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F ederal R eserve ban k

Dallas, Texas, April 30, 1947


To All Banking Institutions, and Others Concerned,
in the Eleventh Federal Reserve District:
In connection with the amended procedure announced by the Secretary
of the Treasury on April 25, 1947, under which tenders will be received
for Treasury bills in exchange for maturing bills, as well as for cash, the
following terms, effective immediately, will govern all purchases of Treas­
ury bills until further notice:
This bank will continue to purchase all Treasury bills that may be
offered to it on a discount basis at the rate of % Per cent per annum
(0.375%), any such purchases to be upon the condition that this bank,
upon the request of the seller on or before the last business day preceding
the final day on which the Treasury will accept tenders for new Treasury
bills, will sell to him Treasury bills of like amount and maturity at the
same rate of discount.
It will be observed that the only change in the terms under which
Treasury bills have heretofore been purchased by this bank is that the
option to repurchase must be exercised not later than the last business
day preceding the final day on which the Treasury will accept tenders
for new Treasury bills.
The change does not affect any agreements outstanding prior to
April 25, 1947, under which this bank agreed to repurchase Treasury bills
at any time prior to maturity.
The press statement issued by the Federal Open Market Committee
on April 25, 1947, is quoted on the reverse of this circular.

Yours very truly,

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (

The Treasury Department this week revised its Treasury bill offering
circular so as to permit bidders for Treasury bills to obtain new Treasury
bills by the exchange of an equivalent amount of maturing bills, to the
extent that their tenders are accepted. Concurrently the Federal Open Mar­
ket Committee has authorized the Federal Reserve banks to place weekly
tenders for bills in an amount not exceeding the amount of their weekly
maturities. The Federal Reserve banks will receive the same percentage
allotment of bills as will other bidders at the same price. Acquisitions of
bills by the Federal Reserve banks, in this manner, will represent the
replacement of bills originally purchased in the market and, like other
exchanges of maturing securities for new securities, would not be subject
to the limitation contained in subsection (b) of section 14 of the Federal
Reserve Act.
No new credit will be made available to the Treasury by the Federal
Reserve banks as a result of this change in procedure, nor will new Reserve
funds be placed at the disposal of the banks of the country. Funds which
have already been provided to the market through bill purchases will not
be increased by this action.
These related actions were taken to relieve a situation which has
become less and less appropriate, as weekly maturities of bills held by the
Federal Reserve banks have increased, until recently they have ordinarily
been more than $1,100 million out of a total weekly maturity of $1,300
million. In the past the market has taken all of each week’s offerings of
Treasury bills and has promptly sold to the Federal Reserve banks that
portion of the offering which it did not wish to hold. Thus the Federal
Reserve banks indirectly replaced part or all of their Treasury bill matu­
rities. Such a procedure means that the market places tenders for new
issues of bills in amounts bearing no relation to market requirements, the
excess being taken for the purpose of immediate sale to the Federal Reserve
banks. In these circumstances, a more direct method of replacing maturing
bills held by the Federal Reserve banks has been deemed desirable.