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FED ER A L R E SE R V E BANK O F N EW YORK Fiscal Agent of the United States Circular No. 4 7 8 7 October 6, 1959 O FFERIN G O F T W O SERIES O F T R E A S U R Y BILLS $1,200,000,000 o f 91-Day Bills, Additional Am ount, Series Dated July 16, 1959, Due Jan. 14, 1960 (T o B e Issued O ctober 15, 1959) $400,000,000 o f 182-Day Bills, Dated O ctober 15, 1959, D ue A p ril 14, 1960 T o A ll Incorporated Banks and Trust Companies, and Others Concerned, in the Second Federal R eserv e D istrict: Following is the text o f a notice issued by the Treasury Department, released for publication in morning newspapers, Tuesday, October 6, 1959: T he Treasury Department, by this public notice, invites tenders fo r tw o series o f Treasury bills to the aggregate amount o f $1,600,000,000, o r thereabouts, f o r cash and in exchange fo r Treasury bills maturing October 15, 1959, in the amount o f $1,600,122,000, as fo llo w s : 91-day bills (to maturity date) to be issued O ctober 15, 1959, in the amount o f $1,200,000,000, or thereabouts, repre senting an additional amount o f bills dated July 16, 1959, and to mature January 14, 1960, originally issued in the amount o f $401,023,000, the additional and original bills to be freely interchangeable. 182-day bills, fo r $400,000,000, or thereabouts, to be dated O ctober 15, 1959, and to mature A pril 14, 1960. T he bills o f both series will be issued on a discount basis under competitive and noncompetitive bidding as hereinafter provided, and at maturity their face amount will be payable without interest. Th ey will be issued in bearer form only, and in denominations o f $1,000, $5,000, $10,000, $100,000, $500,000 and $1,000,000 (m aturity value). Tenders will be received at Federal Reserve Banks and Branches up to the closing hour, tw o o ’clock p.m., Eastern Daylight Saving time, Friday, October 9, 1959. Tenders will not be received at the Treasury Department, W ashington. Each tender must be fo r an even multiple o f- $1,000, and in the case o f competitive tenders the price offered must be expressed on the basis o f 100, with not m ore than three decimals, e.g., 99.925. Fractions may not be used. It is urged that tenders be made on the printed form s and forw arded in the special envelopes which will be supplied by Federal Reserve Banks o r Branches on application therefor. Others than banking institutions will not be permitted to submit tenders except fo r their own account. Tenders w ill be received without deposit from incorporated banks and trust companies and from responsible and recognized dealers in in vestment securities. Tenders from others must be accompanied by payment o f 2 percent o f the face amount o f Treasury bills applied for, unless the tenders are accompanied b y an express guaranty o f payment by an incorporated bank or trust company. Immediately after the closing hour, tenders w ill be opened at the Federal Reserve Banks and Branches, follow in g which public announcement w ill be made by the Treasury Department o f the amount and price range o f accepted bids. Those sub mitting tenders will be advised o f the acceptance or rejection thereof. T he Secretary o f the Treasury expressly reserves the right to accept o r reject any o r all tenders, in w hole or in part, and his action in any such respect shall be final. Subject to these reservations, noncompetitive tenders fo r $200,000 o r less fo r the additional bills dated July 16, 1959, (91 days remain ing until maturity date on January 14, 1960) and noncom petitive tenders fo r $100,000 or less fo r the 182-day bills without stated price from any one bidder will be accepted in fu ll at the average price (in three decim als) o f accepted competitive bids for the respective issues. Settlement f o r accepted tenders in accordance with the bids must be made or completed at the Federal Reserve Bank on October 15, 1959, in cash o r other immediately available funds or in a like face amount o f Treasury bills maturing October 15, 1959. Cash and exchange tenders will receive equal treatment. Cash adjustments w ill be made for differences between the par value o f maturing bills accepted in exchange and the issue price o f the new bills. The income derived from Treasury bills, whether interest or gain from the sale o r other disposition o f the bills, does not have any exemption, as such, and loss from the sale o r other disposition o f Treasury bills does not have any special treat ment, as such, under the Internal Revenue Code o f 1954. T he bills are subject to estate, inheritance, g ift or other excise taxes, whether Federal or State, but are exem pt from all taxa tion now or hereafter imposed on the principal or interest thereof by any State, or any o f the possessions o f the United States, or by any local taxing authority. F o r purposes o f taxa tion the amount o f discount at which Treasury bills are originally sold by the United States is considered to be interest. Under Sections 4 5 4 (b ) and 1221(5) o f the Internal Revenue Code o f 1954 the amount o f discount at which bills issued hereunder are sold is not considered to accrue until such bills are sold, redeemed or otherwise disposed o f, and such bills are excluded from consideration as capital assets. A ccordingly, the ow ner o f Treasury bills (other than life insurance com panies) issued hereunder need include in his income tax return only the difference between the price paid fo r such bills, whether on original issue o r on subsequent purchase, and the amount actually received either upon sale or redemption at maturity during the taxable year fo r which the return is made, as ordinary gain or loss. Treasury Department Circular N o. 418, Revised, and this notice, prescribe the terms o f the Treasury bills and govern the conditions o f their issue. Copies o f the circular m ay be obtained from any Federal Reserve Bank o r Branch. This Bank will receive tenders for both series up to 2 p.m., Eastern Daylight Saving time, Friday, O ctober 9, 1959, at the Securities Department o f its Head Office and at its Buffalo Branch. Tender forms for the respective series are enclosed. Please use the appropriate form s to submit tenders and return them in an envelope marked “ Tender for Treasury Bills.” Tenders may be submitted by telegraph, subject to written confirmation; they may not be submitted by telephone. Payment fo r the Treasury bills cannot be made by credit through the Treasury T ax and Loan Account. Settlement must be made in cash or other immediately available funds or in maturinq Treasury bills. This circular was printed before the results o f the bidding for Treasury bills to be issued October 8, 1959, were available; those results will be announced after release by the Treasury Department. A lfred Closing date for receipt of tenders is Friday, October 9. H , President. a y e s
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