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Federal Reserve Bank of New York
Offering of $ 5 0 0 , 0 0 0 , 0 0 0 (or thereabouts)
U n i t e d S t a t e s of A m e r i c a T r e a s u r y Certificates of I n d e b t e d n e s s
Dated and bearing interest from December 15, 1920

Series T J 2—1921, S% Per Cent. Due June 15, 1921
Series TD—1921, 6 Per Cent. Due December 15, 1921
To all Banks, Trust Companies, Savings Banks, Bankers, Investment Dealers
and Principal Corporations in the Second Federal Reserve District:
T h e 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
December 15, 1920, the certificates of Series T J 2—1921 being payable on June 15, 1921 and
bearing interest at the rate of five and three-quarters per cent, per annum and the certificates of
Series T D—1921 being payable on December 15, 1921 and bearing interest at the rate of six per
cent, per annum payable semi-annually.
Applications will be received a t the Federal Reserve Banks.
Bearer certificates will be issued in denominations of $500, $1,000, $5,000, $10,000, and
$100,000. The certificates of Series T J 2—1921 will have one interest coupon attached, payable
June 15, 1921, and the certificates of Series T D—1921, two interest coupons attached payable June
15 and December 15, 1921.
T h e certificates of both said 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
(b) graduated additional income taxes, commonly known as surtaxes, and excess profits and warprofits taxes, now or hereafter imposed by the United States, upon the income or profits of individuals, partnerships, associations, or corporations. T h e 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 t h e taxes provided for in clause (b) above.
Certificates of these series will be accepted at par, with an adjustment of accrued interest, during such time 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,
T h e certificates of these series do not bear the circulation privilege.
T h e right is reserved to reject any subscription and to allot less t h a n the amount of certificates of either or both series applied for and to close the subscriptions as to either or both series
a t any time without notice. Payment at par and accrued interest for certificates allotted must
be made on or before December 15, 1920, or on later allotment. After allotment and upon
p a y m e n t 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
allotted 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 D—1920, maturing December 15, 1920, of Series A—1921,
January 3,1921, and of Series B—1921, maturing January 15,1921, will be accepted at par, with an
adjustment of accrued interest, in payment for any certificates of the Series T J 2—1921 or T D—1921
now offered which shall be subscribed for and allotted.
As fiscal agents of the United States, Federal Reserve 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 Reserve Banks of the
respective districts.
Yours very truly,
J. H.


New York, December 8, 1920.


The attention


of subscribers


is directed


to the







R e p r i n t of L e t t e r of t h e S e c r e t a r y of t h e T r e a s u r y to t h e P r e s i d e n t s of B a n k i n g
I n s t i t u t i o n s of t h e U n i t e d States o n t h e C u r r e n t 5% a n d 6 P e r C e n t .
I s s u e s of T r e a s u r y Certificates of I n d e b t e d n e s s .


Dear Sir: About $700,000,000 of Treasury
certificates of indebtedness mature on December 15, 1920, about $175,000,000 on J a n u a r y
3, 1921 and about $125,000,000 additional on
J a n u a r y 15,1921. On December 15,1920 there
will also become payable the semi-annual
interest on t h e First Liberty Loan and
Victory Liberty Loan aggregating about
T h e greater part of t h e
$700,000,000 of tax certificates maturing on
December 15 will be covered by the installment of income and profits taxes payable on
t h a t date. In order t o meet the remainder of
these heavy maturities of principal and interest and at the same time provide for the
current requirements of the Government,
the Treasury has decided, on the basis of the
best estimates available at this time, to offer
Treasury certificates of indebtedness in the
amount of $500,000,000 or thereabouts, in
two series dated December 15,1920, one series
designated T J 2—1921, bearing 5 % per cent,
interest maturing June 15, 1921, and the
other series designated T D—1921 bearing
6 per cent, interest and maturing December 15,
1921. Applications for Treasury certificates
of these series will be received through t h e
several Federal Reserve Banks, from which
full particulars concerning t h e offering may
be obtained.
Treasury certificates of t h e
series maturing December 15, 1920, J a n u a r y
3, 1921, and J a n u a r y 15,1921 will be accepted
a t par with an adjustment of accrued interest
in p a y m e n t for any certificates of the two
series now offered which may be subscribed
for and allotted.
As indicated in t h e circular letter of September 7, 1920 to t h e banking institutions of
the country the operations of t h e Treasury
for the first quarter of the present fiscal year,
ended September 30, 1920, showed a surplus
of ordinary receipts over ordinary expenditures amounting t o $289,224,706.29 notwithstanding actual cash payments t o railroads
during the quarter of some $275,000,000 under
the provisions of the Transportation Act in
connection with t h e return of t h e railroads
to private control. T h e Treasury's current
operations during the months of October and
November show a net current deficit (excess
of ordinary disbursements over ordinary re-

