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

Dallas, Texas, September 5, 1963

A D V A N C E REFUNDING

To All Banking Institutions and Others Concerned
in the Eleventh Federal Reserve District:

The following material relating to an advance refunding by the Treasury Department is enclosed: ( 1 ) press
release issued by the Treasury Department on September 4, 1963, ( 2 ) an appendix to paragraph No. 9 of the
press release relative to the treatment of gain or loss for Federal income tax purposes in connection with the
exchange, ( 3 ) an announcement of the Advance Refunding Offer, ( 4 ) Treasury Department Circulars,
Public D ebt Series Nos. 14-63, 15-63, and 16-63, and ( 5 ) official subscription forms.
Securities eligible for exchange
and their maturity dates
3 V i% C o fI , B-1964 5 /1 5 /6 4
43
/4% notes, A-1964 5 /1 5 /6 4
33/4% notes, D-1964 5 /1 5 /6 4

Securities offered in exchange
and their maturity dates

(
(
\

“Junior
33/4%
4%
3s %
/s
33/ 4 %

bonds,
1966 5 /1 5 /6 6
notes, A-1966 8 /1 5 /6 6
notes, B-1967 2 /1 5 /6 7
notes, A-1967 8 /1 5 /6 7

i
l

(

Prerefunding
3 % % bonds, 1968 (new issue)
4%
bonds, 1973 (new issue)
4Vs% bonds, 1989-94 (addl. issue)

1 1 /1 5 /6 8
8 /1 5 /7 3
5 /1 5 /8 9 -9 4

Advance Refunding
4%
bonds, 1973 (new issue)
4 1 % bonds, 1989-94 (addl. issue)
/8

8 /1 5 /7 3
5 /1 5 /8 9 -9 4

The securities to be exchanged should accompany the subscriptions and final settlement will be made on
September 18, 1963.
All subscribers requesting registered securities will be required to furnish appropriate identifying numbers
as required on tax returns and other documents submitted to the Internal Revenue Service, i.e., an individual’s
social security number or an employer identification number.
The subscription books will be open for all classes of subscribers on September 9 through September 13,
1963. Subscriptions placed in the mail before midnight, Friday, September 13, will be considered timely. Sub­
scriptions will be received at this bank and its branches at El Paso, Houston, and San Antonio, and should be
submitted on the enclosed forms. Additional circulars and forms will be furnished upon request.
Yours very truly,
Watrous H. Irons
President

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

TREASURY DEPARTMENT
WASHINGTON, D .C .
September 4 , 1963
FOR IMMEDIATE RELEASE
ADVANCE REFUNDING OFFER

The Treasury today announced th at i t w i l l o f f e r h olders o f seven
is s u e s o f outstanding Treasury s e c u r it ie s an opportunity to extend
th e ir h old in gs at a t t r a c t iv e y i e l d s .
$ 2 3 .0 b i l l i o n o f these s e c u r it ie s
are h eld by the p u b lic .
Including $ 9 .1 b i l l i o n o f h oldings by o f f i c i a l
acco u n ts, there are $ 3 2 .1 b i l l i o n o f these is s u e s ou tstan d in g.
The current o ffe r in g combines a "j u n i o r " advance refunding o f
c e r ta in s e c u r it ie s maturing in 1966 and 1967 w ith a "p r e -r e fu n d in g " o f
a l l s e c u r it ie s maturing on May 1 5 , 1964.
Holders o f s e c u r it ie s e l i g i b l e fo r exchange w i l l have the option
through a l l o f next week o f exchanging them fo r three new issu e s as
f o llo w s :

S e c u r itie s e l i g i b l e fo r exchange
and t h e ir m aturity dates

S e c u r itie s o ffe r e d in exchange
and t h e ir m aturity dates

P re-refu ndin g
3 -7 /8 % bonds, 1968 (new)

1 1 /1 5 /6 8

bonds, 1973 (new)

8 /1 5 /7 3

3 -1 /4 % c t f s . ,

5 /1 5 /6 4 )

3 -3 /4 % notes *

5 /1 5 /6 4 )

4%

4 -3 /4 % n o te s ,

5 /1 5 /6 4 )

4 -1 /8 % bonds, 1 9 89-94
(a d d l. is s u e )

3 -3 /4 % bonds,

Junior Advance Refunding
5 /1 5 /6 6 )
bonds, 1973 (new)
4%

4%

n o te s ,

8 /1 5 /6 6 )

3 -5 /8 % n o te s ,

2 /1 5 /6 7 )

3 -3 /4 % n o te s ,

8 /1 5 /6 7 )

D-961

5 /1 5 /8 9 -9 4

8 /1 5 /7 3

4 -1 /8 % bonds, 1 9 89-94
5 /1 5 /8 9 - 9 4
(a d d l. is s u e )

2

The Background o f this Advance Refunding
This advance refunding i s another part o f a continu in g debt
management program designed to finance the Government's requirements
at the low est p ra c tic a b le c o s t , w hile a ls o fu rth erin g the growth and
expansion o f the American economy, h elping to r e sto re balance o f
payments e q u ilib riu m , and developing a m aturity stru ctu re o f the debt
i t s e l f that w i l l co n trib u te to f l e x i b l e operations a t minimum c o s t in
the fu tu r e .
By o ffe r in g h olders o f outstanding issu e s w ith coupons o f
3 -1 /4 % to 4 -3 /4 % an opportunity to in v e st fo r longer periods at
coupon y ie ld s o f 3 -7 /8 % to 4 -1 /8 % , the Treasury w i l l accomplish
fu rth er needed re stru c tu rin g o f the outstanding debt as a coordinate
part o f i t s program fo r carryin g out these in t e r -r e la t e d o b je c t iv e s .

During the remainder of calendar 1 9 63, the Treasury must raise
a net amount of approximately $6 billion in cash. The present
intention is that the great bulk of this cash financing will be
accomplished through offerings of Treasury bills, possibly including
tax anticipation bills. The Treasury will, of course, adjust the
timing and magnitude of these borrowing operations with a view not
only to the pattern of its cash requirements and the needs of the
balance of payments situation, but also to assure that the growth of
the very short-term debt does not exceed the needs of the economy.
The Treasury must also attempt, from time to time, to reduce the debt
in the one-to-five-year maturity area, in order for the market to be
able to absorb readily future borrowing within that area.
In the p re-refu n d in g p ortion o f th is o p era tio n , the Treasury i s
seeking to reduce the t o t a l s iz e o f the se c u r ity issu e s maturing on
May 1 5 , 1 9 64, o f which $ 8 .0 b i l l i o n are held by the p u b lic .
This is
a la rg e r q u a rterly m aturity than any other now ou tstan din g.
The
ju n io r advance refu n d in g , by reducing the amount o f debt maturing in
1966 and 1967, w i l l help to s im p lify the T rea su ry's problems o f
refunding maturing o b lig a tio n s in the years immediately ahead.

With the economy still operating well below capacity levels, the
Treasury has a continuing concern that its actions shall not reduce
the availability of capital for constructive investment nor place
upward pressures on long-term interest rates. Past experience with
advance refundings which were conducted under comparable market
conditions suggest that such operations mav have a helpful catalytic
effect in testing and clarifying the absorptive capacity of the
long-term market without any appreciable effect on long-term interest
rates.

