
378.8
392.3
385.6
388.8
388.3
393.3
390.7
394.8
386.1
389.3
388.6
391.7
381.8
313
EXHIBITS
TABLE II.—Relation of average cash halanceto withdrawals from Treasurer's account
hy fiscal years
[Dollar amounts in bilUons]
Fiscal year
1962..
1963..
1964..
1965..
1966..
1967..
1968..
1969..
Average operTotal
ating balance withdrawals
(excluding)
(DTS)
gold)
$4. 934
6.010
5.664
6.293
5.086
4.526
5.146
6.043
$112.188
118.477
124.066
126. 396
142.190
164.691
184. 681
201. 491
Percent
4.4
5.1
4.6
6.0
3.6
2.7
2.8
2.5
financial affairs may well require somewhat larger balances in the future. On
particular days, to be sure, the cash balance can safely be reduced to lower
levels in anticipation of heavy scheduled receipts. Nevertheless, sharp intramonthly swings are inevitable and require that, even during periods of the
year when the debt is fiuctuating about peak needs, we sometimes must carry
balances well in excess of the average.
I feel certain you will agree that a $3 billion allowance for contingencies,
which we retain unchanged from earlier presentations, provides a minimum
degree of protection for unforeseen circumstances over a 12-month period ahead.
As you will see on table I, with the specified assumptions, the debt limit need
between December and March will fiuctuate generally between about $388 billion
and $393 billion. However, the peak requirement reached just prior to mid-April
will be above $395 billion.
The present temporary ceiling is $377 billion. On the basis of our current projections, we are requesting a new temporary ceiling of $395 billion, an increase
of $18 billion.
If the present definition of debt subject to limit is continued, we see no pressing reason to ask for a change in the present permanent limit of $365 billion.
However, it is now apparent that at the end of the fiscal year the outstanding
debt will substantially exceed that limit. If the committee wishes to provide a
permanent limit more appropriate to the projected debt at the end of fiscal 1971,
that limit should also be raised by $18 billion to $383 billion.
I am sure that questions will be raised as to the need for an increase of the
magnitude we are requesting when the unified budget is within $1.8 billion of
balance in fiscal year 1970 and within $1.3 billion of balance in fiscal year 1971.
There are several elements which need to be taken into account.
First, a sizable portion of the increase reflects the need to restore a reasonable
margin for contingencies and for adequate cash balances. To illustrate, this year
our peak cash requirements developed on April 14. The actual debt subject to
limit on that date was $375.9 billion, and our cash balance was only $2.4 billion.
In other words, we were $1.9 billion below the desired margin for contingencies,
and our cash balance was $3.6 billion below the assumed requirement of $6
billion. An increase in the debt limit of $5.5 billion is therefore required simply
to provide the assumed operating margins.
Second, the debt ceiling must be increased sufficiently to cover the anticipated
investment of trust funds and other Government accounts in Treasury debt.
This is estimated to amount to slightly over $6 billion from mid-April 1970 to
mid-April 1971, when our debt will again reach a seasonal peak.
Third, the deficit in the unified budget, requiring a comparable increase in
debt outside of Government accounts, will be considerably greater—approaching $7 billion—from the April peak to the April peak than for either fiscal 1970
or fiscal 1971. This primarily refiects (1) the bunching of retroactive pay in
the current quarter; (2) the timing of the anticipated revenues from the proposed speedup in estate and gift taxes, which are not expected to be large until
the last quarter of fiscal 1971, after the peak in the debt has passed; (3) the
current short fall in corporate profit tax collections; (4) current peak interest
314
1970 REPORT OF THE SECRETARY OF THE TREASURY
r a t e levels, which are expected to subside before the end of fiscal 1971; and (5)
the anticipated declining trend of military expenditures.
Taken together these factors r e q u i r e the ceiling be increased by early April
1971 by some $18 billion over the present ceiling if we a r e to m a i n t a i n t h e full
assumed margin for contingencies and the cash balance. I would emphasize this
calculation bears little relationship to our borrowings from the general public,
which on present estimates should increase little, if a t all, over the year a s a
whole.
You will recognize that, today a s always in the past, our receipt and expenditure estimates a r e subject to some uncertainty. While the estimating task
is no more uncertain today than a t times in the past, I would like t o recall to
t h e Committee t h a t t h e conventional assumptions of a constant $4 billion cash
balance and a $3 billion reserve for contingencies were established many years
ago a t a t i m e when Federal expenditures a n d receipts were far below present
levels. They a r e less t h a n adequate if we a r e to assure the prudent management
of the Government's finances. Thus, I would reemphasize the desirability t h a t
t h e temporary limit not be reduced below the $395 billion figure which we a r e
requesting.
I would also like to raise w i t h t h e committee for i t s consideration an additional and broader question, which will continue to be of concern whether the
debt limit concept is altered a s we have recommended or whether the conventional concept is continued for another year.
The debt limit h a s been used—or a t least a n a t t e m p t has been made to use
the debt limit—as a means for controlling Federal expenditures. My predecessors have unanimously agreed t h a t the debt limit is neither an appropriate nor
an effective i n s t r u m e n t for t h i s purpose, and I concur in their view. I believe,
however, t h a t it is of utmost importance t h a t both the executive branch and the
Congress pay heed to the total of Federal expenditures. Fiscal discipline is essential if we a r e to have a responsible fiscal policy. There is no perfect solution
to this difficult problem, b u t we must continue to search for better answers.
Exhibit 17.—Statement by S e c r e t a r y Kennedy, J u n e 18, 1970, before t h e Senate
Finance Committee, on the public debt limit
You have before you H.R. 17802, which w a s passed by t h e House of Representatives on J u n e 3, a n d which would provide a new permanent debt ceiling
of $380 billion and a new temporary debt ceiling of $395 billion through J u n e 30,
1971.
.We appreciate the promptuess with which the committee has scheduled the
hearings on this bill.
I t is essential t h a t the Congress give final approval to an increase in the
debit limit by J u n e 30 when the present temporary limit of $377 billion expires
and the limit reverts to t h e permanent ceiling of $365 billion. Our projections
indicate t h a t on J u n e 30 t h e debt subject to limit, assuming a realistic cash
balance, is likely to be in the vicinity of $370 billion, which is in excess of the
present permanent limit. Consequently, if a new limit has not been approved, t h e
T r e a s u r y D e p a r t m e n t will be unable to refund any m a t u r i n g debt or to issue any
new debt. I need not dwell on the extraordinarily serious consequences of such a
situation. The chaos t h a t would be created would cause severe additional strains
on the Nation's already strained financial markets. Public confidence in the
ability of the Government to manage its affairs rationally would be seriously
undermined.
I would like to begin by explaining why we a r e asking for an increase of
$18 billion in the t e m p o r a r y debt ceiling, from $377 billion currently, to $395 billion for fiscal year 1971. I n estimating our needs, we have in the past assumed
a constant cash balance of $4 billion, with a further allowance for contingencies
of $3 billion. B u t the conventional assumption of only $4 billion for operating
cash needs h a s become increasingly unrealistic, in view of the g r e a t e r size of
the Federal budget a n d unavoidable fluctuations in the balance from day-to-day
and week-to-week.
As shown in table 11,^ our actual cash balance has averaged more than $5
billion in recent years, and has declined in relation to expenditures to little
1 See table II, exhibit 16.
EXHIBITS
315
more than one week's outpayments. We cannot practicably plan on reducing our
balances further. To the contrary, prudent management of our financial affairs
may well require somewhat larger balances in the future.
On particular days, to be sure, the cash balance can safely be reduced to lower
levels in anticipation of heavy scheduled receipts. Nevertheless, sharp intramonthly swings are inevitable and require that, even during periods of the year
when the debt is fiuctuating about its peak, we sometimes must carry balances
well in excess of the average.
I feel certain you will agree that a $3 billion allowance for contingencies, which
we retain unchanged from earlier presentations, provides a minimum degree of
protection for unforeseen circumstances over a 12 month period ahead.
With these working assumptions, I think that the arithmetic of the needed
increase in the debt limit is most clearly seen by starting with our position on
April 14 of this year. That was the date on which the debt subject to limit was
close to its peak, and we expect a similar peak at about the same time next year.
Now on April 14, the debt subject to limit was $375.9 billion, only about $1
billion short of the present ceiling. (On March 30, we came within $100 million
of the ceiling). But our operating balance was down to $2.4 billion, and we
were only $1.1 billion away from the ceiling instead of the $3 billion allowance for contingencies that is needed. In other words, just to restore the leeway
necessary for prudent operations, the debt limit would have to be raised by
$5.5 billion (i.e., $3.6 billion to provide an operating balance of $6 billion, and
$1.9 billion to restore the $3 hillion allowance for contingencies).
To this $5.5 billion one must add the anticipated deficit in the Government's
own operations during this period April 1970-April 1971—the so-called Federal
funds deficit. As you know, we expect the Federal funds deficit for the entire
fiscal year 1971 to amount to $10 billion, compared with $11 billion this year.
But the deficit during the 12 months between peak debts—April to April—
is expected to be larger than for either fiscal year. Our current estimate is about
$13.2 billion.
There are a number of factors that contribute to the concentration of the
deficit during this particular 12 months. For one thing, the payment of retroactive Government wage increases in the current quarter is a nonrecurring outlay. In addition, with an approximate $6 billion decline in defense expenditures
from fiscal year 1970 to fiscal year 1971, it is anticipated that second half defense
expenditures will be lower than during the first half. The anticipated revenue
from the proposed speedup of estate and gift taxes is not expected until the last
quarter of fiscal 1971. Interest expenditures are expected to be relatively heavier
in the first half of the fiscal year than in the second half when lower interest
rates are anticipated.
Adding the $13 billion of Federal funds deficit to the $5.5 billion needed to
restore working leeway, one comes to a figure just over the $18 billion we requested, a figure approved by the House.
You will see from table I^ that the debt limit need between December and
March will fiuctuate generally between $388 and $393 billion. The peak requirement will be reached just prior to mid-April, and that peak will be slightly above
$395 billion.
We believe that a temporary limit of $395 billion will be adequate to carry
us through fiscal 1971. Budget Director Mayo can comment in detail on the
outlook for expenditures, and the basis for our belief that these expenditures,
with the help of Congress, can be held to projected levels.
On the receipts side, we are counting on an additional $3.8 billion of taxes in
fiscal 1971 which will require legislation. These include the proposed taxes on
lead used in gasoline and the speedup in the estate and gift tax collections. We
are anticipating that the Congress will act favorably on both of these proposals
as well as on the other tax proposals which it has before it, including extension
of excise taxes on automobiles and telephone services through December 1971.
The House has already approved an increase in the wage base for social security
to $9,000, as was recommended in the budget, and this committee now has this
proposal before it.
If Congress fails to act in a timely way on these proposals, a substantial part
of the revenue loss will not occur until after the peak in the debt subject to
limit has been passed. Consequently, short falls from these sources would not
1 See table I, exhibit 16.
397-702 0—71
22
316
1970 REPORT OF THE SECRETARY OF THE TREASURY
necessarily use up the entire allowance for contingencies although they would,
of course, narrow the margin of safety.
In our eyes, a more serious question is raised by the estimate by the staff of
the Joint Committee on Internal Revenue Taxation that fiscal 1971 receipts
would be $3 billion below our estimates.
We have carefully reviewed the differences between our estimates and the
estimates of the Joint Committee and it appears that, except for minor amounts,
the entire difference lies in somewhat more pessimistic economic estimates by
the Joint Committee staff.
We believe that there is no strong reason to alter our economic projections
at this time. But we recognize the difficulties of making precise forecasts for
a year ahead in the present state of the economy and, consequently, we realize
that our revenue estimates could turn out to be on the high side. This simply
emphasizes the need for an adequate contingency allowance.
In order that there be no misapprehension about the Treasury's need for new
funds during the coming year, let me stress that Treasury net borrowing from
the public for the year as a whole will be only a small fraction of the $18 billion
increase in the temporary ceiling that we seek. As I indicated earlier, we
anticipate a deficit in the Federal funds accounts for fiscal 1971 of approximately
$10 billion. But the trust funds are expected to be in surplus by about $8.8 billion during the same period. This trust fund surplus will be invested in Government securities, as in the past, leaving only about $1.3 billion to be financed by
the general public.
One final word. The House Ways and Means Committee considered it desirable
to raise the permanent debt ceiling as well as the temporary ceiling. They proposed a permanent ceiling of $380 billion, $15 billion above the present ceiling
of $365 billion. This will give us somewhat less room than the related increase
in the temporary ceiling, because it does not allow fully for contingencies. But
it is a ceiling that I believe we can live with.
I urge the committee and the Senate to act promptly on H.R. 17802. Prompt
action will assure the ability of the Federal Govemment to finance its requirements in a responsible way and will help in restoring and maintaining much
needed confidence to financial markets and the financial community generally.
Exhibit 18.—Statement by Under Secretary for Monetary Affairs Volcker,
March 17, 1970, before the Annual Meeting of the American Paper Institute,
New York, New York, on financing domestic growth
As my contribution to this morning's panel, I want to consider the financial
dimensions of living with prosperity. My main focus will be the problem of financing sustained domestic growth. But I also want to touch briefiy on our external
financial relationships, because the progress of our economy—and that of trading
partners—is closely tied to the health of the dollar internationally.
Certainly the paper industry—highly capital intensive and interriational
minded—has been affected by the financial strains of recent years. Domestically,
with investment spending doubling in the past decade, the historic highs in interest rates have created a heavy burden. Internationally, you have not been
exempt from the competitive pressures implicit in rising U.S. costs or prices^—
nor can you, as major international investors, look with equanimity on the fact
that the United States in recent years has had to maintain restraints on foreign
investment out of concern for international financial stability.
Even so, your industry has been able to cope with the domestic financial
pressures better than other sectors of the economy—especially the hard-pressed
homebuilder and home buyer. I was also delighted to see that you achieved a
considerable rise in exports during the 1960's and are holding your imports relatively steady. But, over the same period, the nation as a whole has experienced a
substantial decline in our traditional trade surplus.
It seems to me plain that the financial strains and imbalances of recent years
are incompatible with the sustained prosperity of the U.S. economy. Therefore,
we must understand the causes and deal with them effectively.
The first, and most fundamental, point that I would make is that the financial
turbulence of recent years has been mainly an outgrowth of the infiationary
process. From 1965 through most of last year, spending pressures—public or
private—^^tended to outrun our capacity to generate both production and savings.
EXHIBITS
317
The financial counterpart has been more demand for credit than could be satisfied. As expectations of inflation and high rates became more firmly imbedded
with the passage of time, the financial strains were further aggravated by a
tendency to "borrow now and pay later."
The link between an overheated economy and financial strains may seem so
self-evident that it does not bear repeating. But, from my particular vantage
point, I cannot help but be impressed by the number of proposals that would
purport to deal with the latter without affecting the former—and which, indeed,
in many cases, would only add to the pressures.
The problem can be aptly illustrated in the case of mortgage financing, which
normally accounts for about one-fifth of net credit extensions. In an aggressive
and useful effort to moderate the developing squeeze on that market. Federal
agencies and Government-sponsored institutions provided some $8.4 billion to
the residential mortgage market last year. By the final quarter, they had stepped
up their activities to the point that they financed three-fifths of the entire growth
in residential mortgages. Nevertheless, the vast extension of federally sponsored
credit could do no more than cushion the pressures. With an excess demand for
total credit, private and public borrowers in a stronger competitive position
drew funds from potential mortgage lender.^ even faster than the Federal activities speeded up. Indeed, the financing of the federally sponsored credit extension was one important source of the pressure on private mortgage-buying
institutions.
Nor could an answer be fourid in an effort to increase the supply of credit by
creating new money—a process that, in the circumstances could only have
added another twist to the spiral of infiation and, thus, to interest rates. In
other words, in a situation where there is already an excessive demand for
credit, relief for one sector can only effectively be achieved by squeezing it
out of another. Unless one is prepared to consider controls as a way of life—
and I do not and doubt their effectiveness—the only realistic alternative is to
deal with the overheating in the economy itself.
The Administration, in inheriting an infiationary situation with strong momentum, took this course. The job turned out to be even harder than we contemplated a year ago. But the fact is that the reins were held tight in the face
of the ever-present temptations to yield—to cut taxes sooner than would have
been prudent, to give way to pressures to spend more for admittedly worthy
causes, or to create more money in an effort to dampen the massive pressures
in the credit markets and reduce financing costs.
We are now seeing the first fruits of this decision. Excess demand has been
squeezed out. The inflationary psychology does seem to be waning—even though
the momentum of rising prices is still strong. And tensions in the credit markets
have begun to relax.
I do not underestimate the difficulties that lie ahead. The pressures on prices
and costs will die down only over a period of time. Employers and employees
alike will be testing their bargaining strength in an atmosphere in which price
increases jeopardize markets and profits are vulnerable to a cost squeeze. No one
has found the way to make that difficult process either instantaneous or painless.
But it does work—^and a combination of reduced price expectations and restored
productivity growth could ease the way toward a more stable price level.
Clearly, we must be responsibly alert to the risks implicit in any important
change in the economic environment—that psychology and cumulating forces may
carry the swing too far; or that, in overreacting to a temporary showdown, we
might underwrite a new unsustainable burst of demand pressures. But, recognizing the risks on either side, I believe we are on a course that promises a
more settled atmosphere in financial markets and is fully consistent with a
strategy for maintaining a better balance in the future.
There has already been some drop in interest rates from the historic peaks
around the turn of the year. The decline has been 1 percent or more in money
market instruments, almost 1 percent on medium term Treasury securities and
nearly as much for municipal bonds, and perhaps i/^ percent for new corporate
issues. There is also some evidence that banks and savings institutions, after a
rough winter, are beginning to see steadier deposit fiows.
Certainly interest rates, by any historical standard, are still very high and
financial markets remain unbalanced. Some time will have to pass before our
financial institutions can plan ahead with full confidence. The heavy volume of
corporate and municipal market financing in the wings is warning enough that,
318
1970 REPORT OF THE SECRETARY OF THE TREASURY
after 5 years of heavy pressure, a return to rate levels once considered normal
will be a long and difficult process. Nevertheless, the significant changes in the
economy are laying the groundwork for a restoration of a better balance in the
financial markets.
This has some direct implications for the mortgage market. I believe that this
country can develop the capacity to finance its housing needs and desires over
the longer run—if the economy as a whole is not under excessive strain. But
the mortgage market, historically, is slow to react to an easing of tensions. The
immediate challenge is to speed the process by a vital 6 months to 9 months.
This is one object of the array of special measures adopted or proposed by the
Administration in recent weeks. These include maintenance of a high level of
activity by FNMA and the home loan banks, reinforced in the latter instance
by the provision of subsidy funds sufficient to induce member savings institutions
to employ more funds in the mortgage market. These activities will be supplemented by a secondary market for conventional mortgages on the model of the
successful FNMA facility.
Meanwhile, we in the Treasury have had discussions with several key investor
groups—^including pension funds, life insurance companies, and commercial
banks—to elicit their voluntary cooperation in financing residential construction. This process will be facilitated by making so-called mortgage-backed
bonds—fully guaranteed bonds issued against a pool of mortgages—available in
some volume in coming months. In this way, a simple marketable investment instrument will be provided for those investors who find a mortgage an awkward
vehicle for employing their funds.
The key objective is to make mortgage commitments more readily available
for the spring and summer building starts, so we are facing real time pressure.
We are definitely encouraged in this objective by the early response of some key
lending groups. But we are under no illusions. This voluntary effort, and, indeed, the other measures to help the mortgage market, cannot be fully effective
unless they are accompanied by a better balance in the overall supplies and
demands for credit.
This underscores the central imxx)rtance of maintaining steady progress on
the infiation front and of policies that will foster and thus maintain a better
balance in the financial markets as a whole.
Our basic strategy is rooted in the premise that, for as far ahead as one can
hope to see, demands for our real and financial resources will remain very heavy.
This premise is documented quantitatively in the longer term projections presented in the President's budget and the Economic Report.
Those projections bear out what I believe most of us instinctively feel: both
our future budget revenues and our economic growth are already heavily committed if we are to repair urban decay, move toward our long-run housing goals,
clean up the environment, improve education, and recognize our responsibilities
for foreign assistance—and, at the same time, provide the wherewithal to support the growth and modernization of our industry and meet the insistent demands of the American consumer.
In the short run, this array of potential demands lies behind our confidence
that the necessary present period of business adjustment will not give rise to
cumulative downward forces. Looking beyond this year, these same demands
emphasize the insistent need to establish priorities in moving toward our goals.
Indeed, the only real choice is whether we will establish these priorities with
care and intelligence, or whether, in an effort to do too much, our choices will
emerge as the haphazard result of stresses and dislocations of an overstrained
economy and financial markets.
I would emphasize five key elements in our approach to maintain mastery of
this problem:
(1) Budgetary control—a matter that Maury Mann has already described in
detail.
(2) A rejection of the cynical philosophy that a balanced budget is a rare and
fleeting phenomenon. Indeed, our recent problems can be traced in large part to
a series of inappropriate deficits after the mid-1960's, culminating in the $25 billion debacle of fiscal 1968. Present planning, in contrast, envisages 3 consecutive
years of surplus—small, to be sure, but to be achieved consistent with some reduction of the tax burden. The direct implication is that the Treasury will not be
absorbing funds from the credit markets in competition with other borrowers.
A deficit in response to a temporary and unexpected period of slack in the
EXHIBITS
319
economy need not be disturbing—it would represent a normal and useful stabilizer. But, if we are right in our basic assessment of underlying trends, a balance or surplus should become the norm.
(3) We also need to recognize that a surplus or deficit in the budget does not
tell the full story of Federal finance. In one form or another, the Federal Government in recent years has increasingly used its own credit as a means of supporting the activities of other sectors. While these activities do absorb funds from
the market, they are not, for the most part, refiected in the budget totals. Indeed,
sponsors of some of these programs may entertain the hope of escaping full budget
scrutiny or look upon the Government's credit as virtually a free good and the
supply of credit as inexhaustible. More basically, these programs are a valid reflection of the basic fact to which I have already referred—our enormous needs
for social investment.
The figures are startling. In fiscal 1969, the federally-assisted borrowing from
the public totaled some $12^^ billion. During the current fiscal year, the total
is expected to reach over $15 billion. In fiscal 1971, the aggregate is projected at
over $20 billion—equivalent to probably a fifth of net credit availabilities in the
economy as a whole. Plainly, these demands, overshadowing the requirements of
direct Treasury finance, present serious new problems of coordination, control,
and efficient financial management. President Nixon's first budget broke new
ground by spot-lighting the totals in the main budget table. This was supplemented
by a detailed special analysis later in the budget document. As this suggests, we
recognize the need for closer appraisal of priorities in this area, as well as within
the budget proper.
(4) So far as monetary and debt management policies axe concerned, I would
emphasize one point of longer-term significance. We are, today, much more conscious of the inevitable lags between policy action and economic impact. These
long and uncertain lags are, of course, one of the reasons why the shaping of
financial policy is, at any given time, so difficult. But, on balance, I would expect
that a certain even-handedness in monetary and in related debt management
policies could help avoid disturbing gyrations in financial markets.
(5) Finally, I would call your attention to the fact that the President plans
shortly to appoint a commission to study our financial structure and recommend
needed changes in the light of experience. It would be wrong, in my judgment,
to conclude that the strains like those of last year are primarily a reflection of
faults in the institutional structure. But it would be blind to faU to examine
closely the problems and potential weaknessies in the institutional structure exposed by the recent turbulence or neglect to prepare the way for fresh innovations to meet the needs of the 1970's. The existing hodgepodge of interest rate
ceilings is one area crying out for rational review, but it is certainly not the only
one.
It is not possible for me to talk about appropriate financial policies v^ithout
also considering their international repercussions. Indeed, the size of the United
States—our enormous weight as a trading and investing nation—and the key
role of the dollar—malje it essential that we view our policies in that broader
perspective. Certairily the strains on our domestic markets in the past year have
exerted a far reaching, and not always welcome, influence abroad, as our banks
and international corporations combed the world for funds.
This search for financing wherever it could be found, has been an important
factor in maintaining the strength of the dollar in the exchange markets. That
strength has been reflected in a surplus of some $4V^ billion in our balance of
payments on the official settlements basis over the past 2 years. Foreign official
dollar holdings have declined significantly, and our own reserve assets have substantially increased.
We must recognize these developments for what they are—in good part the
fortuitous result of extremely tight money. They must not be permitted to obscure a deeper problem—the unsatisfactory state of our underlying international
payments position.
No single figure can adequately summarize the complexities of our balance of
payments. Certainly the $7 billion liquidity deficit recorded last year—distorted
by short term capital flows and special transactions—overstated the problem.
But there can be no question but that the erosion in our trade position by years
of inflation and overheating needs our serious attention.
In both of the past 2 years, our trade balance stood well below $1 billion, and
our current account surplus entirely disapi)eared. The implication is plain enough.
320
1970 REPORT OF THE SECRETARY OF THE TREASURY
Without a sizable surplus on these accounts, we are unable to provide to the rest
of the world the real goods and services that must be the counterpart of our
legitimate desire to provide aid and to export capital.
With tensions easing in our domestic markets, the large-scale importation of
short-term capital that has characterized the recent past is unlikely to be sustained. In fact, banks have already cut their own borrowings in the Euro-dollar
market considerably in recent weeks. It should not be surprising if, as part of the
process of a return to better balance in domestic markets, there is some reflow of
dollars into officials hands abroad and a deficit in our official settlements accounts.
That prospect should not, in itself, be disturbing, following a period of surplus.
I believe our international monetary arrangements—greatly strengthened in
recent years—^can absorb and accommodate large recurrent swings in payments
positions. What does seem to me essential is that we use this period to begin
rebuilding our trade and current account position and justify confidence in the
dollar as a secure store of value. If we do not fulfill that responsibility, I know
of no purely financial devices that offer assurance of continued international
financial stability, any more than an overheated domestic economy is consistent
with balanced flows of internal finance.
The present period of adjustment is laying the essential groundwork for the
long term effort that will be required. As we reap the benefits, we will be able to
maintain our natural position as a capital exporter in a manner fully consistent
with a strong international financial position. It is also that process that will
permit us to move toward our objective of dismantling the remaining restraints
on capital transactions.
So my basic point today is clear enough, whether viewed from a domestic or
international v-antage point. Calmer and balanced financial arrangements rest,
in the end, on a more basic balance in our economic affairs. It is precisely the
objective of our present policies to achieve that result.
Exhibit 19.—Statement by Deputy Under Secretary for Monetary Affairs
MacLaury, October 4, 1969, before the 16th Annual Bankers Forum, Georgetown University, Washington, on Federal credit programs in the 1970's
Among the many imponderables for "Banking in the 1970's" is the role of the
Federal Govemment as a supplier of credit in the coming decade. The general
public, if they think of the capital market operations of the Government at all,
normally think of us not as suppliers of credit, but as mlassive borrowers, piling
up ever increasing amounts of national debt. There are, of course, years such as
fiscal 1968, when this characterization is less of a caricature than we might wish.
But there are also years, such as that just behind us, when the Federal Government retired debt on balance. In all these years, however, be they deficit or surplus, the Federal Government is involved in a great variety of ways in channeling credit to various sectors of the economy.
The role of Federal credit programs does not appear very impressive from
a quick glance at the recently completed summer review of the 1970 budget. This
shows Federal net lending of only $1.0 billion in the current fiscal year 1970,
compared with $1.5 billion in fiscal 1969 and $6.0 billion in 1968. But this apparent
decline in Federal lending is a misleading Indicator of Federal invoJlvement in
the credit markets, as many of you know.
There are basically two factors that account for this statistical mirage. First
is the shift that has taken place from direct loans to guarantees, about which
I shall say more in a minute. Even more important during this 3-year period,
however, was the removal from the budget accounts of three federally sponsored
lending agencies: the Federal National Mortgage Association, the Federal intermediate credit banks, and the banks for cooperatives. When the Government
held stock in these agencies was retired in 1968, they became private corporations.
In keeping with the new unified budget concepts, therefore, the loans made by
these agencies are no longer counted as Federal budget outlays.
There are two other similar agencies, the Federal land banks and the Federal
home loan banks, which became privately owned many years ago. Yet these five
federally sponsored agencies, which issue their own securities to private investors
and are well established in the market, though expanding rapidly iu the aggregate,
have accounted for less than one-fourth of the total increase in Federal credit
program growth over the past decade.
EXHIBITS
321
The bulk of the growth in Federal credit programs during this longer period
has been in the form of Grovemment guarantees on credits funded by the private
sector. Ten years ago, these guarantees were largely the familiar FHA and VA
guarantee on one family-four family housing loars. The funds generally were
provided by banks and other institutional lenders and involved little or no cost
to the Government. In effect, the (Government tool: a page out of the banker's
book, satisfying customer credit needs at little cost through creation of
"acceptances."
The growth of the regular FHA-VA programs is now surpassed, however, by
a number of other programs of loan guarantees by the Farmers Home Administration, the Export-Import Bank, the Office of Education, the Small Business
Administration, the Housing Assistance Adininistration, the Renewal Assistance
Administration, and most recentiy the new FHA programs of guarantees of low
interest loans for low income housing.
After making necessary adjustments to avoid double couritirig of such items
as FNMA purchases of FHA insured loans, the net increase in loans outstanding
under all Federal direct, guaranteed, insured, and sponsored loan programs in
the fiscal year 1960, was $4.6 billion. In fiscal 1965 the comparable figure had
jumped to $9.7 billion; and in fiscal 1970, while I do not have an up-to-date estimate, the figure implied in the January budget was $22.4 billion. The total amount
outstanding under all the various loan programs was slightly under $100 billion
in 1960, and is expected to pass the $200 billion mark in 1970.
The relevant question to ask now is, where do we go from here—what lies
ahead for Federal credit programs in the 1970's. I can't pretend to give a fully
satisfactory answer, but I think it is nevertheless worthwhile looking a little
more closely at how we got where we are today.
The basic rationale for Federal involvement in the lending process is to fill
gaps in the provision of credit through private institutions and credit markets,
or to provide assistance for public purposes on terms that would not be available
even in the absence of market imperfections. While one could choose among numerous examples, it is the housing sector that commands most attention at the
moment because of its special vulnerability during periods of tight credit. You
gentlemen are as aware as I am of the special problems that beset mortgage lending in times of infiation—the drying up of flows into mortgages through normal
institutional channels. Under such circumstances it seems perfectly appropriate
for federally sponsored agencies such as FNMA and the FHLB's to make every
effort to take up some of the slack, even though their borrowing may place substantial additional strains on the bond market. It is for this reason that the
Treasury has raised no objection to the record levels at which the housing agencies
have been coming to market in recent months.
At the same time, no one looks to this type of emerg^cy financing as an adequate answer to the longer term question of how best to provide credit to meet
general housing needs. Indeed, I think there is widespread agreement that not
financing innovations, though these may help, but only an end to inflation itself,
and its accompanying credit stringency, will reopen the more normal channels
of housing finance.
Rather, it is in the areas of subsidized housing, small business, student loans,
export credit, urban redevelopment, public housing, and rural development that
one may question whether the methods of providing Federal credit assistarice
have been as effectively conceived as they might be. Indeed, there has been an
interesting change in the pattern of financing of Federal credit programs in
recent years. I have already noted the shift from direct loans to guaranteed loans
as a major trend of the 1960's. Superimposed on this shift has been a growing
tendency to rely on the securities markets through such programs as asset sales,
with lesser reliance, at least in a relative sense, on institutional lenders.
Direct loans have not been adequate to carry out growing program requirements
largely because of the pressures to keep Federal budget outlays in check. The shift
to financing these programs through the private sector on the basis of guaranteed
and insured loans was adequate so long as private lenders were willing to participate in these programs and provide credit on terms the Congress determined
as appropriate. In cases where subsidized interest rates were required on guaranteed loans. Federal program agencies have made direct interest supplement
payments to private lenders. In many cases, however, private lenders are unvdlling or unable to extend the longer term credits required to properly finance
these programs. Thus more and more of these programs are now being designed
322
1970 REPORT OF THE SECRETARY OF THE TREASURY
so that they can be financed directly with pension funds and other investors in
the bond market.
In the housing area, as I've already indicated, the Federal guarantee of mortgage loans has not been sufficient to assure an adequate flow of funds, and we have
come to rely to a great extent on FNMA purchases of these insured loans, thus
financing of them in the bond market. Similarly, the new program of GNMA
guarantees of mortgage-backed securities is designed to attract investor funds
which would not normally be channeled into the mortgage market.
In the small business area, a Federal direct loan program was established in
1953 and was supplemented by the Small Business Investment Company program
in 1958. Efforts are now being made to establish some sort of small business capital bank to raise funds directly in the bond market for small business investment
companies who, in turn, would provide the necessary long term credit to the small
businesses.
A similar trend is evident in the REA electric and telephone loan programs.
Federal direct loans have not been available in sufficient amounts to meet the
demands, partly because even supporters of these programs found it difficult to
justify credits at 2 percent in today's market when the Government itself is paying
8 percent. It is questionable whether banks are the appropriate source of funds,
even if they were willing, to make these long term loans even with a Federal
guarantee. Thus a private REA electric bank is-being established to raise funds
directly in the market, and a number of proposals have been made to establish a
REA telephone bank as well.
We have heard much this year about the problems in the student loan area.
Student loans were first established as Federal direct loans in the National
Defense Education Act of 1958, but the available funds in the budget were not
adequate to meet the demand. Thus a guaranteed student loan program was established in 1965, which went a long way toward meeting the demands until
this year when the ceiling of 7 percent on the interest rate to be paid by the student threatened to shut the program dovm. This problem hopefully is being resolved by the Administration's proposal for direct Federal payment of additional
interest up to 3 percent to encourage lenders to make these loans.
But the interest rate is only part of the problem, since banks are necessarily
concerned with their liquidity position and are reluctant to take on too many of
these long term credits. Thus plans are being devised in many States to provide
a secondary market for student loans made by banks; in some cases these plans
involve tax-exempt bond financing of these loans, which would add to the overall
pressures on the municipal bond market. There are also proposals to establish a
federally-sponsored secondary market facility for student loans, which has been
dubbed by some as "Sallie Mae," to join the family of Fannie Mae and Ginnie Mae.
I am sure you have heard of other similar proposals to finance Federal credit
assistance programs in the bond market.
The problem is perhaps especially acute in the area of federally assisted programs financed through municipal borrowing. Apart from temporary problems,
such as the failure last month of the public housing and urban renewal bond and
note issues, due to local interest rate ceilings, these guarantee programs are expanding rapidly and taking an increasing share of the limited supply of funds
available to the municipal market. In addition to such well-established programs
as public housing and urban renewal, one can anticipate growing new demands
from proposed programs in the area of water pollution and mass transit. This
potential crowding out of general purpose financing by local governments has
prompted suggestions to shift the financing of these Federally assisted programs
to the taxable bond market, thus relieving market pressures for other municipal
borrowing and reducing the interest costs of all States and localities.
Another approach to private financing of Federal credit programs has been
by converting direct loans to guaranteed loans through the sa^e of loan assets
such as Farmers Home Administration notes, CCC certificates of interest, ExportImport Bank certificates of beneficial interest, and individual loan sales by
SBA, VA, HUD, and other Federal agencies. An effort was made to coordinate
such asset sales programs in the enactment of the Participation Sales Act of
1966, which permitted FNMA to pool direct loans made by several other Federal
agencies and sell guaranteed certificates of participation in these pools to private
investors, thus reducing the cost of financing the asset sales programs. Although
this program got off to a bad start for a variety of reasons, not the least of which
was its inauguration on the eve of the credit crunch in 1966, there was probably
EXHIBITS
323
much to be said for it as a technique of governmental financial management.
But since such sales were counted in the Federal budget as asset sales or negative
expenditures, and thus reduced overall budget outlays by a similar amount, there
was justifiable criticism of the program on grounds of budget gimmickry. As a
result, in 1968 the President adopted the recommendation by the Commission
on Budget Concepts that participation certificates be treated in the budget as
a means of financirig in the same manner as Treasury's own issues. Since direct
Treasury issues are even less costly than PC's as a means of financing Government programs, there was no incentive to continue the PC program, and the
Government stopped selling participation certificates in 1968. It is interesting
to note, however, that in this case the banks seem to have taken a leaf out of our
book, since a number of banks used the PC technique extensively in 1969 as a
means of financing their own loan portfolios.
There is no doubt in my mind that there will continue to be an importarit
role for the Federal Governmen\in facilitating credit fiows to particular sectors
of the economy. I say this in full recognition that in the future, as iri the
past, the basic job of providing the credit needs of this country must arid should
rest with private financial institutions such as your own, and the credit markets
in which you operate, if we expect to harness most effectively our financial
capabilities to our physical needs. But even in those areas where the Federal
Government has a role to play, I think we need to rationalize the processes by
which we arrive at our decisions on the amounts, terms, and allocations of
Federal credit assistance.
In the first place, there needs to be wider recognition within the Government
that a dollar of credit can be as scarce a resource as a dollar of budget expenditure. The trend from direct loans within the budget to guaranteed loans outside
the budget is testimony, I'm afraid, that all too often the route of the guaranteed
loan has seemed to provide the simple solution to pressing ahead with desired
programs "at no cost" in terms of the budget. The fact that there is a limit to
the capacity of the capital markets, in the broadest sense, to absorb iricreasing
demands placed upon them by federally sponsored credit programs is a thought
that is brought home only in times of stress such as the present, when FNMA
notes sell for 8% percent. The addition of a Government guarantee to a piece
of paper is not the open sesame to easy credit that it may at times seem.
Lest I be misunderstood, let me hasten tp say that there are good and sufficient
reasons for transferring a number of Federal credit programs out of the budget
and to the private sector. It would certainly be inconsistent to argue the principle
that the private credit markets should be relied on to as large an extent as possible, and at the same time bend every effort to keep such programs on a direct
loan basis within the Government. Indeed, one of the toughest assignments iri
this whole area is to come up with a set of consistent criteria to serve as
guides in the administration of Federal credit assistance—unfortunately,
borderline cases seem to be more the rule than the exception.
The conclusion to be drawn, rather, is that some means must be fourid for
monitoring the total demands of federally assisted credit programs on the capital
markets. The numbers I cited to you earlier, while available to the public, are
known only to a relatively small handful of specialists who concern themselves
with these matters. A way must be found, it seems to me, to focus puiblic attention much more strongly than in the past on the growth of these Federal credit
programs. As a practical matter, it does not seem realistic to expect, nor indeed
would it necessarily be desirable, to reinsert all forms of Federal credit assistance
into the calculations that end up as a single figure of a deficit or surplus in the
Federal accounts. But there is reason to summarize in a prominent way in the
budget tables the overall demands on the credit markets implied by the growth
of Federal credit programs.
Not only would such a consolidation help to focus attention on the total of
these credit demands, but it would also serve as a means for bringing together
in a single place the varying terms on which various Federal credit programs
are operated. In a number of these programs, as you know, there is a substantial
element of Federal subsidy involved. Yet it takes an expert to ferret out from
the scattered evidence in the present Federal accounts exactly what this element
of subsidy may be.
Finally, I should mention that there has long been felt within the Treasury
a need for rationalizing the means of financing various Federal credit programs.
The participation certificate was an earner attempt to provide this rationaliza
324
1970 REPORT OF THE SECRETARY OF THE TREASURY
tion, and I have mentioned some of the reasons for its failure. But with the
prospect of continuing substantial growth in potential demands on credit markets
to finance federally sponsored programs—and the growing evidence that separate federally-sponsored financial institutions are being designed to provide that
financing—it seems to me that it is not too soon to undertake a new effort to
impose greater order on what could become an unnecessary proliferation of
quasi-governmental channels for transferring financial resources from lender
to borrower.
Taxation Developments
Exhibit 20.—Statement by the President, December 30, 1969, on signing the
Tax Reform Act of 1969
Eight months ago, I submitted a sweeping set of proposals to the Congress for
the first major tax reform in 15 years, one which would make our tax system
more fair.
My proposals were carefully balanced to avoid increasing the pressure on prices
that were already rising too fast.
Congress has passed an unbalanced bill that is both good and bad. The tax
reforms, on the whole, are good; the effect on the budget and on the cost of living
is bad.
When the Congress reduces revenues, and at the same time increases appropriations, it causes budget deficits that lead to higher prices.
In terms of long-overdue tax reform, most of my major reform proposals were
adopted. Other proposals were worked out between the Congress and the Administration ; still others were the handiwork of the Congress alone.
—More than 9 million low-income people who pay taxes will be dropped from
the tax rolls. This results primarily from the special Low Income Allowance
that I proposed last April as a means of making sure that people at or below the
poverty level do not have to pay Federal income taxes.
—A large number of high-income persons who have paid little or no Federal
income taxes will now bear a fairer share of the tax burden through enactment
of a minimum income tax comparable to the proposail that I submitted to the
Congress, which closes the loopholes that permitted much of this tax avoidance.
However, the highest rates on wages and other earned income, not otherwise
tax-sheltered, will be reduced from 70 percent to 50 percent in 1972.
—The Congress accepted my recommendations to reduce sharply the discrimination against single persons in the tax laws.
—Over 19 million additional people who pay taxes will find their annual task
easier because they will find it advantageous to use the simple standard deduction, which is being significantly increased, rather than listing each deduction
separately.
—Measures are also included that will guard against over-withholding of income taxes. For example, students who work in the summer and who in the past
have had taxes withheld and retained by the government until refund checks
were mailed out the following spring, will no longer be subject to such
withholding.
—The application of our Low Income Allowance will permit a student in 1970
to earn $1,725—$825 more than at the present time—without paying Federal
taxes or being subject to withholding.
—The 255-page bill represents a sweeping revision of the Internal Revenue
Code. Section after section is tightened to prevent the avoidance of taxes that
has permitted far too many of our citizens to avoid the taxes that others have
had to pay.
—Our continuing efforts to meet the nation's housing needs will be aided. The
tax bill encourages rehabilitation of old housing and investment in residential
construction.
—Tax-free foundations were brought under much closer Federal scrutiny
although Congress wisely rejected provisions that would have hampered legitimate activities of the voluntary sector. At the same time, we must recognize
that congressional consideration of this matter refiected a deep and wholly
legitimate concern about the role of foundations in our national life.
Congress also accepted this Administration's recommendation to increase
Social Security payments, enabling our older citizens to maintain their standard
EXHIBITS
325
of living in the face of rising prices. Earlier I proposed that this be accomplished
through a "catchup" increase in payments coupled with automatic increases in
the years ahead to meet any future rises in living costs. Congress provided instead for a higher one-time increase with no automatic increases in the years
ahead. I believe my position was more responsive to the ilong-range needs of the
elderly, but the overriding consideration is that 25 million recipients of Social
Security benefits have fallen behind financially, which makes my approval of
this short-range revision necessary.
Despite the achievement of these worthy goals, the decision to sign the bill
was not an easy one.
The bill unduly favors spending at the expense of saving at a time when demands on our savings are heavy. This will restrict the fiow of savings to help
build housing, to provide credit for small business firms and farmers, and to
finance needed State and local government projects. It will make our fight against
the rising cost of living more difficult.
The critical moment for this legislation came after the Senate had passed a
totally irresponsible bill that would have led to a sharp increase in the cost of
living for every family in America. In a letter to the leaders of the Congress,
I left no doubt that such a bill would be vetoed.
As a result, when members of the Congress met to work out the differences
between the House and Senate bills, the bill that came out of that Conference
was over $6 billion less inflationary for the next fiscal year than the bill that had
passed the Senate. It still falls almost $3 billion short of my original proposals,
but this response to my appeal to budgetary sanity makes it possible for me to
sign the bill into law.
I am, however, deeply concerned about the reluctance of the Congress to face
up to the adverse impact of its tax and spending decisions. If taxes are to be
reduced, there must be corresponding reductions on the expenditure side. This
has not been forthcoming from the Congress. On the contrary : In the very session
when the Congress reduced revenues by $3 billion, it increased spending by $3
billion more than I recommended.
A deficit in the budget at this time would be irresponsible and intolerable. We
cannot reduce taxes and increase spending at a time and in a way that raises
prices. That would be robbing Peter to pay Paul. That is why I shall take the
action I consider necessary to present a balanced budget for the next fiscal year.
I am also concerned about the constraint this act imposes on Government
revenues in future years, limiting our ability to meet tomorrow's pressing needs.
Seldom is any piece of major legislation fully satisfactory to a President. This
bill is surely no exception. But I sign it because I believe that, on balance, it is
a necessary beginning in the process of making our tax system fair to the
taxpayer.
Exhibit 21.—Statement by Secretary Kennedy, September 4, 1969, before the
Senate Finance Committee, on the Tax Reform Act of 1969
The Tax Reform Act of 1969 is a milestone in tax legislation. The Administration strongly urges its enactment at the earliest practicable date.
While we endorse its enactment, we believe that the bill should be improved
in a number of respects. Broadly, these are:
—the long run revenue loss in the bill of approximately $2.4 billion should be
scaled down by about half;
—the balance of tax shifts in the bill (a $7.3 billion reduction for individuals
and a $4.9 billion increase for corporations) should be redressed by including a
2-point reduction in the corporate tax rate;
—a number of structural changes in the bill should be modified, some because
they go too far, others because they do not go far enough.
Let us make no mistake about the nature of the legislation approved by the
House of Representatives. H.R. 13270 is not only the most sweeping tax reform
measure in the history of the Internal Revenue Code. It also embodies a significant amount of tax reduction. Reduction of this type and amount at this time can
be questioned on three grounds.
First, action now to reduce the national tax burden by a net $2.4 billion annually would represent a significant decision with respect to national priorities.
To the extent future revenues are today committed for such reduction, they can-
326
1970 REPORT OF THE SECRETARY OF THE TREASURY
not be used to support important Government programs. (It should be noted
that the $2.4 billion projected revenue loss is expressed in terms of today's
income levels. With incomes expected to rise significantly in the next decade, the
revenue loss would be much higher.)
The Administration's concern over the proposed cuts in individual taxes does
not mean that we attach a low priority to this goal. But tax reduction cannot
be carried out without due consideration for other national needs. The extent to
which we can responsibly curtail our defense outlays has to be determined by
future events, many of which are beyond our control. Domestically, the Congress has enacted programs which call for increased spending in future years.
This Administration is committed to renovation of national welfare programs and
to an imaginative program of revenue-sharing with State and local governments.
Proposals also will be forthcoming to promote additional hiring and training
of the hard-core unemployed and to foster investment in poverty areas.
The nation is committed to the goal of adequate housing for all of its citizens.
Recent studies demonstrate that Federal surpluses, which would bring down
interest rates and stimulate the flow of funds into mortgages, may well be the
best way in which to promote such housing.
Even though this Administration is determined to pursue a prudent spending
policy, we simply do not know enough about the future to commit ourselves today
to the degree of tax reduction embodied in H.R. 13270. In our suggested changes,
we have not attempted to attain a precise balancing of estimated increases and
decreases over the period. Indeed, revenue estimating is far too imperfect a
science for that purpose. However, we urgently recommend that you reduce the
expected shortfall in H.R. 13270 by approximately half, to $1.3 billion.
The second major question concerning the tax reduction in H.R. 13270 is
whether it is equitable. The largest cuts are appropriately centered in the
lowest brackets. But, in too many instances, certain taxpayers are given reductions much higher than others in comparable economic circumstances.
Our recommendations would reduce these inequities by:
Restoring the "phase-out" in the proposed Low Income Allowance, but at a
rate of $1 tax for $4 income as contrasted with the $1 to $2 curve in President Nixon's original proposal. This still would remove 5 million taxpayers,
including almost all of those at the poverty level, from the Federal tax rolls.
Raising the present standard deduction of 10 percent with a $1,000 ceiling
to 12 percent with a $1,400 ceiling, instead of 15 percent with a $2,000
ceiling.
Liberalizing taxation of single persons as compared to married couples
through a new rate schedule rather than allowing head-of-household status
to those single persons over 35.
The third shortcoming of H.R. 13270 is that it is weighted in favor of consumption to the potential detriment of the nation's productive investment. To
be sure. President Nixon recommended on April 21 the repeal of the 7 percent
investment tax credit. Such repeal represents over half of the $4.9 billion
increase in corporate taxes in the bill. While the Administration's position on
repeal of the investment tax credit is unchanged, we are concerned about the
bias in the bill against investment in favor of consumption. iSuch overweighting,
embodied in the proposed treatment of capital gains as well as corporate tax
increases, could impede economic growth in the years ahead by curtailing the
incentive to make productive investments.
To help guard against this drag on growth, the Administration strongly recommends that the tax rate on corporate profits be reduced by one point in calendar
year 1971 and an additional point in 1972. This would reduce corporate taxes
by an estimated $800 million in 1971 and $1.6 ihillion by 1972 (in terms of
today's profit levels), thereby reducing the net increase in corporate taxes in
H.R. 13270 from $4.9 billion to $3.5 billion (after other recommended adjustments). This change in the bill would not be unfair to individuals. Their tax
relief, concentrated in the lower brackets, would still amount to a gross amount
of $7.3 hillion and a net figure of $4.8 billion.
Although no one can forecast perfectly the trend of the economy in the next
two years, the Administratiori's current timetable in its anti-infiationary program
of tax relief in H.R. 13270, individual as well as corporate, will have to be
reevaluated in the light of then existing conditions.
Investment in the years ahead may also be impeded by the proposed changes
in tax treatment of capital gains. We believe these changes go too far. Our origi
EXHIBITS
327
nal proposals were designed to prevent excesses rather than fundamentally alter
such tax treatment. Accordingly, we recommend retention of the 6-month holding
period, as contrasted with the extension to 1 year in H.R. 13270. In addition, we
favor retention of the maximum 25 percent rate on capital gains, except in cases
of very large gains relative to ordinary income. In these instances, which would
affect a relatively small number of individuals, the rate could rise as high as
321/^ percent, or to half the new top bracket rate of 65 percent.
Our recommendations concerning capital gains taxation and other provisions of
H.R. 13270 are outlined in detail in Assistant Secretary Cohen's statement, which
has been submitted to the committee. Before responding to questions, I would
like to summarize several of these recommendations.
1. Petroleum taxation.—In its tax proposals of April 22, the Administration
made no recommendation for change in percentage depletion as it affects the
petroleum industry, except to include such depletion in the Limit on Tax
Preferences (LTP) and the Allocation of Deductions Rule (AD(R). We recommended that intangible drilling costs that would otherwise be capitalized also be
included in the LTP and ADR. Further, we proposed that certain sales of
production payments be treated as loans to avoid manipulation of income and
losses in mineral transactions.
The House of Representatives accepted our proposals relating to production
payments. It included percentage depletion and intangible drilling costs in the
Allocation of Deductions but dropped them from the Limit on Tax Perferences.
The House action also disallowed percentage depletion on foreign operations
and reduced depletion on domestic operations from 27% percent to 20 percent.
Although the Administration did not recommend a cut in domestic percentage
depletion, we accept the House approach to increasing the share of the national
tax burden borne by the petroleum industry. But this cut in domestic depletion
will not close the loophole which permits a wealthy oilman to pay little or no
Federal income tax. To do so, we recommend that the Senate restore percentage
depletion to the LTP. However, intangible drilling costs, included originally in
the Administration's LTP proposal, should be restored to the LTP only for investors and not for those individuals who receive 60 percent or more of their
income from oil and gas operations.
2: Financial institutions.—The Administration does not object to the provisions
of H.R. 13270 which would base bad debt losses of commercial banks, mutual savings banks, and savings and loan associations on actual experience—subject to a
10-year carryback and a 5-year carry forward for net operating losses. But we
are concerned about the continued heavy reliance on investment restrictions to
promote a fiow of money into residential construction. Such restrictions limit
the ability of the thrift institutions to compete for savings during periods of tight
money. They also fail to recognize other important national goals.
We therefore recommend a special tax deduction for each of these three
institutions, designed to encourage the fiow of credit not only into residential
construction, but also into other socially preferred uses, such as guaranteed loans
to college students and loans guaranteed by the Small Business Administration.
At the outset, this deduction could consist of 5 percent of gross interest income
from such loans. However, the deduction could not serve in any year to reduce
the taxable income of any such institution to an amount less than 60 percent of
taxable income, adjusted to include the full amount of dividend income and taxexempt interest.
The result of these provisions would be to create tax equity among these competing institutions, enhance their competitive ability relative to other outlets
for savings, and encourage the flow of money into uses determined by the Congress to be socially preferable.
3. Other provisions.—Five other Administration recommendations should be
noted:
—H.R. 13270 goes too far in taxing foundations. We recommend that the proposed 7% percent tax on income be replaced by a 2 percent "supervisory tax,"
vvhich would raise sufficient funds for an adequate audit program in the Internal
Revenue Service.
—In order to make certain that the bill does not unduly restrict donations of
property to charities, colleges, and other tax-exempt activities, we recommend
deletion of the provision which would include appreciation on such property in
the Limit on Tax Preferences and the Allocation of Deductions.
—The personal deduction allowed for State gasoline taxes should be repealed.
328
19 70 REPORT OF THE SECRETARY OF THE TREASURY
Inasmuch as the State tax is, like the Federal tax, essentially a user charge, the
existing deduction in effect shifts the.burden of those taxpayers who itemize to the
general taxpayer. Repeal would raise the average tax on those who itemize by
$10 to $15.
—The House bill goes beyond the Administration's recommendations and
includes interest on State and local bonds in the LTP. The Administration opposes this inclusion for the same reasons we gave on April 22—there are constitutional doubts as to inclusion as well as the possibility of adverse repercussions
in the market for State and local securities. However, we recommend as we did in
April that the full amount of tax-exempt interest be included in the Allocation
of Deductions rule, without the 10-year phase-in contained in the House bill.
—To simplify compliance by millions of low-income individuals, persons not
subject to tax under the new higher levels resulting from the Low Income
Allowance should not be required to file returns.
Mr. Chairman, I repeat that the bill before you is a milestone in tax legislation.
Almost all of the 16 substantive tax proposals which President Nixon submitted
to the Congress in April, including the Limit on Tax Preferences and the Low
Income Allowance, are included in the bill. The House Ways and Means Committee, as a result of its exhaustive hearings, added a number of constructive
measures to those proposed by the Administration. The resulting legislation was
overwhelmingly approved by the House of Representatives.
Now it is up to the Senate. I am confident that this committee will proceed
with the same determination shown in the House and that we can look forward
to final enactment of H.R. 13270, appropriately modified, before the end of 1969.
In the words of President Nixon, such enactment will represent a long step
toward making taxation, if not popular, at least fair for all of our citizens.
Exhibit 22.—Statement by Assistant Secretary Cohen, September 4, 1969, before
the Senate Finance Committee, on the Tax Reform Act of 1969
It is my pleasure to join in Secretary Kennedy's statement and to present the
Administration's position on the specific provisions of H.R. 13270, the Tax Reform
Act of 1969.
The bill in its present form when fully effective provides tax relief of $9.7
billion to individuals and also contains certain incentive provisions which involve
a revenue loss of $0.8 billion—a total revenue reduction of $10.5 billion. These
are offset by revenue-raising provisions which in the long run will total $8.1
billion (including $3.3 billion from repeal of investment credit), resulting in a
net revenue loss of $2.4 billion. In some years in the early 1970's the net revenue
loss will be about $1.0 billion higher. The bill would commit at this time revenues
which may be needed for programs of high priority, such as President Nixon's
family assistance plan, the Administration's program for revenue sharing with
State and local governments, and other vital measures. The size of this revenue
loss requires that the tax relief provisions of the bill be carefully evaluated.
The provision giving $4.5 billion of rate reductions to individuals represents
reasonable, equitable tax relief. The other broad impact of the bill—^the individual relief provisions other than rate reduction—^converting the Administration's
proposed Low Income Allowance to a flat minimum standard deduction allowance
of $1,100, extending the standard deduction to 15 percent vnth a $2,000 maximum,
extending head-of-household treatment to all single persons over age 35, and
extending special relief to widows and widowers, provide disproportionately high
tax reduction in many instances. In effect, these various beneflts cumulate in
some of the income brackets, particularly with respect to single persons, and
create some serious imbalances in the allocation of the total tax relief. While
there is merit in these changes, in the aggregate they go too far and should be
cut back. The imbalances, we believe, should be corrected.
The bill would result in a net long term shift in tax burden between corporations and individuals as follows:
Individuals: —$7.3 billion
Corporations: +$4.9 billion
The resulting shift in emphasis of this magnitude from investment to consumption is in our judgment inadvisable.
The Administration recommends a revised program of tax relief for both
individuals and corporations designed to decrease the revenue loss in the bill.
329
EXHIBITS
distribute the tax relief among individuals more equitably, and reduce to an
acceptable degree the shift in emphasis from investment to consumption. This
revised program would provide substantial relief for individuals of the same
general types as are contained in the bill. The program also calls for a corporate
rate reduction ultimately reaching 2 percentage points—^relief of the same general
magnitude as the individual rate reductions.
This revised program would result in a long term revenue loss of $1.3 billion
per year, approximately half as much as the $2.4 billion revenue loss which would
result from the House bill. It would result in a net increase in corporate taxes
of $3.5 billion and a reduction for individuals of $4.8 billion. While this still
represents some shift in emphasis from investment to consumption, it is one that
is much less severe than that provided in the House bill and is one that is
warranted by the economic conditions which we expect to prevail in the year 1972
and thereafter, when it will have its principal effect.
The general composition of the bill by rate reduction, reform, relief and incentive, for individuals and corporations, is shown in table I. Table II contains
a list of the specific provisions in the House bill in the order that I will discuss
them, with the long-run revenue estimate of the House bill and the proposed
Treasury change.
I have attached at the end of this statement tables showing the effects of the
principal provisions on a typical married taxpayer at various income levels.
There is also a table showing by adjusted gross income classes the pattern of
total tax change under the bill and under the proposed changes. It demonstrates
that our program continues but moderates the pattern of the House bill of
heavier reductions in the bottom brackets, cuts of about 5 percent in the middle
brackets, and an increase in the top brackets.
TABLE I.—Comparison of House hill and Treasury proposal hy principal feature
in terms of long run revenue effect
[In millions of dollars]
House bill
Rate reduction and relief provisions:
Individual:
Rate reduction
Standard deduction
Single person.
Other.
Treasury
proposal
Difference (—)
is Increased
revenue loss, or
decreased gain
—4,498
—4,025
—660
-500
-207
2,336
-9,673
-7,340
2,333
-1,600
Total
Corporation;
Rate reduction
Incentive provisions:
Individual
Corporation
•4,705
1,690
-445
-600
-1,600
-70
206
-760
600
1,976
160
2,415
2,675
160
2,700
2,970
2,700
2,830
-140
6,670
6,630
-140
8,085
Corporations:
Investment credit repeal
1,063
600
Total
-9,460
1,815
Reform provisions:
Individuals:
Investment credit repeal
Other
320
-10, 503
Total rate reduction, relief, and incentive...
-70
-440
8,106
Other
Total
20
Total individuals and corporations reform....
Total:
Individuals
Corporations
Combined
_.
—7,328
4,910
-2,418
•4,835
3,490
-1,345
2,493
-1,420
1,073
330
19 70 REPORT OF THE SECRETARY OF THE TREASURY
TABLE II.—Long-run revenue effects of H.R. 1S270 as passed hy the House dnd
proposed Treasury changes hy major provision
[In miUions of dollars]
Long-run revenue effects
House
Bill
Tax relief—Individuals:
Rate reduction._
Low income allowance—minimum standard deduction
Standard deduction.
Single persons. Reporting by low income taxpayers.Earned income rate limit.
Gasoline tax deduction.
Tax relief—Corporations:
Rate reduction.„
Others:
Foundations
Exempt organizations—unrelated business income
Charitable contributions
Farmlosses
.^....
Interest deductions
.*....
Moving expenses
Limit on tax preferences
Allocation
Income averaging
Restricted property.
Deferred compensation
Accumulation trusts
Multiple corporations
Corporate securitiesStock dividends
Foreign income..:
Financial institutions
Regulated utilities
Tax-free dividends
Natural resources
Capital gains and losses of indi viduals...
Capital gains of corporations
Realestate
Cooperatives
Subchapters
Investment credit repeal
Amortization of freight cars
Amortization of pollution equipment
Taxation of state and local bonds
Total
Current
Treasury
proposal
Difference (—)
is greater
revenue loss
-4,498
—2,662
—1,373
—650
»-4,705
—920
—770
-^445
2 _207
1,732
603
205
—100
0
—100
390
0
390
0
—1,600
—1,600
100
20
20
20
20
—100
85
460
-300
(*)
26
70
235
70
(*)
66
460
310
80
600
635
175
1,005
(*)
(*)
3,300
—100
—400
(*)
25
20
20
60
0
—100
60
480
—300
-76
0
0
30
—20
0
—26
20
0
-2,418
(•)
(•)
0
70
236
70
50
410
310
80
600
425
175
1,005
(*)
(*)
3,300
0
—180
(*)
-1,345
(*)
(•)
(*)
(*)
(*)
(*)
—26
0
0
—15
—60
0
0
0
—210
0
0
0
100
220
1,073
•Less than $2.6 million.
11979, calendar year liability.
2 Increase due to broader tax base associated with a lower standard deduction.
The Administration's position on the provisions of the House bill is as follows.
A separate more detailed memorandum making further recommendations as to
various matters is also being submitted to the committee.
1. Tax relief—individuals (sees. 801, 802, 803,804,805)^
Rate reductions.—The $4.5 billion rate cut in the biU does not discriminate
between itemizers and nonitemizers, between homeowners and tenants, between
married persons and single persons, between heads of households supporting
dependents and single persons without this burden, or between taxpayers with
different sources of income. The Administration recommends retention of the
$4.5 billion rate cut ^ in the form contained in the House bill because it provides
such evenhanded nondiscriminatory relief.
Low income allowance.—The Administration in April 1969, recommended a
Low Iricome Allowance designed to relieve persons and families with incomes
1 References are t o section numbers of H.R. 13270.
2 T h e r a t e cuts will cost $4.7 billion under our proposals because our changes in t h e
s t a n d a r d deduction broaden t h e inoome base.
EXHIBITS
331
below the poverty level from any tax liability. To reduce the revenue loss from
this additional special deduction, and to direct its impact at those below or near
the poverty level, it was to be "phased-out," i.e., the special allowance was to be
reduced at the rate of 50 cents for each dollar of income over the specified
"poverty" levels. This limited the bulk of the relief to persons with incomes below
$5,000. The allowance in this form would have relieved over 5 million presently
taxable persons from any tax liability, would have reduced the tax of 7 million
more persons, and would have resulted in an annual revenue loss of only $625
million. The Low Income Allowance in this form was favorably rex>orted in H.R.
12290 by this Committee.
The present bill contains the Low Income A^llowance but provides for the
phaseout for the year 1970 only. Thus, the bill completely eliminates the phaseout
for 1971 and subsequent years, resulting in an additional revenue cost of $2.0
billion.
The Administration recomimends that the phaseout be retained but be stretched
out by application at the rate of 25 cents for each dollar of income above the
poverty level. This will extend the tax benefits provided by the allowance to
somewhat higher brackets where they are justified, but without converting the
allowance to a minimum standard deduction of $1,100, which is the effect of the
House bill. The Low Income Allowance with this extended phaseout will result
in a revenue loss of $920 million in lieu of the $625 million as originally proposed.
It will thus save some $1.7 billion of the cost of outright elimination of the
phaseout.
Standard deduction.—The provisions of the House bill increasing the standard
deduction over a 3-year period from the present 10 percent, with a ceiling of
$1,000, to a level of 15 percent, with a ceiling of $2,000, should be changed. The
increase should be limited to a level of 12 percent with a ceiling of $1,400. This
more limited extension of the standard deduction would still result in major
simplification since some 4 million taxpayers will be able to switch from itemizing
their deductions to the standard deduction. The combined effect of the rate reduction, the Low Income Allowance and standard deduction increase will be to
reduce taxes for some 63 million taxpayers and to remove some 6 million persons
completely from the tax rolls. The revenue cost of the standard deduction
liberalization in this more limited form will be $770 million as compared to
$1,373 million cost of the House bill provision.
Single persons.—^The tax burden on single persons is disproportionatelly high
in relation to that of miarried persons who enjoy the benefits of income splitting.
However, in our judgment the provision of the House bill extending head-ofhousehold treatment to all single persons age 35 and over is not the best means
of dealing with this inequity. While a test based on maintenance of a household
might have been devised, it would have been extremely difficult to administer
where the taxpayer had no dependents, and in any event, the inequity to be
corrected is the disparity in burden between single persons, whether or not they
have dependents, and married couples. It seems preferable to reserve more favorable treatment for individuals who both maintain households and support dependents, as opposed to single persons who do not, but yet also narrow the tax
differential between single and married persons. Further, the selection of age
as a dividing line for preferential treatment seems arbitrary and bears no
relationship to actual ability to pay.
Accordingly, in lieu of the provisions of the House bill, the Administration
recommends that a new rate schedule be adopted for single persons. This schedule
would be constructed so that the difference between single person riates and
married coupile rates would be narrowed; no single person with the same taxable
income as a married couple would pay a tax more than 20 percent greater than
the tax paid by the married couple. The head-of-household rates would be reserved for persons maintaining a household for the support of dependents, and
would continue to fall approximately halfway between the new single person rate
schedule and the rates applicable to married couples. This proposed maximum
20 percent differential refiects a reasonable judgment of the additional costs of
living of married couples and their ability to pay as compared to single persons.
The provision of the bill extending without limitation split income treatDient
to surviving spouses with dependents (rather than for only 2 years after the
death of the spouse, as provided by existing law) should be deleted. A surviving
spouse will become entitled to head-of-household treatment after the 2-year period
if the surviving spouse continues to support a dependent, and there i s no rational
397^702 0—71——23
332
1970 REPORT OF THE SECRETARY OF THE TREASURY
basis for providing more favorable treatment to a surviving spouse than to any
other head of household. The limited 2-year period following the other spouse's
death is appropriate because this is a period of transition, but we believe the
split income benefits should not be extended beyond this period as the House bill
provides.
The revenue cost of the lower rate schedule for single persons and heads of
households, after deleting the unlimited extension of split income treatment for
surviving spouses, would be $445 million as compared to the $650 million cost
of the House bill provision.
Reporting hy low income taxpayers.—To simplify compliance by millions of
low-income individuals, the Administration recommends a liberalization of the filing requirements. Under present law (not changed by the House bill), an individual is required to file a return if his gross income is $600 or more, except that an
individual over 65 years of age is required to file a retum only if hi^ income
is $1,200 or more. Consequently, 5 million nontaxable individuals with incomes
which exceed these levels but which are less than the amounts exempted from
tax by the Low Income Allowance would still be required to file retums. Since
the Low Income Allowance is built into the withholding provisions of the bill,
many of these persons will not be filing for refunds. The filing requirements
should be raised to the new nontaxable levels.
Eamed income rate limitation.—The Administration strongly supports the
provisions of the House bill placing a 50-percent maximum tax rate on earned
income. This limitation will provide an important incentive to the earning of
income by personal services, both by employees and self-employed personsi Many
of the devices for conversion of ordinary income into capital gain, and for deferment of income, have been nurtured out of the natural desire of persons who
have reached high earned income levels to avoid the burden of very high rates.
With a 50-percent top marginal rate on earned income, the successful executive
or professional man will be more inclined to concentrate his efforts in the field
in which he is qualified and devote less of his attention to intricate means of
minimizing the effect of high tax rates. Particularly when coupled with the many
provisions of the bill which eliminate or curb' existing tax avoidance techniques,
we think the 50-percent ceiling rate on eamed income represents a substantial
improvement in the law.
Gasoline tax deduction.—The Administration recommends that the personal
deduction allowed for State gasoline taxes be repealed. It is appropriate to discontinue this deduction as a part of an overall program of rate reductions and
liberalization of the standard deduction. The State tax, like the Federal law, is
essentially a user charge for highway facilities paid by those who use the highways. As a user charge the existing deduction simply shifts part of the burden of
those taxpayers who itemize to the general taxpayer. No other nonbusiness user
charges are deductible. The proposed repeal of the deduction would not affect
State gasoline taxes paid for business purposes. The revenue gain from repeal
would be $390 million, an average tax increase from this change of about $10$15 to taxpayers who itemize their deductions.
2. Tax relief—corporations
The Administration recommends a corporate rate reduction of two points, a
one-point reduction effective in 1971 and a full two-point reduction effective in
1972 and thereafter. The present corporate rate, including the surcharge, is 52.8
percent for the calendar year 1969. This will reduce to 49.2 percent for the
calendar year 1970 if the surcharge is extended at 5 percent for half the year as
recommended by the Administration. The regular 48 percent rate, which would
otherwise be effective for 1971, should be reduced to 47 percent for that year. The
rate should be further reduced to 46 percent for 1972 and subsequent years. This
program of continuing reduction will provide an important offset to the provisions of the bill withdrawing incentives to investment, such as the repeal of the
investment credit. This rate reduction would result in a revenue loss of $800
million in 1971 and $1.6 billion in 1972 and thereafter.
3. Private foundations (sec. 101)
Much of the property of private foundations derives from the income, gift and
estate tax deductions allowed for contributions to their creation or support and
from the income tax exemption enjoyed by the organizations. The Federal Government thus has a vital interest in insuring that their assets are properly ap-
EXHIBITS
333
plied. The provisions of the House bill dealing with private foundations will tend
to insure that their property is devoted solely to charitable purposes. Private
foundations will thus become even more useful as a flexible source of support for
achievement of new levels of thought and action, relieving the burdens of
government.
In summary, the House bill would regulate certain activities of foundations.
Self-dealing between a private foundation and its substantial contributors would
be prohibited. Foundations would be required to distribute the greater of their
income or 5 percent of the value of their corpus on a relatively current basis.
Where a business is controlled by a foundation, or by a foundation and its substantial contributors, the foundation would be required within a 10-year period
to limit or dispose of its interest unless common control is otherwise eliminated.
These provisions were recommended by the Administration to the Congress in
substantially the form contained in the bill.
The bill prohibits grass roots lobbying, and it also proscribes other activities
designed to influence legislation even though they represent only an insubstantial
part of the foundation's activities. Existing law with respect to political activities would not otherwise be changed except that activities which influence the
outcome of any public election would be significantly restricted. Individual
grants would be prohibited unless made pursuant to an objective and nondiscriminatory procedure. Certain transactions with Government officials which
might raise substantial questions of propriety would also be prohibited. We
regard these rules as necessary restrictions on foundation activity which will not
interfere with attainment of their charitable objectives.
Penalties for violations would be imposed in the form of a graduated series of
sanctions designed to compel compliance. Foundation managers would not be
penalized for any such improper act unless carried out by them with knowledge
that it constituted a violation of these provisions. For example, reliance on the
advice of counsel would be sufficient defense for a manager.
The provision of the bill on this subject which requires the mose careful evaluation is the imposition of a 7%-percent tax on investment income, including capital gains, of a private foundation. We have concluded that a tax designed to
raise revenue from private foundations cannot be justified once the other restrictions imposed on them by the bill have been enacted to insure that their funds
will be used solely for charity. That is, there is no reason to reduce funds available for charitable activities by a tax once their tax-exempt status has been
justified in the first instance.
However, the Administration considers that it is unfair to require taxpayers
in general to pay the increasing cost of administering the audit program for these
organizations when such program is required to insure that charity receives the
full benefit of foundation resources. Thus, the Administration recommends an annual supervision tax of 2 percent of private foundation investment income. This
will raise about $25 million per year in the long-run effect (about $17 million in
1970), which approximates the estimated audit cost.
The bill also contains special provisions granting permanent exemption for two
existing private foundations from those provisions designed to prohibit foundation control of operating businesses. We do not believe these two foundations can
appropriately be distinguished from other foundations which are subject to the
bill; the reasons for applying the business holdings rule to existing foundations—
an assurance that their assets, interests, and activities are totally committed to
their charitable function—apply equally to these two foundations. We believe
these two special exemptions should be eliminated from the bill.
The bill fails to provide an exemption from the business holding requirements
where an organization's charter precludes disposition of certain business interests, although it does provide that these requirements are suspended while efforts are being made to secure court authorization of charter amendment. Even
if disx>osition of business holdings is ultimately found by the court to be prohibited, the sanctions of the bill would then be applicable. The House Ways and
Means Committee was concerned that if a permanent exemption were granted,
the courts would tend to deny permission to amend the instrument. There is,
however, a permanent exemption from the income payout rules for those organizations which are required by their governing instruments to accumulate
income and which find it impossible to effect a change. It appears that the
provision pertaining to dispositions of business holdings is too stringent and
should be changed to conform to the income payout rule.
334
1970 REPORT OF THE SECRETARY OF THE TREASURY
4. Other exempt organizations (sec. 121)
The provisions of the bill dealing with other exempt organizations adopt the
Administration's recommendation to extend the application of the unrelated business tax. The business income of churches and other exempt organizations from
commercial transactions in direct competition with taxpaying business would no
longer be tax exempt. Further, borrowing by a tax-exempt organization to purchase income producing assets which are unrelated to the exempt functions of
the organization would be discouraged by taxing all such debt financed income,
including investment income. This prevents a tax-exempt organization from extending its tax shelter to a nonexempt seller through inflation of the price.
Investment income used to finance the social activities of members of social
clubs and similar groups would be taxed, since in this situation it relieves the
members of personal expense which otherwise would be paid by them out of
aftertax income.
Finally, rents, interest, and royalties from controlled subsidiaries of any taxexempt organization would be taxed. This will prevent avoidance of the unrelated
business tax by transferring active business operations to taxable organizations
while siphoning off the profits from such operations in the form of "passive"
income (representing deductible payments to the taxable organization).
The bill also codifies previously existing Treasury regulations defining activities such as advertising, which will be treated as unrelated business. On the other
hand, it eases the qualification requirements for voluntary employee beneficiary
associations which are in reality health and welfare trusts established pursuant
to collective bargaining agreements.
The Administration supports these basic provisions of the House bill. However,
these provisions are only a beginning step in resolving the tax problems which
exist with respect to exempt organizations. These problems are presently being
given further intensive study. For example, the Treasury Department is presently reexamining the requirements for exempt status and the consequences of
loss of exemption. Additional recommendations in this area will be presented
to Congress as soon as they can be developed.
5. Charitable contributions (sec. 201)
The bill provides in general for an increase in the limitation on the charitable
contributions deduction from 30 percent to 50 percent for gifts to churches, educational institutions, and publicly supported charities, as recommended by the
Administration. This will provide even greater incentive for private support of
these institutions in the United States. Charitable gifts of appreciated property
will remain subject to the 30-percent limit. Since we are recommending that
appreciation in such property be removed from the Limit on Tax Preferences and
the Allocation of Deductions rules, as hereinafter explained, we believe that the
retention of the 30-percent limit for such gifts is appropriate. However, in its
present form in the bill, it could have an unintended harsh result in some cases.
A significant portion of the charitable deduction may be denied where the appreciation in the contributed property is nominal. This provision should be changed
so that (a) the appreciation element in charitable gifts of property may not
exceed 30 percent of adjusted gross income, and (b) the basis of the property
would be counted against the additional 20-percent allowance.
In order to limit some of the present tax advantages of gifts of appreciated
property in particular cases, the bill provides that taxpayers making such contributions under certain specified circumstances must either: (a) limit their
deduction to the cost or other basis of the property, or (b) take the larger deduction based on the fair market value of the property and include the appreciation
in income. This treatment is to apply to gifts of property which would give rise
to ordinary income if sold by the taxpayer, gifts to private foundations (other
than an operating foundation) unless the property is channeled to a publicly
supported charity within 1 year, gifts of tangible personal property, and gifts of
future interests of property.
