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FEDERAL RE SE R V E BANK O F N EW YO R K [ Circular No. 4 0 4 9 Fiscal A gent o f the United States N ovem ber 26, 1953 Offering o f $1,500,000,000 of 91-Day Treasury Bills Dated December 3, 1953 Maturing M a r c h 4, 1954 T o a ll I n c o r p o r a t e d B a n k s a n d T r u s t C o m p a n ie s , a n d O t h e r s C o n c e r n e d , in th e S e c o n d F e d e r a l R e s e r v e D i s t r i c t : F o llo w in g is the text o f a n otice published to d a y : F O R R E L E A S E , M O R N IN G N E W S P A P E R S , T h ursday, N ovem ber 26, 1953. TREASU RY DEPARTM ENT W ash in gton T h e T re a su ry D epartm ent, b y this pu blic notice, invites tenders f o r $1,500,000,000, or thereabouts, o f 91-day T reasu ry bills, fo r cash and in exch ange fo r T reasu ry bills m aturing D ecem ber 3, 1953, in the am ount o f $1,500,482,000, to be issued on a discou nt basis under com petitive and n on -com p etitive b id d in g as h ereinafter provided . T h e bills o f this series w ill be dated D ecem ber 3, 1953, and w ill mature M a rch 4, 1954, w hen the fa ce am ount w ill be payable w ith ou t interest. T h ey w ill be issued in bearer fo rm only, and in denom inations o f $1,000, $5,000, $10,000, $100,000, $500,000, and $1,000,000 (m aturity va lu e). T en ders w ill be received at Federal R eserve Banks and Branches up to the closin g hour, tw o o ’c lo ck p.m., E astern Standard time, M on day, N ovem ber 30, 1953. Tenders w ill n ot be received at the T reasu ry D epartm ent, W ash ington. E ach tender m ust be fo r an even m ultiple o f $1,000, and in the case o f com petitive tenders the price offered m ust be expressed on the basis o f 100, w ith n ot m ore than three decim als, e. g., 99.925. F raction s m ay n ot be used. It is urged that tenders be m ade on the printed form s and forw a rd ed in the special envelopes w hich w ill be supplied by F ed eral R eserve Banks or B ranches on a pp lication therefor. O thers than banking institutions w ill n ot be perm itted to subm it tenders excep t fo r their ow n account. T en ders w ill be received w ithout deposit from in corpora ted banks and trust com panies and from responsible and recogn ized dealers in in vestm ent securities. T en ders fro m others must be accom panied by paym ent o f 2 percent o f the face am ount o f T reasu ry bills applied for, unless the tenders are accom panied by an express guaranty o f paym ent by an in corporated bank o r trust com pany. Im m ediately after the clo s in g hour, tenders w ill be opened at the F ed eral R eserve Banks and B ranches, fo llo w in g w hich pu blic announcem ent w ill be made by the T reasu ry D epartm ent o f the am ount and price range o f a ccepted bids. T h ose subm itting tenders w ill be advised o f the acceptance or rejection thereof. T h e S ecretary o f the T reasu ry exp ressly reserves the righ t to accep t o r reject any or all tenders, in w hole or in part, and his a ction in any such respect shall be final. S ubject to these reservations, n on -com p etitive tenders fo r $200,000 or less w ith ou t stated price from any one bidder w ill be accepted in fu ll at the a verage price (in three decim als) o f accepted com petitive bids. Settlem ent fo r accepted tenders in a ccordance w ith the bids must be made or com pleted at the F ed eral R eserve Bank on D ecem ber 3, 1953, in cash or oth er im m ediately available funds o r in a like face am ount o f T reasu ry bills m aturing D ecem ber 3, 1953. Cash and exch an ge tenders w ill re ceive equal treatment. Cash adjustm ents w ill be m ade fo r differences betw een the par value o f m aturing bills a ccepted in exch ange and the issue price o f the new bills. T h e incom e derived from T reasu ry b ills, w hether interest or gain from the sale or oth er disp osition o f the bills, shall not have any exem ption, as such, and loss from the sale or other disp osition o f T reasu ry bills shall not have any special treatment, as such, under the Internal Revenue Code, or law s am endatory or supplem entary thereto. T h e bills shall be subject to estate, inheritance, gift, or oth er excise taxes, w hether Federal or State, but shall be exem pt from all taxation now o r hereafter im posed on the principal or interest th ereof by any State, o r any o f the possessions o f the U n ited States, or by any loca l ta x in g authority. F o r purposes o f taxation the am ount o f discou nt at w h ich T reasu ry bills are origin a lly sold b y the U n ited States shall be con sidered to be interest. U nder S ections 42 and 1 1 7 (a )(1 ) o f the Internal Revenue C ode, as am ended by S ection 115 