3
Debt management operations during the f i r s t seven months o f
calendar 1963 have la id a strong foundation fo r the achievement o f the
T rea su ry 's o b je c tiv e o f n o n -in fla tio n a r y fin an cin g o f the budget
d e fic it.
D espite in creasin g use o f Treasury b i l l s during the
January-July period o f th is y e a r, the Treasury has reduced the t o t a l
debt maturing w ithin one year by $ 2 .0 b i l l i o n over the same p eriod .
The debt maturing in o n e -t o -f iv e years has been reduced by $ 3 .6 b i l l i o n .
During the same span o f tim e , the debt maturing beyond fiv e years has
been increased by $ 6 .1 b i l l i o n .
This change in stru ctu re has been accompanied by a sharply
reduced r e lia n c e on the banking system in fin an cing the d e f i c i t .
The
estim ated h oldings o f Government s e c u r it ie s by a l l commercial banks
have a c tu a lly d eclin ed by $ 4 .3 b i l l i o n during the f i r s t seven months
o f calendar 1963.
Perhaps even more s i g n i f i c a n t , commercial bank
h oldings o f Government s e c u r it ie s on July 31 , 1963 were only about
$100 m illio n higher than they were at the end o f 1960, d e sp ite the
fa c t that the t o t a l outstanding Government debt has r is e n by $ 1 5 .1
b i l l i o n during th at p eriod .
In s h o r t , the debt re stru c tu rin g accomplished thus fa r in
calendar 1 9 63, togeth er with the re stru c tu rin g which w i l l be
accomplished by th is advance refu n d in g, should assure tha-t-, the budget
d e f i c i t w i l l be financed in a n o n -in fla tio n a r y manner, and should
co n trib u te fu rth er toward th is c o u n try 's economic growth and i t s
e x te rn a l b alan ce.
Advance Refunding High Coupon Issu es
T y p ic a lly , advance refundings have involved the exchange o f
outstanding s e c u r it ie s fo r new issu e s carryin g higher coupon ra te s
o f in te r e s t.
However, as advance refunding continues to evolve as
a debt management t o o l , there w i l l be occasions in which holders o f
outstanding high-coupon s e c u r it ie s w i l l be o ffe re d exchange options
in v o lv in g new issu e s w ith lower coupon ra te s o f i n t e r e s t .
I t is
im portant, t h e r e fo r e , that in v e sto rs become f u l ly aware o f the
advantages which can accrue to them in an advance refunding exchange
o f r e l a t i v e l y high coupon issu e s fo r issu e s carryin g lower coupons.
In the present advance refu n d in g, holders o f the 4 -3 /4 % notes o f
May 19 64, for example, are being o ffered an a t t r a c tiv e " opportunity
to exchange th e ir h oldings ip th is issu e for longer-term s e c u r it ie s
bearing lower coupon ra te s o f in t e r e s t - - ranging from 3 -7 /8 % for
the 1968 m aturity to 4 -1 /8 % for the 1989-94 m atu rity.
The
fin a n c ia l advantage which w i l l accrue to the holders o f the
4 -3 /4 % notes in making th is exchange i s , however, as great as the
f in a n c ia l advantage o ffe re d to the o th e r, lower coupon

-

4

-

e l i g i b l e issu e s maturing in May 19 6 4 , the 3 -1 /4 % c e r t i f i c a t e s and the
3 - 3/4% n o te s .
This com parability among the variou s options is
accomplished by the estab lish m en t o f d if fe r e n t adjustment payments to
be paid by the Treasury.
In the present c a s e , f u l l allowance has been
made fo r the d iffe r e n c e s in in t e r e s t over the period from now u n t il
next May as between the 4 -3 /4 % issu e and any o f the 3 -7 /8 % , 4% and
4 - 1/8% issu e s o ffe re d in exchange.
These adjustm ents are based on the
d iffe r e n c e s between the current market valu es o f the e l i g i b l e
s e c u r it ie s and the in d ica ted current market valu es o f those being
o ffe r e d in exchange.
In a d d itio n , the adjustment payment a ls o in clu des
an amount s u f f i c i e n t to improve s u b s t a n t ia lly the e f f e c t i v e y ie ld on
the new issu e s over the current market le v e l o f y ie ld s fo r the
m a tu ritie s in v o lv ed .

As an illustration, a holder of the 4-3/4% notes of May 1964 who
exercises the option to exchange into the 4% bonds of August 1973 will
receive, in the form of an immediate payment from the Treasury, not
only the full value of the coupon difference from now until the maturity
of the 4-3/4's next May but, in addition, an investment yield of more
than 4-1/8% on a security which will mature in 9 years and 11 months.
D e ta ils in the Advance Refunding
The su b sc rip tio n books fo r th is o ffe r in g w i l l be open beginning
Monday, September 9 , and w i l l remain open through F rid a y, September 1 3 ,
1 9 63, fo r a l l c la s s e s o f su b sc r ib e r s .
Payment date i s Wednesday,
September 1 8 , 1 9 63, w ith in t e r e s t adjustments as o f September 15.
The amounts o f cash payments due to su b scrib ers under each
p o s s ib le exchange, the amounts o f accrued in t e r e s t ad justm en ts, and
the investment y ie ld s and reinvestm ent ra te s are s e t fo r th in the
attached t a b le s .
Other d e t a i ls r e la t in g to th is advance refunding
may be found in the formal o ffe r in g c i r c u la r s .

Table 1.

Payments to and by the Subscriber in the September 1963
Advance Refunding
(in dollars per $100 of face value)

Securities eligible
for exchange

'Pre-refunding"j
3-1/4# Certificate, 5 /l5 /6 4 .
4-3/4# Note, 5 /1 5 /6 4 ............
3-3/4# Note, 5 /1 5 /6 4 ............

Accrued intere:at
Adjustment
to September 15j 1963
payments
Net amount
Net
Payable : Payable
to
to be paid
accrued
to
:
by
subscriber
interest
sub: sub­
(on ac­
•
payable
•
scriber : scriber
count of
•
to
on
:
on
purchase
To
!
By
sub­
issues : offered
price of
Subscriber!Subscriber
scriber
to be
: issues
offered
•
*
exchanged;
Issues)
1/
—
For the 3-7/8# bond. November 15, 1968

1

.650000 1.086277
1.600000 I .587636
.950000 1.253397

1.086277
I .587636
1.253397

1.736277

3.187636
2.203397

For the 4# bond, August 15, 1973
3-1/4# Certificate, 5/15/64.
4-3/4# Note, 5/15/64 ............
3-3/4# Note, 5/15/64 ............

1.150000 1.086277
2.100000 1.587636
1.450000

1.253397

1.086277
1.587636
1.253397

2.236277

3.687636
2.703397

For the 4 -l/8 # bond, May 15, 1989-94
3-1/4# Certificate, 5/15/64.
4-3/4# Note, 5/15/64 ............
3-3/4# Note, 5/15/64 ............

1.350000 1.086277 1.686402 -.600125
2.300000 1.587636 1.686402 -.098766
1.650000 1.253397 1.686402 -.433005

.749875
2.201234
1.216995

'Junior refunding"j
For the 4# bond, August 15; 1973
3-3/4# Bond, 5/15/66 ............
4# Note, 8/ 15/66 ....................
3-5/8# Note, 2/15/67 ............
3-3/4# Note, 8/15/67 ............

1.150000

1.800000
.400000
.700000

1.253397
.336957
.305367
.315897

1.253397
.336957
.305367
.315897

2.403397
2.136957
.705367
1,015897

For the 4-1/8# bond, May 15, 1989-94
3-3/4# Bond, 5/15/66 ............
4# Note, 8/ 15/66 ....................
3-5/8# Note, 2/15/67 ............
3-3/4# Note, 8/ 15/67 ............

1.350000 1.253397 1.686402 -.433005
2,000000
.336957 1.686402 - 1.349445
.600000 .305367 1.686402 - 1.381035
.900000 .315897 1.686402 - 1.370505

Office of the Secretary of the Treasury
Office of Debt Analysis
l/

Minus sign indicates net accrued interest payable by the subscriber.

.916995
.650555
.781035
.470505
September 4, 1963

Table 2.

Investment Returns in the September 1963 Advance Refunding

Approximate investment yield
Securities eligible
for exchange

:

Approximate reinvestment rate

from 9/ 15/63 to maturity!/

*

for extension period^/

3
W

•

• 4# Bond : 4-1/8# Bond : 3-7/8# Bond : 4# Bond
: 8/15/73
: 8/15/73 : 5/15/89-94 3 /: 11/ 15/68

"Prerefunding":

: 4-1/8# Bond
: 5/ 1V 89-94 3/

•

•

3-1/1# Certificate 5/15/ 6 k . ., ,

4.02#

4.15#

4.21#

:

4.14#

4.22#

4.24#

4-3/4# Note

5 /1 5 M ....