Our recommendation (discussed below) to delete the appreciation element from
the Limit on Tax Preferences and the Allocation of Deductions provisions makes
most of these limitations appropriate even though they go beyond our recommendations on April 22, 1969. However, we recommend that this rule not be
extended to all tangible personal property as provided in the bill. Under other
provisions of the bill collections of papers will produce ordinary income if sold,
EXHIBITS
335
just as are paintings sold by the artist under existing law. As we recommended on
April 22,1969, the bill prohibits deduction of the value of ordinary income property
unless the appreciation is included in ordinary income. But the extension of this
rule to gifts of all v^orks of art, even though not created by the donor, appears
unduly severe. Our finest museums and art galleries are dependent on such gifts,
and their contribution to the good of our society is universally acknowledged. We
see no sufficient reason to distinguish such gifts from gifts of appreciated securities to other charities. The problems of valuation of tangible personal property
have been substantially resolved by changes in the income tax form, by improved
audit programs, and by the creation of a special advisory group to the Commissioner of Internal Revenue on valuation of art objects.^ Moreover, these valuation problems are not eliminated by the rule in the bill since the donor would
still be entitled to deduct the value of the art work against ordinary income even
though the appreciation were treated as capital gain.
The bill provides for repeal of the unlimited charitable deduction, the change
to be phased in over 5 years. This differs somewhat from the Administration's
original recommendation that the unlimited deduction be limited so that the
charitable deduction, when taken together with other itemized deductions, could
not result in reducing the taxpayer's adjusted gross income by more than 80
percent thereof. However, the provision in the bill is also a reasonable solution
and we support it.
The bill restricts the availability of the charitable contribution deduction
where, by the use of a trust, property interests are split between charitable and
noncharitable beneficiaries. On reconsideration, we believe the bill is unduly
stringent in permitting a deduction for the value of a charitable income interest
only where the income is taxable to the grantor under other rules. The donor
should be allowed a deduction for the value of any long term income interest to
charity which is in the form of a guaranteed annuity or a "unitrust." Under the
bill a "unitrust" is a trust in which the income beneficiary is entitled to a return
equal to a fixed percentage of the value of the assets of the trust each year, thus
assuring the income beneficiary a certain return irrespective of the investment
policies of the trust.
We also recommend that the effective date of the new estate tax provisions
governing charitable deductions be deferred so that the new rules will apply
only to persons dying after December 31, 1970. This will provide time for amendments of wills. Moreover, the new estate tax rules should not apply to trusts
created heretofore that cannot be amended.
6. Farm losses (sees. 211,212, 213)
dur studies have demonstrated that large farm losses generally represent
capital expenditures which have been deducted under the liberal cash method
of accounting. The cash method has been allowed to farmers primarily to help
small farmers, but taxpayers with large farm losses are generally not in this
class but are wealthy investors who obtain a tax shelter. The bill requires that
taxpayers maintain an excess deductions account (EDA) for large farm "losses."
On the later sale of farming property, any gain—to the extent it would otherwise
be taxed as a long term capital gain—will be treated as ordinary income to the
extent of the balance in the excess deductions account. The provision would not
apply if the taxpayer used inventories and capitalized items properly chargeable
to a capital account as part of his method of accounting for the farming operation.
In its present form, this provision of the bill applies only to individuals with
nonfarm adjusted gross income in excess of $50,000. Taxpayers with nonfarm
income over $50,000 are permitted to exclude the first $25,000 of their farm losses
each year from the operation of the EDA provisions. In practice, this exclusion
renders the bill ineffective.
The Administration recommended this EDA treatment on April 22, 1969, but
at that time proposed that only $5,000 of losses in any year be excluded. We believe the higher exclusions in the bill should be modified. We now recommend
that the EDA rules apply to any taxpayer with nonfarm adjusted gross income
in excess of $25,000 whose farm losses exceed $15,000. In such a case, all of the
losses should be included in the excess deductions account. These changes will
not affect the small farmer or the person with modest nonfarm income.
1 See exhibit 62.
336
1970 REPORT OF THE SECRETARY OF THE TREASURY
We estimate that as so modified the EDA rule would apply to only 9,300 individuals, whose farm losses would aggregate $418 million, an average farm loss
per individual of $44,700. The effect of this particular provision would not be to
disallow the loss, but only to require that future gains from the sale of cattle,
race horses, orange groves, etc., raised on the farm could not be reported as
capital gains until they had offset these losses previously deducted from ordinary
income.
The bill also provides new rules to deal with the problem of hobby losses.
Under the bill, losses will be disallowed if the activity is not carried on with a
reasonable expectation of profit. The taxpayer will be presumed not to have a
reasonable expectation of profit if the losses from the activity exceed $25,000
in three out of any five consecutive years. The Administration urges adoption
of this proposal as an effective means of dealing with cases where the tax laws
are being used to subsidize the hobbies of wealthy taxpayers. However, in order
to make it clear that the provision is not intended to apply to legitimate business
operations, it is recommended that the term "profit" be specifically defined to
include not only immediate economic profit but also any reasonably anticipated
long term increase in the value of property.
7. Interest (sec. 221)
Under the bill, the deduction for interest in excess of $25,000 on indebtedness
incurred to purchase or carry investment assets is allowed only to the extent
that the interest is not in excess of investment income plus long term capital
gains. This provision is designed to deal with an abuse resulting from the opportunity to deduct an unlimited amount of interest expense, making it possible to
acquire grovrth potential property with borrowed funds and deduct the interest
against ordinary income with the anticipated gain on disposition being subject
to the capital gains rate.
However, the bill in fact fails to correct many of the problems in this area.
By permitting the interest deduction to the extent of investment income, it
discriminates against the taxpayer who has only earned income out of which to
pay his interest expense. The abuse is the same in either case, though under
the bill the individual with earned income, but not a person receiving dividends
or other investment income, might lose his interest deduction.
We have been studying many alternatives to the approach of the bill. The
only truly equitable solution would require tracing the interest expense to the
particular investment for which the funds were borrowed. We are inclined
to believe, however, that an attempt to trace investment interest to the related
investment would be administratively unworkable. Other alternatives do not
appear to correct any substantial number of the actual abuses and uniformly
add extraordinary complexity.
In light of these considerations, the Administration recommends that the
interest provision of the bill be deleted, although we shall continue to explore
the problem in an effort to develop a workable solution. The Allocation of
Deductions provision (referred to below) will prevent individuals from offsetting all of their interest deductions against ordinary income when they have
tax preferences, such as capital gains, in the current year, and will serve as a
major limitation on the use of interest expense as a tax shelter.
8. Moving expenses (sec. 231)
The bill extends the deduction of employee moving expenses to expenses of
house hunting trips, temporary living quarters at the new location, and the sale
or purchase of a house. Reasonable limitations are provided. The bill adopts
the Administration's recommendations in this regard, except that the distance
requirement of existing law is increased from 20 miles to 50 miles. The Administration recommends that the 20-mile test be restored.
9. Limit on tax preferences and allocation of deductions (sees. 301,302)
Present law imposes no limit on.the amount of economic income which an
individual may exclude from tax through preferential treatment contained in
various provisions of the Code. These preferences were intended as incentives
to investment, but they contain no adequate limits on their use. In recent years,
many high bracket individual taxpayers have used these preferences alone or
EXHIBITS
337
in combination so as to pay little or no tax for the support of the Federal
Government.
Neither does present law prevent a taxpayer from charging all personal deductions against taxable income even though the presence of substantial amounts
of preferential income makes it apparent that, from an economic standpoint, such
nontaxable income in fact bears its share of the burden of such personal
expenditures.
The bill seeks to correct these inequities through the Limit on Tax Preferences
and the Allocation of Deductions provisions. The Limit on Tax Preferences
places an overall limit on the combined use of preferences; the Allocation of
Deductions rule requires that a proper portion of itemized deductions be charged
against income sheltered by tax preferences.
The House bill goes beyond the Administration's recommendations and provides that tax-exempt interest on State and local bonds is included as a
preference item for the Limit on Tax Preferences provision. The Administration
opposes this inclusion for the same reasons we gave on April 22: there are
constitutional doubts as to the inclusion of tax-exempt interest and its inclusion
will adversely affect the ability of hard-pressed State and local governments to
market their bonds. On the other hand, the House bill provides that tax-exempt
interest will be treated as a preference for the Allocation of Deductions rule
only to the extent such interest is paid on future issues and even then only with
a 10-year phase-in rule. In April, we recommended that all tax-exempt interest be
included without such a phase-in rule, and we renew that recommendation at
this time.
Under the bill, the excess of percentage depletion over cost and the intangible
drilling cost deduction are not treated as preference items under the Limit on
Tax Preferences (LTP) provision, although they are included as preferences
under the Allocation of Deductions rule. Since making our original tax reform
proposals in April, in which both percentage depletion and intangible drilling
costs were included in the Limit on Tax Preferences as well as the Allocation
of Deductions rule, we have studied carefully the operation of these provisions.
We have concluded that some changes in our original proposals are warranted.
First, in view of the substantial reduction in percentage depletion contained
in the bill, the inclusion of the intangible drilling cost deduction as a tax preference item could work an unintended hardship in the case of an individual whose
principal business is exploration for oil and gas. Accordingly, the Administration
proposes that the intangible drilling cost deduction be excluded from the Limit on
Tax Preferences provision, but not the Allocation of Deductions provision, if
at least 60 percent of the taxpayer's gross income is from the sale of oil and gas.
We also recommend, however, as a complement to this rule, that a recapture rule
be added to the Code treating as ordinary income any gain on sale or transfer
of a well, including a transfer to a controlled corporation, to the extent of
intangible drilling costs previously deducted.
For all other purposes, however, both percentage depletion and intangible
drilling costs should be included in the Limit on Tax Preferences as well as the
Allocation of Deductions provision. Thus, an investor who is not primarily engaged in the oil business will be subject to this broader LTP rule.
In our judgment the provisions in this form will apply more reasonably to
persons whose principal business is the discovery of new oil and gas deposits and
to whom intangible drilling costs are more in the nature of an annual expense.
They should avoid creating any serious disincentive to drilling .However, even in
this form the Limit on Tax Preferences should insure that substantially all taxpayers, including those in the oil business, will i)ay some reasonable amount of
tax each year.
High bracket taxpayers will no longer be able to avoid any substantial Federal
income tax liability each year by regularly investing their funds in successful
wells. (Dry hole costs, of course, will not constitute preferences for any purpose.)
The provisions as recommended are essential from the standpoint of fairness
in view of the various other preferences which have been included in the LTP.
Second, it appears that the inclusion of gifts of appreciated property to
charity as a tax preference item will reduce the benefit of the contribution and
thus unduly restrict public support of worthwhile educational and other public
charitable institutions. For this reason the Administration proposes that this
item be deleted from the Limit on Tax Preferences and Allocation of Deductions
provisions.
338
1970 REPORT OF THE SECRETARY OF THE TREASURY
Third, further study of the excessive use of tax preferences by some taxpayers
has led to the conclusion that three additional preferences should be added both
to the Limit on Tax Preferences and Allocation of Deductions provisions. Accelerated depreciation in excess of straight line depreciation taken on equipment
and other personal property by a lessor of the property under a net lease arrangement should be included. Accelerated depreciation on real property is
already treated as a preference under the biU, and accelerated depreciation on
leased personal property offers an equivalent shelter to reduce taxes on other
income. In addition, the excess of interest, taxes, and rent over receipts (if
any) from unimproved real property during the period of construction of improvements should be included as a preference. These amounts are part of the
economic cost of the improvement and when allowed as a deduction result in
excessive tax benefits to some high-bracket investors. Finally, rapid amortization of rehabilitation expenditures for low cost housing (provided elsewhere in
the bill) should be included as a preference. This new provision could easily
be used to such an extent as to shelter all of the taxpayer's income unless some
limit is placed on its use.
The bill in certain instances allows a basis adjustment in the amoTint of disallowed preferences with respect to property when the property is later sold.
A similar adjustment should be allowed in connection with amounts disallowed
under the Allocation of Deductions proposal to the extent ordinary income is
realized on a later sale of the property.
10. Income averaging (see. 311)
The bill substantially liberalizes the income averaging provisions. The eligibility requirement is reduced from 133i/^ percent to 120 percent of base period
income, and averaging is permitted for capital gains, income from gifts and
bequests, and wagering income. Removal of these exceptions from present law
adds simplification, while achieving greater equity. The Administration strongly
supports this provision.
11. Restricted property (sec. 321)
During the past few years there has been a rapid growth in the number of
so-called restricted stock plans. Under these plans, an employee receives stock
or other property subject to certain restrictions, such as a prohibition on sale
for a specified period. Under existing Treasury regulations, a tax is not imposed
until the restrictions expire. The compensation deemed to be realized at that
time is based in most cases upon the lower value of the property at the time of
its previous receipt. This combination of deferral and capital gain treatment
of appreciation during the deferral period with respect to property received as
compensation represents an unwarranted and unintended benefit.
The Administration's recommendation is adopted in the bill. In general, the
bill provides for the imposition of tax when the employee's rights to the property
become nonforfeitable even if the property is subject to restrictions. The tax
is imposed on the then current value of the property determined without regard
to these restrictions. Similar treatment is proposed for property transferred in
trust. The Administration urges adoption of this provision.
12. Deferred compensation (see. 331)
This bill provides a minimum tax on deferred compensation payments exceeding $10,000. This minimum tax would be based, in effect, on the individual's
rate of tax in the years in which such payments are deemed to have been earned.
From a conceptual, standpoint, this provision modifies in certain respects
both the cash method of accounting and the annual accounting period. The annual accounting concept underlies our entire tax system. While the cash method
of accounting may not lead to perfect results in some cases, the imperfections
extend to many areas other than deferred compensation. We believe that with
further study of this problem in the context of the tax treatment of all deferred compensation, including amounts paid under both qualified pension and
profit sharing plans and nonqualified plans, a better solution in principle can
be developed.
In addition, there are a number of problems in the practical operation.of this
provision which the Treasury Department has not solved satisfactorily. For
example, we have been unable to date to develop a satisfactory definition of the
term "deferred compensation." Further, while the bill authorizes Treasury reg-
EXHIBITS
339
ulations to determine the year in which deferred compensation is deemed to
have been "earned," we are concerned about the difficulty of developing satisfactory and workable tests for this purpose.
Deferred compensation is only one aspect of the overall employee benefits
problem. Under present law the form of the business organization materially
affects the tax treatment of the contributions to retirement funds. Thus many
partnerships have been induced to convert into essentially artificial corporations. Recent^ court decisions invalidating regulations defining "professional
corporations,'' as well as the present incongruity in the treatment of deferred
compensation plans of "small business (Subchapter S) corporations" (treated
in the bill), make it essential that the Treasury Department develop comprehensive recommendations dealing with the tax consequences of all deferred
compensation arrangements.
We have undertaken a comprehensive study of both qualified and nonqualified plans. Our study will be completed and will result in recommendations to
the Congress without extended delay. For these reasons, and because of the
basic difficulties in these provisions of the bill, the Administration recommends
that this provision be deleted from the present bill.
13. Accumulation trusts (sees. 341,342)
This provision of the bill adopts the Administration's recommendation to
limit the present tax advantage inherent in the use of trusts which accumulate
income at low rates. It provides an unlimited "throwback'* rule which imposes
an additional tax on the beneficiary at the time a trust distributes accumulated
income to him. This provision would apply to all future distributions of trust
income, including that accumulated in years commencing with 1964.
On further study, we have become concerned as to the retroactive effect of
this provision. The Administration recommends that present law be continued
for accumulations of income in taxable years beginning before April 22, 1969,
and that the unlimited throwback provided by the bill apply only to accumulations made in taxable years beginning after that date.
14. Multiple corporations (sec. 401)
The bill adopts the Administration's recommendation to limit a controlled
group of corporations to a single $25,000 surtax exemption, one $100,000 accumulated earnings credit, and one $25,000 limitation on the small business
deduction of life insurance companies. These limitations would be phased in
over an 8-year transition period beginning on January 1, 1969. This is a more
liberal transition period than that recommended by the Administration.
The bill also contains two special 8-year transitional rules for corporations
which are affected by this provision. There is a gradual increase of the dividends
received deduction from 85 percent to 100 percent for transition period dividends. The second rule operates with respect to a controlled group filing a
consolidated return and permits the deduction of a gradually increasing portion
of certain preconsolidation net operating losses arising in the transition period.
These special transition rules introduce extraordinary complexity, and we
believe are not justified in view of the phase-in rules already provided for the
change. Accordingly, we recommend that these additional special transitional
rules be eliminated. Also, while we do not oppose the 8-year phase-in period,
a 5-year phase-in period as we originally recommended seems adequate to do
equity and would reduce the administrative complexity of the lengthy transition
involved.
15. Corporate securities (sec. 411)
The bill seeks to curb tax benefits obtained by conglomerates and other acquisition minded companies by the substitution of an interest deduction for nondeductible dividends. This may occur where, for example, convertible debentures
or other debt instruments having equity characteristics are used to effect a
merger or acquisition. Under the bill, interest in excess of $5 million incurred
for acquisition purposes would be disallowed where (i) the indebtedness is convertible or has warrants attached, (ii) the indebtedness is subordinated, and
(iii) either the debt to equity ratio of the acquiring corporation (including
affiliated corporations) exceeds 2:1, or the projected annual earnings of the
acquiring corporation are less than three times the annual interest expense of
the company.
340
1970 REPORT OF THE SECRETARY OF THE TREASURY
Although the Treasury Department is presently seeking to develop regulations
w'hich will aid in distinguishing debt from equity in all contexts, the Adminisstration supports these particular statutory rules designed to deal specifically
with the merger situation.
In addition, the Administration supports those provisions of the bill which
adopt the Administration's prior recommendations. These include some (but not
all) of the provisions of the bill dealing with installment sale treatment under
Section 453 and the provisions of the bill dealing with corporate securities issued
at a discount and repurchase by a corporation of its convertible securities.
16. Stock dividends (sec. 421)
The distribution of common stock dividends on common stock does not normally represent a taxable event to the shareholder. The shareholder simply receives
additional shares to represent the same unchanged equity interest in the corporation. The Internal Revenue Code does, however, provide for taxing a distribution of stock dividends where the shareholder has an election to receive either
cash or stock. Many new sophisticated types of stock have been developed in
recent years to avoid the impact of this rule, such as increasing and decreasing
conversion ratios.
Present law does not adequately distinguish between taxable and nontaxable
stock dividends and other corporate adjustments which have the effect of a
stock dividend. A general provision is necessary to tax all stock dividends which
change the proportionate interest of the shareholder in the corporation where
such change is related to a cash dividend on other outstanding shares. Without
such a provision substantial revenue losses resulting from circumvention of
existing law are anticipated.
The bill substantially adopts the recommendation of the Administration, and
we continue to support its enactment. The bill makes it clear that an increase in
a shareholder's interest in a corporation, when related to a taxable dividend
paid to other shareholders, is to be taxed. In addition to setting out a clear
standard for the application of the statute, the section provides needed flexibility
for its administration by regulation.
17. Foreign tax credit (sees. 431,432)
The bill deals with two separate circumstances in which the foreign tax credit
is extended under existing law beyond its basic purpose of preventing double
taxation of the same income.
The first type of case involves taxpayers, particularly U.S. mineral companies
with foreign operations, who choose the "per-country" limitation on the credit
(as opposed to the "overall" limitation) in order to deduct losses incurred in a
particular foreign country, such 'as those arising from the favorable rules
applicable with respect to oil drilling expenses, against U.S. source income. When
operations in that country become profitable, they are able to credit foreign taxes
on the income against the U.S. tax even though there has been no net income over
the span of years from that country and there is no net U.S. tax against which
the credit should be applied. The taxpayer obtains a double benefit: in the year
of the loss, he deducts the loss against U.S. source income, and in a subsequent
profitable year, he claims the full foreign tax credit for the income from that
country.
The bill deals with this problem by requiring a carryover of the losses in applying the limitation on the credit in subsequent years where the per-country limitation was used in the loss year. We support this provision and recommend that it
be extended to apply also where there has been an overall foreign loss under the
overall limitation.
The bill also deals with the problem of foreign taxes paid on mineral income in
excess of U.S. taxes paid on such income. The bill provides for the separate
computation of the foreign tax credit limitation with respect to mineral income in
those cases where the foreign country holds mineral rights to the property pr
other conditions suggest that the high excess foreign tax may constitute a disguised royalty payment. The separate computation prevents any excess credit
with respect to such income from being applied to shelter other foreign income
which may be subject to foreign tax at an effeotive rate less than the U.S. effective rate on such income.
The Administration supports, in part, the effect of this second provision. How-
EXHIBITS
341
ever, while we recognize the hidden royalty problem at which the House bill is
directed, we do not feel that the bill provides an equitable solution to that
problem. On further examination of the tax and royalty structure applicable to
the international minerals industry, we do not feel that it is proper to characterize all foreign taxes on mineral income in excess of U.S. taxes on such
income as disguised royalties. It is impossible to ascertain the extent to which
income taxes in any particular country are a substitute for royalties, and in
many cases the foreign country receives royalty payments which are even greater
than royalties customarily paid in the United States. Also, foreign countries
frequently impose income tax on nonmineral income, as well as on mineral
income, at a rate in excess of the U.S. rate.
If, then, this separate limitation in \the bill regarding miaeral income is not
justified on the ground that any foreign tax in excess of the effective U.S. tax
on mineral income is a royalty, it works unfairly for mineral companies as
compared to all other U.S. taxpayers with foreign operations. It completely
denies mineral companies the opportunity, available to other taxpayers, to average the excess of foreign tax over U.S. tax on mineral income against any excess
of U.S. tax over foreign tax on their other foreign income. This result occurs
even though the foreign tax on the mineral income is at a reasonable rate judged
by world standards and even though such averaging is precisely the purpose of
the overall limitation.
In our view, the special problem connected with foreign mineral income which
can and should be dealt with arises from the lower effective U.S. rate on mine^l
production resulting from our percentage depletion incentive. While the bill
denies percentage depletion with respect to foreign oil and gas production, we
are recommending (as hereinafter described) that this provision be deleted from
the bill. While the overall limitation normally allows high foreign itax rates to be
averaged with low foreign tax rates, in our judgment this is inappropriate in
the case of mineral production income where the excess credits arise because
the foreign country does not match our percentage depletion allowance.
We therefore recommend that excess foreign tax credits which result from the
allowance of percentage depletion by the United States should not be available
against other foreign income. Thus, to the extent the foreign tax in a particular
foreign country exceeds the U.S. tax on the same foreign mineral income, but is
less than the U.S. tax on such income computed without percentage depletion
being allowed, the excess credits could not be applied against other foreign
income. We believe this rule will effectively deal with the problem of percentage
depletion on foreign mineral production. A similar rule now applies in the Code
to Western Hemisphere Trade Corporations, which are taxed at an effective rate
approximately 14 percentage points less than the usual corporate rate.
We also recognize that, even aside from not allowing percentage depletion,
foreign tax rates on mineral income sometimes exceed the top rates generally
applicable by world 'tax standards to other income.^ This also, of course, results
in unusually high excess credits to be applied against other foreign income. This
problem could be resolved on the basis that typically the top rate on distributed
income by world standards does not exceed 60 percent. Thus, it could be provided
that to the extent the foreign tax exceeded 60 percent of the foreign mineral income from a particular country determined by U.S. standards without a percentage depletion allowance (this allowance having been dealt with by the
proposal previously described), excess credits could not be used against other
income. This approach could be justified on the ground that taxes in excess of
60 percent represent a substitute for royalties. However, as stated above, not
all high foreign rates can be properly characterized as royalty substitutes, and it
is impossible to establish to what extent such characterization is proper. Since
aside from percentage depletion it is difficult to justify dealing with high foreign
taxes in the case of foreign mineral production income but not high foreign
taxes imposed on other types of income, we believe it preferable to deal with
high foreign tax rates in a general context. We plan to present recommendations
to Congress on this subject as a part of comprehensive proposals relating to the
U.S. taxation of foreign source income which we are presently developing.
l l n some oases the foreign country achieves high effective tax rates by requiring the
taxpayer to compute taxable income on the basis of "posited prices" which are substantially in excess of arm's length prices and thus artificially inflate taxable income for their
tax purposes.
342
1970 REPORT OF THE SECRETARY OF THE TREASURY
Consideration of the foreign tax credit as applied to mineral income points up
the need for clarification of the tax status of the continental shelf. There is no
general provision to this effect in the present bill. The continental shelf areas of
the world are being developed at an accelerated pace, and existing uncertainties
as to the tax consequences could discourage development of natural resources or
result in unintended tax preferences to taxpayers with continental shelf operations. We recommend ithat the tax status of these areas be clarified by: (1)
amending the definition of "United States" in the Code, consistent with our
rights and obligations under international law, to include the continental shelf
of the United States with respect to the exploration for natural resources; and
(2) defining the term "foreign country" as used in the Code to include the continental shelf which pertains to the foreign country concerned.
18. Financial institutions (sees. 441,442, and 443)
Commercial banks will be required under the bill to compute their reserves
for bad debts on the basis of actual bad debt experience; they will no longer
be entitled to the special rule under existing law granting them an absolute reserve of 2.4 percent of outstanding uninsured loans. The special bad debt deduction now allowed mutual thrift institutions is to be substantially reduced under
the bill over a 10-year transitional period; their special dediiction based on 3 percent of increases in real estate loans would be repealed, and their alternative
deduction of 60 percent of taxable income would be reduced to 30 percent. The
allowance of this 30 percent deduction is tied to a sliding scale permitting the
full deduction to a savings and loan institution only if at least 82 percent of
its assets is invested in residential real estate loans and certain other qualifying
items. In the case of mutual savings banks, the required level would be 72 percent.
To furnish protection against unusually large losses, all financial institutions
would be permitted to carry back net operating losses for 10 years (instead of 3
years) and to carry forward net operating losses for 5 years.
The bill also provides that gain on disposition of debt securities of financial
institutions will be treated as ordinary gain rather than capital gain. Net losses
on such securities are now allowed as ordinary losses, and the bill seeks to provide parallel treatment for net gains.
The Administration endorses the concept that the bad debt deduction should
be based Ori actual loss experience, but we also support the allowance of a special
deduction to encourage investment by financial institutions in residential real
estate mortgages. Investment by these institutions in residential mortgages is a
vital policy goal of the Administration and traditionally has been encouraged
through the use of tax incentives. We believe that this goal will be more effectively accomplished by extending the same incentive to all banking institutions,
not just the mutual thrift institutions.
The investment standards applied by existing law and the bill to savings and
loan institutions and mutual savings banks serve this goal imperfectly and limit
free and ^open competition between these institutions and commercial banks.
Conversely, those commercial banks which have traditionally invested in home
mortgage financing will be prejudiced by the provisions of the bill which deny
their present special deduction but retain a special deduction for the other two
types of institutions with which they compete.
Accordingly, the Administration recommends that a special deduction, not tied
to bad dept reserves, be provided for banking institutions as an incentive for
investment in residential real property loans, student loans, and certain other
loans which are made pursuant to national policy objectives. This incentive
would be provided by a special deduction equal to a specified percentage of
gross interest income from such residential real property and other loans, except
that the deduction could not serve in (any year to reduce taxable income to an
amount less than 60 percent of taxable income, adjusted (for purpose of this
calculation only) to include the full amount of dividend income and tax exempt
interest. The latter limitation will insure that the incentive could not be used
to reduce the effective rate of tax on these institutions below an equitable level.
We suggest that the special deduction be 5 percent of gross interest income
from such loans, subject to the limitation stated above.
To prevent undue hardship on mutual savings banks and savings and loan
institutions and to minimize the possible adverse effect of these proposed changes
on the housing market, a 5-year transition rule should be provided to phase in
gradually the increased tax burden on these institutions.
EXHIBITS
343
19. Foreign bank deposits (sec. 444)
The bill extends from December 31, 1972, to December 31, 1975, the expiration date of the rule of existing law relieving from Federal income tax certain
interest paid on deposits by U.S. banks to nonresident aliens and foreign corporations. This rule applies where the interest constitutes income not effectively
connected with the alien's or corporation's trade or business in the United
States. This extension would also apply to the existing relief from Federal
estate tax for such deposits by nonresident aliens with U.S. banks.
Because of balance-of-payments considerations, the Administration recommended in April that these relief provisions not be permitted to expire at the
end of 1972 but be continued indefinitely. We would prefer complete removal of
the expiration date so long as the balance-of-payments problem exists, but the
provision of the House bill extending the provisions through 1975 seems adequate for the time being.
Under current law, interest paid by U.S. branches of foreign banks to nonresident aliens or foreign corporations ordinarily is not subject to U.S. income
tax whether or not the deposit is effectively connected with the depositor's U.S.
trade or business. In the case of U.S. banks, the interest income is free of tax
only if the deposit is not so connected. While the Foreign Investors Tax Act of
1966 recognized that U.S. business-connected deposits in U.S. branches of foreign
banks should be subject to U.S. tax to the same extent as if the deposits were
made in a U.S. bank, that Act provided that such deposits in U.S. branches of
foreign banks would not become taxable until January 1, 1973. We see no reason
for any delay in achieving parallel treatment, and therefore recommend that interest paid by U.S. branches of foreign banks be treated the same as interest paid
by U.S. banks effective for the calendar year following enactment of the bill. A
similar problem arises with respect to deposits in U.S. branches of foreign
banks by nonresident aliens for purposes of the estate tax liability, and we
recommend similar action.
20. Regulated utilities (see. 451)
Regulated public utility companies in general account for depreciation on a
straight-line basis for purposes of the ratemaking process. Where accelerated
depreciation is taken for tax purposes, the actual Federal tax paid is lower than
the tax liability which would result from the straight-line depreciation taken
for ratemaking purposes. Some regulatory commissions permit taxpayers to
"normalize" their tax for ratemaking purposes; that is, they treat as a cost the
tax which would have been imposed if straight-line depreciation had been used
and treat the difference between this amount and the actual tax as a reserve for
future taxes. In other situations the regulatory commissions require companies
to take into account in determining the current cost of their operations only the
actual tax paid, with the result that the tax reduction due to accelerated depreciation is "fiowed through" to the customer as a reduction in price, thus
further reducing profits and income tax revenues.
Many commissions are presently switching from normalization to flow through,
and others are even imputing the use of accelerated depreciation where the
utility in fact is using straight-line depreciation for tax purposes. This trend will
force utilities to switch to accelerated depreciation for tax purposes, and the
"fiow through" consequences will have a double effect in reducing tax revenues,
since it results in a reduction iri utility gross revenues as well.
Under the bill gas and oil pipeline, telephone, gas and electric utility companies, and water and sewage disposal companies would be allowed accelerated
depreciation only if they "normalize" the tax saving for ratemaking purposes.
Thus they could not be required by regulatory agencies to "flow through" their
tax savings to their consumers at the expense of Federal revenues. An exception would be provided for utilities which are presently using "flow through."
Where straight-line depreciation is being taken with respect to property constructed or placed in service before December 31, 1969, no accelerated method
will be permitted.
We support this provision of the bill. It would generally "freeze" the present
situation, and prevent a major reveriue loss estimated as high as $1.5 billion
annually, which would result if the present trend by regulatory commissions
toward "flow through" were allowed to continue.
There is one transitional problem which should be corrected. In determining
whether a utility will be allowed to use accelerated depreciation and "flow
344
1970 REPORT OF THE SECRETARY OF THE TREASURY
through," the bill looks to the taxpayer's latest return filed prior to July 22, 1969.
We recommend that a utility be granted this right if, as of July 22, 1969, the
utility had established by book entries or certain other means that it was
adopting accelerated depreciation and "fiow through."
21. Effect of accelerated depreciation on corporate dividends (sec. 452)
Under present law, a dividend is a distribution out of earnings and profits. A
distribution exceeding the amount of earnings and profits is not taxed as a dividend but treated as a return of capital. Through the use of accelerated depreciation many companies, particularly in the utility and real estate fields, have
been able to distribute substantial amounts to shareholders without current tax
to the shareholders.
The bill adopts our recommendation made in April to require companies to
compute earnings and profits by using only the amount of depreciation allowable
under the straight-line method. The Administration supports this provision.
22. Natural resources (sec. 501)
The bill puts an end to the tax benefits arising from carved out production
payments and ABC transactions by treating these as loan transactions, a i*esult
which is in accord with their true nature. The bill also provides recapture rules
for all hard mineral exploration costs. The Administration endorses these
provisions.
The bill reduces the percentage depletion allowance for oil and gas from
2 7 ^ percent to 20 percent and makes similar reductions for other minerals
except copper, gold, silver, iron ore, and oil shale. While the Administration did
not recommend these reductions, we do not oppose the decision of the House to
increase the share of the national tax burden of the mineral industry.
However, the bill also extends the cutoff point for determining percentage
depletion on oil shale to include certain nonmining processes. We oppose this
provision because it would approximately double the effective depletion allowance on oil shale and would constitute an important breach in the principle
that percentage depletion is to be computed on gross income from mining, not
manufacturing to any extent. As stated, the bill makes no reduction in the depletion rate for oil shale while reducing nearly all other rates. This would seem
to provide a special incentive. If any additional incentive is to be provided, it
should be granted in terms of the research and development objective, or at
most in terms of the rate, not the cutoff point, or by some other means.
Finally, the bill eliminates percentage depletion with respect to foreign oil
and gas production. Our analysis of this provision indicates, in the light of our
foreign tax credit provisions, that after a brief period it will probably result in
foreign countries increasing their effective tax rates on income from oil and gas
production to "sponge up" any additional tax revenue otherwise accruing to the
United States. Thus the denial of foreign depletion will increase the effective
U.S. rate of tax on such income, which tax the foreign governments will then
offset by increasing their rates. The end result will be that the U.S. taxpayer
will pay additional tax to those countries, but no additional tax to the United
States.
For these reasons, the elimination of percentage depletion on foreign deposits
of oil and gas is unlikely to increase U.S. revenues significantly, and will merely
increase the burden of foreign taxes on U.S. businesses. We recommend, therefore,
that this provision be deleted from the bill. Our proposal with respect to the
foreign tax credit, previously described, adequately deals with percentage depletion on foreign deposits by preventing the depletion allowance on foreign mineral
production from being used to reduce U.S. tax on other income and will not
induce the foreign country to raise its tax on the American company.
23. Capital gains and losses of individuals (sees. 511-516)
The bill repeals the alternative capital gains tax rate of 25 percent and increases the holding period for long term capital gains from 6 months to 12
months. It also provides that net long term capital losses are reduced by 50
percent before being available as an offset against ordinary income. The bill
narrows the definition of a capital asset so that the sale of letters, papers, or
memoranda by a person whose efforts created them, or by a person for whom
they were produced, will give rise to ordinary income. The bill provides that an
EXHIBITS
345
employer's contribution to a pension ^lan, when paid to the employee as part of
a lump sum distribution, is taxed as ordinary income.
Additional changes made by the bill include a provision that life interests received by gift, bequest or inheritance, are not accorded a tax basis when sold.
Under the bill, all casualty gains and losses on capital assets and section 1231
property are consolidated for the purposes of determining whether they give rise
to an ordinary loss or to a gain which is consolidated with other section 1231
gains and losses. Finally, the bill provides that transfers of franchises will not
give rise to capital gain treatment if the transferor retains any significant rights
in connection with the transfer.
We are opposed to the complete elimination of the alternative tax and to the
extension of the holding period. These changes in our judgment impose too great
a burden on capital investment. The effect of the bill would be to remove a large
measure of the incentive for private capital to engage in new and expanded business ventures. Present capital investments would tend to be frozen and the economy as a whole would suffer. We believe that the 6 months' holding period should
be maintained and that, in general, the alternative tax should be retained.
However, the 25 percent ceiling rate on long term capital gains has been used
regularly by some wealthy persons who at the same time have minimized their
ordinary income. By this means they have reduced their overall effective income
tax rate well below that of other persons of comparable or lesser ability to pay.
We recommend that a maximum limit be placed on the extent to which the 25
percent ceiling rate can be used in relation to the amount of ordinary income.
The inclusion of the omitted one-half of long term capital gains in the list of
preferences contained in the Limit on Tax Preferences (LTP) generally has no
operative effect because the purpose of that provision is only to insure that preferences do not exceed one-half of a person's income determined without the preferences. Thus, for example, when a long term capital gain of $50,000 is realized,
50 percent or $25,000 is included as a preference in the LTP calculation, but it has
no effect on that calculation since LTP operates only to limit tax preferences to
50 percent of income. However, if a taxpayer has $1 million of capital gains which
are taxed at 25 percent instead of the 65 percent top rate applicable to ordinary
income under the bill, his actual preference is 40/65 of this amount, or about
61.5 percent, instead of the 50 percent preference permitted by LTP. Thus, the
actual preference due to the 25 percent alternative capital gains tax rate, which
may be well above the 50 percent nominally excluded, should appropriately be refiected in LTP.
As a means of simplifying the calculation that would be required under LTP
but at the same time achieving a comparable result, the Administration proposes
that the 25-percent alternative capital gain tax be limited in its use by any taxpayer to long term capital gains which do not exceed the higher of the two following amounts:
1. $140,000 in the case of a married person and $85,(X)0 in the case of a single
person if their other tax preferences do not exceed $10,000 ; or
2. Four times the taxpayer's taxable income (other than long term capital
gains) if his other preferences do not exceed $10,000. (If his other preferences do
exceed $10,000, the allowable amount would be four times his taxable income
adjusted under the LTP and Allocation of Deductions rules, less the amount of
those other preferences.)
As an illustration, a married person with tax preferences of less than $10,000
could always realize at least $140,000 of long term capital gains in any year and
be assured of availability of the 25 percent alternative rate. Moreover, if he has
$60,000 of taxable ordinary income from salary, dividends, etc., he could have
$240,000 of capital gains at the 25 percent rate. However, beyond that amount he
would lose the benefit of the alternative tax computation; in effect, to the extent
his long term capital gains exceed such amount, 50 percent of such amount would
be added to his ordinary income and taxed at effective rates ranging from 25
percent up to 32.5 percent (one-half of the regular rates).
To prevent undue hardship arising from occasional realization of a large capital
gain, the taxpayer would be permitted to carry over the unused portion of his
limit on the alternative tax computation for any taxable year to each of the five
succeeding years. This will achieve a fair averaging result.
The result of this rule will be to insure that a taxpayer who consistently realizes
large capital gains in relation to his ordinary income will not be able to use the
346
1970 REPORT OF THE SECRETARY OF THE TREASURY
25-percent ceiling tax to excess so as constantly to reduce his total effective tax
rate.
In all other respects, we support the capital gain and loss provisions of the bill.
24. Capital gains rates for corporations (sec. 461)
The alternative capital gains tax on corporations is increased from 25 percent
to 30 percent. The Administration supports this provision. Consistent with the rule
we recommend for individuals, an amount up to $50,000 of capital gains could
continue to be subject to the 25 percent rate, subject to the multiple corporation
provisions.
25. Real estate (sec 521)
The bill would limit accelerated depreciation on new real estate construction
(other than housing) to 150 percent declining balance depreciation. Two hundred
percent declining balance and sum-of-the-years digits depreciation methods would
continue to be available for new housing starts only. The bill would deny accelerated depreciation to real estate purchased from prior owners, but it provides for
a 5-year writeoff of capital costs incurred in the rehabilitation of housing made
available for persons of low and moderate income. The bill would amend the present recapture provisions of the Code to deny long term capital gain treatment on
the sale of real estate to the extent of all depreciation claimed in excess of straight
line, eliminating the 10-year phaseout of the recapture provisions under present
law.
We believie these provisions represent a major advance in the tax treatment of
real estate and are consistent with the national housing objectives. We urge their
approval. We recommend, however, that the special incentive for housing should
be restricted to that constructed in the United States and its possessions. Moreover, we are concerned with the continued heavy reliance upon tax incentives as
a means of achi^ving our national housing goals, and believe that consideration
should be given in the near future to other additional methods of doing so.
26. Cooperatives (see. 531)
Under present law, cooperative organizations are permitted to reduce their
taxable income by the amount of patronage dividends distributed to members if
20 percent of the patronage allocation is paid to the patron in cash. There is no
requirement for redemption of the remaining amount in cash. The bill requires
patronage dividends to be paid in cash over a period of no more than 15 years. It
also requires that an additional 30 percent of the amount of current dividends be
paid to patrons either with respect to the current allocation or in redemption
of prior allocations. This additional 30-percent requirement is phased in over a
10-year period.
The additional 30-percent requirement is complex and creates serious administrative problems. Since the 15-year requirement assures that cooi)eratives will
make significant current payments, we recommend that the additional 30 percent
payout rule be eliminated.
27. Small business corporations—Subchapter S (sec 541)
The bill provides limitations similar to those applicable to partnerships with
respect to contributions to retirement plans for individuals who are significant
shareholders of Subchapter S small business corporations. The bill adopts only
this one element of our comprehensive recommendations in April dealing with
the tax treatment of small business corporations. Our recommendations would
have made the tax rules applicable to Subchapter S corporations simpler and
easier to satisfy by conforming them more closely to the partnership rules.
These changes, worked out through extended discussions with the members
of a committee of the American Bar Association, would also have eliminated
several unintended abuses in the Subchapter S provisions.
We recognize that the constraints of time made it impossible for the House
to deal with the entire Subchapter S proposal, but we do not feel that additional
limitations should be placed on the use of Subchapter S without making the
liberalizing changes proposed. It is also clear, as I noted earlier, that treatment
of deferred compensation and qualified pension and profit-sharing plans needs
overall revision. Accordingly, we recommend that this provision be deleted from
347
EXHIBITS
TABLE III.—Tax under present law and tax change under H.R. 13270 ond the
Treasury proposals before the Senate Finance Committee
Present
law tax
Adjusted gross
Income class
[In thousands]
Oto 3
3to6......
6to7
7 to 10
10 to 16
15to20
20 to 50
60 to 100.
100 and over
Change in
H.R. 13270
tax
Treasury
change
before
Senate
Finance
Committee
$1,169
3,320
6,691
11,792
18,494
9,184
13,988
6,669
7,686
-$661
-448
-423
-794
-1,166
-611
-781
-308
+246
77.884
Total
[In miUions]
-$766
-1,025
-960
-1,276
-1,798
-699
-827
-306
+363
-7,293
Percent change
H.R. 13270
from present law
-4,835
Treasury
from present law
Percent
-66.4
-30.9
-17.2
-10.8
-9.7
-7.6
-6.9
-4.6
+4.7
—66.5
-13.6
-7.6
-6.7
-6.2
-6.6
-5.6
-4.6
+3.2
-6.2
-9.4
the present bill and be dealt with when the other aspects of Subchapter S and
compensation plans are dealt with in legislation.
28. Taxation of State and local bonds (sees. 601 and 602)
The bill grants States and localities the option of issuing obligations, the
interest on which would be taxable, in which case the higher interest cost
would be offset by the Federal Government paying a percentage of the total
interest cost of the issue. The amount of the subsidy is to be set by the Secretary
of the Treasury, in advance, for each calendar quarter, and may range between
30 percent and 40 percent of the interest yield of the issue of obligations until
1974, and thereafter between 25 percent and 40 percent. The provisions of the
bill are entirely elective with the issuer: if the issuer chooses to issue taxable
obligations, the Federal subsidy follows automatically, but the State or municipality may always issue tax-exempt bonds if it prefers. These provisions of
the bill were not contained in the Treasury's April 22 proposals.
The Administration has been quite concerned over the problems facing the
States and localities as their demands for funds increase, driving the interest
cost of tax-exempt obligations closer to the interest cost of taxable obligations.
The Administration has studied this provision in the bill as well as alternate
means for alleviation of these problems and has concluded that it will not recommend enactment of this provision. The Administration plans to recommend
to,the Congress a different proposal at an early date.
TABLE IV.—Present law tax, tax under H.R. 13270, tax under Treasury proposals
hefore Senate Finance Committee, and percent tax change
[Married couple with two dependents. Deductible nonbusiness expenses of 10 percent of Income]
AGI
Present law tax
H.R. 13270 tax
$3,000
3,500
4,000
6,000
7.600
10,000
12,600
16,000
17,500
20,000
25,000
0
$70
140
290
687
1,114
1,667
2,062
2,598
3,160
4,412
0
0
$66
200
576
958
1,347
1,846
2,393
2,968
4,170
Percent tax change
Treasury proposals before •
Senate Finance Present Law to Present law to
Treasury proCommittee
H.R. 13270
posals
Percent
397--702 0 — 7 1
-24
0
0
$81
263
616
1,012
1,447
1,961
2,451
2,968
4,170
0
-100.0
-53.6
-31.0
-16.2
-14.0
-14.0
-10.6
-7.9
-6.1
-6.5
0
-100.0
-42.1
-12.8
-10.3
-9.2
-7.6
-5.4
-5.6
-6.1
-5.6
348
1970 REPORT OF THE SECRETARY OF THE TREASURY
The bill would also deny tax-exempt status to so-called arbitrage bonds, the
specific definition of which is left to the regulations. We believe that this is
in general a proper method of handling that abuse, but we believe the scope
of the term "arbitrage obligation" should be described with some further particularity in the bill.
29. Income tax surcharge (sec 701)
The hill would impose the income tax surcharge at a 5 percent rate for the
first 6 months of calendar year 1970. This contemporary extension of the surcharge is essential to control the infiationary forces now present in our economy
and to provide a firm basis for future economic growth. The Administration
strongly urges the adoption of this proposal.
30. Automobile and commnnieations services excise taxes (see. 702)
This bill would extend the existing rates of the excise taxes on automobiles
(7 percent) and on communications services (10 percent) for 1 year until
December 31, 1970, and would postpone scheduled reductions in future years.
These measures would contribute substantially to our efforts to control the
infiationary forces now present in our economy. We support their adoption.
31. Termination of the investment credit (sec 703)
The bill provides for repeal of the investment credit effective as of April 18,
1969. It also provides for transitional rules similar to the rules employed when
the credit was suspended in 1966. The Administration recommends no change
in these provisions.
32. Rapid depreciation for pollution control facilities and railroad cars (sec&
704 and 705)
The bill contains a provision for rapid 5-year amortization of expenditures for
certain facilities for the control or abatement of air and water pollution. The
bill also gives railroads an option to depreciate rolling stock other than locomotives on a 7-year straight-line basis. These provisions of the bill are designed as a
substitute for the investment credit.
Our national concem as to problems of pollution and environmental control
should not obscure the heavy revenue costs ($400 million annually in longrun
operation) of the pollution proposal. The necessity for, and effectiveness of, any
such provision is doubtful. The overwhelming incentive for industrial pollution
control will continue to be governmental antipollution enforcement action, or
the threat thereof. A tax relief provision in this setting is not an incentive so
much as it is a type of cost sharing, or more accurately, an interest-free loan,
to reduce the industrial cost of compliance with enforcement action.
As recommended by Secretary Kennedy in his previous appearance before this
committee in connection with the surcharge extension legislation in July, we
TABLE V.—Present law tax, tax under H.R. 13270, tax under Treasury proposals
hefore Senate Finance Committee and percent tax change
[Married couple with two dependents. Deductible nonbusiness expenses of 20 percent of hicome]
AGI
Present law tax
H.R. 13270 tax
$3,000
3,600
4,000
6,000
7,600
10,000
12,600
16, 000
17,500
20,000
25,000
0
$56
112
230
662
924
1,304
1,732
2,172
2,660
3,708
0
0
$66
200
616
868
1,228
1,636
2,066
2,608
3,492
Treasury proposal before
Senate Fhiance
Committee
Percent tax change
Present law to
H.R. 13270
Present law to
Treasury proposals
Percent
0
0
$81
214
516
868
1,228
1,636
2,066
2,608
3,492
0
-100.0
-42.0
-13.0
-6.5
-6.1
-6.8
-6.5
-6.3
-6.7
-6.8
0
-100.0
-27.7
-7.0
-6.6
-6.1
-6.8
-5.6
-6.3
-6.7
-5.8
349
EXHIBITS
TABLE VI.—Longrun revenue effects of H.R. 13270 as passed hy the House and
proposed Treasury changes hy major provisions
[In millions of dollars]
Longrun revenue effects
House bill
Reform provisions:
Individuals:
Contributions
Farmlosses
Accumulation trusts
Deferred compensation.
Capital gains
Natural resources
Interest deductions
LTP
Allocation
Realestate
Tax-free dividends
Gasoline tax deduction.
Total.
Corporations:
Foundations
Unrelated business Income .
Multiple corporations
Financial Institutions
Natural resources
Foreign Income
Regulated utilities
Real estate
Disallowed Interest
Capital gains rate
Total
Tax relief provisions:
Individuals:
Low Income allowance
Eliminate phaseout
Increased standard deduction
Maximum tax on eamed Income.
Head of household treatment
Reduce tax rates
Moving expenses
Income averaging.
Total
Corporations:
Rate reduction.
TotalTax Incentive provisions:
Pollution control amortization (Corporation) .
Rail freight car amortization (Corporation)...
Real estate rehabilitation (Individual)
Real estate rehabilitation (Corporation)
Total.
Other provisions:
Repeal Investment credit:
Individuals
Corporations
Total.
Grand total
Individuals...
Corporations.
Excise...
20
20
70
25 .
636
70
20 .
85
460
330
80
Current
Treasury
Proposal
20
60
70
425
70
60
480
330
80
390
1,815
1,975
100
20
235
460
530
65
310
1,005
70
176
25
20
235
410
530
60
310
1,005
70
175
2,970
2,830
-625 \
-2,027 ?
-1,373
-100
-650
-4,498
-100
-300
-920
-770
-100
-446
-4,705
-100
-300
-9,673
-7,340
-1,600
-8,940
-400
-100
-70
-260
-180
-830
-510
600
2,700
600
2,700
-70
-260
3.300
3.300
-2,418
-7,328
4,910
-1,346
-4,836
3,490
350
19 70 REPORT OF THE SECRETARY OF THE TREASURY
urge that as a minimum certain corrective amendments be made to this provision.
It should be amended to—
(1) limit the fast writeoff to the portion of cost that would otherwise be
depreciated over the first 15 years of the life of the facility (as now drawn the
provision would confer a benefit roughly equivalent to a 20-percent investment
credit in the case of facilities with a 50-year life—almost three times as liberal
as the 7 percent investment credit the writeoff is designed to replace) ;
(2) restrict the writeoff to facilities installed as antipollution facilities in
existing plants.
The fast writeoff for railroad cars will provide a substantial tax advantage,
involving some $100 million annual revenue loss in full operation, to a relatively
small number of profitable railroads which already have adequate buying power
to acquire new cars. It will be of no financial assistance to the more depressed
railroads. Further it will not be an effective instrument for dealing with the
specialized problem of seasonal shortages of general purpose freight cars. We
are opposed to this provision.
Conclusion
With the changes we have recommended, we believe that the Tax Reform
Act of 1969 will provide a much more equitable division of the tax burden and
will materially strengthen the structure of our tax system. We shall continue
to study the provisions of the bill and present any further recommendations
to the Committee as they are developed. Our objective now and in the future will
be to improve the equity and effectiveness of our tax laws.
Exhibit 23.—Statement by Secretary Kennedy, May 12, 1970, before the House
Committee on Ways and Means, on the proposed trade aet of 1969
I am pleased to appear today to discuss certain elements of the Administration's trade policy and to support H.R. 14870, the proposed Trade Act of 1969.
In addition, my associate, John S. Nolan, Acting Secretary for Tax Policy, is
prepared to present to you in some detail a specific proposal covering our tax
treatment of export income. This proposal is designed to provide tax treatment
of export income more comparable to that provided other foreign source income
and more in accord with the competitive realities of world markets.
The United States has provided leadership throughout the postwar period
for liberal trading and investment practice. The essence of that policy has been
to work toward the removal of tariff and other restrictions on trade on an
evenhanded and reciprocal basis. We have done so in the firm belief that expansion of international trade and investment under fair competitive conditions
is in the interest of all nations.
I believe we can take pride in the achievements of the past, particularly in
the reduction of tariffs. Our basic approach remains sound. At the same time,
we must recognize that, with tariff barriers already substantially reduced, dramatic new breakthroughs are less likely in that area. Our attention must shift
Increasingly to other barriers to trade—equally real but often less easy to identify
and measure. We must also be alert to the hardships and adjustments enforced on
particular industries or sectors in response to shifting trade patterns. Otherwise,
past accomplishments will be undermined, and we will not be able to maintain
forward momentum against the challenge of those who would seek other solutions to their problems—solutions that look inward to unilateral protective measures in one form or another.
H.R. 14870 would provide the Administration with the minimum tools it
needs to maintain forward progress, while protecting the legitimate interests of
American husiness and labor. The Special Representative for Trade Negotiations has discussed the specific provisions of that bill in some detail. I would like,
briefiy, to note the relationship between our approach to trade policy and our
broad international economic situation.
Our international balance of payments remains unsatisfactory. This is true
despite the fact that during 1969 we achieved some growth in our international
reserve assets^—that is, our holdings of gold and foreign currencies, as well as
creditor position in the IMF. At the beginning of this year, these assets were
further supplemented by the first allocation of Special Drawing Rights. More-
EXHIBITS
351
over, foreign oflacial dollar holdings have declined significantly below peak levels.
In each of the past 2 years, we have recorded some surplus in our oflScial
settlements accounts, in a cumulative amount of about $4^/^ billion.
However, it must be recognized that these shifts in our financial position were
primarily a refiection of extremely tight money in the United States. The high
interest rates and shortage of funds in our markets attracted a huge infiow of
short term money from abroad. This infiux of short term funds cannot continue
indefinitely. Indeed, in 1970, there has already been some reversal. This has contributed, at least temporarily, to a sizable deficit in our external accounts during the early months of the year.
In these circumstances, a new emphasis needs to be placed on developments in
the more basic elements of our international accounts. Our trade position is of
central importance in this respect. The heart of our present balance-of-payments problem lies in the fact that, largely under the pressure of internal
infiation and overheating, our traditional trade surplus has dwindled away.
Standing at about $6i/^ billion in 1964—roughly 1 percent of our then GNP—
our trade surplus declined to less than $1 billion in both 1968 and 1969.
Paralleling this drop in our trade balance, our surplus on all goods and services—despite a steady increase in income on foreign investments—has also
decreased.
Rebuilding this surplus must be a prime policy objective. There is no other
way in which, over a period of time, we can provide the rest of the world with
the real goods and services necessary to support our investment activities and
international obligations. Moreover, we must restore our trade and current account surplus in a manner fully consistent with our key position in the world
economy, and with the role of the dollar as the preeminent world reserve and
trading currency.
In meeting this challenge, the path of restrictionism is not really open to us,
not just as a matter of economic philosophy, but also for very practical reasons.
Restrictions which are unfair and unacceptable to our trading partners invite
retaliation. Thus no benefit to our trade position is achieved, and spreading restrictions would damage our prospects for regaining a substantial surplus
through competitive processes. Moreover, I believe we should recognize that
freedom to import is one of the most effective possible checks to domestic infiationary pressures. We cannot expect to maintain a competitive industry at
home behind a succession of import barriers. Conversely, as we reap the benefits
of our current policies to restrain intemal inflation, one consequence will be
an improved international trade position. We see evidence of this already. In the
first quarter, our trade surplus was about $500 million, almost as much as during all of 1969. This is encouraging, but we have a long distance to go in achieving and maintaining a surplus in the magnitude we need.
Better economic performance over a series of years is essential to that effort.
But, in addition, the Administration is undertaking a concerted effort to induce
and support efforts of industry to seek out and better develop foreign markets.
One major element in that effort is to assure competitive export credit facilities.
At the same time, we in the Treasury have reviewed thoroughly the implications
of our tax structure for the exporting effort. Specifically, we have appraised
such factors as the tax treatment of exporters in other countries, the tax treatment of export income under U.S. law as compared to other foreign source income, and the question whether the U.S. tax structure does not inadvertently
contribute to an attitude among many American producers that export markets
are of secondary interest, not worth concerted and aggressive effort over a period
of years.
This examination has led to the conclusion that, in some respects, our tax
system does tend to create an unnecessary drag on exports and actually gives
some incentive to manufacturing abroad rather than in the United States.
Accordingly, we have developed a proposal for a Domestic International Sales
Corporation (DISC). We believe this proposal provides a more equitable and
satisfactory basis for the taxation of export income. Essentially, it would permit
a company, within prescribed rules, to defer income taxation on exports sold
through a domestic export subsidiary. The proposal builds upon and modifies
certain existing provisions of U.S. tax law that, in practice, have not been
fully effective. It is consistent with international practice and obligations.
Specifically, the DISC proposal recognizes that export income is partly foreign
source income, just as income from foreign subsidiaries is foreign source income.
352
1970 REPORT OF THE SECRETARY OF THE TREASURY
This principle that export income may in substance include foreign source income has long been recognized in our tax code, and it has long been a provision
of the tax code of other countries. Where this sound tax philosophy has gone
astray in the operations of our tax system is that the tax deferral of retained
earnings available on foreign investment income can only be obtained on export
income through creating a foreign-domiciled sales subsidiary, which many companies find awkward and impractical. Foreign source income may appropriately
be determined by the real place of sale, and the destination of the goods; the
domicile of the corporate vehicle through which the sale is passed is a matter
of incidental significance.
We believe that this approach is consistent with the basic philosophy of the
U.S. tax system. The committee has before it another bill, H.R. 13713, that
would approach the problem from an entirely different direction, providing a
rebate to the exporter for taxes directly or indirectly borne by articles exported.
I recognize that elements in this approach bear some similarity to the GATTsanctioned practices of many foreign countries providing a rebate to their exporters for value-added taxes. It would, however, raise a number of issues that
have not been satisfactorily resolved internationally. In the circumstances,
other countries could well institute comparable provisions related to similar
taxes where no rebate is now provided. Moreover, the revenue cost would be
substantial. For example, if the rebate should work out to roughly 4 percent,
the loss would probably approach $1 billion or more.
it must be recognized that our own proposal, by deferring income taxes on a
large volume of exports, would also entail a significant revenue loss. I cannot
ignore that impact, in the light of our present budgetary position. Consequently,
fiscal responsibility requires that the effective date for action in this area be
delayed beyond fiscal 1971 to July 1,1971.
The estimated revenue impact for the first full year—under our proposal;
fiscal 1972—is expected to approximate $450-$600 million. This revenue impact
will, of course, need to be taken into account in shaping our overall budgetary
program for that period.
The imjyact on exports would develop through several channels. Most directly,
the tax deferral would increase the profitability of exporting. In many instances
this should induce more effective promotional efforts or other measures to
compete more effectively. Perhaps more important over time, basic decisions on
the location of new investment facilities at home or abroad would be affected,
and companies would be encouraged to develop long-range export strategies.
Indeed, I believe this shift in taxation would help signal to industry that improved export performance is a national objective of high priority; it would help
build the consciousness and attitudes toward exports that this country has been
Sorely lacking.
In our judgment, the effect of removing the bias against exports in our tax
system in the manner proposed should be to generate over time a level of exports
a billion dollars or more greater than might otherwise develop.
In summary, we consider the DISC can be an effective companion piece to our
liberal trade policy. It is an outward looking measure, resting on a desire to
remove impediments to competing more effectively. It can be a part of an
effective approach to our entire balance-of-payments problem, and it is an approach that accepts competitive imports as a factor in our battle against infiation.
At the same time, we must face the fact that, in the light of fiscal requirements, the effective date should be deferred. We urge that this proposal receive
your careful consideration in the light of all these factors.
Exhibit 24.—Statement by Assistant Secretary Weidenbaum, October 1, 1969,
before the House Ways and Means Committee, on The Employment Security
Amendments of 1969
I am pleased to have the opportunity today to express the views of the Department of the Treasury on H.R. 12625, a bill which would modernize the FederalState unemployment insurance system. Although basically sound, the system—
which has been in operation since 1935—in some respects has fallen behind in
a much changed economy. It is like the long-used, well-constructed machine that
is operating well but requires some improvements.
The system has not been generally revised since its inception 35 years agio.
EXHIBITS
353
It is in much need for revision to better meet its objectives as insurance against
the risks of, unemployment and as a built-in mechanism to moderate the impact
of significant reductions in the level of economic activity.
Much of the details on the operations of the system and the way the bill would
improve these is covered by the testimony of the Labor and Commerce Departments. I will concern myself with the fiscal and financing aspects of the legislation. This bill strengthens the ability of the insurance system to act as an automatic stabilizer when the economy declines to a substantial degree. I believe that
prudent planning calls for taking such measures now when the economy is
basically healthy and continuing to expand.
An analysis of the past history of unemployment insurance demonstrates its
effectiveness as a stabilizing factor. For example, in the 1958 recession, as a
result of lower output (GNP), personal income before taxes (excluding transfer
payments) declined at an annual rate of $3.2 billion between the third quarter
of 1957 and the second quarter of 1958 (see table I ) . Because of the automatic
response of stabilizers such as unemployment benefits, disposable personal income
was actually increasing at an annual rate of $2.8 billion during the same period.
This stabilizing infiuence was attained without any discretionary action. Specifically, the $3.2 billion decline in personal inconie was moire than offset by a $2.5
billion increase in unemployment benefits payments^ a $900 million increase in
social security payments, and $1.5 billion of reduced income taxes resulting from
lower incomes. Such sustained disposable income in a recession supports consumption and leads to economic recovery.
We need to improve unemployment insurance so that its potential as an automatic stabilizer can be even greater. To the extent that autonnatic stabilizers are
structured into our economy, this enables economic forces to respond more quickly
to adverse employment impacts which may result from periods of substantial
economic restraint. This bill goes a long way toward improving unemployment
insurance as an automatic stabilizer and hence toward minimizing the social costs
which may accompany necessary changes in economic policy.
Need for more automatic response
Mr. Chairman, we need to provide through our insurance system added protection a.srainJ^t prolonged unemployment, should that eventuality ever arise. In the
past, the more serious a recession grew, the larger were the number of benefit
exhaustees and the longer the duration of unemployment. Although such a contingency seems quite remote, it would appear advisable to protect our workers
against this possibility. We need to protect our economy by structuring the unemployment insurance system so that protection comes into effect automatically,
in timely fashion, and with adequate reserve to meet an emergency.
It should be recognized that our present system of unemployment compensation tends to provide effective built-in stabilization for small recessions (see
table I ) , but it tends to become relatively weaker as recessions become more
severe and increasing numbers of workers exhaust benefits. The purpose of
"triggered-in" extended benefits is to deal more effectively with the latter type
of situation.
TABLE I.—Changes in personal income, tax payments, and transfer payments from
third quarter 1967 to second quarter 1968
[In billions of dollars]
Decline in personal Income (excluding transfer pajmients)
Offset by built-in stabilizers:
Increase in unemployment benefits.
Increasein OASI benefits
Increase In other transfer pasnnents..
Reduction in Federal personal taxes
Reduction In personal contributions for social Insurance
Increase in state and local personal taxes
Subtotal built-in stabilizers.
Equals: Rise In disposable personal income
—3.2
_
+2.5
-f-O.9
-f 1.0
-I-1.-8
-j-0.1
—0.3
+6.0
4-2.8
NOTE.—At seasonally adjusted annual rates.
SOURCE.—U.S. Department of Commerce, "The National Income and Product Accounts, 1929-65,"
Supplement to Survey of Current Business, Washington, D . C , U.S. Government Printhig Office, August
1966.
354
1970 REPORT OF THE SECRETARY OF THE TREASURY
In 1958 and again in 1961 the Congress, when it recognized the seriousness
of those recessions, enacted temporary extended benefit programs. This bill provides for a program of Federally-financed extended benefits to be "triggered in"
automatically when the national unemployment rate among insured workers
reaches 4.5 percent for the last 3 months. The current unemployment rate for
insured workers is about 2 percent.
Once triggered, the extended program will be "triggered out" when three conditions are met:
(1) The national unemployment rate for 1 month is less than 4.5 percent,
(2) The number of exhaustees of regular State benefits is less than 1 percent, over a 3-month period, and
(3) The program has been in effect at least 13 weeks.
Under the extended benefits program, exhaustees of regular State benefits will
continue to receive the equivalent of the regular State weekly benefit for a period
equal to one-half the length of the State duration, or 13 weeks, whichever is less.
In no case will regular and extended benefits compensate for more than 39 weeks
of total imemployment.
Responsiveness of payroll taxes
The higher taxable wage base in the bill will make payroll taxes more responsive to a changing economy. Unemployment insurance benefits have been strongly
countercyclical. Taxable wages (limited by the present $3,000 ceiling) are less
responsive to economic changes than total wage payrolls. Extending the ceiling
to $6,000 will make taxable wages more responsive to the needs of economic
stabilization.
Adequacy of State reserves
As a good insurance principle, the States should be able to accumulate adequate
reserves to finance a high cost benefit period brought on by more unemployment
than usual. Today, a good number of States have adequate reserves if measured
by the principle that a State's reserves should be at least one and one-half times
the highest 12-month cost benefit rate over the past decade. For example, at the
end of 1968, the national average was 1.81 times and 35 States (plus the District
of Columbia and Puerto Rico) more than met the 1.5 ratio rule. However, 15
States did not, and these account for over 40 percent of covered workers. The
reserves of these States generally need strengthening to assure the soundness of
the insurance system. By increasing the Federal taxable wage base to provide
Federal Unemployment Tax Act (FUTA) funds for financing the extended
benefits program, the bill will also move indirectly in aiding State funding.
The outdated $3,000 wage base will go to $4,800 in 1972 and 1973 and to $6,000
thereafter. States will automatically or by specific action follow the Federal limit
Twenty-six States (plus the District of Columbia and Puerto Rico) have provisions for automatic extension of their taxable wage ceilings to the ceiling in
the Federal Unemployment Tax Act.
States will find that the potential yield of their tax systems will Increase.
Under these circumstances they have the alternative of building their reserves
to adequate levels or, if having adequate reserves, the States could lower taxes
by reducing rates.
Adequacy of benefits
This bill does not establish Federal standards for the adequacy of State benefits. President Nixon pointed out that this is a responsibility of the States and
that such freedom of action is well warranted. But the President requested the
States to examine their benefit structures and establish realistic benefit ceilings.
In some of our large industrial States, for example, 60 percent to 75 percent
of the male workers laid off receive less than one-half of their weekly wages.
It has been generally accepted since the beginnings of unemployment insurance
that the wage loss recovery should be at least 50 percent. It was about that level
in the thirties, but benefits have simply not kept up with the growth of earnings.
Of course, benefits should not completely replace wages lost from unemployment. Work incentives are needed. The 50-percent rule adequately maintains
those incentives. The problem in the present system is that the maximum weekly
benefit amount in most States is so low that a large proportion of laid-off workers
are unable to receive as much as 50 percent of their normal weekly wages.
365
EXHIBITS
TABLE II.—Comparison of estimated Federal Unemployment Tax Act (FUTA)
revenues with estimated administrative costs
[In millions]
Fiscal year
1970
1971
1972
1973
1974
1975
FUTA
revenue
under
present
law
$726
776
826
765
796
826
Proposed flnancing
FUTA
revenue'^
$726 .
776 .
879 .
1,133
1,214
1,449
Reserve for
extended
benefits 2
Balance
after
reserve
$189"
202
241
$725
776
879
944
1,012
1,208
Admlnlstra- tive costs to
be financed
from
balance 3
$691
783
868
883
977
1,082
«Assumptions:
a. Taxable wage base—$3,000 in calendar years 1970-71; $4,800 in 1972-73; $6,000 In 1974 and 1975.
b. Tax rate at 0.4 percent of taxable wages.
c. Coverage extension effective Jan. 1,1972.
2 Reserve for extended benefits (H of FUTA revenues) estimated at $1.4 billion for an 18-month period
on a national basis once each 7 years.
3 Assumes insured unemployment rate of 2.2 percent. Estimates assume that, beginning with 1973, 75
percent of Employment Service costs will be financed out of FUTA revenues; therefore, the estimates
exclude amounts to be financed from general revenues. Estimates include costs of legislation beginning in
1971.
SouECE.—U.S. Department of Labor, Manpower Administration.
Adequacy of benefits is essential in automatic stabilization. The larger the
wage loss recovery, the more disposable income and personal consumption expenditures are sustained.
Fundmg
The increase in the taxable wage base ultimately to $6,000 will provide the
revenue necessary to finance the extended benefits program and administrative
expenses (see table I I ) . It is more equitable to finance these programs by increasing the wage base than by increasing rates which would fall more heavily
on low wage industries.
Training
The reduction of residual unemployment or structural unemployment would
make automatic stabilizers even more effective. Structural unemployment may
exist because workers are unskilled or need more skills, because they do not move
easily to areas where there are more job opportunities, or because industry may
not shift readily from tight labor supply areas to regions where labor resources
are more adequate.
We have specific programs now which are directed at overcoming these problems. To the extent that this bill encourages unemployment insurance claimants'
who need training to take it, it is also contributing to the resolution of these
problems. These programs are long range and like our education programs represent a worthwhile investment in human resources to complement investments in
capital plant and equipment.
Exhibit 25.—Press release. May 19, 1970, announcing the President's request for
enactment by Congress of an environmental control tax on lead additives used
in motor fuels
The President today announced his intention to request that Congress enact
an environmental control tax on the lead additives used in motor fuels.
The primary purpose of the proposed environmental control tax on lead is to
provide an incentive for the rapid development of gasoline with a low and eventually lead-free content. The proposed tax, in addition to providing this important
anti-pollution incentive, will provide increased revenue during the period of
transition to nonleaded gasoline which will compensate in part in the budget for
356
19 70 REPORT OF THE SECRETARY OF THE TREASURY
the reduced level of corporate tax collections and certain additional expenditures
not included in the fiscal 1971 budget.
It is estimated that the proposed tax will result in a first-year revenue gain
of approximately $1.6 billion. This amount will diminish as the incentive takes
effect and lead-free or low-level leaded gasoline is successfully developed.
The proposed tax will take the form of an excise tax at the rate of $4.25 per
pound of lead and generally would be imposed on the sale by the manufacturer
or importer of lead additives which are used in motor fuels. In order to prevent
possible circumvention of the tax, importer would be defined to include an
importer of gasoline containing lead additives.
The tax would apply to lead additives in gasoline used in all gasoline engines
although its primary impact would be on automotive fuel. A typical gallon of
regular automobile gasoline presently may contain 2.5 grams of lead which, at
the rate of $4.25 a pound, would produce a tax of approximately 2.3 cents a gallon
if no reduction were made in the lead additive content. The proposed $4.25 rate
is designated to impose on leaded gasoline a price penalty which will allow
unleaded gasoline, which is more expensive to manufacture, to be marketed more
competitively.
The tax would be imposed on the manufacturer's sale of lead additives after
June 30, 1970. To bring the tax fully into play at that date and to discourage
possible stockpiling of tax-free lead additives sold in the interim period between
the date of the President's announcement and the proposed effective date, a fioor
stock tax would be imposed on all inventories of lead additives held by any person
other than the manufacturer or importer on June 30, 1970. This fioor stock tax
would be in the same amount and measured in the same manner as the tax on the
sale by the manufacturer of lead additives.
In order to prevent the tax from causing undue hardships on the part of
smaller refiners of gasoline, it is proposed that each separate company engaged
in the refining business be permitted to use, free of tax, additives containing up
to 1,000,000 pounds of lead during the first year the tax is in effect. This amount
would be decreased by 200.000 pounds annually until 1976 when all lead contained
in such additives would be fully taxable. Only one member of a controlled group
of corporations, as defined in section 1563 of the Internal Revenue Code, would be
permitted this tax-free use of additives. For this purpose, the 80-percent ownership rule of section 1563(a) would be reduced to 50 percent.
The figure of 1,000,000 pounds is based upon the average amount of lead in
additives that is believed to be used by a typical refinery with a capacity of
30,000 barrels a day of crude oil. The figure of 30,000 barrels a day is that established by the Small Business Administration for distinguishing small refiners
eligible for set-asides for contracts with the Department of Defense.
Although each such refiner would be able to use additives containing up to
1,000,000 pounds of lead, we propose that this allowance be limited to the amount
of additives containing no more lead than that contained in the additives actually
used during the preceding year, or if greater, the average of the three preceding
years. In this manner the possibility of small refiners profiting by selling unused
tax-free additives to other refiners will be avoided.
It is proposed that this tax-free use be accomplished by permitting the refinery
company to compute the amount of tax attributable to the lead contained in the
additives used during each period for which a tax payment reportable on Form
720 (the Quarterly Federal Excise Tax Return) is due. The amount of the tax
so computed would be used as an adjustment reducing the total tax payable.
Alternatively, the refiner would be authorized to claim a refund for the amount
of the tax.
Revenue Sharing
Exhibit 26.—Message from President Nixon to the Congress, August 13, 1969,
on revenue sharing
If there is a single phenomenon that has marked the recent history of nations,
large and small, democratic and dictatorial, it has been the rise of the central
government.
In the United States, revenues of the Federal Government have increased
90-fold in 36 years. The areas of our national life where the Federal Government
has become a dominant force have multiplied.
EXHIBITS
357
The flow of power from the cities and States to Washington accelerated in the
Depression years, when economic life in America stagnated, and an energetic
national government seemed the sole instrument of national revival. World War
II hrought another and necessary expansion of the Federal Government to
marshall the nation's energies to wage war on two sides of the world.
When the war ended, it appeared as though the tide would be reversed. But
the onset of the cold war, the needs of a defeated and prostrate Europe, the growing danger and then the reality of conflict in Asia, and later, the great social
demands made upon the Federal Government by millions of citizens, guaranteed
the continued rapid growth and expansion of Federal power.
Today, however, a majority of Americans no longer supports the continued
extension of Federal services. The momentum for Federal expansion has passed
its peak; a process of deceleration is setting in.
Tbe cause can be found in the record of the last half decade. In the last 5 years
the Federal Government enacted scores of new Federal programs; it added
tens of thousands of new employees to the Federal payrolls; it spent tens of
billions of dollars in new funds to heal the gl^'ave spcial ills of rural and urban
America. No previous half decade had witnessed domestic Federal spending on
such a scale. Yet, despite the enormous Federal commitment in new men, new
ideas, and new dollars from Washington, xt was during this very period in
our history that the problems of the cities deepened rapidly into crises.
The problems of the cities and the countryside stubbornly resisted the solutions
of Washington; and the stature of the Federal Govemment as America's great
instrument of social progress has suffered accordingly—^^all the more so because
the Federal Government promised so much and delivered so little. This loss of
faith in the power and eflScacy of the Federal Government has had at least one
positive impact upon the American people. More and more, they are turning
away from the central Govermnent to their local and State govemments to deal
with their local and State problems.
As the Federal Government grew in size and power, it became increasingly
remote not only from the problems it was supposed to solve, but from the people
it was supposed to serve. For more than three decades, whenever a great social
change was needed, a new national program was the automatic and inevitable
response. Power and responsibility flowed in greater and greater measure from
the state capitals to the national capital.
Furthermore, we have hampered the effectiveness of local government by constructing a Federal grant-in-aid system of staggering complexity and diversity.
Many of us question the efficiency of this intergovernmental financial system
which is based on the Federal categorical grant. Its growth since the end of
1962 has been near explosive. Then there were 53 formula grant and 107 project
grant authorizations—a total of 160. Four years later on January 1, 1967, there
were 379 such grant authorizations.
While effective in many instances, this rapid growth in Federal grants has
been accompanied by:
—Overlapping programs a t the State and local level.
—Distortion of State and local budgets.
—Increased administrative costs.
—^Program delay and uncertainty.
—A declihe in the authority and responsibility of chief executives, as grants
have become tied to functional bureaucracies.
—Creation of new and frequently competitive State and local governmental
institutions.
Another inevitable result of this proliferation of Federal programs has been
a gathering of the reins of power in Washington. Experience has taught us that
this is neither the most efficient nor effective way to govern; certainly it represents a radical departure from the vision of Federal-State relations the nation's
founders had in mind.
This Administration brought into office both a commitment and a mandate to
reverse the trend of the last three decades—a determination to test new engines of
social progress. We are committed to enlist the full potential of the private sector,
the full potential of the voluntary sector and the full potential of the levels of
government closer to the people.
Thiis week, I am sending to Congress for its approval for fiscal year 1971, legis*
lation asking that a set amount of Federal revenues be returned annually to
358
1970 REPORT OF THE SECRETARY OF THE TREASURY
the States to be used as the States and their local governments see fit—without
Federal strings.