o f the Revenue A c t o f 1941, the am ount o f discou nt at w hich bills issued hereunder are sold shall not be con sidered to accru e until such bills shall be sold, redeem ed or otherw ise disposed o f, and such bills are exclu d ed fro m con sidera tion as capital assets. A cco rd in g ly , the ow ner o f T reasu ry bills (oth er than life insurance co m pan ies) issued hereunder need include in his incom e ta x return only the difference^ betw een the price pa id fo r such bills, w hether on origin a l issue o r on subsequent purchase, and the am ount actu ally received either upon sale or redem ption at m aturity du rin g the taxable year fo r w h ich the return is m ade, as ord in a ry gain or loss. T reasu ry D epartm ent Circular N o. 418, as am ended, and this notice, prescribe the terms o f the T rea su ry bills and govern the con ditions o f their issue. Copies o f the circu la r m a y be obtained from any F ed eral R eserve Bank or Branch. T h is B ank w ill receive tenders up to 2 p.m ., Eastern Standard time, M on d a y , N o v e m b e r 30, 1953, at the S ecu ri ties D epartm ent o f its H ead O ffice and at its B u ffa lo B ranch. P lease use the fo rm on the reverse side o f this circu lar to su bm it a tender, and return it in an en velop e m arked “ T e n d er fo r T rea su ry B ills.” T en d ers m ay be subm itted by telegraph, subject to written confirm ation; they may not be submitted by telephone. Payment for the Treasury bills cannot be made by credit through the Treasury Tax and Loan Account. immediately available funds or in maturing Treasury bills. Settlement must be made in cash or other A lla n S prou l , President. R esults o f last o ffe rin g o f T reasu ry b ills (9 0 -da y b ills d a te d N o v e m b e r 27, 1953, m aturing F e b ru a ry 25, 1954) T o ta l applied f o r ......... $2,168,957,000 T ota l a c c e p t e d .............$1,501,170,000 (includes $231,261,000 entered on a non-com petitive basis and accepted in full at the a ver age price show n b elow ) A vera ge p r ic e .......... 99.628 Equivalent rate o f discou nt approx. 1.488% per annum R a n ge o f accepted com petitive b id s : H ig h ............................. 99.675 L o w .............................. 99.625 E quivalent rate o f discount 1.300% per annum E quivalent rate o f discount 1.500% per annum (69 percent o f the am ount bid fo r at the low price w as accep ted) F ed era l R ese rv e D is trict T o ta l A p p lied fo r .. N ew Y o r k ................... P h ila d e lp h ia ............... C leveland ..................... R ich m on d ................... A tlanta ....................... St. L ou is ..................... M inneapolis ............... K ansas C i t y ............... San F r a n c i s c o ............ T otal ...........................,. $ 27,432,000 1,578,610,000 26,172,000 46,869,000 15,943,000 22,337,000 215,636,000 43,237,000 11,193,000 54,344,000 44,565,000 82,619,000 $2,168,957,000 P lease n o te that th e results sh ow n a b ov e are fo r 90-day T reasu ry b ills. T o ta l A c c e p te d $ 26,432,000 988,358,000 11,172,000 46,869,000 15,943,000 20,875,000 173,071,000 36,937,000 11,193,000 48,282,000 44,565,000 77,473,000 $1,501,170,000 ( over) 30 K I M P O R T A N T — I f y o u d esire t o b id o n a com petitive basis, fill in rate p e r 100 and m aturity valu e in p a ra g ra p h h e a d e d “ C o m p e titiv e B id .” I f y o u desire to b id o n a non-competitive basis, fill in o n ly th e m a tu rity valu e in p a ra g ra p h h e a d e d “ N o n -co m p e titiv e B id .” DO NOT fill in both paragraphs on one form. A separate ten d er m ust b e used fo r e a ch b id , e x ce p t that ban k s su b m ittin g b id s o n a co m p e titiv e basis fo r th e ir o w n an d th e ir cu stom ers’ accou nts m a y su b m it o n e ten d er fo r th e to ta l am ou n t b id at ea ch p r ic e , p r o v id e d a list is attach ed sh ow in g th e n a m e o f each b id d e r , th e a m ou n t b id fo r h is a cco u n t, an d m e th o d o f paym en t. F orm s fo r this p u rp o se w ill b e fu rn ish e d u p o n request. N o ............................... T E N D E R FOR 91-D A Y T R E A S U R Y BILLS D ated D e ce m b e r 3, 1953 T o F e d e r a l R e ser v e B a n k o f N e w Y Fiscal A gen t o f the U nited States. M atu rin g M a rch 4, 1954 ork, D ated a t ............................................................. .................................................................... C O M P E T IT IV E B ID P ursuan t to the p rov ision s o f T re a s u ry D epartm ent C ircular N o. 418, as am ended, and to the p ro v isio n s o f the p u b lic n o tice on N ov em b e r 26, 1953, as issued b y the T rea su ry D epartm ent, the undersigned offers ............................................... * fo r a total am ount o f (R ate per 100) $ . .........................................................