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TREASURY DEPARTMENT WASHINGTON September lh, 19^2. To the President of the Banking Institution addressed: The Victory Fund Committees throughout the country will assist the Treasury in the distribution of Tax Savings Notes* The official circulars describing these notes have been sent to you by the Federal Reserve Bank in your district. The terms of the Series A Notes have been changed so as to permit a purchaser to present amounts up to $5,000 per annum in payment of taxes, whereas the Series A Notes were formerly limited to $1,200 per annum* A new Tax Savings Note, designated Series C, will be offered. It will mature three years from date of purchase and may be used in unlimited amounts in payment of taxes. Series C Notes will be redeemable with accrued interest, except by commercial banks, and therefore offer an unusually attractive medium for those seeking temporary investment of funds. Both series of new Tax Savings Notes will be offered to the public on September l4, 19^2. It would be most helpful to the Committees, as well as to the taxpayers in your community, if you will designate a convenient place in your bank where prospective purchasers of Tax Savings Notes may obtain information and make application for purchase. I shall appreciate your cooperation. Very truly yours, This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) TREASURY D EPAR EN TM T Washington FOR RELEASE, M RN O ING NEWSPAPERS, M ONDAY, September 14, 1942. Secretary Morgenthau today announced changes in the terms of the Treasury Tax Savings Notes, which have been on sale since August 1, 1941, fo r the con venience of taxpayers and which are receivable at par and accrued in terest in payment of Federal income, e sta te , and g i f t taxes. The changes are e ffe c tiv e in new Treasury Notes of Tax Series A-1945 and Tax Series C-1945, which w ill be offered for sale beginning September 14, a l though the now notes w ill not be ready for delivery before the la tte r part of the month. The notes of Tax Series A-1944 and Tax Scries B-1944, which havo boon available since January 1, 1942, wore withdrawn from sale at the close of business September 12, 1942. The new notes of Tax Series C are adaptable for dual purposes: ( l ) for the accumulation of tax reserves and (2 ) for tho temporary or short-term investment of cash balances which are at present id le . This new' series of Treasury Notes, tho Secretary said, w ill furnish a security w ell adapted to corporations and other investors for the m obilization of th e ir id le funds for the War program. The now to m s provide greater f l e x i b i l i t y , and, through provision for cash re demption with in te r e st, permit holders of Tax Series C notes to realizo on the notes without loss of in te r e st. Members of the Victory Fund Committees in tho twelve Federal Reserve Dis t r i c t s , with a trained secu rities sales personnel, w ill participate actively in the sale of the now Tax Savings Notes. Each Federal Reserve D istrict Com mittee is headed by tho President of the Federal Reserve Bonk of the D is tr ic t. Members of Victory Fund Committeos, as well as bonkers and securities salesmen gonerally, m i l havo complete information and application forms and w ill assist 2 taxpayers and other investors desiring to purchase these notes. The notes of Tax Series A-1945, like those of prior Series A notes, are intended primarily for the smaller taxpayer. The new notes will be dated September 1, 1942, and will mature September 1, 1945, thus pro viding a maturity of three rather than two years from issue date. The limitation on the principal amount that may be presented on account of any one taxpayer's liability for each class of taxes (income, estate or gift) for each taxable period has been raised from $1,200 to $5,000, The new limitation will also apply to prior Tax Series A-1943 and A-1944, or to any combination of the three series. In other respects the terms of notes of Tax Series A-1945 remain the same as those of A-1944. Interest will accrue (from September 1942) at the rate of 16 cents per month per $100, equivalent to a yield of approximately 1.92 percent per annum. will be issued at par and accrued interest. The notes If not presented in payment of taxes, the notes will bo redeemed at tho purchase price only, cither at or before maturity, without advance notice. The notes will bo avail able in the denominations of $25, $50, $100, $'500, $1,000 and $5,000. The now notes of Tax Series C will bo dated as of tho first day of tho month in which purchased, will mature three years thereafter, and thoy wall be issued at par. Interest on the notes will accrue) each month from month of issue, on a graduated scale, the equivalent yield if held to maturity being approximately 1.07 percent per annum. The amount of accrual each month on each $1,000 principal amount of notes, from month of issue to month of maturity,follows: . ■3' H alf-year Periods after month of issue $1,000 principal with in terest accrual (cumu la tiv e ) to end of period added____________ Interest accrual each month per $1,000 F irst l / 2 y e a r . . . . . . . . . . . l / 2 to 1 y e a r . . . . ......... .. 1 to 1 -1 /2 y e a r s ..••••••• 1 - l / 2 to 2 y e a r s . . . . . . . . . 2 to 2 -1 /2 y e a r s ................. 2 - 1 /2 to 3 years................ .. $0.50 0 .8 0 0 ,9 0 1.00 1 .1 0 1.10 ................ ••••.»••••••■••* .•••••••••..•••* •••••••••••••••• ................................. ................................. $ 1 ,0 0 3 .0 0 1,0 0 7 .80 1 ,0 1 3 .20 1,0 1 9 .20 1,0 2 5 .80 1 ,0 3 2 ,40 I f hot presented in payment of taxes, and except for those in the names of banks that accept demand doposits, the notes of Tax Series C w ill bo redeemable at par and accrued in to r e st, either at maturity or, on 30 days' ad I ’ vanco n o tice, during and after the sixth calendar month after the month of issu e . I f inscribod in the name of a bonk that accepts demand doposits, the notes w ill bo accepted at par and accruod intorest in payment o f taxes, but re deemed fo r cash at or before maturity only at the purchase p rice, or par. Tho notes of th is series may be pledged with banking in stitu tio n s as co lla te ra l for loans but no othor hypothocation w ill bo recognized by the Treasury Department. The new Treasury Tax Savings Notes, like those of prior se r ie s, w ill bo issued only by the Federal Reserve Banks and Branches, and the Treasury Deport ment, Washington. Tho o f f ic ia l circu la rs, giving f u l l particulars regarding the notes of the new se r ie s, fo llo w :
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