Because of budget stringencies, the initial fund set aside to start the program
will not be great—$500 million. The role of the Federal government will be
redefined and redirected. But it is my intention to augment this fund annually
in the coming years so that in the fiscal year beginning in mid-1975, $5 billion in
Federal revenues will be returned to the States without Federal strings. Ultimately, it is our hope to use this mechanism to so strengthen State and local
government that by the end of the coming decade, the political landscape of
America will be visibly altered, and States and cities will have a far greater
share of power and responsibility for solving their own problems. The role of
the Federal Government will be redefined and redirected toward those functions
where it proves itself the only or the most suitable instrument.
The fiscal case for Federal assistance to States and localities is a strong one.
Under our current budget structure, Federal revenues are likely to increase
faster than the national economy. At the local level, the reverse is true. State
and local revenues, based heavily on sales and property taxes, do not keep pace
with economic growth, while expenditures at the local level tend to exceed such
growth. The result is a "fiscal mismatch," with potential Federal surpluses and
local deficits.
The details of this revenue sharing program were developed after close consultation with members of the Congress, governors, mayors, and county officials.
It represents a successful effort to combine the desirable features of simplicity
and equity with a need to channel funds where they are most urgently needed
and efficiently employable.
The program can best be described by reviewing its four major elements.
First, the size of the total fund to he shared will be a stated percentage of
personal taxable income—the base on which Federal individual income taxes
are levied. For the second half of fiscal year 1971, this will be one-third of 1
percent of personal taxable income; for subsequent fiscal years this percentage
will rise to a regular constant figure. In order to provide for the assured flow of
Federal funds, a permanent appropriation will be authorized and established for
the Treasury Department, from which will be automatically disbursed each
year an amount corresponding to the stipulated percentage.
Second, the allocation of the total annual fund among the 50 States and
the District of Columhia will be made on the basis of each State's share of natipnal population, adjusted for the State's revenue effort.
The revenue effort adjustment is designed to provide the States with some incentive to maintain (and even expand) their efforts to use their own tax resources to meet their needs. A simple adjustment along these lines would provide
a state whose revenue effort is above the national average with a bonus above
its basic per capita portion of revenue sharing.
Third, the allocation of a State's share among its general units of local government will be established by prescribed formula. The total amount a State
will share with all its general political subdivisions is based on the relative roles
of State and local financing in each State. The amount which an individual unit
of general local government, will receive is based on its share of total local
government revenue raised in the State.
Several points should be noted about these provisions distribution of a State's
portion of revenue sharing.
—The distribution will be made by the State.
—The provisions make allowance for State-by-State variations and would tend
to be neutral with respect to the current relative fiscal importance of State and
local governments in each State.
—In order to provide local fiexibility, each State is authorized to develop an
alternative distribution plan, working with its local governments.
Fourth, administrative requirements are kept at a minimum. Each State will
meet simple reporting and accounting requirements.
While it is not possible to specify for what functions these Federally shared
funds will provide—the purpose of this program being to leave such allocation
decisions up to the recipient units of government—an analysis of existing State
and local budgets can provide substantial clues. Thus, one can reasonably expect
that education, which consistently takes over two-fifths of all State and local
general revenues, will be the major beneficiary of these new funds. Another pos-
EXHIBITS
359
sible area for employment of shared funds, one most consistent with the spirit
of this program, would be for intergovernmental cooperation efforts.
This proposal marks a turning point in Federal-State relations, the beginning
of decentralization of governmental power, the restoration of a rightful balance
between the State capitals and the National Capital.
Our ultimate purposes are many: To restore to the States their proper rights
and roles in the Federal system with a new emphasis on and help for local responsiveness; to provide both the encouragement and the necessary resources
for local and State officials to exercise leadership in solving their own problems;
to narrow the distance between people and the Government agencies dealing
with their problems; to restore strength and vigor to local and State governments ; to shift the balance of political power away from Washington and back
to the country and the people.
This tax-sharing proposal was pledged in the campaign; it has long been a
part of the platform of many men in my own political party—and men in the
other party as well. It is integrally related to the national welfare reform.
Through these twin approaches we hope to relieve the fiscal crisis of the hardpressed State and local governments and to assist millions of Americans out of
poverty and into productivity.
RICHARD NIXON
T H E WHITE HOUSE,
August IS, 1969.
Exhibit 27.—Remarks by Secretary Kennedy, November 13, 1969, before the
Greater South Dakota Association, Mitchell, South Dakota, on the fiscal side
of the new federalism
Tonight I want to discuss a subject in which President Nixon is vitally interested—the future of our American Federal system. This Administration is firmly
convinced that our progress as a free and progressive society depends importantly
on the health and vitality of government at all levels—Federal, State, and local.
The President is deeply disturbed over the imbalance that now exists among these
partners in federalism.
The story of American government in the 20th century has been one of increasing concentration of power and responsibility at the Federal level. This fiow of
power to Washington was induced and stimulated by major wars, both hot and
cold, and by economic crises. In recent years it has been accelerated by a variety
of efforts to cure major domestic ills through the force of Federal programs and
Federal money. The remarkable capacity of the Federal tax system to generate
revenues has sustained and even encouraged this transfer of power.
But this expansion in the scope of Federal influence and responsibility has produced an undesirable imbalance in the American public sector. Our State and
local governments have been asked to deliver an ever growing quantity of vital
domestic services, but they lack efficient and productive systems of taxation to
respond adequately: In short, they have been unable to play their rightful role in
our Federal system.
The traditional functions of State and local government—education, welfare,
police protection, health and hospitals, highways, sanitation—are more important
today, on our scale of national priorities, than ever before. Over the years, the
Congress and the Federal executive branch have recognized the importance of
these local services, and have considered it essential that they be provided to our
citizens. As a result. Federal grants-in-aid to State and local governments have
grown enormously—from $1 billion in 1946 to a level of $25 billion this flscal
year.
But this significant rechanneling of Federal tax dollars to our States and localities has not been as successful in increasing the scope and quality of State and
local public services as one might hope. The transfer of Federal funds has been
accompanied by an ever growing maze of program authorizations, restrictions,
formulas, matching provisions, project approval requirements, and a host and
variety of administrative burdens.
Over a period of years the Federal system of assistance to States and communities has evolved in piecemeal fashion. Federal, State, and local officials are
today confronted with over 600 programs for narrow categorical grants. Many
of these programs are extremely cumbersome and each is equipped with its own
360
19 70 REPORT OF THE SECRETARY OF THE TREASURY
array of administrative procedures and its own set of requirements to be levied
upon State and local governments.
In drawing upon several funding sources to help finance one neighborhood
project, for example, a local official may be confronted with a series of application
forms weighing several pounds, a tortuous application process which may require many months to elicit a "yes" or "no" response from the Federal Government, and a continuing process which may burden that community with hundreds
of reports to the Federal Government which are rarely read. Further, the local
official may have to work with Federal people located in three or four different
States in the course of putting this one project together.
I am told that a single program may require over 100 different kinds of forms
and reports, and that it may take over 100 pages merely to list the administrative
steps involved in the processing. We have found instances in which Federal, State,
and local governments make scores of independent studies in the same community without one knowing what the other is doing or having an opportunity to share
in the results of the other study efforts.
On March 27th, President Nixon undertook a major 3-year program to simplify
Federal assistance. He has mounted a multipronged attack on the mass of red
tape which is smothering the efforts of our three levels of government to work
together effectively. Initial results are encouraging, and I am confident that in
3 years the President's efforts will have resulted in the elimination of many of
these costly procedures and requirements which today burden our public officials
and limit their ability to respond to public needs.
Against this background, the President also has come forward with a bold and
challenging new domestic policy program designed to restore balance to American federalism while strengthening government's ability to deliver needed public
services as efficiently as possible. This "New Federalism" seeks to redefine and
redirect the role of the Federal Government toward those public functions where
its capacity and effectiveness are unquestioned. It will move to restore to our
states and localities the decisionmaking power rightfully theirs.
At the heart of our New Federalism is the proposal for sharing Federal revenues with State and local govemments. The Treasury has had a major hand in
drafting this revenue-sharing proposal, and we will be working very hard in the
coming months to secure its enactment by the Congress.
I would like to take this opportunity to outline for you the main features of
this revenue-sharing plan. It can be conveniently discussed in terms of its four
major provisions.
First, the annual revenue-sharing appropriation will be a stated percentage
of personal taxable income—the base on which Federal individual income taxes
are levied. For the first year of operation, this percentage will be modest, yielding about $500 million. But in 1976 we will be sharing a full 1 percent of the tax
base, or about $5 billion. In subsequent years, the revenue^sharing appropriation
will automatically respond to the growth in taxable income. This is only one
more reason why our State and local governments have a strong stake in seeing
a healthy national economy—a point which I will turn to shortly.
Second, the State-by-State distribution of funds will be made on the basis of
each State's share of national population, with a small adjustment for revenue
effort to provide an incentive for maintenance of local taxing efforts. This adjustment will mean that a State like South Dakota, whose revenue collections
in relation to State personal income are 24 percent above the national average,
would receive a 24-percent bPnus above its basic per capita portion of revenue
sharing.
Third, each State government must distribute a portion of these revenuesharing payments to all its general purpose local governments, regardless of size.
Some alternative proposals would only include our larger cities and counties in
direct revenue sharing. We strongly believe that all local governments are faced
with fiscal pressures and that all deserve specific inclusion in this program.
The total amount a State must share with all its cities, counties, and townships
will depend on the existing division of public financing responsibilities within
each State. An individual local government will receive a fraction of each revenue-sharing payment which corresponds to the relative role which its general
revenues bear in relation to the total of all State and local general revenues. We
use this basis for allocating funds among local governments because a per
capita distribution cannot distinguish between the importance of overlapping
jurisdictions.
EXHIBITS
361
Fourth, State and local officials will receive not only the funds, but also the
decisionmaking authority over the use of those funds. This is perhaps the most
important feature of revenue sharing, and one which clearly distinguishes it from
the Federal government's existing grant-in-aid system. Without the Federal program or project "strings," State and local authorities are free to initiate ideas
which respond directly to the particular needs and interests of their jurisdictions.
Only simple accounting and reporting requirements will be in force.
This revenue-sharing program represents an important new direction in the
relationships between Federal Govemment and State and local governments.
It gives our Federal system both a sound financial center and a needed decentralization of control. It will serve as an important supplement to our existing
categorical aid programs. I am especially pleased to have this opportunity to describe the major features of our proposal to you, since Senator Mundt, as a longtime supporter of revenue sharing, was one of its sponsors when the plan was
introduced in the Senate. We greatly appreciate the strong support and interest
he has given us.
As I noted earlier, the size of the annual revenue-sharing appropriation will be
primarily determined by the level and growth of the American economy. Therefore, the State and local governments will be vitally interested in seeing our
Nation maintain a steady and healthy rate of economic expansion. Of course,
these governments have always had a strong stake in our economic good health,
particularly as the state of the economy affected their tax receipts, operating expenses, and borrowing costs. With revenue sharing there is even more to be
gained by State and local governments from noninfiationary economic growth.
The responsibility for national economic policy is one public function which
the Federal Government cannot delegate to the States and cities. It can only be
exercised from Washington. However, when the Nixon Administration took
office last January, the economy was suffering from several years of failure by
the Federal Government to exercise that responsibility in a timely and effective
manner. As a result, a serious infiation had been permitted to work its way deeply
into the fabric of our economic life. We moved quickly and firmly to bring the
policies of the Federal Government in line with our urgent need to halt the spiral
of rising prices, and we are now beginning to see some hopeful signs of success.
But infiationary pressures are currently much too strong for us to assume any
complacency. Our policies of economic restraint—especially our efforts to achieve
a significant budget surplus—must be maintained until infiation is brought under
control. For this we must depend on the Congress to approve the revenue measures we recommended last April. Without the extension of the income tax surcharge at the reduced rate of 5 percent for the first half of 1970, plus the repeal
of the investment tax credit and the extension of certain excise taxes, we stand
to lose about $4 billion in urgently needed revenues.
A revenue loss of this magnitude would have two serious impacts. First, we
would lose most of our fiscal restraint in the budget—a restraint which is only
moderate without the revenue loss. This is not the time to bring about an abrupt
easing of fiscal policy. Second, and perhaps even more significant, this $4 billion
shrinkage in Federal revenues would mean an equivalent strain on our already
tight financial markets. This would be most unfortunate at a time when we might
hope that interest rates could begin to ease from their historic high levels. These
extraordinarily high interest rates have had a particularly severe impact on the
fiow of funds into housing and State and local government projects.
It is quite clear, therefore, that our State and local governments have a strong
interest in seeing the income tax surcharge extended and the other revenueraising measures enacted. For a shift,in the mix of economic policies to even
tighter monetary measures because of an easier fiscal position would seriously
upset the essential borrowing efforts of States, cities, and counties.
Thus, at the Treasury we are engaged in two very important efforts to
strengthen the fiscal structure of our American Federal system. On the one hand
we are working hard to enact a program of revenue sharing—to provide both the
encouragement and the resources for local and State officials to exercise leadership in solving their own problems. On the other hand, we are striving to exercise our unique Federal responsibility for restoring the American economy to
a prosperous, growing, and stable condition. Both these efforts are vital to our
national well-being, and I hope you will join me in encouraging the Congress to
move forward on both fronts.
My remarks this evening would be incomplete if I did not outline for you the
362
1970 REPORT OF THE SECRETARY OF THE TREASURY
relationship between these two efforts, which occupy so much of our attention at
the Treasury, and the Administration's total package of domestic policy initiatives. President Nixon's new domestic program has been described by many
observers as the most significant Presidential proposal for domestic reform in
recent decades. It is significant both for qualitative and quantitative reasons,
both for the number of new ideas it presents and for the boldness with which
they were conceived. The President's package of proposals included the most
striking conceptual change in the history of the welfare program, the most
sweeping administrative change in the history of manpower training programs,
and this entirely new and different approach to the fiscal relationship between
the Federal Government and the States and localities which I have described to
you.
Each of these proposals was historic in its own right. Yet the President chose
to discuss all of them together, for he saw them as component parts of a single
strategy. "They make both a package and a pattern," he observed. "They should
be studied together, debated together, and seen in perspective."
I look forward to the time, hopefully quite soon, when we have this exciting
new package of proposals fully implemented. Their institution will signal a new
direction and a new hope for effective government performance. That is an
objective which we all must share.
Exhibit 28.—Remarks by Under Secretary Walker, March 23, 1970, before the
10th Annual Washington Conference on Business-Government Relations, on
new federalism in the 1970's—the financial dimension
"Where is the money coming from?"
That perplexing question serves as the central theme for this morning's session. It is a question which everyone must periodically ask, and depending upon
the circumstances of the questioner, will be answered with varying degrees of
uncertainty and difficulty. In addition, it is a question with many dimensions.
Money is needed to cover current operating requirements, and to finance investment outlays both now and in future years.
For the State and local governments of our country, the answers to this question have become increasingly difficult during the 1960s. And the 1970s hold no
promise for making the answers much easier. Recognizing the financial health
of States and localities as an important national priority, the Nixon Administration has taken several significant steps toward improving the fiscal outlook
for the State and local partners in our Federal system.
Major Administration proposals are directed toward improving both the
current operating picture and the availability of debt capital to States and
localities. I think it would be useful to begin this session by examining the
issues and the proposals affecting both of these financial dimensions.
I. Current operating picture
Anyone who carefully examines our system of public finance is struck by the
existence of what analysts of all political persuasions have called the "fiscal
mismatch." Simply stated, this term describes the completely opposite underlying budgetary position of the Federal Government compared to State and
local governments.
At the Federal level, our growth responsive income taxes generate revenues
at a pace which exceeds both economic advancement and i>eacetime expenditure
requirements. Since 1950, for example, the Federal Government has indulged in
the political luxury of voting three major tax reductions (1954, 1964, and 1969),
while still maintaining a healthy revenue growth, indeed, in the new budget our
projections of revenues, expenditures, and incomes indicate that the current
Federal tax structure will be generating $266 billion in revenues by fiscal year
1975. In the same year, the expenditure requirements resulting from existing
programs and new Presidential initiatives will amount to $244 billion.
This difference of $22 billion does not represent a planned "surplus" for the
Federal budget in 1975. What it measures is the amount of fiscal leeway available to the Congress and the President for the initiation of new programs, for
tax reduction, or for debt reduction. In addition, this longer range projection
reveals the underlying strength of the Federal fiscal position in a growing
economy.
EXHIBITS
363
At the State and local level, we get quite a different picture. The Advisory
Commission on Intergovernmental Relations estimates that between 1950 and
1968, less than one-half the increase in major State taxes was the result of
economic growth. Legislative action on new or higher taxes was responsible for
the better part of this increase. In contrast to Federal tax reductions, State
governments made more than 300 rate increases in major taxes during the 1960s
alone.
In view of their revenue sources, this unresponsiveness of State and local
tax systems to economic growth is not surprising. At the local level, more than
85 percent of tax collections come from property taxes, while nearly three-fifths
of all State tax collections come from sales and gross receipts levies.
In the face of this sluggish revenue growth, our States and localities are faced
with ever increasing demands for the provision of basic public services. As
always, they are expected to operate our major domestic service systems—such
as education, law enforcement, and waste disposal. But the expenditure requirements generated by these basic social needs continue to outpace State and local
revenue growth.
The result is the "fiscal mismatch." One level of government has the superior
revenue generating system. The other levels of government have the major
domestic expenditure requirements.
The Federal Government has not been oblivious to this discontinuity between
needs and resources. Federal assistance to State and local governments has
grown dramatically in the postwar period, from $2 billion in 1948 to $28 billion
in the new budget for 1971. The latter figure represents nearly one-quarter of
all domestic Federal spending.
But this growing Federal assistance has come in the form of narrow program
and project grants-in-aid. The number of program authorizations has been growing just as fast—if not faster—than the dollar total of assistance. Currently,
\ye have somewhere in the neighborhood of 500 separate programs of Federal
aid to States and localities.
That statement bears repeating: Today, we have approximately 500 separate
programs of Federal aid to State and local governments !
This proliferation of so-called categorical grant programs, while recognizing
the provision of adequate local public services as a national priority, has
threatened to create as many problems as the separate authorizations were
designed to solve.
—Large sums of money have been expended on a wide range of projects and
programs, many of them hastily conceived and difficult to evaluate.
—A substantial amount of Federal assistance is absorbed in "overhead," with
too much overlap, duplication, and red tape.
—Grant allocations are often arbitrarily awarded, with proficiency in making
applications frequently substituted for real local need.
—State and local budget costs are distorted, as certain activities are made
"cheaper" by virtue of varying matching provisions. Local needs are tailored
to fit program specifications, instead of the other way around.
—In some instances, new and frequently competitive State and local institutions
have been created, with very little effort devoted to assessing the effectiveness of
that course.
—Perhaps most significantly, because the grant approach creates direct ties
between functional bureaucracies—usually appointed or career officials—^the
role of elected public officials at the State and local level has been correspondingly reduced.
It is against the backdrop of this explosive increase in Federal grant programs
that present Administration is seeking to bring some order and rationality to
intergovernmental financial relations.
The question has never been whether Federal aid to States and localities is
appropriate. These govemments face increasing expenditure requirements, beyond
the capacity of their revenue systems, while the Federal tax system is both efficient and growth responsive. Federal assistance will continue to increase.
The important question today is not whether such aid is appropriate, but
whether we can design better systems for delivering Federal program assistance
and better methods of fiscal assistance.
Almost immediately upon assuming office. President Nixon undertook several
major efforts to improve the effectiveness of our intergovernmental relations.
They included reorganization within the executive branch, proposals for con397-702 0—711
^25
364
1970 REPORT OF THE SECRETARY OF THE TREASURY
solidation of related assistance programs, joint funding, and the restmcturing of
existing programs.
But by far the most important as well as the most dramatic step that the
President has taken to reform our intergovernmental assistance system is his
proposal to the Congress to inaugurate a program of Federal revenue sharing
with State and local governments.
When adopted, revenue sharing will constitute a milestone in Federal-State
relations. It seeks to restore to the States their proper roles in the Federal system, with a new emphasis on local discretion. More precisely, it proposes to extend
additional Federal assistance to our State and local governments in a manner
that mil permit local officials to respond fiexibly to the pressing needs of their
own jurisdictions, without being subjected to rigid Federal controls or
requirements.
The leading features of the Administration's revenue sharing proposal are as
follows:
—First, the total amount to be shared will be a stated percentage of personal
taxable income—the base on which Federal individual income taxes are levied.
In view of budgetary constraints, the revenue sharing fund will be limited to
$275 million in fiscal 1971, but will grow fairly rapidly and reach $5 billion
by the mid-'70s.
—Second, the distribution of the fund among the States will be based on a
simple formula that assigns primary weight to population, but also gives some
weight to tax effort.
—Third, the distribution within each State between the State govemment and
the localities will be likewise based on a formula, so that each unit of general
government within a State will be assured a share that is proportionate to its
own revenues.
—^Fourth, no program or project restrictions will be placed on the use of the
funds made available by the Federal Govemment. Each State, county, city, or
town will rely on its own judgment, and allocate the funds as it deems best.
Through revenue sharing, we ai'e trying to deliver a portion of our Federal
assistance in a broader and less conditional manner. By a direct distribution of
funds to our States and localities, the Federal overhead will be eliminated. By
including all general govemments on an equivalent basis, the arbitrariness of
"grantsmanship" will be removed from the process. Thus, the revenue sharing
approach respresents both a quantitative and a qualitative improvement in our
Federal aid system. The funds will come not with a list of requirements and
restrictions, but with a challenge—^to spend the money wisely. I think that is a
healthy aspect to inject into our intergovernmental relations.
II. Capital finance
Now I would like to move from the State and local current operating picture
to a discussion of capital financing. While much of the financing of State and
local public facilities will come from current revenues, and from Federal grants
and revenue sharing, it seems likely that States and localities will continue to
finance as much as one-half or more of their capital facility outlays through
borrowing.
I won't attempt to add my guess to the various projections which have been
made for State and local borrowings in the 1970's, but I think it reasonable to
expect that the annual growth in State and local debt in the 1970's will not be
less than the 9-percent rate of growth in the 1960's. Several factors support the
case for an even faster increase in municipal debt—the current backlog of public
facilities, the great difficulties which States and localities have in meeting capital
needs from their current revenues, and the growing demands for 'borrowing for
new municipal facilities for transportation, education, health, recreation, and,
of course, pollution control.
Yet we cannot expect the growth in municipal debt to keep pace with the
identification of new capital needs. We need only look at the 1969 experience
in the municipal market to see how far below expectations we sometimes fall.
As the President stated in his Environmental Message to the Congress of February 10, when he proposed the creation of an Environmental Financing Authority
(EFA) to help finance the estimated $6 billion of new municipal borrowings for
waste treatment facilities:
"The condition of the municipal bond market is such that, in 1969, 509 issues
totaling $2.9 billion proved unsalable. If a municipality cannot sell waste treat-
EXHIBITS
365
ment plant construction bonds, E F A will buy them and will sell its own bonds
on the taxable market. Thus, construction of pollution control facilities will
depend not on a community's credit rating, but on its waste disposal needs."
Gross issues of municipal bonds were less than $12 billion in 1969, compared to
over $16 billion in 1968, because m a r k e t interest r a t e s were too high a n d legal
interest r a t e ceilings in many States were too low.
Of course, 1969 w a s an unusually bad year for municipal borrowers because
it w a s a period of extremely tight money. Municipal borrowers a r e particularly
vulnerable at times of restrictive monetary policy since they have become so
dependent upon commercial bank purchases of their issues; bank investments
are necessarily reduced when money is tight and loan demands are strong. B a n k s
took about two-thirds of net municipal issues in the 1960's compared to only
one-fourth in the 1950's ; in 1967 and 1968 bank acquisitions accounted for nearly
the entire municipal market. B u t in 1969, preliminary figures show t h a t banks
took less t h a n 15 percent of net issues.
Time does not permit a thorough examination of t h e flow-of-funds statistics
and the many complex factors which cloud the outlook for the municipal bond
market. There are many pluses and many minuses. B u t a brief look a t some of
the major factors suggests t h a t States and localities a r e going to be h a r d pressed
to meet their growing credit demands a t reasonable r a t e s of interest.
On the t a x front, municipal borrowers will be in a stronger position relative
to other borrowers in the 1970's because the existing t r e a t m e n t of tax-exempt
municipal bond interest was not changed by the t a x reform actions of the Congress in 1969. Yet, the 1969 act also provided for ordinary income taxation of
earnings by banks and other institutions from capital gains on securities, which
could prove to be very costly to municipal borrowers. T h a t is, a s m a r k e t interest
r a t e s decline—as they have in recent months^—the appreciation in the value of
outstanding bonds will be much less because of the reduction in the capital gains
t a x advantage. The consequent reduction in the demand for long-term securities
will be especially h a r d on the municipal m a r k e t because State and local governments, unlike Federal agencies, rely so heavily on long-term borrowings.
The pressures on the municipal m a r k e t may be reduced somewhat as a larger
portion of State and local needs is met from Federal aid outlays, including
revenue sharing, r a t h e r t h a n from borrowing. Federal aid h a s been growing
steadily as a percentage of total State and local revenues, from 12 percent in the
fiscal year 1961 to over 18 percent estimated for fiscal 1970.
On the other hand, other demands on Federal resources a r e also increasing,
which add to overall pressures on credit markets. I n addition to direct Federal
budget outlays, a growing volume of p r i v a t e demands are being met through
new and expanding programs of Federal credit assistance. The budget for the
fiscal year 1971 provides for a decrease of $1.2 billion in net borrowing from the
public by the T r e a s u r y and other Federal budget agencies—which will help to
relieve pressures on credit markets—but there will be added m a r k e t pressures
in 1971 from the estimated increase of over $20 billion in net borrowings from
the public by federally guaranteed borrowers and by FNMA, the Federal home
loan banks, and other federally sponsored credit agencies. The $20 billion of net
borrowings for these Federal credit p r o g r a m s in fiscal 1971 is one-third more
t h a n t h e record $15 billion to be raised for these programs in fiscal 1970 and
more t h a n twice the net a n n u a l borrowings by States and localities in recent
years. These growing demands for Federal credit aid are largely to assist housing—an acknowledged victim of tight money in 1969. In the fourth q u a r t e r of
1969 about $3 out of every $5 of residential mortgage credit was provided directly
by Federal and federally sponsored agencies.
Yet we cannot achieve our national housing goals without at. the same time
providing the streets, sewers, schools, transportation, and other public facilities
which must accompany new housing. Our concern with housing is p a r t of our
overall concern with the quality of our environment. Improving environmental
quality clearly requires a balanced growth of both private and public facilities.
B u t "Where is the money coming from?" Municipal borrowers, like housing
borrowers, a r e also h a r d hit by tight money. I n fact, average tax-exempt bond
yields increased much faster than the yields on mortgages or corporate bonds in
1969—rising from about 70 percent of corporate yields in December 1968 to
about 85 percent of corporate yields in December 1969.
I n addition to the special problems of municipal borrowers during periods of
tight money, it is difficult to be optimistic about the municipal bond m a r k e t if
366
197 0 REPORT OF THE SECRETARY OF THE TREASURY
State and local debt is to continue to grow at 9 percent a year—which is clearly
a faster growth rate than we can expect for the gross national product or for
the total fiow of funds to credit markets.
The basic problem in the municipal market is that the structure is basically
wrong. The natural market for municipal bonds is the fast-growing pension and
retirement funds and other institutional investors who desire to maintain a
large percentage of their investments in safe, long term securities. But these
institutional investors are exempt from Federal income taxation, so they have
no interest in tax-exempt bonds. Thus we wind up selling municipal bonds to
banks and other high tax bracket investors, who are naturally interested in
maximizing their earnings through investment in shorter term and riskier instruments such as business loans and stocks. So municipal bond rates must be more
competitive with the aftertax returns on stocks and business loans, if the volume
of municipal debt is to keep pace with the demands for public facilities.
What then can the Federal Government do to help improve the availability of
debt capital to States and localities ?
Clearly, the most important action that the Administration can take is to continue the overall fiscal restraint necessary to curb infiation and inflationary
expectations, and permit some easing in monetary restraint, thus lowering the
general level of interest rates and reducing the cost of borrowing to States and
localities. We have already achieved a significant start in this direction, with
declines thus far this year in municipal bond rates of a full percentage point.
Long-term municipal bond yields declined from a high of about 7 percent in
mid-December 1969 to about 6 percent in mid-March.
Assuming that municipalities continue to increase their net borrowings by 9
percent a year, State and local deibt will rise from the current level of about $140
billion to over $240 billion in 1976. If we are successful in curbing overall
infiationary expectations in the economy, so that municipal bond rates continue to
decline from the 7-percent high of last December to, say, the 4 percent to 5 percent
levels of 1967 and 1968, the potential interest savings will rival the estimated $5
billion of Federal revenue sharing with the States and localities in the mid-70's.
That is, a decrease of 2 percent to 3 percent in the cost of carrying $240 billion of
municipal debt will in time permit interest savings to State and local governments of $4.8 billion to $7.2 billion a year, as the higher rate bonds are eventually
replaced with issues at the lower rates.
Thus, returning the economy to a more stable growth rate, which will permit
lower interest rates, must clearly be the number one objective.
There have been a number of suggestions that the Federal Government help
to broaden the market for municipal securities through some sort of a central
financing facility, such as the Urbank proposal; or some form of Federal
guarantee or interest subsidy on municipal bonds financed in the taxable bond
market; or simply Federal subsidy payments to retirement funds and other
tax-exempt investors to induce them to acquire municipal bonds. Yet a fundamental objection raised to these proposals—I think, understandably—is that
they could lead to greater Federal control over municipal borrowings and thus
confiict with the overall philosophy of greater State and local financial independence. While these proposals deserve our careful consideration, I believe there
is much we can do in the meantime to avoid adding to the pressures on the
municipal bond market. Specifically, I refer to actions currently proposed by the
Administration to provide for taxable bond financing of new municipal obligations
generated in connection with Federal credit assistance programs for waste treatment facilities and for rural water and sewer facilities. Since these directly aided
programs will otherwise require direct Federal subsidies and direct involvement
by the Federal Government with the State and local project agencies, there need
be no additional element of Federal control accompanying any shifting of the
borrowings from the tax-exempt to the taxable bond market.
If, instead of financing some of this municipal debt in the taxable bond market,
we were to take the alternative approach of Federal guarantees of tax-exempt
bonds for all new mumcipal borrowings requiring Federal credit aid, we would
add to the pressures on State and local interest rates. Since many of these bonds
could not have been issued without the aid of the Federal guarantee, the effect
of the guarantee would be to add to the total supply of municipal bonds and thus
to the overall demands on the relatively narrow tax-exempt bond market.
The estimated $1.9 billion of new federally supported public housing and urban
renewal borrowings in fiscal 1971, for example, may well require about 20 per-
EXHIBITS
367
cent of the supply of funds available to the municipal market, compared to only
about a 12-percent share taken by these two programs in fiscal 1969. If we also
offer Federal guarantees, or debt service grants, on tax-exempt bonds for mass
transit, municipal airports, health, education, pollution control, and other new
public facility programs, it is easy to see in the not too distant future that half
or more of the supply of funds to the municipal market will be required merely
to finance these Federal aid programs. Also, with Federal guarantees on these
tax-exempt bonds, they would be of higher investment quality than the typical
municipal issue, so that States and localities borrowing on their own and competing with these federally backed issues will surely have to pay a significantly
higher interest rate.
Thus the 1971 budget contains an Administration proposal providing that loans
made to rural communities by the Farmers Home Administration and then sold
by that agency to private investors with a Government guarantee shall bear taxable, rather than tax-exempt, interest. Under this proposal the Federal Government will pay a portion of the interest, so that the cost to the borrowers will be
more in line with the rates paid by municipalities borrowing at tax-exempt rates.
The required Federal interest subsidy will involve no net cost to the Treasury,
as compared with the alternative of tax-exempt financing, since all of our studies
indicate that the Federal revenue loss from tax-exempt interest is significantly
greater than the interest savings to the borrower from the tax-exempt feature.
A similar approach to this same problem is the Environmental Financing
Authority (EFA) proposed by the President, which I have already mentioned.
Under the legislation submitted to the Congress by Secretary Kennedy on
February 10, EFA would stand ready to purchase the waste treatment bonds of
any public body receiving a project grant from the Secretary of the Interior and
unable to raise its share of the project costs at reasonable interest rates. Then
EFA will finance these purchases by issuing its own obligations in the taxable
bond market.
These new Administration proposals will at least reduce the volume of taxexempt bonds stimulated by new Federal credit aid programs and will help
minimize new pressures on municipal interest rates. Yet the basic problem
remains. State and local borrowing demands are growing faster than the supply
of long-term investment funds from investors in high income tax brackets. The
price of this imbalance is reflected in the interest rate on tax-exempt bonds. The
value of tax exemption to each borrower declines as the total volume of tax
exempts increases.
Tax-exempt interest has at times been an effective means of revenue sharing—
the investor pays the tax to the State or local borrower, by accepting a lower
interest rate, rather than to the Federal Government. But the efficiency of this
type of revenue sharing declines as borrowings increase and tax-exempt rates
rise relative to taxable rates.
III. A concluding note
To sum up, we have only a partial answer to our starting question, "Where
is the money coming from?" On the current operating side we are moving in the
direction of an effective system of revenue sharing, rather than continued expansion in the number of narrow, categorical grants in aid. We can look forward to greater State and local financial independence as the amount of revenue
sharing grows along with the growth in the economy. But on the capital side we
do not yet have the tools to do the job. As the volume of local public facility
financing increases, the effectiveness of tax-exempt interest as a form of revenue
sharing decreases. Unless a more efficient tool is designed, we can expect growing
demands for direct Federal credit aid for each high priority program. Will this
lead to an expansion of credit program bureaucracies—as opposed to our efforts
toward streamlining Federal financial assistance through revenue sharing? If
so, it will hardly contribute to the kind of healthy relationship we desire in our
intergovemmental relations.
What then is the answer? I am confident it must be something other than making continued demands upon an overburdened tax-exempt market. We will be
actively engaged in developing a more effective alternative to that approach
during the coming months, and I would certainly welcome the thoughts and
suggestions of State and local officials. To work together toward more effective
solutions is just what the President's New Federalism is all about. All of us
have a vital stake in coming up with workable solutions, so that the needed ex-
368
1970 REPORT OF THE SECRETARY OF THE TREASURY
pansions in our public sector facilities can take place—and be financed in the
most economic and efficient manner.
Exhibit 29.—Remarks by Assistant Secretary Weidenbaum, August 27, 1969,
before the National Conference of State Legislative Leaders, St. Louis,
Missouri, on a new fiscal federalism
When President Nixon first outlined the principles of his domestic program on
April 14, he described one of this country's more pressing needs:
,.
"If there is one thing we know, it is that the Federal Government cannot
solve all the Nation's problems by itself; yet, there has been an over-shift of
jurisdiction and responsibility to the Federal Government. We must kindle a
new partnership between government and people, and among the various levels
of government."
The need for such a new partnership was never stronger than it is today. The
evidence of "over-shift" is readily apparent. Just to catalog the current domestic
programs of the Federal Government now requires a book of more than 600
pages.
In retrospect, it is quite clear that this large fiow of power from the private
sector and from the cities and States to Washington did not just happen of its
own accord. It was induced initially by economic crises. It was further stimulated by mobilization for major war and the threat of major war. It has been
accelerated by a variety of efforts of the Federal Government to cure major
domestic ills through the power of Federal programs and Federal money.
Yet for all this emphasis on the assumed power and influence of our national
Government, the limits to its effectiveness have become all too apparent. Too
often. Federal funds have been wasted or used inefficiently. Too often, a bountiful promise has been followed by a lack of performance. Too often, the application of some centrally formulated regulation has failed to accommodate the
diversity of local situations. The result has been some erosion of public confidence in the Federal Government's ability to serve as a truly effective instrument of social progress.
State and local governments are, in some cases, better able to deal with these
problems. These governments have also experienced rapid growth. Indeed, since
World War II, their expenditures, employment, and indebtedness have increased
significantly faster than those of the Federal Government. Yet the services the
public has expected them to provide—education, transportation, health, and
many more—have often been beyond the capacity of local public resources to
finance and hence to deliver.
The Federal Government has not been oblivious to the needs of State and local
governments. Federal grants in aid to States and localities will pass the $25
billion mark this fiscal year—up from $7 billion in 1960. This type of program or
categorical assistance has represented an increasing portion of both total Federal
outlays and State and local revenues. But, too often, it has also been accompanied
by an ever growing maze of program restrictions, formulas, matching provisions,
project approval requirements, and a host and variety of administrative burdens.
The result has been the creation of a complicated network of intergovernmental
assistance efforts with many inefficiencies and unworkable features.
This Administration intends to correct the inefficiencies and infiexibilities of
the present system while assisting the States and localities in a more substantial
way than in the past. The need for such assistance can be clearly demonstrated.
Public finance experts of all political persuasions have noted that under the
existing income tax structure Federal revenues increase faster than the national
economy, while Federal expenditures for current programs (except in wartime)
are likely to rise more slowly. The reverse is true for States and localities. Their
revenues, based heavily on sales and property taxes, do not keep pace with the
rate of national economic growth. In contrast, their expenditure requirements
for existing programs tend to rise far more rapidly. The resulting "fiscal mismatch" of potential Federal surpluses and State-local deficits is the financial
basis for Federal aid.
This is not a partisan point that I am making. The "fiscal mismatch" has been
noted by analysts of all political persuasions. In preparing the Administration's
revenue-sharing plan, we carefully reviewed the literature on the subjek?t I was
EXHIBITS
369
personally struck by the widespread support for introducing a new and broader
type of Federal financial aid to State and local governments—support by Democrats as well as Republicans, liberals as well as conservatives, academic experts
as well as political leaders, and big city dwellers as well as smalltown residents.
The challenge, then, is to redesign our system of intergovernmental assistance
to achieve the results we all desire :
—a better allocation of total public resources,
—more responsiveness in public institutions,
—more control over local events by local authorities,
—greater program and budget flexibility for locally-elected officials,
—more efficient, less encumbered forms of Federal assistance.
The President has accepted this challenge. On August 13, he proposed to the
Congress fundamental revisions in both the spirit of our intergovernmental relations and the substance of our intergovernmental assistance system. As he put it,
we are seeking to build a "New Federalism," with a retum to the States, cities, and
counties of the decision-making power rightfully theirs. At the heart of this effort
is the proposal for sharing Federal revenues with the State and local governments.
Revenue sharing can provide both the encouragement and the resources for local
and State officials to exercise leadership in solving their own problems.
I want to take this opportunity to outline in some detail the essential elements
of our revenue-sharing proposal. I find it most helpful to describe it within the
framework of four major questions.
First, how do we determine the total amount to he shared?—We propose to establish a permanent appropriation, automatically determined each fiscal year,
which will provide revenue-sharing funds equal to a stated percentage of personal
taxable income—the base on which Federal individual income taxes are levied.
To provide for an orderly phase-in of this program, the fiscal year 1971 percentage
is one-sixth of 1 percent, or about $500 million. Subsequent fiscal year percentages
increase annually up to a permanent 1 percent for the fiscal year 1976 and thereafter. On this basis, we estimate an appropriation for the 1976 fiscal year of about
$5 billion. We think that it is important to make a start soon, rather than waiting
until the budget permitted a larger program. A 5-year-transition is a desirable approach for a brand new activity.
Like most revenue-sharing proposals, our plan uses aggregate i)ersonal taxable
income as the base for computing the shared amount. This tax base has the advantages of relative stability, steady growth, and independence from tax rate
changes. Furthermore, it insures the taxpayer that State and local officials will
not become advocates for higher Federal tax rates in order to gain revenuesharing funds.
Second, how are the funds distributed among the States?—We propose a distribution based on each State's share of national population, adjusted for the
State's revenue effort. The revenue effort adjustment is designed to provide the
States with some incentive to maintain, and even expand, their efforts to use
their own tax resources to meet their needs. Revenue effort is defined in the
customary fashion—the ratio of total general revenues collected by a State and
all its local governmental units during a given fiscal year to the total personal
income of that State. A simple adjustment along these lines provides a State
whose revenue effort is 10 percent above the national average with a 10-percent
bonus above its basic per capita ix)rtion of revenue sharing.
One important point about revenue effort should be noted: It is a relative and
not an absolute measure, since revenues collected are expressed as a percentage
of personal income for each State. It does not, therefore, reward "wealthy"
States—that is, those States with high average income levels. Indeed, some of
the wealthier States on a per capita income basis have relatively low revenue
efforts, and some of the poorer States have high revenue efforts. In a direct way,
the revenue effort provision rewards those States that try harder to meet their
own needs with their own resources.
The State-by-State distribution is primarily determined, then, on a per person
basis, with revenue effort added as a minor adjustment. (To compute a State's
share of the revenue sharing fund, the arithmetic is quite straightforward: one
simply computes the product of that State's population times its revenue effort
and divides the result by the sum of the products so computed for all 50 States
and the District of Columbia.)
Our proposal does not contain a so-called equalization provision, whereby lowincome States receive more per person than high-income States. We have found,
370
19 70 REPORT OF THE SECRETARY OF THE TREASURY
in the course of many discussions with State and local officials, that variations
in State per capita income are simply not a good measure of need. In fact, many
of our most urgent domestic problems are found in the urban centers of the States
with high per capita income. Therefore, we have chosen to keep the distribution
among States as neutral as possible, basing it primarily on population.
Third, how are the funds distributed within each State?—Including local
governments in Federal revenue sharing is a relatively new idea. We spent
more time trying to perfect the local "pass-through" than on any other part of
the revenue sharing plan. You cannot use a simple per capita distribution among
local governments because of the overlapping jurisdictions of cities and counties.
You cannot use a measure of "need" because there are no adequate statistics on
income levels by city and county.
This is the approach that we did come up with: We propose that each State
share a given proportion of these funds with its local governments. The allocation of a State's payment among its local governments is carefully prescribed
by formula. First, the total proportion which a State shares with its local governments corresponds to the ratio of general revenues raised by these local
governments to the combined total of revenues raised by the State and all its
units of local government. Second, the proportion of this local share which an
individual unit of general government receives corresponds to the ratio of its
own general revenues to total general revenues raised by all general purpose
local governments in the State.
There are some features of this local distribution which deserve emphasis.
For one, we are proposing to share revenues with all general purpose local
governments—cities, towns, and counties—-and only general purpose local governments. There is no minimum size requirement for a locality to participate, and
no special or school districts are eligible for direct sharing. These features are
fully consistent with the spirit of the New Federalism and the purposes of
revenue sharing. That is, all general governments should be included, and no
program or project restrictions should be placed on the funds. To have distributed
dollars directly to fire districts, or school districts, or drainage districts would
have amounted to widespread earmarking of substantial funds for specific programs. Our desire is to avoid that and to leave such budget allocation decisions
up to the responsible State and local officials.
It may be useful to analyze how the local pass-through would operate. Limiting
eligibility to general purpose local governments has an important impact on the
other key feature of the local distribution formula—allocation of funds on the
basis of general revenues raised. A distribution based on revenues raised has
several important advantages : it makes allowance for State-by-State variations ;
it tends to be neutral with respect to the current relative fiscal importance of
State and local governments in each State; and it provides a method for allocating among governmental units with overlapping jurisdictions. By sharing funds
only with municipalities, counties, and townships, the State government portion
of revenue sharing is enlarged by the relative proportion of special and school
district revenues to total revenues.
This result has a direct effect on potential State and local allocations of
revenue sharing funds to particular programs and projects. In those areas where
the functions elsewhere performed by a special purpose district or a school district
are carried on directly by a general purpose government, then that government's
portion of revenue sharing will be enlarged by the proportion of its revenues
that it raises for such functions. Therefore, those officials responsible for managing and administering the special functions involved will look to the general
purpose local government for any additional funds. On the other hand, if a special
purpose or school district exists independent of the local government, then the
State government's portion of revenue sharing will be enlarged by the proportion
of total revenues that are raised by these districts. In these cases, the officials
responsible for managing and administering such district will look to the State
government for additional assistance. By this distribution procedure, the Federal
revenue sharing program avoids directing or infiuencing the allocation of funds
to particular governmental functions. Such allocation decisions will be made by
State and local officials in response to the needs of their jurisdiction.
There is another important point which should be made regarding the
allocation of funds on the basis of revenues raised. Some observers have
jumped to the conclusion that such a distribution procedure rewards the wealthy
EXHIBITS
371
suburb at the expense of the central city. This is simply not a valid generalization. Revenue-sharing funds go to local govemments in proportion to their
share of general revenues raised, not in relation to the income level of their
residents. We are unable to find evidence to support a contention that suburban
governments raise more revenues per capita than urban governments. In fact,
the reverse is true in many specific instances. For example. New York City raised
$404.81 per capita in general revenues in 1967-68 (the latest figures available),
while New Rochelle raised $152.55 and Mount Vernon $121.89. For all cities of
1 million or more, the average per capita revenues were $255.95, compared to
$78.74 for cities with population of less than 50,000.
One final point about our proposal for distribution of funds within each State
deserves mention. In order to provide local flexibility, we will permit a State—
working with its local governments—the option of developing an alternative
distribution plan. Any alternative plan, however, must receive sufficient support
from both the State and the local govemments, large and small.
The fourth major question is: What restrictions or qualifications are imposed
on the use of revenue-sharing funds?—I have already expressed our determination that these funds should have no program or project "strings" connected with
their use. A fundamental purpose of revenue sharing is to permit local authorities
the programing fiexibility to make their own budget allocation decisions. This
purpose is basic to the spirit of the New Federalism: a return to the States and
localities of their rightful powers and responsibilities.
The requirements we propose are minimal: (1) that the States carry out the
requirement to share funds with their local governments; (2) that this local
sharing be in addition to current sharing efforts; and (3) that all recipient
governments provide a reasonable amount of information reporting to the
Treasury Department for the funds they receive.
We welcome the thoughts of State and local governments on how best to
implement these general concepts. We have had the benefit of numerous helpful
suggestions from governors, mayors, county executives, legislators, academic
experts, and other interested parties. In preparing this specific proposal, we
have attempted both to draw on past efforts and to go beyond them.
I believe that the Administration's revenue-sharing plan contains several
important improvements over some of the earlier proposals: (1) it includes local
as well as State governments, and (2) it leaves to the State and local governments the decision as to how to allocate the funds among programs and activities.
However, we claim no monopoly on wisdom. We welcome further suggestions
and advice.
I would like to conclude by citing what I believe are the most advantageous
characteristics of the Administration's revenue-sharing plan.
—It is simple. No new Federal bureau or agency is needed; the funds are
distributed on the basis of readily available objective statistics, as clearly
specified in the plan. None of the Federal revenue-sharing money is to be used
for "overhead" or other expenses by the Federal Government.
—It is automatic. State and local governments can count on the funds in their
own fiscal planning. The money for revenue sharing is automatically available
each year and is geared to the growing personal income tax base of the Nation.
—It is fair. The funds go to every State, every city, and every county in the
Nation. All areas are included—urban and rural, large and small, rich and poor,
industrialized and agricultural.
—It has no strings. The State and local governments are free to exercise their
discretion over the use of the funds. Decisionmaking authority, as well as money,
is returned to State and local governments.
—It is neutral. The State-by-State distribution is based primarily on where
people reside. The allocation among governments within a State is based on the
existing distribution of financial responsibilities among the various units of
government, as decided in each area.
President Nixon's call last April for a new partnership among the various
levels of government has received an enthusiastic response from many quarters.
Revenue sharing is an integral part of such a partnership. It is a program which
has long enjoyed bipartisan professional and political support. That is the
measure of its merit. Its enactment will represent an important step toward
establishing a more effective and better working Federal system of Government.
372
19 70 REPORT OF THE SECRETARY OF THE TREASURY
Exhibit 30.—Remarks by Assistant Secretary Weidenbaum, May 18, 1970, before
the Chemical Forum, Washington, on the progress of revenue sharing
It has just about been 1 year since the Administration's Committee on Revenue
Sharing started functioning. As chairman of the committee, I believe that it is in
order for me to present a progress report, indicating both accomplishments to
date as well as future activities.
It certainly is premature to start crowing; but as I look back, I find that we
have come a very long way in the past 1 year. As you may know, revenue sharing
has a fairly extended history. For many years, economists in universities and
research institutions have been developing different types of plans whereby the
Federal Government can share a portion of its financial resources with the
States and with local governments. Also, numerous bills have been introduced
in both Houses of the Congress, by Democrats and Republicans, liberals and
conservatives, by men and women from every region of this Nation.
However, until this past year, the prospects for any action were poor, for two
reasons. First of all, there was no agreement on what specific form revenue
sharing should take. There were dozens of different proposals, each with some
merit but with no common focus. Moreover, no Administration in Washington—
and certainly no President of the United States—had come out in support of
the general idea of revenue sharing, much less in favor of any specific approach.
As you know, both of these obstacles were overcome, and I might add, ahead
of our original schedule. As I reflect on it, our approach was quite simple and
straightforward. Last summer, the President called into the White House a
representative and bipartisan group of governors, mayors, and county officials
to assist us in developing the Administration's revenue-sharing approach.
Thus, the approach that we came up with was not imposed unilaterally but
was the result of a joint effort by Federal, State, and local elected government
officials. One of the key participants, Governor Daniel Evans of Washington,
described the meeting as follows :
"There was remarkable agreement among those attending this meeting over
the principles which should be embodied in a revenue-sharing proposal. This
agreement represents a hallmark in new governmental relations."
That effort resulted in agreement on what have come to be the basic principles
of revenue sharing:
1. An automatic distribution each year of a designated portion of Federal
revenues, based on objective criteria spelled out in law.
2. An equitable sharing of the money among State and local governments, also
spelled out in clear formulas contained in Federal law.
3. No "strings" or restrictions on the use of the money. In effect, the funds
become State and local money, which they can spend for any lawful purpose, as
they see fit, with the same discretion that they spend their own money.
4. Inclusion of all general purpose local governments, regardless of size or
location. Many of the earlier plans omitted local governments or only included
the largest ones. Thus, the intention was clear; revenue sharing was going to
be a fair, equitable, and broadly based method of providing a portion of the
Federal tax base to help State and local governments meet their urgent
problems.
Indeed, there were two fundamental differences from any other Federal program: (1) not just the expenditure of money was being decentralized, but the
decisionmaking power over its use, in an effort to strengthen our Federal form
of government, and (2) by providing for an automatic operation, no new
Federal overhead function was being set up; 100 percent of the revenue-sharing
fund was going to be disbursed to State and local governments.
It was this commonly agreed upon approach that President Nixon presented in
his Message to the Congress of August 14, 1969, the first Presidential revenuesharing message, certainly since Thomas Jefferson's second inaugural address.
The reaction was strikingly good.
The Baltimore Sun called it "a bold and broad-visioned proposal." Business
Week labeled it a "compelling idea," and The New York Times stated that it
"marks a turning point not only in fiscal policy but in the whole relationship of
Federal, State, and local government."
Perhaps that was not too surprising in view of the fact that the Gallup Poll
consistently has reported strong approval of the approach to revenue sharing
which has been adopted by this Administration. In May 1969, the Gallup Poll
EXHIBITS
373
showed 71 percent in favor of having a percentage of Federal income taxes returned to State and local governments for use as they see fit.
This approach to revenue sharing has now been enthusiastically endorsed by
the National Governors' Conference, the U. S. Conference of Mayors, the National
League of Cities, the National Association of Counties, the National Legislative
Conference of State Officials, and by State and local leaders in every part of this
Nation.
The governors endorsed revenue sharing with the following language :
"The National Governors' Conference has supported by resolution since 1965
the concept of revenue sharing as vital to the continuation of a strong Federal
system * * *. The Nation's governors stand ready to work with you closely and
responsibly'to achieve this vital result * * *."
In a joint statement, the National League of Cities and the Conference of
Mayors declared when they "enthusiastically welcomed" the Administration bill:
<' * * * j,^ is vitally important to establish the principle of revenue sharing at
the earliest possible moment so that steps will be triggered to begin the long, hard
struggle to restore balance to our Federal system."
The counties echoed the sentiment expressed by the State and city governments :
"We are pleased that the Administrations' bill has the general wholehearted
support of the Nation's mayors and governors. Certainly, all must entiiusiastically
concur with the President when he states that one cf the purposes behind Federal
revenue sharing will be a 'new emphasis on and help for local responsiveness,
and to provide both encouragement and the necessary resources for local and
state officials to exercise leadership in solving their own problems.'
"The National Association of Counties pledges its wholehearted and enthusiastic support for this much needed harbinger of a basic change in our concepts
of federalism."
My colleagues and I have been devoting a major part of our energies to explaining how revenue sharing will work to the many, many groups that have invited
us to meet with them. I am pleased to report that the response has been overwhelmingly favorable, varying from carefully considered support to that enthusiasm that warms the heart.
Certainly the variety of groups that we have met with is impressive itself—
varying from national conventions of thousands of delegates from all over the
country to statewide meetings to civic groups in a single city. The support for
revenue sharing has come from every region of this Nation, from every size of
community, and from every type of organization.
Of the many hundreds of letters that the Treasury has received on revenue
sharing, it is hard for me to recall more than one or two unfavorable ones. I
cannot think of any other proposal that has engendered such a favorable ratio
of response.
The many thousands of miles that I have traveled during the i>ast year and
the literally tens of thousands of fellow citizens that I have talked to on revenue
sharing have fully convinced me that this is a real need of our country, that
this is an idea that when thought through appeals to Americans of all political
persuasions and all walks of life.
Well, then, if the support is so broadly based, why hasn't revenue sharing
been enacted into law? This is a question that I frequently get, whether I am
lecturing on the subject at our colleges and universities or meeting with civic
groups or addressing audiences of business or professional men and women. My
response is usually along the following lines.
Despite its academic pedigree, revenue sharing is a relatively new idea. It
takes time for new. ideas, no matter how praiseworthy, to be enacted into law.
Certainly, the initial congressional response was quite good. The revenue-sharing
bill that our Committee drafted was introduced in the Senate by Senator Howard
Baker of Tennessee and 32 other Senators, and referred to the Committee on
Finance. In the House of Representatives, the bill was introduced by Representative Jackson Betts of Ohio and 87 other congressmen and referred to 'the Committee on Ways and Means.
One indication of the congressional interest and reaction is the numerous statements on revenue sharing which have been inserted in the Congressional Record
during the past year. They virtually all have been favorable.
Well, then, if the level of congressional as well as public support and interest
is so high, what is holding it up? At this point, I usually start to explain how
the Government is organized and, particularly the way in which the Congress
374
1970 REPORT OF THE SECRETARY OF THE TREASURY
functions. The fact of the matter is that the committees to which the revenue
sharing bills have been assigned have not yet held hearings.
Of course, this can be discouraging, particularly to many of our young people
who do not hesitate to needle me on the responsiveness of our institutions
to the problems that we face. I am not sure that my response is altogether satisfying to them, but I point out the need for patience coupled with persistency and
perseverance. And let me assure you that we wiil persist and we will persevere
until revenue sharing becomes a reality. I am pleased to report that several
members of the Ways and Means Committee have endorsed revenue sharing
with enthusiasm.
One of the most heartening developments that I have witnessed is the rising
efforts on the part of State, local, and private citizen groups to promote revenue
sharing. In recent weeks, the national associations representing the governors,
mayors, and county officials held an unprecedented joint press conference in
Washington with a single subject and a single purpose: to urge the Congress to
enact revenue sharing as promptly as possible.
Let me quote from a joint statement issued last month by the head of the
Governors' Conference (Governor Love of Colorado), the head of the National
League of Cities (Mayor Curran of San Diego), the head of the Conference of
Mayors (Mayor Maltester of San Leandro), and the head of the National
Association of Counties (Judge Fowler of Shelby County, Alabama) :
"Officials of State and local government join in expressing a most urgent need
for congressional action on Federal revenue-sharing measures this year. Our
intergovernmental fiscal system is in serious structural jeopardy. As a Nation,
we are no longer able to produce adequate revenue from, existing State and local
fiscal sources to meet the cost of overwhelming program and service responsibilities at these levels. We view revenue sharing—the federalization of the Federal
Government's personal income tax base—as a far reaching and imperative structural change to bring direly needed relief to this fiscal condition."
Let me repeat what I consider to be their key words: "urgent", "imperative",
"direly needed."
Revenue sharing is the Treasury Department's number one legislative item for
1970, just as tax reform was our highest priority effort last year. I can assure you
that you will be hearing much more about this basic part of the Nixon Administration's New Federalism during the rest of 1970.
Personally, I am convinced that it is just a matter of time until a program
with the strong and widely-based public support that revenue sharing has obtained will ultimately be adopted. Of course, the sooner the better, but mine is
a counsel of patience and perseverance. We have come a long way since President
Jefferson first urged in 1803 that Federal revenue be utilized for "a just reparation among the States * * * applied * * * to rivers, canals, roads, arts, manufactures, education, and other great objects within each State."
Law Enforcement Developments
Exhibit 31.—Remarks by Assistant Secretary Rossides, April 16, 1970, before
the 76th Anniversary banquet of the Bronx Board of Trade and Chamber of
Commerce, Bronx, New York, on President Nixon's antiheroin action program
I would like to discuss with you tonight President 'Nixon's action program to
curtail the fiow of heroin into the United States, to curtail its use in the United
States, and Treasury's role in this program.
The antiheroin program is a major part of the overall antidrug abuse program
of this Administration. The problem of drug abuse and particularly heroin
abuse was not created overnight, and it will not be cured overnight. The drug
problem of the 1950's became the drug crisis of the 1960's. Tt will take hard work
and cooperative effort in the 1970's by many groups on the Federal, State, and
local levels to win this battle. I bring you a message of hope tonight but also a
message of hard work ahead for all of us.
President Nixon recognized the problem during his campaign for the Presidency
in a statement that he made at Anaheim, California, on September 16, 1968. In
that statement, the President said :
"Four weeks ago, after the convention at Miami Beach, I came out to Mission
Bay to rest and to work. When I was there, a letter was delivered to me from a
EXHIBITS
375
19-year-old girl. She described to me her involvement with narcotics from the
time she was 16 years old ; she told me how many of her teen-age friends had also
become hooked on drugs; she gave the details of the horrible life they led, and
the gruesome things they did to support their habit. She asked me what I could
do to help her generation, and because she was still on drugs she never signed her
name.
"This was not some statistic that sent me this letter. It was a human being,
someone's daughter—and in a letter like this the evil of narcotics comes through
a good deal clearer than it does from reading statistics or a local newspaper.
"I don't have to tell you this story, many of you are aware of the wholesale
destruction of lives within your own area." * * *
"Let us begin to face facts—and to act upon that knowledge. Narcotics are the
modern curse of American youth. Just like the plagues and epidemics of former
years, these drugs are decimating a generation of Americans."
How many of you know people in your neighborhoods, perhaps on your street
or perhaps in your family, who have become victims of drugs?
That young girl asked what the President could do to help her gemeration.
The President has acted on several fronts:
First, he has elevated the drug problem to the foreign policy level and, indeed,
to the level of pe^rsonal Presidential initiatives in foreign policy.
Second, he has stressed the role of education, research and rehabilitation and
provided for increased funds and emphasis in these essential areas.
Third, he has recommended differentiation in the criminal penalty structure
between heroin and marijuana.
Fourth, he has provided a substantial increase in budgetary supx>ort for law
enforcement in this area.
Fifth, he has stressed the need for cooperation with the States and the involvement of the private sector.
In short, the President has highlighted the multidimensional aspects of the
problem and has moved on many fronts, both governmenbal and nongovernmental,
to meet a problem of crisis dimensions.
For the first time in history, we see not only the total involvement of the
institution of the Presidency in the battle against drug abuse, but also the personal
involvement of the President himself.
Foreign policy
President Nixon has made the drug problem a foreign policy issue and has
taken personal initiatives in eliciting the cooperation of the governments of
Turkey, Mexico, and France.
Once President Nixon had raised drug abuse to the foreign policy level, the
Department of State, as the primary representative for communicating to foreign
governments the vital interests of the United States, became responsible for doing
everything necessary to advance our drug abuse policy through diplomacySecretary of State William P. Rogers has given high priority and personal
leadership to the State Department's efforts in this area. Last year, he appointed
a senior Foreign Service Officer as his Special Assistant for Narcotic Matters in
order to better coordinate and push forward the various elements of the campaign
against narcotics which have foreign relations implications.
This new role of the State Department in the Administration's war on narcotics
has had a unique and immediate impact. In the past, tiie primary oonitact with
foreign governments in this area had been almost exclusively limited to the
enforcement level. Through the use of diplomacy, however, we have, in my judgment, achieved a substantial advance in our objectives. As Under Secretary of
State Elliot Richardson observed recently :
"We have made processing and producing nations aware of the terror drugs
have brought to our society. We have stressed that what has happened here can
happen to them.
"Diplomacy is * * * a means of achieving national objectives. In the case of
narcotics I believe we have successfully employed it to transmit our sense of
urgency to * * * [Turkey, Mexico, and France] so that, even though their own
immediate interest in tighter measures of control is a good deal less acute than
our own, they are moving ahead with encouraging speed."
Our first, and to date most fruitful diplomatic advance, was made with the
Government of Mexico. It is estimated that 15 percent of the heroin and 85 per-
376
1970 REPORT OF THE SECRETARY OF THE TREASURY
cent of the high-potency marijuana consumed in the United States is illegally
grown and refined in Mexico and smuggled into the United States.
Operation Cooperation, the successor to Opei'ation Intercept, has led to a
meaningful working relationship between the two governments in the area of
opium poppy and marijuana eradication and smuggling suppression. Our very
able Ambassador to Mexico, Robert McBride, has the drug problem on the top
of his priority list. I predict that the two governments will be working together
in ever-increasing harmony and effectiveness.
It is estimated that 80 percent of the heroin entering the United States annually originates in Turkey. That is why, as Mr. Richardson said, "Turkey has
figured so prominently in our diplomatic activities on narcotics." Our efforts
have been aimed at helping the Government of Turkey bring the illicit opium
traffic completely under control. We are in the advanced stages of negotiations
with the appropriate levels of the Turkish Government. Our Ambassador to
Turkev, William Handley, also has the heroin problem at the top of his priority
list.
Our diplomatic efforts with the Govemment of France have also been helpful.
France has become concerned with its own increasingly serious heroin problem
and has launched a major drive against the operators of clandestine heroin
production laboratories operated on her soil, often by foreign traffickers.
Research
The national dialogue on drug abuse has demonstrated that our knowledge of
many of the most abused drugs is far from adequate. Little is known, for example, of the long-range effects of the continued use of marijuana and the vastly
more powerful LSD. We do know that there are no known beneficial effects, and
that both can induce psychological dependency and loss of goal orientation. Far
more must be known, however, about LSD and marijuana if we are to prevent
their use through persuasion.
In this connection, the outstanding contribution of Dr. Stanley Yolles, Director
of the National Institute of Mental Health of HEW, to the Administration's
program, should be noted. It is under Dr. Yolles' auspices that the bulk of the
research sought by the President will be accomplished.
Differentiation in penalty structure between heroin and marijuana
But Dr. Yolles has already made his mark. It was his cogent and articulate
testimony which laid the groundwork for the Administration's decision to reverse
the traditional approach to marijuana by differentiating in the penalty structure
between heroin, a true narcotic, and marijuana, an hallucinogen. Both are treated
the same under present Federal law. The President's decision to seek revised
penalties for marijuana violations has gone far toward achieving another Administration goal: credibility with the young.
Education
The drug abuse problem is one of both supply and demand, and President
Nixon's response has been guided accordingly. While we are battling to eliminate
the supply at the source and to stop the smuggling of illicit drugs into the
United States, the goal of eliminating the demand for drugs among our young
is, in my judgment, also central to success.
The key to eliminating the demand for drugs lies in education. President
Nixon is convinced that much of our problem is attributable to the mass of misinformation and street corner mythology which has filled the vacuum left by our
failure in the past to deal with the young on a mature, reasoned and factual
basis. In the past, government took the easy but ineffective route of "do as I say
because I say so" rather than the more difficult route of clearly presenting the
facts necessary for informed decision.
Again stressing the theme of prevention through persuasion, on March 11
President Nixon released a million dollars to the National Institute of Mental
Health for marijuana research, and another million dollars to NIMH for an expanded program of public education and information on drug abuse, including
creation of a national clearing house for drug abuse information.
Increased enforcement budgets
Drug law enforcement is a difficult and dangerous business. It demands the
highest standards of professional competence of enforcement agents. President
EXHIBITS
377
Nixon has increased substantially the budgets of the two Federal agencies
primarily concerned with drug law enforcement—the Bureau of Narcotics and
Dangerous Drugs and the Bureau of Customs.
The burdens carried by these agencies are illustrated by the record of the
Treasury agents of the Customs Service, who in 1969 worked over 111,000 hours
on their own time without pay to meet the challenge of drug abuse.
In enforcing the law, only half the job is done when the suspected violator is
arrested. Society is not protected until a jury is persuaded of guilt beyond a
reasonable doubt. Skillful prosecution is necessary.
The Department of Justice is meeting this challenge with a new aggressiveness inspired by this Administration, backed up by substantial funding for the
narcotics prosecution section of the Department.
Cooperation with the States and the private sector
No one is more aware than President Nixon of the vital and necessary role of
the States in the battle against drug abuse. In December, the President was host
to the State Governors at a White House conference designed to produce the
closest cooperation between the Federal and State governments.
The State of New York, of course, under Governor Rockefeller, has led the
way for all the States in combatting drug abuse.
It was under Governor Rockefeller's leadership and at his personal initiative
that New York's pioneering mandatory treatment program for addicts was bom.
For the first time, as the Governor said, we have a "program for getting addicts
off the street where they endanger others and under confinement and treatment
were they can help themselves."
In January, Governor Rockefeller again broke new ground when he proposed
the Nation's first State methadone maintenance program which it is hoped will
in time return up to 80 percent of the hard-core heroin addicts to an orderly and
productive life.
If the State of New York provides the finest example of State participation in
the antidrug campaign, the Advertising Council shows the way for the private
sector.
In a campaign under the auspices of the National Institute of Mental Health,
the Advertising Council is using youth-oriented media to educate rather than to
frighten. The Council reports "fantastic interest" in the program, directed at the
intellect rather than the emotions. It is a perfect example of President Nixon's
theme of prevention through persuasion.
Treasury's role in the President's antiheroin action program
Treasury is playing a major role, primarily through its Bureau of Customs, in
the enforcement phase of the President's antiheroin action program.
In his September 16, 1968, Anaheim, California, speech, the President stated:
"Let us recognize that the frontiers of the United States are the primary
responsibility of the United States Bureau of Customs. I recommend that we
triple the number of customs agents in this country from 331 to 1000."
The President has followed through on that pledge. In his July 14, 1969, Message to the Congress on the Control of Narcotics and Dangerous Drugs, he stated:
"The Department of the Treasury, through the Bureau of Customs, is charged
with enforcing the nation's smuggling laws. I have directed the Secretary of
the Treasury to initiate a major new effort to guard the nation's borders and
ports against the growing volume of narcotics from abroad. There is a recognized
need for more men and facilities in the Bureau of Customs to carry out this
directive."
This directive was backed up with a substantial antinarcotic supplemental
budget request. The Congress responded magnificently and passed in late December of 1969 an appropriation for $8.75 million for 915 additional men and for
equipment.
The leadership role of Congressman Tom Steed of Oklahoma, Chairman of the
House Appropriations Subcommittee which handled the President's request, and
the then ranking minority member, Congressman Silvio Conte of Massachusetts,
in support of the supplemental appropriation request, is an outstanding example
of bipartisan action in our Nation's war against drug abuse.
The House Appropriations Committee Report, in relevant part, stated:
"The Department testified that every available index indicates that problems
associated with the use of marijuana and narcotics in the United States have
378
19 70 REPORT OF THE SECRETARY OF THE TREASURY
reached major proportions. Drug usage is now widespread both geographically
and among strata of society in which previously such usage was rare. Usage
among college and even high school students is reported as commonplace.
"In order to deal with this problem, the Department proposes to substantially
increase the law enforcement effort against smuggling. The whole problem is
put into sharp focus by the following testimony from the Treasury Department:
'Almost all of the marihuana, all of the hashish, all of the cocaine, and
all of the smoking opium used in the United States is smuggled into this
country.'
" 'Operation Intercept,' a recent blitz law enforcement effort along the Mexican border, demonstrated rather conclusively that smuggling activities can be
substantially reduced by increased enforcement efforts. The committee strongly
supports the Department's objective of reducing to a minimum the smuggling of
this contraband into the United States. The committee specifically allows the
915 additional positions requested and urges the Department to move ahead on
this project as rapidly as practicable."
Customs has moved expeditiously to implement the supplemental appropriation,
and I am pleased to report that the Commissioner of Customs, Myles J. Ambrose,
has informed me that commitments have been made for the entire number of 915
additional personnel authorized by the supplemental appropriations and they
will all be on board by June 30, 1970. A substantial amount of this new manpower will be assigned to the New York metropolitan area, as well as to the
Mexican and Canadian borders and other trouble spots, to interdict the fiow
into the United States of narcotics, marihuana, and dangerous drugs.
Narcotics intelligence groups
Customs has established international narcotics intelligence groups with offices in New York, Houston, and Los Angeles. Additional intelligence offices will
be opened in Miami and Chicago in the near future. These groups will provide
better evaluation of the information relating to smuggling into the United States.
They will permit more extensive dissemination of intelligence throughout the
national and international enforcement community.
Automatic data processing
In support of the intensified enforcement effort, the Bureau of Customs is currently installing a central ADP intelligence network which will provide a comprehensive bank of suspect information on a 24 hour a day basis, to agents and
inspectors. On April 1, 1970, Customs established a computer center to process
enforcement intelligence information, and a trained operation and programming
staff is supporting the data processing center located in San Diego, Calif. Expansion of the system to cover all inspection stations along the Mexican border
will be completed by November 1970.
The initial data base has been compiled from existing suspect records. With
the coordinated efforts of the various Customs offices, rapid growth of the data
base is expected. Data concerning suspect aircraft and vessels are being added
to the system. A task force has begun to define nationwide law enforcement intelligence needs of the Bureau of Customs. This study will be completed by
November 1970.
Facilities
New Customs facilities along the Mexican-United States border are being
acquired and present facilities are being enlarged to accommodate the additional
Customs enforcement personnel. At some ports, these improvements involve
creation of additional vehicle and pedestrian lanes and rearranging traffic patterns to provide more expeditious handling of vehicles and persons crossing the
border. At others, trailers and prefabricated equipment are being acquired for
use until such time as permanent facilities can be installed.
Laboratories
New laboratories have been established in San Antonio, Tex., and San Diego,
Calif., with the analysis of narcotics as their primary purpose. These laboratories will provide more rapid identification of narcotics and dangerous substances and thus accelerate the judicial processing of violators.
EXHIBITS
379
Training
Customs has embarked on a major training program stressing anti-narcotics
smuggling. This training has been particularly important for inspectors and
commodity specialists. Training will continue to be a major activity as we
process the 915 new employees authorized by the supplemental appropriation.
Additional equipment
The supplemental appropriation provides for five additional aircraft, four
additional boats, and 148 additional interceptor-type automobiles.
Radio communications
The Bureau of Customs is modernizing and supplementing present radio
communications in order to obtain complete coverage along the Mexican border.
This improved communications system will contribute greatly to the effectiveness of both United States and Mexican officials in Operation Cooperation.
Intensified inspection program
A program of intensified examination of passengers and their baggage arriving at all major airports, and of foreign mail parcels and commercial cargo has
been instituted.
Customs' Office of Operations has created a new Enforcement Inspection
Section which will be responsible for developing plans and procedures for carrying out the enforcenient responsibilities of the augmented inspection force.
A team concept was initially tested in Philadelphia and Buffalo for agents,
inspectors, and commodity specialists jointly to select and examine commercial
cargo shipments for both contraband and revenue purposes. Based on their activity and success, guidelines have been established. This team concept will be
in operation throughout the United States by the end of May 1970. New agents
entering on duty throughout 1970-71 will permit increased coverage and blitz
operations at airports of entry.
It should be noted that the vast percentage of Customs seizures are made by
the inspectors without advance information, and that Customs seizes more drugs
than all other Federal agencies put together.
Customs is presently reviewing all its procedures and methods with a view
to increasing its enforcement effectiveness, particularly in procedures called preclearance and the Accelerated Inspection System. Treasury and Customs will
be consulting with industry and Government representatives to review each
preclearance operation to determine if enforcement can be raised to a satisfactory level.
The Accelerated Inspection System, which has proved so successful in facilitating the flow of passengers, has been under evaluation for its effectiveness in suppressing smuggling. Preliminary study indicates that enforcement must be improved while still preserving the benefits of facilitation.
Cargo theft study
Treasury has now under serious consideration by a special task force proposed
administrative actions and legislative proposals to prevent theft of intemational
cargo at all ports of entry—airports and seaports—throughout the nation. This
includes, of course. New York's Kennedy International Airport.
Because of the jurisdiction of the Bureau of Customs over theft from Customs'
custody and because of its existing presence and responsibilities at all ports of
entry, Customs is uniquely qualified to take the lead in solving this problem.
A byproduct of this effort will be increased risks for the drug smuggler.
Public support and cooperation
In this situation, we cannot hope to do business as usual. Our current antismuggling enforcement drive will mean that more travelers are going to be
inspected more closely, more baggage examined and new inspectional techniques
employed for detecting criminal smugglers. It will mean some additional inconvenience for the international traveler. It may require a few more minutes
for customs clearance. We suggest that this is a small price to pay to help keep
drugs out of the hands of your children, my children, and the boy or girl next
door.
397-702 0—71
26
380
197 0 REPORT OF THE SECRETARY OF THE TREASURY
I am convinced that the American public fully supports this program. Enforcement officials cannot do the job alone. We need the cooperation of the public on
many fronts. Regarding inconveniences, we need the public's understanding,
patience, and cooperation.
Government cannot do the job alone. We need the support of the private sector
for maximum effectiveness. We have spoken with a number of representatives
from industry and labor and will be talking to many more. Treasury is most
pleased that all the groups we have met with have volunteered to cooperate in
the drive to suppress drug smuggling.
To sum up. President Nixon has highlighted the multidimensional aspects of
the drug abuse crisis and has taken several major initiatives.
First.—He has elevated the drug problem to the foreign policy level and made
it a matter of personal Presidential concern.
Second.—He has stressed the role of education, research and rehabilitation, and
provided increased funds in these essential areas.
Third.—He has recommended differentiation in the criminal penalty structure
between heroin and marijuana.
Fourth.—He has provided a substantial increase in budgetary support for
law enforcement in this area.
Fifth.—He has stressed the need for cooperation with the States and the involvement of the private sector.
Let there be no false optimism. The road ahead is long and hard—and requires
the active participation of all of us.
Exhibit 32.—Remarks by Assistant Secretary Rossides, April 23, 1970, before
the 89th Annual Banquet of Phi Delta Phi, Columbia Law School, New York
City, New York, on the Nixon administration's reform program to combat
the illegal use of secret foreign bank accounts
Tonight I want to discuss with you the Nixon Administration's reform program to combat the use of secret foreign bank accounts by organized crime and
white collar crime to violate U.S. tax and other laws.
When this Administration took office, it decided to do something about this
problem. We point out with pride that this is the first Administration seriously
to study the matter and recommend action designed for correction of this longstanding problem area. We take further pride in the fact that the Treasury is in
the forefront of this effort. Treasury organized a Task Force to attack the problem on a concerted basis. It is the first of its kind of which we are aware.
Our overall aim is to build a system to deter and to prevent the use of secret
foreign bank accounts for tax fraud, their use to screen from view a wide
variety of criminally related financial activities, and their use to conceal and
cleanse criminal wealth. Our immediate aim is to combat organized crime and
white collar crime in their use of foreign banks to achieve criminal objectives.
This Administration recognizes the widespread moral decay that would result
if these practices are permitted to continue and expand. We are determined to do
something about the;m.