(m atu rity value) o f the T reasu ry bills therein described, or fo r any less am ount that m ay be awarded, settlement th e re fo r to be m ade at y o u r Bank, on the date stated in the p u blic notice, as indicated b e lo w : □ B y surrender o f m aturing T reasu ry bills am ou n tin g t o .................... $_________________________ □ B y cash o r other im m ediately available funds 1953 N O N -C O M P E T IT IV E B ID Pursuant to the p ro v isio n s o f T rea su ry D e partm ent C ircu lar N o. 418, as am ended, and to the p rov ision s o f the p u b lic notice on N o v e m b er 26, 1953, as issued b y the T rea su ry D epartm ent, the undersigned offers a n on -com p etitive tender fo r a total am ount o f $ .................................................. (N o t to exce e d $200,000) (m atu rity v a lu e) o f the T rea su ry b ills therein described, at the average p rice (in three deci m a ls) o f accepted com p etitiv e bid s, settlem ent th e re fo r to be m ade at y o u r B ank, on the date stated in the p u b lic notice, as indicated b e lo w : □ By surrender o f m aturing T rea su ry bills a m ou n tin g t o .................... $_________________________ Q B y cash o r other im m ediately available funds * P r i c e m u s t b e e x p r e s s e d o n th e b a s is o f 100, w it h n o t m o r e th an t h r e e d e c im a l p la c e s , f o r e x a m p l e , 99.925. T h e T rea su ry bills fo r w hich tender is h ereby m ade are to be dated D ecem ber 3, 1953, and are to m ature o n M a rch 4, 1954. This tender will be inserted in special envelope marked “ Tender for Treasury Bills.” N am e o f B id der .......................................................................................................................................... (P lea se print) By ................... ................................................................ , (Official signature required) ....................................................... (T itle ) Street A dd ress ............................................................................................................................................... (C ity , T ow n o r V illa g e , P. O. N o., and State) I f this tender is subm itted by a bank fo r the accou n t o f a custom er, indicate the custom er’ s name on line b elow : (N am e o f Custom er) (C ity , T ow n or V illa ge, P. O. N o., and State) I M P O R T A N T IN S T R U C T IO N S : 1. N o tender fo r less than $1,000 w ill be considered, and each tender must be fo r an even m ultiple o f $1,000 (m aturity valu e). 2. If the person m aking the tender is a corp oration , the tender should be signed by an officer o f the corporation authorized to make the tender, and the sign in g o f the tender by an officer o f the corp ora tion w ill be construed as a rep resentation b y him that he has been so authorized. I f the tender is made by a partnership, it should be signed by a m em ber o f the firm, w ho shou ld sig n in the fo rm “ ............................................................................................................... . a copartnership, by ......................... ............................................................................................, a m em ber o f the firm .” 3. T en ders w ill be received w ith ou t deposit from in corporated banks and trust com panies and from respon sible and recogn ized dealers in investm ent securities. T en ders from others must be accom panied b y paym ent o f 2 percent o f the fa ce am ount o f T reasu ry bills applied for, unless the tenders are accom pa n ied b y an express guaranty o f paym ent b y an in corpora ted bank or trust com pany. 4. I f the language o f this tender is changed in any respect, w hich, in the opin ion o f the S ecretary o f the T reasu ry, is m aterial, the tender m ay be disregarded. Payment by credit through Treasury Tax and Loan Account will not be permitted. T E N T B 1222-a (o v e r ) INTEREST ON DEPOSITS Tim e C e rtifica te with Alternate Maturities Q u estion s have recen tly been ra ised as to whether certain forms o f time ce rtifica te s o f d e p o s it providing for alternate maturities and in cre a sing rates o f in terest com ply with the requirements o f the Board*s R egulation Q relating to payment o f in terest on d e p o s its by member banks,. Under the Supplement to R egulation Q member banks may not pay in terest at a rate in e x c e s s o f 2 1 /2 per cen t per