4.02

4.14

4.20

:

4.13

4.22

4.24

3-3/4 # Note

5 /1 5 /6 4 ....

4.02

4.14

4.20

:

4.13

4.22

4.24

"Junior" refunding:

«
•

3-3/4# Bond

5/ 15/ 66. . . .

1#

Note

6/ 15/ 66. . . .

3-5/8# Note

2/ 15/ 67. . . .

3-3/4# Note

8/ 15/ 67. . . .

Not eligible

n

Office of the Secretary of the Treasury
Office of Debt Analysis

1/
2/
2/

4.21

: Not eligible

4.32

4.28

4.15

4.21

:

I
B

4.34

4.29

4.15

W

4.15

4.21

:

1
8

4.32

4.28

4.14

4.20

:

4.36

4.29

It

September

4,

1963

Yields to nontaxable holders (or before tax) on issues offered in exchange based on prices of eligible
issues (adjusted for payments on account of issue price). Prices are the mean of bid and ask quotations
at noon on September 3/ 1963*
Rate for nontaxable holders (or before tax).
Reopening of an existing security.

APPENDIX TO PARAGRAPH NO. 9
NONRECOGNITION OF GAIN OR LOSS FOR FEDERAL INCOME TAX PURPOSES

Where a bond is offered by the Treasury with a payment (other than the accrued interest adjustment)
to the investor.
Examples:
1. Assume that:
(a) The fair market value of the security offered by the Treasury on the date the subscription
is submitted is $99.50 (per $100 face value).
(b) The payment to the subscriber (discount) on account of $100 issue price is $.80.
(c) The amortised cost basis of the security surrendered on the books of the subscriber is
$100.50 (per $100 face value). (It is assumed that the security surrendered was bought
at a price above $100.50 and that the original premium was reduced prorata over the period
from purchase date to maturity.)
The sum o f the fair market value of the security offered by the Treasury and the payment
to the subscriber is $99.50 plus $.80 or $100.30. This is less than the cost basis of the issue sur­
rendered, therefore, no gain is recognized. The new issue will be entered on the books of the sub­
scriber at a cost basis of $99.70, the cost basis of the issue surrendered less $.80. The gain or
loss between this cost basis and the proceeds of a subsequent sale or redemption of the new
issue will be a capital gain or loss to all investors, except those to whom the securities are stock
in trade. Under present law, if the combined time that the security surrendered and the new
security received in exchange were held exceeds 6 months, the capital gain or loss is long-term,
otherwise it is short-term.
2. The assumptions are the same as in example 1 except that the payment (discount) to the sub­
scriber is now $1.20 (per $100 face value) instead of $.80 in example 1.
The sum of the fair market value of the new security received in exchange by the subscriber
plus the $1.20 payment (discount) is $100.70. This exceeds the cost basis of the security sur­
rendered by $.20. This excess is a recognized gain reportable for the year in which the exchange
takes place. The gain is a capital gain except to those to whom the securities are stock in trade.
Under present law, if the time the security surrendered was held exceeds 6 months, the capita]
gain is long-term, otherwise it is short-term.
The subscriber will carry the new issue received in exchange at a cost basis equal to the basis
of the issue surrendered ($100.50), less the payment ($1.20), plus the amount of the recognized
gain ($.20), or ($100.50 minus $1.20 plus $.20) $99.50.
3. The assumptions are the same as in example 1, except that the cost basis on the books of the
subscriber, of the security surrendered is $99.00 (per $100 face value) instead of $100.50 in
example 1.
The sum of the fair market value of the new issue received in exchange by the subscriber
plus the $.80 payment (discount) is $100.30 (as in example 1). This exceeds the $99.00 cost basis
by more than $.80. However, the amount of the gain reportable for the year of the exchange is
$.80, since the amount of gain recognized cannot exceed the amount of the payment. The nature
of the recognized gain and its treatment is the same as in example 2.
In this case, the subscriber will enter the new security received in exchange on his books at
$99.00, the same cost basis as the security surrendered.

TREASURY DEPARTMENT
Washington, D. C.

September 4, 1963
ADVANCE REFUNDING OFFER

The Treasury today announced that it will offer holders of $32.1 billion of outstanding Treasury
securities an opportunity to extend their holdings at attractive yields. Of this total, $23.0 billion are
held by the public.
The current offering combines a junior advance refunding with a “ prerefunding,” that is, an
advance refunding of issues maturing within the next 12 months.
Holders of securities eligible for exchange have the option of exchanging them, as of September 15,
1963, (with payment for the new bonds to be completed by and delivery to be made on September 18)
for three new issues as follows:
Securities eligible for exchange
Securities offered in exchange
and their maturity dates
and their maturity dates
PREREFUNDING
31
/4% c t f s .,
43,4% notes,
33,4% notes,

B-1964
A-1964
D-1964

5/15/64
5/15/64
5/15/64

/ 3 % % bonds, 1968 (new issue)
)4 %
bonds, 1973 (new issue)
14ys % bonds, 1989-94 (addl. issue)

11/15/68
8/15/73
5/15/89-94

“JUNIOR” ADVANCE REFUNDING
33,4% bonds,
1966 5/15/66
4%
notes, A-1966 8/15/66
8/15/73
( 4%
bonds, 1973 (new issue)
3% % notes,
B-1967 2/15/67
5/15/89-94
/ 4 % % bonds, 1989-94 (addl. issue)
33,4% notes, A-1967 8/15/67
The exchanges will be made on the basis of par for par with accrued interest adjustments as of
September 15, 1963, and with cash payments to subscribers which will approximately equalize current
market values among eligible issues having different coupons and maturities, and provide an attractive
exchange value for each of the issues offered. The amount of the offering will be limited to the amount
of securities accepted in exchange. Cash subscriptions are not invited.
The exchanges will not be treated as a sale and purchase for tax purposes; therefore, there will be
no recognition of gain or loss for Federal income tax purposes solely on account of the exchange of old
for new securities. Details are presented in the following paragraph No. 9.
The subscription books will be open beginning Monday, September 9, and will remain open through
Friday, September 13, 1963, for all classes of subscribers.
Further details of the offering, including amounts of cash payments due to subscribers, and the
amounts of accrued interest adjustments, are described below.
Terms and Conditions of the Advance Refunding Offer
1. To all holders of the following outstanding Treasury securities:
Remaining term
Amount
outstanding
to maturity
Final maturity
Description of securities
(in billions)
Issue date
date
Yrs. -Mos.
3^4% certificate B-1964
May 15, 1963
May 15, 1964
— 8
$5.7
43,4% note A-1964
July 20, 1959
— 8
4.9
May 15, 1964
33,4% note D-1964
June 23, 1960
May 15, 1964
—
8
3.9
33,4% bond 1966
Nov. 15, 1960
May 15, 1966
2
8
3.6
4%
note A-1966
Feb. 15, 1962
Aug. 15, 1966
2 11
4.5
3% % note B-1967
Feb. 15, 1967
3
5
4.3
March 15, 1963
33/4 % note A-1967
,
Sept. 15, 1962
Aug. 15, 1967
3 11
5.3
2. New securities to be issued (or additional amount of an outstanding issue):
Amount
outstanding
Description of Securities
Issue date
(in billions) Interest starts1
Interest payable
3% % bond of Nov. 15, 1968 Sept. 15, 1963
—
Sept. 15, 1963 May 15 and Nov. 153
4%
bond of Aug. 15, 1973 Sept. 15, 1963
—
Sept. 15, 1963 Feb. 15 and Aug. 15
41/8% bond of May 15, 19942 April 18, 1963
$0.3
Sept. 15, 1963 May 15 and Nov. 15
1Interest on the securities surrendered stops on September 15, 1963.
2Callable on and after May 15, 1989.
3First interest payment will be May 15, 1964.