The Administration has acted in four interrelated areas :
First.—The development of solutions has been elevated from an ad hoc caseby-case approach to the foreign policy level. Treaty discussions have been undertaken with the Swiss authorities and we are in the process of contacting other
governments.
Second.—The Treasury is carrying out a comprehensive administrative review of current procedures and an analysis of what further can be done under
existing statutory authority.
Third.—^The Treasury has made, on behalf of the Administration, certain
legislative proposals regarding this problem.
Fourth.—The Treasury is working with the private sector to develop cooperative measures against this illegal activity.
(Before discussing our actions in these four areas, I must emphasize three
fundamental concerns that predominate in formulating Treasury's enforcement
approach to this problem.
•First, the U.S. dollar is the principal reserve and transactions currency of the
world. Foreign holdings of U.S. dollars are huge, amounting to some $43 billion in
liquid form. This fact itself is a mark of the confidence which others have in
EXHIBITS
381
the political and economic stability of the United States and is a tribute to the
success of the international trade and payments system we have been creating—
a system of progressively fewer restrictions to the fiow of goods and capital. The
overwhelming bulk of the rapidly growing volume of international transactions
by Americans and foreigners alike are not only legitimate business and personal
transactions, but serve the larger interests of the United States in effective monetary arrangements and freely flowing trade and payments. It has, therefore, been
of paramount concern to us that the proposals we are making will in no way
restrict the regular and efficient flow of domestic and international business, or
personal transactions, or diminish the willingness of foreigners to hold and use
the U.S. dollar.
The second consideration is that consistent with our determination to deter
tax and other evasion by U.S. persons involving foreign financial transactions,
we have sought to develop proposals under which the benefits to our tax collections and to our law enforcement objectives exceed the direct and indirect costs
which these proposals bring about.
Finally, we have not lost sight of traditional freedoms, many of which are set
forth in our Constitution, others which have become identified with our way of
life. In strengthening enforcement, we must not jeopardize these principles.
Background
Just what is a secret foreign bank account? It is an account maintained in a
foreign banking institution in a country which has laws which strictly limit
the conditions under which information concerning an account will be made
known to governmental authorities.
There is no certainty as to the exact dimension of the use of foreign bank
accounts by U.S. citizens and residents, or the number being used for illegal
purposes or the size of the tax fraud and other criminal violations shielded by
such accounts. Even though the number of persons involved and the amounts of
tax fraudulently evaded by these means may be small in comparison to total
U.S. taxpayers and tax collections, the principle involved is central to proper
tax administration : any tax fraud scheme must be attacked vigorously.
We all have the right to demand that all Americans pay their proper amount
of taxes as determined under the revenue laws. If tax fraud fostered through
the illegal use of foreign bank accounts is not curbed, our self-assessment system
of taxation could be seriously impeded.
Rapid means of international transportation and communication have greatly
facilitated the free flow of funds and commerce across what were once thought
to be great distances. These technological advances have added to the problem
of tax fraud through the use of secret foreign bank accounts.
The anonymity offered by foreign accounts has been used to conceal income
made in connection with various crimes that have international features. They
include the smuggling of narcotics, black market currency operations in Southeast Asia, and illegal trading in gold. These illegal undertakings frequently
involve tax fraud.
Use by organized crime
Racketeer money.—^^There is strong evidence of a substantial flow of funds from
racketeers in this country, particularly those associated with gambling, to certain
foreign banks. Some of these funds appear to have been brought back into the
United States under the guise of loans from foreign sources. This may be providing a substantial source of funds for investment by the criminal element in
legitimate business in the United States.
Money from narcotics.—In March 1969, Treasury Agents of the Bureau of
Customs broke up a major international heroin smuggling scheme by intercepting 115 pounds of heroin in New York City. Cash transfers of this organized
crime enterprise were run through secret foreign bank accounts. One of the
defendants alone admitted to forwarding half a million dollars from the United
States to Geneva.
If adulterated at the usual ratio of five to one, the 115 pounds of pure heroin
would have yielded 690 pounds of diluted heroin mixture. It is estimated that
one such pound will yield 7,000 one-grain doses. The 690 pounds would have put
4.83 million one-grain doses into the hands of pushers on the streets with a total
value of about $24,000,000 ($5.00 per dose). I am sure that you can understand
why we feel so strongly that something must be done.
382
19 70 REPORT OF THE SECRETARY OF THE TREASURY
Use in connection with white collar crime
Foreign bank accounts are opened to facilitate tax fraud by some people who
otherwise appear respectable and law abiding. They are used in an effort to
hide unreported income from commercial operations in the United States or
income from investments made through a foreign bank.
Personal accounts.—Accounts in foreign banks are used as repositories for
money representing income not reported on U.S. tax retums, much in the same
way as bank safety deposit boxes have been used in this countiy. For information
on the existence and nature of the accounts, dependence has been placed upon
informants and the subsequent tracing of transactions through banks in this
country.
''Arrangements" ivith foreign customers and suppliers.—In some cases, U.S.
taxpayers have arranged with their foreign customers or foreign suppliers for
the preparation of false commercial documents overstating amounts received
from the U. S. taxpayers or understating amounts paid to them. The funds placed
in the hands of the foreign conspirators as a result of these falsifications are
deposited with banks in bank-secrecy countries for the credit of the U.S. taxpayers.
Transaotions in seeurities.—Taxpayers, by opening accounts with foreign banks
and financial institutions, have been able to buy and sell on the U.S. stock markets
without disclosing their interest in, or taxable income from, such transactions.
Let me now turn to the Nixon Administration's reform prograni.
Foreign policy—Swiss treaty negotiations
The recent discussions with Swiss officials have centered upon the development of a proposed mutual assistance treaty to provide information and judicial
records, locate witnesses, and provide other aid in criminal matters. However,
the United States and Switzerland already are parties to a convention for the
avoidance of double taxation with respect to income taxes which is relevant to
bilateral cooperation for obtaining bank records to prosecute tax fraud. Article
XVI of this latter treaty provides for the exchange of information for the prevention of fraud or the like in relation to income taxes which are the subject
of the convention.
We have only recently become aware that Swiss law makes an important distinction between simple tax evasion and tax fraud, which is an aggravated form
of tax evasion. Whereas individuals guilty of simple tax evasion under Swiss
law are not considered to have committed "crimes" as we know the term, and
thus ai'e not subject to jail sentences, tax fraud in connection with the Swiss
federal withholding tax laws on interest and dividends and the inconie tax laws of
sixteen of the 25 Swiss cantons, including the economically more important
cantons is deemed a criminal offense which can result in the imposition of jail
sentences and which is handled in criminal rather than adniinistrative
proceedings.
This distinction between tax evasion and tax fraud becomes of essential importance because under Swiss law the obligation of a bank to observe secrecy
about the affairs of its depositors is superseded by the duty tO' furnish information, give testimony, or produce docmiients in criminal proceedings which include tax fraud proceedings.
Speaking on behalf of this Administration, I can assure you that we are actively
exploring with the Swiss authorities the obtaining of the same information,
including bank records, as can be made available to Swiss authorities.
Administrative reform
I believe that a primary responsibility upon taking office is to determine how
current law is being administered and whether administration can be improved.
In early 1969, in conjunction with work for discussions with Switzerland, I
authorized a review of existing practice and statutory authority to see what
improvements and additional action could be taken administratively. It was concluded that much along the following lines could be done to combat this problem even without legislation.
No niatter what treaty, legislation, or regulations might be implemented,
efficient and effective prosecution of law evaders is an important element in curbing the illegal use of foreign bank accounts. Law enforcement agencies are
increasing efforts to uncoVer individuals who have made illegal use of foreign
EXHIBITS
383
bank accounts. The new United States Attorney for the Southern District of
New York, Whitney N. Seymour, Jr., has been in close contact with key officials
in Washington to implement a vigorous attack against individual offenders.
The Internal Revenue Service presently is thoroughly reviewing its operations,
including its audit procedures, to develop more effective intemal procedures for
uncovering cases of tax fraud involving the use of foreign bank accounts, as well
as for compiling and constructing solid evidentiary records in these cases. New
guidelines are being established to aid Treasury agents of the Internal Revenue
Service in handling investigations of taxpayers who employ or are believed to
employ secret foreign bank accounts.
Another means of attacking the problem under existing law is to implement
new effective regulations and administrative practices.
One significant measure that this Administration has already taken under
existing authority will be to require on next year's tax retum that U.S. citizens,
residents, and certain other persons effectively doing business in the United
States identify their direct or indirect interests in foreign bank accounts. I believe that this will be an effective deterrent to the use of these accounts to evade
taxes, since the failure to reveal the existence of such interests will result in
the imposition of criminal penalties apart from those otherwise applicable to
the filing of fraudulent tax returns.
In conjunction with this disclosure requirement, this Administration has under
consideration a proposal that, pursuant to regulations, taxpayers with interests
in foreigii bank accounts be required to maintain specified records of transactions
they have with these accounts.
Another related proposal which is being given consideration is that taxpayers
who report interests in foreign bank accounts on their tax returns at the same
time personally would authorize the foreign financial institutions in which the
accounts are maintained to forward any information which might be requested
by U.S. law enforcement officers pursuant to the same legal process required to
obtain bank records in the United States.
StiU one more area being thoroughly considered by the Treasury Task Force
is the extent to which evidentiary presumptions could be implemented through
regulations which would make funds flowing through foreign bank accounts be
deemed to be untaxed income unless taxpayers provided sufficient information
and records to the contrary. This area is very closely related to comparable legislative proposals which I shall mention shortly.
I believe that this recitation of what already has been done by this Administration with respect to adniinistrative measures and regulations, and to further
international assistance to curb the illegal uses of foreign bank accounts clearly
demonstrates our seriousness of purpose and that we have accomplished more
than ever before. Even apart from the legislation on this subject presently
before this Congress, administrative action and international cooperation hold
promise of substantially curbing the illegal use of these foreign accounts.
Legislation
This is the first Administration in recent history to support the concept of
development of effective legislation which would provide valuable additional
statutory tools to counter the illegal use of secret bank accounts. In this connection, this Administration has strongly supported the objectives of those aspects
of the legislation of the House Banking and Currency Comniittee chaired by
Congressman Wright Patman, H.R. 15073, that are intended to ameliorate this
problem. However, in my testimony before the House Banking and Currency
Committee on March 2, 1970, I pointed out several key changes of H.R. 15073
which were necessary to make it responsive to this problem, only some of which
vvere implemented by the committee before it reported the bill out at the end of
March.
As originally introduced, H.R. 15073 suffered from numerous and obvious
shortcomings. In general, it maximized burdens upon the public and the economy
while minimizing enforcement effectiveness. More specifically, the bill would
have made mandatory the photocopying, a t least once and possibly twice, of
every check written in the United States^at least 20 billion and possibly
40 billion items annually—^and it further would have permitted uninhibited official Government rummaging through the records of certain banks without,
regard for the privacy safeguards provided by established discovery procedures.
384
1970 REPORT OF THE SECRETARY OF THE TREASURY
We presented to the committee amendments and, later, a substitute bill. Our
proposals would have maximized enforcenient and minimized burdens and offered
further advantages of brevity, clarity, ease of application, and fiexibility not
shared by H.R. 15073. Our proposals would have strengthened the bill in several
ways, including amendnients to lessen wasteful and clounterproductive recordkeeping, and limit incursions upon the right of privacy.
Those amendments to the Patman legislation suggested by the Treasury, which
were accepted, considerably improved H.R. 15073 as it was initially introduced.
For example, key amendments of H.R. 15073 broadened recordkeeping requirements to encompass various types of other financial institutions engaged in international transfers of funds, as well as commercial banks.
In my testimony before the House Banking and Currency Committee on March 2,
1970, I specified records of types of international transfers which the Treasury
Department recommended be maintained by these institutions pursuant to regulations issued by the Secretary of the Treasury for a period of 6 years. These
included records of remittances transferring funds to and from fhe United States,
both records of checks negotiated abrload and foreign credit card purchases in
excess of $1,000, records of foreigii checks transmitted abroad for collection,
records of foreign drafts, and records of international letters of credit, and
documentary collections.
I believe that the committee should have adopted a nuniber of desirable
suggestions made by the Treasury which are needed to limit the scope of the
legislation to its intended purpose—to assist criminal, tax, and regulatory investigations and proceedings.
The Treasury recommended recordkeeping, reporting, and disclosure requirements which would have a high degree of usefulness in criminal, tax, or regulatory investigations, and which were dire<^tly related to the problem, of the illegal
use of secret bank accounts.
It has only recently come to the fore that the legislation is intended to deal
not only to some extent with the probleni of secret foreign bank accounts, but
that a basically separate problem area Avith which H.R. 15073 also is concerned
is the trend on the part of domestic banks not to maintain microfilm records of
all checks drawn on them.
The Treasury Department urged amendments that would have limited all
recordkeeping and repor'ting requirements of H.R. 15073 to those which are
likely to have a high degree of usefulness in criminal, tax, ^or regulatory investigations or proceedings.
However, the committee adopted this significant limitation only in connection
with the recordkeeping requirements imposed upon banks and other financial
institutions. It failed to accept the same Standard with reference to the reporting
requirements imposed.
This refusal is significant, especially in view of the growing concem in America
over possible incursions by Government into individual privacy. I believe it is
generally accepted that the right of privacy is not absolute, but must be balanced
against the need for information inherent in the governing process. For example,
few of us would quarrel with the need for the Government to require individuals
to file tax returns which, to some extent, of course, contain private information.
Nevertheless, this right of privacy must be protected against any unnecessary
incursions.
However, the reporting requirements of the Patman Committee legislation
possibly could result in unnecessary inroads into this right of privaicy. For
example, consider the requirement of reporting domestic currency transactions
in the Patman legislation. An analogy can be made between reporting of such
transactions by financial insititutions to 'the Government and searches through
the records of these institutions without the transactions of a particular taxpayer in mind.
If such reporting requirements are limited, as the Treasury recommended,
to those transactions likely to have a high degree of usefulness in criminal, tax,
or regulatory investigations or proceedings, the potential unnecessary incursions on personal privacy would be limited; such might not be the case under
the present H.R. 15073 language which permits the requiring of reports of any
domestic currency transactions without any comparable limitation.
The Patman Committee testimony indicated that H.R. 15073 would require the
microfilming of at least 20 billion checks per year. There have been conflicting
and unsupported views expressed as to the cost of such a requirement, as well
EXHIBITS
385
as to the additional nuniber of checks which would have to be microfilmed, in
addition to those presently being copied. However, there was no substantial
testimony indicating that the records of such checks would be of sufficient value
to counter the additional recordkeeping costs whatever they, in fact, may be.
The cost of any burdensome recordkeeping or reporting requirements would be
likely to be passed on to the public, including everyone with a checking account.
This apparent willingness of the committee to enact legislation with only
meager study or factual basis is even clearer with respect to Title III of H.R.
15073 which would extend the applicability of margin requirements under section
7 of the Securities Exchange Act to the purchasers of ^tock as well as to brokerdealers and financial institutions who lend nioney for that purpose. This significant provision was added to H.R. 15073 only in March, over 3 months after the
original bill was introduced, and was accepted by the committee without any
testimony being presented on it by concerned parties.
One legislative proposal which the Treasury Department has been fully considering (if the remedy, as I discussed earlier, cannot be achieved administratively), which we believe could be of significant assistance in curbing the illegal
use of foreign bank accounts, and which would not pose any confiict with a
right of personal privacy, is the establishment in the Internal Revenue Code of
rebuttable presumptions that U.S. citizens,•residents, and certain other taxpayers,
engaging in certain foreign transactions, and not furnishing upon request adequate information to the Secretary of the Treasury or his delegate, are dealing
with their own untaxed income. As an alternative proposal. Treasury also has
under consideration an excise tax which would be applied in situations where no
adequate information of the foreign transactions is provided by the. taxpayer.
The presumptions would be in the nature of evidentiary presumptions which
could form the basis for a determination of civil tax liability (including interest
and penalties) unless the taxpayer establishes by the clear preponderance of the
evidence that his untaxed income is not involved.
It is the Government's understanding that most persons who use foreign
financial institutions, even in countries where bank secrecy is strictly observed,
can themselves obtain full information about their accounts and transactions.
Therefore, it is assumed that U.S. taxpayers will be able, without difficulty,
to satisfy the Secretary of the Treasury or Ms delegate as to his foreign transactions so as to avoid the application of either the presumption or excise tax if
either is implemented.
Cooperation of the private sector
As is true in developing any public policy as expressed by legislation or administrative rulemaking, final action is taken only after securing views, information, and, hopefully, cooperation from those sectors that would be primarily
affected. In the instant case, in developing a legislative and adniinistrative approach to this problem affecting primarily the financial community, we believed
it incumbent upon us to work with representatives of the banking industry,
brokerage houses, and other related businesses involved in the transmittal of
funds to and from foreign secret bank accounts. As stated in a December 27,
1969, "Washington Post" editorial referring to the Patman bill as originally
introduced:
"This is a subject, of course, on which bankers ought to have their say. The
strange thing is that they had not been consulted while the bill was being
drafted. Though it is of great importance to curb the misuse of hidden bank
accounts abroad, it is equally vital to protect the free flow of international commerce and to avoid the imposition of unnecessary burdens upon the banks."
I would be remiss not to publicly thank these members of the business community for the high level of cooperation we received, and I would especially like
to thank the large banks which are members of the New York Clearing House.
They provided us with much valuable background information on possible avenues of illicit activities, on foreign banking operations, and they offered many
new and constructive suggestions on more effective legislative and administrative approaches that would benefit our enforcement efforts.
Clearing House member banks further indicated that on a voluntary basis,
even before any legislative or regulatory action, they will comply with almost all
of the recordkeeping requirements in connection with international transfers of
funds that we desire, which records would, of course, only be available to gov-
386
19 70 REPORT OF THE SECRETARY OF THE TREASURY
ernmental representatives in accordance with existing discovery procedures. I
believe that this spirit of cooperation between the public and private sectors will
continue to grow, and that working together we shall effectively meet this
priority enforcement problem.
To sum up, the Nixon Administration has acted to attack this critical enforcement problem in four interrelated areas :
First.—The development of solutions has been elevated from an ad hoc caseby-case approach to the foreign policy level. Treaty discussions have been undertaken with the Swiss authorities and we are in the process of contacting other
governnients.
Second.—The Treasury is carrying out a comprehensive administrative review
of current procedures and an analysis of what further can be done under existing statutory authority.
Third.—The Treasury has made, on behalf of the Administration, certain
legislative proposals regarding this problem.
Fourth.—The Treasury is working with the private sector to develop cooperative measures against this illegal activity.
Exhibit 33.—Statement by Assistant Secretary Rossides, June 9, 1970, before
the Subcommittee on Financial Institutions of the Senate Banking and Currency Committee, on secret foreign bank accounts
The Treasury Department appreciates this opportunity to present the Administration's reform program to combat the use of secret foreign bank accounts by
organized crime and white collar crime to violate U.S. tax and other laws, and
to testify on S. 3678 and on H.R. 15073 which was passed by the House on
May 25, 1970.
When this Administration took office, it decided to do something about this
problem. We point out with pride that this is the first Administration seriously
to study the niatter and recommend action designed for correction of this longstanding problem area. The Treasury is in the forefront of this effort. Treasury
organized a Task Force to attack the problem on a concerted basis. It is the first
of its kind of which we are aware.
Our overall aim is to build a system to combat organized crime and white collar
crime and to deter and prevent the use of secret foreign bank accounts for tax
fraud and their use to screen from view a wide variety of criminally related
financial activities, and to conceal and cleanse criminal wealth.
This Administration recognizes the widespread moral decay that would result
if these practices are permitted to continue and expand. We are determined to do
something about them.
The Administration has acted in four interrelated areas :
First.—The development of solutions has been elevated from an ad hoc case-bycase approach to the foreign policy level. Treaty discussions have been undertaken with the Swiss authorities and we are in the process of contacting other
governments. We are reviewing all of our tax treaties with this problem in mind.
Second.—The Treasury is carrying out a comprehensive administrative review
of current procedures and an analysis of what further can be done under existing
statutory authority. We have already decided, with respect to taxable years
beginning January 1, 1970, to require every U.S. taxpayer to disclose his direct
or indirect interests in foreign bank, brokerage, and similar accounts on his tax
return.
Third.—The Treasury has made, on behalf of the Administration, certain
legislative proposals regarding this problem, many of which are incorporated in
the bills before this conimittee. Further views on legislation are being presented
in this statement and in Attachments A and B. Proposals for the amendments to
the Internal Revenue Code will be presented to the House Ways and Means Committee and the Senate Finance Committee.
Fourth.—The Treasury is using the expertise of the private sector in this work,
especially to obtain information on the methods by which international financial
transactions are actually or might be carried out.
Before discussing our actions in these four areas, I must emphasize three
fundamental concerns that predominate in formulating Treasury's enforcement
efforts.
EXHIBITS
387
First, the U.S. dollar is the principal reserve and transactions currency of the
world. Foreign holdings of U.S. dollars are huge, amounting to some $43 billion in
liquid form. This fact itself is a mark of the confidence which others have in the
political and economic stability of the United States and is a tribute to the success
of the international trade and payments system we have been creating—a system
of progressively fewer restrictions to the fiow of goods and capital. The overwhelming bulk of the rapidly growing volume of international transactions by
Americans and foreigners alike are not only legitimate business and personal
transactions, but serve the larger interests of the United States in effective
monetary arrangements and freely fiowing trade and payments. It has, therefore,
been of paramount concern to us that the proposals we are making will in no way
restrict the regular and efficient fiow of domestic and international business, or
personal transactions, or diminish the willingness of foreigners to hold and use .
the U.S. dollar.
The second consideration is that consistent with our determination to deter
tax and other evasion by U.S. persons involving foreign financial transactions,
we have sought to develop proposals under which the benefits to our revenue system and to our law enforcement objectives outweigh costs and inconveniences of
the proposals.
Finally, we have kept firmly in view our traditional freedoms, such as the
constitutional prohibition against unreasonable searches and seizures and the
right of our citizens to privacy. In strengthening enforcement, we must not
Jeopardize these principles.
There is no certainty as to the extent foreign bank accounts are used by U.S.
citizens and residents, the number being used for illegal purposes, or the size of
the tax fraud and other criminal violations shielded by such accounts. Even
though the nuniber of persons involved and the amounts of tax fraudulently
evaded by these means may be small in comparison to the total number of U.S.
taxpayers and total tax collections, the principle involved is central to proper
administration of our self-assessment system of taxation: tax fraud schemes
must be attacked vigorously.
Rapid means of international transportation and communication have greatly
facilitated the free flow of funds and commerce across what were once thought to
be great distances. While these advances are of great benefit to the world
economy and international understanding, they have also added to the problem
of tax fraud and other crimes through the use of secret foreign bank accounts.
During the last few decades the use of commercial banks to gather savings
and hold the deposits of individuals has grown substantially. In times past,
financial obligations were settled through the transfer of coin and paper currencies, but now, with few exceptions, the personal or corporate check settles
accounts. The request for a bank to transfer funds is an active alternative to
the check. With the convertibility of currencies, particularly the dollar, and
with the increasing interrelationship of our economies, international financial
transactions often involve foreign bank accounts in at least one stage or another.
The United States, of course, does not have nor should it seek jurisdiction over
foreign financial institutions not engaged in trade or business in the United
States. Once funds owned by U.S. citizens and residents leave the United
States, the Internal Revenue Service, the Securities and Exchange Commission,
and other U.S. law enforcement agencies cannot normally trace these funds in
the foreign country unless the foreign government has agreed to conduct investigations on our behalf. In contrast, where only doniestic financial institutions are
used, our investigators can frequently pick up the trail at various junctures and
trace transactions from bank to bank.
I. Foreign policy-discussions with Switzerland
As you know, we have been holding discussions with the Swiss Government
to explore the possibilities for a treaty for mutual assistance in criminal matters.
We are also reviewing our 1951 income tax treaty with Switzerland to make
sure that we are making full use of the provisions which provide for the exchange of information "for the prevention of fraud or the like in relation to
taxes" covered by the treaty. Our third round of talks with the Swiss was held
in Washington in March, the United States being represented by an interdepartmental group from the State, Treasury and Justice Departments and the Securities and Exchange Commission. A Treasury delegation visited Bern in May and
further talks are scheduled for next month. The talks are at a crucial stage.
388
19 70 REPORT OF THE SECRETARY OF THE TREASURY
but it will probably not be until the fall or later when we know whether an
agreement can be reached.
We believe Article XVI of the existing tax treaty already requires, except in
a narrow range of circumstances, the exchange of information in tax fraud
investigations and proceedings to the extent that the laws of both countries
provide for the obtaining of the type of inforniation sought. Swiss law makes
an important distinction between simple tax evasion and tax fraud, which is
an aggravated form of tax evasion. Whereas individuals guilty of simple tax
evasion under Swiss law are not considered to have committed "crimes" as we
know the term, and thus are not subject to jail sentences, tax fraud in connection
with the Swiss federal withholding tax on interest and dividends and the income
tax laws of sixteen of the twenty-five Swiss cantons, including the economically
more iniportant cantons, is deemed a criminal offense which can result in the
imposition of jail sentences and which is handled in criminal rather than administrative proceedings.
This distinction between tax evasion and tax fraud becomes of essential
importance, not only because the tax treaty requires the exchange of information
in tax fraud cases, but also because under Swiss law the obligation of a bank to
observe secrecy about the affairs of its depositors is superseded by the duty to
furnish information, give testimony, or produce documents in criminal proceedings which include tax fraud proceedings.
We believe that our tax treaty entitles us to obtain no less information than
is obtainable by Swiss authorities in comparable proceedings. However, some
have suggested an interpretation significantly at variance with that of the
United States which could severely restrict the exchange of information under
the tax treaty.
Our program involving foreign policy has not been solely focused upon Switzerland. The Treasury also has been reviewing the operation of our other tax treaty
exchange of information provisions. We are examining the use of financial
facilities in other foreign jurisdictions which offer shields of financial secrecy
to United States taxpayers. Moreover, other countries have recognized that
evaders and other criminals often go beyond national boundaries and have raised
the possibility of international cooperation.
II. The Administration's program for obtaining information on foreign accounts
and transactions
The Treasury, as part of the Administration's prograni, has been developing
a systeni for obtaining inforniation on foreign bank, brokerage and similar
accounts and international transactions of U.S. citizens and residents for use
in tax determinations and criminal and regulatory investigations and proceedings.
I will discuss each of the parts of our system in turn and indicate how it relates
to the bills before the committee and to other legislation.
1. Foreign account disclosure requirement.—Each U.S. taxpayer will, with
respect to taxable years beginning on or after January 1, 1970, be required to
disclose his interests at any time during the taxable year in foreign bank,
brokerage, and similar accounts on his tax return. This requirement will be
imposed under section 6011(a) of the Internal Revenue Code. We may also
recommend to the BLouse Ways and Means Committee and the Senate Finance
Committee a special penalty for failure to furnish this information.
In connection with this disclosure requirement, we have under consideration
a proposal to issue regulations, pursuant to existing statutory authority, requiring taxpayers with such interests to maintain specified records of transactions
they have with these accounts. These records would correspond to the type of
evidence taxpayers are now expected to produce when their returns are audited.
We believe that this disclosure requirement will constitute a significant deterrent to the use of foreign accounts for tax evasion and other illegal purposes
while in no way affecting the legitimate use of such facilities.
2. International transactions recordkeeping hy hanks and other financial
institutions.—The extent to which our financial institutions have been keeping
records of domestic and international transactions has undergone considerable
change in the last few years as a result of technological advancements in the
industry. The multiplication of transactions in the banking industry has only
been made possible through the extensive use of electrical office machinery and
computers. All of us have noticed how our own monthly bank statements have
changed in format and procedures in the last few years, reflecting at a personal
EXHIBITS
389
level the changes that have taken place in the industry. With these changes,
the traditional copies and forms which the banks have retained in their own
files have been reduced primarily for reasons of operating efficiency. This has
occurred at the same time the public has focused on the use of international
banking transactions to disguise criminal acts.
Since bank records can help in dealing with such crime, the Treasury recommends that banks and other financial institutions located in the United States
be required to maintain certain minimuni records of foreign transactions.
This would assist our law enforcement agencies to trace transfers of funds
across our borders by U.S. citizens and residents and help investigation of foreign
accounts subject to the foreign account disclosure requirement. In many cases,
these requirenients would codify present practices. Primarily, we seek improved
availability of records.
The legislation could establish requirements for recordkeeping with respect
to international transactions by authorizing the Secretary of the Treasury to
prescribe particular records which must be maintained. While we originally
recommended this approach, it now seems to us that in addition the legislation
can appropriately provide that banks and other financial institutions located in
the United States be required to maintain six specific types of records as follows :
(1) Records of foreign remittances transferring funds abroad.
(2) Records of foreign remittances transferring funds to the United States.
(3) Records of large checks negotiated abroad drawn on banks located in the
United States and records of large foreign credit card purchases by U.S. citizens
and residents.
(4) Records of foreign checks transmitted abroad for collection.
(5) Records of foreign drafts.
(6) Records of letters of credit and documentary collections.
As experience is gained and methods of business change, the Secretary would
be authorized to issue regulations adding specific types of international records
to those required or to suspend the requirement as to any type of record specified
in the statute. With respect to retention period, we recommend that the statute
prescribe a general 6-year retention period with authority conferred on the
Secretary to reduce the period where appropriate. The Secretary should have
authority to establish the magnitude of transactions or documents subject to the
requirements or to set exceptions on the basis of other criteria.
A further description of the international records we recommend and some
details on the contemplated recordkeeping requirenients are set forth in Attachment A.
If the Internal Revenue Service could survey the foregoing records of international transactions, either by examining them on the preniises of the bank or
other financial institutions or by requiring information returns as to some of the
contents of the records, the usefulness of the records in providing initial leads
to cases of possible tax evasion would be enhanced. Such surveys, however, would
extend the utilization of the records beyond their traditional role as a source of
inforniation and evidence in an examination of a particular taxpayer.
The Internal Revenue Code authorizes the Internal Revenue Service to obtain
and examine records niaintained by banks and others in connection with the determination of the tax liability of particular taxpayers. There is also a statutory
basis for arguing that the Internal Revenue Code authorizes the use of compulsory
process for a survey of the records of a financial institution located in the United
States. Nevertheless, the Internal Revenue Service has not generally asserted such
survey authority, the scope of which has not been reviewed by the courts.
We decided against seeking specific statutory authority extending the rights of
the Internal Revenue Service to survey the records of international transactions
in banks and other financial institutions. In deciding this, we considered the
constitutional prohibition against unreasonable searches and seizures and the
need to avoid unnecessary incursions against the right of privacy. While it is
clear that obtaining records by established discovery procedures from the banks
and other institutions in connection with the examination of a particular taxpayer would not violate these rights, provision for a survey of such records
raises a much more serious question. We are also concerned that surveys or
information returns could have an adverse effect on legitimate foreign investment
in the United States. It has been the tradition overseas to place great emphasis
on the privacy of financial transactions and a breach of this tradition could
adversely affect the fiow of foreign funds to the United States.
390
19 70 REPORT OF THE SECRETARY OF THE TREASURY
Balancing these factors, we concluded that it would not be appropriate for us
to suggest legislation extending the rights of the Internal Revenue Service to
survey the records of banks and other institutionsNext we considered the approach taken in sections 241 and 242 of S. 3678 and
H.R. 15073 which could be used to accomplish the same result by requiring banks
and other financial institutions to file information returns setting forth the
information contained in the international records. For the same reasons that we
have concluded that we cannot support new legislative authority for the survey
of records not tied to a particular taxpayer investigation, we believe it inappropriate to support legislation requiring reports of inforniation obtained from
the records of international transactions. Since sections 241 and 242 of the bills
authorize such reports, we cannot support their inclusion unless they are substantially amended.
This is a very delicate area which requires full consideration of the constitutional prohibition against unreasonable searches and seizures, the need to avoid
unnecessary incursions against the right of privacy, the international reaction,
and the needs of the Internal Revenue Service for information. We intend to do
additional work in this area with the thought that if a sound proposal can be
developed, it will be presented to the Congress.
3. Reports of exports and imports of currency.—In addition to international
transfers through banks and other financial institutions, funds can be transferred
directly by the physical movement of U.S. currency or its equivalent.
In order to make sure that records of such direct transfers are available for
the purpose of verifying income tax returns and for criminal law enforcement,
the Treasury proposes that persons importing or exporting on one occasion
$5,000 or more of U.S. currency or its equivalent be required to file an information return prior to the importation or exportation.
There would be no restrictions on exporting and importing currency or the
equivalent in any amount, and no return would be required of those exports or
imports under the $5,000 level. The average international traveler would not be
affected by this requirement. Those who reach this level could comply with this
requirement by simply completing or turning in the report form which would be
provided.
Enforcement of this provision, which would include a forfeiture provision,
would require substantial additional manpower in the Bureau of Customs.
4. Rebuttable presumptions that U.S. citizens and residents engaging in certain
foreign transactions are dealing with their own untaxed income.—By means of
the disclosure of foreign accounts, the required international records, reports of
exports or imports of currency and, to a certain extent. Treasury Currency Reports, the Internal Revenue Service will be in a much better position to identify
instances of tax evasion by U.S. taxpayers involving foreign accounts and international transactions than now. While such information would certainly be of
use in reducing such evasion, there are limits to the benefits of the proposals so
far made. We believe our effectiveness in law enforcement would be enhanced if
the Internal Revenue Code were amended to provide rebuttable presumptions that
persons who engage in certain international transactions and who do not furnish
satisfactory information with respect thereto are dealing with their own untaxed
income.
Legislative implementation of the presumptions would be through amendment
to the Internal Revenue Code. The Treasury has discussed these matters with the
staff of the Joint Committee on Internal Revenue Taxation and is developing
proposals for submission to the House Ways and Means Committee and the
Senate Finance Committee.
5. Administrative measures.—The previous four parts of the Treasury's program to deal with tax evasion and other crimes facilitated by the use of foreign
bank accounts have involved rules which would be applicable to taxpayers or
financial institutions. There is, however, an important additional element that is
necessary to make any law enforcement systeni work—adequate numbers of informed personnel and vigorous and comprehensive enforcement. The measures
made available by the new legislation would require additional manpower.
A number of new approaches are being considered, including the establishment
of a specialized group in the National Office of the Internal Revenue Service,
with expertise in foreign banking and international transactions and the various
possibilities for obtaining information. This group would be immediately avail-
EXHIBITS
391
able to field agents for consultation and guidance in cases which involve or might
involve an undisclosed foreign account or international transaction. In addition,
new instructions are being prepared for use by field agents which would require
informing the National Office at an early stage about cases involving foreign
banks for possible requests for information to foreign governments under treaty
provisions.
The Internal Revenue Service also is evaluating whether it has in the past
fully used the inforniation which it has been able to obtain to draw inferences
as to untaxed inconie. This is closely related to the statutory presumptions
discussed above. While statutory presumptions will add strength to the inferences that are appropriate, even without these presumptions we believe that
inferences can be properly drawn and tax liability established based on information which heretofore has not been considered sufficient to support a claim.
The Treasury recognizes that increased audit and enforcenient activity will
require additional manpower and perhaps data processing facilities in the
Internal Revenue Service. Every attempt will be made to obtain sufficient funds
for these needs and Bureau of Customs' needs in forthcoming Treasury appropriation requests.
III. The Administration's proposal for obtaining domestic information
In addition to dealing with the problem of secret foreign bank accounts,
S. 3678 and H.R. 15073 also deal with a basically separate problem area, law
enforcenient in a purely domestic context. Two provisions are involved: requirements for recordkeeping by banks and other financial institutions of records of
domestic financial transactions, and Treasury Currency Reports.
1. Domestic transaction records of hanks and other institutions.—While unlimited requirements for recordkeeping by banking institutions of all domestic
transactions are undesirable and unnecessary, records of certain doniestic transactions are often essential in the fight against tax evasion and other crime,
especially organized crime.
Therefore, we recommend that the legislation provide discretionary authority
in the Secretary of the Treasury to require that banks and other financial
institutions maintain such records of domestic transactions as may be specified
in regulations. Regulations would be developed to identify the types of documents subject to these requirenients, specify the minimuni aniounts, establish
the classification of documents (such as checks paid or checks deposited) and
other classifications subject to these requirements and specify the retention
periods.
2. Treasury currency reports.—Turning to the second domestic requirement,
financial institutions currently are required to file Treasury currency reports
in cases where persons who use their facilities engage in "unusual" currency
transactions. The present system has not been adequate because the concept of
an "unusual" transaction has been subject to differing interpretations. Also,
financial institutions may not have always sufficiently verified whether the person engaging in the transaction has furnished his correct name and address.
We support in general the concept of sections 221 and 222 of H.R. 15073 and
S. 3678 for a new statutory basis for Treasury currency reports, provided that
these reports are limited by statute to those concerning transactions likely to
have a high degree of usefulness in criminal, tax, or regulatory investigations
or proceedings.
The following summarizes the legislative aspects of the Treasury proposals:
—A bill (i) requiring U.iS. banks and other financial institutions to maintain
records of specified international transactions, (ii) requiring persons importing
or exporting from the United States large amounts of currency or its equivalent to file reports, (iii) authorizing the Secretary of the Treasury to impose
recordkeeping requirenients on banks and other financial institutions with respect to domestic transactions, and (iv) requiring Treasury currency reports,
to the extent it is found that such records and reports are likely to have a high
degree of usefulness in criminal, tax and regulatory investigations and
proceedings;
—A bill amending the Internal Revenue Code to provide a specific penalty
for failure to comply with the foreign account disclosure requirement and to
provide statutory presumptions that U.S. taxpayers engaging in certain foreign
transactions and not furnishing complete information with respect thereto are
dealing with their own untaxed income.
392
19 70 REPORT OF THE SECRETARY OF THE TREASURY
H.R. 16444, prepared by the Treasury and introduced by Representative Widnall on March 12, 1970, would provide the legislative framework, other than
the Internal Revenue Code amendments, for the enforcement system which we
recommend. We would recommend amending H.R. 16444 to specify the required
records of international transactions in a separate section. In addition, I am
sure that Treasury and congressional staffs could make a number of technical
improvements.
IV. Administration position on extending margin requirements to borrowers
and restricting dealings with foreign finanical agencies
1. Margin requireinents.—Section 301 of the bills would give the Federal
Reserve Board clear authority to apply margin requirements not only to lenders
but also to borrowers. This is an entirely new concept in the regulation of credit
as margin rules have been only applied in the past to lenders.
The Administration supports the extension of the margin requirenients to
borrowers provided it is made clear that this is not intended to regulate the
availability of credit abroad to foreigners. Therefore, section 301 should be
amended to provide that only borrowers who are American citizens or residents
and foreign persons controled by or acting for them are subject to these requirements. In addition, it should be made clear that the requirements are
applicable only with respect to the purchase of U.S. securities, or of foreign
securities where the transaction is executed in the United States.
It is not our intention to engender direct jurisdictional conflicts with foreign
countries which have sovereign authority to regulate the availability of their
own doniestic credit. Any problems that may be raised by foreign participation in our securities niarkets should be approached through international
cooperation.
2. Restricting dealing with foreign financial agencies.—A new section appears
in S. 3678 which does not appear in H.R. 15073 which aims at identifying users
of foreign financial facilities. The new provision. Title IV of S. 3678, would
accomplish this objective by providing that no person may effect any transaction
in a domestic security within the United States if such transaction was initiated by a foreign financial agency, unless such person either obtains from
the foreign financial agency the identity of all persons having any beneficial
interest in the transaction, or has in good faith accepted a certification from
the foreign financial agency that no citizen or resident of the United States
had any beneficial interest in the transaction. In addition, it provides that any
U.S. citizen or resident who purchases or sells domestic securities through a
foreign financial agency must both authorize that foreign financial agency to
disclose the citizen's or resident's identity to the U.S. broker or dealer executing the transaction and file periodic reports with the Securities and Exchange
Commission disclosing details of purchases and sales as may be required by
the SBC.
We must be careful to avoid provisions that are too stringent and which may
have the effect of impeding the channels of trade and this defect exists in
Titte IV.
Moreover, I believe that foreign financial agencies might find it extremely
difficult to comply with this provision. Even with the best of will, a foreign
financial agency might be unaware of the real parties in interest in a transaction. Consequently, fear of the consequences of failure to comply with this
section, particularly if criminal or other penalties were to attach to a false
identification or certification, could have serious effects on the willingness of
foreigners to invest in the United States, Thus, this provision is likely to produce
little in the way of reliable information and could have limiting effects on investment in the U.S.
At the same time. Title IV would put a heavy administrative burden on those
foreign securities dealers and banks seeking to make portfolio investments in
the United States. Yet the information obtained under Title IV would in part
duplicate information obtainable under other provisions of the bill which will
achieve many of the same objectives as those sought to be accomplished by
Title IV, but without the significant drawbacks of this provision.
For these important reasons, the Treasury recommends the deletion of this
provision from S. 3678. In our view it does not meet the goals set by Senator
Proxmire in introducing S. 3678 that, "Our law enforcement authorities need
additional tools to trace the international fiow of funds into and out of the
EXHIBITS
393
United States without impairing the international mobility of capital or infringing upon the sovereign rights of foreign countries."
V. Proposed Amendments to H.R. 15073 and S. 3678
While H.R. 15073 and S. 3678 incorporate a number of Treasury recommended
improvenients, further amendments are required to insure adequate enforcement authority and responsibility and eliminate provisions which would or
could lead to unnecessary and counterproductive paper work and potentially
unwarranted invasions of privacy. I will outline in this statement the principal
aniendments which the Treasury feels are necessary. These and other amendments whicii we urge are discussed in Attachment B. I have already stated
our views on the margin requirements provision and on the provision restricting dealings with foreign financial agencies.
The major additional amendments which we suggest in S. 3678 and H.R. 15073
are as follows:
A. Purpose.—As introduced, H.R. 15073 stated a number of purposes, including facilitating the supervision of the business of banking, the establishment of
civil liabilities, the regulation of the value of money and the collection of statistics necessary for the formulation of monetaiT and economic policy. The
Treasury argued that the only proper purpose of H.R. 15073 is to assist criminal,
tax and regulatory investigations and proceedings. Title I of H.R. 15073 was
aniended in the House in conformity therewith and Title I of S. 3678 also refiects
this view.
However, the stated purposes of Title II, set forth in Section 202 of H.R. 15073
and S. 3678, have not been changed. Section 202 still provides, "The purposes of
this title are (1) to facilitate the supervision of financial institutions properly
subject to Federal supervision, (2) to aid duly constituted authorities in lawful
investigations, and (3) to provide for the collection of statistics necessary for
the formulation of monetary and economic policy."
The Treasury urges that Section 202 be amended to make it clear that the
only purpose of Title II is to assist criminal, tax and regulatory investigations
and proceedings. The need for such a change is especially great in view of the
growing concern in America over possible incursions by Government into individual privacy.
Where reporting is recommended, as in the case of the Treasury currency
reports, the purpose of the requirement should be appropriately limited. If
such reporting requirements are limited to those transactions likely to have
a high degree of usefulness in criminal, tax, or regulatory investigations or
proceedings, the potential unnecessary incursions on personal privacy would be
limited; such might not be the case under present S. 3678 and H.R. 15073 language which permits the requiring of reports without any comparable purpose
limitation.
Limiting the purpose of the bill is also important because under section 204 the
authority of the Secretary of the Treasury to prescribe regulations for the implementation of Title II is limited to those "he may deem appropriate to carry
out the purposes of this title."
B. Unnecessary and counter-productive domestic records.—Both bills provide
that—
"(d) Each insured bank shall make, to the extent that the regulations of the
Secretary so require—
"(1) A photocopy or other copy of each check, draft, or similar instrument
drawn on it and presented to it for payment;"
In addition, H.R. 15073, but:not S. 3678, provides :
"(i) Notwithstanding any other provisions of this section the recordkeeping
requirements referred to in this section shall not apply to domestic financial
transactions involving less than $500."
There seems to be some disagreement as to the meaning of these provisions.
Our concern is that the basic provision might be interpreted as requiring the
Secretary of the Treasury to issue regulations providing that all banks photocopy all checks drawn on them, or under the House bill all checks except checks
of less than' $500 used in domestic financial transactions.
We believe that the imposition of an all-encompassing requirement to photograph all checks drawn on U.S. banks (with or without a $500 domestic exclusion) could be impractical, wasteful, and counter-productive.
In excess of 20 billion checks are drawn annually in the United States and
394
19 70 REPORT OF THE SECRETARY OF THE TREASURY
fiow through the banking system and only a small percentage of these are likely
to be of use in criminal, tax or regulatory investigations and proceedings. In
designing recordkeeping requirenients, a balance has to be struck between the
cost to maintain the records (and let us he sure to recognize that this cost will
be borne by the American public that uses the banks) and their likely use in
investigations and proceedings.
While the Treasury has developed precise recommendations as to the records
of foreign transactions whicii banks and other institutions should be required to
maintain, neither Treasury nor any other group has done adequate work so
as to determine the records of purely domestic transactions which are likely to
have a high degree of usefulness in criminal, tax and regulatory investigations
and proceedings. We feel that it is unwise to adopt legislation with such mandatory requirements on the ground that the cost of compliance is not great
without some better idea of the use to which such records could be put, how this
might be accomplished and the costs involved.
C. Sections 241 and 242.—Sections 241 and 242 authorize the Secretary of the
Treasury to impose four independent types of requirements in connection with
international transactions and relationships: (1) reporting by financial institutions of their clients' international transactions and relationships; (2) reporting
of international transactions and relationships by the principals; (3) recordkeeping by financial institutions of their clients' international transactions and
relationships; and (4) recordkeeping of international transactions and relationships by the principals.
As I stated in connection with the international transactions records of banks
and other financial institutions, legislation for reports of international transactions by such institutions is not desirable. As for the other three types of requirements which sections 241 and 242 would permit, one is inappropriate
(reports of foreign transactions by principals) while another is duplicative (required recordkeeping by principals). The only proj^er use of these sections would
be to impose international recordkeeping requirements on banks and other
financial institutions. If these sections are to be used for that purpose, they
should be amended along the lines that I have indicated above and to delete
the inappropriate and duplicative material.
D. Administrative responsihility and authority.—The Treasury Department
believes that the intent of the bills is to assign to the appropriate Federal agency
the responsibility to make sure that banks, brokers and other financial institutions are complying with the requirements imposed upon them by the bills
and the regulations issued thereunder. Such an intent was made specific in
H.R. 16444, which states the responsibility of the Secretary of the Treasury to
assure that the requirenients of the bill are being carried out and to make
appropriate delegations to that end. We urge that a similar provision be included in the legislation enacted.
Section 302(g) of H.R. 16444 specifically authorizes the Secretary of the
Treasury to prescribe regulations including "the procedures to be followed by
the Bureau of Customs, including border and mail checks, to assure compliance
with the requirements imposed by this chapter." While it is believed the intent
of H.R. 15073 and S. 3678 is to authorize such procedures, it would seem desirable if the bills contained a provision similar to that in H.R. 16444.
E. Inconsistency with S. 30, the Organized Crime Control Act.—We endorse
the recommendation of Assistant Attorney General Wilson that the immunity
provision set forth in section 211 either be deleted or made consistent with the
testimonial immunity approach contained in S. 30, the Organized Crime Control
Act.
These and other changes which are discussed in Attachment B are needed
to make S. 3678 and H.R. 15073 a more effective and efficient tool in criminal,
tax, and regulatory investigations and proceedings without undue cost or interference with the other national policies whicii I referred to at the beginning
of this statement.
Conclusion
The Treasury has undertaken actively and vigorously to curtail the use
of foreign bank accounts and international transactions for tax evasion and
other crimes. Our program includes administrative action, new regulations,
treaty negotiations, legislative proposals, and cooperation with the private sector. Today I have presented our proposals for legislation and for improvements
EXHIBITS
395
in the bills before this committee which legislation we urge the committee to
adopt. We believe that such legislation would contribute to our efforts to curb
tax evasion and other crimes by U.S. citizens and residents where foreign accounts and international financial transactions are involved assuming budgetary
resources for proper enforcement are obtained. However, past experience indicates that no system is foolproof. We will continue to be alert to new devices
developed by those seeking to evade taxes or otherwise violate our criminal laws.
We feel that the measures that we have undertaken and the legislation we
have recommended, when fully utilized by the Internal Revenue Service and
other Federal law enforcement agencies, will result in improvement in our
continuing efforts to curb tax evasion and other white collar crimes as well
as to suppress organized crime.
ATTACHMENT A
June 9, 1970.
INTERNATIONAL TRANSACTIONS RECORDKEEPING BY BANKS AND OTHER FINANCIAL
INSTITUTIONS TREASURY'S PROPOSAL AS TO RECORDS TO BE REQUIRED
(1) Records of foreign remittances transferring funds abroad.—In a typical
foreign remittance transaction, a U.S. bank or other financial institution such as
a currency exchange, pursuant to a request by a customer, will instruct either by
airmail or cable a foreign correspondent bank (or its foreign office) to pay either
directly or through another institution a specified amount to a designated person located in the area of the foreign bank with reimbursement effected through
either the foreign bank's dollar account in the U.S. bank or the foreign currency
account of the U.S. bank at the foreign bank. The customer of the U.S. bank will
either instruct the U.S. bank to charge the customer's account with the amount
of the remittance or furnish funds in that aniount. Under our proposal, the
U.S. bank would be required to maintain the application for the remittance, or a
copy, including the identification of its customer, and a copy of the remittance.
Regulations would specify the minimum information to be set forth on this and
other applications made a part of the required records.
(2) Records of foreign remittances transferring funds to the United States.—
This is the converse case to the one just described. U.S. banks instructed by
foreign banks to make a payment either directly or through another institution
would, under our proposal, be required to keep records of the instructions and
payment including, in the case of the bank actually making the payment, the
identification of the payee.
(3) Records of cheeks negotiated abroad and foreign credit card purchases.—
Checks drawn on U.S. banks, including cashier's checks issued by U.S. banks,
which are sent outside the United States are generally forwarded by foreign
banks (or foreign offices of U.S. banks) to their U.S. correspondents banks
(or to their head offices) for immediate credit or for collection. The foreign bank
transmits the checks with a "cash letter." We recommend that the first bank
located in the United States to receive a cash letter from abroad be required to
keep a microfilm or other copy of each check of $1,000 or more and the cash
letters transmitting such checks. In addition, since credit card charges of foreign purchases have the same effect as checks negotiated abroad. United States
institutions whose credit cards can be employed to obtain credit overseas also
would be required to maintain records of each foreign charge of $1,000 or more.
(4) Records of foreign checks transmitted abroad for collection.—A U.S. bank
transmitting abroad checks drawn on foreign banks paid to U.S. beneficiaries
would be required to keep a microfilm or other copy of the checks.
(5) Records of foreign drafts.—A foreign draft (also called a banker's draft)
is like a cashier's check in that both involve the obligation of a bank. A cashier's
check is payable by the bank from which it is purchased, while a foreign draft
is drawn on a foreign correspondent bank of the bank where the draft is purchased. The purchaser sends or carries the check or draft to the foreign country
himself. Under the Treasury recommendations, a U.S. bank selling a foreign
draft would be required to maintain the application of its customer, and a copy
of the draft itself. Conversely, U.S. banks would be required to maintain a copy
of foreign drafts sold by foreign banks which are payable in the United States,
and maintain records of the identification of the payee.
(6) Records of letters of eredit and documentary collections.—With respect
to letters of credit, including travelers' letters of credit, issued by U.S. banks and
397-702 0 — 7 1
27
396
1970 REPORT OF THE SECRETARY OF THE TREASURY
by foreign banks, and documentary collections employed in export and import
transactions, U.S. banks also would have to maintain records along the lines
customarily maintained by most banks v^^hich engage in such transactions.
ATTACHMENT B
June 9, 1970.
TREASURY
DEPARTMENT
RECOMMENDED
AMENDMENTS
TO S.
3 67 8
AND
H.R.
15073
1. Title I—Financial institution records of domestic transactions
The Treasury Department took separate approaches to recordkeeping of international and domestic transactions in the statements of Assistant Secretary of
the Treasury Rossides before the Subcommittee on Financial Institutions of the
Senate Banking and Currency Committee on June 9, 1970, and before the House
Banking and Currency Committee on March 2, 1970. With respect to international transactions it listed six specific types of records which it thought
should be required, while with respect to domestic transactions it left the specific
requirements to future development. The reason for this is simple. The Treasury
Task Force on Secret Foreign Bank Accounts concentrated on its assigned
problem—evasion aided by international means—and was able to develop recordkeeping requirements responsive to the relevant international transactions. The
Treasury Task Force then turned to the question of evasion involving purely
domestic transactions, but concluded that insufficient work had been completed
to enable it to recommend specific recordkeeping requirements which would
have a maximum law enforcement potential with a minimum of interference with
commerce and a minimum cost to financial institutions and their customers. The
Treasury therefore suggested that the responsibility for developing specific
domestic requirements be assigned to the Secretary of the Treasury.
As introduced, H.R. 15073 would have required each insured bank to photocopy
all checks drawn on it and presented to it for payment. Largely in response to
the views expressed by the Treasury, the House Banking and Currency Committee adopted a number of amendments which reduced this inflexibility.
Although not recommended by the Treasury, one amendment added to new
section 21 of the Federal Deposit Insurance Act, subsection (i) provided:
"Notwithstanding any other provisions of this section the recordkeeping requirements referred to in this section shall not apply to domestic financial transactions
involving less than $500."
The committee also amended subsection (d) of new section 21 to provide:
"Each insured bank shall make, to the extent that the regulations of the Secretary so require, (1) a photocopy or other copy of each check, draft, or similar
instrument drawn on it and presented to it for payment." The addition of the
words "to the extent that * * * so require" would appear to be a clear grant
of power to the Secretary of the Treasury to provide that the photocopying
requirement does not extend to all international transactions and to all domestic
transactions involving $500 or more. In other words, he is given the authority to
prescribe the extent of the photocopying requirement. While the committee
report recognizes this power, it indicated that, in view of the congressional
findings, the Secretary is left with "little choice but to require, upon the effective date of the legislation, that banks photocopy all checks except" those covered by the $500 exemption provision. But the report does recognize that "the
Secretary's duty to impose such a requirement is neither absolute nor permanent." In introducing S. 3678 on April 6, 1970, which contains a new section 21
similar to that in H.R. 15073 as passed except that S. 3678 does not contain the
less-than-$500 exemption provision. Senator Proxmire explained the authority
of the Secretary as follows: "Nonetheless, the expense involved might outweigh
the potential benefit and for this reason, the Secretary of the Treasury is given
full authority to exempt certain classes of checks from the photocopy
requirement."
The Treasury is concerned that the language of Subsection (d) and the
somewhat confiicting statements of legislative intent might lead to an interpretation requiring the Secretary of the Treasury to issue regulations providing
that all banks photocopy all checks drawn on them, or, under H.R. 15073, all
checks except checks of less than $500 used in domestic financial transactions.
Since, as indicated above, additional work must be done to develop efficient
recordkeeping requirements for domestic transactions. Treasury urges that the
bill be further amended to eliminate the reference to specific types of domestic
EXHIBITS
397
records, and to place the responsibility to develop specific requirements on the
Secretary of the Treasury. Regulations would be developed to identify the types
of documents subject to these requirements, specify the minimum amounts,
establish the classification of documents (such as checks paid or checks deposited)
and other classifications subject to these requirements.
It would be unwise to adopt legislation with such mandatory requirements
without greater knowledge of the use to which such records could be put, and
little more than a cursory idea of the costs involved.
It should also be noted that the $500 domestic exemption provision contained
in H.R. 15073 most likely would not accomplish its apparent purpose, to eliminate
the recordkeeping requirements in connection with relatively small domestic
checks. It would be impossible for banks to ascertain with certainty whether a
particular small check was negotiated abroad or was a domestic item. One could
not tell simply from the name of the endorser whether a check were endorsed
abroad. Therefore, in order to be in certain compliance with the international
recordkeeping requirement which has no minimum exemption, banks would have
to microfilm all checks regardless of amount.
2. Type of records
Title I of both bills contains language related to recordkeeping requirements
in terms of "photocopies" and "a photocopy or other copy" of enumerated instruments. This terminology raises a possible implication that only hard copies rather
than microfilm or other film records would be acceptable or could be required by
the Secretary in lieu of actual photocopies. Since microfilm is much less expensive
than hard copy processes and provides acceptable reproductions of.the records
in question, it is suggested that the use of the term "photocopies" in section
21(a)(1) and "photocopy or other copy" in section 21(d)(1) be replaced by
"microfilm or other reproductions" and "microfilm or other reproduction"
respectively.
3. Records of identity of customers and signatories
Subsection (c) of new section 21 of the Federal Deposit Insurance Act provides:
"Each insured bank shall maintain such records and other evidence as the
Secretary shall require of the identity of each person having an account with the
bank and of each individual authorized to sign checks, make withdrawals, or
otherwise act with respect to any such account." The Treasury agrees with the
purpose of this provision, but believes that the Secretary of the Treasury should
specifically be given the authority to establish exemptions. For example, it might
be decided to limit the requirement for identity records to certain types of
accounts involving minimum amounts or to exclude from the identity record
requirements employees with authority to sign checks or make deposits where the
account owner maintains complete personnel records.
4. Annual Report to Congress
Subsection (h) of new section 21 of the Federal Deposit Insurance Act provides : "The Secretary shall make an annual report to the Congress of his
implementation of the authority conferred by this section and any similar
authority with respect to recordkeeping or reporting requirements conferred by
other provisions of law." The Secretary of the Treasury already makes an annual
report to Congress and it should be made clear that the information requirement
by subsection (h) may be furnished as part of that report.
5. Geographical scope
In accordance with recommendations made by the Treasury, the geographical
scope of Title II of H.R. 15073 has been clarified so that financial institutions are
subject to the reporting requirements only to the extent they perform functions
within the United States. Thus, a U.S. branch of a foreign bank would be
required to file relevant reports while a foreign branch of a U.S. bank would
not be subject to these requirements. However, S. 3678 does not contain this
clarification, but rather has retained in Section 203(f) and (h), the original
language of H.R. 15073, which could be construed to require comparable reports
from foreign branches of U.S. banks and other financial institutions. Under this
language, for example, any bank which has a branch abroad would be both a
"domestic financial institution" and a "foreign financial agency" within the
398
1970 REPORT OF THE SECRETARY OF THE TREASURY
meaning of these definitions in S. 3678. It is recommended S. 3678 be amended
to conform to Section 203(g) and (h) of H.R. 15073.
Moreover, it would appear that the Secretary of the Treasury does have authority to similarly confine the applicability of Title I, of both H.R. 15073 and S. 3678
to offices of financial institutions located within the United States. However, it
would be desirable for this authority to be clarified in both bills.
6. Retention periods
The bills presently do not limit the authority of the Secretary to specify
retention periods or required records. It is recommended the bills prescribe a
general 6-year retention period with authority conferred on the Secretary to
reduce the period generally or for specific types of records. It should also be
provided that any record which has been called for by a Federal agency in connection with an investigation or proceeding must be retained while the investigation or proceeding is pending.
7. Types of institutions to maintain records or file reports
With respect to the persons engaged in various businesses which must maintain
records under Title I of the bills, it should be noted that in section 123, S. 3678
applies to a much narrower group of functions than H.R. 15073. The reason for
this is not clear. Since the purpose of this section should be to eliminate potential
loopholes which otherwise could permit the international transfer of funds
through businesses which would not have to maintain records of such tranfers, it
is recommended the language of section 123 in S. 3678 be aniended to be consistent
with and as broad as the language of H.R. 15073.
With respect to the definition of a "financial institution" found in section 203(e)
of Title II of the bills, the New York Clearing House has recommended it be
broadened to also include specifically agencies within the United States of
foreign banks, travel agencies, licensed transmitters of funds, and telegraph
companies. The Treasury believes this reconimendation has merit.
8. Purpose of Title II
As originally introduced, H.R. 15073 stated a number of purposes, including
facilitating the supervision of the business of banking, the establishment of
civil liabilities, the regulation of the value of money and the collection of
statistics necessary for the formulation of monetary and economic policy. The
Treasury argued that the only proper purpose of the bill is to assist criminal, tax
and regulatory investigations and proceedings. The House accepted this view
in part and amended Title I in conformity therewith. For example, new section 21
of the Federal Deposit Insurance Act was amended by the House to provide :
"It is the purpose of this section to require the maintenance of appropriate
types of records by insured banks where such records may have a high degree of
usefulness in criminal, tax, or regulatory investigations or proceedings." (Section
21(a)(2)).
However, the stated purposes of Title II, set forth in Section 202 of H.R. 15073
and S. 3678 have not been changed. Section 202 still provides, "The purposes of
this title are (1) to facilitate the supervision of financial institutions properly
subject to Federal supervision, (2) to aid duly constituted authorities in lawful
investigations, and (3) to provide for the collection of statistics necessary for
the formulation of monetary and economic policy." The Treasury urges that
Section 202 be amended to make it clear that the only purpose of Title II is
to assist criminal, tax and regulatory investigations and proceedings. This is
especially important to avoid unnecessary incursions on the right of privacy. Also,
under Section 204 of the bills the authority of the Secretary of the Treasury to
prescribe regulations for the implementation of Title II is limited to those "he
may deem appropriate to carry out the purposes of this title."
9. Definition of monetary instruments
Originally the reporting requirements of H.R. 15073 were limited to specified
transactions in U.S. currency. The Treasury recommended that this be enlarged
to include items equivalent to U.S. currency. The purpose of this change was to
close a potential loophole through which reporting requirements could be avoided
by not using U.S. currency but rather its equivalent. The House Banking and
Currency Committee responded by extending the reporting requirements to
EXHIBITS
399
specified transactions in monetary instruments and Section 203 defined "monetary
instruments" to include "coin and currencies of the United States, and in addition
such foreign coin and currencies and such types of checks, bills, notes, bonds, or
other obligation or instruments as the Secretary may by regulation specify * * *"
The Committee Report on H.R. 15073 clearly indicates this definition is intended
to be no broader than to include "bearer instruments which may substitute for
currency." (page 22). In order to more restrictively define the types of noncurrency items included within the term "monetary instruments" within the statute
itself, it is suggested the definition of "monetary instruments" be amended to
include "coin and currency of the United States, and in addition such foreign
coin and currencies, and such types of travelers' checks, bearer negotiable instruments, bearer investment securities, or their equivalent, as the Secretary may
by regulation specify." The term "or their equivalent" is necessary to permit the
Secretary of the Treasury the necessary discretion to include other types of
instruments which are easily transferable which may not be bearer in form.
For example, a nonbearer security accompanied by a power of attorney could
be negotiated by a series of individuals without leaving a record of the chain
of ownership. The Secretary should be empowered to include such instruments
within the definition of "monetary instruments." Otherwise, serious loopholes in
the legislation could develop.
10. Inconsistency with S. 30, the Organized Crime Control Act
The imniunity provision in S. 3678 and H.R. 15073 is inconsistent with S. 30, the
pending Organized Crime Control Act. The immunity granted by Section 211 of S.
3678 and H.R. 15073 would apply to the transaction with respect to which the
witness is compelled to testify. On the other hand, the policy of the Administration refiected in S. 30 and as expressed in the testimony of Assistant Attorney
General Wilson, is that the appropriate scope of immunity is with respect to the
testimony and that the immunity should not bar prosecution with respect to the
transactions testified to if other evidence is obtained with respect to that transaction as long as the other evidence is obtained independently of the testimony
with respect to which the imniunity applies. Therefore, the Treasury endorses the
recommendation of Assistant Attorney General Wilson that Section 211 either be
deleted or made to conform to the immunity provision now appearing in S. 30.
11. Filing Treasury currency reports
Section 223 of the bill provides for a reporting procedure under which domestic
financial institutions could be designated to receive Treasury currency reports to
which they were not a party, and then transniit them to the Treasury Department. Since the Treasury believes all Treasury currency reports should be filed
directly with the Treasury Department, Section 223 is superfiuous and should be
deleted.
12. Cumulative exports and imports of monetary instruments
Section 231 of H.R. 15073 and S. 3678 requires that any person who participates
in the transportation of monetary instruments in an amount exceeding $5,000 on
any one occasion or $10,000 in any calendar year to report such activity if it involves a place outside the TJnited States. The reporting requirenients applicable
to cumulative transportation of monetary instruments in excess of $10,000 would
be extremely difficult, if not impossible, to implement from an administrative
standpoint. For example, if an individual failing to file a report were found to be
transporting less than $5,000 worth of monetary instruments in his possession, it
would not be ascertainable whether he had transported an additional aniount
during the calendar year to reach a cumulative figure in excess of $10,000.
Therefore, the Treasury recommends the deletion of the $10,000 cumulative reporting requirement.
13. Reports of exports and imports of monetary instruments
Section 231(b) of the bill sets forth the information that can be required by
the Secretary of the Treasury in reports of exports and imports of nionetary instruments. As presently drafted, this provision does not provide sufficient authority to the Secretary to require additional information which he may deem
necessary for these reports to be effectively utilized. For example, it would not
presently permit the Secretary to require individuals filing these reports to pro-
400
1970 REPORT OF THE SECRETARY OF THE TREASURY
vide their social security numbers which are necessary to relate the information
contained in the reports to taxpayers' general tax records. This section should be
redrafted to broaden the Secretary's authority to require relevant information in
reports of exports and imports of monetary instruments.
14. Section 241
Section 241 authorizes the Secretary of the Treasury to impose four independent requirements in connection with international transactions and relationships: (1) require reporting by financial institutions of their clients' international transactions and relationships ; (2) require reporting of these transactions
and relationships by the clients (U.S. citizens, residents, and persons in the U.S.
doing business therein) themselves; (3) require recordkeeping by financial institutions of their clients' international transactions and relationships; and (4)
require recordkeeping of these transactions and relationships by the clients
themselves.
With respect to the first requirement, reporting by financial institutions, for the
reasons set forth in the June 9, 1970, testimony of Assistant Secretary Rossides,
the Treasury Department has concluded it would be inappropriate to support
legislation requiring reports by financial institutions of information obtained
from the records of international transactions.
With respect to the second requirement, reporting by clients, the Treasury
already has announced that taxpayers will be required under existing statutory
authority to report the existence of interests in foreign bank, brokerage, and similar accounts on their tax returns. Since the Internal Revenue Service already is
empowered to issue a summons for records of any specific taxpayer involving his
transactions with a foreign bank account, a burdensome reporting requirement on
taxpayers involving individual transactions with these accounts would not be
justifiable. In any instance in which the disclosure of the existence of an account
or other information raises questions of tax liability for which the Internal Revenue Service would need additional information of individual transactions, the
IRS can obtain such records through the issuance of a summons. Therefore, the
authority in Section 241 to require reports by individuals of transactions with
foreign accounts is unnecessary.
With respect to the third requirement provided in Section 241, recordkeeping by
financial institutions, the Treasury has indicated the need for such records. However, Treasury has suggested that these requirements be implemented in a more
straightforward approach, under which international recordkeeping requirements
would be limited to banks and other listed financial Institutions in the United
States, specified types of records would be listed, and the Secretary would be
empowered to substitute for, eliminate from or add to the requirements by regulation. This could be accomplished by amending Sections 241 and 242 or by amending
Titie I.
With respect to the fourth requirement of Section 241, recordkeeping of foreign
transactions by individuals, the Treasury has stated that it is considering the
issuance of regulations pursuant to existing statutory authority requiring taxpayers with interests in foreign bank, brokerage and similar accounts to maintain specified records of transactions they have with these accounts. In view of
the existing authority to implement such a proposal, the corresponding authority
provided in Section 241 is superfiuous.
Based upon the foregoing. Treasury recommends the deletion of Sections 241
and 242 of the bills, or its amendment along the lines suggested.
15. Administrative responsibility to assure compliance by financial institutions
The Treasury Department believes that the intent of the bills is to assign to
the appropriate Federal agency the responsibility to make sure that banks,
brokers and other financial institutions are complying with the requirements imposed upon them by the bills and the regulations issued thereunder. Such an intent was made specific in H.R. 16444 introduced by Representative Widnall on
March 12,1970. Section 405 of that bill provides—
" S E C . 4 0 5 . R E S P O N S I B I L I T Y OF SECRETARY
"The Secretary shall have the responsibility to assure compliance with the
requirements of this Act and to the greatest extent possible delegate such
responsibility to the appropriate bank supervisory agency, or other supervisory
agency."
EXHIBITS
401
H.R. 15073 and S. 3678 impose recordkeeping requirements for insured banks and
for insured savings institutions in Title I in the form of amendments to existing
statutes the enforcement of which has already been assigned to various federal
regulatory agencies. In addition, the bills elsewhere impose recordkeeping and reporting requirements on uninsured bank and savings institutions and on certain
other businesses which perfomi financial functions, as well as reporting requirements on insured entities. With respect to these recordkeeping and reporting requirements, it would be desirable for the bills to specify the responsibility of the
Secretary of the Treasury to make sure that the requirements are being carried
out and to make appropriate delegations of responsibility. The Treasury urges
that the bills be amended accordingly.
16. Enforcement authority with respect to reports of exports and imports of
monetary instruments
Section 302(g) of H.R. 16444 specifically authorizes the Secretary of the Treasury to prescribe regulations including "the procedures to be followed by the Bureau of Customs, including border and mail checks, to assure compliance with the
requirements imposed by this chapter." While it is believed the intent of H.R.
15073 and S. 3678 is to authorize such procedures, it would seem desirable that
the bills contain a provision comparable to Section 302(g), H.R. 16444.
17. Sharing information contained in reports with other Federal agencies
The reports required to be filed under Title II of H.R. 15073 and S. 3678 are to
be filed with the Treasury Department. In order for full use to be made of these
reports in accordance with their intended purpose, it will be necessary for other
agencies to have access to them. While the Federal Reports Act of 1942 (44
U.S.C. 3507) provides for the sharing of information between Federal agencies,
it does not apply to the release of information by the Internal Revenue Service.
Release of information by the Internal Revenue Service is governed by Section
6103 of the Internal Revenue Code which provides that returns made with respect
to income and certain other taxes "shall be open to inspection only upon order of
the President and under rules and regulations prescribed by the Secretary or his
delegate and approved by the President." While it would appear that the quoted
language would give the President authority to provide for the sharing of the
information obtained from reports filed under Title II by the Internal Revenue
Service with other agencies, it would be useful to clarify this authority.
18. Margin requirements
Section 301 of the bills would give the Federal Reserve Board clear authority
to apply margin requirements not only to lenders but also to borrowers. This is
an entirely new concept in the regulation of credit as margin rules have been only
applied in the past to lenders.
The Administration supports the extension of the margin requirements to borrowers provided it is made clear that there is no intent to regulate the availability of credit abroad to foreigners. Therefore, Section 301 should be amended to
provide that only borrowers who are American citizens or residents and foreign
persons controlled by or acting for them are subject to these requirements. In
addition, it should be made clear that the requirements are applicable only
with respect to the purchase of U.S. securities, or of foreign securities where the
transaction is executed in the United States.
Moreover, as a technical matter the Treasury recommends these substantive
changes in the margin requirement law be accomplished through the enactment
of a new section rather than by amendment of Section 7(a) of the 1934 Act.
19. Restrictions on dealing with foreign financial agencies
For the reasons stated in the statement of Assistant Secretary Rossides on
June 9, 1970, the Treasury recommends the deletion of this provision.
20. Administrative Procedure Aet
In promulgating regulations under this legislation, the Administrative Procedure Act would be applicable. This would require that the notice and public procedure provisions provided in 5 U.S.C. 553 be followed.
402
1970 REPORT OF THE SECRETARY OF THE TREASURY
Exhibit 33a.—Remarks by Assistant Secretary Rossides, June 24, 1970, before the
Senate Select Committee on Small Business, on the action program of the
Treasury to combat international cargo theft and pilferage.
I am pleased to be here today to present the views of the Treasury Department on international cargo theft and pilferage in general, and to report to you
on the current drive of the Treasury to combat such theft through a three-point
action program of the Bureau of Customs.
Our action program attacks cargo theft and pilferage through :
—iStricter cargo accountability,
—New regulations providing for personnel identification and improved physical security of cargo, and
—Reviewing the desirability of additional authority for establishing national
standards for cargo facilities and extending licensing requirements.
This action program ties in with two top priority Presidential concerns—^the
drive to stop smuggling of narcotics into the United States and the campaign
against organized crime.
The Treasury Department has followed with great interest the investigations
of your committee. We congratulate your committee for spotlighting this very important problem area. We will submit a technical report on S. 3595.
Although your staff is familiar with the role of the Bureau of Customs, I would
like to establish the perspective from which customs sees its involvement in the
matter of security of cargo.
Cargo in international trade is exposed to theft and pilferage at many points
from the time it leaves the foreign producer until it reaches the consumer in the
United States. Some losses, of course, occur in transit in the foreigii country and
while awaiting loading either at docks or airports abroad prior to transoceanic
shipment. The shipment arrives in the United States, is held by the carrier for a
brief period until it has been cleared by customs, and is then transported inland
either by freight forwarders or by the importers via their own transport.
From the time that the merchandise physically touches the territory of the
United States, either being unladen from an airplane at an airport of entry or
from a vessel onto a dock, it is under "customs custody" until released by customs
for entry into the commerce of the United States. After this release, delivery may
be made by the carrier either directly to the importer or to a designated agent,
such as a customhouse broker or freight forwarder.
It is this period of customs custody, including the point of delivery by the
carrier, with which customs is and should be concerned. During this period the
carrier is responsible for insuring the physical security of the merchandise.
Customs, however, does exercise control over movement of the cargo by the carrier until a suitable arrangement for payment of duty has been made and until
customs is satisfied that contraband, such as heroin and cocaine, is not being
smuggled into the United States.
Clearly, any theft or pilferage Of merchandise, once it has landed and until its
release from customs custody, threatens the proper collection of duty and the
prevention of smuggling, with which customs is charged. Moreover, customs
already has personnel physically present at the airports and docks, at the terminals and warehouses. And these personnel—inspectors, agents, and enforcement
officers—^are vested with unique powers of search and seizure without being required to show probable cause, which makes for strengthened law enforcement at
our borders and ports of entry.
It is on the basis of these interests and capabilities that I am able to report to
you this morning a threefold prograni upon which the Treasury Department has
embarked to contribute its full share to the protection of cargo against theft and
pilferage during this segment of the trade chain. This will strengthen our ability
to collect revenue and, as important, our ability to contribute strongly to the
President's drives against drug smuggling and organized crime.
Treasury's three-part program
The Treasury established early this year a special task force to study the problem of cargo theft prevention. The task force first examined what we could do
administratively, and we have already moved forward in that area. We are now
determining what additional legislative authority appears necessary or desirable.
The Treasury program focuses on the problem in three principal ways:
Cargo accountahility.—We propose to tighten the carriers' accountability for
EXHIBITS
403
cargo from the moment of unlading until the moment of delivery to the importer
or his bona fide agent, so that there can be no question whether a loss has
occurred while the merchandise is in the physical custody of the carrier.
Personnel identification and improved physical security.—^We intend to intensify greatly our investigations of persons associated with cargo handling so as to
reduce to a minimum the number of individuals with criminal backgrounds or
susceptible to criminal inducements who may have access to customs documents
and to merchandise under customs custody. Also, permits to unlade would be
contingent on transport and storage of the cargo under security conditions approved by customs.
National standards for storage and handling of cargo and extended licensing.—
We are reviewing the desirability of obtaining additional legislative authority
to establish more extensive physical standards for the protection of cargo and
to extend licensing to additional personnel and firm's.
In order to clarify the applicability of each of these measures to the period of
customs custody, several points of particular vulnerability for cargo theft and
pilferage should be noted:
—The first of these is the process of unlading and movement to terminal
storage. When cargo is being unladen from an aircraft and transported, frequently several miles, to the air carrier's terminal w'arehouse, there are opportunities for removing a package from the aircraft directly irito private channels,
or for dropping off the transporting truck or van one or more packages which can
be picked up by a confederate in a following vehicle. Similar diversion of a package or carton can be effected on the docks.
