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(New Issues) ' q % Circular Kb. 287. FEDERAL RESERVE BANK OF HOT YORK Offering of $400,000,000 {or thereabouts) • UNITED STATES OF AMERICA TREASURY CERTIFICATES OF INDEBTEDNESS Dated and bearing interest from June 15, 1920 Series A 1921, 5f Per Cent Due January 3, 1921 Series T J-1921, 6 Per Cent Due June 15, 1921. To all Banks, Trust Companies, Savings Banks, Bankers, Investment Dealers and Principal Corporations in the Second Federal Reserve District: The Secretary of the Treasury, under the authority of the act approved September 24, 1917, as amended, offers for subscription, at par and accrued interest, through the Federal Reserve Banks, Treasury certificates of indebtedness, in two series, both dated and bearing interest from June 15, 1920, the certificates of Series A 1921 being payable on January 3, 1921 with interest at the rate of five and three-quarters per cent per annum and the certificates of Series T J-1921 being payable on June 15, 1921, and bearing interest at the rate of six per cent per annum payable semi-annually* Applications will be received at the Federal Reserve Banks. Bearer certificates will De issued in denominations of #500, $1,000, $5,000, $10,000 and $100,000. The certificates of Series A 1921 will be issued without coupons. The certificates of Series T J-1921 will have two interest coupons attached payable December 15, 1920 and June 15, 1921. The certificates of both s&id series shall be exempt, both as to principal and interest, from all taxation now or hereafter imposed by the United States, any State, or any of the possessions of the United States, or by any local taxing authority, except (a) estate or inheritance taxes, and (bj graduated additional income taxes, commonly known as surtaxes, and excess profits and war profits taxes, nor or hereafter imposed by the United States, upon the income or profits of individuals, partnerships, associations, or corporations. The interest on an amount of bonds and certificates authorized by said act approved September 24, 1917, and amendments thereto, the principal of which does not exceed in the aggregate $5,000, owned by any individual, partnership, association or corporation, shall be exempt from the taxes provided for in clause (b) above. The certificates of these series do not bear the circulation privilege. The certificates of Series A 1921 will not be accepted in -payment of taxes. The certificates of Series T-J 1921 will be accepted at par, with an adjustment of accrued interest, during such ticse and under such rules and regulations as shall be -prescribed or approved by the Secretary of the Treasury.in payment of income and profits taxes payable at the maturity of the certificates. The right is reserved to reject any subscription and to allot less than the amount of certificates of either or both series applied for any to close the subscriptions as to either or both series at any time without notice. Payment at par and accrued interest for certificates allotted must be made on or before June 15, 1920, or on latter allotment. After allotment and upon payment Federal Reserve Banks may issue interim receipts pending- delivery of the definitive certificates. Any qualified depositary will be permitted to make payment by credit for certificates alloted to it for itself and 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. Treasury certificates of Indebtedness of Series T J-1920. maturing June 15.1920, of Series £ 1920. maturing July 1. 1920. and of Series F 1920. maturing July 15. 1920T will be accepted at par with an adjustment of accrued interest, in payment for any - 2- Circular No. 287 certificates of the Series A 1921 or T J-1921 now offered which shall be subscribed for and allotted. As fiscal agents of the United States, Federal Heserve Banks are authorized and requested to receive subscriptions and to make allotment in full in the order of the receipt of applications up to amounts indicated by the Secretary of the Treasury to the Federal Beserve Banks of the respective districts. Yours very truly, J. H. CASE, Acting Governor. New York, June 10, 1920. (Reference to reprint of letter of the Secretary of the Treasury, page 3) Circular tfo* 287 (Continued) Heprint of Letter of the Secretary of the Treasury to the Presidents of Banking Institutions of the United States on the Current 5-f and 6 Per Gent Issues of Treasury Certificates of Indebtedness. Washington, D. C , June 10, 1920 Dear Sir: Treasury certificates to the amount of nearly $1,000,000000 mature on or before July 15. The greater part of these are prov vided for by the income and profits tax installment payable in June. To refund the balance and provide for current requirements up to July 15, according to the best estimates now available, it seems desirable at this time to issue Treasury certificates to the amount of v400,000,000 or thereabouts; and accordingly the Treasury is offering certificates in two saries, both dated June 15, Series A 1921, bearing interest at 5f$ and maturing January 3, 1921, and Series T J-1921, bearing interest at 6% and maturing June 15, 1921, particulars concerning which will be furnished by the federal Beserve Banks. nearly $26,600,000,000 had been reduced May 31, 1920, to less than £25,000,000,000. The floating debt outstanding (loan and tax certificates) which on June 30, 1919 amounted to over #3,250,000,000 and on August 31, 1919, to nearly |4,000,000,000, had been reduced 2&y 31, 1920, to less than *2,850,000,000. The reduced ordinary and public debt disbursements have made possible a very Important reduction in the amount of the net balance in the general fund, which has been applied to the reduction of debt. Both gross debt and floating debt will be further greatly reduced by the operations outlined in the first paragraph of this letter. During the coming fiscal year beginning July 1, 1920, the Treasury expects, though it is impossible to speak positively, that there will be a further reduction of both gross debt and floating debt in the first two quarters and, unless additional burdens should be imposed be future legislation, that there will be a very important reduction in the last two quarters. On the basis of Treasury daily statements and excluding tranaotions in the principal of the public debt: though the first quarter, ended September 30, 1919,of the present fiscal year ending June 30,1920, was marked by a deficit of about *>770,000,000, in the second quarter, The period of upwards of twelve months ended December 31, 1919, there was a since the flotation of the Victory Libsurplus of over #150,000,000; in the erty loan has witnessed great expansion third quarter ended Iflarch. 31, 1920, of commercial credits, but steady liquithere was a surplus of nearly #400,dation of United States Government war 000,000 and the fourth quarter endsecurities. The Federal Reserve Banks' ing June 30 next, should also show a combined loans and discounts secured by surplus. The completed fiscal year's United States Government war securities operations should show little, if any have been reduced by more than $400,000deficit—the Government having about 000 though they have increased their balanced its budget, current receipts other loans and investments by about $1,against current disbursements, for 200,000,000. All reporting member banks the first full fiscal year after (about 800 member banks in leading cities fighting stopped. which are believed to control about 40$ of the ooiaaerciEl bank deposits of the The total gross debt of the United country) have reduced their holdings of States, which, on June 30, 1919, on and loans upon United States Government the basis of Treasury daily statewar securities by about #2,000,000,000 but have increased their other loans and ments, amounted to nearly *25,500,000,000 and on August 31, 1919, to http://fraser.stlouisfed.org/ investments by about $4,000,000,000. Federal Reserve Bank of St. Louis Circular no, 287 (aont'd) - 2 - The Treasury confidently asks the banking institutions of the country for their continued support, and, in particular, to subscribe liberally for the certificates now offerad and use their best efforts to obtain the widest possible distribution of them among investors. Oordially yours, D. F. HOUSTON.