3. Terms of the exchange:
Exchanges will be made on the basis of equal face amounts, with payments by the Treasury, and
with adjustments of accrued interest to September 15, 1963, on the securities surrendered and on
the additional issue of bonds (per $100 face amount), as indicated below:
Amounts to be paid to or by subscribers
Payable
On account of
Net amount
to
accrued interest to 9/15/63
subscriber
Payable
Payable
on account
to
by
To be
Extension
To be
of purchase subscriber
subscriber
of
collected
paid
price of
on
on
maturity
from
to
Securities
securities
securities
securities
sub­
sub­
to be
to be
to be
to be
scriber
Yrs. - Mos.
scriber
exchanged
issued
exchanged
issued
FOR THE 3%% BONDS OF 1968
__
4— 6
$1.736277
314% ctf. B-1964
$0.65
$1.086277
4— 6
4% % note A-1964
3.187636
1.60
1.587636
4— 6
2.203397
3% % note D-1964
0.95
1.253397
FOR THE 4% BONDS OF 1973
__
9— 3
3% % ctf. B-1964
$1.15
$2.236277
$1.086277
9— 3
4% % note A-1964
2.10
1.587636
3.687636
—
9— 3
2.703397
3% % note D-1964
1.45
1.253397
—
—
7— 3
3% % bond 1966
2.403397
1.15
1.253397
—
—
7— 0
2.136957
4%
note A-1966
1.80
0.336957
—
—
6— 6
0.705367
3% % note B-1967
0.40
0.305367
6— 0
—
1.015897
3% % note A-1967
1
1
0.70
0.315897
FOR THE 4'/g% BONDS OF 1989-94
—
30 — 0
$1.686402
$0.749875
314% ctf. B-1964
$1.35
$1.086277
.--30 — 0
2.201234
4% % note A-1964
1.686402
2.30
1.587636
334% note D-1964
30 — 0
1.686402
1.216995
1.65
1.253397
28 — 0
33^% bond 1966
1.686402
0.916995
1.35
1.253397
27 — 9
0.650555
4%
note A-1966
2.00
1.686402
0.336957
$0.781035
27 — 3
3% % note B-1967
0.60
1.686402
0.305367
334 % note A-1967
0.470505
26 — 9
1.686402
0.90
0.315897
—
The following coupons should be attached to the securities in bearer form when they are
surrendered:
Securities
Coupons to be attached
314% ctf. B-1964, 434 % note A-1964,
3% % note D-1964, and 3% % bond 1966
Nov. 15, 1963, and subsequent
4% note A-1966, 3% % note B-1967, and 3% % note A-1967
Feb. 15, 1964, and subsequent
4. Payment:
Payment for the new securities must be completed by September 18, 1963. The new securities will
be delivered September 18, 1963. Where the table in the preceding paragraph shows a net amount
to be collected from subscribers such amount should accompany the subscription. Where the table
shows a net amount payable to subscribers the payment will be made by the Treasury, if bearer
securities are surrendered following their acceptance, and if registered securities are surrendered
following discharge of registration in accordance with the assignments on the securities.
5. Limitation on amount of securities to be issued:
The amount of securities to be issued under this offering will be limited to the amount of the
eligible securities tendered in exchange and accepted.
6. Books open for subscriptions for the new securities:
The books will be open for the receipt of subscriptions from Monday, September 9, through Friday,
September 13. Subscriptions placed in the mail by midnight, September 13, addressed to any
Federal Reserve Bank or Branch or the Treasurer, U. S., Washington, D. C. 20220, will be considered
as timely. The use of registered mail is recommended for the security holders’ protection in sub­
mitting securities to be exchanged.
If securities eligible for exchange are pledged with a State or Federal Government agency or
authority and such securities cannot or will not be released by such authority to the pledgor in
time for use in making payment for the securities offered in this exchange, the pledgor may,
nevertheless, enter a subscription. Such subscriptions should be accompanied by a letter signed by
an authorized official of the pledgor explaining the circumstances and, if the authority will not
release the securities, a request and authorization for the Federal Reserve Bank, or Branch, or the
Treasurer of the U. S. (according to where the subscription is directed) to deliver the new
securities to the State or Federal authority in exchange for the old securities held by such authority.
—

—

—

—

—

—

—

—

—

—

7. Requirements applicable to subscriptions:
Subscriptions will be received at the Federal Reserve Banks and Branches and at the Office of the
Treasurer of the United States, Washington, D. C. 20220. Banking institutions generally may
submit subscriptions for account of customers. All subscribers requesting registered securities will
be required to furnish appropriate identifying numbers as required on tax returns and other
documents submitted to the Internal Revenue Service.
8. Denominations and other characteristics of new securities:
The bonds will be issued in denominations of $500, $1,000, $5,000, $10,000, $100,000 and $1,000,000
in coupon and registered forms. The bonds will be acceptable to secure deposits of public moneys.
9. Nonrecognition of gain or loss for Federal income tax purposes:
(a) General — The Secretary of the Treasury has declared pursuant to section 1037 (a) of the
Internal Revenue Code that no gain or loss shall be recognized for Federal income tax purposes
solely on account of the exchange of the securities; however, section 1031 (b) o f the Code requires
recognition of any gain on the exchange to the extent that money (other than interest) is received
by the security holder in connection with the exchange as indicated in (b).
(b) Where the securities to be issued are offered by the Treasury with a payment to the investor
— if the fair market value1 of the securities to be issued plus the amount paid to the investor
(discount) exceeds the cost basis to the investor of the securities to be exchanged, such gain (but
not to exceed the amount of the payment) must be recognized and accounted for as gain for the
taxable year of exchange. He will carry the new securities on his books at the same amount as he is
now carrying the old securities except that he will reduce the cost basis by the amount of the
payment and increase it by the amount of the gain recognized. If the fair market value of the new
securities plus the amount of the payment does not exceed the cost basis of the old securities, the
basis in the new securities will be the cost basis in the old securities reduced by the amount
of the payment.
(c) Gain to the extent not recognized under (b) (or loss), if any, upon the old securities
surrendered in exchange will be taken into account upon the disposition or redemption of the
new securities. (See appendix to paragraph 9 attached.)
10. Federal estate tax option on the 4% % bonds of 1989-94:
The 4Vs% bonds of 1989-94 will be redeemable at par and accrued interest prior to maturity for
the purpose of using the proceeds in payment of Federal estate taxes but only if they are owned
by the decedent at the time of his death and thereupon constitute part of his estate.
11. Book value of new securities to banking institutions:
The Comptroller of the Currency, Board of Governors of the Federal Reserve System, and the
Federal Deposit Insurance Corporation have indicated to the Treasury that banks under their
supervision may place the new securities received in exchange on their books at an amount not
greater than the amount at which the eligible securities surrendered by them are carried on their
books plus the amount of premium, if any, paid on the new securities, or reduced by the amount of
discount, if any, received by the subscriber and increased by the amount of gain, if any, which will
be recognized as indicated in paragraph 9.
12. Computation of reinvestment rate for the extension of maturity:
A holder of the outstanding eligible securities has the option of accepting the Treasury’s exchange
offer or of holding them to maturity. Consequently, he can compare the interest plus (or minus)
any payment, other than the adjustment of accrued interest, he will receive resulting from
exchanging now with the total of the interest on the eligible issues and what he might obtain by
reinvesting the proceeds of the eligible securities at maturity.
The income before tax for making the extension now through exchange will be the coupon rates
plus (or minus) any payment on the new issues. If a holder of the eligible securities does not make
the exchange he would receive the coupon rates on the eligible issues to their maturity and would
have to reinvest at that time at a rate equal to that indicated in paragraph 13 below for the
remaining terms of the issues now offered, in order to equal the return (including any payment)
he would receive by accepting the exchange offer. For example, if the 3% % bonds of 5/15/66 are
exchanged for the 4% bonds of 8/15/73, the investor receives 4% for the entire nine years and
eleven months plus $1.15 (per $100 face value) immediately. If the exchange is not made, a 3% %
rate will be received until May 15, 1966, requiring reinvestment of the proceeds of the 3 % ’s of
1966 at that time at a rate of at least 4.32% for the remaining seven years and three months, all
at compound interest, to average out to a 4% rate for nine years and eleven months plus the $1.15
immediate payment. This minimum reinvestment rate for the extension period is shown in the
table under paragraph 13. The minimum reinvestment rates for the other issues included in the
exchange are also shown in the table under paragraph 13.
1 The mean of the bid and asked quotations on date subscriptions are submitted.