—In the terminal, merchandise, especially high value merchandise, if not
given separate secure storage, is vulnerable to theft and pilferage.
—And, at the time of delivery from the terminal to the importer or the freight
forwarder, additional merchandise beyond that for which the trucker has legitimate papers can be added to the loading of the truck, or delivery can be made
to a false claimant.
As your committee has noted, objective data on the incidence of theft during
these stages is not available. However, the consensus of a number of supervisory
customs inspectors involved in clearing cargo at airports suggests that, of the
total losses during customs custody perhaps 5 to 10 percent of the theft or pilferage occurs between the aircraft and the terminal warehouse, perhaps 15 percent by pilferage within the warehouse, and 75 to 80 percent through collusion
between truckers and the carrier's cargo handlers in delivering goods at the
warehouse dock. We would expect roughly sim_ilar ratios on the waterfront.
Organized crime is undoubtedly a significant factor in theft of cargo. This is a
development that must be recognized and dealt with effectively if any meaningful progress is to be achieved. A favorite device of organized crime is placing
individuals with serious criminal records on air freight, airline, and warehouse
company payrolls as cargo handlers. These corrupt and corruptible handlers then
become principal actors in collusive theft.
Customs' pilot program at JFK International Airport
JFK Airport presented such a special problem, including involvement of organized crime, that we began a pilot program of immediate remedies there in
May. These are administrative measures that the Bureau of Customs has undertaken under its current authority.
In late April, our customs director at JFK Airport met with all airline managers at JFK and outlined the following new procedures :
1. Carriers are required to segregate high-value merchandise and any broken
packages or cartons as they are unladen from the aircraft and to transport these
promptly to terminal warehouses in closed trucks.
2. On arrival at the warehouse, high-value goods must be moved into "strong
rooms" or special security storage cages, and broken packages repaired or repacked. Customs will deny to importing carriers permission to unlade their aircraft if these procedures are not carried out.
3. A new pick-up document is now in universal use at JFK Airport. This form
employs authentication by the consignee or, in the case of brokers, validation
similar to that used in mechanical checkwriters and is designed to prevent unauthorized truckmen from driving off with whole loads by presenting false documents. A stamped copy of the pick-up form must be retained by the trucker as
404
1970 REPORT OF THE SECRETARY OF THE TREASURY
proof of authority to have the merchandise on his truck if he is stopped by
customs agents at check points.
4. Backing this up are fraud-prevention cameras which take simultaneous
photos of the pick-up form and of the trucker or other person receipting for the
merchandise.
5. New lock boxes, similar to post office boxes, have been installed at JFK Airport to insure that papers for importers and customhouse brokers cannot be
taken, or even scanned, by unauthorized individuals.
The 35 airline representatives attending the meeting pledged support for this
enforcement program. Customs inspectors will insure compliance by spot checking unlading of aircraft and deliveries from carriers to truckers.
Regulation changes
The second phase of our program would apply these and additional measures
nationwide by changes in Customs Regulations. One of these notices of proposed
rulemaking, which appeared in the Federal Register on June 6 (35 FR 8829),
would, we believe, improve the accounting for cargo by carriers, from unlading to
delivery to importer, by increasing the incentive to avoid payment of duty on
undelivered merchandise.
The second notice of proposed rulemaking will be published later this week. If
placed in effect in their proposed form, these regulations would empower District
Directors throughout the country to adopt measures similar to those in effect at
Kennedy, as well as additional measures in the area of personnel controls,
wherever a high incidence of theft warrants such action.
Under the new personnel measures, carriers would be required to furnish lists
of persons employed in connection with unlading, storage and delivery of imported merchandise; in high-risk areas, such employees would be required to be
fingerprinted, and if they met customs standards, customs photo ID cards would
be issued to them, without which access to cargo in customs custody would be
denied. These are proposed as conditions for a permit to unlade.
Similar requirements would be levied on bonded warehouses and licensed cartmen and lightermen.
Since customhouse brokers are required to exercise "responsible supervision
and control" over the transaction of customs business, similar listing of personnel or qualification by their personnel for an ID card would be required. And
when a broker employs a messenger firm to transport customs documents, similar
listing and identification would be imposed on employees of the messenger firm.
The Organized Crime Section of the Bureau of Customs already has underway a reinvestigartjion of all licensed cartmen, customhouse brokers, and operators
of bonded warehouses and container stations. This will cover not only the individuals holding the licenses, but also stockholders, directors, and officers of firms
involved. The same increased investigation standards will, of course, apply to
the issuance of new licenses.
Legislative considerations
In addition to these administrative measures, we are examining the need for
additional legislative authority. Such legislation may include action areas such
as:
1. Establishment in high-risk areas of additional security standards covering
physical facilities and equipment.
2. Licensing of truckers, trucking firms, and certain other personnel seeking
access to these high-risk areas.
To summarize. Treasury feels it has a special responsibility to deal with theft
of cargo in intemational trade and a special capability to do so. We have already
in effect at Kennedy Airport measures to tighten customs' controls and to establish certain cargo handling and storage standards. These measures are incorporated in the proposed changes to Customs Regulations, which would also improve the carriers' cargo accountability and would enable cu^oms to identify
those individuals handling or processing international cargo who have organized
crime connections or criminal backgrounds, and those who fraudulently take
delivery of merchandise. And, thirdly, we are investigating legislation to cover
national standards for cargo facilities and licensing of additional personnel and
firms.
We are not, of course, pretending to eliminate all theft of cargo. For instance,
hijackings which occur after merchandise has been released by customs are out-
EXHIBITS
405
side our purview. Nor are we proposing to replace local police or private security
guards. ImiK)rted merchandise is in the physical possession of the carriers until
it is delivered to the consignee or his agent, and responsibility for safeguarding
it rests squarely on the carriers. And, as you are probably aware, the Department
of Transportation is also in the process of studying this problem area.
However, through this Treasury three-part action program, we believe swift
and substantial improvement can be made in combatting theft and pilferage of
cargo, while also aiding in the vital areas of President Nixon's top priority
programs against the smuggling of narcotics and against organized crime.
International Financial and Monetary Developments
Exhibit 34.—Statement by Secretary Kennedy, July 28, 1969, on ratification
of the Special Drawing Rights Amendment
The International Monetary Fund informed me today that the Amendment to
the Fund's Articles of Agreement, which includes the provisions for the Special
Drawing Rights facility, has been formally ratified and has now entered into
force. For the first time, the nations of the world can, by conscious international
decision, create international reserve assets to supplement supplies of gold and
foreign exchange.
The Amendment is the first major change in the Articles of the Fund since
the original Bretton Woods Articles became effective in December 1945. It represents an enlightened willingness of Fund members to work together in a spirit
of cooperation to adapt the Fund Agreement to meet the problems of today and
tomorrow.
I strongly support a decision to activate the Special Drawing Rights Facility
in substantial amounts at the time of the Annual Meeting of the Fund later this
year in Washington. I anticipate that the Managing Director will be able to make
a formal proposal to that effect in ample time for a decision by the Governors.
The consensus reached among the Deputies of the Group of Ten at last week's
meeting in Paris is a major step toward that objective.
We can, therefore, look forward with confidence to a reasonable rate of growth
in world reserves in aniounts adequate to support future expansion of international trade and payments.
The quinquennial review of quotas in the Fund is also due in 1970. The discussions among the Deputies point toward an enlargement in those credit facilities
which will further strengthen the monetary system.
Exhibit 35.—Remarks by Secretary Kennedy as Governor for the United States,
September 30,1969, at the Joint Annual Discussion of the Boards of Governors
of the International Monetary Fund and the International Bank for Reconstruction and Development and its affiliates
I am honored to address this annual session of the International Bank for
Reconstruction and Development and the International Monetary Fund. The
accomplishments of the quarter century since Bretton Woods refiect both the
foresight of those who set these institutions on their initial course and the outstanding leadership that has guided their destinies over the postwar years. The
President of the World Bank, Mr. McNamara, and the Managing Director of
the Fund, Mr. Schweitzer, are carrying forward in this great tradition.
Anniversaries are a time for looking back on past achievements—and those of
the Bank and the Fund are indeed impressive. But today is even more a time for
looking ahead to the challenges of the next 25 years, for setting new goals, and
for appraising our methods for reaching them.
In the field of development finance, Mr. McNamara has already pointed toward
some new directions for the Bank's lending and outlined his thoughts on how we
can better direct available resources to the points of urgent need. The forthcoming report of the Honorable Lester Pearson and his distinguished panel will
406
1970 REPORT OF THE SECRETARY OF THE TREASURY
provide us all with a fresh perspective and thoughtful analysis to further stimulate our thinking and our actions.
This report is particularly timely for the United States. We are engaged in
a comprehensive review of our own foreign assistance effort. It would be premature to anticipate the results of this study. However, I would like to emphasize
two basic principles that will help guide my country's future efforts.
First, we are firmly committed to the multilateral approach to development
financing, epitomized by the World Bank and its affiliates. This approach brings
to bear on development problems the collective efforts and experience of all
nations, large and small, rich and poor. It helps to achieve equity, both among
donors and among recipients. One of President Nixon's first acts after assuming
office was to recommend to the Congress our contribution to the then pending
Second Replenishment of the International Development Association. We are
pleased that this multilateral endeavor has been able to go forward.
'Second, we are convinced that development can be accelerated if we enlist
more effectively the vast potential of private enterprise. Too often, the individual
in developing countries with ability and ambition, but with a paucity of resources, is denied an opportunity to help his country grow. Too often, companies
with ample financial strength and technical competence shy away from the
challenges to be found in less developed areas.
The 1970's are sure to require some new emphasis in the development process.
But, in approaching the new decade, we must also deal forcefully with key
problems already upon us.
For instance, the extemal debt problem has become acute. Debt reschedulings
testify that the burden of debt servicing is already weighing too heavily on some
oountries. But debt reschedulings, in themselves, provide no general solution.
Instead, debtors and creditors alike must aim to avoid unmanageable levels
and structures of external debt. Assistance on realistic concessionary ternis must
be provided from a broader range of donor countries. Recipient countries,
for their part, must see to it that they help create a dimate in which funds
can be efficiently used and internal development fiourish.
We must also seek better ways of meshing development finance with the needs
of baLance-of-payments adjustment. When, as at present, a number of large
providers of aid must simultaneously deal with problems in their international
payments, the fiow of real resources should not be interrupted. At the same time,
balance-of-payments surpluses should more readily be put to work for development purposes, on appropriate terms.
The problem of coordination looms ever larger as the regional development
banks grow side by side with the worldwide institutions. The variety of institutions now at work to complement national efforts makes it essential that we
more consciously seek improved ways to fit the pieces together in mutually complementary and reinforcing ways.
I wonder, too, whether simple numerical targets for development assistance
by industrial nations do not divert too much attention from the quality of the
aid provided and the techniques employed.
Finally, I must emphasize that the building and expansion of new economies—
as well as of old—must be achieved in a manner consistent with outward-looking
trading and financial practices—^practices which our predecessors launched when
they adopted the Bretton Woods proposals and its trading system counterpart,
the General Agreement on Tariffs and Trade. In this connection. I am glad to
hear the Managing Director's statement that the Fund will be prepared to reinforce its collaboration with international institutions which have special
responsibilities in the field of trade and aid.
II
I am acutely conscious of the fact that the climate for orderly economic growth
everywhere will be enormously affected by the success with which we in the
United States guide our own economy.
Looking back over the past decade or more, I believe there is room for some
satisfaction. The 1960's have brought virtually uninterrupted growth of real
production in the United States at the historically high rate of about 4% percent a year. Despite evident flaws in the record, we also managed to miaintain
over that same ii>eriod of time a somewhat hetter degree of internal price
stability than nearly all of our major trading partners.
Nevertheless, when President Nixon and his Administration took office, this
EXHIBITS
407
inflationary process was well entrenched. Quite simply, the United States failed
to respond with sufficient vigor in making available, without inflation, the resources required by the Vietnam conflict at a time of sharp increase in other
public expenditures. Moreover, our traditionally strong trade surplus had almost
vanished.
Some countries have no doubt welcomed the larger export markets that are
the counterpart of the recent surge in U.S. imports. Forced growth in the U.S.
markets under the pressure of inflation cannot, however, be a sound basis for
sustained payments equilibrium. Moreover, we recognize that the pressures on
our own money markets have contributed to the worldwide upward racheting
of interest rates.
Those same market pressures have been reflected in a massive flow of private
short term capital to the United States. This has tended to keep the dollar
strong in the exchange markets, and to hold down or reduce foreign official dollar holdings. But short term capital inflows are not an effective substitute for
a stronger payments structure, solidly rooted in a current account surplus large
enough to support a steady flow of aid and foreign investment.
President Nixon has made control of inflation his first domestic priority. By
now, the basic strategy of his Administration for achieving this goal through
the coordinated use of expenditure, tax, and monetary policies is widely
understood.
Those policies are not—nor did we anticipate that they would be—-painless.
The President has pledged a strict limit of $192.9 billion on budget spending
during the current fiscal year, a figure below congressionally authorized ceilings.
To keep within that limit at a time of higher costs all along the line, and despite
social programs that demand larger financing, we have had to cut $7.5 billion
from program levels planned in the budget submitted to the Congress last January. Significantly, the expenditure total planned for the entire fiscal year
allows for virtually no increase from the. current rate of defense and civilian
spending.
This restraint is being achieved at a time when the Vietnam confiict is continuing. Looking ahead, however, let me assure this audience that the people
of the United States are solidly behind President Nixon in his efforts to bring
about a just and honorable peace in Vietnam.
We have continued the 10-percent income tax surcharge through the remainder
of this calendar year and have requested the Congress to inaintain half of that
surcharge for an additional 6 months. We are also moving to eliminate the special tax credit for business investment. These revenue measures, combined with
the control on expenditures, are designed to produce an overall budgetary surplus of nearly $6 billion—^the largest in 18 years.
Meanwhile, the expansion of money and credit has been slowed sharply. Our
lending institutions are unable to satisfy fully the demands for credit, and the
effects are being felt on important sectors of the economy. Where possible, we
have moved to ease points of excessive pressure, such as those on housing activity. But we are determined to maintain the basic thrust of our restrictive
policies until the overheating is visibly dissipated.
Eight months ago, we knew that controlling infiation without precipitating a
serious recession would be a long and diffieult process. It requires holding the
. rate of public and private spending below the basic trend of growth in capacity
and output, thereby relieving excessive pressure on our resources. That process
is now well underway, and we anticipate further slackening in the quarters
immediately ahead.
Clearly, a reduced rate of growth is not a long term policy objective. But it is
essential to an effective attack on infiation, and it should be a prelude to renewed
growth at a sustainable pace.
Experience warns us that the trend of prices—^particularly of services and
consumer goods—levels off only after a considerable lag behind other business
indicators. ^So far, we can see only scattered and not wholly conclusive signs of
an easing of price pressure.
In these circumstances, it is not time to shift gears. I believe we are realistically
aware of the inevitable risks on either side of the course we have set for ourselves. But all our planning is rooted in the basic proposition that the firm and
persistent application of appropriate fiscal and monetary restraint can lead us
past those shoals into calmer waters.
408
1970 REPORT OF THE SECRETARY OF THE TREASURY
III
Tension and pressures have also been evident over recent years in the international nionetary systeni, and speculative outbursts have recurred. Indeed, it
is a tribute to the underlying strength of the system devised at Bretton Woods
and to the spirit of cooperation nurtured by the Intemational Monetary Fund
that disturbances have been contained and that world trade and payments have
continued to grow at a rapid rate.
Yet we still face the challenge of moving in a coordinated way to close the
persistent imbalances in trade and payments among the major countries that have
contributed so importantly to the monetary istraius. There can be no escape in this
process from the need for effective national economic policies.
I have already commented upon the circumstances in the United States. In
the case of the United Kingdom, we have highly encouraging evidence that the
underlying trend in its balance of payments is noticeably improving, and a
current account surplus has been reestablished. France has, within recent weeks,
launched a program to complement the adjustment in the franc parity. Consequently, there is a real improvement in the prospects of important countries
which have experienced an erosion of their external positions over recent years.
It is vitally important that this recovery not be slowed by an unwillingness of
countries in a strong position to see a decline in their trade balance. Sizable trade
surpluses happen to be highly concenti^ated among only a few countries. We look
to these countries to not only refrain from resisting adjustment but, where
possible, to take actions of their own to assist and encourage it.
Certainly, solutions should be found other than intemal infiation, and the
prescription appropriate for one country may not be suitable for another. But it
is equally clear that, in each case, much could be done to spread and diffuse existing surpluses in ways that support both the broad objectives of freer trade and
intemal stability. Import controls, systematic tying of aid, failure to share fully
in the burdens of defense, preferences for domestic production, export incentives
and inhibitions on capital exports are all out of place for countries with current
account surpluses ranging as high as 2 percent or 3 percent of domestic production. The processes of international consultation and cooperation embedded in
the IMF might well be reviewed to assure that the policies of chronic surplus
coimtries are suhjected to the same searching evaluation that is more or less
automatically given to deficit countries.
IV
Strong ties of trade and investment, close links between financial markets, and
the rapidity of communication and transportation in the modem world make each
country highly sensitive to developments abroad. Yet we live in a world of nationstates, each of which seeks to preserve a degree of economic independence.
We must face the facts of differing emphases in national policy objectives,
changes in the structure of industry and population, cyclical excesses or deficiencies of internal demand, the economic consequence of social disturbances, and
rigidities of costs and prices. Any of these factors can become a source of disturbance and uncertainty. At least temporary imbalances are inevitable, and
every country wants to preserve some margin of liquid financial resources to
buttress its freedom of action.
Our international monetary arrangements will serve us well or poorly to the
extent that they can absorb and diffuse sources of strain on exchange markets,
provide effective incentives for national adjustment, and thus maintain an efficient and durable mechanism for the finance of trade year in and year out. It is
one of the great strengths of the present system that, through the years, it has
demonstrated a capacity to evolve and grow in response to changing needs.
Indeed, in adopting the first amendment to the IMF Agreement since Bretton Woods, we now stand on the threshhold of a fundamental developnient: the
creation of a new reserve asset—Special Drawing Rights. We are indebted to
those who years ago not only foresaw the potential need for supplementing the
traditional sources of reserve creation, but who worked tirelessly to translate
general concepts into concrete reality.
Their efforts could not have come to fruition at a more opportune time. I believe the Fund's Annual Report, and even more the report embodying the Managing Director's proposal for activation of the Special Drawing Rights, makes
amply clear that the contingency against which we have been planning has now
EXHIBITS
409
arrived. The United States, therefore, fully supports the proposal to move
promptly to meet the acknowledged need for growth in intemational reserves
through activation of the new facility. We particularly welcome the sense of
conviction and confidence that enables us to move forward to use this new instrument in substantial amounts, reasonably commensurate with need.
I recognize, but do not share, the concern expressed by some that fresh additions to world reserves might delay the necessary adjustment of payments
imbalances. I am persuaded that, in fact, the opposite is true. Without a timely
supplement to world reserves, the efforts of deficit countries to eliminate those
deficits could be made more difficult, and could even be frustrated, by actions
taken by other countries to safeguard their existing reserves. Moreover, I can
assure you that, for the United States, the activation of this facility will in no
way diminish our efforts to bring infiation under control.
As we enter this new era of managed reserve creation, SDR's will have to find
their proper role within the total complex of reserve assets and credit facilities.
There is no doubt in my mind that, within the basic framework of the amended
Fund Articles, we will jointly demonstrate our ability to use this new reserve
asset constructively—in the same spirit of cooperation that was essential to its
development.
SDR's have properly been at the center of attention in recent discussions of
international liquidity. However, the regular drawing rights in the IMF also
have an important role to play. The approach of the period of quinquennial review makes this an appropriate occasion for surveying the size of Fund quotas.
Preliminary discussions indicate that a nuniber of questions remain to be resolved
before a concrete proposal can be presented to the Governors. I feel certain that
this matter can be satisfactorily resolved within the framework of a reasonable
increase in the overall size of the Fund at an early date.
The clear progress we are making in dealing with the provision of international
liquidity must not divert our attention from other sources of strain. I have
already noted that the process of international adjustment has not been working
with full effectiveness, and that the difficulties in this regard are in large part a
byproduct of inadequate or inappropriatiei domestic policies.
At the same time, I believe we must recognize that events themselves have
raised new questions as to the appropriate role for adjustments in exchange
rates—not as a substitute for, but as a complement to, other policies. I have
particularly in mind the range of proposals for "limited fiexibility" to which Mr.
Schweitzer alluded yesterday.
These proposals all look to less rigidity in the exchange rate mechanism than
has in fact developed in the practices of industrialized countries. Some suggested
approaches would, in practice, affect only a handful of currencies, or would introduce largely technical changes in the management of exchange markets. Other
versions—such as those for a very substantial widening of exchange rate margins—would appear to introduce so large an element of uncertainty, and be so
at variance with the basic objectives of the Fund, that they probably do not need
to occupy our attention.
Certainly, in the United States we have reached no conclusion on the desirability of any particular proposal. I would, however, like to share with you some
of the relevant points that, on the basis of our own review of the matter, we
believe should be kept in mind in further investigations in this area.
In the first place, the various plans for "limited fiexibility" in exchange rates
seem to pose formidable technical and policy problems that will require careful
study over a considerable period by national authorities, as well as international
monetary bodies, before any consensus is possible.
Secondly, well-conceived changes, as part of their basic design, should reduce
incentives for speculation, or make it more costly. Thus, if it is to be successful,
any proposal must come to grips with the difficulty of confining changes in
exchange rates withiii carefully defined limits, while providing enough flexibility
to reduce the need for, and expectations of, large abrupt changes in parities.
Third, we should not lose sight of the fact that any reasonable scheme to remove undesirable rigidities in exchange rates would have to be built upon the
foundation of responsible and appropriate internal policies, so that the need for
large and discrete changes in parities should arise even less frequently than in
the past. Similarly, the world would continue to require an orderly growth in
410
19 70 REPORT OF THE SECRETARY OF THE TREASURY
reserves and credit facilities, to facilitate the maintenance of parities within
established and relatively narrow ranges.
Fourth, given the pivotal role of the dollar in the international monetary
system, the initiative for even limited exchange rate adjustnients would continue
to lie with countries other than the United States. As a corollary, we must guard
against the possibility of encouraging a bias toward devaluations.
It is implicit in these comraents that we believe that proposals for limited
flexibility in exchange rates offer no panacea for present problems. Nonetheless,
the increasingly widespread discussion of these ideas in this country and abroad
reflects a real concern over the need to facilitate, over a period of time, a better
working of the adjustment process. In concept, these proposals seek to preserve
and enhance the basic stability of the system as a whole precisely by breaking
down unnecessary rigidities and inhibitions to orderly change, when change is
necessary.
In this light, efforts to define and develop techniques of limited fiexibility need
not be looked upon as radical new departures from the main stream of developments in the monetary area. Instead, they seem to me to fall within the framework of orderly and evolutionary change and of multilateral monetary
cooperation.
As I have noted, these devices have had no official sanction and are full of
subtle and unsettled technical and policy questions. In sum, they are a long way
from fruition, if, indeed, some variant proves practical at all in the end. But
neither are these ideas something that we can, or will, responsibly ignore.
I, therefore, welcome the Managing Director's stateinent, elaborating on the
Fund's Annual Report, that the Fund will be continuing its study and appraisal
of these questions. The United States will actively participate in and contribute
to such a study. We would hope that, during the coming months, the Fund will
examine proposals for limited exchange flexibility, determine which particular
proposals appear worthy of further attention, and set forth the major issues and
considerations that would concern officials of member governments as they
formulate considered judgments on such matters.
In conclusion, let me say the principal contribution of the United States to the
stability and viability of the international monetary system in the present setting is perfectly plain—ito bring our inflation to an end and to do so without
sending shock waves of recession to every corner of the world.
That is the main path we in the United States have set for ourselves. In
participating in an examination of possible further improvements in our monetary arrangenients, we will not be misled into thinking that we can dispense
with the fundamental need.
Exhibit 36.—Communique of the Ministerial Meeting of the Group of Ten,
October 1,1969, Washington, D.C.
1. The Ministers and central bank Governors of the 10 countries participating
in the General Arrangements to Borrow met in Washington on 1st October 1969.
In the absence of the Chairman for the current year, Mr. Karl Schiller, Minister for Economic Affairs of the Federal Republic of Germany, the meeting was
first presided over by Mr. David M. Kennedy, Secretary of the U.S. Treasury.
The Ministers and Governors began by electing Baron Snoy et d'Oppuers,
Minister of Finance of Belgium, Chairman of the Group of Ten for the coming
year and he presided for the rest of the meeting.
Mr. Pierre-Paul Schweitzer, Managing Director of the International Monetary
Fund, took part in the meeting, which was also attended by a representative
of the Swiss National Bank, the Secretary-General of the Organization for
Economic Co-operation and Development, Jonkheer E. Van Lennep, and the
General Manager of the Bank of Iiiiternational Settlements, Mr. Gabriel Ferras.
2. The Ministers and Governors heard a report on the work of their Deputies
by the Chairman of the Deputies, Mr. Rinaldo Ossola.
3. The Ministers and Governors noted the proposal made by the Managing
Director of the IMF for the first decision to allocate Special Drawing Rights and
agreed to support this proposal.
4. In order to strengthen the liquidity of the Fund, the Ministers and Governors also expressed their willingness to support, during the forthcoming quinquennial review, an appropriate adjustment of the quotas of menibers of the
EXHIBITS
411
IMF. They will support general increases of reasonable size and such selective
adjustnients as may be agreed in the Fund for the purpose of bringing the
relative size of quotas more into line with the present economic relationships
between IMF members.
5. The Ministers and Governors noted that the Participants in the General
Arrangements to Borrow had, under these arrangements, been called upon twice
in 1969 to provide the IMF with supplementary resources for a total amount of
$575 million. In view of the important contribution which the General Arrangements to Borrow provide for the smooth functioning of the international monetary system, the Ministers and Governors agreed that these arrangements should
be renewed next year for a period of 5 years.
6. The Ministers and Governors exchanged views on recent international
monetary developments and, in particular, those concerning exchange markets
and interest rates.
7. The Ministers and Governors instructed their Deputies to continue their
regular meetings for the purpose of reviewing developments, and possible improvements, in the functioning of the international monetary system.
Exhibit 37.—Resolution on allocation of Special Drawing Rights far the first
basic period, approved by the Board of Governors of the International
Monetary Fund, October 3,1969
Allocation of Special Drawing Rights for the first basic period
WHEREAS the Managing Director has submitted a proposal for the allocation of special drawing rights pursuant to ilrticle XXIV, Section 4, of the
Articles of Agreenient of the International Monetary Fund ; and
WHEREAS in the Report containing his proposal, the Managing Director
has declared that, before making the proposal, he had satisfied himself that
the proposal will be consistent w^ith the provisions of Article XXIV, Section
1(a), and that, after consultation, he has ascertained that there is broad support among participants for the proposal;
WHEREAS the Managing Director, on the occasion of this proposal for the
first allocation, has satisfied himself that the provisions of Article XXIV, Section 1(b), have been met and that there is broad support among participants
to begin allocations; and
WHEREAS the Executive Directors have concurred in the proposal of tht*
Managing Director;
NOW, THEREFORE, the Board of Governors, being satisfied that the proposal of the Managing Director meets the principles and considerations governing the allocation of special drawing rights set forth in A.rticle XXIV, Section
1, hereby RESOLVES that:
1. The Fund shall niafee allocations to participants in the Special Drawing
Account, in accordance with the Articles of Agreement, during a basic
period of 3 years which shall begin on January 1,1970.
2. Allocations during the basic period shall be made on January 1, 1970, January 1,1971, and January 1,1972.
3. Allocations shall be on the basis of quotas on the day before the dates of
the allocations.
4. The rate for the first allocation shall be 17.5 percent and the rate for the
second and third allocations shall be 15 percent, provided that these rates
shall be adjusted, to the nearest one tenth of one percentage point, by
multiplying them by the ratio of $20 billion to the total of quotas on the
day before allocation of those participants which were niembers of the
Fund on December 31,1969.
Exhibit 38.—Announcement by the Intemational Monetary Fund, January 2,
1970, of an initial allocation of Special Drawing Rights
The International Monetary Fund has made an initial allocation of special
drawing rights equivalent to $3,414 million, effective January 1, 1970, to 104
participants in the Fund's Special Drawing Account.
3971-702 0 — 7 1
28
412
1970 REPORT OF THE SECRETARY OF THE TREASURY
The allocation was made in accord with a Resolution adopted by the Fund's
Board of Governors at its 1969 Annual Meeting. The Resolution approved a
proposal of the Managing Director concurred in by the Executive Directors to
allocate special drawing rights for a first basic period of three years, beginning
January 1, 1970. The present allocation is made for the first year and will be
followed by annual allocations on January 1, 1971 and January 1, 1972. Allocations are made at a rate expressed as a percentage of the quotas of participants
on the day before the allocation in question, the percentage being such as to
yield allocations close to the equivalent of $3.5 billion in the first year, $3 billion
in the second year, and $3 billion in the third year.
The rate of allocation for the first year of the basic period was computed at
16.8 percent of the quota as of December 31, 1969, of each participant receiving
an allocation.
International Monetary Fund, Special Drawing Account, allocations of Special
Drawing Rights received by participants January 1, 1970
[U.S. dollar equivalents]
Participant
Afghanistan
Algeria
Argentina
Australia
Austria
Belgium
Bolivia
Botswana
.Brazil
.
Burma
Burundi
Cambodia
.
Cameroon
Canada
Central African RepubUc
Ceylon
Chad
Chile....
Colombia
Congo (Brazzaville)
Congo, Democratic Republic of
Costa Rica
C yprus
D ahomey
Denmark
Dominican Republic
Ecuador
ElSalvador
Equatorial Guinea..
Finland
Malaysia
Mali
Malta
Mauritania
Mauritius
Mexico
Morocco
Netherlands.
New Zealand
Nicaragua
Niger
Nigeria
Norway
Pakistan
Panama
Paraguay
Peru
Philippines
Rwanda.....
Senegal
Sierra Leone
Somalia
SDR
4,872,000
12,600,000
58,800,000
84,000,000
29,400,000
70,896,000
4,872,000
504,000
68,800,000
8,064,000
2,520,000
3,192,000
3,057,600
124,320,000
1, 596,000
13,104,000
1,680,000
21,000,000
21,000,000
1,680,000
15,120,000
4,200,000
3,360,000
1,680,000
27,384,000
5,376,000
4,200,000
4,200,000
1,008,000
21,000,000
21,000,000
2,856,000
1,680,000
1,680,000
2,688,000
45,360,000
15,120,000
87,360,000
26,376,000
3,192,000
1,680,000
16,800,000
25,200,000
31,584,000
4,704,000
2,520,000
14,280,000
18,480,000
2,520,000
4,200,000
2,520,000
2,520,000
Participant
South Africa...
Southern Yemen.
Spain
France
Gabon
Gambia, The
Germany
Ghana
Greece
Guatemala
Guinea
Guyana
Haiti.
Honduras
Iceland
India
Indonesia
Iran
Ireland
Israel.
Italy
Ivory Coast
Jamaica
Japan
Jordan
Kenya
Korea
Laos
Lesotho
Liberia
Luxembourg
Malagasy Republic
Malawi.
Sudan
Swaziland
Sweden
Syrian Arab Republic...
Tanzania
Togo
Trinidad and Tobago
Tun isia
Turkey
Uganda...:...
United Arab Republic
United Kingdom
United States
UpperVolta
Uruguay
Venezuela
Vietnam
Yugoslavia
Zambia
SDR
33,600,000
3,696,000
42,000,000
165,480,000
1,596,000
840,000
201,600,000
11,592,000
16,800,000
4,200,000
3,192,000
2,520,000
2,520,000
3,192,000
2,520,000
126,000,000
34,776,000
21,000,000
13,440,000
15,120,000
105,000,000
3,192,000
6,384,000
121,800,000
2,688,000
5,376,000
8,400,000
1,680,000
504,000
3,360,000
3,192,000
3,192,000
1,890,000
9,576,000
1,008,000
37,800,000
6,384,000
5,376,000
1,890,000
7,392,000
5,880,000
18,144,000
5,376,000
25, 200,000
409,920,000
866,880,000
1,680,000
9,240,000
42,000,000
6,552,000
25,200,000
8,400,000
EXHIBITS
413
Exhibit 39.—Remarks by Secretary Kennedy as Governor for the United States,
April 10, 1970, at the 3d annual meeting of the Asian Development Bank,
Seoul, Korea
It gives me great pleasure to participate again in the annual meeting of the
Asian Development Bank. It gives me equal pleasure to join with my fellow
Governors in welcoming France and Fiji to membership in the Bank.
It is fitting that this Bank should hold its Third Annual Meeting here in this
vigorous city of Seoul. In the past decade the Republic of Korea has achieved an
enviable record of development, and one of the world's highest rates of economic
growth. Starting from the exhaustion and the devastation of war in the early
1950's, the Korean people applied their energies with the single purpose to the
job of rebuilding and developing their country. We see ample evidence of their
achievement here in Seoul.
Korea's progress is an example of the success of the cooperative approach to
development. Korea's economic growth has resulted fundamentally from the labor and dedication of the Korean people. At the same time, foreign technical
and capital assistance have contributed substantially to Korea's successful development. Furthermore, we see in the World Bank's consulting group for Korea,
how consulting builds confidence and contributes to sound economic judgment.
Economic development such as we witness here in Korea testifies to the effectiveness of pursuing economic aid and development on a cooperative, multilateral basis. The Asian Development Bank incorporates such an approach. Its
structure and its organization assure a sharing of responsibilities and benefits.
To see that this sharing is real, it is sufficient to recall that 60 percent of the
Bank's capital comes from its Asian member nations.
The structure and organization of the Bank refiect acceptance of the principle
of partnership among nations. That principle, in turn, is a cornerstone of U.S.
foreign policy. To underline this point, I would like to refer to a unique and
important document issued by President Nixon on February 18 of this year
entitled "United States Foreign Policy in the 1970's: A Strategy for Peace,"
which explores those principles essential to the success of the President's efforts
to achieve and maintain peace. Among these principles, of course, is that of
partnership.
Like most every ingredient of foreign policy, partnership has an economic
dimension. Therefore, as Chief Financial Officer of the United States, it seems
appropriate for me to focus on those economic policies which vrill so greatly
assist in achieving a true and lasting partnership among nations. Such policies,
of course, are concerned with the question of aid and how it may be most effectively applied. Yet these policies are directed as well to all aspects of economic
interchange among nations.
With respect to the question of aid, it is our belief that a multilateral approach
must play an increasing role in the provision of that aid. Further, it has become
apparent that developing countries must play a larger part in formulating their
own development strategies. In short, it is our conviction that partnership in
economic development among those nations giving aid as well as between giver
and recipient—is the best way of promoting growth and development. It is a
conviction based on experience and observation refiected in the record of progress of such multilateral institutions as the Intemational Bank for Reconstruction and Development, the Inter-American Development Bank, and now the Asian
Development Bank.
The United States as well as other nations has not always been able to approach
the aid question in such a manner. In the immediate postwar years, the United
States conducted its aid program primarily on a bilateral basis. During that
period there were many reasons for such an approach. To mention a basic consideration, the United States was one of the few nations which emerged from
the ravages of World War II with a strong economy. Consequently, it was appropriate for the United States to promote, as rapidly as possible, the rebuilding of
those economies destroyed by war. It became no less appropriate for the United
States to stimulate economic development amopg lesser developed nations through
its aid programs.
As we gained experience in the area of economic development, we saw a need
to supplement the bilateral approach. The United States thus tumed more and
more to wPrking in partnership with other nations in the aid process. Not only
has the World Bank expanded but the Inter-American and Asian Banks have been
414
1970 REPORT OF THE SECRETARY OF THE TREASURY
fostered. The results of this policy have been gratifying. A multilateral approach
makes possible the use of the wealth of experience ahd expertise which people
from different backgrounds bring together when they focus in economic aid,
growth and development.
Any one country, of course, is most familiar with its own problems, its own
institutions, and its own way of doing things. The solution it applies to its
problems may not be appropriate in a different economic and social environment. This is a lesson we learned in the important first years of our aid
programs. At the same time we found that economic development benefits
immeasurably by drawing on the experiences of other people and their varied
approaches to resolving their economic problems.
The regional development banks, especially, draw upon the benefits of each
of these lessons. As economic development benefits from a multilateral, partnership approach to this problem, so does the very process of development play
a crucial role in laying a groundwork of economic relations among nations which
may well lead to durable partnerships. We know that economic development
does not progress most rapidly in isolation. Quite the opposite is true. Voluntary
economic interchange among nations—whether in terms of goods, services,
capital or labor—is a mutually beneficial relationship. It is a relationship which
allows each country involved to make greater economic gains than would
otherwise be possible. Consequently, the results of economic interchange can
provide a very important base upon which closer and more stable relations
among nations may be built. With this thought in mind, I find it heartening to
witness the growth of trade and economic exchange among the regional members of the Asian Development Bank. Korean-Japanese trade, for example,
has grown immensely over the past years. The same holds true for the Republic
of China and Japan as well as for trade relations between Japan and Australia,
to mention but a few such examples. If the growth of economic ties among
the regional member nations of the Asian Development Bank is impressive, so
too is the growth of economic relations between these nations and the United
States. Further, projections based on long terin trends indicate that these ties
will increase significantly over the next decade. For example, by 1980 the level
of U.S. exports of goods and services will approach $130 billion. If this trend
continues, exports will become an increasing percentage of U.S. gross national
product and, therefore, U.S. interest in foreign markets for those goods will
grow correspondingly.
By the same token we look for commensurate growth of U.S. imports. These
magnitudes alone are significant. But more important are the relative trends
with regard to the trading partners of the United States. If these trends continue, Asian nations will account for larger percentage of exports to the U.S.
market by 1980 than they do now. Further, U.S. exports, in a relative sense, will be
increasingly directed to Asian markets.
Just as LIS. exports and imports are exi)ected to multiply in the next decade,
so too are United States and foreign private capital flows expected to increase
substantially. International capital movements in the decade of the seventies will
be immeasurably enhanced by the tremendous growth and development of the
multinational banks which progressed so dramatically in the decade of the
sixties. Creation of the Euro-dollar and Euro-bond markets has increased the
sophistication, integration, and efficiency of money and capital markets in the
Western industrial nations. Similar developments are currently in progress in
other centers of the world—notably in Tokyo, Hong Kong, and Singapore.
Therefore, it becomes increasingly apparent that the flnancial links between Bast
and West are growing in magnitude as well as sophistication.
In sum, I see the past decade as laying the foundation for even more growth
in every feature of intemational trade and flnance. It seems to me that the
implications of this growth for our relations with Asian nations as well as vdth
other nations are clear. As these interests grow, our commitments to pa!rtnership increase. Isolationism may have been possible in the world of trade barriers
and currency blocs in the thirties; it seems apparent, however, that isolationism
in a world of growing economic interests is a thing of the past.
The United States will remain clearly involved with the world outside its
borders. But this involvement will continue to be based on the principle of
partnership. This principle, as I have said, is the substance of the structure and
activities of the Asian Development Bank. This principle, furthermore, is promoted by the growth of economic ties between Asian nations and other nations
EXHIBITS
415
of the world. Economic forces have always played an extremely important role
in world peace and stability. In the coming decade with the world growing
smaller and increasingly interdependent, the course of economic relations among
nations may well make the difference between conflict and peace.
For these reasons, the United States will continue to advocate those policies
designed to nurture economic ties among nations. We shall strive—in the future
as in the past—tP realize those principles underlying the International Monetary
Fund and the General Agreement on Tariffs and Trade. We shall attempt to continuously enhance the economic dimensions of partnership.
Economic growth and development, stimulated by increased trade and capital
flows among nations, is an essential condition as well as a primary objective in
resolving difficulties among nations. And, as I have emphasized previously, it is
my belief that a multilateral approach—^be it in terms of aid, trade, or capital
flows—is the best possible means of promoting this objective. Consequently, I
want to commend the vision of the Asian Development Bank in applying the
multilateral approach. Further, I wish it every success in the decade of the
seventies. For the progress it makes in that decade will have a major role in
determining how well we, as nations, conduct our affairs among each other and
resolve our difficulties.
To make the necessary progress, however, the Bank must obviously have adequate resources. To help meet this need. President Nixon submitted to Cbngress
his proposal for a U.S. contribution to the Bank's Special Funds. Under this proposal, the United States would pledge $100 million to the Special Funds of the
Bank over a 3-year period—$25 million in the year ending June 10, 1970, $35
million in the following year, and $40 million in the 3rd year.
We are convinced that an adequate Special Funds concessional Financing facility is essential to the success of the Bank's activities and we are determined
that the United States shall contribute its appropriate share. When the U.S.
Congress has acted upon this legislation, it will enable the United States to join
with present and future contributors to establish this necessary Special Funds
facility on a flrm, lasting, and adequate basis.
Finally, it will enable the Asian Development Bank to better promote that
process of economic growth and development which is so important to the future
of each and every one of us.
Exhibit 40.—Statement by Secretary Kennedy, April 16, 1970, before the House
Committee on Banking and Currency on behalf of legislation relating to the
Intemational Monetary Fund, the International Bank for Reconstruction
and Development, and the Asian Development Bank
I appear today to support authorization for the United States to:
—accept an increase in its quota in the International Monetary Fund;
—provide for a related adjustment in the capital subscription of the United
States to the Intemational Bank for Reconstruction and Development;
—contribute to the Asian Development Bank Special Funds.
Legislation to implement authorizations for these three institutions was introduced as H.R. 16891. Separate authorization bills were also introduc€^d on the
Asian Development Bank (H.R. 16641), and on the Fund and Bank (H.R.
16764). Since the authorization provisions of the three bills on the IMF, IBRD,
and ADB are almost identical, I have not drawn any distinction among them
in my testimony today. I will address myself speciflcally to the three additional
provisions in H.R. 16891 at the conclusion of my remarks.
The Intemational Monetary Fund has recently assumed additional responsibilities in administering the new Special Drawing Rights and is steadily growing
in influence and importance as the primary institution for multilateral cooperation and action in international monetary matters. The World Bank fulfills a
similar role in multilateral financing of economic development.
/On the regional level, it is timely for the United States to join with other
countries in strengthening the ability of the Asian Bank to meet a wider range
of Asian development needs than it can satisfy from its ordinary lending
window.
Approval of legislation necessary to carry out these purposes will permit the
United States to maintain a role within these multilateral financial institutions
that is in keeping with its economic and financial position among the nations of
the free world.
416
1970 REPORT OF THE SECRETARY OF THE TREASURY
Proposed legislation
The proposed legislation before the Committee would amend the Bretton
Woods Agreements Act of 1945 essentially in two respects :
First, it would authorize the U.S. (Governor of the Fund to consent to an
increase of $1,540 million in the U.S. quota in the International Monetary Fund
and authorize an appropriation for that purpose;
Second, it would authorize the U.iS. Governor of the Bank to vote for a $3
billion increase in the capital stock of the Bank; subscribe to 2,461 additional
shares of the Bank's capital; and authorize an appropriation of $246.1 million
for this purpose.
In addition, the Special Drawing Rights Act would be amended to provide
authority for-the U.S. Governor of the Fund to vote for allocations of Special
Drawing Rights to the United States in any future basic period in an amount
equal to the U.S. quota in the International Monetary Fund.
The background of the proposed increase in resources is described in the
Special Report of the National Advisory Council on International Monetary and
Financial Policies whicii has been presented to you. Included in that report are
the reports of the Executive Directors of the Fund and the Bank to the Boards
of Governors of their respective institutions.
Finally, the Asian Developnient Bank Act would be amended by authorizing
the United States to enter into an agreement with the Bank providing for a
U.S. contribution of $100,000,000 to the Special Funds of the Bank.
Proposal to increase Fund quotas
Tliis is the third occasion on which a proposal to increase the quotas in the
Fund has been put before the member governments. The Fund Agreenient entered
into force in December 1945 with total quotas of approximately $7.2 billion.
Although the Articles of Agreement provide for a general review of the adequacy
of quotas every 5 years, there was no general increase in quotas of the Fund
until 1958-59. At that time, there was a general upward revision of quotas by
50 percent. Special quota adjustnients were also made for a small number of
countries at that time. The total size of the Fund after these adjustments, and
after taking into account the quotas of a number of new members, was $15.2
billion at the end of 1962.
In 1965-66, a second decision was taken to revise all quotas upward by 25
percent and to provide additional selective increases for 16 member countries.
In both the first and second enlargements of the Fund, the United States
accepted its share of the general increases of 50 percent and 25 i)ercent, respectively. On this third occasion, the proposed legislation recommends that the
United States accept an increase of $1,540 million, raising the U.S. quota to
$6,700 million. In this instance the United States would participate not only in
the general increase, but also in the additional increases being provided for a
number of countries in order to establish a better alignment between IMF
quotas and the relative economic and financial positions of the respective member countries.
If all countries were to accept the quotas proposed for them, the total increase
in the Fund's resources would be $7,577 million, raising the aggregate size of the
Fund to $28.9 billion. This represents an enlargement of about 35 percent in the
Fund's medium term credit facilities.
The proposed increase in the Fund's conditional medium term credit resources
is needed at this time to keep pace with the growth in the world economy and
world trade, and to provide larger drawing rights on these resources to member countries that have to cope with larger imbalances in their international
paynients as international transactions continue their rapid rise.
The two previous enlargements in IMF quotas have kept pace with the postwar expansion of world trade. The chart appearing on page 10 of the Report of
the National Advisory Council, and attached to this statement, shows graphically
the size of the Fund in relation to the upward curve of world imports, which
have grown from $100 billion in 1958 to an annual rate of $250 billion in mid1969. Once again, as in 1958 and 1965, the line representing Fund quotas has
fallen below the rising curve of world imports. The proposed increases will restore
a more appropriate relationship.
417
EXHIBITS
WORLD RESERVES, IMPORTS AND FUND QUOTAS
1948 10 1969
$Bil.
400
300
250
200
100
80
60
40
20
Total reserves. Reserves excluding the Uniied States and WorU Imports are based on the scale on
the left margin and Fund quotas are based on the scale on the right margin.
10
1948
I
I
'52
I
I
'54
l
l
l
l
_L_L
l l l l
'56 '58 '60 '62 '64 '66 '68
YEAR
'70
'72
418
1970 REPORT OF THE SECRETARY OF THE TREASURY
In recent years, we have also witnessed a rapid expansion in the size and
volatility of international capital movements. To protect their economies from
these sharp and sudden swings in capital, Fund members, especially the major
industrial countries, have come to rely increasingly on the Fund's medium term
credit facilities. In the 6 years since the end of 1963, drawings on the Fund
aggregated $13.1 billion, almost twice the amount ($7.1 billion) drawn in the
previous 16 years (1947 to 1963), and drawings by the industrial countries have
risen at an even faster rate. Since these drawings are limited by each country's
quota, the proposed increase in quotas would permit an expansion of the Fund's
credit operations and thus provide more scope to redress payments imbalances
without resort to undesirable restrictive practices.
The quota adjustments recommended by the Executive Directors of the Fund
consist of increases of 25 percent or more for nearly all countries. On this
occasion, a major effort is being made to readjust the relative proportions of
quotas of countries which had not been appropriately aligned. To provide an
initial guide to the relative quota positions, the Fund has used a number of
revisions of the so-called Bretton Woods Formula. This formula takes account of
national income, reserves, imports, exports, and the variability of exports.
Among the largest percentage increases, ranging beyond 50 percent, are those
for Belgium, France, Italy, and Japan, as is shown in table 4 of the Special
Report. The new quota distribution will broaden the support on which the Fund
can call to provide medium-term reserve credit.
The overall increase proposed for the United States is 29.8 percent, of which
25 percent is equivalent to a general increase and the remaining 4.8 percent,
to a special increase. As the addition to the U.S. quota is less than the proposed
overall increase of 35.5 percent, the U.S. share of total Fund quotas would be
reduced from the present level of 24.3 percent to about 23.3 percent (See table 4
of Special Report).
T*he resolution providing for an increase in quotas has been approved by
Governors casting the required 85 percent of weighted votes. On the advice of
the National Advisory Council, I cast the U.S. vote January 19, 1970, in favor
of the resolution, while formally recording that I was not requesting or consenting to an increase in the U.S. quota.
The proposed quota increases will come into effect on October 30, 1970, for
those members which have accepted their proposed increases by that date.
The Bretton Woods Agreements Act (Section 5) provides that the authorization
of Congress shall be received before any person or agency shall, on behalf of
the United States, request or consent to any change in the quota of the United
States. The proposed legislation provides congressional authorization for the
United States to consent to the $1,540 million increase in quota and authorizes
an appropriation of a similar amount to remain available until expended. The
authorization and appropriation should be considered in two parts:
First, the Articles of Agreement of the Fund provide that 25 percent of any
quota increase must normally be paid to the Fund in gold. Twenty-five (25)
percent of the proposed U.S. increase amounts to $385 million. In exchange for
this payment, the United States will receive a "gold tranche" drawing right
in the Fund. This is an automatic drawing right and represents a reserve asset
which the United States can call upon at any time. Thus, we have an exchange
of assets and no diminution of U.S. reserve assets.
The remaining portion of the authorization, $1,155 million, will permit the
United States to issue to the Fund a letter of credit in that amount, on which the
Fund may draw at such time as it may require the corresponding dollar funds
to meet drawings of other members. When U.S. currency is drawn from the Fund,
the drawing rights of the United States in the Fund are correspondingly
increased.
Both the gold payment and the letter of credit represent monetary transactions ; neither of them entails a budgetary expenditure.
Arrangements to minimize impact of subscriptions by other IMF members on
U.S. reserves
As mentioned, the U.S. gold subscription in connection with the prox)osed
quota increase is $385 million. While this will mean a reduction in the U.S.
gold stock, the United States will receive in return reserves in the form of a gold
tranche drawing right at the Fund. Most other majpr countries will also pay
their gold subscriptions from their own gold holdings. A number of other coun-
EXHIBITS
419
tries, however, will wish to purchase gold from the United Staies or other sizable
reserve holders in order to pay the gold portion of their quota increase to the
Fund. If such purchases are made from the United States, both our reserves
and aggregate world reserves would be reduced.
To offset or mitigate this and other consequences of gold subscription payments, the Fund has proposed special measures which are explained in detail in
the Special Report and in the report of the Executive Directors. These measures
contemplate sales of gold up to a maximum amount equivalent to $700 million
to replenish the Fund's holdings of the currencies of members from which gold
has been purchased by other members. We have discussed these arrangements
with the management and Board of Executive Directors of the Fund and we
believe they will prove adequate to offset over time the full amount of secondary
gold and reserve losses by the United States.
Use of Fund resources by the United States
The United States currently has a large "super gold tranche" position in the
Fund. As of February 28, 1970, the Fund holdings of dollars were 51 percent of
the U.'S. quota. This means that, as of that date, other Fund members had
drawn over $7 billion from the U.S. dollar subscription, adding a similar amount
to U.S. international reserves.
From early 1964 to December 1966, the United States drew on the Fund to
an aggregate aniount of $1,840 million and Fund holdings of dollars reached
93 percent of quota at the end of 1966. Large borrowing abroad by American
banks and corporations, during the past 2 years, tended to draw down dollar
holdings of foreign central banks, and thus to provide the United States with
official settlements surpluses. These surpluses permitted the United States to
acquire a large super gold tranche, or net creditor position in the Fund. ('See
attached chart.) Foreign borrowing on the scale of the past 2 years may be
replaced by net repayments to foreign countries in the future; in this event, the
ability to draw on the Fund could prove useful to the United States. An
enlarged quota will provide additional scope for such drawings if needed.
Voting shares and SDR allocations
In addition to establishing drawing rights in the Fund, the quotas determine
the relative voting power of Fund members and fix the relative shares in the
allocations of Sipecial Drawing Rights. The proposed new quota distribution involves a moderate decline in the U.S. voting position, but it would still remain
above 21 percent. Since the procedure for amending the Articles of Agreement
requires, inter alia, the approval of 80 percent of the total voting power, the
United States is protected against the possibility, however, unlikely, of amendments to which we might be strongly opposed.
The allocation of SDRs is also based on relative quota shares. Failure to
consent to an increase in the U.S. quota would reduce the U.S. share in the next
allocation of SDRs on January 1, 1971, and on the following January 1 by about
$130 million.
SDR limitation proposal
The legislation would also provide a new limit on the aniount of Special Drawing Rights that the U.S. Governor can vote to allocate to the United States. Since
a meniber voting for a proposal to create 'SDRs must accept the SDR allocated
to it under that proposal, it is essential to have adequate advance authority to
accept any SDR allocations that may be agreed upon. Most countries have unlimited authority from their parliaments to vote for SDR allocations. In the
United States it was decided to give sufficient authority to the U.'S. Governor to
allow the United States to participate in SDR activations within a broad range
without further congressional authority, but a reasonable upper limit was esta'blished on the amount of SDRs the U.S. Governor could vote to create.
The present limit is set at the amount of the U.'S. quota which, as you know,
is $5,160 million. At the time this limit was enacted in June 1968, it was correctly
anticipated that this would provide adequate scope for negotiating the initial
activation of SDRs. The actual activation of $3^/^ billion for the first year and
$3 billion a year in each of the next 2 years will result in allocations of about
2.3 billion SDRs to the United States. Thus, almost half of the present authority
to vote the SDR allocations to the United States has been used up. If no change
420
1970 REPORT OF THE SECRETARY OF THE TREASURY
is made in existing legislation, the U.S. Governor could vote for further total
allocations to all countries of about $12 billion. I would expect that this amount
would be clearly inadequate in any future activation decision.
The proposed bill would retain the concept of relating the authorized limit,
for allocation of S^Rs to the U.S. quota in the Fund as it may be in effect from
time to time. This would be $6,700 million should Congress approve the present
proposed increase. However, unlike the present limit which governs cumulative
allocations, the proposal would also allow the U.S. Governor to vote for an
amount of SDRs up to the congressionally authorized U.S. quota in the Fund in
each basic period for allocation of SDRs. This formula thus allows the U.S. Gov-
EXHIBITS
421
ernor fiexibility in each basic period to vote for iSDRs allocated to the United
States up to an amount equal to the U.S. quota. Further congressional action
would be required to authorize any amounts allocated to the United States in
excess of the U.S. quota.
U.S. capital subscription to the IBRD
I turn now briefiy to the proposed increase in the capital of the World
Bank. This proposed increase in the U.S. subscription, amounting to $246.1
million, will enable the United States to do its part in carrying out a longstanding practice of member countries of the Bank to take parallel action on
special increases received in the Fund. Only 10 percent, or $24.6 million, of the
U.S. subscription will be paid in, and hence result in a U.S. budget outlay.
The remaining 90 percent, or $221.5 miilion, will add to the U.S. subscription of
callable capital. The latter amount will not result in budget expenditure unless—
and this is most unlikely—a call should be made upon it in the future for the
purpose of meeting the Bank's debt obligations.
The increase in the U.S. subscription to the Bank corresponds to that i)ortion
of the increase in the U.iS. quota in the IMF which exceeds the 25 ipercent general increase in quotas for all members. No general increase in capital subscriptions to the IBRD is proposed.
The policy of parallel special increases in the World Bank carries forward
the principle I described as applied to the IMF of establishing a better alignment between subscriptions and the relative economic and financial positions of
the respective member countries. The policy also- has the effect of retaining a
relative alignment in voting strength of members in the two institutions.
Since this is the first occasion on which the United States will receive a si)ecial
increase in its IMF quota, it is also the first occasion on which the policy of
parallel action in the two institutions calls for an increase in the paid-in portion
of the U.S. subscription to the Bank. The only previous increase in the initia)
U.S. subscription to the Bank of $3,175,000,000 was in 1959 when there was a
general increase of 100 percent in the subscriptions of all members. That took
the form entirely of an increase in callable capital.
The United States has strongly supported the policy of parallel action in the
IMF and IBRD in the past when its financial impact has fallen entirely on other
members. It is appropriate that we continue that support and that the United
States now accept the special increase called for in that policy.
The policy has been beneficial to the Bank and fully consonant with U.S. international financial policy. Up to the present time, there have heen approximately
96 special increases in Bank subscriptions taken by 62 countries, each of which
had received a similar increase in its IMF quota. These sx>eciajl increases have
brought almost $3.5 billion of additional capital to the Bank. The largest indiyidual increases have come from other developed countries such as Germany,
Italy, and Japan which have undergone rapid economic growth in recent years.
While the present round of special increases for the first time entails an increase
in the U.S. subscription, the policy of parallel action continues to have strong
advantages for the United States from a burden-sharing point of view. Special
increases in capital subscriptions to the Bank are proposed for 75 member countries. In total, they aniount to over $2.2 billion, of which the U.S. increase—
$246 million—represents only 11 percent. Several other developed countries will
increase their subscriptions by a much larger percentage than the United States.
As a result of the relatively small U.S. share of the total special increases
proposed, the U.S. share in total subscriptions to the Bank, now 27.48 percent,
would fall to 26.04 percent. This wiU also mean that the U.S. voting share in the
Bank, which is now 24.65 percent, will fall by approximately 1 percent.
The World Bank recently has greatly increased its lending activities in line
with expanding opportunities for productive use of capital in the developing
countries. New loans exceeding $1.8 billion were extended over lan 18-month period
between July 1, 1968, and December 31, 1969. The Bank's need for funds to
sustain a continued high level of activity is substaiitial. The $222 million of
additional paid-in capital and the $2 billion of additional callable capital which
will be provided in total by the 75 countries for which special increases are proposed will further strengthen the Bank's resources. It will facilitate Bank
borrowings in world capital markets. Such markets have been and will continue
to be the Bank's main source of new funds.
In summary, Mr. Chairman, I believe the proposed increase in authorized
422
1970 REPORT OF THE SECRETARY OF THE TREASURY
capital and the special increase in the U.S. subscription serve the U.S. national
interest. The AVorld Bank is an outstanding institution. It has a central role in
the Administration's wish to place greater emphasis on the multilateral financial
institutions in our development assistance efforts. I, therefore, urge the Congress
to take prompt, affirmative action on the legislation requested.
Asian Development Bank Special Funds
Finally, I turn to the proposal for a U.S. contribution to the Consolidated
Special Funds of the Asian Development Bank. The President's message to the
Congress requesting this action highlighted the objectives of this proposal. It
has the full support of the National Advisory Council, and the Council's Special
Report, which is before you, describes it in detail.
Both the Asian Development Bank and its Special Funds are well known to
this committee. In 1966, with strong bipartisan support, the Congress authorized
the United States to join the Bank and to subscribe to its ordinary capital. That
action by the Congress was decisive in assuring that the Bank would receive
major support from outside the Asian region.
The Bank is now firmly established. It has demonstrated its ability to marshal
resources from Europe, Asia, and North America and these resources are being
effectively committed to help meet Asia's development needsi
Thus far, most of the Bank's commitments have been from its Ordinary Capital
resources and on relatively hard repayment terms. Such lending, while critically
important, cannot meet the full range of Asia's development financing needs.
The Bank must also be able to provide financing on concessional terms—that
is, at very low interest rates and with long maturities. Without such concessional
facilities, the Bank could not adequately assist those developing country members who have very limited external debt servicing capability but still have a
need to finance long term projects which are essential to their economic growth
and at the same time meet the Bank's normal rigorous criteria for project
selection.
Accordingly, the Bank's Articles of Agreement provide for Special Funds for
lending on concessional terms, separate from and supplementary to the Bank's
Ordinary Capital.
The President's proposal would respond to the Asian desire—which we fully
share—to strengthen the Bank as a multilateral regional institution, capable of
dealing with a broad range of current and future development problems in Asia.
It would authorize a U.S. contribution of $100 million to the Bank's Special Funds
over the 3-year period beginning with $25 million in fiscal year 1970, $35 million
in 1971, and $40 million in 1972.
The proposal is designed to encoixrage other advanced nations to share fairly
the burden of contributions to the Bank's Special Funds. The U.S. contribution
would be a minority share of total contributions by all donors. It would not
constitute the largest single contribution. In effect, the U.S. contribution would
be either exceeded pr matched dollar-for-dollar by Japan, the Bank's other largest
subscriber, which has already made a substantial pledge to the special resources.
This is a logical and reasonable sharing arrangement which refiects the important
biit minority role of the United States in the Blank. In this and other provisions
of the proposal, there would be assurance of the advantages of true multilateral
support It should be noted that the proposal does not have any early budgetary
impact in the United States as we make payment in the form of lettei^s of credit.
This procedure permits the Bank to make loan commitments against these additional resources, but the natural time lag in project construction delays the
budgetary expenditure. At the same time, the proposal refiects our assessment of
the Bank's present needs and its ability effectively to utilize Special Fund
resources. It represents a U.S. contribution appropriate to the probable size and
timing of contributions by other donors, and phased oyer time.
The legislation that President Nixon has submitted outiines the terms and
conditions of our participation. These are analyzed and described further in the
Special Report of the National Advisory Council before you. In formulating this
proposal, We have been able to take account of the Bank's 3 years of experience.
We have also benefited from the views of the members of this committee and
from the Senate Foreign Relations Committee expressed during their consideration of an earlier proposal.
I have just returned from the Annual Meeting of Governors of the Asian
Development Bank held in Seoul, Korea. Together with some members of this
EXHIBITS
423
committee, I have again had the opportunity to hear firsthand of the hopes and
plans from the Bank's officers and my fellow Governors for the Special Funds.
At that meeting Australia and the United Kingdom made specific offers to contribute to the Special Funds, joining Japan, Canada, Denmark, and the Netherlands who are already contributing. In addition there were indications of possible contributions from other donors. My belief has been reconfirmed that the
United States should now act promptly to provide a contribution and help to
assure that the Special Fund facility can be placed on a firm and multilateral
long term basis.
H.R. 16891, unlike H.R. 16764, includes three unrelated provisions concerning
the Exchange Stabilization Fund, monetary gold purchases, and the economic
and social policy of interriational financial institutions.
As best I understand the purposes of these provisions, they are already being
effectively achieved. Therefore, I do not believe a positive purpose would be
served by their enactment. At the same time, these proposals would present
difficult and serious practical problems that would jeopardize the effectiveness
of our efforts. I therefore strongly urge that these provisions not be enacted.
Taken as a whole; these provisions would significantly change the longstanding
approach by the Congress in the area of international financial affairs by reducing the flexibility and confidentiality with which the Secretary of the Treasury
must act in pursuit of broad policy objectives.
In the case of Exchange Stabilization Fund, the Congress has consistently
recognized the confidential, sensitive, and frequently urgent nature of the transactions of the Fund, by providing the Secretary with full authority, subject to
a full annual audit report which the Congress has received since 19!39. Concerning gold purchases, the provision would impose unworkable and unnecessary
rigid limitations on official dealings in monetary gold under specified conditions.
The expression of the third provision in legislation could appear to other nations
as an attempt by the United States by unilateral action to determine policy of
the multilateral lending institutions, rather than by trying to negotiate the acceptance of the principle by all members of the institutions concerned.
I therefore recommend that the legislation be approved without these three
provisions.
ExhibH 41.—Remarks by Secretary Kennedy, April 23, 1970, as Governor for the
United States, at the l l t h annual meeting of the Inter-American Development
Bank, Punta del Este, Uruguay
The In ter-American Community is again grateful to the government and
people of Uruguay for providing this beautiful and historic city as the site of our
deliberations. Here, where Presidents of the Americas have conferred and
contemporary Inter-American solidarity has been forged we have an opportunity
this week to give concrete reality to our mature partnership, in the framework
of this decade's program of action for progress. We are also fortunate to have
here with us, for the first time, the Governor for Jamaica, whom we welcome as
our newest member.
In this year when we celebrate the first decade of the Bank under the able
leadership of President Herrera and the Board of Executive Directors, I have
organized my observations around three points: (1) the significance to the
Bank of the last decade, (2) the proposed increase in Bank resources, and (3)
perspectives for the future.
I. The Bank's first decade
The world, our hemisphere, and this Bank have undergone extraordinary
changes since the first Board of Governors met in San Salvador in early 1960.
Ten years ago, foreign assistance had only recently changed focus from the
reconstruction of relatively advanced countries to the development of underdeveloped ones. Advanced countries other than the United States were just
beginning to make contributions to development assistance. The terms of such
assistance were often poorly adapted to the prospective balance-of-payments
situations of borrowing countries. In the multilateral assistance field, there was
the World Bank, but its concessional lending instrument, the International
Development Association, was untested. Multilateral financial cooperation for
regional development was, until the establishment of the Inter-American Bank,
nonexistent.
424
1970 REPORT OF THE SECRETARY OF THE TREASURY
Today's contrast with 1960 is striking. Development assistance, its form and
its degree of multilateralism have changed markedly. This Bank has emerged
as a major element in the Inter-American economic structure. It has demonstrated the validity of the idea of multilateral development cooperation at the
regional level. And it can justly regard itself as the trail blazer for the regional
institutions, such as the Asian Development Bank.
A second contrast can be found in the ability of a regional institution such
as the Bank to reach out and mobilize funds in the world capital markets, using
for this purpose the guarantee provided by its members. Its bonds are now
widely held and its financial standing highly respected. Through its patient
efforts in world financial centers, the Bank itself has been an iinportant instrument in changing the forms and practices of development finance.
A third difference relates to the kinds of activities in which we now think
it appropriate for development institutions to engage. This Bank has led the
way in directing attention of development agencies to areas that had been relatively neglected or even considered inappropriate for the attention of international financial institutions. These include education, health and the difficult
problems of rural poverty. Lending in this frontier areas of development assistance has gained respectability only within the last 10 years. This Bank—
supported in the early years, I am proud to say, by the Social Progress Trust
Fund provided by the United States—has played a catalytic role in the emergence of new attitudes.
Ten years of experience has made us all more realistic in our approach to
development. We have leamed that there is no single formula for development
applicable to all countries. Each nation is different and each requires a different mix of resources. We recognize more clearly now the imx)ortance of a
sound framework of fiscal, monetary, exchange, and investment policies within
which development can take place. And we perceive now more clearly than
ever that external assistance can only be efficiently utilized where there is an
intense domestic will to develop. This must be accompanied by a readiness to
commit domestic resources to the development task in the fullest measure.
Thus, the opening of this decade presents new opportunities to the Bank. It
can become more selective, both in terms of activities it finances .and the quality
of economic performance it expects of borrowers as a condition of its lending.
With such selectivity, and a continuation of its distinctive Latin and pioneering
spirit, the Bank can make the decade of the Seventies a fitting and fruitful
successor to the Sixties.
II. Increase in resources
The main task of this meeting is to make adequate provision for obtaining
the capital resources needed by the Bank in the first half of its second decade
of lending. I have been authorized by President Nixon to announce that the
United States is prepared to join Latin American efforts in accomplishing this
task. In the context of a proposal with full Latin American support, we would
be prepared to approach the U.S. Congress promptly for increases in both our
Ordinary Capital subscription and our contribution to the Fund for Special Operations. Specifically, the United States would be prepared to seek legislative
authority for:
—An increase in its paid-in Ordinary Capital subscription of $150 million
combined with a $674 million increase in its callable Ordinary Capital subscription, both as our established share of a $2 billion overall increase in the Bank's
Ordinary Capital resources.
—A substantial contribution to the Fund for Special Operations as part of an
overall increase in Fund resources which would refiect the progress Latin
economies have made these past 10 years as well as their commitment to the
role of multilateral institutions in development.
Resources should be sought in a magnitude which will cover requirements
foreseen for the Bank in a 3 year to 5 year period. They should permit the
Bank to provide half again as much financing per year as the approximately
$6(X) million which the Bank committed to loans in 1969. Moreover, they should
ensure funding for new types and directions of activities that are now under
preliminary consideration in the Bank.
But provision for the future requires more than money alone. I t requires
adaptation to refiect new realities in the seventies. It requires new relationships
beyond the hemisphere to refiect Latin America's growing integration into the
EXHIBITS
425
world economy and the world's growing commitment to multilateral development financing.
I have three major areas in mind where beneficial changes could be made.
First, the present practice of extending Fund for Special Operations loans on
a local currency repayable basis involves the potential problem of excess accumulations of such currencies ih the Bank's accounts. A shift to a policy of
repayment in the currencies lent, combined with an appropriate easing of repayment terms as necessary, would avoid the problem. This would permit the
Fund ultimately to become a revolving source of hard currency financing. I
understand that a move in this direction already had widespread support.
Second, our concem for achieving more balanced growth in the hemisphere
suggests that the financial needs of the least developed members should have
first claim on the Bank's concessional loan resources. The opposite side of the
same coin is that the region's more advanced countries should place relatively
greater reliance on Ordinary Capital financing. This would be considered a cooperative contribution on the part of the stronger countries toward self-help
in the hemispheric sense. It would also complement the willingness of the
larger members to allow a greater usefulness of their local currency subscriptions to the Fund for Special Operations. In this latter connection an expansion
of the group of countries allowing this broader use would be widely applauded.
Finally, I believe that multiple benefits would accrue not only to the Bank
but to Latin American development in general if other developed countries—
regional and nonregional—^could be brought within the Bank's membership.
Additional Ordinary Capital resources would become available and access to
capital markets would be ea:.sier. Membership would also elicit additional concessional loan resources more effectively. In the light of experience elsewhere
I am confident that these benefits can be obtained without changing the essentially regional character of the Bank. Indeed, it is my confidence in the permanent Latin character of our Bank which permits this judgment. Serious
efforts to move in this desirable direction have iniportant and broadening support and steps are needed now to move toward the removal of existing barriers.
This is the time to begin. I strongly urge that the Board of Governors take the
necessary steps which will lead to opening our doors to Canada and others.
The provision of the resources called for and the adoption of the policy
changes recommended entails real burdens and real sacrifices for all of us.
Nevertheless—^and with full consideration of the Intense competing demands
for budgetary resources—I offer full assurance of President Nixon's readiness
to support these financial and policy measures. I believe such supx>ort constitutes
solid evidence of our commitment to Latin America and to hemispheric
development.
III. Perspectives for the future
In reviewing the last decade I came across the following statement made by
one of my predecessors, Robert B. Anderson, the first Bank Governor for the
United States, at the inaugural meeting of this Board.
"The creation of the Bank does not in itself solve any of the problems with
which we are all so concerned; yet it does provide us with an effective framework in which men of good will can join with the confidence that through the
exercise of thought, diligence, and mutual respect they can achieve great benefit for their peoples."
This judgment is still true today and it remains the framework within which
we will meet the challenges in the decade ahead. Four challenges to the Bank
should be noted.
Firstj multilateral institutions will undoubtedly assume a great role in providing financial and technical assistance. Within this hemisphere, the Bank is
in an excellent position to continue leadership in financing development. But
to do so fully will require closer collaboration and coordination with the other
bilateral and multilateral financing agencies, and with the Inter-American
Committee for The Alliance for Progress. This will assure that scarce extemal
funds are being most effectively utilized and that the Bank has access to the
best hemispheric judgments on whether or not a borrowing country itself is pursuing proper development policies and progranis.
Second, the Bank's intemal organization, management, and procedures will
have to continue to adapt to changing conditions.
Third, the next decade challenges the Bank to participate directly and indi-
426
1970 REPORT OF THE SECRETARY OF THE TREASURY
rectly in encouraging private initiative and free market forces. While it is
clear that each nation must fashion its own policies about the role of public
and private sector activities, and of domestic and foreign private investnient
in its society, the posture of the Bank will be guided, I hope, by practical considerations of efficient economic development. In this regard, I look forward
with interest to the deliberations of the Board on expanding the Bank's role
in assisting private productive enterprise. In particular I hope that it will be
possible to employ in this effort the existing extensive framework of banks and
other financial intermediaries.
Fourth, the next decade should see more countries advancing toward selfsustained institutional, financial, and social growth. This will permit a greater
number of the stronger member countries to assist the less developed through
both technical and economic assistance. And it will contribute to the strengthening of the multilateral character of the Bank.
These and many other challenges of the seventies lie ahead of us. I am confident that the leadership of this great institution, supported by the Bank's
capable staff, will effectively meet these challenges with inventiveness, wisdom,
and determination.
The actions we are taking this week to increase the resources of the InterAmerican Development Bank make clear our strong support of this InterAmerican institution. President Nixon, in February, outUned in realistic terms
the basis on which we must face this decade of the seventies.
"There are no short cuts to economic and social progress. This is a reality,
but also a source of hope, for collaborative effort can achieve much. And it is
increasingly understood among developed and developing nations that economic
development is an international responsibility."
The Inter-American Development Bank is a fine example of a multilateral institution through which this responsibility is effected. The United States is
proud to be a member.
Exhibit 42.—Remarks by Seeretar:^ Kennedy, May 20, 1970, at the American
Bankers Association Monetary Conference, Hot Springs, Virginia
The closing luncheon of the ABA International Monetary Conference is a
familiar occasion for me. I have taken part many times, but always before from
the other side of the lectern! I am honored to make the switch and to take
advantage of your custom of inviting the U.S. Secretary of the Treasury to have
the last scheduled word.
I want to spend my time today primarily on the external aspects of our economic relationships. But our internal problems and performance cannot be
separated from our balance of payments or, indeed, from the health of the international monetary system as a whole.
A year ago, at a similar luncheon in Copenhagen, Bill Martin concluded his
delightful reminiscences of his long years of public service with some pointed
remarks about the future. As usual, he pulled no punches in pointing out the
necessity to deal with the infiation and overheating that had characterized the
American economy for four long years. And he warned that this would inevitably
be a painful process—the needed adjustment could not be achieved without
financial strains or without challenging some of the presumptions of investors,
business, and labor.
Today, we are in the midst of that adjustment process. The pains are evident
to all.
Unemployment has increased. Profits have declined. Financial markets reflect
a good deal of uncertainty. Businesses which expanded imprudently, failed to
control costs, or maintained inadequate financial reserves are now paying the
price.
There is, of course, still widespread concern about infiation. But inflationary
expectations are now giving way to a new concern by some that the business
adjustment will be overdone or unduly prolonged.
This is not a comfortable situation for anyone. But the essential point seems
clear enough. Our policies have already worked to squeeze out excess demand.
The present sluggishness and uncertainty is an inevitable part of a period of
transition to more orderly growth. Indeed, it may be necessary and desirable in
terms of refocusing attention of businessmen and labor on the fundamental need
EXHIBITS
427
for efficiency and productivity, and wage and price restraint. We fully recognize
there are risks on both sides of the equation as we move ahead. But we mean to
stay the course with a blend of fiscal and monetary policies consistent with
orderly expansion and the restoration of reasonable price stability.
This also happens to be the best possible medicine for our balance of payments,
and it is basic to our approach to international monetary affairs as well. I recognize that, as urgent economic and social problems crowd in upon us for solution, there are some in this country who question the need to attach high priority
to international economic problems.
After all, they point out, our exports amount to only about 4 percent of our
gross national product. They cite the fact that the dollar was strong in the exchange markets in the face of both a deteriorating trade balance in recent years
and a record deficit in the conventional measure of our balance of payments in
1969. They add the hope that recent and prospective improvements in international monetary arrangements will provide new dimensions of fiexibility that
will somehow require less attention to the health of the dollar.
At best, these are half truths. They could lead us dangerously astray as a basis
for realistic national policy.
We cannot step aside from the fact that the United States is the world's
largest international trader, accounting for some 15 percent of world exports.
Nor can we ignore the fact that a strong current account position is the necessary counterpart of our role as the world's principal supplier of aid and private
investment. Further, we must not forget that international money and capital
markets are, to a large degree, dollar markets or that our currency is the leading
reserve and transactions currency. Even in more strictly domestic terms, those
who would minimize the importance of our world competitive position simply fail
to realize the costs and strains—both in consumer satisfaction and in industrial
dislocations—if we are unable to support liberal import policies with a strong
export position.