D. C, December 8, 1920.

ceipts) amounting to $357,134,068.15 of which
about $112,000,000 represents payments to
the railroads under the Transportation Act.
T h e Treasury confidently expects, however,
t h a t the current quarter ending December 31,
1920 will still show a substantial surplus as
t h e result of the quarterly payment of income
and profits taxes in December.
I n consequence of t h e operations incident
to the retirement of the Treasury certificates
which matured on September 15, and October
15,1920, and t h e quarterly payment of income
and profits taxes on September 15, the gross
debt of the Government on October 31,1920,
on the basis of daily Treasury statements,
was reduced to $24,062,509,672.96, of which
about $2,337,000,000 consisted of loan and
tax certificates unmatured. On September 30,
1920, the gross debt had been $24,087,356,128.65 of which about $2,347,000,000 were
loan and tax certificates unmatured.
November 30,1920, after the issue of $232,000,000 of Treasury certificates on November
15 and the retirement on the same date of
about $100,000,000 of maturing certificates,
t h e gross debt, on the basis of daily Treasury
statements, amounted to $24,175,156,244.14
of which about $2,475,000,000 represented
floating debt (loan and tax certificates unmatured).
These temporary increases in
both gross debt and floating debt will, it is
expected, be more t h a n overcome by December
31, 1920 in consequence of the December
operations, and both gross debt and floating
debt should on December 31 be reduced
below the amounts outstanding on September
30. The Government's further progress in
retiring the gross debt and the floating debt
will depend, of course, upon the relation between current receipts and current expenditures during t h e coming calendar year, b u t
there is good reason to hope t h a t , unless new
burdens are imposed by legislation, there
should be important further reductions in
t h e last two quarters of the current fiscal
year, provided always t h a t tax receipts are
maintained a t a sufficiently high level, salvage operations vigorously pressed, and the
strictest economy practiced in Government
expenditure. T h e three months which have
passed since t h e last quarterly tax payment

3 ^"Z-

period have been marked by a still further
distribution of Treasury certificates among
investors and a further reduction of holdings
of Treasury certificates by the banks. The reporting member banks of the Federal Reserve
System (about 823 member banks in leading
cities, which are believed to control about
40 per cent, of the commercial bank deposits
of the country and to have subscribed in
the first instance for perhaps 75 per cent, of
the Treasury certificates of indebtedness now
outstanding) held on November 26, 1920
only about $313,000,000 of Treasury certificates, as compared with reported holdings on
August 27, 1920 of about $430,000,000, and
on November 28,1919 of about $816,000,000.
On December 3, 1920 the Federal Reserve
Banks reported t h a t there were pledged with
Federal Reserve Banks only about $214,000,000 of Treasury certificates to secure loans
and discounts, notwithstanding the preferential rates still maintained in many of the
Federal Reserve Districts and the probability
t h a t borrowing banks would use Treasury
certificates as convenient collateral to secure
loans for commercial purposes.
T h e Treasury certificates of the two series
now offered are exempt, like other Treasury
certificates outstanding, from all state and

local taxes (except estate and inheritance
taxes) and from the normal Federal income
tax and the corporation income tax and are
admissible assets for the purpose of calculating
profits taxes. The certificates now offered
are also acceptable in payment of Federal
income and profits taxes payable at their
respective maturities, and the United States
reserves no option to call them for redemption
before maturity. With these features, the
attractive rates of interest, and absolute security of principal and interest these certificates are extremely desirable investments
and should prove particularly attractive to
taxpayers having taxes to pay in the calendar
year 1921, as well as to persons having idle
funds awaiting investment. I n these circumstances, the Treasury believes t h a t banking
institutions generally should feel free to
enter subscriptions for the two issues now
offered with the confident expectation of
prompt resale for investment, and urges them,
as in the past, t o subscribe liberally for the
certificates and devote their best efforts to
obtain the widest possible distribution among
Cordially yours,




Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102