13. Payments on issue price and investment rates on the new bonds offered in exchange to holders of the eligible securities:
3'
4

%

C/Is
5/15/64

3

%%

Notes
5/15/64

43/ %
4
Notes
5/15/64

33/4%
Bonds
5/15/66

4%
Notes
8/15/66

Notes
2/15/67

33/ %
4
Notes
8/15/67

$1.15

$1.80

$0.40

$0.70

3

%%

FOR THE NEW 3%% BONDS OF NOVEMBER 15, 1968
Payments on account of $100 issueprice to subscriber__________ $0.65
Approximate investment yield from exchange date (9/15/63)
to maturity of bonds offered in exchange based on price of
_____________________________ 4.02%
securities eligible for exchange1
Approximate minimum reinvestment rate for the extension
period2 _____________________________________________________ 4.14

$0.95
4.02%
4.13

$1.60
4.02%
4.13

FOR THE NEW 4% BONDS OF AUGUST 15, 1973
Payments on account of $100 issue price to subscriber__________ $1.15
Approximate investment yield from exchange date (9/15/63)
to maturity of bonds offered in exchange based on price of
securities eligible for exchange1
_____________________________ 4.15%
Approximate minimum reinvestment rate for the extension
period2 _____________________________
4.22

$1.45
4.14%
4.22

$2.10
4.14%

4.15%

4.15%

4.15%

4.14/

4.22

4.32

4.34

4.32

4.36

$1.35

$2.00

$0.60

$0.90

FOR THE NEW 4
»/8% BONDS OF MAY 15, 1989-94
Payments on account o f $100 issueprice to subscriber__________ $1.35
Approximate investment yield from exchange date (9/15/63)
to maturity of bonds offered in exchange based on price of
securities eligible for exchange1
______________________________ 4.21%
Approximate minimum reinvestment rate for the extension
period2 _____________________________________________________ 4.24

$1.65
4.20%
4.24

$2.30
4.20%

4.21%

4.21%

4.21%

4.20^

4.24

4.28

4.29

4.28

4.29

1Yield to nontaxable holder or before tax. Based on mean of bid and asked prices (adjusted for payments on account of issue price) at noon on September 3, 1963.
2Rate for nontaxable holder or before tax. For explanation see paragraph 12 above.

UNITED STATES OF AMERICA
3%

PERCENT TREASURY BONDS OF 1968

Dated and bearing interest from September 15, 1963

Due November 15, 1968

Interest payable May 15 and November 15

TREASURY DEPARTM ENT
Office o f the Secretary
Washington, September 5, 1963

DEPARTMENT CIRCULAR
Public Debt Series — No. 14-63

I. OFFERING OF BONDS
1. The Secretary of the Treasury, pursuant to the authority of the Second Liberty Bond Act, as amended,
invites subscriptions from the people of the United States for bonds of the United States, designated 3 % percent
Treasury Bonds of 1968:
( 1 ) at 99.35 percent of their face value in exchange for 3 Vi percent Treasury Certificates of Indebted­
ness of Series B-1964, dated M ay 15, 1963, due M ay 15, 1964;
( 2 ) at 98.40 percent of their face value in exchange for 4 % percent Treasury Notes of Series A-1964,
dated July 20, 1959, due M ay 15, 1964; or
( 3 ) at 99.05 percent of their face value in exchange for 3 3 percent Treasury Notes of Series D-1964,
A
dated June 23, 1960, due M ay 15, 1964.
Interest adjustments as of September 15, 1963, and the cash payments due to the subscriber on account of the
issue prices of the new bonds will be made as set forth in Section IV hereof. The amount of the offering under
this circular will be limited to the amount of eligible securities tendered in exchange and accepted. Delivery of the
new bonds will be made on September 18, 1963. The books will be open only on September 9 through September
13, 1963, for the receipt of subscriptions for this issue.
2. In addition to the offering under this circular, holders of the eligible securities are offered the privilege
of exchanging all or any part of such securities for 4 percent Treasury Bonds of 1973, or 4Va percent Treasury
Bonds of 1989-94 (additional issue), which offerings are set forth in Department Circulars, Public Debt Series—
Nos. 15-63 and 16-63, respectively, issued simultaneously with this circular.
3. Nonrecognition of gain or loss for Federal income tax purposes. — Pursuant to the provisions of section
1037 ( a ) of the Internal Revenue Code of 1954 as added by Public Law 86-346 (approved September 22,
1959), the Secretary of the Treasury hereby declares that no gain or loss shall be recognized for Federal income
tax purposes upon the exchange with the United States of the eligible securities enumerated in paragraph one
of this section solely for the 3 % percent Treasury Bonds of 1968. Section 1 0 31(b) of the Code, however, requires
recognition of any gain realized on the exchange to the extent that money is received by the security holder in
connection with the exchange. T o the extent not recognized at the time of the exchange, gain or loss, if any, upon
the obligations surrendered in exchange will be taken into account upon the disposition or redemption of the
new obligations.
II. DESCRIPTION OF BONDS
1. The bonds will be dated September 15, 1963, and will bear interest from that date at the rate of 3 %
percent per annum, payable on a semiannual basis on M ay 15 and November 15, 1964, and thereafter on M ay 15
and November 15 in each year until the principal amount becomes payable. They will mature November 15,
1968, and will not be subject to call for redemption prior to maturity.
2. The income derived from the bonds is subject to all taxes imposed under the Internal 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.
3. The bonds will be acceptable to secure deposits of public moneys. They will not be acceptable in pay­
ment of taxes.
4. Bearer bonds with interest coupons attached, and bonds registered as to principal and interest, will be
issued in denominations of $500, $1,000, $5,000, $10,000, $100,000 and $1,000,000. Provision will be made for
the interchange of bonds of different denominations and of coupon and registered bonds, and for the transfer of
registered bonds, under rules and regulations prescribed by the Secretary of the Treasury.5
5. The bonds will be subject to the general regulations of the Treasury Department, now or hereafter pre­
scribed, governing United States bonds.

III. SUBSCRIPTION AND ALLOTMENT
1. Subscriptions will be received at the Federal Reserve Banks and Branches and at the Office of the
Treasurer of the United States, Washington, D. C. 20220. Banking institutions generally may submit subscrip­
tions for account of customers, but only the Federal Reserve Banks and the Treasury Department are authorized
to act as official agencies.
2. All subscribers requesting registered bonds will be required to furnish appropriate identifying numbers as
required on tax returns and other documents submitted to the Internal Revenue Service, i.e., an individual’s social
security number or an employer identification number.
3. The Secretary of the Treasury reserves the right to reject or reduce any subscription, and to allot less
than the amount of bonds applied for; and any action he may take in these respects shall be final. Subject to
these reservations, all subscriptions will be allotted in full. Allotment notices will be sent out promptly upon
allotment.
IV. PAYMENT
1. Payment for the face amount of bonds allotted hereunder must be made on or before September 18,
1963, or on later allotment, and may be made only in a like face amount of securities of the three issues enumer­
ated in paragraph 1 of Section I hereof, which should accompany the subscription. Payment will not be deemed
to have been completed where registered bonds are requested if the appropriate identifying number, as required
by paragraph 2 of Section III hereof, has not been furnished; provided, however, if a subscriber has applied for
but is unable to furnish the identifying number by the payment date only because it has not been issued, he may
elect to receive, pending the furnishing of the identifying number, interim receipts and in this case payment will
be deemed to have been completed. Cash payments due to subscribers, as shown below, will be made in the case
of bearer securities following their acceptance and in the case of registered securities following discharge of regis­
tration. In the case of registered securities, the payment will be made by check drawn in accordance with the
assignments on the securities surrendered, or by credit in any account maintained by a banking institution with
the Federal Reserve Bank of its District.
2. 3'A percent certificates of indebtedness of Series B-1964. — Coupons dated November 15, 1963, and
M ay 15, 1964, must be attached to the certificates when surrendered. Accrued interest from M ay 15 to Septem­
ber 15, 1963 ($10.86277 per $1,000) plus the payment ($6.50 per $1,000) due on account of the issue price
of the bonds will be paid to subscribers.
3. 4% percent notes of Series A -1964. — Coupons dated November 15, 1963, and M ay 15, 1964, must be
attached to the notes in bearer form when surrendered. Accrued interest from M ay 15 to September 15, 1963
($15.87636 per $1,000) plus the payment ($16.00 per $1,000) due on account of the issue price o f the bonds
will be paid to subscribers.
4. 3% percent notes of Series D-1964. — Coupons dated November 15, 1963, and M ay 15, 1964, must be
attached to the notes in bearer form when surrendered. Accrued interest from M ay 15 to September 15, 1963
($12.53397 per $1,000) plus the payment ($9.50 per $1,000) due on account of the issue price of the bonds will
be paid to subscribers.
V. ASSIGNMENT OF REGISTERED NOTES
1. Treasury notes in registered form tendered in payment for bonds 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 Office of the Treasurer of the
United States, Washington, D. C. 20220. The notes must be delivered at the expense and risk of the holder. If
the new bonds are desired registered in the same name as the notes surrendered, the assignment should
be to “The Secretary of the Treasury for exchange for 3 % percent Treasury Bonds of 1968”; if the new bonds
are desired registered in another name, the assignment should be to “The Secretary of the Treasury for exchange
for 3 % percent Treasury Bonds of 1968 in the name of_______________________________ ”; if new bonds in coupon
form are desired, the assignment should be to “The Secretary of the Treasury for exchange for 3 % percent
Treasury Bonds of 1968 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 allotments on the basis and up to the amounts indicated by the Secretary of the Treasury
to the Federal Reserve Banks of the respective Districts, to issue allotment notices, to receive payment for bonds
allotted, to make delivery of bonds on full-paid subscriptions allotted, and they may issue interim receipts pend­
ing delivery of the definitive bonds.
2. The Secretary of the Treasury may at any time, or from time to time, prescribe supplemental or amend­
atory rules and regulations governing the offering, which will be communicated promptly to the Federal Reserve
Banks.
D O U G LA S DILLON,
Secretary of the Treasury.