Nor should we be deluded by the strength of the dollar in 1969. That was
primarily a result of the severe tightness of credit in the United States. There
was a massive infiux of short term interest-sensitive money—more than enough
to balance the wide deficit on other accounts.
The flaw in that picture is implicit in the first quarter balance-of-payments
flgures published last week. They showed that dollars fiowed in large volume
into foreign official hands—a forcible reminder of the fleeting nature of a
surplus based on short term capital flows.
A presumption that improvements in intemational monetary arrangements
provide an escape from balance of payments and intemational flnancial disciplines is equally unjustifled. Certainly, significant improvements have been
made. I am hopeful that we can build further on this progress. All nations
need to have the capacity to deal in an orderly way with wide swings in
volatile elements in their intemational accounts. All will benefit if we can
find ways to dampen incentives to speculation. And make exchange rate adjustments more smoothly and in more timely fashion when they become necessary.
But no feasible monetary arrangements can eliminate the need for each
nation to make the internal adjustments required to contribute to a basic
equilibrium with the rest of the world. This applies with special force to the
United States, precisely because the critical international functions of the
dollar require maintenance of its stability.
In sum, I have a short answer to those inclined to ask of late: "Whatever
became of the balance-of-payments problem?" It is definitely still with us. It
matters. We would downgrade it at our own peril.
Confusion on this issue has been fed by the large discrepancy between the
various measures of our payments position over the past year. The deficiencies
of the conventional "liquidity" calculations which receive so much prominence
are now well known. The newer official settlements balance, useful as it is
in summarizing the net fiows of reserve assets and official liabilities, has
shortcomings as well. One in particular is that it can be heavily infiuenced
by short term capital fiows.
I share the widespread sense of frustration over these deficiencies. I have,
therefore, requested a thorough internal review of this matter to see if we
cannot regularly provide more adequate summary measures of our basic position. But we do not need new data to make an intelligent assessment of the
nature of the problem.
397-702 0—71.—-29
428
1970 REPORT OF THE SECRETARY OF THE TREASURY
I am not overly disturbed by the volatile swings in short term capital that
contributed to the strength of the dollar last year and to the large deficit
in the first quarter this year. The technical financing problems should certainly
be manageable in the framework of existing monetary arrangements and
cooperation.
More important, it seems to me, is the fact that our underlying payments
position—short term capital fiows apart—still seems to be in sizable deficit.
It is probably correct to attribute some portion of that persistent deficit to the
fact that the United States is an international banking center. We, in a sense,
serve as a financial intermediary, acquiring short term liabilities to foreigners
while investing at longer term abroad.
There are, however, limits to that process. In most earlier years—in fact,
through the niid-1960's—the bulk of our capital outfiow and aid program was
covered by a substantial surplus on current goods and services. In the past
few years capital fiows have been better balanced. But, we have permitted our
current surplus to drop sharply.
The increasingly heavy interest burden on our large short term indebtedness has been part of the problem. So have our continuing heavy military
burdens in many places overseas. As we look ahead, it is reasonable to anticipate
some relief from those burdens, as well as considerable growth in profits and
interest from abroad. Nevertheless, we must also recognize that a large part
of the problem lies in our trade accounts.
Our traditionally large trade surplus has dropped off in disturbing fashion—
from an average of $5.4 billion in the first half of the 1960's to an average of
only $650 million in 1968 and 1969. The first quarter results of this year, when
our trade balance rose to slightly over $500 million, suggest some recovery may
be underway. But that balance is still far from what we need to support a
strong payments position.
There can be no question that infiationary pressures at home must bear a
major share of the responsibility for this deterioration. As we master that
problem, our trade balance should certainly reach a higher level.
But it would be wrong to underestimate the challenge we face in achieving
the needed degree of improvement. The technological gap has been partly closed.
The growth of the common market and the enormous industrial progress of Japan
have narrowed or eliminated the advantages we once enjoyed in large-scale
manufacturing for a mass market. The deep desire of many countries to achieve
and maintain agricultural self-sufficiency—or even to generate surpluses—robs
us of some of the benefits of a natural comparative advantage in agricultural
production.
I believe all of this requires some serious rethinking at home and abroad.
American trade policy has long been oriented toward open markets, toward
reducing barriers and promoting competition, toward the mutual interest in
freer trade. It still is. The growth in world trade and international prosperity
is testimony enough to the effectiveness of this approach. It would be a mistake
of the first magnitude to turn back.
At the same time, I must emphasize that, under the pressure of rising imports, our current policy of freer trade is being challenged more strongly than
at any time in memory by business and labor groups directly affected by a
weakened competitive position. These groups are gaining considerable political
support.
The challenge cannot be met by denying that a problem exists. Rather, we
are being compelled to reexamine our policies all along the line to find solutions.
We seek to find solutions not by shrinking back into protectionism but by
improving our position in a context of broadening and growing markets.
Within the Governnient, we have been reviewing our approach in several
key areas to make sure that our own exporters are not placed at a disadvantage with respect to foreign producers. For instance, we fully recognize that
the types of products in which we excel typically require medium term financing.
But, for some years, a combination of tight markets, limited budgetary funds
for official credit, and a desire to restrain capital exports seems to have inhibited our ability to provide adequate support in this important area. We
have no desire now to take part in any competitive easing of terms for
commercial advantage. We remain eager to work with other countries to define
appropriate limits for official credit assistance. Within that framework, however, we are moving to assure industry the degree of support to which it is
EXHIBITS
429
entitled. I believe some fruits of that effort are already emerging in the revitalization of the Export-Import Bank.
Last week, after prolonged study and consideration, I was able to present
to Congress a proposal in another area—taxation—that should help remove
an obstacle to an aggressive exporting effort. The simple fact is that, as presently
structured, our income tax system tends to treat income earned on exports
more severely than income earned on foreign investments—and more severely
than most other industrialized countries. To remedy this defect and remove
a drag on exports, the Administration would permit an exporter to establish
a Domestic International Sales Corporation (or "DISC").
Such a corporation would, within clearly defined rules, permit tax deferral
of export income, just as tax deferral is now available for other foreigii source
income. In the light of significant budgetary costs, we have been compelled
to request that the eftective date be postponed to the middle of next year. But
I believe this action will provide a better balance—^insofar as tax considerations
are important—in investment decisions between home and foreign manufacture. It should help focus attention of more American businesses on export
markets.
Industry has responsibilities as well. The competitive inroads of foreign
products have, in many cases, revealed weaknesses in marketing strategies,
quality, and design by American industry that can and should be remedied.
I am encouraged, for instance, by the development and marketing of small
cars by Anierican manufacturers in response to competitive pressures from
abroad.
Finally, I believe foreign countries themselves must recognize and be willing
to accept the implications of their own strength. It is surely inconsistent to urge
a stronger U.S. payments position and, at the same time, maintain and adopt
policies that tend to thwart achievement of that very objective. Yet I believe
any fair-minded observer must be disquieted on that score. Most industrialized
countries seem to be intent on preserving, or even enlarging, their own trade
surpluses. To reconcile these goals, the developing nations would need to run
increasingly large deficits. To finance these deficits, sharply larger flows of aid
and investment would be required. I question whether the industrialized nations
have yet fully faced up to this implication of their trade surpluses.
I am disquieted, too, by the apparent reluctance of important foreign countries now in strong positions to talvc up the leadership so long borne by the
United States in reducing barriers to trade. In some instances, such as Japan,
a dismantling of barriers—barriers perhaps once justifiable for a country with
limited financial resources and recurrent paynients difficulties—seenis overdue.
In other instances, the pu.sh toward a broader or closer economic union—however
desirable on other grounds^—inevitably has had discriminatory side effects on
the trade of third countries that need to be considered.
Nontariff barriers abound in the present world. We are not free of them in the
United States. But is it not the surplus countries that have a special responsibility to take positive action toward their reduction and elimination? A leading
case in point is the trade consequences inherent in the international rules for
border taxes and subsidies integrated with domestic turnover or value-added
taxes.
Countries without these domestic taxes, such as the United States, are placed
at a relative disadvantage—a disadvantage that beconies more pronounced as
value-added tax systems become more widely adopted and levels of rates rise.
Rules that may have been acceptable in the quite different circumstances of
the immediate post-war period need to be reexamined in the light of today's
needs.
I do not underestimate the difficulties of progress in all these areas. But neither
do I underestimate, the challenge, whether in ternis of our balance of payments
or the threat to a liberal trading order. We do not want to follow the road of
restrictionism. We want to resist the pressures for mandatory controls on imports
and other inward-looking solutions. We have too much at stake, for ourselves and
the rest of the world, to retreat now. But realism requires that we do not stand
still. We must do the other things necessary to assure a stronger trading position
if the pressures for restrictionism are not to overpower us all.
The primary role for American leadership in all of this seems to me perfectly
plain. The world is caught up in a serious infiation—an infiation for which we
share a part of the responsibility. I believe that—beneath the present turbu-
430
1970 REPORT OF THE SECRETARY OF THE TREASURY
lence—we are now well on our way toward dealing with that problem. This
will provide the base we need for a stronger balance of payments and to maintain
the stability of our international financial arrangements.
On that base, we can preserve and enhance the gains of the past: in trade,
in finance, and in development. Success demands that we work together, in
partnership and in full recognition of the responsibilities that go with strength.
We cannot afford to fail.
Exhibit 43.—Statement by Secretary Kennedy, June 30, 1970, before the House
Banking and Currency Committee on proposed replenishment of the InterAmerican Development Bank
I appear to support the Administration's request for authority to join with
22 Latin American nations in a further replenishment of the Inter-American
Development Bank (IDB).
The United States has a deep and traditional commitment to hemispheric
cooperation. The Inter-American Bank, born as a financial expression of this
cooperation a decade ago, has become the key multilateral instrument of hemispheric financing for development. It requires expanded resources to meet the
challenges of Latin American development as we advance further into this
decade.
I have found in my participation as U.S. Governor in the formulation of this
proposal at the recent IDB meeting in Punta del Este, Uruguay, that it is a
true expression of partnership. This proposal has as an integral feature commitments by the Latin Americans to provide a significant input of their own
resources along with ours, and to implement important new policy undertakings
relating to the Bank's operations. These commitments testify to Latin America's
determination to assume an increased responsibility for development within the
area as a whole as well as within individual Latin American countries. The
support the United States is prepared to offer will be an important factor in
determining whether or not this constructive spirit in Latin America can achieve
its goals in the time ahead.
In these opening remarks I first will touch on the specific legislative request
which is described in detail in the report of the National Advisory Council before
you. Second, I will review some more general aspects of this multilateral
approach to development flnancing.
Authorization request
The request before you involves the Bank's Ordinary Capital window, which
lends on conventional terms that refiect the cost of capital, and its Fund for
Special Operations, which lends on concessional repayment terms.
—On Ordinary Capital, we are seeking authority to subscribe to $150 million
of paid4n capital stock, in three annual $50 million payments beginning in
fiscal 1971. Our Latin American partners will more than match this with subscriptions totaling $236 million. As the companion to this payment, we seek
guarantee authority in the form of a subscription to $673.5 million of callable
capital stock which is not expected to result in cash outlays. Half of this callable
subscription would be made in the fiscal year 1971 and half in fiscal 1973. The
Latin American members would subscribe to $879 inillion of callable capital.
—On the Fund for Special Operations (FSO), we are seeking authority to
contribute $1 billion to the Fund's resources over a 3-year period, at the rate of
$100 million in fiscal 1971 and $450 million in each of the following 2 years.
The U.S. contribution of $1 billion compares with the $900 million contribution
the United States made in the last replenishment, while the Latin Americans
will contribute the equivalent of $500 million for this replenishment or $200
million more than their contributions last time.
Action to replenish the Bank's resources at this time is essential to permit
the Bank to continue its existing loan programs and meet the important target,
established by the Bank's Board of Governors, of a 50-percent increase in lending
volume before the middle of this decade. By the end of calendar 1970, the Bank's
Ordinary Capital resources in hard currencies will be insufficient to carry on
another full year of operations even at current levels—about $200 million a
year recently. With the paid-in and callable resources now being sought, the
Bank would be able to reach or somewhat exceed a lending level of $300 million
per year, and maintain it until calendar 1975.
EXHIBITS
431
Although its resource situation is currently somewhat less stringent, the FSO
also will enter 1971 with less than will be required for the amount of loan commitments that will be needed in that year. Lending in all currencies from the
Fund for Special Operations reached a level of about $400 million last year.
The new resources are intended to permit a progressive increase in FSO lending
reaching the equivalent of about $600 million a year and to cover funding
requirements through 1973.
In its 10-year operating history, the IDB has lent $3.5 billion in support of
Latin American developnient. These sums were part of projects involving a
total investment of almost three times this amount. Roughly a quarter of its
loans financed high-priority agricultural development projects. The Bank lent
over $500 million to industrial and mining projects, and a similar amount for
transportation and communications projects. It also provided substantial sums
in the electric power, water supply, housing, and education sectors. While carrying on this impressive and rising volume of lending, the Bank has maintained
itself on a financially sound basis with a $20 million net inconie in 1969 and
total reserves at the end of the year of $85 million. It has attracted resources
from nonmember countries. The Bank's bonds are fully accepted in the world's
capital markets; a funded debt of $767 million was outstanding at the dose of
its fiscal year on December 31,1969; about one-half or $375 million is held outside
the United States.
Budget impact
The impact of this request on the U.S. budget over the next years is acceptable and substantially less than the total authorization figure of this legislation. Our $674 million of callable capital is not expected to result in any expenditures now or in the future. Appropriation of the first $50 million of the
three equal installments of paid-in capital would be sought in the fiscal year
1971, and payment would be expressed in the form of a letter of credit. Only
a part would result in cash or budget expenditures in fiscal 1972. Similarly,
appropriations would be sought in fiscal year 1971 for the first $100 million of
the U.S. contribution to the FSO, but only a fraction of this would result in cash
budget expenditures in fiscal 1972.
Thus, there would be no expenditure impact resulting from this request in fiscal
year 1971 and only a modest amount in fiscal 1972. Expenditures would rise by
fiscal 1973 but probably would not exceed $125 million. The proposal overall calls
for $1,150 million to be paid to the Bank (as letters of credit) by the end of fiscal
1973 and this entire amount of course would eventually be expended and refiected in budgetary cash outlays in the years in which they are disbursed, but
this process would be spread over a number of years well beyond fiscal 1973.
On completion of the proposed increases, the total U.S. investment in the
IDB's Ordinary Capital from its inception will amount to $1,997 million, consisting of $300 million of paid-in capital and $1,697 million of callable capital.
The U.S. share of total subscriptions would remain practically unchanged at
42.47 percent. Cumulative U.S. contributions to the FSO would rise to $2.8
billion, or 73 percent of the total.
New policy directions
Besides the quantitative aspects of the proposed IDB replenishment I have
just outlined, there are some iniportant qualitative aspects arising from the Punta
del Este meeting that deserve emphasis.
First, the Latin American members of the Bank have agreed to a further
increase in their relative share of the contributions to the Bank's soft loan
resources.
In 1964, the Latins provided $20 of their currencies for each $100 provided
by the United States. In 1967, they provided $33 for each $100 from the United
States. Now, the Latins will put up the equivalent of $50 for every $100 provided
by us. This steady improvement in the ratio of contributions is direct evidence
of the increased degree of multilateralism and self-help that we have been able
to elicit through the IDB mechanism.
Second, two more eo^intries, Chile and Colombia, have agreed, along with
Argentina, Brazil, Mexico, and Venezuela, to make up to half their contributions to the Fund for Special Operations available for lending to other memher
countries.
This means that the countries with the six largest Latin subscriptions in the
432
1970 REPORT OF THE SECRETARY OF THE TREASURY
Bank have now agreed to such arrangements, thereby increasing substantially
the usefulness of Latin American local currency subscriptions.
Third, Latin countries have endorsed a policy statement giving thc least
developed countries of the region a first priority claim on FSO loan resources.
Correspondingly, this help will steer the relatively advanced countries more
heavily toward the Bank's conventional loan window. This is further evidence
of a recognition of intraregional cooperation.
Fourth, it was agreed that loans made from the new resources of the Fund
for Special Operations would he repayable in the currencies lent, instead of local
currencies.
Dollars loaned by the Bank would be repayable to it in dollars. This over
the longer run will better assure the revolving fund nature of the FSO. Other
loan terms would be adjusted in order to maintain the necessary concessional
character of the FSO.
Fifth, the Bank's Governors endorsed a strengthened statement regarding the
importance of sound national economic policies and satisfactory over-all economic
performance as factors in determining the character and amount of Bank
assistance.
In this connection, the same policy statement pledged Bank support of.the
efforts of the Inter-American Committee on the Alliance for Progress (CIAP)
and other international financial entities toward coordinated lending efforts in
particular countries.
Finally, provision has heen made to consider the matter of admission of
developed countries not presently memhers of the Bamk.
This is aimed at assuring an increased fiow of resources on improved conditions
to the Bank in a manner consistent with the maintenance of its regional character. Currently, membership in the Organization of American States is a prerequisite for Bank membership. This has posed an obstacle to serious consideration of 'membership by other developed countries. At Punta del Este, the Latin
Americans agreed to the creation of a new and special committee of the Governors that would examine the membership question on an intergovemmental
level and report with recommendations by the end of the year.
While maintaining the inter-American character of the Bank, we are interested in determining whether the quality and fiow of resources to the Bank
from other developed countries can be increased and regularized.
Multilateral approach
Let me turn now to some broader perspectives of the Inter-American Bank
as a multilateral institution and on our relationships with such institutions.
I think it is timely to recall that U.S. financial cooperation for development
with other nations through multilateral institutions has always had strong
bipartisan support in the Congress. We have progressed in this development
endeavor because Congress over the years has made judgments that there were
concrete advantages for the United States in the multilateral approach to
development financing.
The executive and the legislative branches have agreed many times on the advantages in many circumstances of the multilateral approach. Without in any
way prejudging or forecasting the outcome of the current review of our total
foreign assistance effort, I can safely say that the benefits inherent in doing
our development business multilaterally argue for greater, not lesser, reliance
on multilateral institutions. Let me just mention some of the advantages of this
approach: the sharing of the financial burdens of development financing, so
that we do not carry all of the cost; the greater likelihood that lending judgments will be made on strictly economic grounds; and the desirable maintenance of economic discipline on borrowing countries through a collective
judgment, not one determined by the United States alone.
We must recognize, however, that if we wish to continue to enjoy the benefits of a cooperative partnership in the international field, we cannot expect
to enjoy the same independence of action we have when we proceed bilaterally.
Multilateral development institutions serve well our broad foreign policy goals,
but they should not and cannot be asked to serve particular U.S. foreign policy
interests. To try would be to jeopardize their multilateral status.
Just as we must not seek to employ a multilateral bank as an instrument
serving particular foreign policy interests, so is it not consistent with a workable
multilateral approach to impose unilaterally narrow limitations on the ways
EXHIBITS
433
that regular contributions provided by the United States may be used or may
not be used. Such efforts would affect not only our funds but contributions other
countries have made to the institution. Moreover, these efforts would prompt
similar efforts from other participants. The result would be not a multilateral
agency with a manageable and coherent program, but a collection of national
trust funds to be used under highly special and often confiicting criteria.
In making this point I am seeking to convey the distinction between unilaterally imposed limitations by one donor and conditions or new policies that
are negotiated and accepted multilaterally by meniber countries. I haye just outlined new policy directions which we have agreed to with our Latin partners
in Punta del Este. They are an integral part of the replenishment we are now
asking Congress to authorize. This is an example of the method and the manner
in which we work together to shape the policies of the institution in which
23 countries share membership. This achievement is current testimony of the
effectiveness and the value of this approach.
In considering the role the United States plays as a major member country in
the Inter-American Development Bank, we must remember that we have the
benefit of a highly experienced Executive Director and Alternate, long acquainted
with both the problems of development finance and the concerns of the Treasury.
He is a full-time Executive Director, as is his Alternate, with their offices in the
Bank, representing the United States in the Bank's deliberations. Through Mr.
Costanzo the United States receives full iriformation upon not only lending operations but also policy issues as they evolve. This information is used by the
Treasury staff and the other agencies of the NAC—including the Department of
State, the Federal Reserve, the Export-Import -Bank, and the Department of
Commerce—in advising me how the United States should instruct the U.S. Executive Director to vote on a particular issue. Therefore, it is with experience,
exposure, and full information that the United States pursues its responsibilities
with this Bank.
I mention these considerations which touch upon a proper and workable relationship with the multilateral financial bodies because over the years Treasury
has been acutely conscious of these issues. Now, as we place more reliance on
them, it is quite natural that we be expected to demonstrate that our national
interests are being well served through the productive employment of our contributions. What assurances now exist and where should improvements be sought
within a framework that recognizes the multilateral character of institutions
such as the IDB?
A description of the established controls and procedures in the Inter-American
Bank would be helpful. The Bank follows internationally accepted standards and
criteria of operation that are compatible with our own methods. The main
elements are:
—Internal audit.—This is a full-time audit staff of the Bank. It reports to the
Bank's President. Operating with broad audit authority, it functions in a way
similar to comparable staffs in major private corporations and lendirig institutions. Their responsibilities range from assuring compliance with procedures and
cash controls to developing new internal controls and procedures to meet the
expanding activities of the Bank.
—External comprehensive financial audit.—.From its founding the Bank has
asked an important and much experienced accounting firm of international reputation to conduct a comprehensive financial atidit on behalf of the Governors.
This is exactly the same type of audit this firm makes of many of our own large
financial institutions.
—An independent review and evaluation audit group.—This is a multilateral
group composed of three persons of competence and high standing, chosen from
outside of governments, to provide an independent overview into the effectiveness
of programs and operations of the Bank. It reports to the Executive Directors
and Governors. This group is relatively new and, due to illness, somewhat slow
starting. However, we expect much of it in the future. It was created by multilateral agreement, under the stimulus of the Selden Amendment to the IDB Act.
But it is not enough to describe what we rely upon now. Treasury must continually ask where improvements can be made.
First, we can strengthen the mechanisms for executive-legislative contact in
the overview of our participation in the IDB—as well as the other multilateral
institutions. I share the view expressed by committee members on other occasions
434
1970 REPORT OF THE SECRETARY OF THE TREASURY
that we should ensure that these mechanisms function on a continuing basis. We
are happy to do this.
Second, we can encourage the development into full effectiveness of the IDB's
relatively new arrangements for the independent oversight group for measuring
the effectiveness of its programs which I just mentioned. Such audits are an
important management tool and should be used to assure effective and efficient
operations. While there have been delays, a start has been made by this "Group
of Controllers of the Review and Evaluation System." It is important that the
work of this group move forward effectively and efficiently.
Third, we look forward to benefits and insights that may be obtained from the
review the General Accounting Office now has underway regarding the U.S.
management of its participation in the multilateral institutions. Pursuit of this
examination has been clarified through testiniony by GAO officials before the
Congress in which it is recognized that direct GAO audit of the multilateral
institutions would be inconsistent with the basic legal framework under which
we participate in those institutions. While speaking of U.N. international organizations and noting probable opportunities for improvement in the management of
U.S. participation in that family of U.N. organizations, the Comptroller General
stated,
"We recognize that U.S. efforts toward improved management of activities of
international organizations, of which the United States is a member, must be
undertaken and assessed within the framework of the international character of
the organiz^ation and that menibership presumes a willingness on the part of
member nations to rely on the management of the organization. We also recognize that constraints on actions that can be taken unilaterally are an inherent
part of such membership no matter how constructive the proposed actions might
be"
This common view of the U.S. relationship with intemational organizations—
which applies at least as fully to the multilateral lending institutions—permits
us to respect the vital distinction between examining the U.S. management of its
participation in such an institution and examining that institution itself. The
GAO staff is presently in Treasury making its examination on this basis.
Mainly because this vital distinction is overlooked in the proposed section 504
of this year's Foreign Aid Appropriation Bill, which would require a GAO audit
of the IDA and Asian Bank, I feel it necessary to register the strongest objections
to that provision. Very similar considerations apply to the accompanying proposed section 505 of the same bill, which would also be harmful to the multilateral status of these institutions by requiring unilateral justification of each
international lending action by these multilateral institutions. Justification of
our participation takes place in sessions with Congress such as is taking place
today.
Moreover, we are prepared to discuss frankly and forthrightly some recent unfavorable allegations concerning the conduct of the Bank's affairs. I can assure
the committee that all the critical points of which I am aware have been carefully reviewed. I remain convinced that the Bank is a sound institution operating
effectively in support of the hemisphere's developnient. It is well placed to meet
the challenges of the 1970's. We stand ready to respond to any further inquiries
you may have in this area.
Conclusion
Mr. Chairman, the proposal before you has President Nixon's full support. The
authorization aniounts we are seeking today are large, just as the development
financing needs in Latin America are large. The institution through which these
funds will be channeled, along with comparable funds from all of the other member countries, is the primary vehicle for financial cooperation in this hemisphere.
The IDB continues to show satisfactory financial results, enabling it to strengthen
its reserve position and maintain the confidence of the purchasers of its securities
around the world. The U.S. stake in it is large, not simply in financial terms but
also in terms of our entire foreign economic policy stance toward Latin America.
Both our national interests and the development aspirations of Latin America
have been well served by the constructive contribution made by the Bank in its
ten-year history. I urge that you endorse the legislation before you for its early
adoption by the Congress.
EXHIBITS
435
Exhibit 44.—Statement by Under Secretary for Monetary Affairs Volcker,
September 3, 1969, before the Senate Finance Committee, on extension of the
interest equalization tax
I appreciate the opportunity to appear before this committee to urge your
approval of H.R. 12829 extending for a further period (through March 31, 1971)
the interest equalization tax (lET).
This Bill follows a recommendation of the President in his April 4 statement
on the balance of payments.
As the President made clear at that time, this Administration aims to relax
and dismantle as soon as possible the various selective controls over capital
exports. But he also indicated that this must be done with prudent concern for
the realities of our balance-of-payments situation. Consequently, while he reduced the rate of the tax he found it necessary to request the extension of
the legislation.
This tax does not in any way reduce the necessity to pursue the fundamental
measures needed to correct the underlying causes of the balance-of-payments
problem. Most importantly we must eliminate the overheating and inflationary
pressures that have characterized the economy in recent years. However, this
approach requires time. In the interim, we need the balance-of-payments protection afforded by the interest equalization tax.
There is no denying that our balance-of-payments position continues to be a
subject of concern.
The source of this concern is the disappearance of our large trade surplus.
From an annual average of $5 billion in the early 1960's this surplus has rapidly
evaporated. Consequently, our total current-account position (including net investment income, other service transactions and transfers, as well as trade) has
shown a large deterioration.
Even excluding military expenditures abroad—infiated since 1965 by the
Vietnam confiict—our current-account surplus, which averaged around $5.7
billion per year in the early 1960's, is now running somewhat under $3.5 billion
per year, notwithstanding the growth in investment income. While we look forward to a reversal of this trend and an improvement in our current account
position, this is not a short-term process.
•Fortunately, our overall payments position has been supported by capital
infiows. Permitting the lET to lapse—with a consequent increase in capital outfiows—would hurt our position on capital account at a time of deterioration in
our current account. This could result in increased pressure on our reserves.
The lET has substantially supported our payments situation since its inception.
In addition, this tax has played a significant reinforcing role in connection with
the other two capital restraint programs covering (1) loans to foreigners by
U.S. financial institutions; and (2) direct investment outfiows of U.S.-source
funds. The design of each of these programs was such that their effectiveness and
their administration would be facilitated by the lET.
There is ample evidence of the continued need for this tax measure.
1. Lower interest costs for bond issues by foreign borrowers in the U.S. capital
market, as compared with alternative sources, is largely what prompted this
measure in the first place. These differentially lower U.S. rates persist today.
This fact may come as a surprise to those who cite the U.S. bank "prime rate"
of 8.5 percent and read about Euro-dollar borrowings at 10 percent to 11 percent.
However, comparison of rates on long term bonds shows that even though the
differential between borrowing costs, here and abroad, did narrow this spring, it
continues to be cheaper, apart from the lET, for foreigners to borrow in the
United States.
2. Countries and institutions exempt from the lET—which can choose between
the U.S. and foreign markets—have continued to place an increasing amount of
issues in the United States.
3. The foreign direct investment program has encouraged borrowings overseas by U.S. companies as a means of financing investment abroad, thereby
reducing the balance-of-payments impact on the United States. Many of these
issues have had especially attractive features. The lET has deterred U.S. residents from purchasing these securities—purchases which would negate the benefit of the direct investment prograni. The very substantial volume of these
attractive issues now outstanding would certainly occasion an intolerable outfiow
of capital from U.S. residents if the tax were to lapse now.
436
1970 REPORT OF THE SECRETARY OF THE TREASURY
Supported by this clear evidence of its effectiveness and the continued need
dictated by our payments position, the proposed extension of the lET is the minimum insurance necessary to guard against the risk of potentially large portfolio
outflows.
Secretary Kennedy has recently written to Senator Javits, relating this request for extension of the interest equalization tax to our balance-of-payments
policy and to President Nixon's April 4 statement. The occasion was a letter from
the Senator which emphasizes the desirability of dismantling our direct balanceof-payments controls as soon as possible and asks for the Secretary's views.
The Secretary replied:
"On April 4, 1969, President Nixon purposefully began just exactly this type
of process consistent with our balance-of-payments position. At that time he announced a relaxation of the capital restrictions on foreign direct investment and
lending abroad by bank and nonbank flnancial institutions. In addition, he pledged
that *we shall flnd our solutions (to our economic problems) in the framework
of freer trade and payments.'
"The. President also pointed out that 'The distortions created by more than 3
years of inflation cannot be corrected overnight. Nor can the dislocations resulting
from a decade of balance-of-payments deficits be corrected in a short time.' It was
against the background of these actions, this pledge and an appreciation pf
the time it takes to restore balance to the economy that the Presidenit announced
his intention to seek an extension of the Interest Equalization Tax. The extension legislation now before the Senate has a new provision which would provide
to the President the authority to have a lower tax rate on new issues from that
which would i)ertain to outstanding securities. The purpose of this provision is to
provide that degree of flexibility which could be useful in reducing the reliance
upon this tax as a selective restraint in our overall balance-of-payments program. For example, if this authority is employed, a low or no tax on new issues
could permit greater access to our markets for new projects without according
this benefit to outstanding issues.'
"The willingness of this Administration to vary the lET tax rate so that it will
be as low as possible consistent with monetary stability was demonstrated flrst
on April 4 wheji President Nixon reduced the lET rate from approximately 1 ^
percent per annum to three-quarters percent per annum on debt securities. It is
my intention to recommend to the President further use of this authority as
circumstances permit, and in this regard I will be specially mindful of the opportunity to employ the additional flexibility we are now seeking from Congress
which hopefully will advance the time when our reliance upon this tax can
disappear.'
"It is also my intention to recommend as soon as possible in the light of
balance-of-payments developments, additional steps in the gradual relaxation
of the capital restrictions imposed under the foreign direct investment program.'
"I would emphasize the fundamental fact that our efforts to further reduce
reliance upon selective restraints will be greatly facilitated by the evident effectiveness of our program of general restraints in reducing inflation, restoring
better balance to our economy, and creating the conditions that make it possible
to rebuild our trade position. As inflation is so much the cause of our international payments problem, it is vital that we pursue the fiscal-naonetary restraint
which will foster our balanced growth."
I am providing for the record, as an annex to this statement, an updated summary of the main statistics relating to this subject.
ANNEX
STATISTICS RELATING TO REQUEST FOR EXTENSION OF THE INTEREST EQUALIZATION
TAX
Interest rates.—While the gap between long-term interest rates on U.S. and
foreign capital markets has narrowed in recent years, a significant differential
favoring an outfiow of U.S. long term loan capital still remains.
The accompanying data summarize the situation during recent months and
during the same period 2 years ago for U.S. and foreign corporate issues.
437
EXHIBITS
Yields on outstanding honds in domestic market and on international straight debt
issues abroad
[Average of end-of-montli rates]
May-July
1969
U.S. corporate bonds (domestic)
Dollar issues abroad by:
U.S. companies
Foreign companies
Margin by which foreign yield exceeds U.S. yield:
U.S. companies
Foreign companies
May-July
1967
7.16
5.66
7.47
7.68
6.40
6.67
.31
.42
.74
1.01
On long-term government issues, the differential also continues to be significant
in the case of many major covmtries, as shown in the accompanying table.
Yields on U.S. Government and various foreign government long term honds,
June 1969
[Percent per annum]
Differential
over U.S.
bond yield
Yield
Western Europe (average)
Belgium
Dehmarl:
France
Germany
Italy
.-.-.:.
Netherlands
Sweden
Switzerland
United Kingdom
Other developed countries:
Canada
Australia...
New Zealand.
U.S: Treasury b o n d s . . - . .
6.95
5.94
9.46
6.37
6.50 (May)
6.00
6.83
6.82 (May)
4.58 (May)
9.46
.,.
0.89
-.12
3.40
.31
. 65 (May)
-.06
.77
.97 (May)
-1.27 (May)
3.40
1.62
-.19
-.51
7.68
5.87
5.55
6.06
1
New issues.—New issues in the United States by countries subject to the tax
have virtually disappeared in recent years, whereas issues here by tax-exempt
countries have increased.
New issues of foreign securities purchased hy U.S. residents, 1962 through mid-1969
[In millions of U.S. dollars]
Annual rate
1962 and 1st 2d half 1963
half 1963 through 1966
Total new issues
Countries subject to I E T
-..
. .
Countries exempt from l E T (including international institutions) ofwhich:
Canada.:
Latin America
Other Countries
International institutions
1st half 1969
1967
and 1968 (estimate)
1.384
1,065
1,639
1,494
466
919
89
976
8
1,631
1,494
711
88
64
56
690
96
115
75
977
1421
194
318
1,028
466
438
1970 REPORT OF THE SECRETARY OF THE TREASURY
The decline in new issues in the United States by countries subject to the tax
has been accompanied by an increase in their international issues abroad,
according to the following estimates compiled by Morgan Guaranty Trust
Company.
Estimated new issues of foreign securities sold outside North America 1962 through
mid-1969
[In millions of U.S. dollars]
Annual rate
1962 and
1st half
1963
2d half 1963
through
1966
1967 and
1968
1st half
1969
(estimate)
393
Foreign borrowers, total
Western Europe
Japan
Canada
Other countries
International institutions (including minor
unallocated).
928
2,116
3,002
247
33
559
81
68
45
140
148
948
97
123
511
437
1,498
240
366
412
486
Outstanding issues.—The tax has also discouraged U.S. purchases of outstanding foreign securities from foreigners. In the 3% years preceding the announcement of the tax in mid-1963, U.S. residents were net purchasers of foreign outstanding issues at an annual rate of about $270 million mostly from foreigners
in countries later subject to the tax.
For several years following announcement of the tax, U.S. residents were net
sellers of foreign outstanding issues. Since 1967, however, U.S. residents have
again become net purchasers of outstanding foreign securities, as the following
table Shows.
Net transactions in outstanding foreign securities hy U.S. residents, 1960-68
[In millions of dollars. Negative figures represent net sales]
1960
1961
1962
-309
-387
-96
1963—1st half annual rate.
_
—302
Average annual rate, 1960-June 1963
_ —274
1963-2d half annual rate
1964
1965
1966
1967
1968
1969—1st half annual rate
204
194
225
323
. . . -116
-102
—414
Average annual rate, July 1963-June 1969
70
lET collections.—Collections under the lET legislation are shown below. The
bulk of the collections results from U.S. purchases of outstanding stocks.
Tax collections under the l E T
[In millions of dollars]
1964
1965
1966
1967
1968
1st
half
1969
8.0
20.7
25.3
40.4
91.7
71.2
EXHIBITS
439
Exhibit 45.^Statement by Under Secretary for Monetary Affairs Volcker,
November 14, 1969, before the Subcommittee on International Exchange and
Payments of the Joint Economic Committee
This Subcommittee has come to play a most valuable role in the never-ending
task of keeping our international financial arrangements abreast of the needs of
the times. You have promoted informed public discussion of important issues too
often considered the preserve of experts, prodded practitioners to seek new and
better solutions, and—not least—provided leadership and support when the need
for change has been demonstrated. I am pleased to assist in this process this
morning by discussing U.S. policies related to the proposed increases in International Monetary Fund quotas and the two-tier gold market arrangements.
I am doubly pleased that we can consider these matters against a backdrop of
relative calm in international financial markets. The recurrent stresses and
strains characteristic of recent years have been symptoms of underlying imbalances within and among national economies, as well as of some shortcomings in
international financial arrangements. It would be too much to claim these problems are all behind us. But I think we can see some tangible and significant
progress toward dealing with a number of the principal sources of uneasiness.
The evident strengthening of the external position of the United Kingdom,
the adjustment of the French franc parity without serious disturbance, and the
wise and courageous action of the new German Government in revaluing the
mark have together removed the main sources of immediate speculative tensions. More than that, I believe they have helped establish a solid footing for
moving ahead to deal simultaneously with remaining external and internal
imbalances.
For instance, by making imports relatively cheaper and dampening strong incentives to divert current production into foreign markets, the revaluation of
the mark should, at one and the same time, assist the German Government in
dealing with emerging infiationary pressures at home and significantly improve
the prospects of achieving a better equilibrium in external trade fiows.
Accompanied by effective, sustained policies of internal fiscal and monetary
restraint, the new exchange rate for the franc provides a basis for orderly
restoration of the French competitive position. In weathering the strains of the
past year—^and with clear signs of basic improvement now showing through in
recent trade and balance-of-payments data—sterling need no longer be a focus
for speculative pressure.
The sense of greater stability fostered by these recent developments in particular countries had been strongly reinforced, I believe, by the multilateral decision at the IMF meeting to move ahead with the creation of Special Drawing
Rights in the sizable volume of $9.5 billion over the next 3 years. This decision
has been clearly presaged by intensive preliminary discussion through the summer. Nevertheless, the formal activation decision—taken with only one abstention—emphasized the extent of the consensus to move forward into a new era of
managed reserve creation. More broadly, this wide agreement about so sensitive
a subject as intemational money creation seems to me the best i>ossible omen of
our capacity to deal cooperatively with the problems in other difficult and complex areas.
Indeed, this process of monetary cooperation is now refiected in the fact that,
as a result of discussions by the Governors of the Fund at the Annual Meeting,
the Executive Board is now preparing to examine carefully and systematically
the possible usefulness of introducing a somewhat greater degree of fiexibility
into the exchange rate mechanism. Study of this matter will take time. A wide
variety of points of view must be brought to bear, many of which stem from the
basically different econoniic circumstances in which various countries find themselves. It is far too soon to pronounce judgment on what, if any, specific proposals will pass the test of practicality and widespread usefulness. Certainly,
we want to be imaginative in seeking ways to eliminate rigidities that inhibit
the adjustment process or tend to build up Incentives to speculation. But we
also want to take prudent care that, in making changes, we do not undermine
the broader stability and disciplines of the system as a whole—stability and
disciplines that provide an essential base for expanding trade and orderly
planning and investment decisions. I can assure you that the United States will
be actively participating in this joint effort in this spirit
The series of crises and near crises in international financial markets that have
440
1970 REPORT OF THE SECRETARY OF THE TREASURY
been characteristic of recent years have been a prod for constructive change. But
we can also take some satisfaction from the fact that massive speculative fiows
have been absorbed and contained without rupturing the basic international
financial structure pr impeding the growth of trade. Our defenses have been
tested, and they have stood firm.
Nowhere has this been more striking than with respect to the new gold market
arrangements introduced in March of 1968—the so-called two-tier system. In
essence, the decisions taken at that time separated dealings in gold among
national authorities from the vagaries of industrial and speculative demands
and new production in the private markets. The immediate result was to break
the link between currency disturbances or speculation and a drain of gold from
oflScial stocks into private hoards—a link that, in practice, had become selfreinforcing. Instead, speculation in gold now spends itself in fluctuations in the
price in private markets. The process is self-limiting, as the rising price of an
asset that yields no return simply increases the risk of subsequent loss.
Since the two-tier system was introduced, we have, in fact, seen the private
price move over a considerable range in the leading markets. The upper end of
that range, at about $44 an ounce, was reached in the course of the first year—a
period when the market was growing accustomed to the new arrangements even
while the supplies of newly mined gold released to the market were unusually
light. Since March of this year, the trend has generally been downward. The
current price happens to be close to the lowest point since the two-tier system
was established.
At least to those not actively participating in the market, the forces pushing
the price in one direction or another at a given time are often obscure. But what
is important is that fiuctuations in the private price have increasingfly come to
be viewed as a characteristic of what is essentially a commodity niarket, with
limited significance for the monetary system. Indeed, the private market reacted
only slightly, if at all, to some of the more severe currency crises of the past
year. The price movements that have developed in response to private forces and
interests only seem to reinforce the wisdom of separating our basic monetary
arrangements from the vagaries of this market.
The existing national stocks of some $39 billion of gold of course remain the
most important single element in oflScial worild reserves, accounting for somewhat
over half the total. I believe gold will continue to have an important role in the
monetary system as far ahead as we can foresee. The institution of the two-tier
system recognizes that, relative to other reserve assets, the role of gold will
decline over time as the need for total reserves grows. Indeed, operation of the
two-tier system must assume the creation of acceptable reserves in other forms.
In this sense, the SDR is a natural complement. Within 3 years, the volume of
SDR's will be the equivalent of, roughly, one-fourth of the entire oflScial stock
of gold.
On the basis of perforniance, I believe the two-tier system must be judged a
success. This is true despite the fact that it has not been possible so far to reach
an understanding with the world's largest gold producer—South Africa—as to
appropriate means by which it might wish to handle its newly mined gold within
the framework of the generally accepted arrangements. Normally, South Africa
accounts for almost 80 percent of all new production.
South African authorities have indicated that, as a practical matter, a substantial portion of this production has been channeled to private hands at
premiums over the oflScial price. Unlike other gold producers, however. South
Africa has also chosen to withhold a portion of its potential supply from the
private market. The manner of handling South African gold has, of course, been
a recurrent element of market uncertainty that I doubt is in anyone's long term
interest. That is why I remain hopeful that an understanding can ultimately
still be reached as to the appropriate methods of handling South African sales
within the framework of the best interests of the system as a whole.
Consistent with the basic premises of the two-tier system, I am aware of no
attempt by oflScial institutions to profit from the higher price of gold in private
markets by oflBcial sales. Moreover, the collective judgment embodied in the
March 17, 1968, Communique that there is no need to add to reserves in the form
of gold from the private markets has been refiected in the abstention of all major
countries from purchases of South African or newly-mined gold, apart from
certain transactions arising from the normal mechanism of the IMF.
EXHIBITS
441
The exceptions to this practice, to the best of my knowledge, have been confined to a very few, small countries. These purchases seem to me to have been
distinctly unfortunate. Obviously, the amounts of gold involved have not, in
themselves, impaired the effective operation of the two-tier system. Nevertheless,
all countries and all central banks seem to me to share a common responsibility
for maintaining the health of the system as a whole, from which all benefit. In
this instance, the proper expression of this common responsibility seems to me
a willingness to abide by the generally accepted implications of the two-tier
system.
In a world of more than 100 countries, misunderstandings of the purpose and
importance of the new arrangements are, of course, possible. In those few instances where some question has come to our attention, we have, naturally, communicated our views directly to those concerned. On this basis, I feel confident
that the basic principles inherent in the two-tier system are increasingly weU
understood.
In announcing these hearings, your Chairman correctly noted that new gold
has entered the monetary system from South Africa as a byproduct of certain
IMF transactions. Some $100 million of South African rand have been drawn
from the Fund since the beginning of the two-tier system. In addition, as reviewed
earlier in an exchange of letters between Messrs. Reuss and Widnall and Secretary Kennedy published last spring, in certain circumstances South African
drawings from the Fund may be repaid in gold. A total of $50 million was
involved in such repayments last summer.
These transactions follow long-standing IMF procedures, and the United States
has not felt it necessary or desirable to raise questions about these particular
applications of established procedures so long as no clear record developed of
their repeated use simply to divert gold from the private market. This has not
been the case so far. The use of rand in drawings has not been out of proportion
to the use of other currencies, on the basis of established criteria. So far as the
South African drawing in the spring was concerned, Secretary Kennedy noted,
in his letter to the Chairman, that:
"* * * We have long supported the concept that gold tranche drawings be
virtually automatic, and we continue to believe that no doubt should be cast on
the ability of a country to mobilize these funds promptly should it deem a need
exists. I am convinced that should experience show that the privilege is being
abused by repeated drawings and repayments unrelated to the basic objectives
of the IMF, adequate means exist to effectively halt such practices."
Your Chairman, in his announcement, also raised the question of what plans
there might be for handling the gold portion of the payments required in connection with the anticipated increase in IMF quotas. The problem arises essentially
because the Fund Articles—drafted 25 years ago—require that 25 percent of any
increase in quotas must be made in the form of a single kind of reserve asset:
namely, gold. Because some countries hold very little gold, the potential arises
for a large conversion of dollars into gold, presumably at the expense of U.S.
reserves, simply to enable these countries to make necessary quota payments.
One effective and straightforward way of averting this incidental, but quantitatively large, potential drain of U.S. reserves as a result of quota increases
would be to permit SDR's to be use& as well as gold. As a result of the initial
activation of SDR's in January, virtually every country would then be equipped
to make the necessary payment from its own reserves, just as major countries,
including the United States, are prepared to pay in gold. Moreover, this procedure would further demonstrate the essential equivalence of gold and SDR's as
reserve assets.
Unfortunately, the amendment to the Articles of Agreement providing for
SDR's failed to include such a provision. I believe many foreign oflBcials would
now share the regret expressed publicly by Emilio Colombo, the Italian Minister
of the Treasury, who was a principal in the SDR negotiations, over this omission.
However, I think we must recognize the difiiculty of amending the Articles at this
time for this purpose.
In any event, other techniques are available to forestall the so-called secondary
impact of quota paynients on our own reserve position. These techniques are more
cumbersome. They essentially entail a series of transactions by which countries
with insuflBcient gold would initially obtain the gold from one or more other
countries ; the gold is then paid into the Fund ; and the Fund, in turn, repurchases
with equivalent gold, needed currencies. In the end, the Fund will be adequately
442
1970 REPORT OF THE SECRETARY OF THE TREASURY
supplied with usable currencies, or perhaps SDR's, without impairing the reserve
position of any country. I believe in concept the need for such an arrangement is
widely accepted, and there is every reason to expect that the Executive Directors
will propose a fully acceptable and technically sound plan.
The Executive Directors are now shaping a proposal to the Governors as to
the size and distribution of quota increases themselves. The U.S. welcomes this
prospective addition to the Fund's resources, which I anticipate will be reasonably
in line with the growth of the world economy. In a sense, this prospective addition to the supply of international credit is a natural complement to the inauguration of SDR's, which provide an expanded reserve base.
The task of achieving a distribution of quotas that fairly rejects the relative
needs and circumstances of various meniber countries is a delicate process. In
balancing the various considerations involved and to facilitate the negotiating
process, the United States has indicated a willingness to accept a slightly smaller
percentage increase in its own quota—now at $5.2 billion—than seems likely
for the average member. Nevertheless, we anticipate that, for the first time since
the Fund was founded, the United States, in addition to its share of a general
Increase applicable to all menibers, will accept a portion of the additional selective increase to which it would be entitled on the basis of commonly used formulas calculated to refiect relative econoniic growth and weight. This decision
may raise the further que-^tion, in the light of previous practices, of whether we
are prepared to increase in approximately the same proportion our capital subscription to the World Bank. Both the quota and any possible increase in the
World Bank subscription would, of course, require legislation.
All of this, as I suggested at the start, sugge-ts progress in dealing with the
problems of the international financial system. But we must also recognize there
is one area—fundamentally more iniportant than any other I have touched on
today—where the needed progress has been all too slow.
I am referring, of course, to the related problems of our balance-of-payments
position and our internal inflation. The preliminary third quarter payments
flgures show a seasonally adjusted deflcit on the so-called liquidity basis of some
$2% billion, only a bit below the average of $2.8 billion during the first two
quarters of the year. Moreover, on the oflScial settlements basis, where we had a
sizable surplus in the first half of the year, a deficit approaching $1 billion developed in the third quarter.
It would be misleading to focus too closely on precise numbers. The conventional measure of the liquity deficit continues to be distorted by some transient
factors of little real economic significance, including a sizable reversal of socalled special receipts. Outfiows related to speculation in the German mark,
which subsided only at the end of the quarter, probably had some impact on
both measures of our payments position. Conversely, a refiow of funds from
Germany, the apparent need for many corporations to repatriate funds to conform to the direct investment regulations, and other factors should work toward
some improvement during the current quarter.
Nonetheless, any analysis makes it plain that, beyond short-run distortions, we
face a major challenge. The nub of the problem is perfectly clear. If we expect to
invest freely abroad, to provide aid, and to carry our military responsibilities,
we must, over time, provide the bulk of the resources through a strong trade and
current account position. Instead, we have permitted, over recent years, an
erosion in our international competitive position, and overheating has sucked
in imports. By 1968, our traditional large trade surplus had almost vanished.
In recent months, there have been some glimmerings that the process of restoring that favorable trade balance may have begun; at the least, the deterioration
has been stemmed. A vigorous business climate abroad should provide a clear
opportunity for improvement in the year ahead. But it is plain that the full job
of restoring our competitive position can't be accomplished easily or quickly.
What is essential is that the signs of underlying progress are plain. The most
important sign of all will be a dampening of our internal infiationary pressures.
I know this kind of plea is familiar to you all, and I have no new approach to
recommend other than the tough and painful—but also indispensable—course of
fiscal and monetary restraint. I repeat these words today only because it is
always too easy—in the euphoria of the mcment, intrigued by the intellectual
challenge of developing one monetary mechanism or another—to lose sight of
EXHIBITS
443
this fundamental. The size and distribution of Fund quotas, the perforniance of
the two-tier systeni, the effects of the Gernian revaluation, even the major accomplishment of the SDR and the potential for some limited fiexibility of
exchange rates will be of limited consequence if we do not meet our own responsibilities for a reasonable degree of price stability.
In the end, world monetary stability rests on the stability of the dollar itself.
Failing that, I will be in no position to report in the future the same grounds
for confidence that I have cited today.
Exhibit 46.—Letter from Under Secretary for Monetary Affairs Volcker, January 9,1970, to Congressman Reuss, on the handling of South African gold
January 9, 1970.
DEAR MR. REUSS : As Chairman of the Subcommittee on Intemational Ex-
change and Payments of the Joint Econoniic Committee and the Subcommittee
on Intemational Finance of the House Banking and Currency Committee, you
are particularly interested in the announcement on December 30 by the International Monetary Fund of a decision on the handling of South African gold.
As I recently testified before your comniittee, the two^tier gold market has
performed with great effectiveness. At the same time, I noted there had been
one element of uncertainty with respect to the handling of new gold production
that was not in anyone's long term interest.
The appropriate treatment of newly-mined gold, and of South African gold
more generally, within the framework of present gold arrangenients was not fully
considered or resolved at the Washington meeting among some leading central
banks that led to the establishment of the two-tier system in March of 1968. This
matter has, of course, been discussed repeatedly among the interested countries
since the inception of that system. One common thread in all the discussions in
which the United States has participated, dating back at least to the IMF meetings in the fall of 1968, has been the concept of oflicial purchases of South African
gold in circumstances in which the private price moved to or below the oflBcial
price. However, there have also been areas of substantial disagreement and
contention.
I believe that the agreement that has now been reached on the proper treatment of South African gold in the framework of the IMF is fully consistent with
the continued effective functioning of the two-tier system. Indeed, the decision
with respect to South African gold represents a formal recognition of the twotier system and its essential operational characteristics by the IMF membership
itself.
The oflBcial consensus now expressed in these related IMF decisions, practices,
and policies seems to me an important step in institutionalizing the gold market
arrangements in an agreed manner. It should certainly help avoid future deviations in practice in the handling of gold transactions with South Africa, as have
occasionally taken place in the past.
I am enclosing a copy of the press release ^ of the International Monetary Fund
setting forth the elements of the overall understanding.
I would note, in summary of the principal aspects, that a major feature of the
understanding is that South Africa will sell all newly-mined gold in the private
market in an orderly manner to the extent of its payments needs as long as the
market price is above $35 per ounce. When the price is $35 or below, the IMF
would be prepared to buy such newly-mined gold in amounts limited to South
African paynients needs at a price equivalent to $34.9125. This would, of course,
be the lowest price at which South Africa has had to sell gold for many years.
Otherwise, South African reserve gold, with certain understandings as to
South African intentions, is available for use for the same essential purposes
that other countries normally may satisfy through use of their gold reserves.
However, when South African reserve gold is sold oflBcially, South Africa will
normally offer it to the IMF (i.e., not solicit sales to other oflScial buyers) and
members of the IMF will generally not initiate gold purchases from South Africa.
^ See following exhibit.
397-702 0—71
30
444
1970 REPORT OF THE SECRETARY OF THE TREASURY
Consequently, the I M F will be the recognized channel for gold transactions
between South Africa and other monetary authorities.
I would note t h a t the decision of the I M F to buy South Africa's new production if the m a r k e t price is not above $35 per ounce does not provide any certain
fioor for the market. Obviously, the potential removal of this large source of
supply from the m a r k e t when the price declines to the official price should inhibit
declines in the m a r k e t price below t h a t level. B u t it does not assure t h a t the
private price will not go below $35 per ounce. Specifically, speculative holders
of gold a r e neither assured a fioor price for their holdings nor an ability to unload
promptly without driving the price down.
I t is our view that, with these agreed a r r a n g e m e n t s for newly-mined South
African gold, monetary authorities need no longer be concerned over price
developments in the private m a r k e t and should abstain from any purchase of
gold from the private market. I t h u s anticipate t h a t these a r r a n g e m e n t s will,
in effect, tie up the "loose end" of the two-tier system and permit us to dispose
of gold as a contentious issue in international monetary affairs.
I might also take this opportunity to comment on the relationship of the decision t a k e n in the I M F to t h e recommendations contained in the Subcommittee's
Report entitled "The Pedigreed Gold System: A Good System—Why Spoil I t ? "
With respect to the subcommittee's first recommendation, I have already explained why I believe t h e I M F decision, far from undercutting the two-tier
system as t h e subcommittee may have feared, will help to consolidate and institutionalize t h a t system by making it the agreed basis for I M F practices as
well as t h e policies of individual countries. Indeed, press reports clearly indicate
t h a t it is precisely in recognition of t h a t point t h a t one country, which h a s not
associated itself officially with the two-tier system, felt it must abstain from the
F u n d decision. Also, I have noted t h a t a firm fioor has not been placed under the
free m a r k e t itself.
I respect and u n d e r s t a n d the considerations t h a t led your committee to a different view as to the appropriate handling of South African gold. I am sure
t h a t you, too, u n d e r s t a n d t h a t t h i s is a niatter for I M F decision and for an
international consensus, not a m a t t e r of interest to the United States alone.
The second recommendation of the subcommittee regarding purchases by the
I M F of legitimate monetary gold is one with which I agree. Our Executive
Director to the I M F has so indicated to I M F members.
Also, I am in agreement with the third recommendation a n d am pleased to
report t h a t fully satisfactory "mitigation" arrangenients have been agreed to in
connection with the currently proposed quota increase. This will be accomplished
without any use of South African gold (other t h a n t h a t used by South Africa to
make its own quota p a y m e n t ) .
Finally, I agree with the subcommittee view expressed in the fourth recommendation that, in the future, SDR should, along with gold, be eligible to meet
quota obligations. T h e United States has made clear t h a t it will support an
amendment to the Articles of the I M F to accomplish this, and I fully hojDe and
expect such an amendment will be adopted prior to any general increase in quotas
beyond the present proposals.
I hope these views will be useful to you in considering the merits of the understanding reached in t h e I M F on South African gold. I would, of course, be
pleased to discuss the niatter further with you in any way you might wish.
Sincerely,
P A U L A.
Hon.
VOLCKER.
HENRY S. R E U S S ,
U.S. House of Representatives.
Exhibit 47.—Press release of t h e I n t e r n a t i o n a l Monetary Fund, December 30,
1%9, on South African gold
After noting a policy statement of South Africa with respect to t h e sale of
gold a n d the handling of its reserves, t h e I n t e r n a t i o n a l Monetary F u n d today
decided t h a t it will buy gold offered to it by South Africa whenever the l a t t e r indicates t h a t the offer is in accordance with this statement.
Under this policy. South Africa may offer to sell gold to t h e F u n d when the
m a r k e t price of gold falls to $35 per fine ounce or below, in aniounts necessary to
meet current foreign exchange needs during any such period. F u r t h e r , South
EXHIBITS
445
Africa may sell gold to the Fund, regardless of the price in the private market,
to the extent that South Africa has a need for foreign exchange over a semiannual period beyond the need that can be satisfied by the sale of all current new
gold production in the private market.
At the same time South Africa intends to sell its current production of gold
in an orderly manner in the private market to the full extent of current payments needs. However, South Africa may offer to sell gold up to $35 million
quarterly beginning January 1, 1970, from the stock of gold it held on March 17,
1968, reduced by sales it made to monetary authorities (including Fund-related
transactions) after that date and also by such future sales to monetary authorities as it may make to finance deficits or as a result of Fund-related transactions.
South Africa would also continue to use gold in accordance with the Articles
and past decisions of the Fund whenever the occasion would arise, for example,
to pay charges, to make repurchases of the Fund's holdings of rand, or to pay
the gold subscription arising from any increase in South Africa's quota. South
Africa has stated that South African rand purchased by other Fund members in
accordance with Fund procedures would generally be converted into gold by
South Africa on the request for conversion of the member purchasing the rand
from the Fund. The announced policy also envisages that South Africa may offer
to sell gold to the Fund to obtain currency when South Africa is designated by
the Fund under the Articles to receive Special Drawing Rights from another
participant in return for currency to be provided by South Africa to the participant that is using its Special Drawing Rights. These Fund-related sales of
gold will not affect the volume of sales of newly-mined gold in the market.
The Fund decision, which is taken without prejudice to the determination
of the legal position under the Fund's Articles of Agreement, is to be reviewed
whenever requested because of a major change in circumstances and in any event
after five years. The Fund also has accepted at this time an offer previously
made by South Africa to sell gold to the Fund in return for 14.5 million pounds
sterling.
South Africa has also stated that when selling gold other than in the private
market it intends in practice normally to offer such gold to the Fund. The Fund
took the decision to purchase gold from South Africa with the understanding
that members generally do not intend to initiate gold purchases directly from
South Africa. Gold sold to the Fund can be used by it whenever the Fund deems
it necessary to replenish its holdings of member currencies. Ordinarily, sales of
gold to the Fund by South Africa will be subject to a charge of one-quarter of 1
percent.
v^
Exhibit 48.—Press release of the International Monetary Fund, January 13,
1970, attaching correspondence from South African Minister of Finance
Diederichs and Under Secretary for Monetary Affairs Volcker
In view of public interest in details of the recently announced arrangements
relating to sales of gold by South Africa to the Intemational Monetary Fund,
the South African and U.S. authorities have requested the Fund to publish the
attached correspondence.
MINISTRY OF FINANCE,
Pretoria, SoutJi Africa, 23d Decemher, 1969.
DEAR MR. SCHWEITZER : As you know, for some time the Republic of South Africa
has been discussing with the United States, with other members, and with you
procedures for the orderly sale of newly-mined gold in the market and the sale
of gold to the International Monetary Fund. I wish to inform you that as a result
of these discussions, the South African authorities have adopted a policy with
respect to gold sales and I would like to request that the Fund confirm that it will
be prepared in the light of this statement of policy to buy gold from South
Africa in the circumstances and under the conditions set forth below.
The following are the intentions of the South Africa authorities as to the handling of newly-mined gold and reserves.
(1) Without prejudice to the determination of the legal position under the
Articles of Agreement of the Fund, the South African authorities may offer to
sell gold to the Fund for the currencies of other members at the price of $35 per
ounce, less a handling charge, as follows :
(a) During periods when the market price of gold falls to $35 per ounce or
446
1970 REPORT OF THE SECRETARY OF THE TREASURY
below, at which times offers to sell gold to the Fund under this paragraph (a)
would be limited to amounts required to meet current foreign exchange needs,
and
(b) Regardless of the price in the private market, up to the extent that
South Africa experiences needs for foreign exchange over semiannual periods
beyond those which can be satisfied by the sale of all current new gold production on the private market or by sales to the Fund under paragraph (1) (a)
above.
(2) (a) The South African authorities intend to sell current production of
newly-mined gold in an orderly manner on the private market to the full extent
of current payments needs. It is anticipated that new production in excess of
those needs during a semiannual period may be added^to reserves.
(b) When selling gold other than in the private market, the South African
authorities intend in practice normally to offer such gold to the Fund.
(c) The South African authorities may use gold in normal Fund transactions,
e.g. in repurchase of appropriate drawings from the Fund, and to cover the gold
portion of any South African quota increase, and to obtain currency convertible
in fact to exchange against Special Drawing Rights for which South Africa is
designated by the Fund. Rand drawn from the Fund by other members would
generally be converted into gold when rand are included in drawings under
normal Fund procedures. These Fund-related transactions, which may take place
without regard to the market price of gold, will be refiected by changes in the
composition of South Africa's reserves but will not affect the volume of sales of
newly-mined gold in the market.
(3) Notwithstanding paragraphs (1) (b) and (2) (a) above, the amount of gold
held by South Africa on March 17, 1968, reduced by sales by South Africa to
monetary authorities (including Fund-related transactions) after that date and
further reduced by such future sales to monetary authorities as may be made to
finance deficits or as a result of Fund-related transactions, will be available for
such additional monetary sales as the South African authorities may determine,
up to $35 million quarterly beginning January 1, 1970. It is also contemplated
that as an implementation of this understanding, the Fund would agree to purchase the amount of gold offered to it by South Africa in May 1968.
In order to determine whether South Africa has balance-of-payments surpluses or deficits as well as to indicate other operational and procedural points
with respect to this policy, I enclose a memorandum which clarifies these particular matters.
It would be appreciated if, in the light of these policy intentions, the Fund were
able to decide that it would purchase gold from South Africa in the circumstances outlined above. I would expect that the Fund would review the situation
at any time if there were a major change in circumstances and in any event after
5 years.
The South African authorities will work out with the Managing Director consultation procedures on the currencies to be purchased from the Fund with gold.
I hope that this announced policy, the implementation of which I believe will
be a contribution to the stability of the International Monetary System, and my
suggestion meet with the concurrence of the Fund. A copy of this letter has been
sent to the Secretary of the Treasury of the United States.
Yours sincerely,
N. DIEDERICHS,
Minister of Finance,
Repuhlic of South Africa.
T H E MANAGING DIRECTOR,
International Monetary Fund,
Washington, D.C. 20431
United States of America.
Operational and Procedural Points
A. For the present purposes, balance-of-payments deficits and surpluses will
be equal to the change during the accounting period in the total of South African
official gold and foreign exchange reserves, the net IMF position and changes in
SDR holdings, and any foreign assets held by other South African banking institutions and public agencies under swap arrangements with the Reserve Bank.
It is understood that changes in gold hpldings outside the monetary reserves and
EXHIBITS
447
in monetary banks' positions not covered by Reserve Bank swaps are normally
not significant. If they should at any time become significant, further consideration will be given to their inclusion in the calculation. SDR allocations will not
be considered as reducing a deficit or increasing a surplus as above defined. South
Africa does not envisage unusual or nontraditional foreign borrowings or other
special transactions that would affect the elements listed in this paragraph.
B. Addition of newly mined gold to South African reserves under paragraph
2(a) will take place when there is a surplus for an accounting period. It is envisaged that all new gold production, less domestic consumption, during the
accounting period will be treated as a balance-of-payments credit item and that
it will, in fact, be sold currently under paragraph 1(a) and paragraph 2(a) to
the full extent necessary to meet payments needs, except for the sales available
under paragraph 3, apart from the Fund transaction initiated in May 1968.
C. Sales of gold by South Africa to monetary authorities under paragraph 1(a)
may be made for any day when both London fixing prices are $35.00 p.f.o. or
below, in an amount reasonably commensurate with one-fifth of weekly sales
from new production required to be marketed to meet balance of payments needs.
D. Subject to paragraph 2(a) :
1. Should sales to monetary authorities under paragraph 1(b), plus sales of
SDRs and drawings from the IMF by South Africa, exceed the deficit defined
under paragraph A of this memorandum, such excess will be deducted from the
amount allowable for the first succeeding accounting period wherein a deficit is
again encountered.
2. Should sales to monetary authorities under paragraph 1(b), plus sales of
SDRs and drawings from the IMF, fall short of the amount allowable for an
accounting period in which South Africa aims to finance its entire deficit by these
means, such shortfall will be added to the amount allowable for the next succeeding accounting period.
3. It is expected that any discrepancies under 1 and 2 above will be minimal.
4. Should sales to monetary authorities under paragraph 1(b), plus sales of
SDRs and drawings from the IMF, fall short of the amount allowable for an
accounting period in which South Africa does not aim to finance its entire deficit
by these means but chooses to sell more on the free market than it undertakes to
do in paragraph 2(a), no correction will be made for any succeeding accounting
period.
E. When the price criterion is operative, sales of gold to the IMF shall be attributed to the total deficit, if any, during the accounting period. The balance of
such sales, if any, will be attributed to newly mined gold to the extent of gold
production during the accounting period.
F. Sales or payments under paragraph 2(c) in connection with IMF-related
transactions are expected to take place only within the criteria normally envisaged for IMF drawings by members, for use of members' currencies in drawings by other members and for SDR transactions.
G. Fundamentally, it is expected that the composition of South African reserves will not be greatly changed. In particular, it is understood that the ratio
of gold to total reserves will remain relatively stable. If South Africa should
desire to make additional sales of gold or otherwise exchange assets for the
purpose of achieving a basic change in the composition of its reserve holdings,
further discussion would be held with a view to clarifying intentions.
T H E SECRETARY OF THE TREASURY,
Washington, Decemher 24,1969.
DEAR MR. SCHWEITZER : I have received a copy of the letter dated December 23,
1969, sent to you by Mr. Diederichs in which he sets forth the intentions which
South Africa proposes to follow with respect to the handling of its newly-mined
gold and reserves. This matter bears importantly on the continued effective functioning of the two-tier gold market which was initiated at a meeting on
March 16-17,1968, which you attended.
In view of the intentions of South Africa, and in view of discussions we have
had with other Fund members, I should like to inform you that I have instructed
the U.S. Executive Director to take the following position. The United States
is prepared to support decisions of the Intemational Monetary Fund to purchase
gold offered for sale by South Africa in the circimistances and under the conditions described in that letter, assuming that there is an understanding among
Fund members generally that they do not intend to initiate official gold purchases
448
1970 REPORT OF THE SECRETARY OF THE TREASURY
directly from South Africa. With this understanding, I believe that the policies
to be followed will be consistent with the stability and proper functioning of
the intemational monetary system.
Sincerely yours,
PAUL A. VOLCKER,
Acting Secretary.
MR. PIERRE-PAUL SCHWEITZER,
Managing Director, International Monetary Fund,
Washington, D.C. 204S1.
Exhibit 49.—Statement by Under Secretary for Monetary Affairs Volcker,
February 19,1970, before the Joint Economic Committee
We meet at a time when the atmosphere in world currency markets is happily
free of the strains and tensions that characterized much of the late 1960's.
In part, this refiects solid progress during the past year toward reshaping our
b^sic monetary arrangements. The collective decision to create Special Drawing
Rights in sizable aniounts was a step of fundamental iniportance. It points the
way toward the provision of adequate amounts of world reserves in the years
ahead, without relying either on the vicissitudes of the gold market or upon
unsustainable growth in reserve currencies. The two-tier gold market arrangements—a logical complement to the era of internationally managed reserve
creation implicit in SDR's—has proved its strength and value in practice. With
the question of the treatment of new production now resolved, the two-tier
system is becoming embedded in the operating practices and policies of our
monetary institutions.
The calmer atmosphere can also be traced to effective policies by several large
European countries. The exchange rate adjustments by France and Germany
removed two of the principal focuses of speculative pressure. The progress of
the British trade and payments position during the course of 1969 supports
confidence in one of the most important world currencies. The process of balanceof-payments adjustment in France also appears to be advancing in an orderly
way.
Finally, as always, developnients in this country have been a critical ingredient
in the international monetary scene. There is no question, as Secretary Kennedy
has already suggested, that our underlying balance-of-payments position remains
unsatisfactory. We must not be lulled by the tranquility of current monetary
developments into ignoring this basic problem. The dollar has been demonstrably
strong over the past year. But this strength has rested in part on some transient
factors.
Most immediatey, the tightness of money in the United States has induced
Anierican banks and other borrowers to comb the world for dollars to use in the
United States. There was an enormous short term capital infiow—^mostly through
the Euro-dollar market—running to some $9 billion in 1969. These pressures of
demand have kept the dollar relatively scarce in the exchange markets, just as
it has seemed scarce to potential borrowers within the United States.
As a result, foreign official dollar holdings actually declined in 1969, and
U.S. official reserves rose by $1.3 billion. Those realities were refiected in a
record surplus of $2.8 billion in our overall extemal accounts, as measured on
the official settlements basis.
A second factor supporting the position of the dollar— and this looks toward
the longer run—is the fact that a new Administration was visibly and directly
grappling with our serious infiationary probleni through the fundamentals of
fiscal and monetary restraint. This supported confidence that the process of
infiation and overheating would be brought under control, laying the needed
groundwork for improvement in our basic payments position.
Helpful as these factors were last year, we plainly cannot count on tight
money and good intentions as a lasting solution for our balance-of-payments
problem. Instead, it is vitally important that we make visible progress on the
more fundamental elements.
The $7 billion paynients deficit, calculated on a liquidity basis, recorded last
year is not, by itself, a meaningful measure of our basic position. Conceptually,
that figure does not take into account the huge infiow of private short-term
capital. Because those fiows can be erratic and certainly cannot be sustained
EXHIBITS
449
at last year's level, their exclusion can be useful for analytic purposes. But we
should recognize that, with the use of the dollar as a transactions currency
still increasing, some rise in liquid dollar holdings by private foreigners can be
anticipated over time.
Apart from the matter of definition, there were evident distortions in the
so-called liquidity calculation last year. These grew out of the diversion into
the Euro-dollar market of a sizable, but unidentified, amount of funds that
otherwise might have been employed directly in the United States—funds that
eventually were reborrowed by U.S. banks. Ih addition, there were shifts of
official dollar holdings from the "nonliquid" to the "liquid" side of an arbitrary
statistical line that had no econoniic significance. Together, these factors probably added at least $2i/^ billion to $3 billion to the recorded liquidity deficit.
Even with these mental adjustments, it is clear that our external accounts
refiect a serious problem. I would suggest the dimensions of that problem can
best be appraised by analysis of the trend in our trade balance and other current
items. Only by achieving a sizable surplus in these accounts can we sustain over
time our propensity to lend or invest abroad and to provide aid without, at the
same time, feeding out more dollars into the rest of the world than other
countries want to hold.
The attached table illustrates what has been happening during the past 5
years of infiation. Our trade balance, largely because of a surge in imports,
declined from an average of nearly $51/2 billion per year in the early 1960's to
between $6(X) million and $700 million in 1968 and 1969. Meanwhile, high interest
rates and the increased volume of short-term borrowing have driven up external
iriterest and profit payments to foreigners over recent years almost as fast as
the growth in profits and interest remitted to the United States. Other service
accounts have changed little on balance. Consequently, a healthy balance on
goods and services averaging about $6 billion from 1960 to 1964 dwindled to an
estimated $2y2 billion in 1969.
It would be an illusion to think that we can, in the course of a year or two,
repair the damage of 5 years of inflation. Moreover, as the extreme pressures in
our domestic money markets recede, the short-term capital inflow will presumably be curtailed and could even, for a time, be reversed. The consequence
would be to produce a reflow of dollars into official reserves abroad and a deficit
in our official settlement balance.
This should not, in itself, be an alarming prospect. Time and again in recent
years, individual countries have experienced massive shifts of short-term money,
responding to interest rate differentials as well as speculative movements. As
economies become more closely integrated, as the total volume of intemational
transactions by the United States alone reaches well beyond $100 billion a year,
and as official inhibitions to capital fiows are reduced, we must be prepared for
recurrent large short-term swings in payments positions. It is a prime function
of the intemational monetary system to finance those short-term swings, and I
believe we are better equipped to do so than ever before.
Moreover, a moderate easing of pressures in U.S. credit markets may not be
refiected in a massive net refiux of short-term money abroad. Indeed, the high
rates here and the pull of funds into the United States has produced unwelcome
presstires in some European markets. Given the close linkages among international niarkets, an easing in U.S. rates could well be accompanied by an
easing in European money markets,^ and especially in Euro-dollar rates. I believe,
at the proper point, such a general'downward movement in interest rates would
be welcomed by most foreign countries, as well as by the United States. In these
circumstances, American banks may well retain a relatively large borrowing
position in foreign markets.
We have had a cumulative official settlements surplus of $4.4 billion over the
past 2 years. We would certainly be prepared to see that favorable balance
reversed for a time, as a byproduct of a welcome easing of domestic monetary
tensions. What is essential is that, over this same period ahead, we make visible
progress in our basic trade and service accounts. Failure to achieve this result
would be deeply disturbing.
Until the outburst of infiation since 1965, the U.S. record of intemal price
stability stood very favorably among industrialized countries. Even the recent
deterioration in our trade position has been fairly concentrated among a relative
handful of countries—especially Germany, Japan, Italy, and Canada. In other
words, the deterioration in our trade position with most countries has been
450
19 70 REPORT OF THE SECRETARY OF THE TREASURY
moderate, and, in some instances where the balance has been sharply adverse,
some corrective forces already seem to be developing. While domestic overheating has swelled our imports, iniportant export markets for manufactured
goods have been reasonably well maintained.
Improvement will not come without sustained effort. This primarily means a
much better price performance than in recent years and the avoidance of excessive demand pressures.
But we must also be concerned, as must other countries, to improve the processes of international balance-of-payments adjustment generally. The provision
of more adequate international liquidity should itself help. When reserves are
inadequate, there is a tendency by individual countries to strive for surpluses or
resist deficits simply to achieve adequate reserve growth over time. Unless the
glPbal supply of reserves is great enough to satisfy these desires, these tendencies are apt to be mutually frustrating and impede adjustment. Reserve
asset creation is aimed at this problem.
In addition, the experience of the 1960's has led to more questioning of whether
improvements are not also necessary in the means and methods by which
exchange rates might be altered, in those instances when changes are appropriate, through gradual and limited acijustments. This matter is now under
intensive discussion in the International Monetary Fund, including such familiar
proposals as "crawling pegs" or "wider bands."
I cannot forecast the results of this discussion today. Certainly, views of
national governments remain widely mixed and important issues are unresolved.
I would emphasize, too, that, in accord with the reserve currency role of the
dollar, our mechanical role in exchange rate adjustments tends to be passive;
the initiative for change lies in other hands.
Obviously, we do have a close interest in the outcome of these discussions.
We want to take full advantage of this period of calm to examine, fully and
sympathetically, those areas where improvement may be needed.
The international monetary system is in a phase of transition. In the area of
liquidity, it is clearly moving steadily away from dependence on gold to managed
reserve creation. We are in a much earlier stage in considering how exchange
rate changes, when appropriate and necessary, can be achieved with less disturbance. The events of the past year in international money niarkets also
emphasize that we must face frankly the need for still more effective policy
cooperation and coordination among nations in the period ahead.
The alternatives to evolutionary change are not inviting. We would find ourselves faced again with too many of the problems of the 1960's. Pressures to
retreat into a world of controls and restriction would be strong—a world in which
each nation, in an effort to preserve ah unrealistic autonomy, builds walls around
its industry and its money markets. That is the path we must resist—^in the
interests of the United States and the world as a whole.
U.S. halance of payments on goods and services account
[In billions of U.S. dollars]
Goods
and
services
balance
1960...