annum on any time d e p o sit having a maturity date 6 months or more after the date o f d e p o sit or payable upon written n otice o f 6 months or more, in e x c e s s o f 2 per cen t on any time d e p o sit having a maturity date le s s than 6 months and not le s s than 90 days after the date o f d e p o sit or payable upon written n o tice o f le s s than 6 months and not le s s than 90 d a ys; or in e x c e s s o f one per cen t on any time d e p o sit having a maturity date le s s than 90 days after the date o f d e p o sit or payable upon written n o tice o f le s s than 90 days* In applying th ese p ro v isio n s, it i s the B oard’ s p o sitio n that i f a time certifica te permits withdrawal at a stated maturity, the maximum rate o f in terest payable is to be determined by the length o f time betw een the date o f is s u e and the maturity, or i f the ce rtifica te d oes not s p e c ify a maturity but permits withdrawal after a prescribed period o f written n o tic e 5 the maximum rate o f in terest is determined by the length o f su ch period o f notice,, If a certificate permits withdrawal either at a s p e cifie d maturity or prior to such time after a s p e c ifie d period o f written n o tic e , the maximum rate o f interest w ill depend upon which o f such withdrawal p riv ile g e s is e le c te d by the de~ p o sitor and the rate a p p lica b le under the R egulation in the circu m stan ces of the withdrawal p riv ileg e s o elected , F or exam plet i f a ce rtifica te p rovid es for payment 5 years after date o f is s u e with in terest at a rate o f 2 1 /2 per ce n t, but a ls o p rov id es for earlier payment after 90 d a y s5 written n otice with in terest at a rate o f 2 per cent, su ch a ce rtifica te com p lie s with the requirements o f R egu lation Q, Sim ilarly, such a five-yea r ce rtifica te providing for earlier withdrawal after 30 d a y s’ written n otice with in terest at a rate o f one per cen t would m eet the requirements o f the R egulation. R E P R I N T E D 5N N E W Y O R K FROM F E D E R A L R E S E R V E B U L L E T IN JULY 1953 (over) T im e D e p o s it, O pen A c c o u n t4 with A lte rn a te M aturities An inquiry h a s been r e c eiv ed by the Board a s to whether the p rin cip le sta ted in its interpretation o f R eg u la tio n Q relatin g to ''T im e C e r tific a te s with A ltern a te M a tu ritie s” and p u b lish ed in the 1 9 5 3 F ed era l R e s e r v e B u lle tin , page 7 2 1 ? i s a p p lic a b le a ls o in the c a s e o f a " t i m e d e p o s it, open a cc o u n t” a s d efin ed in s e c tio n 1(d) o f the regulation . By w ay o f illu stra tio n , the inquiry c ite d a c a s e in w hich, by the term s o f the con tract, the d e p o sit would be p a y a b le at a sta ted m aturity o f 6 m onths from the date th ereof with in te re st at a rate o f 2 1 / 2 per c e n t, but w ith an option on the part o f the d ep o sito r to withdraw a ll or part o f the d e p o s it at an earlier date eith er after 3 0 d a y s ’ written note with in te re st at a rate o f 1 per cen t, or after 9 0 d a y s ’ written n o tic e with in te re st at a rate o f 2 per cen t. It i s the B oa rd ’ s view that su ch a d e p o sit could properly be c la s s if i e d a s a " t i m e d e p o sit, open a cc o u n t” and that the p rin cip le sta ted in the interpretation referred to above with r e sp e c t to tim e c e r tific a te s o f d e p o s it w ould a ls o be a p p lic a b le to su ch a tim e d e p o sit, open a cc o u n t; in other w ords, that the maximum p e rm issib le rate o f in te re st would depend upon which o f the alternate w ithdraw al p r iv ile g e s i s e le c te d by the d e p o sito r and the rate a p p lic a b le under the regulation in the c irc u m sta n c es o f the w ith drawal p riv ile g e s o e le c t e d . T h e a p p lica tio n o f th is p rin cip le i s not a ffe c te d by the fa c t that the con tract o f d e p o sit p ro v id e s con tem poraneous, a ltern ative p r o v isio n s for w ithdraw al prior to the stated m aturity, either o f which the d e p o sito r might e x e r c is e at h is option . T h e Board is o f the v ie w a ls o that, sh ou ld the d ep o sito r withdraw o n ly a part o f the d e p o sit pursuant-to e x e r c is e o f eith er the 3 0 d a y s ’ or the 9 0 d a y s ’ written n otice p ro v isio n , it would be p e rm issib le for the remainder o f the origin al d e p o sit to bear in te re st at the 2 1 / 2 per cen t rate for the sp e c ifie d maturity o f 6 m onths. * R eprinted on rev erse s id e . R E P R IN T E D FROM FEDERAL IN NEW YORK RESERVE OCTOBER 1953 B U LLET IN
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