UNITED STATES OF AMERICA
4 PERCENT TREASURY BONDS OF 1973
Dated and bearing interest from September 15, 1963

Due August 15, 1973

Interest Payable February 15 and August 15

TREASURY DEPARTM ENT
Office of the Secretary
Washington, September 5, 1963

DEPARTMENT CIRCULAR

-----------------Public Debt Series — No. 15-63

I. OFFERING OF BONDS
1. The Secretary of the Treasury, pursuant to the authority of the Second Liberty Bond Act, as amended,
invites subscriptions from the people of the United States for bonds of the United States, designated 4 percent
Treasury Bonds of 1973:
( 1 ) at 98.85 percent of their face value in exchange for 3 % percent Treasury Certificates of Indebtedness
of Series B-1964, dated M ay 15, 1963, due M ay 15, 1964;
( 2 ) at 97.90 percent of their face value in exchange for 4 % percent Treasury Notes of Series A-1964,
dated July 20, 1959, due M ay 15, 1964;
( 3 ) at 98.55 percent of their face value in exchange for 3 3 percent Treasury Notes of Series D-1964,
A
dated June 23, 1960, due M ay 15, 1964;
( 4 ) at 98.85 percent of their face value in exchange for 3 % percent Treasury Bonds of 1966, dated
November 15, 1960, due M ay 15, 1966;
( 5 ) at 98.20 percent of their face value in exchange for 4 percent Treasury Notes of Series A-1966, dated
February 15, 1962, due August 15, 1966;
( 6 ) at 99.60 percent of their face value in exchange for 3 % percent Treasury Notes of Series B-1967,
dated March 15, 1963, due February 15, 1967; or
( 7 ) at 99.30 percent of their face value in exchange for 3 3 percent Treasury Notes of Series A-1967,
A
dated September 15, 1962, due August 15, 1967.
Interest adjustments as of September 15, 1963, and the cash payments due to the subscriber on account of the issue
prices of the new bonds will be made as set forth in Section IV hereof. The amount of the offering under this circular
will be limited to the amount of eligible securities tendered in exchange and accepted. Delivery of the new bonds will
be made on September 18, 1963. The books will be open only on September 9 through September 13, 1963, for the
receipt of subscriptions for this issue.
2. In addition to the offering under this circular, holders of all of the eligible securities are offered the privilege
of exchanging all or any part of such securities for 4Vs percent Treasury Bonds of 1989-94 (additional issue), and
the holders of the certificates and notes maturing on M ay 15, 1964, are also offered the privilege of exchanging them
for 3 % percent Treasury Bonds of 1968, which offerings are set forth in Department Circulars, Public Debt
Series — Nos. 16-63 and 14-63, respectively, issued simultaneously with this circular.
3. Nonrecognition of gain or loss for Federal income tax purposes. — Pursuant to the provisions of section
1037(a) of the Internal Revenue Code of 1954 as added by Public Law 86-346 (approved September 22, 1959),
the Secretary of the Treasury hereby declares that no gain or loss shall be recognized for Federal income tax pur­
poses upon the exchange with the United States of the eligible securities enumerated in paragraph one of this sec­
tion solely for the 4 percent Treasury Bonds of 1973. Section 1031(b) of the Code, however, requires recognition of
any gain realized on the exchange to the extent that money is received by the security holder in connection with the
exchange. T o the extent not recognized at the time of the exchange, gain or loss, if any, upon the obligations sur­
rendered in exchange will be taken into account upon the disposition or redemption of the new obligations.
II. DESCRIPTION OF BONDS
1. The bonds will be dated September 15, 1963, and will bear interest from that date at the rate of 4 percent
per annum, payable on a semiannual basis on February 15 and August 15, 1964, and thereafter on February 15 and
August 15 in each year until the principal amount becomes payable. They will mature August 15, 1973, and will not
be subject to call for redemption prior to maturity.
2. The income derived from the bonds is subject to all taxes imposed under the Internal 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.
3. The bonds will be acceptable to secure deposits of public moneys. They will not be acceptable in payment of
taxes.

4. Bearer bonds with interest coupons attached, and bonds registered as to principal and interest, w ill be issued
in denominations of $500, $1,000, $5,000, $10,000, $100,000 and $1,000,000. Provision w ill be made for the inter­
change of bonds of different denominations and of coupon and registered bonds, and for the transfer of registered
bonds, under rules and regulations prescribed by the Secretary of the Treasury.5
5. The bonds w ill be subject to the general regulations of the Treasury Department, now or hereafter prescribed,
governing United States bonds.
III. SUBSCRIPTION AND ALLOTMENT

1. Subscriptions w ill be received at the Federal Reserve Banks and Branches and at the Office 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 official
agencies.