1961
1962
1963...
1964
1965..
1966
1967
1968
1969 (3 qtrs. ann. rate)
Trade
balance
4.1
6.6
5.1
6.0
8.6
7.1
5.3
5.2
2.5
L9
4.9
5.6
4.6
5.2
6.8
6.0
3.9
3.9
.6
3.3
Income from
U.S. investment abroad >
Payments of
investment
income to
foreigners i
Total (Interest) Total (Interest)
-1.1
3.3
-LO
3.9
-Ll
4.4
-L3
4.6
-L5
5.4
-L7
...
..
6.9
(2.3) - 2 . 1
(-L4)
6.3
(2.5) - 2 . 4
(-L6)
6.9
(2.9) - 2 . 9
(-2.1)
7.7
(3.4) - 4 . 3
(-3.3)
8.8
Military
expenditures
-3.1
-3.0
-3.1
-3.0
-2.9
-3.0
-3.8
-4.4
-4. 5
-4.8
Other
items 2
0.1
.1
.3
.5
.8
.9
LO
L2
L6
1.9
»Interest, dividends and branch profits.
2 Travel, transportation, fees and royalties, deliveries under military sales contracts, and miscellaneous
services.
3 Actual for 1969 was $674 million.
SOURCE.—Department of Commerce.
EXHIBITS
451
U.S. trade halance, overall and with certain major countries; and latter's overall
trade halance with world
[In billions of dollars; f.o.b. basis]
1968
Deterioration
(-),or
improvement
1964-68
7.01
.84
44 - L O l
.24 - L I O
68 - . 9 4
42
.02
5.23
3.87
(-6.17)
(-L45)
(-L34)
(-L62)
(-.40)
(-L36)
1964
U.S. trade balance i with:
World
Germany..
Japan.
Canada
Italy...
All other countries...
Trade balances of certain foreign countries with world: 2
Germany
Japan
Canada
Italy
_
2.40
.17
.65
-.64
5.68
2.53
L27
L05
1969
L26
-.48
-L40
-L25
.06
4.33
(3.28)
(2.36).
(.62)
(L69)
1 Census data—differs from balance-of-pajrments data, largely through inclusion of DOD military export
sales.
2 Country sources.
Exhibit 50.—Remarks by Under Secretary for Monetary Affairs Volcker, April 20,
1970, before the annual dinner of the American Chamber of Commerce, Brussels, Belgium
I am honored to address your annual dinner tonight The American Chamber
of Commerce in Belgium symbolizes the close and friendly ties between our countries. It refiects the vitality of trans-Atlantic economic relationships. Even your
location, in the heart of the Common Market, emphasizes important new dimensions in our relationship that are emerging from the drive for European economic
unity.
Indeed, anyone concerned as I am with international financial developments
cannot help but be aware of the ferment within "the six" on the monetary
dimension of unity. There is an old maxim that prudence is the better part of
valor. I will therefore resist the temptation—on the home ground of the experts—
to offer unasked advice on that matter.
Instead, I would like first to report briefiy on the current state of the economy
in that other great common market called the United States and to relate those
developments to our balance of payments. I would also like to suggest some
broader conclusions for intemational monetary arrangements.
The tone of business activity in the United States has certairily changed in
recent nionths. The further rise in the price indices is evidence enough that the
momentum of infiation accumulated over a period of years is still strong. But
the persisting inflationary concerns are also accompanied—and tempered—^by
much more public uncertainty about the course of the economy.
That is not an entirely comfortable position. But I believe it should be recognized for what it is—an essential phase through which we must pass in moving
from overheating and inflationary strains to more balanced and orderly growth.
Indeed, the present evidence suggests that the economy is broadly on the course
foreseen in shaping the major fiscal and monetary policy decisions.
A period of negligible or no growth during the first part of 1970 had been
clearly anticipated. The small decline in real gross national product now estimated for the first quarter and the modest rise in unemployment confirm that
this pause has materialized. The necessary process of squeezing out excess
demand pressures is never entirely free of risk. But the indications are that this
objective has been successfully achieved without setting off cumulative downward
pressures.
The easing of demand pressures has been accompanied by some relaxation of
the tensions in financial markets that characterized 1969. Interest rates are, of
452
1970 REPORT OF THE SECRETARY OF THE TREASURY
course, still at very high levels by American standards. As a part of the process
of achieving better balance in the economy, I would welcome further declines.
But lower interest rates cannot be pursued in isolation. At this critical point
in the fight on infiation, we are also conscious of the danger, in feeding a
resurgence in demand beyond our real growth potential.
Our success in steering a course to a resumption of balanced growth is, of
course, not only important for the United States. The state of our economy will
directly affect world trade. The financial dimensions may be even more critical.
International money markets are mainly dollar markets and sensitive to changes
in our own credit conditions. The fiuctuations in our balance of payments inevitably have a large infiuence on worldwide reserve and monetary developments.
I am particularly aware that, over much of the past year, the extreme tightness of money in our markets had strong repercussions on European money
markets. Moreover, the strong demands for money in the United States tended
to drain reserves from European central banks, limiting their capacity to deal
with their domestic market pressures.
The massive fiow of liquid funds to the United States in 1969—which probably amounted to a net of some $6 billion—more than covered the continuing
deficit in other elements of our balance of payments. In fact, there was a sizable
increase in our own international reserves. At the same time, foreign official
dollar balances by the end of last year had declined to the lowest level since
1963—in individual cases, probably falling below desired or sustainable levels
and contributing to a feeling of tightness in international liquidity. In fact,
partly as a result of these drains, the total reserves of the 10 leading industrialized countries of the European Continent had declined at the end of 1969
to $28.3 billion, lower than 5 years earlier.
We are not misled by the inflow of short-term funds to the United States and
the related strength of the dollar in the exchange markets. It is plain that our
underlying balance of payments remains unsatisfactory, and improvement is a
basic policy concern.
The primary source of the difficulty has been an erosion in our trade position
over the course of several years. This, in turn, has been in good part another
symptom of the infiationary strains.
As recently as 1964, the United States had a trade surplus of $6i/^ billion,
roughly 1 percent of our then gross national product. Our surplus on all goods
and services was even larger. Within 5 years, the trade surplus had slipped to
under $1 billion, and our entire current surplus on goods and services was only
$2 billion.
A current surplus of that size is simply not large enougli to provide the transfer of real resources necessary to support over time the propensities of our business to invest overseas or our responsibilities for aid—even taking into account
the growing flow of private long-term investment into the United States.
We do not—in our interest or that of the world—seek a solution to that problem by prolonging unnecessarily the direct controls on the outward flow of investment or in restraints on aid. Such restraints are not directed at the root
of the problem, and we look toward the day when our position permits them
to be further relaxed and dismantled.
Our growing eamings on private foreign investnient—now running to $8 billion
a year—will give us a head start toward a stronger current surplus. We would
also, as security permits, welcome a reduction in the military burdens on our
balance of payments, swollen by the Vietnam War. But the heart of our longterm strategy will need to be restoration of a large trade surplus.
We are, of course, deeply concerned that, inadvertently or otherwise, our
exporters are sometimes placed at a disadvantage vis-a-vis foreign producers
through differences in tax treatment, access to export credits, or trade restrictions. We will be working, to remove those impediments and to equalize competitive conditions.
But we also recognize there are no shortcuts. The only solid foundation for a
successful trade effort must be sustained, effective econoniic performances over
a period of years at home.
I am not discouraged by the prospects. Historically, the perforniance of the
American economy in terms of internal price stability, even after allowing for
the inflation of recent years, compares favorably with other industrialized countries. Even during the past 5 years, our export growth has been remarkably
EXHIBITS
453
steady after allowing for a contraction in important markets for our agricultural goods. Paralleling the experience of other countries, the effects of overheating have been most evident on the import side—and it is here that we should
benefit most from the ending of excessive demand pressures.
Following an earlier bout with infiation, we managed to increase our trade
surplus by almost $6 billion in 5 years. To be sure, world conditions were then
favorable for our trade, and our own economy was not working to full capacity.
But, in the much larger world economy of the 1970's, I believe that a substantial
trade surplus can be restored as the cornerstone of our balance of paynients.
In the shorter run, I believe we must be prepared to see considerable swings
in our payments position. The situation already appears to have changed
markedly from last year. As a byproduct of the relaxation of money market
pressures in the United States, our banks have repaid some of the short-term
foreign indebtedness incurred last year. The result is that, without any deterioration in our basic position—indeed, with some signs that our trade surplus is again
growing—our official settlements accounts, at least temporarily, have turned
toward a sizable deficit following the surpluses of recent years.
In these circumstances, a short-run shift from surplus to deficit is not alarming. Some of it merely reflects the reflux of extraordinary yearend inflows. The
relaxation of nioney market pressures is no doubt welcome in some countries
abroad, as well as in the United States. The principal official recipients of dollars
in recent months appear to have been the United Kingdom and France. T'hose
countries, in turn, repaid substantial amounts of debt, in large part to the United
States. As a consequence, these months of sizable deficit have probably added
little to the sum of foreign official dollar holdings.
Nevertheless, these large shifts of liquid funds do point up a much broader
question for the international financial system. Such volatility is not confined
entirely to short term funds, and certainly not to trans-Atlantic crossings. Recent
experience is replete with examples of massive capital fiows across national
borders, sometimes for speculative reasons, but also in response to more normal
niarket incentives.
The reasons are fundamental. National financial markets have grown both
larger and more integrated. Transportation and communications are speedy and
sure. Indeed, it is at last as easy—and probably substantially easier—for a New
York bank to deal with its branch or correspondent in London today than it
would have been for the same bank to deal with its Chicago or St. Louis correspondent 20 years ago.
The growth in the number of U.S. banks with offices in Brussels is one refiection of a worldwide phenomenon. The number of branches and subsidiaries
throughout the world of such foreign banks has reached some 400—quadrupling
in the past 15 years. There are about 100 offices of foreign banks in the
United States. The rise of multinational corporations, with vast amounts of
liquid funds at their disposal and close banking contacts in a variety of key
markets, is another dimension. American-based companies alone now have some
$50 billion of overseas assets.
Large and closely integrated markets mean that funds will move quickly and
in volume in response to relatively 'small incentives. Sometimes these international shifts will help support domestic or balance-of-payments objectives; but
often they will appear to be working at cross-purposes with national policies.
Thus, questions are posed, both for the independence of national policies and for
the international monetary system.
You will note that I have managed to talk about international money markets
without specifically mentioning the Euro-dollar niarket. The sheer efficiency of
that market probably has contributed to the growth of internationally mobile
capital. But it seems to me the current focus on Euro-dollars is misleading to
the extent it emphasizes one particular channel. The basic probleni is much
broader. Even if we could somehow imagine that the Euro-dollar market were
swept away, I have no doubt that the ingenuity of bankers and traders would
develop other mechanisms so long as the basic convertibility of currencies is
maintained.
In concept, we would, of course, try to thwart that response by control. But
experience suggests a network of controls could not be spread very far or tightly
without impairing the freedom of action for traders and investors that the basic
convertibility of currencies is designed to promote. Despite some individual
exceptions, the broad tendency of the postwar years has been to move in the
454
19 70 REPORT OF THE SECRETARY OF THE TREASURY
other direction. That seems to me the inherent logic of a multilateral trading
and investment world. At the same time, we must be prepared to accept the consequences of that logic:
—One consequence of free and integrated money and capital markets will be
further large recurrent short-term swings in internationally mobile capital. It
would be neither desirable nor feasible to try to control these flows with offsetting swings in trade or other elements in the current account. Consequently,
we must be prepared to view large swings in overall payments positions with
some equanimity and be prepared to finance them, whether by reserves or by
credit facilities.
—International money markets tend to equalize credit market conditions in
different countries, forcing a kind of rough and ready coordination of one element of national economic policies. At the same time, the need for a more
thorough-going coordination of policy objectives and instruments becomes more
pressing. Otherwise, the source of the imbalance will remain, and the fiows will
become so large and chronic as to destroy the basis for their financing.
The Common Market countries are in the process of facing up to these questions in the most direct way—as part of a deliberate effort to achieve a closer
monetary unity. But, in more general terms, the issues are relevant to the
relationships among all industrialized countries.
Considerable progress has already been made on the financing side. There
have been basic innovations in developing international reserve and credit facilities, including the decision last year for managed reserve creation through
SDR's. With economies and markets growing rapidly, even in this area the job
cannot be considered complete.
Nevertheless, the problems are still more difficult in the area of policy coordination. Here, it is less a question of new techniques than the delicate problem
of reconciling external needs with domestic objectives and the retention of
freedom of action internally. Answers suitable within a relatively cohesive and
limited group, such as the Common Market, cannot necessarily be applied beyond
that group. Yet, the need plainly extends beyond such groups.
I have no desire to minimize the efforts of the past decade to achieve a better
reconciliation of policies internationally. I spend a good deal of my own time
in meetings aimed precisely at that problem. But this experience also illustrates
the inherent difficulties of achieving better coordination given the differing economic circumstances and structures, and domestic policy objectives of individual
countries.
It is precisely these difficulties that have raised the question whether a limited
degree of greater flexibility in exchange rates might not provide a means for
better reconciling the desired inder)endence of national policies with the broader
stability of the international financial system as a whole.
I would emphasize the basic premises on which international discussions of
this matter are proceeding. We are considering evolution, not revolution, within
the basic elements of the Bretton Woods system. 'Specifically, discrete changes
in exchange parities would remain the rare exception for industrialized countries and not the rule. Exchange rate decisions would continue to be taken at the
initiative of individual countries. They would also remain matters for international consideration, and thus should fall within accepted "rules of the game."
No formulas could replace the decisionmaking process, nor are nations willing
to leave their exchange rates entirely to the market processes—or establish a
band so wide around a nominal parity that many of the elements of a system of
freely fioating rates would exist.
Those fundamental points are not at issue. But, in the light of experience, we
cannot escape the need to consider the usefulness of some changes in present
arrangements and practices. For instance, some countries might find a band moderately wider than the 2 percent range now specified by the Articles of Agreement of the Intemational Monetary Fund a helpful dampening infiuence on
international capital fiows, both by increasing the uncertainty for the speculator
and by affording a greater degree of maneuverability for the authorities.
Perhaps more important is the question of whether a series of very small
changes in parity, within accepted limits, might in specific instances help some
countries, consistent with internal goals, to maintain a better equilibrium in
their basic external payments position over time. The effort would be to avoid
the disturbance associated with delayed and sizable parity changes in response
EXHIBITS
455
to a large, accumulated disequilibrium. If so, can criteria be developed that
help to point to the appropriate timing and use of such fiexibility ?
Finally, some have urged more willingness to experiment with methods of
moving from one parity to another in those instances when a sizable change
may become necessary. The German experience last year with a transitional
fioat points in this direction.
I do not detect any clear consensus on these points internationally. But
neither do I believe these are questions that can be easily dismissed, in the light
of the experience of the late 1960's. I am glad they are under discussion now. It
would be a great mistake, in my judgment, if, during this period of calm in
international financial markets, we fail to take advantage of the time available
to adapt the system to foreseeable needs.
I recognize that there is the feeling of some within the Common Market
that more rigidity in rates, rather than less, might foster its own goals. That
is the judgment only the member nations can make. Nevertheless, however the
question is resolved for relationships wdthin the market, the broader issue
cannot be dismissed.
Thus, we must seek ways of reconciling the needs of particular countries, or
groups of countries, with the needs of the system as a whole. The first prerequisite is to remain in close touch, and not freeze positions, before there is a
chance to test ideas fully in broader international forums.
Meanwhile, the main responsibility of the United States is plain enough. We
must not be diverted from the goal of restoring reasonable price stability, consistent with orderly economic expansion. That is, of course, in our domestic
interest. It is also the best possible assurance of international financial stability.
Exhibit 51.—Remarks by Assistant Secretary Petty, May 28, 1970, before the
Conference on Economic Growth, sponsored by the Toronto Stock Exchange,
Toronto, Canada, on the World, North America and Canada
Introduction
In view of the course of stock market prices around the world these past
few weeks, I am sure you understand that it is with some relief that my assignment is to speak about North America in the context of longer term economic
factors.
In preparing these remarks, I have taken to heart that over the years discussions across our long border have been noted for their candor. I will not
deviate from this tradition. However, I w^ill try to avoid those aspects of this
same tradition which have contributed to misunderstandings—however candid
the remarks may have been.
There are several recurrent themes which can be traced back through the
history of Canadian-American intercourse. I have three in particular in mind.
The tariff issue has had high and low protagonists both north and south.
Increased commercial traffic has stirred ambitions on one side of the border
and fears of political annexation on the other. A third theme was the confiicting
Canadian commitment between Old World ties and New World realities, a fear
that reciprocity and trade with the United States involved disloyalty to the
European ties.
Fortunately, the 1970's can be faced with these issues resolved.
We have come a long way from the days when tariff levels were, the subject
of shouts across the table—with advocates of each extreme well represented
on either side. Today, Canada is a leader in the liberal trade movement and
can be counted on to move progressively with others toward further multilateral
reductions in barriers to trade. The United States, too, is determined to continue its liberal trade posture and participate in the reduction of these barriers
around the world.
Next, the political annexation issue is dead and forgotten. If it isn't, it
should be. The 1911 Canadian election results killed it; although, some might
say the body was not finally put to rest until the mid-1940's. Whichever, we
are now able to talk about and work toward the more efficient development of
our economies without being concerned over the motives of the participants.
It is no longer necessary to impute political ambitions into an examination
of what is best for our economies and our people.
456
1970 REPORT OF THE SECRETARY OF THE TREASURY
Finally, the old dichotomy between Caandian trade with the United States and
allegiance to the Old World is resolved. The issues are now understood to be
unrelated. History shows this theme to have been expressed in terms of
which fiag files at the head of the mast: the "Union Jack or Ole Glory?" Well,
the Maple Leaf is up there where it belongs.
True, new issues have replaced the old ones. Vestiges of the past remain
too. But the dominant characteristic of Canada today is her self-confidence.
This augurs well for tomorrow. With this maturity will come a better understanding of our respective places in the hemisphere. It should provide the
basis to resolve common problems to our mutual benefit.
With that brief treatment of the past and before moving on to the issues
of today we should note long term trends in the world economic order. These
developments can then be related to our North American continent.
Evolution of the world economic order
The recent post World War II years have seen the free world economies surge
in international investment and trade. The achievement of convertibility by
many industrial countries, the improved liquidity of the international monetary
system, and progress in the adjustment of balance-of-payments positions has
made this investment and this transfer of resources possible. Economies and
people have prospered.
Commencing with the achievement of foreign exchange convertibility in the
late 1950's the industrial economies of the world accelerated their trade with
one another as well as their investment across national borders. This brought
about large movements of capital and the need to settle imbalances between
nations. Responding to this need the liquidity to finance these capital fiows
has been substantially increased through the expansion of quotas in the International Monetary Fund, supplemented by the General Arrangements to Borrow,
and Central Bank swap facilities. Significantly, quotas have been reinforced
by the development of a new supplementary reserve asset. Special Drawing
Rights, now created and distributed annually.
The facility with which imbalances between nations are adjusted, however,
has a less even record of successes. Increased liquidity only provides additional
time. But time and restraints on internal demand may not be all that is required and, therefore, it is the balance-of-payments adjustment process which
is now the subject of discussion in intemational nionetary circles.
We have reached the point where international financial markets, international banking, and multinational companies, and other factors tend to equalize
credit market conditions in different countries, consequently requiring some
coordination of one element of national economic policies. This involves, however, a delicate problem of how to reconcile external needs with domestic objectives. To avoid protracted payments disequilibrium, how can we achieve better
coordination when countries face different economic circumstances and structures and there is no uniform ordering of priorities?
The stresses to which the international monetary system was subjected in
1968 and 1969 have led to discussions, now going on in the International Monetary Fund, concerning proposals for some evolutionary changes in the procedures
and attitudes with respect to exchange rates. The founders of the Bretton
Woods system did not have in mind the magnitude and volatility of international movements of capital that take place in today's w^orld. As Secretary Kennedy stated recently:
"All nations need to have the capacity to deal in an orderly way with wide
swings in volatile elements in their international accounts. All will benefit if
we can find ways to dampen incentives to speculation, and make exchange rate
adjustments more smoothly and in more timely fashion when they become
necessary."
What is under examination in the Fund is nothing revolutionary; it is evolutionary within the basic principles of the Bretton Woods system. Discrete
changes in exchange rates would be exceptional for industrialized countries.
Moreover, exchange rate decisions would continue as in the past to be made
at the initiative of the country concerned. Also as in the past, they would be
matters for international consideration and should fall within internationally
accepted "rules of the game."
Within these parameters the Fund is examining proposals for wider bands,
moving parities, and also transitional exchange adjustments. The latter would
EXHIBITS
457
allow for some modest experimentation when moving from one parity to another,
as in the recent German experience. The examination in the Fund seeks to determine whether any of these techniques would achieve a broader stability of the
international financial system as a whole, while providing some better reconciliation of this objective with the desired independence of national policies.
Whatever results from the examination will at most involve a continued
orderly evolution in the monetary system. We do not need more but we would
not want less.
Interrelationship of national economies
Evolution in the intemational monetary system has had its counterpart in
national economies. The growth of trade and investment, accelerated by convertibility, has helped create a marked interrelationship of national economies
that will continue and may accelerate in the future. This fundamental economic
fact is reinforced by political, transportation, and communications achievements.
These achievements create an international awareness in all of the people of
the world. People now relate internationally as well as nationally. This characteristic of today's world has implications that affect national and corporate
life dramatically.
Look, if you will, at one aspect of this economic interrelationship: technology
and its present transfer internationally. At the time of Adam Smith, cotton
spinning machinery was virtually a British monopoly, the preservation of which
was anxiously, and for a period of years effectively, pursued. The plans are said
to have moved to the United States finally in the brain of Samuel Slater. In due
course, the machinery was duplicated over here and then reproduced and improved upon. But consider the number of years it took. The technological advantage achieved and preserved by British industry brought with it aii economic
monopoly good for decades.
This is not the story today.
Licensing agreements covering existing products and processes are signed
daily. What is more, most of these agreements not only cover proven technological achievements but they guarantee the availability of new technology even
before it is created and before one knows exactly what it is.
The development of technology and its transfer does not stop there: countries
admitting foreign investment frequently seek applied research to be undertaken
within their own borders and often pure research as we'll. In fact, the usual
wrinkle in licensing agreements is to provide reciprocal features so the parent
company can obtain technological advantages which foreign subsidiary research
facilities are now increasingly creating.
To a country, and to one involved in long range economic considerations, the
preservation of comparative advantage through a significant and natural lag
in technology transfers can no longer be looked upon as a sustaining feature
of a country's payments position.
Because this technological transfer is made through licensing arrangements
between affiliated and unaffiliated companies alike, and because scientific and
production interchange and managerial relationships are all elements of licensing
arrangements, this development is fundamental. It is also representative of basic
integrative forces in the world's economy.
The Euro-dollar market can be cited as another illustration of the interrelationship of economic forces. Whatever annoyance the Euro-dollar market
may provide to financial officials seeking to supervise money supply and credit
growth, one cannot deny that the very existence of the market, its size, its
flexibility, its durability, and its availability to all comers, betokens the interrelationship of our capital markets. For the world financial community it could
be likened to the sole water fountain in the peasant village, providing all ladies
the chance to partake commonly.
These illustrations demonstrate the remarkable commercial and financial developments of recent years which require a reordering of our traditional concepts. Measuring achievements by the speed of light, not the speed of sound,
introduces a whole new theory of relativity: with the jet replacing the sail, man
achieves the moon by design; he does not find a continent by accident.
In my mind the most interesting feature of the growing interrelationships in
financial and commercial matters is that this intercourse proceeds without a
corresponding political involvement. This certainly is the lesson of the 1960's.
Commercial activities have intensified but political arrangements have been
458
1970 REPORT OF THE SECRETARY OF THE TREASURY
affected only when there have been, other, noneconomic motivations. Indeed,
the United Kingdom's decision to seek membership in the Common Market is not
evidence of the infiuence of an economic imperative; the motivating factor there
is primarily political. I believe the reason behind this lesson is simple. Economic
strength is enhanced through expanded reciprocal trade and investment. Increased economic strength permits greater political independence. Whether or
not an economic interrelationship is translated into movements toward political
integration is primarily a function of noneconomic considerations.
It is interesting to look upon postwar econoniic developments in Canada in this
light.
Canada and an interrelated world
How does Canada's position compare with other economies? I think what is
most significant is that through the fruits of Canada's own labor she has achieved
new balance in the form of her trade and substantial industrial capacity here
within her borders. The image of this great land "being hewers of wood and
drawers of water" is just out of date. Today, over one quarter of the labor force
is employed in the manufacturing sector—a fact explaining why automotive
products are fast becoming Canada's largest export. The labor force proportion
in the United States is only a couple of percentage points higher than that in
Canada.
I noted with interest the Economic Council of Canada's Sixth Annual Review
which looked ahead to the middle of the decade. The Council expects exports of
"highly manufactured" products to triple between 1967 and 1975. This would be
on top of a tenfold increase during the previous decade. Over 40 percent of
Canada's total exports are expected then to consist of these highly manufactured
products. Their export value is expected to rise to 10 percent of GNP by 1975,
compared with only 1 percent 10 years to 15 years ago.
The benefits of the increasing economic interrelationship of the world have
clearly fallen to Canada: Canada's trade with the world—and particularly with
the United States—has grown more rapidly than her own economy. As a result
Canadian export trade as a percentage of GNP has increased from 18 percent to
24 percent over the past decade.
Developments in commercial relations have their parallel in the financial
field. Links with external markets are important to Canadian borrowers. It
seenis that last year provinces and municipalities relied almost entirely on foreign markets to meet their borrowing requirements (apart from pension plan
funds). Canadian corporations also rely heavily on nonresidents to provide both
long term and short term funds. Yet the flow is not all one way. Canada is investing and lending abroad as well as at home.
Do not accept just my judgment of Canada's achievements. The International
Monetary Fund reviews the economic progress of its menibers in connection with
quota reviews conducted every 5 years. This permits an adjustment of quotas
in order to reflect relative changes in economies when economic performance
is above average. As a result of this review last year—concurred in by over 100
countries^—Canada's quota was raised by almost 50 percent; the average increase
for members was only 35 percent.
These figures are impressive and I believe they have considerable significance.
They are significant because they respond to those who wonder whether Canada
can increase economic interrelationships with the rest of the world—including
the United States—without assuming unacceptable risks to her national identity.
Perhaps basic distrusts dating back to the old and now dead annexation issue
prompt the question. Nevertheless, the question should be answered as well as
asked. The best answer is that Canada already has increased her relationship
with other economies and particularly with the United States and she has done
this without any sacrifice whatever to her national identity. Indeed, it seems to
me that as this interrelationship has increased Canadian economic prowess has
been enhanced and with that, her self-confidence, her political position and her
national identity.
If you assume, as I do, that economic relations between Canada and the United
States cannot avoid the increased interrelationship other economies of the world
are experiencing—that is, cannot without depriving the people of substantial
benefits—then the issue which faces us is not whether, but how, within the
framework of our existing political predilections, we can fashion our economic
involvement more efficiently. Perhaps I am posing a question that has no single
EXHIBITS
459
answer. More likely, it involves a never-ending examination of ourselves and of
our role in a changing world.
One of the economic constants in this changing world of ours is that our financial systems and considerable segments of our economy are already heavily interrelated. They have become so primarily because sound economic forces have
made them so. We must recognize that the course of Canadian economic development is not unrelated to the course of the U.S. economy. The United States—particularly some border areas—is infiuenced by the Canadian economy too. The
Canadian fiscal and nionetary policies steer the Canadian economy, but it seems
to me that Canada and the United States travel down much the same economic
road more often in step than not. In this sense, our interrelationship is not unique.
There are many countries in Europe about which the same could be said. To my
mind, this just emphasizes the basic principle which must be involved in any
examination of our relationship.
The governing principle has to be that a balanced economic arrangement must
be reached if the interrelationship is to prove viable. In tinies past, long term
ecpnomic relationships have survived in an unbalanced form. We have seen extractive industries involving production in one country with fabrication and
processing in another. A viable relationship cannot be built upon those terms
today. Old relationships of that type are bound to change.
We have a recent example in the United States, the outcome of which has
not been particularly happy. I refer to our sale of unprocessed logs from the
Pacific Northwest to Japan. Our efforts to permit U.S. mills to fabricate board
and sell abroad encountered restrictive import and buying practices. The ability
to deliver lumber at substantially lower prices was not the prevailing consideration. Our Congress took the matter into its own hands and imposed export
controls on raw logs. This is an example of legislative action responding to understandable frustrations in the private sector. British Columbia avoids a problem
of this particular type by concentrating processing in the Province. We in the
United States understand the issue too: while we are anxious to develop and
export the resources of Alaska, we cannot forget the need to create jobs in that
area. But balanced arrangements are not easy to achieve. They require a willingness to accept the responsibilities of the multilateral world—in order to avoid
unsustainable situations of one party enjoying substantial benefits with disproportionately few costs.
The principle of balance in economic relations must recognize that a demand
without a related supply is unsatisfactory just as a supply without a related
demand is unsatisfactory. The seller needs the buyer and the buyer needs the
seller. Once the tactic of bargaining for maximum advantage is set aside for
more realistic and enduring arrangements, then economic accords can be reached.
This principle has not always guided U.S. economic negotiations in the postwar
years but I doubt very much if it will not be the guiding principle in the future.
For those who doubt this last point, let me remind you that in the early days
when the United States gave foreign aid, we structured it in such a way that
procurement took place outside the United States. Of course, it has been some
time since we have done that and we have passed through the phase of restricting procurement to the United States. Today, however, we are prepared to negotiate multilaterally the untying of bilateral aid on the condition that all other
donor countries also subject themselves to the identical disciplines of worldwide
competitive bidding. A unilateral gesture in this direction by the United States
would not satisfy the principle of balance.
Canada has benefited from this earlier attitude. For example, some years ago
the U.S. Government gave a 50-percent preference to domestic suppliers of defense
equipment. We extended this same preference to Canadian suppliers expecting
to create a balance between the two countries in defense procurement. It has
not worked out that way. There are other examples, in the financial field, for
instance.
But the point of my comments is not to review the past but to express what
I view will have to be the guiding principle for the future. You are concerned
about jobs in your country. We are concerned about jobs in ours too. Each of us
is concerned about national feelings and each of us is anxious to enhance the
economic well-being of our people. Balanced arrangements between us can help
us both to achieve this objective. No arrangement other than one which balances
the benefits and costs satisfies this common and minimum objective.
397-702 0—71
31
460
1970 REPORT OF THE SECRETARY OF THE TREASURY
What are some of the elements we should keep in mind as we look ahead to our
hope for mutually beneficial arrangements in this decade?
It might be a familiar outline to this audience if, in responding to this question, I were to speak in terms of supply, demand, and the role of government.
Governments—all of them—will be occupied throughout this decade with calls
upon their financial resources far in excess of revenues. Each will be greatly concerned with the problem of setting priorities and rationing funds. The calls upon
these resources will grow geometrically because social capital investment, not
normally associated with private enterprise endeavors, will rank higher on our
list of priorities. Established governmental programs will be reexamined to see
if they are relevant to the present day. This process can only be healthy for a
country.
The economic planners in government will continue to seek the appropriate
relationship between employment, growth, and reasonable price stability. We
are all becoming a bit more humble about the ability to call the shots exactly
on economies, large or small. Statistical information lags, inforniation dissemination, as well as differences and errors in judgment, compound the problem. The
1970's will offer fewer perfect batting averages than we dream about, but I
suspect achievements high above what our critics predict. This problem of balancing priorities within a national economy will be experienced in all of the countries of the world. With the differing relative values nations assign at a given
time to the employment, growth, and stability equation, imbalances in international payments must be expected as a natural function of the system. Our understanding of this, our institutional framework for dealing with it, and perhaps an
increased readiness to take necessary action in a timely manner, should make
the 1970's less accident prone than the end of the 1960's.
Looking ahead, the supply factor in the economic equation will play "follow
the leader." The leader will be demand. In a predominantly buyers' market situation, it will not be the strain of plant capacity or inadequacy of available
services which will dominate investment decisions and directors' meetings.
Demand, especially the changing nature of demand, is the economic phenomenon which we are now experiencing. ^
I come North from a troubled country. The issues over which my country is
agonizing are fundamental issues. They are posed in moral terms. Some are
posed in eternal terms. America is going through a reexamination of its values
and a self-appraisal of its conscience. The gyrations of the process may distract
many, and many especially in Canada. But I for one am heartened that our
society and our political systeni are viable enough to sustain, indeed benefit from
just this type of concern. How could one not recognize the positive elements in
this turmoil? The debate on Vietnam is not whether we get out, but how. The
concern with our universities is not one of whether education is desirable but
whether the school programs are relevant to needs students now feel. The concern
for minorities is not whether the Nation is moving in the direction of increasing
their share of our society but whether we can move faster. The issue on communications is whether balanced reporting is provided. The concem over television is about the impact of violent shows upon our children, and whether there
are enough meaningful shows for adults.
The time to worry is when people are afraid to ask these questions. The time
to worry is when there is no official concern or response.
This mood and this concem in the United States is not peculiar to my country.
The value and the benefits of reexamination are known to many peoples.
In economic terms, this new element in demand means that an increasing
number of people refuse to equate change with progress. These new values mean
that the consumer will not seek "more" but "better." Increasingly, the public
is not concerned with "having" but with his own "state of being." The search
for a better quality life—an age-long quest of the few—is becoming a dedication
of the many.
I believe we can now look back upon the long developing and supremely important preoccupation with population growth as an early expression of the
search for a better life. With less need to satisfy growing numbers, greater
effort can be directed towards improving the quality of life.
Environmental needs will have to be satisfied at an accelerated rate and I
would be surprised if corporate management does not respond to these factors.
Not only as businessmen but as consumers themselves they will see the broad
consensus that is developing for a better quality of life and will translate it
EXHIBITS
461
meaningfully into product design and service delivery. The demand ingredient
is changing and with this change the definition of optimum growth may take
on a new dimension. It does not seem to me that a country will sacrifice in
the future human values and social obligations in a one-tracked pursuit of
growth as measured in the traditional quantitative manner.
Perhaps in no better place than in our common aspirations for an improved
quality of life can Canada and the United States find new understanding. The
interrelation of our life here on the North American continent is nowhere more
evident than in our environment. Rivers that Start in Canada end in the United
States. Air that is polluted in the United States travels North. Surely anything
but a common approach to these basic issues shortchanges our people. In this
area, as we have found in the financial area, we must work together. So too,
in the comniercial area will the 1970's find the United States and Canada searching for arrangements involving balanced benefits, responsive to our respective
national needs.
Exhibit 52.—Statement of the U.S. Treasury, August 8, 1969, concerning the
devaluation of the French franc
The action of the Government of France in reducing the external value of
the franc represents an adjustment to economic developments in France during
the past year. The amount of devaluation—11.1 percent—is the aniount discussed
when finance ministers of the Group of 10 countries met in Bonn last November.
This adjustment can be accommodated within the framework of existing
exchange rates.
This action will not affect the value of the U.S. dollar.
Exhibit 53.—Statement of the U.S. Treasury, October 24, 1969, on revaluation
of the German mark
The Treasury welcomes the announcement by the German authorities of their
decision to establish a new par value for the mark at $0.2732, 9.29 percent above
their previously established par. Today's action by the German governnient
should resolve in a constructive manner the principal cause of uncertainty that
has existed in the exchange markets.
Exhibit 54.—Press release, December 24, 1969, announcing extension of the
exchange stabilization agreement between the United States and Mexico
Secretary of the Treasury David M. Kennedy and the Ambassador of Mexico,
Hugo B. Margain, have exchanged letters extending the $100,000,000 Exchange
Stabilization Agreement between the United States Treasury, the Bank of Mexico,
and the Government of Mexico signed on December 21, 1967, for a 2-year period
ending December 31, 1971.
This exchange of letters represents a continuation of the stabilization arrangements between the United States and Mexico which have been in effect since
1941, and have proved beneficial to the financial relationships between the two
countries.
Exhibit 55.—Press release. May 15, 1970, announcing the U.S. purchase of $150
million in foreign currencies from the Intemational Monetary Fund and the
sale of $20 million of Special Drawing Rights
The Treasury Departnient announced today that the United States is purchasing $150 million in foreign currencies from the International Monetary
Fund, consisting of the equivalent of $90 million in Belgian francs and $60
million in Netherlands guilders. In addition, the United States is selling $10
million of Special Drawing Rights (SDR) each to Belgium and the Netherlands.
462
1970 REPORT OF THE SECRETARY OF THE TREASURY
These transactions have been undertaken for the purpose of completing the
repayment of short-term swap drawings made by the Federal Reserve System
in 1969 and early 1970.
The $150 million IMF purchase represents the use of a small amount of the
net creditor position in the Fund which the United States has accumulated in
substantial size since the end of 1968. Following this drawing, the U.S. reserve
position in the IMF will be $2,360 million, including $1,070 million in its creditor
or "super gold tranche" position.
The sale of SDR, the first such use by the United States, has been undertaken
under provisions of the Fund Agreement which enable a country to use its SDR
to purchase its own currency directly from other countries with the agreement
of the latter. Following these transactions, U.S. holdings of SDR will be $915
million, including the $867 million allocated to the United States on January 1,
1970, and $48 million acquired subsequently in international transactions.
Exhibit 56.—Other Treasury testimony published in hearings before congressional committees, July 1,1969—June 30,1970
Secretary Kennedy
Statement published in hearings before the Committee on Foreign Relations,
U.S. Senate, 91st Congress, 2d session, on behalf of legislation relating to the
International Monetary Fund, the Intemational Bank for Reconstruction and
Development, and the Asian Development Bank, May 6, 1970, pages 9-29.
Under Secretary for Monetary Affairs Volcker
Statement published in hearing before the Subcommittee on International
Finance of the Committee on Banking and Currency, House of Representatives,
91st Congress, first session, on recent international financial and monetary development, August 6,1969, pages 2-26.
No. 217, REVISION 1, JUNE 30, 1970—ESTABISHMENT OF CONSOLIDATED FEDERAL
LAW ENFORCEMENT TRAINING CENTER
1. Authority and Establishment
By virtue of the authority vested in me as Secretary of the Treasury, including
the authority in ithe Government Employees Training Act, 5 U.S.C. 4101-4118,
as implemented by Executive Order 11348 of April 20, 1967, and Reorganization
Plan No. 26 of 1950, I hereby reaffirm the establishment of the Consolidated
Federal Law Enforcement Training Center as an organizational entity within
the Department of the Treasury to function as an interagency training facility,
and place it under the supervision of the Assistant Secretary (Enforcement and
Operations).
2. Center Functions
The Consolidated Federal Law Enforcement Training Center shall:
a. Serve as an interagency law enforcement training center.
b. Provide necessary facilities, equipment, and support services for conducting
recruit, advanced, specialized, and refresher law enforcement training for personnel of participating Federal agencies, including:
(1) Budgeting for and administering funds for construction, maintenance and
operation of the Center;
(2) Housing, feeding, and providing recreation programs and administrative
services for students.
c. Provide support, administrative, and educational personnel for common
training courses to:
(1) Consolidate requirements of participating agencies and develop proposed
curricula;
(2) Develop content and teaching techniques for courses:
(3) Instruct and evaluate students.
d. As an interagency training facility, provide training to other eligible
persons.
EXHIBITS
463
e. Administer the current Treasury Law Enforcement School for as long
as that school is found necessary.
3. Responsibilities of the Director
Under the supervision of the Assistant Secretary (Enforcement and Operations) the Director of the Center shall:
a. Exercise responsibilities prerequisite to initiating full Center operations at
the earliest date, including the development of detailed plans within the guidelines established by the Congress for the design and construction of Center
facilities.
b. Be responsible for the effective and efficient performance of the functions
of the Center, including.
(1) Financial management, including planning, programming and budgeting
for the Center, and fiscal operations;
(2) Administrative managment, including staffing and managerial services;
(3) Development of the internal organization of the Center, including the
designation of subordinate divisions.
4. Authority of the Director
a. The Director of the Center shall have all the authority which has been
delegated to heads of bureaus by Treasury orders and other issuances of the
Office of the Secretary and which is necessary for the performance of his
responsibilities, and the authority to redelegate such authority.
b. In the absence of the Director, the Deputy Director shall have the authority
of the Director.
5. Center Operations
The Department of the Treasury is the Executive Agency for operating the
Center and serves as the established point of authority for implementation of
Federal regulations and policies having government-wide application. Within
this concept:
a. AU employees of the Center staff will be appointed under the authority of
the Secretary of the Treasury and shall be employees of the Department of the
Treasury;
b. Center operations will be financed by a separate appropriation to the Department of the Treasury to be used to pay costs of salaries, equipment, and other
expenses in connection with
(1) Administration.
(2) Maintenance and operation of the physical plant (including dormitories
and dining facilities).
(3) Conducting common training courses.
(4) Operation of the laboratories, library, and other support services.
(5) Research conducted in law enforcement curriculum and training methods.
c. The Office of the Secretary will provide staff support and assistance, related
to:
(1) Organizational structure, management systems, and administrative procedures ;
(2) Staffing patterns, manpower utilization and control, and personnel administration ;
(3) Design, construction, and maintenance of facilities; and
(4) Financial management systems and budgetary processes, including planning, programming and budgeting.
6. Transfer of faciUties
The personnel, equipment, records, supplies, and any remaining funds heretofore used or available for use in the establishment of the Center and in the
conduct of the Treasury Law Enforcement School are transferred to the Center,
without loss of rights or status possessed by such personnel.
7. Effect on prior Treasury Orders
This order supersedes Treasury Department Order No. 217 of March 2, 1970,
which is hereby rescinded. The Office of Law Enforcement Training established
by Treasury Order 147 (Revision 3) ishereby abolished.
Effective date: This order is effective as of July 1,1970.
DAVID M. KENNEDY,
Secretary of the Treasury,
464
19 70 REPORT OF THE SECRETARY OF THE TREASURY
Gold and Silver Operations
Exhibit 57.—Statement by General Counsel Eggers, October 1, 1969, before the
House Banking and Currency Committee, on H.R, 13252, the coinage act of
1969
I welcome this opportunity to urge the prompt enactment of H.R. 13252, the
Coinage Act of 1969. Before setting forth the reasons why the Treasury Department considers the prompt enactment of this legislation to be strongly in the
public interest let me briefly review the procedures under which the Administration's coinage legislation was developed.
In March of this year Secretary Kennedy established a special Task Force of
Treasury officials to review all major silver and coinage issues and recommend
appropriate administrative actions and where necessary new legislation. I had
the honor to act as Chairman of this group. In early May the Task Force completed its study and presented a report to the Secretary outlining its
recommendations.
The recommended program was then reviewed by and received the full approval of the Joint Commission on the Coinage, a nonpartisan body established
by law to advise the President and the Congress on silver and coinage matters.
As you know, this 24-member Commission includes 12 Members of Congress, the
Chairman, and ranking minority member of the Senate Banking and Currency
Committee, four members of the Senate appointed by the President of the Senate,
the Chairman and ranking minority member of the House Banking and Currency Committee, and four members of the House of Representatives appointed
by the Speaker of the House of Representatives, four members from the executive
branch—the Secretaries of the Treasury and Commerce, the Director of the
Budget, and the Director of the Mint, and eight public members appointed by
the President.
The administrative actions endorsed by the Commission were immediately put
into effect by Secretary Kennedy. These were a lifting of the coin melting ban
and a reduction in the weekly sale of silver through the GSA from 2 million
ounces to 1^/^ million ounces. The legislation endorsed by the Commission is now
before your Committee as H.R. 13252.
Under provisions of this legislation the Secretary of the Treasury would be
granted authority to:
(1) Mint a nonsilver cupro-nickel half dollar;
(2) Mint a nonsilver eupro-nickel dollar coin ; and
(3) Transfer the approximately 3 million rare silver dollars now held in the
Treasury to the Administrator of General Services for sale to the public in the
manner recommended by the Joint Oommission on the Coinage.
The Administration's request for authority to mint a nonsilver half dollar is
based on the conclusion that there is an important commercial need for an adequately circulating half dollar that can only be met through the minting of a
nonsilver coin. I think the most convincing argument for granting the Treasury
this new authority is the fact that only a very small percentage of roughly 1^/4
billion silver half doilars (both 40 percent and 90 percent silver) minted since
1963 are actually circulating.
Well over 200 million ounces of silver have already been used to mint this
coin. This is equal to the total amount of silver mined in the United States since
1963. As Secretary Kennedy pointed out in his recent statement to the Coinage
Coinmission the 40-percent silver half dollar, on our past experience, is simply
a losing proposition. The realistic choice we face is either to abandon this coin
altogether or mint it of the same cupro-nickel clad material now used in dimes
and quarters. We strongly recommend the latter alternative.
A second major provision of the Administration's coinage bill would authorize
the Secretary of the Treasury to mint cupro-nickel dollar coins of the same clad
material now used in dimes and quarters. Before making this recommendation
the Treasury gave very careful consideration to the composition of the new dollar
coin which we intend will bear a portrait of President Dwight D. Eisenhower.
The principal issue was whether the coin should contain silver or be minted
of the cupro-nickel clad material used in other coins. Here are the major reasons
why we concluded that a cupro-nickel dollar coin is strongly in the public
interest.
1. Only a nonsilver dollar coin would actually circulate to meet commercial
EXHIBITS
465
needs, which of course, is the hasic purpose of coinage production.—^^The experience with the Kennedy half dollar indicates conclusively that silver coins will
not freely circulate in significant quantity. The Treasury Task Force on Silver
Policy and the Joint Coinage Commission both concluded that there is a commercial need for a circulating dollar coin that can only be met by a nonsilver
coin.
2. The nonsilver dollar covn would mean a fa/r greater monetary retum to the
Federal Government than would he realized hy a 40-percent silver coin.—One
bill now before the Congress which would authorize the minting of 300 million
40-percent silver dollar coins over a three-year period would mean a total return
through seigniorage of roughly $160 million. By contrast, the monetary gain by
producing the same number of nonsilver dollar coins under the Administration
bill would be about $290 million. In addition, the Treasury could obtain as much
as $50 million more in revenue from the continued sale of silver to the GSA, or a
total of well over $300 million.
Moreover, if the cupro-nickel dollar coin were authorized the Treasury would
not be limited to minting only 300 million of these coins. When production resources are in full gear that number could be minted in a single year, depending
upon public demand. The total seigniorage therefore, over a 3-year period would
unquestionably be far greater than if the dollar coin contained silver. And I
might add that the seigniorage return to the Government reduces its public
borrowing needs by an equivalent amount.
However, it should be emphasized that the major purpose of our coinage
system is not to maximize seigniorage but to mee^t the country's need for an
adequate supply of circulating coins. Seigniorage is simply the difference between
the face value of a coin and the cost of its component materials. Including silver
in a coin reduces seigniorage since silver is obviously more costly than copper
or nickel. Although those who advocate a silver dollar assert that this would
be equivalent to selling the silver for $3.16 per ounce it is no more logical to
put a sale price on the silver in the coin than it would be to compute a sale
price on the copper and nickel in dimes and quarters.
3. Using our surplus silver for dollar coins would significamtly increase our
halance-of-pa/yments deficit.—^Current annual domestic silver production is less
than 40 million ounces compared with industrial consumption of about 145
million ounces. If weekly GSA silver sales are halted because all our remaining
surplus silver is reserved for dollar coins, then silver imports for industrial
use will have to increase substantially. We estimate that the resulting adverse
effect on the balance of payments in the first year could be as much as $150
million.
4. Using our surplus silver for dollar coins would mean higher prices for
important consumer products.—Although the Treasury has taken a neutral position with respect to the price of silver, it should be realized that if Treasury
silver sales were halted the price of silver w'ould probably rise significantly.
The principal industrial uses of silver are for film and electrical products. When
the price of silver rose from the fixed $1.29-plus per ounce to over $1.80 an ounce
in 1967, the major film producers increased their prices substantially. A further
increase in the price of silver would very likely mean higher costs to millions of
consumers of film products including X-ray film. Similar effects would be felt
by users of batteries and electrical products. It should be realized that the
ultimate users of silver include virtually the entire American public.
5. The Administration hill is consistent unth the recommendation made hy
the Joint Connmis sion on the Coinage.—^The Joint Commission on the Coinage
is a nonpartisan body established by law to advise the President and the Congress on major coinage issues. The 'Commission carefully considered this matter
and overwhelmingly recommended the minting of a nonsilver dollar coin. We
think the Commission's recommendation is well founded and that legislation
authorizing cupro-nickel clad half dollar and dollar coins is in the best interest
of the public as a whole. The portrait of President Eisenhower on a dollar coin
would include him among the select group of great Americans honored on other
circulating coins.
The enactment of H.R. 13252 in addition to providing the economy with
needed circulating coinage would also be a major contribution tov^^ard alleviating
the unstable conditions that have plagued the silver market for over 2 years.
The sharp and largely irrational movements in silver prices both up and down
have been stimulated by rumors and uncertainties regarding anticipated Gov-
466
1970 REPORT OF THE SECRETARY OF THE TBEASURY
ernment actions. We think the enactment of this bill will end this uncertainty
by finally enabling the Treasury to clearly set forth just how much surplus
silver it holds and how long and at what rate this silver will continue to be
sold through open competitive bids.
As of August 31, 1969, the Treasury stock of silver bullion totaled 85 million
ounces. Of this total about 40 million ounces was in a form readily available
for market sale. In addition we estimate that the Treasury's inventory of silver
in coins that will be melted into bars totals about 60 million ounces, a figure we
consider reasonably accurate within a 10 million ounce range. As of now, reflecting estimated changes in September, the Treasury's total stock of silver, including silver coins, is approximately 135 million ounces. This figure is entirely
separate from the 165 million ounces of silver already set aside in the defense
stockpile.
The enactment of H.R. 13252 would make surplus virtually all of the Treasury's remaining stock of silver except for the relatively small amount that would
be required for minting of half dollars in a transition period. We estimate that
the readily available silver surplus of about 100 million ounces is adequate to
continue sales through the GSA at the current rate through 1970. In this period
of adjustment producers and users of silver will have ample opportunity to gear
their operations to eventual complete independence from Govemment sources of
supply.
Let me now turn to the third major provision of H.R. 13252 which would
authorize the transfer of the approximately 3 million rare silver dollars now
held in the Treasury to the Administrator of General Services for sale to the
public in the manner recommended by the Joint Oommission on the Coinage.
The value of these coins varies from month to month but at the present time
we estimate that their numismatic value in the market ranges up to about $170
per coin depending upon the year of issue.
Since the summer of 1967 several silver dollar disposal plans have been discussed at length by the Joint Comniission on the Coinage. At the July 15, 1968,
meeting an interagency Committee with members from the Treasury, the GSA,
and the Smithsonian Institution was directed to study all the plans and present
for the Commission's consideration, a plan which would (1) insure the public
a widespread opportunity to obtain the coins, (2) obtain the maximum return
on disposal for the Treasury, and (3) conduct the disposal operation in Government rather than private hands.
The Coinage Commission recommended such a plan, and the Treasury Task
Force on Silver and Coinage Policy strongly endorsed the plan under which
these remaining rare silver dollars would be disposed of by the General Services
Administration through a shelf sale at approximately their current numismatic
value.^ The plan limits sales to any one buyer to one coin of each year of
issue, or a maximum of 10 coins. The buyer may tender a bid at a price higher
than the posted price, and in the event orders for any one year of issue should
exceed the supply, these bids will determine who will get the coins.
The major reasons for recommending your approval tp go ahead with this
plan are (1) after considerable study of many plans it appears to be the most
equitable for both the public and the Government, and meets the requirenients
set forth by the Commission, (2) it has received much publicity and seems to
be acceptable to a majority of the public and the numismatic experts with whom
the interagency Committee consulted prior to its recommendation of the plan
to the Committee, and (3) the appropriation required by GSA to carry out this
plan would be sniall compared with the probable total receipts to the Treasury.
In summary, the Treasury believes that the prompt enactment of H.R. 13252
would be a major contribution to a more effective coinage systeni, facilitate an
orderly transition of the silver market to complete dependence on private sources
of supply, and make it possible for us to pay fitting tribute to a great American.
Exhibit 58.—Remarks by Assistant Secretary Rossides, October 20, 1969, before
the 1969 Mining Convention of the American Mining Congress, San Francisco,
California, on silver
I should like to express my appreciation to the Anierican Mining Congress
and to your Cochairmen, Mr. Strauss and Dr. McLaughlin, for inviting me here
to talk about silver. Since the founding of this great organization in 1898 the
^ Silver Dollar Disposal Plan Fact Sheet, IMay 20^, 1969.
EXHIBITS
467
American Mining Congress has worked vigorously for safer and more efficient
mining practices as well as playing a prominent role in all the major policy
decisions which have kept the Government an active participant in the silver
market. The Treasury has always welcomed your advice and now that we are
approaching the end of that phase of the long monetary history of silver, I
think it appropriate that we again exchange views.
At today's meeting I will present the Treasury's view of an appropriate silver
and coinage policy during this sensitive period when the market is making its
final adjustment to complete independence from the Government as a buyer or
seller of silver.
Historical setting
Before outlining the Treasury's current silver and coinage policy aud the
decisionmaking process by which it was reached, I would like to very briefiy
review the events of the past decade. I think this is essential to understanding
today's silver issues.
The series of events which will culminate in the final withdrawal of the
Government from the silver market began in the late 1950's. At that time the
Treasury held huge stocks of silver as a result of heavy purchases to sustain the
silver price during the long period when the mines were producing far more
silver than could be used for coinage and industrial needs. In December 1959
Treasury silver holdings totaled more than 2 billion ounces, nearly all of which
was held as reserve against silver certificates.
About this time two trends of major significance to the future of silver
became evident. The first was the rapid acceleration in the demand for coins
under the infiuence of an expanding economy and growing use of vending
machines. The second key event was that for the first time in modern history
rising industrial demand for silver exceeded current production both on a domestic
and a worldwide basis. The growing gap between production and consumption
was made up in large part from Treasury stocks of free silver which dropped
by about 200 million ounces from April 1959 to November 1961, when sales were
susperided.
At the same time the Gpvernment faced a rapidly growing need for silver
to increase the circulating coinage. Obviously this supply could not come from
domestic production which was already inadequate to meet industrial demand.
In this situation the only practical way to obtain silver for coinage needs
was through the gradual retirement from circulation of silver certificates thereby
freeing the silver held as a reserve for these certificates. It was thought at that
time that the retirement of silver certificates would make available enough free
silver to meet the Treasury's coinage needs for many years into the future.
Unfortunately events did not work out that way. Over the next few years
the tremendous production of coins required to keep pace with the increasing
demands of the economy cut deeply into the Treasury's silver supply. In 1962 and
1963 nearly 200 million ounces of Treasury silver were used for coinage and the
demand was still rising. Moreover, by mid-1963, under pressure of private market
forces, the price of silver had risen to its monetary value of $1.29 per ounce.
A continued price rise much beyond that point would have made it profitable
to melt the subsidiary coins for their silver content and thereby threaten the
continued circulation of our silver coinage. To prevent such a crisis the Treasury
in July 1963 resumed the open sale of silver at the fixed price of $1.29 per ounce.
Over the next 2 years an adequate volume of silver coinge was maintained in
circulation but only at the cost of huge amounts of Treasury silver. In 1964
and 1965 production of silver coins required over 500 million ounces of Treasury
silver. During the same period it was necessary to sell an additional 230 million
ounces in the open market in order to keep the price at a level which would
prevent a wholesale withdrawal of coins from circulation. In short, from 1962
to 1965 the Treasury had to use nearly 970 million ounces of silver in order to
maintain an adequate volume of circulating silver coinage. This total was roughly
equivalent to 25 years annual mining production in the United States.
By this time it was obvious that the use of silver in United States coinage for
very long into the future was no longer possible. Recognizing this, the Congress
in 1965 authorized the production of nonsilver dimes and quarters, retaining
only the 40-percent silver half dollar as a link to the past.
But the coinage crisis was not over by a long shot. The task now was to produce, during the relatively brief remaining period when it would be possible to
468
1970 REPORT OF THE SECRETARY OF THE TREASURY
keep an adequate amount of silver coins in circulation, enough cupro-nickel dimes
and quarters to meet fully the economy's circulation needs.
To the everlasting credit of the men and women of the Treasury's Bureau of
the Mint this race was won, although the finish was very close. By May of 1967,
when the soaring demand for purchases of Treasury silver forced the final halt
to open market sales at the fixed $1.29 price, enough cupro-nickel coins had been
produced to tide us over the crisis.
But again the cost in Treasury silver had been high. In 1966 and 1967 another
100 million ounces of silver was used for the Kennedy half dollar and it was
necessary to sell nearly 300 million ounces to maintain the $1.29 price. This
brought the total amount of Treasury silver used from 1962 through mid-1967 in
the attempt to maintain an adequate circulating silver coinage to approximately
1.3 billion ounces.
In August 1967 the sale of surplus Treasury silver by the GSA through weekly
competitive bids was begun and these sales have continued until the present time.
Sales under this program to date have totaled some 220 million ounces. To round
out this historical resume, just over 100 million ounces of silver were exchanged
for silver certificates during the year preceding the redemption cutoff in June
1968.
The Task Force Report
With this as background, let me now turn to the situation faced by this Administration early this year and review with you the process by which we arrived
at our current policy position on silver.
In March 1969 Secretary Kennedy established a special task force of Treasury
officials to review all major silver and coinage issues and recommend appropriate
administrative actions and where necessary new legislation. I was a member of
this group.
The Task Force took as its hasic premise that a sound silver policy program
shpuld facilitate an orderly withdrawal of the Governnient as a participant in
the silver market consistent with the following essential needs: (1) a strong and
efficient monetary system, (2) niaximum feasible fiscal return to the taxpayers,
(3) minimuni infiationary impact on consumer prices, and (4) minimum adverse
impact on the balance of payments.
The Task Force first gave attention to determining what portion of the Treasury's supply of silver could be considered surplus to the Government's need
over the foreseeable future. We concluded that the total amount of silver available to the Treasury in April of this year that was not directly committed for
any future need was about 140 million ounces. This figure was over and above
the 165 million ounces of silver which by law had been transferred to the strategic
stockpile in June 1968.
In early May the Task Force completed its study and presented a report to the
Secretary outlining its recommendations. The recommended program was then
reviewed by and received the full approval of the Joint Commission on the Coinage, a nonpartisan body established by law to advise the President and the
Congress on silver and coinage matters. This 24 member Commission includes 12
Members of Congress, four members from the executive branch, and eight public
members appointed by the President.
The administrative actions endorsed by the Commission were immediately put
into effect by Secretary Kennedy. These were (1) lifting of the coin melting ban
and (2) a reduction of the weekly sales of silver by the GSA from 2 million
ounces to iy2 million ounces.
The Treasury's action in lifting the coin melting ban in May of this year was
in our judgment a sound one. At that time the coin melting ban no longer served
the purpose cited when it was first put into effect in May 1967, and I might add
that a ban on melting coins was without precedent in our nation's history. The
original purpose of the ban was to keep the silver dimes and quarters circulating
during a period in which there was doubt that supplies of clad coins were fully
adequate for commercial needs. But by May of this year virtually all the silver
coins had disappeared from circulation and the supply of clad coins was fully
adequate for commercial needs.
A secondary purpose of the coin melting ban was to enable the Treasury to
build up its reserve of silver coins. However, by May of this year the remaining
supply of outstanding silver coins was locked up in private hoards and the inflow
to the Treasury had run dry. It is interesting to note, by the way, that lifting the
EXHIBITS
469
coin melting ban was one of the few issues on which the associations representing
both silver users and producers were in accord.
Another important niatter to which the Task Force gave careful attention was
the question of Treasury silver sales through the General Services Administration. The first consideration was whether the Treasury should continue to sell
any silver through the GSA. On this the Task Force recommended that the sale
of silver be continued and that it be made clear as nearly as possible how long
these sales would be maintained. Let me list a few of the major reasons why this
conclusion was reached.
1. The silver being sold is not needed by the Government. The 165 million
ounces already transferred to the defense stockpile has been established by the
Congress as ample for any future emergency industrial need.
2. The continued sale of silver through the GSA has a favorable effect on the
balance of payments. If silver sales were halted, net silver imports over the
next year would have to rise by about 75 million ounces. This would increase
the balance of payments deficit by perhaps $150 million.
3. Profits on silver sales would add substantially to the Treasury's revenue
and since August 4,1967, this profit has totaled over $100 million.
4. Continuation of Government silver sales would permit the market to adjust
in an orderly manner to the inevitable point when the Government must cease
to be a supplier, which we now think will be about the end of 1970.
The Task Force then turned to the question of an appropriate rate for sale
of the Treasury's silver and concluded that the weekly amount of silver offered
through the GSA should be reduced from 2 millipn ounces to l^/^ million ounces.
The main justification for this action was the belief that since the Treasury
would have to halt sales in less than 2 years, a gradual cutback in the amount
offered would help the market make an orderly adjustment to this fact. It was
thought preferable to maintain the l^^ million ounce rate rather than add
further uncertainty by phasing out sales at gradually reduced levels.
We recognized that if the intent to maintain the 1% million ounce sales figure
were made clear, participants in the silver market—^producers, users, and investors—would have full knowledge of the time and.extent of Government activity in the market. During this transition period the market would have ample
opportunity to make an efficient adjustment to the time when—^like other commodities—the price of silver would be determined entirely by private supply
and demand. We felt that removal of uncertainty regarding the future of the
Government's silver policy would add a stability to the silver market that should
be welcomed by both producers and consumers.
The third administrative action taken by the Treasury with the endorsement
of the Coinage Commission was to open the weekly GSA sale of silver to all
bidders with no restrictions on the use of the silver purchased. Until that time
silver sold by the GSA had to be consumed entirely by domestic industry. This
restriction on the use of the silver was established during a period in which the
prolonged refiners strike had sharply curtailed the domestic supply of industrial
silver. In recognition of the temporary nature of this restriction, the Treasury
ia 1967 had signified its intent to remove it as soon as feasible. In our judgment
this action was long overdue.
Legislative program
I would like now to briefiy outline the legislative recommendations recommended by the Task Force and which iare now under consideration by the
Congress. Provisions of this legislation of interest to this group would grant the
Secretary of the Treasury authority to mint both a nonsilver cupro-nickel half
dollar and a nonsilver cupro-nickel dollar coin.
The Treasury's request for authority to mint a nonsilver half dollar was based
on the conclusion that there is an iniportant commercial need for an adequately
circulating half dollar that can only be met by minting a nonsilver coin. I think
the most convincing argument for granting the Treasury this new authority is
the fact that only a very small percentage of the roughly 1% billion silver half
dollars—both 40-percent and 90-percent silver—minted since 1963 are actually
circulating.
Well over 200 million ounces of silver have already been used to mint this coin.
This is equal to the total amount of silver mined in the United States since 1963.
As Secretary Kennedy pointed out in a statement to the Coinage Commission, the
40-percent silver half dollar on our past experience is simply a losing proposition.
470
1970 REPORT OF THE SECRETARY OF THE TREASURY
The realistic choice we face is either to abandoh this coin altogether or mint it
of the same cupro-nickel clad material now used in dimes and quarters. We prefer
the latter alternative.
The second major provision of the coinage bill would authorize the Secretary
of the Treasury to mint cupro-nickel dollar coins of the same clad material now
used in dimes and quarters. Before making this recommendation we gave very
careful consideration to the composition of the new dollar coin which would bear
a portrait of President Eisenhower. The principal issue was whether the coin
should contain silver or be minted of the cupro-nickel clad material used in other
coins. This is still an unresolved issue since on last Wednesday the House of
Representatives voted for a cupro-nickel dollar coin just a few hours after the
Senate voted for a 40-percent silver dollar. This issue will be resolved in the near
future.
There are many sound reasons why we believe that a cupro-nickel dollar coin
is strongly in the public interest:
1. The primary purpose of coinage is to effectively serve as a medium of
exchange, to huy goods and services. Only a nonsilver dollar coin would actually
circulate.—The experience with the Kennedy half dollar demonstrates that silver
coins will not circulate in significant quantity. The Treasury and the Joint Coinage
Commission both concluded that there is a comniercial need for a circulating
dollar coin that can only be met by a nonsilver coin.
2. Over the next fiscal year the nonsilver dollar coin would mean a greater
monetary return to the Federal Government than would he realized hy a 40-percent silver coin.—S. J. 158 which has passed the Senate would authorize the minting of 100 million 40-percent silver dollar coins a year for 3 years or until the
supply of remaining silver is exhausted. Each 100 million of these coins would
mean a return through seigniorage of about $52 million. By contrast, the monetary gain by producing each 100 million nonsilver dollar coins would be about $95
million. In addition, if the remaining silver surplus is not used for coinage the
Treasury could obtain as much as $50 million more in revenue in 1970 from continued sales through the GSA.
Moreover, if the Congress acts now to authorize the minting of a cupro-nickel
dollar coin, the Treasury can move very quickly to mint this coin in volume
production, depending, of course, on public demand and available appropri>ations
We could mint as much as 300 niillion of these coins by the end of 1970. The
total seigniorage, at least in 1970, would certainly be greater for a cupro-nickel
than for a 40-percent silver dollar coin. Over a 3-year period the seigniorage
return on the cupro-nickel coin could approach $1 billion. The advantage to the
public is that this seigniorage return reduces the Government's borrowing needs
by an equivalent amount. However, under the provisions of the coinage biU
passed by the Senate, the minting of a cupro-nickel dollar coin could not begin
until fhe available silver supply is exhausted which might take several years.
However, it should be emphasized that the major purpose of our coinage
system is not to maximize seigniorage but to meet the country's need for an
adequate supply of circulating coins. Seigniorage is simply the difference between
the face value of a coin and the cost of its component materials. Including silver
in a coin reduces seigniorage since silver is obviously more costly than copper or
nickel. Although those who advocate the silver dollar assert that this would be
equivalent to selling silver for $3.16 per ounce, it is no more logical to put a sale
price on the silver in the coin than it would be to compute a sale price on the
copper and nickel in dimes and quarters.
3. Using our surplus silver for dollar coins would sginificantly increase our
balance-of-payments deficit.—Current annual domestic silver production is less
than 40 million ounces compared with industrial consumption of about 145
million ounces. If weekly GSA silver sales are halted because all our remaining
surplus silver is reserved for dollar coins, then silver imports for industrial use
would have to increase substantially. We estimate that the resulting adverse
effect on the balance of paynients in the first year could be as much as $150
million.
4. The final enactment of legislation recommended hy the Treasury in addition
to providing the economy with needed circulating coinage, would also he a major
contribution toward alleviating the unstable conditions that have plagued the
silver market for over 2 years.—The sharp and largely irrational movements in
silver prices both up and down have been stimulated by rumors and uncertainties
regarding anticipated Government actions. We think the enactment of the
EXHIBITS
471
Treasury coinage bill will end this uncertainty by finally enabling the Treasury
to clearly set forth just how much surplus silver it holds and how long and at
what rate this silver will continue to be sold through open competitive bids.
As of September 30, 1969, the Treasury stock of silver bullion totaled about 80
inillion ounces. Of this total about 35 million ounces is in a form readily available for market sale. In addition we estimate that the Treasury's inventory of
silver in coins that will be melted into bars totals about 60 million ounces, a
figure we consider reasonably accurate within a 10 million ounce range. As of
now, the Treasury's total stock of silver, including silver coins, is approximately
140 million jounces. This figure is entirely separate from the 165 million ounces
of silver already set aside in the defense stockpile.
The enactment of the Treasury bill would make surplus virtually all of the
Treasury's remaining stock of silver except for the relatively small amount that
niight be required for minting of half dollars in a transition period. We estimate
that the silver surplus which could be available over the next year is adequate
to continue sales through the GSA at the current rate through the greater part of
1970. At that point the slate would be clean. In this clearly defined period of adjustment producers and users of silver have ample opportunity to gear their operations to eventual complete independence from Government sources of supply.
In summary, the Treasury believes that the administrative actions that have
been put into effect with regard to silver together with the prompt enactment of
the coinage bill recommended by the Treasury will contribute greatly to a more
effective coinage systejn and facilitate an orderly transition of the silver market
to full reliance on private sources of supply.
Exhibit 59.—Press release, June 18, 1970, statement by Assistant Secretary
Rossides concerning the weekly sale of silver through the General Services
Administration.
The Treasury Department will continue to sell silver from its existing stock
at the current rate of 1.5 million ounces per week through November 10, 1970, as
previously announced on May 13, 1970, following the Joirit Coinage Commision
meeting.
Sales of silver recovered from the melting of dimes and quarters will continue
until July 21, 1970. This will be followed by the sale of refined silver bars 996999 fine through September 15. Sales from September 22 through November 10,
1970, will consist of silver bars below 996 fine.
Joint Financial Management Improvement
Exhibit 60.—Memorandum from the President, August 12, 1969, to heads of
Government departments and agencies, on the Joint Financial Management
Improvement Program
In charting the goals of this Administration, I have emphasized the need to
improve the decisionmaking processes of the Federal Government. We must make
our system for delivering program services more effective.
Therefore, I am giving full support to the Joint Financial Management Improvement Program, an indispensable project with a charter to sharpen some of
the tools of management.
Under the leadership of the Comptroller General, the Secretary of the Treasury,
the Budget Director, and the Chairman of the Civil Service Commission, the
Joint Program has promoted many far-reaching improvements in the past. I want
to see achievements in the future that will make management of Government
operations more responsive and efficient.
To get full measure from the resources available to us, we must have all the
necessary management ^information. We must have financial systems that illuminate every level and stage of decisionmaking: from the first-line supervisor to
the President and the Congress, from the long-range forecast to the critical
post-audit. Nothing less will let us go forward with programs that provide the
most benefit for the taxpayer's dollar.
I have previously asked for a vigorous effort to convert to the accrual basis
472
1970 REPORT OF THE SECRETARY OF THE TREASURY
for stating budget revenues and expenditures. That high priority goal dovetails
with the objective of developing effective financial system, including budgeting,
accounting, reporting, and auditing.
I direct the head of each department and agency to join Comptroller General
Elmer B. Staats, Secretary of the Treasury David M. Kennedy, Budget Director
Robert P. Mayo, and Civil Service Chairman Robert E. Hampton, under the
Joint Financial Management Improvement Program, to make the development
of elective financial systems a high priority in strengthening administrative
practices. Without this effort, our ability to cope with the needs of the 1970's
will be seriously impaired.
The challenge is there. I call upon each Federal manager to accept it as a personal challenge. Demand better financial information and use it.
Organization and Procedure
Exhibit 61.—Treasury Department orders relating to organization and
procedure
No. 147, REVISION NO. 3, SEPTEMBER 4, 1969.—DISESTABLISHMENT OF THE OFFICE
OF THE SPECIAL A S S I S T A N T TO T H E SECRETARY (FOR E N F O R C E M E N T ) , AND ESTABL I S H M E N T OF THE O F F I C E OF L A W ENFORCEMENT T R A I N I N G
By virtue of the authority vested in me as Secretary of the Treasury, including
the authority in Reorganization Plan No. 26 of 1950:
a. The Office of Special Assistant to the Secretary (for Enforcement) is
hereby disestablished, and its functions and duties are concurrently reassigned
to the Assistant Secretary (Enforcement and Operations) ; and
b. The Office of Law Enforcement Training is hereby established under the direct supervision of the Assistant Secretary (Enforcement and Operations).
Functions and duties assigned to the Assistant Secretary (Enforcement and
Operations) as a result of the above actions include, but are not limited to, the
following:
iServe as principal advisor to the Secretary on all law enforcement matters;
Inform the Secretary fully of all significant developments relating to Presidential protection;
Coordinate all enforcement activities of the Treasury and provide such policy,
functional and technical guidance to enforcement activities as is required to
assure optimum benefits from joint and cooperative utilization of Treasury law
enforcement resources;
lAppraise Treasury enforcement agencies with respect to the overall efficiency,
effectiveness, performance, and integrity of personnel, programs and activities,
and institute any corrective action required;
.Formulate basic law enforcement policy, program, organizational and procedural proposals to effectively and efficiently carry out the Department's national and international law enforcement responsibilities ;
Provide inter-agency and inter-Governmental liaison and representation on
eriforcement matters;
Direct Treasury enforcement training;
Strengthen relationships with Federal, State, and local enforcement agencies;
Serve as United States representative with the International Criminal Police
Organization (INTERPOL). In this capacity he will deal with all questions relating to INTERPOL dues, INTERPOL functions, obligations of membership and
agenda of and representation at INTERPOL conferences and General Assembly
sessions.
In addition, the Assistant Secretary (Enforcement and Operations) is hereby
delegated authority to act on behalf of the Secretary in fulfilling responsibilities
assigned to the Department of the Treasury for establishing and administering
the Federal Law Enforcement Training Center.
The functions and duties herein assigned to the Assistant Secretary (Enforcement and Operations) may, at his discretion, be delegated to subordinates in such
manner as he shall from time to time d i r ^ t .
To effectuate the provisions of this order, I hereby direct the Assistant Secretary (Enforcement and Operations) to draw pn all enforcement facilities of the
Department without limitation, except as to restrictions imposed by law.
EXHIBITS
473
This order is effective immediately. Any previous orders or instructions in confiict with the provisions of this order are hereby amended accordingly. Treasury
Department Order No. 147 (Revision No. 2) and Treasury Department Orders
No. 147-1 through No. 147-6 are hereby rescinded.
DAVID M. KENNEDY,
Secretary of the Treasury.
No. 178-2, SEPTEMBER 29,1969.—DELEGATION OF AUTHORITY TO EXECUTE
AGREEMENTS OF INDEMNITY
By virtue of the authority vested in the Secretary of the Treasury, including
the authority in Reorganization Plan No. 26 of 1950, and by virtue of the authority vested in me as Fiscal Assistant Secretary by Treasury Department Order
No. 190, Revision 6, there is hereby delegated to the Commissioner of Accounts
the authority of the Secretary of the Treasury under section 3b of the Govemment Losses in Shipment Act, 50 Stat. 479, as amended by the Act of August 10,
1939, 53 Stat. 1359 (40 U.S.C. 725), to execute and deliver, on behalf of the
United States, agreements of indemnity to obtain the replacement of any instrument or document which has been received by the United States and subsequently
lost, destroyed, or so mutilated as to impair its value.
JOHN K . CARLOCK,
Fiscal Assistant Secretary.
No. 183, REVISION NO. 5, AUGUST 11,1969.—ORDER OF SUCCESSION
1. Pursuant to Executive Order 10941, dated May 15, 1961, in the case of the
death, resignation, absence, or sickness of the Secretary, the Under Secretary,
and the Under Secretary for Monetary Affairs, the following officers shall, in
the order of succession indicated, act as Secretary of the Treasury until a successor is appointed or until the absence or sickness shall cease:
(a) GeneralCounsel
(b) Assistant Secretaries, appointed by the President with Senate confirmation, in the order in which they took the oath of office as Assistant
Secretary.
2. Under the authority of Reorganization Plan No. 26 of 1950, the order of
succession stated in paragraph 1 above is hereby extended to include the following, after the Assistant Secretaries appointed by the President with Senate
confirmation:
(a) Other Executive Pay Act Officials in the Office of the Secretary, first
in the order of Executive Pay Act levels, then in the order in which
they took the oath of office in their present positions.
(b) Executive Pay Act Officials in Treasury Bureaus, first in the order of
Executive Pay Act levels, then in the order in which they took the
oath of office in their present positions.
(c) The Assistants and Special Assistants to the Secretary at GS-18 in
the order of the dates of their appointments.
(d) Other GS-18 officials in the Office of the Secretary in the order in
which they took the oath of office.