2. All subscribers requesting registered bonds will be required to furnish appropriate identifying numbers as
required on tax returns and other documents submitted to the Internal Revenue Service, i.e., an individual’s social
security number or an employer identification number.
3. The Secretary of the Treasury reserves the right to reject or reduce any subscription, and to allot less than
the amount of bonds applied for; and any action he may take in these respects shall be final. Subject to these reser­
vations, all subscriptions will be allotted in full. Allotment notices will be sent out promptly upon allotment.
IV. PAYMENT
1. Payment for the face amount of bonds allotted hereunder must be made on or before September 18, 1963,
or on later allotment, and may be made only in a like face amount of securities of the seven 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 bonds are requested if the appropriate identifying number, as required by paragraph 2
of Section III hereof, has not been furnished; provided, however, if a subscriber has applied for but is unable to
furnish the identifying number by the payment date only because it has not been issued, he may elect to receive,
pending the furnishing of the identifying number, interim receipts and in this case payment will be deemed to have
been completed. Cash payments due to subscribers, as shown below, will be made in the case of bearer securities
following their acceptance and in the case of registered securities following discharge of registration. In the case of
registered securities, the payment will be made by check drawn in accordance with the assignments on the securities
surrendered, or by credit in any account maintained by a banking institution with the Federal Reserve Bank of its
District.
2. 3 Vi percent certificates of indebtedness of Series B-1964.— Coupons dated November 15, 1963, and M ay 15,
1964, must be attached to the certificates when surrendered. Accrued interest from M ay 15 to September 15, 1963
($10.86277 per $1,000) plus the payment ($11.50 per $1,000) due on account of the issue price of the bonds will be
paid to subscribers.
3. 4% percent notes of Series A-1964. — Coupons dated November 15,1963, and M ay 15, 1964, must be attached
to the notes in bearer form when surrendered. Accrued interest from M ay 15 to September 15, 1963 ($15.87636 per
$1,000) plus the payment ($21.00 per $1,000) due on account of the issue price of the bonds will be paid to
subscribers.
4. 3% percent notes of Series D-l 964. — Coupons dated November 15,1963, and M ay 15, 1964, must be attached
to the notes in bearer form when surrendered. Accrued interest from M ay 15 to September 15, 1963 ($12.53397 per
$1,000) plus the payment ($14.50 per $1,000) due on account of the issue price of the bonds will be paid to
subscribers.
5. 3% percent bonds of 1966. — Coupons dated November 15, 1963, and all subsequent coupons, must be
attached to the bonds in bearer form when surrendered. Accrued interest from M ay 15 to September 15, 1963
($12.53397 per $1,000) plus the payment ($11.50 per $1,000) due on account of the issue price of the new bonds
will be paid to subscribers.
6. 4 percent notes of Series A-1966. — Coupons dated February 15, 1964, and all subsequent coupons, must
be attached to the notes in bearer form when surrendered. Accrued interest from August 15 to September 15, 1963
($3.36957 per $1,000) plus the payment ($18.00 per $1,000) due on account of the issue price of the bonds will
be paid to subscribers.
7. 3% percent notes of Series B-1967.— Coupons dated February 15, 1964, and all subsequent coupons, must
be attached to the notes in bearer form when surrendered. Accrued interest from August 15 to September 15, 1963
($3.05367 per $1,000) plus the payment ($4.00 per $1,000) due on account of the issue price of the bonds will be
paid to subscribers.
8. 3% percent notes of Series A -1967. — Coupons dated February 15, 1964, and all subsequent coupons, must
be attached to the notes in bearer form when surrendered. Accrued interest from August 15 to September 15, 1963
($3.15897 per $1,000) plus the payment ($7.00 per $1,000) due on account of the issue price of the bonds will be
paid to subscribers.
V. ASSIGNMENT OF REGISTERED SECURITIES
1. Treasury notes and bonds in registered form tendered in payment for bonds 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 Office of the Treasurer
of the United States, Washington, D. C. 20220. The securities must be delivered at the expense and risk of the
holder. If the new bonds are desired registered in the same name as the securities surrendered, the assignment should
be to “The Secretary of the Treasury for exchange for 4 percent Treasury Bonds of 1973”; if the new bonds are
desired registered in another name, the assignment should be to ‘T h e Secretary of the Treasury for exchange for 4
percent Treasury Bonds of 1973 in the name of_______________________________ if new bonds in coupon form are
desired, the assignment should be to “The Secretary of the Treasury for exchange for 4 percent Treasury Bonds of
1973 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 subscrip­
tions, to make allotments on the basis and up to the amounts indicated by the Secretary of the Treasury to the
Federal Reserve Banks of the respective Districts, to issue allotment notices, to receive payment for bonds allotted,
to make delivery of bonds on full-paid subscriptions allotted, and they may issue interim receipts pending delivery
of the definitive bonds.
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.
DOU GLAS DILLON,
Secretary of the Treasury.

UNITED STATES OF AMERICA
4 Vs PERCENT TREASURY BONDS OF 1989-94
Dated April 18, 1963, with interest from September 15, 1963

Due May 15, 1994

REDEEMABLE AT THE OPTION O F THE UNITED STATES AT PAR AN D ACCRUED INTEREST
O N AN D AFTER M A Y 15, 1989
Interest payable May 15 and November 15

ADDITIONAL ISSUE
TREASU RY DEPARTM ENT
Office of the Secretary
Washington, September 5, 1963

DEPARTMENT CIRCULAR

-----------------Public Debt Series — No. 16-63

I. OFFERING OF BONDS
1. The Secretary of the Treasury, pursuant to the authority of the Second Liberty Bond Act, as amended,
invites subscriptions from the people of the United States for bonds of the United States, designated 4 Vs percent
Treasury Bonds of 1989-94:
( 1 ) at 98.65 percent of their face value in exchange for 3 V4 percent Treasury Certificates of Indebted­
ness of Series B-1964, dated M ay 15, 1963, due M ay 15, 1964;
( 2 ) at 97.70 percent of their face value in exchange for 4 % percent Treasury Notes of Series A-1964,
dated July 20, 1959, due M ay 15, 1964;
( 3 ) at 98.35 percent of their face value in exchange for 3 % percent Treasury Notes of Series D-1964,
dated June 23, 1960, due M ay 15, 1964;
( 4 ) at 98.65 percent of their face value in exchange for 3 % percent Treasury Bonds of 1966, dated
November 15, 1960, due M ay 15, 1966;
( 5 ) at 98.00 percent of their face value in exchange for 4 percent Treasury Notes of Series A-1966,
dated February 15, 1962, due August 15, 1966;
( 6 ) at 99.40 percent of their face value in exchange for 3 % percent Treasury Notes of Series B-1967,
dated March 15, 1963, due February 15, 1967; or
( 7 ) at 99.10 percent of their face value in exchange for 3 % percent Treasury Notes of Series A-1967,
dated September 15, 1962, due August 15, 1967.
Interest adjustments as of September 15, 1963, and the cash payments due to the subscriber on account of the
issue prices o f the new bonds will be made as set forth in Section IV hereof. The amount of the offering under this
circular will be limited to the amount of eligible securities tendered in exchange and accepted. Delivery of the
new bonds will be made on September 18, 1963. The books will be open only on September 9 through Septem­
ber 13,1963, for the receipt of subscriptions for this issue.
2. In addition to the offering under this circular, holders of all of the eligible securities are offered the
privilege of exchanging all or any part of such securities for 4 percent Treasury Bonds of 1973, and the holders
of the certificates and notes maturing on M ay 15, 1964, are also offered the privilege of exchanging them for
3 % percent Treasury Bonds of 1968, which offerings are set forth in Department Circulars, Public Debt Series —
Nos. 15-63 and 14-63, respectively, issued simultaneously with this circular.
3. Nonrecognition of gain or loss for Federal income tax purposes. — Pursuant to the provisions of sec­
tion 1037(a) of the Internal Revenue Code of 1954 as added by Public Law 86-346 (approved September 22,
1959), the Secretary of the Treasury hereby declares that no gain or loss shall be recognized for Federal income
tax purposes upon the exchange with the United States of the eligible securities enumerated in paragraph one of
this section solely for the 4Vs percent Treasury Bonds of 1989-94. Section 1031(b) of the Code, however, requires
recognition of any gain realized on the exchange to the extent that money is received by the security holder in
connection with the exchange. T o the extent not recognized at the time of the exchange, gain or loss, if any, upon
the obligations surrendered in exchange will be taken into account upon the disposition or redemption of the
new obligations.
II. DESCRIPTION OF BONDS
1. The bonds now offered will be an addition to and will form a part of the series of 4 Vs percent Treasury
Bonds of 1989-94 which are described in Department Circular, Public Debt Series — No. 11-63, dated M ay 16,
1963, will be freely interchangeable therewith, and are identical in all respects therewith except that interest on

the bonds to be issued under this circular will accrue from September 15, 1963. Subject to the provision for the
accrual of interest from September 15, 1963, on the bonds now offered, the bonds are described in the following
quotation from Department Circular No. 11-63:
“ 1. The bonds, dated April 18, 1963, bear interest from that date at the rate of 4 Vs percent per
annum, payable on a semiannual basis on November 15, 1963, and thereafter on M ay 15 and Novem­
ber 15 in each year until the principal amount becomes payable. They will mature M ay 15, 1994, but
may be redeemed at the option of the United States on and after M ay 15, 1989, at par and accrued
interest, on any interest day, on 4 months’ notice of redemption given in such manner as the Secretary
of the Treasury shall prescribe. From the date of redemption designated in any such notice, interest on
the bonds called for redemption shall cease.
“2. The income derived from the bonds is subject to all taxes imposed under the Internal 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.
“3. The bonds are acceptable to secure deposits of public moneys.
“4. Bearer bonds with interest coupons attached, and bonds registered as to principal and interest,
are available in denominations of $500, $1,000, $5,000, $10,000, $100,000 and $1,000,000. Provision has
been made for the interchange of bonds of different denominations and of bearer and registered bonds,
and for the transfer of registered bonds.
“5. If the bonds are owned by a decedent at the time of his death and thereupon constitute a part
of his estate, they will be redeemed at par and accrued interest at the option of the representative of
the estate, provided the Secretary of the Treasury is authorized by the decedent’s estate to apply the
entire proceeds of redemption to payment of the Federal estate taxes on such decedent’s estate.
“6. The bonds are subject to the general rules and regulations of the Treasury Department, now or
hereafter prescribed, governing United States securities.”
III. SUBSCRIPTION AND ALLOTMENT
1. Subscriptions will be received at the Federal Reserve Banks and Branches and at the Office of the
Treasurer of the United States, Washington, D. C. 20220. Banking institutions generally may submit subscrip­
tions for account of customers, but only the Federal Reserve Banks and the Treasury Department are authorized
to act as official agencies.
2. All subscribers requesting registered bonds will be required to furnish appropriate identifying numbers
as required on tax returns and other documents submitted to the Internal Revenue Service, i.e., an individual’s
social security number or an employer identification number.
3. The Secretary of the Treasury reserves the right to reject or reduce any subscription, and to allot less
than the amount of bonds applied for; and any action he may take in these respects shall be final. Subject to
these reservations, all subscriptions will be allotted in full. Allotment notices will be sent out promptly upon
allotment
IV. PAYMENT
1. Payment for the face amount of bonds allotted hereunder must be made on or before September 18,
1963, or on later allotment, and may be made only in a like face amount of securities of the seven issues enumer­
ated in paragraph 1 of Section I hereof, which should accompany the subscription. Payment will not be deemed
to have been completed where registered bonds are requested if the appropriate identifying number, as required
by paragraph 2 of Section III hereof, has not been furnished; provided, however, if a subscriber has applied for
but is unable to furnish the identifying number by the payment date only because it has not been issued, he may
elect to receive, pending the furnishing of the identifying number, interim receipts and in this case payment
will be deemed to have been completed. Cash payments due from subscribers (paragraphs 7 and 8 below ) should
accompany the subscription. Cash payments due to subscribers (paragraphs 2 through 6 below ) will be made in
the case of bearer securities following their acceptance and in the case of registered securities following discharge
of registration. In the case of registered securities, the payment will be made by check drawn in accordance with
the assignments on the securities surrendered, or by credit in any account maintained by a banking institution
with the Federal Reserve Bank of its District.
2. 3 Vi percent certificates of indebtedness of Series B-1964. — Coupons dated November 15, 1963, and
M ay 15, 1964, must be attached to the certificates when surrendered. Accrued interest from M ay 15 to Septem­
ber 15, 1963 ($10.86277 per $1,000) plus the payment ($13.50 per $1,000) due to the subscriber on account of
the issue price of the bonds will be credited, accrued interest from April 18 to September 15, 1963 ($16.86402
per $1,000) on the bonds to be issued will be charged, and the difference ($7.49875 per $1,000) will be paid to
subscribers.3
3. 4% percent notes of Series A-1964. — Coupons dated November 15, 1963, and M ay 15, 1964, must be
attached to the notes in bearer form when surrendered. Accrued interest from M ay 15 to September 15, 1963

($15.87636 per $1,000) plus the payment ($23.00 per $1,000) due to the subscriber on account of the issue
price of the bonds will be credited, accrued interest from April 18 to September 15, 1963 ($16.86402 per $1,000)
on the bonds to be issued will be charged, and the difference ($22.01234 per $1,000) will be paid to subscribers.
4. 3 3 percent notes of Series D-1964. — Coupons dated November 15, 1963, and M ay 15, 1964, must be
/«
attached to the notes in bearer form when surrendered. Accrued interest from M ay 15 to September 15, 1963
($12.53397 per $1,000) plus the payment ($16.50 per $1,000) due to the subscriber on account of the issue
price of the bonds will be credited, accrued interest from April 18 to September 15, 1963 ($16.86402 per $1,000)
on the bonds to be issued will be charged, and the difference ($12.16995 per $1,000) will be paid to subscribers.
5. 3% percent bonds of 1966. — Coupons dated November 15, 1963, and all subsequent coupons, must be
attached to the bonds in bearer form when surrendered. Accrued interest from M ay 15 to September 15, 1963
($12.53397 per $1,000) plus the payment ($13.50 per $1,000) due to the subscriber on account of the issue
price of the new bonds will be credited, accrued interest from April 18 to September 15, 1963 ($16.86402 per
$1,000) on the bonds to be issued will be charged, and the difference ($9.16995 per $1,000) will be paid to
subscribers.
6. 4 percent notes of Series A-1966. — Coupons dated February 15, 1964, and all subsequent coupons, must
be attached to the notes in bearer form when surrendered. Accrued interest from August 15 to September 15,
1963 ($3.36957 per $1,000) plus the payment ($20.00 per $1,000) due to the subscriber on account of the issue
price of the bonds will be credited, accrued interest from April 18 to September 15, 1963 ($16.86402 per $1,000)
on the bonds to be issued will be charged, and the difference ($6.50555 per $1,000) will be paid to subscribers.
7. 3% percent notes of Series B-1967. — Coupons dated February 15, 1964, and all subsequent coupons,
must be attached to the notes in bearer form when surrendered. Accrued interest from August 15 to Septem­
ber 15, 1963 ($3.05367 per $1,000) plus the payment ($6.00 per $1,000) due to the subscriber on account of
the issue price of the bonds will be credited, accrued interest from April 18 to September 15,1963 ($16.86402 per
$1,000) on the bonds to be issued will be charged, and the difference ($7.81035 per $1,000) must be paid by
subscribers.
8. 3% percent notes of Series A-1967. — Coupons dated February 15, 1964, and all subsequent coupons,
must be attached to the notes in bearer form when surrendered. Accrued interest from August 15 to Septem­
ber 15, 1963 ($3.15897 per $1,000) plus the payment ($9.00 per $1,000) due to the subscriber on account of the
issue price of the bonds will be credited, accrued interest from April 18 to September 15, 1963 ($16.86402 per
$1,000) on the bonds to be issued will be charged, and the difference ($4.70505 per $1,000) must be paid by
subscribers.
V. ASSIGNMENT OF REGISTERED SECURITIES
1. Treasury notes and bonds in registered form tendered in payment for bonds 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 Office of the Treasurer
of the United States, Washington, D. C. 20220. The securities must be delivered at the expense and risk of the
holder. If the new bonds are desired registered in the same name as the securities surrendered, the assignment
should be to “The Secretary of the Treasury for exchange for 4Vs percent Treasury Bonds of 1989-94”; if the new
bonds are desired registered in another name, the assignment should be to “The Secretary of the Treasury for
exchange for 4 Vs percent Treasury Bonds of 1989-94 in the name of__________ ______ ._________ _____ if new
bonds in coupon form are desired, the assignment should be to “The Secretary of the Treasury for exchange for
4 Vs percent Treasury Bonds of 1989-94 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 allotments on the basis and up to the amounts indicated by the Secretary of the Treasury
to the Federal Reserve Banks of the respective Districts, to issue allotment notices, to receive payment for bonds
allotted, to make delivery of bonds on full-paid subscriptions allotted, and they may issue interim receipts pend­
ing delivery of the definitive bonds.
2. The Secretary of the Treasury may at any time, or from time to time, prescribe supplemental or amenda­
tory rules and regulations governing the offering, which will be communicated promptly to the Federal Reserve
Banks.
DOUGLAS DILLON,
Secretary of the Treasury.