3. Under the authority of Reorganization Plan No. 26 of 1950, the senior
official of GS-15 rank or above from the Office of the Secretary, and in the
absence of such an official, the senior Treasury Bureau Headquarters official of
GS-15 rank or above present at the Treasury Elmergency Relocation Site, is
authorized to perform as Acting Secretary of the Treasury all the duties of the
Secretary of the Treasury whenever, to the best of his knowledge, the Secretary
of the Treasury and all officers authorized under paragraphs 1, 2, and 3 above
to act as Secretary are unable to take action. Seniority shall be determined by
rank and salary level and length of service therein.
4. Under the authority of Reorganization Plan No. 26 of 1950, in the event
all the officers designated in paragraphs 1, 2, and 3 above are unavailable or
unable to take action, the following officers shall, in the order of succession indicated, act as Secretary of the Treasury as required:
(a) Regional Commissioners, Internal Revenue Service, in the order in
which they were appointed as Regional Commissioners.
474
1970 REPORT OF THE SECRETARY OF THE TREASURY
(b) Regional Commissioners, Bureau of Customs, in the order in which
they were appointed as Regional Commissioners.
DAVID M . KENNEDY,
Secretary of the Treasury.
No.
190,
REVISION NO. 7, SEPTEMBER 4, 1969.—SUPERVISION OF BUREAUS AND
PERFORMANCE OF FUNCTIONS IN THE TREASURY DEPARTMENT
1. The following officials shall be under the direct supervision of the Secretary:
The Under Secretary
,The Under Secretary for Monetary Affairs
The Assistant to the Secretary
Director, Executive Secretariat
2. The following officials shall be under the direct supervision of the Under
Secretary:
Assistant to the Under Secretary
Special Assistant to the Secretary (Congressional Relations)
Special Assistant to the Secretary (National Security Affairs)
Special Assistant to the Secretary (Public Aft'airs)
Commissioner of Internal Revenue
Comptroller of the Curreucy
3. The following officials shall be under the direct supervision of the Under
Secretary and shall exercise supervisipn over those offices, bureaus, and other
organizational units indicated thereunder:
A. General Counsel
Legal Division
Office of Director of Practice
Office of Equal Opportunity Program
B. Assistant Secretary (Tax Policy)
Office of Tax Analysis
Office of Tax Legislative Counsel
C. Assistant Secretary (Enforcement and Operations)
Bureau of Customs
Bureau of Engraving and Printing
Bureau of the Mint
Oflice of Law Enforcement Training
United States Secret Service
D. Assistant Secretary for Administration
Office of Administrative Services
Office of Budget and Finance
Office of Management and Organization
Office of Personnel
Office of Planning and Program Evaluation
Office of Security
4. The following officials will be under the direct supervision of the Under
Secretary for Monetary Affairs :
Deputy Under Secretary for Monetary Affairs
Special Assistant to the Secretary (Debt Management)
5. The following officials shall be under the direct supervision of the Under
Secretary for Monetary Affairs and shall exercise supervision over those offices,
bureaus, and other organizational units indicated thereunder:
A. Assistant Secretary (International Affairs)
Office of Administration
Office of Balance of Payments Programs, Operations and Statistics
Office of Developing Nations
Office of Financial Policy Coordination and Operations
Office of Foreign Assets Control
Office of Industrial Nations
Office of International Economic Affairs
Office of International Gold and Foreign Exchange Operations
Office of Latin America
B. Assistant Secretary (Economic Policy)
Office of Debt Analysis
Office of Domestic Gold and Silver Operations
Office of Financial Analysis
EXHIBITS
475
C. Fiscal Assistant Secretary
Bureau of Accounts
Bureau of the Public Debt
Office of the Treasurer of the United States
D. United States Savings Bonds Division
6. The Under Secretary, the Under Secretary for Monetary Affairs, the General Counsel, and the Assistant Secretaries are authorized to perform any functions the Secretary is authorized to perform. Each of these officials shall perform
functions under this authority in his own capacity and under his own title, and
shall be responsible for referring to the Secretary any matter on which actions
should appropriately be taken by the Secretary. Each of these officials will
ordinarily perform under this authority only functions which arise out of,
relate to, or concern the activities or functions of or the laws administered by or
relating to the bureaus, offices, or other organizational units over which he has
supervision. Any action heretofore taken by any of these officials in his own
capacity and under his own title is hereby affirmed and ratified as the action of
the Secretary.
7. The following officers shall, in the order of succession indicated, act as Secretary of the Treasury in case of the death, resignation, absence, or sickness of
the Secretary and other officers succeeding him, until a successor is appointed
or until the absence or sickness shall cease:
A. Under Secretary
B. Under Secretary for Monetary Affairs
C. General Counsel
D. Presidentially appointed Assistant Secretaries in the order in which
they took the oath of office as Assistant Secretary
8. Treasury Department Order No. 190 (Revision 6) is rescinded, effective this
date.
DAVID M. KENNEDY,
Secreta/ry of the Treasury.
No. 191, REVISION NO. 4, AUGUST 11, 1969.—DESIGNATION OF DEPUTIES
1. In addition to other assignments, the Principal assistant to each of the
following officials is designated to serve, at the pleasure of the Secretary, as the
deputy of the principal involved:
Principal
Under Secretary for Monetary Affairs,
General Counsel,
Assistant Secretary (International Affairs),
Assistant Secretary (Tax Policy),
Assistant Secretary (Enforcement and Operations),
Assistant Secretary (Economic Policy),
Fiscal Assistant Secretary,
Assistant Secretary for Administration,
Assistant to the Secretary,
Sipecial Assistant to the Secreta-ry (Public Affairs),
Special Assistant to the Secretary (Congressional Relations),
Special Assistant to the Secretary (National Security Affairs),
Oommissioner of Internal Revenue Service,
Comptroller of the Currency,
Oommissioner of Customs,
Director, U.S. Secret Service,
Director, Bureau of Engraving and Printing,
Director, Bureau of the Mint,
Commissioner, Bureau of Accounts,
Oommissioner, Bureau of the Public Debt,
Treasurer of the United States,
Director, U.S. Savings Bonds Division.
2. Each deputy shall have authority to perform, during the absence of his
principal, any function his principal is authorized to perform, consistent with
Treasury Order No. 190 Revised.
397-702 0—71
32
476
1970 REPORT OF THE SECRETARY OF THE TREASURY
3. Principals and deputies shall avoid simultaneous absences. Exceptions may
be requested through the Executive Secretariat in case of emergency of exceptional circumstances.
4. Treasury Department Order No. 191 (Revision 3) is rescinded.
DAVID M. KENNEDY,
Secretary of the Treasury.
No. 209,
REVISED, FEBRUARY 6, 1969.—TREASURY DEPARTMENT UTILIZATION OF
THE DEPARTMENT OF DEFENSE INDUSTRIAL SECURITY PROGRAM
To provide for the Treasury Department, when acting as a "contracting
agency" to participate as a user agency in the Department of Defense Industrial
Security Program. This prograni and the regulations thereof have been developed pursuant to Executive Order 10865, as amended, to protect (1) release
of classified information to or within United States industry that relates to bidding on, or the negotiation, award, performance, or termination of, contracts
and (2) other releases of classified information to or within industry by Government Agencies who have responsibility for the safeguarding of such classified
information.
SECTION 1.
DEFINITIONS
The following terms, as used herein, shall have the meanings specified:
A. "Department" means the Department of the Treasury
B. "Secretary" means the Secretary of the Treasury
C. "Head of the Bureau" means the Head of the Bureau, Independent Office,
or Division of a Department, from which the case emanates
SECTION 2 . PROGRAM
OBJECTIVE
The security of the United States depends in part upon the proper safeguarding of classified information released to industry. The objective of the Industrial
Security Prograni is to assure the safegnarding of classified information in the
hands of United States Industry. The objective of the Department of Defense
Industrial Security Regulations is to set forth the industrial security program,
policies, practices, and procedures used internally by the Department of Defense
to insure maximum uniformity and effectiveness in its application throughout
industry.
SECTION 3 .
AGREEMENT
An agreement between the Department of Defense and the Department of the
Treasury was executed on 26 May 1965 which provides for inclusion of the
Treasury Department as a "user agency" in the prograni.
SECTION 4 . PROGRAM O U T L I N E , A U T H O R I T Y ,
SCOPE
A. The Deputy Director of Contract Administration Services, Defense Supply
Agency (DSA), under the policy guidance of the Assistant Secretary of Defense
(Manpower), developed and promulgated the Department of Defense Industrial
Security Regulation (DOD 5520.22R) pursuant to the National Security Act
of 1947. This regulation is applicable to the Office of the Secretary of Defense,
the Departments of the Army, Navy, Air Force, Treasury, and others, hereinafter referred to as "User Agencies" in all industrial security relationships
with U.S. Industry. The regulation implements the security policies established
by the Assistant Secretary of Defense (Manpower) and establishes the procedures, requirements, and practices concerned with the effective protection of
classified inforniation in the hands of U.S. Industry, including foreign classified
information whicii the U.S. Government is obliged to protect in the interest of
National defense. User Agencies are not authorized to require a different standard of industrial security than prescribed in the regulations except as specifically provided for therein in exceptional cases.
B. The Secretary of Defense is authorized to act in behalf of User Agencies,
in rendering industrial security services. This authority is contained in exchanges of letters between participating agencies and, for the Treasury Department, through execution of the Agreement of 21 April 1965. The Defense Supply
EXHIBITS
477
Agency (DSA) will perform all cognizant security office functions prescribed
by the regulations in behalf of all User Agencies. User Agencies will perform
the functions of, and will have the authority and responsibility, prescribed by
the regulation and in the Industrial Security Manual, of a contracting officer,
except when the administrative contracting officer's functions are delegated or
assigned to the Defense Supply Agency.
SECTION 5. PROCEDURE—LIAISON
A. The procedures for "User Agencies" are set forth in the publications described in SECTION 6 and provide for use of the system at the contracting
officer level through utilization of the services of the appropriate Regional
Defense Contract Administration Services Office. Publications shall be procured
through normal sources.
B. The Director, Office of Security is designated as Liaison Officer for this
program as it applies to the Treasury Departnient and the latter will act upon
request in any dealing involving the central office of the Defense Supply Agency.
SECTION 6. PUBLICATIONS
A. The following publications are essential and required documentation for
the implementation of this prograni:
I. Department of Defense Industrial Security Regulation, DOD 5220.22-R
II. Department of Defense Industrial Security Manual for Safeguarding
Classified Information, DOD 5220.22-M
A. E. WEATHERBEE,
Assistant Secretary for Administration.
No. 216,
SEPTEMBER 8, 1969.—ESTABLISHMENT OF THE TREASURY DEPARTMENT
LAW ENFORCEMENT COUNCIL
1. There is established in the Office of the Assistant Secretary (Enforcement
and Operations) the Treasury Departnient Law Enforcement Council.
2. The Assistant Secretary (Enforcement and Operations) shall be Chairman
of the Council. The Council shall consist of the following officials :
Assistant Director (Investigations), U.S. Secret Service
Assistant Director (Protective Forces), U.S. Secret Service
Assistant Director (Protective Intelligence); U.S. Secret Service
Director (Internal Security Division), Internal Revenue Service
Director (Intelligence Division), Internal Revenue Service
Chief, Enforcement Branch, Alcohol, Tobacco and Firearms Division, Internal Revenue Service
Assistant Commissioner (Investigations), Bureau of Customs
Director, Division of Enforcement, Bureau of Customs
The Assistant Secretary for Adniinistration, the Commissioner of Internal Revenue, the Director, U.S. Secret Service, and the Comniissioner of Customs shall
be members ex officio.
3. The Council shall have the mission of advising and assisting the Assistant
Secretary (Enforcement and Operations) in performing his functions. The
Council will not be used to formulate progranis or make operating decisions
that are reserved as a responsibility to the Head of a Bureau.
CHARLS E . WALKER,
Under Secretary.
No. 217. MARCH 2, 1970.—ESTABLISHMENT OF THE CONSOLIDATED FEDERAL LAW
ENFORCEMENT TRAINING CENTER
1. Authority and Establishment
By virtue of the authority vested in me as Secretary of the Treasury, including
the authority in the Government Employees Training Act, 5 U.S.C. 4101-4118,
as implemented by Executive Order 11348 of April 20, 1967, I hereby establish
the Consolidated Federal Law Enforcement Training Center as an organizational entity within the Department of the Treasury to function as an interagency training facility.
478
1970 REPORT OF THE SECRETARY OF THE TREASURY
2. Objective
Establishment of the Center, within the Department of the Treasury, is for
purposes of:
a. Providing participating Federal agencies with adequate, modern facilities
for conducting law enforcement training in an effective, economical manner;
b. Utilizing the professional support services and administrative mechanisms
of a large existing agency, experienced in law enforcement training, to avoid
duplicating these capabilities within a new, small, independent organization.
3. Center Mission
The Consolidated Federal Law Enforcement Training Center shall:
a. Provide necessary facilities, equipment, and support services for conducting
recruit, advanced, specialized, and refresher law enforcement training for personnel of participating Federal agencies, including:
(1) Budgeting for and administering funds for construction, maintenance,
and operation of the Center;
(2) Housing, feeding, and providing recreation programs and administrative services for students.
b. Provide support, administrative, and educational personnel for common
training courses to:
(1) Consolidate requirements of participating agencies and develop proposed curricula;
(2) Develop content and teaching techniques for courses;
(3) Instruct and evaluate students.
c. As an interagency training facility, provide training to other eligible persons.
4. Center Development
The Secretary of the Treasury will exercise responsibilities prerequisite to
initiating Center operations at the earliest date, including the development of
detailed plans within the guidelines established by the Congress for the design
and construction of Center facilities.
5. Center Operations
The Department of the Treasury is the Executive Agency for operating the
Center and serves as the established point of authority for implementation of
Federal regulations and policies having Government-wide application. Within
this concept:
a. All employees of the Center staff will be appointed under the authority of
the Secretary of the Treasury and shall be employees of the Department of the
Treasury;
b. Center operations will be financed by a separate appropriation to the Department of the Treasury to be used to pay costs of salaries, equipment, and
other expenses in connection with
(1) Administration.
(2) Maintenance and operation of the physical plant (including dormitories and dining facilities).
(3) Conducting common training courses.
(4) Operation of the laboratories, library, and other support services.
(5) Research conducted in law enforcement curriculum and training
methods.
c. Staff offices in the Oflfice of the Secretary will provide support and assistance, related to:
(1) Organizational structure, management systems, and administrative
procedures;
(2) 'Staffing patterns, manpower utilization and control, and personnel
administration;
(3) Design, construction, and maintenance of facilities; and
(4) Financial management systems and budgetary processes, including
planning, programming, and budgeting.
DAVID M. KENNEDY,
Secretary of the Treasury,
EXHIBITS
479
Advisory Committees
Exhibit 62.—^Advisory committees utilized by the Department of the Treasury
under Executive Order 11007
During the fiscal year 1970 the advisory committees listed below were continued in use or newly established after a finding of public interest by the Secretary of the Treasury, in accordance with the requirements of Executive Order
11007, dated February 26, 1962. The information concerning the committees is
published in the annual report in compliance with section 10 of the order.
Office of the Secretary
DEBT
MANAGEMENT
COMMITTEES
The Treasury Department, in connection with debt management duties, uses
in an advisory capacity the services of a number of committees representing
organizations which form a cross section of the American financial community.
The committees meet periodically, at the invitation of the Treasury, to discuss
and advise upon current and future Federal financings. The Treasury finds
discussions with these advisory groups to be of great value, primarily in assessing
the general market sentiment prior to a major refinancing of maturing obligations. Their recommendations are carefully considered by Treasury officials and
serve as a part of the background environment for the final financing decisions.
These committees are as follows:
American Bankers Association, Government Borrowing Committee
Investment Bankers Association of America, Governmental Securities
Committee
National Association of Mutual Savings Banks, Committee on Government
Securities and the Public Debt
Life Insurance Association of America and American Life Convention, Joint
Economic Policy Committee
U.S. Savings and Loan League, National League of Insured Savings Associations, Advisory Committee on Government Securities
Independent Bankers Association, Government Fiscal Policy Committee
Four meetings were held with the Government Borrowing Committee of the
American Bankers Association in fiscal year 1970, on July 29-30, September 1617, January 27-28 and April 28-29.
Membership of the Committee was as follows:
Frederick G. Larkin, Jr.
Chairman, Security Pacific National Bank, P.O.
(Chairman)
Box 2097, Los Angeles, Calif.
William T. Heffelfinger
Federal Administrative Adviser and Senior Dep(Secretary)
uty Manager, A.B.A., Washington, D.C.
William G. Foulke
Chairman and Chief Executive Officer, Provident
National Bank, Philadelphia, Pa.
James P. Hickok
Chairman of Board, First National Bank, St.
Louis, Mo.
Chairman and Chief Executive Officer, Morgan
John M. Meyer, Jr.
Guaranty Trust Co., New York, N.Y.
Chairman, Chemical Bank, New York, N.Y.
William S. Renchard
Chairman and Chief Executive Officer and ChairEmmett G. Solomon
man of Executive Committee, Crocker-Citizens
National Bank, San Francisco, Calif.
President, Bank of Carthage, Carthage, Mo.
Mills H. Anderson
Chairman of Board, Trust Co. of Georgia, Atlanta,
George S. Craft
Ga.
President, First Security Bank of Utah, N.A.,
George S. Eccles
Salt Lake City, Utah
Chairman and Chief Executive Officer, The Chase
David RPckefeller
Manhattan Bank, N. A., New York, N.Y.
Partner, Brown Bros. Harriman & Co., New York,
Robert V. Roosa
N.Y.
Kenneth V. Zwiener
Chairman of Board, Harris Trust & Savings Bank,
Chicago, 111.
480
1970 REPORT OF THE SECRETARY OF THE TREASURY
Henry T. Bodman
Thomas O. Cooper
Gaylord A. Freeman, Jr.
Russ M. Johnson
William H. Moore
Walter B. Wriston
Charles J. Gable, Jr.
John J. Larkin
Donald C. Miller
Paul I. Wren
Clifford C. Sommer
J. Howard Laeri
Douglas R. Smith
Chairman, National Bank of Detroit, Detroit,
Mich.
President and Trust Officer, South Des Moines
National Bank, Des Moines, Iowa
Vice Chairman of Board, The First National Bank,
Chicago, 111.
Chairman of Executive Committee, Deposit Guaranty National Bank, Jackson, Miss.
Chairman of Board, Bankers Trust Co., New York,
N.Y.
President, First National City Bank, New York,
N.Y.
Executive Vice President, The First Pennsylvania
Banking & Trust Co., Philadelphia, Pa.
Senior Vice President, First National City Bank,
New York, N.Y.
Senior Vice President, Continental Illinois National Bank & Trust Co., Chicago, 111.
Chairman of 3oard and Chief Executive Officer,
Old Colony Trust Co., Boston, Mass.
President, Security Bank & Trust Co., Owatonna,
Minn.
Vice Chairman, First National City Bank, New
York, N.Y.
Chairman of Board and President, National Savings & Trust Co., Washington, D.C.
Four meetings were held with the Governmental Securities Committee of the
Investment Bankers Association of America in fiscal year 1970, on July 29-30,
September 16-17, January 27-28 and April 28-29.
Membership of the Committee was as follows :
President, Aubrey G. Lanston & Co., Inc., New
C. Richard Youngdahl
(Chairman)
York, N.Y.
Daniel Aheam
Vice President, Wellington Fund, Boston, Mass.
Robert H. Bethke
Chairman, Executive Committee and Director,
Discount Corp. of New York, New York, N.Y.
Robert B. Blyth
Vice Chairman, National City Bank of Cleveland,
Cleveland, Ohio
Executive Vice President, Briggs, Schaedle & Co.,
Robert H. Britton
Inc., New York, N.Y.
Senior Vice President, Bank of America, San FranAlan K. Browne
cisco, Calif.
Senior Vice President and Director, The First
Carl F. Cooke
Boston Corp., New York, N.Y.
Senior Vice President, First National Bank of
G. Lamar Crittenden
Boston, Boston, Mass.
Vice President and Director, Merrill Lynch, Pierce,
Stewart A. Dunn
Fenner & Smith, Inc., New York, N.Y.
Lester H. Empey
Senior Vice President and Chairman of The Investment Committee, Wells Fargo Bank, San
Francisco, Calif.
Ralph F. Leach
Vice Chairman, Morgan Guaranty Trust Co., New
York, N.Y.
Eugene S. Lee
Executive Vice President, Valley National Bank,
Phoenix, Ariz.
Preston T. Luney
Vice President, Harris Trust & Savings Bank,
Chicago, 111.
Edward D. McGrew
Senior Vice President, The Northern Trust Co.,
Chicago, 111.
Edward R. McMillan
Senior Vice President, National Bank of Commerce,
Seattle, Wash.
John H. Perkins
Executive Vice President, Continental Illinois National Bank & Trust Co., Chicago, 111.
William W. Pevear
Senior Vice President, Irving Trust Co., New York,
N.Y.
EXHIBITS
Robert B. Rivel
H. Jack Runnlon, Jr.
William E. Simon
Robert W. Stone
Paul E. Uhl
481
Executive Vice President, The Chase Manhattan
Bank, New York, N.Y.
Senior Vice President, Wachovia Bank & Trust
Co., Winston-Salem, N.C.
Partner, Salomon Bros. & Hutzler, New York, N.Y.
Senior Vice President, Irving Trust Co., New York,
N.Y.
Executive Vice President, United California Bank,
Los Angeles, Calif.
One meeting was held with the Committee on Government Securities and the
Public Debt of the National Association of Mutual Savings Banks in fiscal year
1970, on September 12, 1969.
Menibership of the Committee was as follows:
President, New Hampshire Savings Bank, ConRobert J. Hill
cord, N.H.
(Chairman)
Senior Vice President and Treasurer, The
Luke A. Baione
Brevoort Savings Bank, Brooklyn, N.Y.
President, Washington Mutual Savings Bank,
Anthony I. Eyring
Seattle, Wash.
President, The Boston Five Cents Savings Bank,
G. Churchill Francis
Boston, Mass.
President, The Poughkeepsie Savings Bank,
Charles B. Grubb
Poughkeepsie, N.Y.
William H. Harder
President, Buffalo Savings Bank, Buffalo, N.Y.
Executive Vice President, Dry Dock Savings
Robert Horsfield
Bank, New York, N.Y.
John W. Kress
President, The Howard Savings Institution,
Newark, N.J.
Sheldon L. Ladd
President and Treasurer, The Meriden Savings
Bank, Meriden, Conn.
William B. Licklider
President, The United States Savings Bank,
Newark, N.J.
Edward F. McGinley, Jr.
President, Beneficial Mutual Savings Bank,
Philadelphia, Pa.
Barrett C. Nichols
Executive Vice President and Treasurer, Maine
Savings Bank, Portland, Maine
Lester J. Norcross
President, Syracuse Savings Bank, Syracuse,
N.Y.
Donald P. Noyes
President, North Avenue Savings Bank, Cambridge, Mass.
Albert N. Place
President, Woonsocket Institution for Savings,
Woonsocket, R.I.
Norman 0. Ramsey
Chairman of the Board and President, Broadway
Savings Bank, New York, N.Y.
William H. Smith, 2d
President, Holyoke Savings Bank, Holyoke, Mass.
Leo F. Stanley
President, The New Haven Savings Bank, New
Haven, Conn.
Theodore W. Lowen
President, Savings Banks Trust Co., New York,
•N.Y.
Dr. Saul B. Klaman
Vice President and Chief Economist, National Association of Mutual Savings Banks, New York,
N.Y.
One meeting was held with the Joint Economic Policy Committee of the Life
Insurance Association of America and the American Life Convention in fiscal
year 1970, on October 14,1969.
Membership of the Committee was as follows:
John J. McGovern, Jr.
President, The Mutual Benefit Life Insurance Co.,
(Chairman)
Newark, N.J.
President and Chairman, The Minnesota Mutual
Franklin Briese
Life Insurance Co., St. Paul, Minn.
G. Daniel Brooks
Chairman, National Life and Accident Insurance
Co., Nashville, Tenn.
482
1970 REPORT OF THE SECRETARY OF THE TREASURY
George T. Conklin, J r .
L. O. Copeland
R. H o w a r d Dobbs, J r .
F r a n c i s E. Ferguson
John T. Fey
Donald S. MacNaughton
H e n r y R. Roberts
H e n r y F . Rood
Robert E. Slater
J. H e n r y Smith
W. Roger Soles
Donald H. Wilson, J r .
President, The G u a r d i a n Life Insurance Co. of
America, New York, N.Y.
President, North American Life I n s u r a n c e Co. of
Chicago, Chicago, III.
President, Life I n s u r a n c e Co. of Georgia, Atlanta,
Ga.
President, The Northwestern Mutual Life Insurance Co., Milwaukee, Wis.,
President, National Life I n s u r a n c e Co., Montpelier,
Vt.
Presiderit, The P r u d e n t i a l I n s u r a n c e Company of
America, Newark, N.J.
President, Connecticut General Life Insurance Co.,
Hartford, Conn.
Chairman, The Lincoln National Life I n s u r a n c e
Co., F o r t Wayne, Ind.
President, J o h n Hancock Mutual Life Insurance
Co., Boston, Mass.
President, T h e Equitable Life Assurance Society
of the United States, New York, N.Y.
President, Jefferson S t a n d a r d Life Insurance Co.,
Greensboro, N.C.
President, Monumental Life Insurance Co., Baltimore, Md.
One meeting w a s held with the Advisory Committee on Government Securities
of the Savings and Loan Business in fiscal year 1970, on September 11, 1969.
Membership of the Committee was as follows :
C. L. Clements, Sr.
(Chairman)
J a m e s A. Aliber
Junius F. Baxter
J a m e s E. B e n t
Frederick Bjorklund
Lacy Boggess
Henry ^ . Bubb
Carl Distelhorst
Fred F. JEnemark
E. Stanley Enlund
J o n a t h a n M. Fletcher
Richard G. Gilbert
L. W. Grant, Sr.
George B. Leonard
F r a n k Lietgeb
Donald P . Lindsay
Roy M. M a r r
J o h n W. Stadtler
Chase Federal Savings & Loan Association, Miami
Beach, Fla.
President, F i r s t F e d e r a l Savings & Loan Association, Detroit, Mich.
President, Western F e d e r a l Savings & Loan Association, Denver, Colo.
Chairman of Board, H a r t f o r d Federal Savings &
Loan Association, Hartford, Conn.
President, Minnesota Federal Savings & Loan Association, St. Paul, Minn.
President, Mutual Savings & Loan Association,
F o r t Worth, Tex.
C h a i r m a n of Board, Capitol F e d e r a l Savings &
Loan Association, Topeka, Kans.
W i n t e r P a r k , Fla.
Executive Vice President, Marin County Savings
& LPan Association, San Rafael, Calif.
President, F i r s t Federal Savings & Loan Association, Chicago, 111.
President, F i r s t F e d e r a l Savings & Loan Association, Des Moines, Iowa.
President, Citizens Savings Association, Canton,
Ohio
Chairman of Board, Home Federal Savings &
Loan Association, Tulsa, Okla.
President, F i r s t F e d e r a l Savings & Loan Association, Phoenix, Ariz.
Executive Vice President, Washington Heights
F e d e r a l Savings & Loan Association, New York,
N.Y.
President, Lincoln F i r s t F e d e r a l Savings & Loan
Association, Spokane, Wash.
Chairman of Board, Leader F e d e r a l Savings &
Loan Association, Memphis, Tenn.
President, National P e r m a n e n t Savings & Loan
Association, Washington, D.C.
EXHIBITS
A. D. Theobald
Donald A. Thompson
Gerrit Vander Ende
John Zellars
James A. Hollensteiner
483
President, First Federal Savings & Loan Association, Peoria, 111.
Senior Vice President, California Federal Savings
& Loan Association, Los Angeles, Calif.
President, Pacific First Federal Savings & Loan
Association, Tacoma, Wash.
Executive Vice President, Atlanta Federal Savings
& Loan Association, Atlanta, Ga.
Secretary, U.S. Savings & Loan League, ChicagoIll.
Two meetings were held with the Government Fiscal Policy Committee of the
Independent Bankers Association for fiscal year 1970, on Deceniber 15, 1969 and
June 9, 1970.
Membership of the Committee was as follows:
President, IBA, and President, Lapeer County
Rod L. Parsch
Bank & Trust Co., Lapeer, Mich.
First Vice President, IBA, and President, ElmDonald M. Carlson
hnrst National Bank, Elmhurst, 111.
Second Vice President, IBA, and President, First
H. L. Gerhart, Jr.
National Bank, Newman Grove, Nebr.
Secretary for IBA, and Secretary to the GovernGene Moore
ment Fiscal Policy Committee, Sauk Centre,
Minn.
William F. Enright, Jr.
Chairman, Government Fiscal Policy Committee,
and Senior Vice President, American National
Bank, St. Joseph, Mo.
Milton J. Hayes
Vice Chairman, Government Fiscal Policy Committee, and Senior Vice President, American National Bank & Trust Co., Chicago, III.
Senior Vice President, National Bank of Commerce
J. C. Reeves
of Pine Bluff, Ark.
Donald R. Ostrand
Vice President, First National Bank, Omaha, Nebr.
O. K. Johnson
Banker Consultant, Milwaukee, Wis.
B. Meyer Harris
President, The Yellowstone Bank, Laurel, Mont.
Raymond K. Smith
President, First National Bank & Trust Co., Corning, N.Y.
S. E. Babington
Director, Brookhaven Bank & Trust Co., Brookhaven, Miss.
TREASURY LIAISON COMMITTEE OF THE BUSINESS COUNCIL
The Secretary of the Treasury proposed this Committee on May 8, 1965, "to
keep up a two-way exchange and dialog on areas of material concern to the
Treasury and the business community." The Committee consists of members informally recommended and appointed by the Business Council and the Secretary
of the Treasury. The functions of the Committee are advisory and consultative.
Formation of the Committee was announced on July 8,1965.
During fiscal 1970 the Committee met on October 7, 1969, and May 9, 1970.
Membership of the Committee in fiscal 1970 was as follows:
Chairman, Morgan Guaranty Trust Co., New York,
Thomas S. Gates, Jr.
N.Y.
(Chairman)
Chairman, Deere & Co., Moline, 111.
William A. Hewitt
President, Kennecott Copper Co., New York, N.Y.
Frank R. Milliken
President, Eli Lilly & Co., Indianapolis, Ind.
Eugene N. Beesley
Chairman, American Express Co., New York, N.Y.
Howard L. Clark
Former Chairman, General Motors Corp., New
Fredrlc G. Donner
York, N.Y.
Charles F. Myers, Jr.
Chairman, Burlington Industries, Inc., Greensboro,
N.C.
Albert L. Nickerson
Former Chairman, Mobile Oil Co., New York, N.Y.
David Rockefeller
Chairman and Chief Executive Officer, Chase
Manhattan Bank, New York, N.Y.
484
1970 REPORT OF THE SECRETARY OF THE TREASURY
ADVESpRY GROUP TO T H E C O M M I S S I O N E R OF I N T E R N A L REVENUE
This group was established by the Commissioner of Internal Revenue on
June 17, 1959.
This Committee, which represents professional and other private groups concerned with Federal taxation, provides constructive criticism of Internal Revenue
policies and procedures and suggests ways in which the Service can improve its
operations.
The advisory group met on October 16-17, 1969, and January 29-30 and
June 4-5, 1970.
The membership in fiscal 1970 follows:
Dinsmore, Shohl, Barrett, Coates & Deupres, CinDonald C. Alexander
cinnati, Ohio 45202
Lybrand, Ross Bros. & Montgomery, Washington,
William T. Barnes
D.C. 20036
Professor, University of Illinois at Urbana-ChamNorton M. Bedford
paign. College of Commerce and Business Administration, Urbana, III. 61801
Professor, Harvard University, Graduate School of
J. Keith Butters
Business Administration, Boston, Mass. 02163
Cohen & Uretz, Washington, D.C. 20036
Sheldon S. Cohen
Hendrick & Lane, Washington, D.C. 20036
F. Cleveland Hendrick, Jr.,
Reed, Smith, Shaw & McClay, Washington, D.C.
William M. Horne, Jr.
20005
Harry K. Mansfield
Ropes & Gray, Boston, Mass. 02110
Bishop Francis John
Brooklyn, N.Y. 11238
Mugavero
Atwood, Scribner, Allen & McKusick, Commerce
Fred C. Scribner, Jr.,
Building, Portland, Maine 04110
Chairman
Congregation Rodfei Zedek, Chicago, 111. 60615
Rabbi Ralph Simon
Washington, D.C. 20016
Richard J. Whalen
Wormser, Koch, Kiely & Alessandroni, New York,
Rene A. Wormser
N.Y. 10022
Commissioner of Internal Revenue
ADVISORY C O M M I T T E E ON E X E M P T
ORGANIZATIONS
In November 1969 the Commissioner announced the appointment of 15 distinguished Americans to the newly created Advisory Conimittee on Exempt Organizations. These widely experienced people have agreed to serve as Internal
Revenue Service consultants in the nature of a sounding board to review problems in charting the outer limitations of the tax law regarding religious, educational, charitable, and other organizations which constitute the majority of tax
exempt organizations.
The committee met on January 15-16 and May 18-19,1970.
Membership in fiscal 1970 follows:
Dr. Carlton P. Alexis
Associate Professor of Medicine, Howard University, Washington, D.C. 20001
Donald T. Burns
Arthur Young & Co., Los Angeles, Calif. 90017
Charles 6. Galvin
Dean, School of Law, Southern Methodist University, Dallas, Tex. 75222
H. J. Heinz, II
Chairman of the Board, H. J. Heinz Co., Pittsburgh, Pa. 15212
Adelaide Cromwell Hill
Boston IJniversity, Afro-American Studies Center,
Brookline, Mass. 02146
John R. Hogness
Executive Vice President, University of Washington, Seattle, Wash. 98105
James Roger Hull
Chairman of the Board, Mutual Life Insurance Co.
of New York, New York, N.Y. 10019
Hon. Louis J. Lefkowitz
Attorney General, State of New York, New York,
N.Y. 10013
Walter L. Kidd
Director of Taxes, American Telephone & Telegraph Co., New York, N.Y. 10007
EXHIBITS
Jeff Blair Mcllroy
A. Waldo Sowell, Jr.
Maurice E. Stark
Arthur B. Willis
485
Public Accountant, P.O. Box 4345, Little Rock,
Ark. 72204
CPA, Alexander Grant & Co., Atianta, Ga. 30303
Stark & Crumley, Fort Dodge, Iowa 50501
Willis, Butler, & Scheifiy, Los Angeles, Calif. 90017
ART ADVISORY P A N E L TO T H B C O M M I S S I O N E R O F I N T E R N A L R E V E N U E
This panel was established by the Commissipner of Internal Revenue on Fehruary 1,1968.
The Art Advisory Group consists of members representing the three major
segments of the art world—museums, universities, and dealers. The Group provided advice on the valuation of works of art for Federal tax purposes at meetings held on Septeniber 10-11, 1969, and March 16-17, 1970. Three new members
were appointed during 1970 as part of the rotational concept of panel membership. The newest members are marked by asterisk in the following list of panel
membership.
Director, Kimbell Foundation, Fort Worth, Tex.
Dr. Richard F. Brown
Director, Minneapolis Institute of Arts, MinneapoMr. Anthony M. Clark
lis, Minn.
Mr. Charles C. Cunningham Director, Art Institute of Chicago, Chicago, 111.
Mr. Louis Goldenberg
Art Dealer, WUdenstein & Oo., New York, N.Y.
Dr. George H. Hamilton*
Williams College, WUliamstown, Mass.
Dr. Sherman E. Lee
Director, Cleveland Museum of Art, Cleveland,
Ohio
Mr. William S. Lieberman*
Director (Prints), Museum of Modern Art, New
York, N.Y.
Prof. Charles F. Montgomery University of Delaware, Newark, Del.
Mr. Alexander P. Rosenberg* Art Dealer, Paul Rosenberg & Co., New York, N.Y.^
Mr. Eugene V. Thaw
Art Dealer, E. V. Thaw Co., New York, N.Y.
F I R E A R M S EVALUATION P A N E L TO T H E C O M M I S S I O N E R OF I N T E R N A L R E V E N U E
The Firearms Evaluation Group was established on November 15, 1968. Informal meetings were held throughout the year, at which advice was given concerning the development of standards to control the importation of firearms
and ammunition.
The membership of the Group during fiscal 1970 was as follows:
Firearms Technician, H. P. White Laboratories,
Mr. Donald Flohr
Bel Air, Md.
U.S. Army, Foreign Science and Technology CenMr. Harold Johnson
ter, Washington, D.C.
Representative, Mauser Works of West Germany,
Mr. Daniel D. Musgrave
Cabin John, Md.
Mr. John Richards
Owner, Potomac Arms Co., Alexandria, Va.
Mr. Jepta Rogers
Administrative Assistant, International Association of Chiefs of Police, Washington, D.C.
Lt. Col. Joseph S. Smith
Deputy Director, Civilian Marksmanship Program,
(Ret.)
Department of Defense, Washington, D.C.
Comptroller of the Currency
ADVISORY C O M M I T T E E FOB I N T E R N A T I O N A L B A N K I N G AND F I N A N C E
This Committee was formed on October 2, 1964, by the Comptroller of the
Currency to provide the Comptroller with technical advice and suggestions
which are essential to effective supervision of the international financial activities of national banks.
The members of this Committee in fiscal year 1970 were as follows:
Frederick Heldring (Chair- Senior Vice President, The Philadelphia National
Bank, Philadelphia, Pa.
man)
Alfred F. Miossi (Vice Chair- Senior Vice President, Continental Illinois National Bank & Trust Co. of Chicago, Chicago, 111.
man)
Senior Vice President, The First National Bank of
A. Robert Abboud
Chicago, Chicago, 111.
486
1970 REPORT OF THE SECRETARY OF THE TREASURY
Luis F. Corea
G. A. Costanzo
Clarence L. Hulford
Matthew P. Murphy
J. Warren Olmsted
Herbert P. Patterson
William Walter Phelps, Jr.
Roland Pierotti
Senior Vice President, The Riggs National Bank
of Washington, Washington, D.C.
Executive Vice President, First National City
Bank, New York, N.Y.
Senior Vice President, The National Bank of Commerce of Seattle, Seattle, Wash.
Senior Vice President, Republic National Bank of
Dallas, Dallas, Tex.
Executive Vice President, The First National Bank
of Boston, Boston, Mass.
President, The Chase Manhattan Bank, N.A., New
York, N.Y.
Senior Vice President, Mellon National Bank &
Trust Company of Pittsburgh, Pittsburgh, Pa.
Executive Vice President, Bank of America N.T.
& S.A., San Francisco, Calif.
C O N S U L T I N G C O M M I T T E E OF B A N K E C O N O M I S T S
On November 23, 1965, the Comptroller announced the appointment of a consulting committee of bank economists which included seven national bank
economists.
This Committee's function was to advise the Comptroller and his staff and
work with the National Advisory Committee. The Committee's primary responsiblity was to bring specialized experience and technical knowledge to bear on
currerit problems of banking policy and practice.
The members of this Committee, which met in fiscal year 1970 on September 8,
1969, and April 29,1970, were as follows:
Senior Vice President, Mellon National Bank &
John J. Balles (Chairman)
Trust Co., Pittsburgh, Pa.
Vice President, The Chase Manhattan Bank, N.A.,
Williaria F. Butler
New York, N.Y.
Vice President & Economist, National City Bank of
James M. Dawson
Cleveland, Cleveland, Ohio
Executive Vice President & Chief Economist, Bank
Walter Hoadley
of America, N.T. & S.A., San Francisco, Calif.
Herbert E. Johnson
Vice President, Continental Illinois National Bank
& Trust Co. of Chicago, Chicago, 111.
William J. Korsvik
Vice President, First National Bank of Chicago,
Chicago, 111.
Leif H. Olsen
Senior Vice President and Economist, First National City Bank, New York, N.Y.
Eugene C. Zorn, Jr.
Senior Vice President and Economist, Republic
National Bank of Dallas, Dallas, Tex.
I N V E S T M E N T S E C U R I T I E S ADVISORY C O M M I T T E E
In 1962, the Comptroller of the Currency established the Investment Securities
Advisory Committee. The purpose of the Committee was to advise the agency
on matters pertaining to the regulations concerning investment securities.
Members of the Committee, who met in fiscal year 1970 on January 28, 1970,
were as follows:
Executive Vice President, Continental Illinois NaJohn H. Perkins
tional Bank & Trust Co. of Chicago, Chicago, 111.
(Chairman)
Senior Vice President, Bank of America, N.T. &
Alan K. Browne
S.A., San Francisco, Calif.
Vice President, Northwest Bancorporation, MinAlbert W. Gray
neapolis, Minn.
Lewis F. Lyne
Executive Vice President, Mercantile National
Bank at Dallas, Dallas, Tex.
Early F. Mitchell
Executive Vice President, First National Bank of
Memphis, Memphis, Tenn.
Arthur H. Quinn, Jr.
Vice President, The Philadelpihia National Bank,
Philadelphia, Pa.
EXHIBITS
Thomas L. Ray
Robert B. Rivel
Wesley G. Schelke
Franklin Stockbridge
James G. Wilson
Richard F. Kezer
487
Senior Vice President, Mercantile Trust Co., N.A.,
St. Louis, Mo.
Senior Vice President, The Chase Manhattan Bank,
N.A., New York, N.Y.
Vice President, Seatttle-First National Bank,
Seattle, Wash.
Executive Vice President, Security Pacific National Bank, Los Angeles, Calif.
Vice President, The National Shawmut Bank of
Boston, Boston, Mass.
Vice President, First National City Bank, New
York, N.Y.
N A T I O N A L ADVISORY C O M M I T T E E ON B A N K I N G P O L I C I E S AND PRACTICES
On October 4, 1965, the Comptroller of the Currency appointed this Committee,
composed of leading bankers. The Committee has participated in a cooperative
effort to bring the thinking of the banking community to bear on the many
matters of national concern in which the banking industry is vitally involved.
No meetings of this Committee were held in fiscal year 1970. Members of the
Committee are as follows:
Chairman, American Security & Trust Co., WashRobert C. Baker
ington, D.C.
President, National Bank of Detroit, Detroit,
Robert M. Surdam
Mich.
Chairman of the Board, The First National Bank
Roger C. Damon
of Boston, Boston, Mass.
Chairman of the Board, President, and Chief
G. Morris Dorrance, Jr.
Executive Ofiicer, The Philadelphia National
Bank, Philadelphia, Pa.
President, First Security Bank of Utah, Salt Lake
George S. Eccles
City, Utah
Chairman of the Board, First City National Bank
J. A. Elkins, Jr.
of Houston, Houston, Tex.
Chairman of the Board, The National City Bank
John S. Fangboner
of Cleveland, Cleveland, Ohio
Chairman ot the Board, Third National Bank in
Sam M. Fleming
Nashville, Nashville, Tenn.
Chairman of the Board and Chief Executive
Robert D. H. Harvey
Officer, Maryland National Bank, Baltimore, Md.
Chairman of the Board, Seattle First National
William M. Jenkins
Bank, Seattle, Wash.
President, The Citizens & Southern National Bank,
Mills B. Lane, Jr.
Atlanta, Ga.
Chairman of the Board, Security Pacific National
Frederick G. Larkin, Jr.
Bank, Los Angeles, Calif.
Chairman of the Board, Mellon National Bank &
John A. Mayer
Trust Co., Pittsburgh, Pa.
Vice Chairman of the Board, Valley National Bank
J. E. Patrick
of Arizona, Phoenix, Ariz.
W. Harry Schwarzschild, Jr. Chairman of the Board and President, The Central
National Bank, Richmond, Va.
Chairman of the Board, First National Bank in
Robert H. Stewart, I I I
Dallas, Dallas, Tex.
Director, Bank of America, San Francisco, Calif.
R. A. Peterson
REGIONAL ADVISORY C O M M I T T E E S ON B A N K I N G P O L I C I E S AND PRACTICES
On November 11, 1965, the Comptroller of the Currency established 14 Regional
Advisory Committees on Banking Policies and Practices to assist the agency in a
continuing review aimed at keeping bank regulation abreast of the Nation's needs.
The Committees' membership and the dates of the regional meetings during
fiscal 1970 follow:
488
1970 REPORT OF THE SECRETARY OF THE TREASURY
Region 1 meeting dates October 6, 1969, and April 9,1970.
E d w a r d M. Stone
(Chairman)
William R. Kennedy
F r a n c i s H. Dewey, I I I
Russell B. Neff
F r a n k G. Chadwick, J r .
Richard P. Chapman
Clarence G. Gifford, J r .
F r a n c i s N. Southworth
F r a n k W. Black
H a r l a n H. Griswold
Richard D. Hill
Wendell L. Phillips
Mark 0. Wheeler
President, Merchants National Bank, Bangor,
Maine
President, Merrimack Valley National Bank,
Haverhill, Mass.
President, The Mechanics National Bank, Worcester, Mass.
President, T h i r d National B a n k of Hampden
County, Springfield, Mass.
President, The F i r s t New H a v e n National Bank,
New Haven, Conn.
Chairman of the Board, New England Merchants
National Bank, Boston, Mass.
President, Rhode Island Hospital T r u s t National
Bank, Providence, R.I.
President, Concord National Bank, Concord, N.H.
Executive Vice President, The Peoples National
B a n k of B a r r e , B a r r e , Vt.
Chairman of the Board, The W a t e r b u r y National
Bank, Waterbury, Conn.
President, The F i r s t National Bank of Boston,
Boston, Mass.
President, Northern National Bank, Presque Isle,
Maine
President, New England Merchants National Bank,
Boston, Mass.
Region 2 meeting dates November 10,1969, and May 16,1970.
Robert B. Hole ( C h a i r m a n )
William H. Bell, J r .
Harold V. Gleason
H. Russell Johnson
William J. Kinnamon
Richard G. Macgill
E d w a r d 0. Bower
J a m e s D. Ellemari
E d w a r d J. Gunnigle
A r t h u r S. H a m l i n
Charles E. Larigner
Donald E. Stone
President, The National Bank of Auburn, Auburn,
N.Y.
President, F i r s t Camden National B a n k & T r u s t
Co., Camden, N.J.
President, F r a n k l i n National Bank, Mineola, N.Y.
President, The Oneida National Bank & T r u s t Co.
of Central New York, Utica, N.Y.
President, The H u n t e r d o n County National Bank
of Flemington, Flemington, N.J.
President, F i r s t Trenton National Bank, Trenton,
N.J.
President, Virgin Islands National Bank, St.
Thomas, V.I.
President, T r u s t Co. National Bank, Morristown,
N.J.
President, Marine Midland Tinker National Bank,
E a s t Setauket, N.Y.
President, The Canandaigua National B a n k &
T r u s t Co., Canandaigua, N.Y.
President, F i r s t National B a n k of Belvidere,
Belvidere, N.J.
President, F a r m e r s National Bank, Malone, N.Y.
Regipn 3 meeting date, J u n e 12,1970.
J o h n 0. T u t e n ( C h a i r m a n )
Thomas H. Kiley
H a r o l d F. Still, J r .
Charles J. Helmberger
M. A. Cancelliere
H a r o l d J. F r e y
President, National B a n k & T r u s t Co. of Central
Pennsylvania, York, Pa.
President, The F i r s t National Bank of WilkesB a r r e , Wilkes-Barre, Pa.
President, T h e Central Penn National Bank, Bala
CynvTyd, Pa.
President, The F i r s t National B a n k of Pennsylvania, Meadville, Pa.
President, Western Pennsylvania National Bank,
Pittsburgh, Pa.
President, The Fulton National B a n k of Lancaster,
Lancaster, Pa.
EXHIBITS
Eugene F . Lee
H. R. Sloan
J o h n Deemer
William F . Jones
F r a n k S. Smith
J. Bruce Maclay
489
President, People's National Bank, S t a t e College,
Pa.
President, Bradford National Bank, Bradford, Pa.
President, Williamsport National Bank, Williamsport, Pa.
President, Easton National Bank & T r u s t Co.,
Easton, Pa.
Chairman, The F i r s t National Bank of Altoona,
Altoona, P a .
President, The Gettysburg National Bank, Gettysburg, P a .
Region 4 meeting dates, September 12,1969, and May 1,1970.
President, Coshocton National Bank, Coshocton,
Ohio
President, F o r t Wayne National Bank, F o r t
Wayne, Ind.
Robert F. Garrettson
President, The First-Merchants National B a n k of
Michigan City, Michigan City, Ind.
W a l t e r F . Lineberger, J r .
Chairman a n d Chief Executive Officer, Society
National B a n k of Cleveland, Cleveland, Ohio
F r a n k A. McCraeken
President, T h e Newport National Bank, Newport,
Ky.
F r e d B. Oney
President, The F i r s t National Bank, Carrollton,
Ky.
L. J. Arnold
President, The F i r s t National B a n k of Danville,
Danville, Ind.
R. A. Brownsword
President, Akron National Bank & T r u s t Co.,
Akron, Ohio
Maxwell J. Gruber
Chairman, Euclid National Bank, Euclid, Ohio
President, Pikesville National Bank & T r u s t Co.,
Robert B. Johnson
Pikesville, Ky.
Vice President, American Fletcher National Bank
Maurice R. Kirkwood
& T r u s t Co., Indianapolis, Ind.
Chairman a n d President, The Citizens National
Jo. T. Orendorf
B a n k of Bowling Green, Bowling Green, Ky.
Seward D. Schooler
(Chairman)
P a u l E. Shaffer
Region 5 meeting dates, December 5,1969, a n d May 14,1970.
Hovey S. Dabney
(Chairman)
George Blanton, J r .
J. Owen Cole
Robert L. Gordon, J r .
J o h n P. Sippel
Coleman E. Trainor, J r .
J o h n M. Christie
F r a n c i s Bell, J r .
Roy C. Herrenkohl
T h o m a s I. Storrs
Dale H. Smith
M a r t i n Piribek
President, National B a n k & T r u s t Co., Charlottesville, Va.
President, The F i r s t National Bank of Shelby,
Shelby, N.C.
President, The F i r s t National Bank of Maryland,
Baltimore, Md.
President, F i r s t & Merchants National Bank,
Richmond, Va.
President, T h e Citizens National Bank, Laurel,
Md.
President, T h e F i r s t Huntington National Bank,
Huntington, W. Va.
President, The Riggs National B a n k of Washington, D . C , Washington, D.C.
President, Rockingham National Bank, Harrisonburg, Va.
President, T h e Colonial-American National B a n k
of Roanoke, Roanoke, Va.
President, North Carolina National Bank, Charlotte, N.C.
Chairman of the B o a r d and President, F a i r f a x
County National Bank, Seven Comers, Va.
Executive Vice President, T h e F i r s t National B a n k
of Morgantown, Morgantown, W. Va.
490
1970 REPORT OF THE SECRETARY OF THE TREASURY
Region 6 meeting dates, October 31,1969, a n d April 3,1970.
President, F i r s t National B a n k in Palm Beach,
P a l m Beach, Fla.
Chairman, F i r s t National B a n k in Tarpon Springs,
T a r p o n Springs, Fla.
President, Fulton National Bank, Atlanta, Ga.
Gordon Jones
President, The Calhoun National Bank, Calhoun,
B e r t Lance
Ga.
Chairman, The F i r s t National B a n k of Tampa,
R. A. Liggett
T a m p a , Fla.
President, The Peoples National Bank, Greenville,
Mitchell P a t t o n
S.C.
Ray Dahl
President, F i r s t National B a n k of Cape Canaveral,
Cape Canaveral, Fla.
J o h n H. Lumpkin
President and Chief Executive Officer, The South
Carolina National Bank, Columbia, S.C.
J o h n H. Manry, J r .
President, Florida National B a n k & T r u s t Co. a t
Miami, Miami, Fla.
Billy E. Nails
President, F a r m e r s National Bank, Monticello, Ga.
Donald T. Schutt
President, F i r s t National Bank, Valdosta, Ga.
Chairman, National B a n k of Melbourne & T r u s t
T. E. Tucker
Co., Melbourne, Fla.
William K. deVeer
(Chairman)
A. L. Ellis
Region 7 meeting dates, November 19,1969, and April 23,1970.
Lyndon D. Comstock
(Chairman)
J o h n H. French, J r .
F r e d H. H a h n e
R. G. Livasy
Robert I. Logan
J a y J. DeLay
E d w a r d W. Bowen
Richard L. Curtis
M. Ryrie Milnor
William R. W a n d r e y
Melvin C. Lockard
Robert L. Holt
President, Hackley Union National B a n k & T r u s t
Co., Muskegan, Mich.
President, City National B a n k of Detroit, Detroit,
Mich.
President, T h e F i r s t National B a n k of Manistique,
Manistique, Mich.
President, T h e Millikin National B a n k of Decatur,
Decatur, III.
President, Central National Bank in Chicago,
Chicago, III.
President, H u r o n Valley National Bank, Ann Arbor, Mich.
President, Peoples National Bank & T r u s t Company of Bay City, Bay City, Mich.
President, Michigan Avenue National B a n k of
Chicago, Chicago, 111.
President, F i r s t National B a n k & T r u s t Co. in
Alton, Alton, III.
C h a i r m a n and President, Moline National Bank,
Moline, 111.
President, F i r s t National Bank, Mattoon, III.
President, The Elgin National Bank, Elgin, 111.
Region 8 meeting dates, November 17,1969, a n d J u n e 15,1970.
H a r r y M. Nacey, J r .
(.Chairman)
Cecil K. Colon
J o h n W. Gay
W. D. Malone, J r .
T h o m a s W. Stone
Ellis E. Shelton
Andrew Benedict
Lewis K. McKee
W a l t e r B. Jacobs, J r .
W. A. Marbury, J r .
President, Hamilton National Bank, Knoxville,
Tenn.
President, Oalcasieu-Marine National Bank, Lake
Charles, La.
President, F i r s t National Bank, Scottsboro, Ala.
President, F i r s t National Bank, Dothan, Ala.
President, A r k a n s a s F i r s t National B a n k of H o t
Springs, H o t Springs, Ark.
President, F i r s t National Bank, Fayetteville, Ark.
Chairman, F i r s t American National Bank, Nashville, Tenn.
Chairman, National B a n k of Commerce, Memphis,
Tenn.
Chairman, The F i r s t National B a n k of Shreveport,
Shreveport, La.
President, Homer National Bank, Homer, La.
EXHIBITS
491
President, First Citizens National Bank, Tupelo,
Miss.
President, The First National Bank, Greenville,
Wade W. Hollowell
Miss.
Region 9 meeting date, March 6,1970.
R. H Walrath (Chairman)
President, First National Bank of Watertown,
Watertown, S. Dak.
President, The First National Bank of Starbuck,
Thomas E. Olson
Staribuck, Minn.
(Vice Chairman)
President, First National Bank of Crookston,
Marvin R. Campbell
Crookston, Minn.
President, First National Bank of McClusky,
John E. Davis
McClusky, N. Dak.
President, First National Bank of Anoka, Anoka,
D. H. Gregerson
Minn.
Chairman of the Board, First Wisconsin National
George F. Kasten
Bank of Milwaukee, Milwaukee, Wis.
President, First National Bank of Waukesha,
AV. A. Kummrow
Waukesha, Wis.
President, First National Bank of Philip, Philip,
Scott Lovald
S. Dak.
President, The First National Bank of Saint Paul,
Philip H. Nason
Saint Paul, Minn.
President, First National Bank in Bottineau,
Harold C. Refiing
Bottineau, N. Dak.
President, Shawano National Bank, Shawano,
0. F. Wilke
Wis.
Wade 0. Barton
Region 10 meeting dates, October 15,1969, and May 13,1970.
Donald E. Lasater
President, Mercantile Trust Co., N.A., St. Louis,
Mo.
(Chairman)
President, The Merchants National Bank of Cedar
James E. Coqulllette
Rapids, Cedar Rapids, Iowa
President, First National Bank of Council Bluffs,
Dale Ball
Council Bluffs, Iowa
President, The First National Bank of Topeka,
Charles Clevenger
Topeka, Kans.
Donald E. Lasater
President, Mercantile Trust Co., N.A., St. Louis,
Mo.
Chairman of the Board, National Bank of ComGlenn Yaussi
merce Trust & Savings Association, Lincoln,
Nebr.
Edward Cosgriff
President, City National Bank of Hastings, Hastings, Nebr.
Thomas R. Smith
President, The First National Bank of Perry,
Perry, Iowa
A. J. Collins
President, Hutchinson National Bank & Trust Co.,
Hutchinson, Kans.
A. Dwight Button
Chairman, The Fourth National Bank & Tmst Co.,
Wichita, Kans.
Ray Evans
President, Traders National Bank of Kansas City,
Kansas City, Mo.
Milton Tootle, Jr.
President, The American National Bank of S t
Joseph, St. Joseph, Mo.
H D. Kosman
President, The Scottsbluff National Bank, Scottsbluff, Nebr.
Region 11 meeting dates, October 9,1969, and May 19,1970.
George A. Nicoud, Jr.
Executive Vice President, First National Bank m
(Chairman)
Dallas, Dallas, Tex.
Clark Bass
President, First National Bank of McAlester,
McAlester, Okla.
President, Republic National Bank of Tulsa, Tulsa,
John Cleary
Okla.
397-702 0—71
33
492
1970 REPORT OF THE SECRETARY OF THE TREASURY
President, The First National Bank, Panhandle,
Tex.
President, Central National Bank & Trust Co. of
W. L. Stephenson, Jr.
Enid, Enid, Okla.
President, El Paso National Bank, El Paso, Tex.
Sam D. Young, Jr.
President, Longview National Bank, Longview,
Jasper Allbright
Tex.
President, Central National Bank of Oklahoma
Dan Lacy
City, Oklahoma City, Okla.
President, The Lubbock National Bank, Lubbock,
Charles E. Maedgen, Jr.
Tex.
Chairman of Executive Committee, The Laredo
Max A. Mandel
National Bank, Laredo, Tex.
President, First National Bank in Brownwood,
Jack Pilon
Brownwood, Tex.
President, Bank of the Southwest, N.A., Houston,
Robert Stewart, Jr.
Tex.
Region 12 meeting dates, November 20,1969, and June 25,1970.
Chairman of the Board, Denver United States
Roger D. Knight, Jr.,
National Bank, Denver, Colo.
(Chairman)
President, First National Bank of Colorado
Thomas S. Moon
Springs, Colorado Springs, Colo.
President, First National Bank of Hobbs, Hobbs,
Reed H. Chittim
N. Mex.
Chairman of the Board and President, Rock
John W. Hay, Jr.
Springs National Bank, Rock Springs, Wyo.
President, The Wyoming National Bank of Casper,
R. W. Miracle
Casper, Wyo.
President, First Security Bank of Utah, N.A.,
Harold J. Steele
Salt Lake City, Utah
Sherman H. Hazeltine
Chairman of the Board, First National Bank of
Arizona, Phoenix, Ariz.
George B. McKinley
President, First National Bank in Grand Junction,
Grand Junction, Colo.
Donald F. Delano
President, The Burns National Bank of Durango,
Durango, Colo.
Robert U. Hansen
President, The First National Bank of Wray,
Wray, Colo.
Edward H. Tatum, Jr.
Chairman of the Board, The First National Bank
of Santa Fe, Santa Fe, N. Mex.
A. Edward Kendig
President, First National Bank in Wheatland,
Wheatland, Wyo.
Region 13 meeting dates, September 5,1969, and May 1,1970.
Kenneth McElhaney
President, The Bellingham National Bank, Bellingham, Wash.
(Chairman)
William G. Moran
President, The First Natipnal Bank of Ketchikan,
Ketchikan, Alaska
B. L. Kunkel
President, The First National Bahk Pf Butte,
Butte, Mont.
Ralph J. Voss
President, First National Bank of Oregon, Portland, Oreg.
V. L. Moore
President, The National Security Bank of Newport, Newport, Oreg.
James Brennan
President, First National Bank in Spokane,
Spokane, Wash.
Andrew Price, Jr.
Chairman, National Bank of Commerce of Seattle,
Seattle, Wash.
Thomas C. Frye
President, The Idaho First National Bank, Boise,
Idaho
Adrian O. McClellan
President, The First National Bank of Great Falls,
Great Falls, Mont.
R. C. Smith
President, The First National Bank of Enumclaw,
Enumclaw, Wash.
T. A. Vashus
President, First National Bank of Glendive, Glendive. Mont.
Eugene M. Phillips
EXHIBITS
493
President, The Conrad National Bank of Kalispell,
Kalispell, Mont.
Region 14 meeting dates, October 31,1969, and April 3,1970.
President, San Joaquin Valley National Bank,
Wayland T. Davis
Tulare, Calif.
(Chairman)
President, Wells Fargo Bank, N.A., San Francisco,
Richard P. Cooley
Calif.
President, Escondido National Bank, Escondido,
Wallace H. McDaniel
Calif.
Chairman of the Board and President, Beverly
David H. Rowep
Hills National Bank, Beverly Hills, Calif.
President, The First National Bank of Orange
Carl E. Schroeder
County, Orange, Calif.
Chairman of the Board and President, Hawaii
K. J. Luke
National Bank of Honolulu, Honolulu, Hawaii
Arthur M. Smith
Chairman of the Board and President, First National Bank of Nevada, Reno, Nev.
Rayburn S. Dezember
Chairman of the Board and President, Bakersfield
National Bank, Bakersfield, Calif.
Arthur W. Foster
Chairman of the Board and President, The First
National Bank of Cloverdale, Cloverdale, Calif.
Howard W. Rathbun
President, The First National Bank of San Jose,
San Jose, Calif.
Edward L. S. Evans
President, Valley National Bank, Salinas, Calif.
Warren R. Harding
President, The First National Bank of Pleasanton,
Pleasanton, Calif.
Eugene O. Gillette
STATISTICAL APPENDIX
TABLES
[The statistical tables to this annual' report will be published in the separate
''Statistical Appendix."
INDEX
A
Page
Accounts, Bureiau of, administrative report
94-101
Administrative management
61-5
Advisory committees
47^-83
Asian Development Bank
50, 53-4, 413-15,415-6, 422-3
Aissistant Secretary Cohen:
Remarks Pn tax reform:
September 4, 1969
328-50
Assistant Secretary Petty:
Remarks on economic factors of North America:
May 28, 1970
455-61
Assistant Secretary Rossides:
Remarks on:
Law enforcement:
April 16, 1970
374-80
April 23, 1970
380-6
June 9,1970
386-95
June 24,1970
402-5
Silver operations:
October 20, 1969
466-71
June 18,1970
471
Assistant Secretary Weidenbaum:
Remarks and statements on:
(1) Bconomic policy:
March 13, 1970
281-4
March 24, 1970-—
284-7
April 16, 1970
287-92
May 12, 1970
292-6
June 2,1970
296-308
June 16, 1970
308-11
(2) Employment security:
October 1, 1969
.
352-5
(3) Revenue sharing:
August 27, 1969
_- 368-72
May 18, 1970
—
372-4
Automatic data processing
63,67,84,106-7,120,124,134
B
Baliance of payments:
Comparative
figures
Euro-dollar market
Foreign trade policy
Measures to improve
Policy
Review
Bills, Treasury:
1970 operations
Press releases
Summary, 1970 issues
Bonds, U.S. Savings:
Issuance and redemption
Promotional activities
—
_
-
37-41,450-1
4^-4
350-2, 4 ^ - 3 0
427-29, 435-8
39, 44, 57, 350-2, 451-3
XX-XXII, 37-41, 44^-53
17-23
150-3
154-9
;
___—
—
.
103-6
.,.!__ 131-3
499
500
INDEX
Page
Budget:
Accounting and reporting
Cash and monetary assets
Concept, accrual basis
Means of
Policy
Receipts, outlays, and net lending
Surplus or deficit
See also Taxation: "Tax Aids."
.
:
financing
-
96-7
6-7
8-9
3
XVII, 62-3, 296-308
:
XVII, 4-6
3
.
Charts:
Budget 1961-70
4
Coin production, U.S., 1793-June 30, 1970
129
Market yields, 1964-70
12
Organization of the Department of the Treasury, June 30, 1970
XIII
Ownership of Federal securities, June 30, 1970
_
17
Private holdings of marketable Federal securities, fiscal years 1966-7014
Reserves, imports and Fund quotas
417
U.S. Position in the I M F .
420
Claims against foreign governments, payment of
__ 99-100
Circular, Department, Numbers:
8-69, September 18, 1969
143-5
6-70, April 30, 1970
145-7
Coins, production by U.S. mints
128-9
Coinage Act of 1969, proposed.
464-71
Comptroller of the Currency, Office of the:
Administrative report
.
66-70
Advisory committees
485-93
Congressional testimony by Treasury officials, other than that reprinted
herein
462
Conscience fund
101
Consolidated Federal Law Enforcement Training Center:
Treasury orders concerning
462-3, 472-3, 477-8
Counterfeiting. See Investigative activities: U.S. Secret Service.
Corporation income taxes. See Taxation : Income and profits taxes.
Corporations and other business-type activities of the Federal Government:
Review for 1970
7-8
Currency:
Production
90
Issued and redeemed—
..--.
109-10
Customs (see aZso Enforcement) :
Antidumping and countervailing duties
XX, 26, 76
Antiheroin program
24, 71-2, 374^-82, 385
Bureau of, administrative report
71-86
Cargo theft program
XIX, 72, 379, 402-5
Carriers and persons entering the United States
73
Collections and payments
73
Containerization
79
Courts and Administrative Reform Act
72
Detector dog program
82
Drawback allowances
77
Facilities management
.
75
Foreign customs assistance
74
Foreign trade zones
85-6
Intemational conferences
^
82-3
Mail operations
80
Regulations
.
77
D
Debt management. See Federal debt: Management.
Defense lending
Deposits, withdrawals and balances in Treasurer's account
100
108
INDEX
501
Page
Depositary services
r 98, 108
—
Deputy Under Secretary for Monetary Affairs MacLaury Statement on
Federal credit programs in the 1970's:
October 4, 1969
320-4
Director of Practice, Office of the, administrative report
86-7
Disbursing operations
97-8
Domestic Gold and Silver Operations, Office of, administrative report
87-9
Doniestic International Sales Corporation
j
XXII, 28, 34, 55, 351-2, 429
Drugs. See Law Enforcement developments.
Drug seizures
_
85
E
Economic conditions:
Policy
XXII, 278-311, 296-304, 308-11
Review
XV-XVII, 293-5
Emergency preparedness
61
Enforcement activities (see also Investigative activities; Law Enforcement) :
Customs, Bureau of
80-2, 376-9, 402-5
Internal Revenue Service
.
188-22
Operation Intercept/Cooperation
XIX, 24, 71, 376
Engraving and Printing, Bureau of, administrative report
89-94
Environment:
EcPnomics and the environment
308-11
Environmental Financing Authority
364-5, 367
Tax on lead additives used in motor fuels, proposed—:
XVII, 28, 355-6
Tax treatment of pollution control facilities
348, 350
Estate and gift taxes, ^ee Taxation: Estate and gift taxes.
Excise taxes. See Taxation: Excise taxes.
Executive Protective Service
27,136
Bxpenditures. See Outlays.
Exchange and Stabilization agreements
-- 9, 48, 461
Federal credit programs.
295, 300-02, 317-24, 364-7
Federal debt («ee aiso Public debt) :
Advisory Committees
- — 479-83
Changes in Federal: Securities
-—•.
12-17
Disposition of marketable Treasury securities
23
Financing operations
17-23
Management, 1970 review
_:
11-23
Offering of marketable Treasury securities
22
Ownership of public debt securities
.
14^17
Policy
XIX, 311-20
Federal-State Unemployment Insurance System
352-5
Federal Tax Deposit System
100-01, 110, 116
Fiscal Service administrative reports...^
94-101
Firearms law enforcement
'.—
'..121
Food coupon program
.__
91
Foreign Assets Control, Office of, administrative report
_.
112-13
Foreign exchange developments and operations
.
.
45-8, 57
G
General Agreement on Tariffs and Trade (GATT)
General Counsel Eggers:
Statement on the coinage act of 1969:
Odbober 1, 1969
Gold:
Production, use and control
'.
Regulations, amended
South African
——
Stock
_____
_
Two-tier system
^^-_—__— 26, 55,415
464-6
-.__ 88-9
88
48, 440, 443-8
XXI, 107, 440
;
43^-43
502
INDEX
Page
Government corporations, ^ee Corporations and other business-type activities of the Federal Goverament.
Government losses in shipment
101,473
Government-wide financial management
8-9,95-6
Group of Ten
410-11
I
Income taxes, ^ee Taxation: Income and profits taxes.
Indebtedness of foreign governments to the United States
'.
99
Interest equalization tax. See Taxation : Excise taxes.
Inter-American Development Bank
50,52-3, 423-6,430-4
Internal revenue, collections and refunds..
116-17
Internal Revenue Service: (See also Director of Practice)
Administrative report
113-27
Advisory committees
.
— 484-5
Taxpayer assistance.
:
114-15
Intemational financial and monetary affairs (see a^o Balance of
payments) :
Review
—
XX-XXII, 37-57, 405-10, 413-15, 426-30
U.S.-Canadian economic relationships
.__.^—.
455-61
Intemational Monetary Fund (IMF) :
Annual review
49-50, 405-10
General Arrangements to Borrow (GAB)
42, 410-11, 456
South African gold
.
XXI, 41, 440-1, 443-8
Special Drawing Rights
XX, 9, 37, 41-2, 49, 405, 411-12
U.S. Drawings
461-2, 419-21
U.S. reserve position
XXI, 48, 49, 418-9
Quota increase proposal
XX, 42, 415-6, 439-43
World reserves
:
. 43, 440
International Bank for Reconstruction and Development (IBRD). ;S^ee
World Bank.
International tax matters
35-7,122-4
INTERPOL
27, 472
Investigative activities:
Customs, Bureau of
84-5
Internal Revenue Service
'.
. . 126-7
U.S. Secret Service
136-9
Investments of Govemment accounts in public debt securities
13,18
Joint Cominission on the Coinage
.
Joint Financial Management Improvement Program
Law enforcement developments. See also Customs
Law enforcement. Office of
^
Administrative report
Treasury orders concerning
:
Letters of credit
464-6, 468-71
._ 9, 471-2
XIX-XX, 24-7, 374-405
XX, 25-6
65-6
462-3,472-3,477-8
110
M
Management improvement program
Mint, Bureau of:
Administrative report
Philadelphia Mint
61, 73,94,95,102,106-07,133-4,135
127-31
130-1
INDEX
503
N
Page
National banks, status
New Federalism, ^ee Revenue Sharing
Notes, U.S. Government. See also Currency:
1970 operations
Savings, regulations, amended and revised
Summary, 1970 issues
68-70
18,20-3
20
148-9
o
Officers, administrative and staff of the Department of the Treasury
VIII-XI
Operations, Office of:
Administrative report
66
Orgamzation
25
Order of succession
473-4
Orders, Department of the Treasury
462-3, 472-8
Organization chart of the Department of the Treasury, June 30, 1970
XIII
Organization for Economic Cooperation and Development (OEDC) 36-7, 56-7
Outlays:
1961-70 budget
—
4
1961-70 by major agencies
—
—
6
P
Participation certificates
13
Personnel management
.- 63-4
Postage stamp program
90
Postal Savings System, liquidation
100
President Nixon:
Message to the Congress on revenue sharing:
August 13, 1969
356-9
Statement on:
Tax reform:
December 30, 1969
— 324-5
Press release on:
Request for legislatipn of an environmental control tax on lead
additives used in motor fuels:
May 19, 1970
355-6
Memorandum on:
Joint Financial Management Improvement Program: August 12,
1969
471-2
Public debt (see also Federal debt) :
Bureau of the, administmtive report
101-06
Circulars
:_
143-7
Donations toward reduction of
;
—
.
101
Financing operation, summaries
;
22-3
Legislation
278
Regulati'ons, amended and revised
160-278
Statutory limit
278, 311-16
R
Receipts:
1961-70 budget
4
Budget
—
3-6
Reconstruction Finance Corporation (RFC) (in liquidation)
100
Retailers excise tiaxes. See Taxation : Excise taxes.
Revenue Sharing
. XVIII, 10-11, 356-74
504
n^DEX
Secretary of the Treasury Kennedy:
Remarks and statements on:
Fiscal and economic policy:
^^^®
February 19, 1970
.
278-281
International financial and monetary affairs:
July 28, 1969
405
September 30, 1969
405-10
April 10, 1970
413-5
April 16, 1970
415-23
Anril 23, 1970....
423-6
May 12, 1970
350-2
May 20, 1970
426-30
June 30,1970
430-4
Public debt limit:
May 25, 1970
311-14
June 18,1970
314-6
Tax reform:
September 4, 1969
325-8
Revenue Sharing
359-62
Secretary, Under Secretaries, General Counsel, Assistant Secretaries, and
Deputy Under Secretaries for Monetary Affairs of the Department of the
Treasury:
January 21, 1960-July 1, 1970
.
VII
Secret Foreign Bank Accounts. See Law enforcement developments.
Silver (see also Coins) :
Holdings
107
Policy
464-71
Regulations, amended
;
^
464-71
Sales
.
89, 130, 471
Special Drawing Rights, ^ee International Monetary Fund.
Strike forces
120-21, 139
T
Tariff and Trade Affairs:
Office of, administrative report
.
66
Operations
26
Policy, international
54-5, 350-2
Taxation:
Air transport
—_
35
Developments 1970
.
324-56
DISC: See Domestic International Sales Corp.
Employment taxes, receipts
5
Estate and gift taxes, receipts
6
Excisetaxes:
Interest equalization tax
57, 435-8
Lead additive tax proposal
XVII, 28, 355-6
Receipts
5
Recommendations and legislation
XVII, 348, 355-6
User charges
28,35
Income and profits taxes:
Corporation
.
5, 332, 339-40, 344, 346-7
Individual, receipts
5, 330-2, 338-9, 344-6
Recommendations, regulations, and legislation
330-2, 338-40, 344-7
Surcharge proposals
XVII, 34, 332, 348
International tax matters
35-7,122-4, 340-2, 351-2
Investment credit and accelerated depreciation
29, 326-7, 333, 344, 348
President's recommendations
328-50
Private foundations
34, 327, 332-3
Small Business
.
34
"Tax Aids"
302-4, 306-8
Tax Reform Act of 1969
XVIII, 27-34,115,124, 324-50
Tax treaties
36
INDEX
505
Treasurer of the United States:
^^^
Account of the
6-7, 107-8
Office of the, administrative report
.
106-12
Securities held in custody
^—^
111
Treasury, Department of the:
Circulars, Department. See Circulars, Department.
Liaison Committee of the Business Council
483
Officers, administrative and staff, July 1, 1970
VIII-XI
Organization and procedure orders
462-3, 472-8
Organization chart, June 30, 1970XIII
Secretary, Under Secretaries, General Counsel, Assistant Secretaries,
and Deputy Under Secretaries for Monetary Affairs: January 21,
1969-July 1, 1970
VII
Under Secretary of the Treasury for Monetary Affairs Volcker:
Letter to Congressman Reuss, January 9, 1970, on the handling of
South African gold
443-4
Remarks and statements on:
Fiscal and financial policies:
March 17, 1970
316-20
Interest equalization tax:
September 3, 1969
.
435-8
I.M.F. quota increases and two-tier goldmarket arrangements:
November 14, 1969
.
439-43
Balance-of-payments situation:
February 19, 1970
448-51
Balance-of-payments and international monetary arrangements:
April 20, 1970
.
451-5
u
U.lS. savings bonds. See Bonds, U.S. Savings.
U.S. Savings Bonds Division, administrative report
U.S. Savings notes, ^ee Notes, U.S. Government: Savings.
U.S. Secret Service, administrative report
Under Secretary of the Treasury Walker:
Remarks on:
Revenue Sharing:
March 23, 1970
131-35
135-39
362-8
w
World Bank:
Annual review
—
50-2, 405-10
International Development Association (IDA), affiliate of
50
International Finance Corporation (IFC), affiliate of Inter-American
Development Bank. See Inter-American Development Bank.
Subscription increase proposal
415-6, 421-2
o
@FedFRASER