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FEDERAL RESERVE BANK OF NEW YORK Fiscal Agent of the United States f C Oclober^ 2 ‘ 195 ®7 ] OFFERIN G OF T W O SERIES OF T R E A S U R Y BILLS 81,000,000,000 o f 91-Day Bills, Additional Am ount, Series Dated July 30, 1959, Due Jan. 28, 1960 (T o Be Issued O ctober 29, 1959) $400,000,000 o f 182-Day Bills, Dated O ctober 29, 1959, Due A pril 28, 1960 T o A ll In corporated Batiks and T ru st Companies, and O thers 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, Thursday, October 22, 1959: The Treasury Department, by this public notice, invites tenders for two series of Treasury bills to the aggregate amount o f $1,400,000,000, or thereabouts, for cash and in exchange for Treasury bills maturing October 29, 1959, in the amount of $1,400,217,000, as follows: 91-day bills (to maturity date) to be issued October 29, 1959, in the amount of $1,000,000,000, or thereabouts, representing an additional amount of bills dated July 30, 1959, and to mature January 28. 1960, originally issued in the amount of $400,798,000, the additional and original bills to be freely interchangeable. 182-day bills, for $400,000,000, or thereabouts, to be dated October 29, 1959, and to mature April 28, 1960. The bills of both series will be issued on a discount basis under competitive and noncompetitive bidding as hereinafter pro vided, and at maturity their face amount will be payable without interest. They will be issued in bearer form only, and in de nominations of $1,000, $5,000, $10,000, $100,000, $500,000 and $1,000,000 (maturity value). Tenders will be received at Federal Reserve Banks and Branches up to the closing hour, one-thirtv o’clock p.m., Eastern Standard time, Monday, October 26, 1959. Tenders will not be received at the Treasury Department, Washington. Each tender must be for an even multiple of $1,000, and in the case of competitive tenders the price offered must be expressed on the basis of 100, with not more than three decimals, e.g., 99.925. Fractions may not be used. It is urged that tenders be made on the printed forms and forwarded in the special envelopes which will be supplied by Federal Reserve Banks or Branches on application therefor. Others than banking institutions will not be permitted to submit tenders except for their own account. Tenders will be received without deposit from incorporated banks and trust com panies and from responsible and recognized dealers in investment securities. Tenders from others must be accompanied by pay ment of 2 percent of the face amount of Treasury bills applied for, unless the tenders are accompanied by an express guaranty of payment by an incorporated bank or trust company. Immediately after the closing hour, tenders will be opened at the Federal Reserve Banks and Branches, following which public announcement will be made by the Treasury Department of the amount and price range of accepted bids. Those submitting tenders will be advised of the acceptance or rejection thereof. The Secretary of the Treasury expressly reserves the right to accept or reject any or all tenders, in whole or in part, and his action in any such respect shall be final. Subject to these reserva tions, noncompetitive tenders for $200,000 or less for the addi tional bills dated July 30, 1959, (91 days remaining until matur ity date on January 28, 1960) and noncompetitive tenders for $100,000 or less for the 182-day bills without stated price from any one bidder will be accepted in full at the average price (in three decimals) o f accepted competitive bids for the respective issues. Settlement for accepted tenders in accordance with the bids must be made or completed at the Federal Reserve Bank on October 29, 1959, in cash or other immediately available funds or in a like face amount o f Treasury bills maturing October 29, 1959. Cash and exchange tenders will receive equal treatment. Cash adjustments will be made for differences between the par value o f maturing bills accepted in exchange and the issue price of the new bills. The income derived from Treasury bills, whether interest or gain from the sale or other disposition of the bills, does not have any exemption, as such, and loss from the sale or other disposi tion o f Treasury bills does not have any special treatment, as such, under the Internal Revenue Code of 1954. The bills are subject to estate, inheritance, gift or other excise taxes, whether Federal or State, but are exempt from all taxation now or here after imposed on the principal or interest thereof by any State, or any of the possessions of the United States, or by any local taxing authority. For purposes of taxation the amount of dis count at which Treasury bills are originally sold by the United States is considered to be interest. Under Sections 454(b) and 1221(5) of the Internal Revenue Code of 1954 the amount of dis count at which bills issued hereunder are sold is not considered to accrue until such bills are sold, redeemed or otherwise dis posed of, and such bills are excluded from consideration as capital assets. Accordingly, the owner of Treasury bills (other than life insurance companies) issued hereunder need include in his income tax return only the difference between the price paid for such bills, whether on original issue or on subsequent pur chase, and the amount actually received either upon sale or redemption at maturity during the taxable year for which the return is made, as ordinary gain or loss. Treasury Department Circular No. 418, Revised, and this notice, prescribe the terms o f the Treasury bills and govern the conditions o f their issue. Copies of the circular may be obtained from any Federal Reserve Bank or Branch. This Bank will receive tenders for both series up to 1 :30 p.m., Eastern Standard time, Monday, October 26. 1959, at the Securities Department o f its Head Office and at its Buffalo Branch. Tender form s for the respective series are enclosed. Please use the appropriate forms 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 for the Treasury bills cannot be male by credit through the Treasury Tax and Loan Account. Settlement must be made in cash or other immediately available funds or in maturing Trcasurx bills. Results o f the last offering o f Treasury bills (9 1 -day bills to be issued October 22, 1959, representing an additional amount o f bills dated July 23, 1959, and maturing January 21. 1960; and 182-day bills dated October 22, 1959, maturing April 21, 1960) are shown on the reverse side o f this circular. A lfred H a y e s , President. Please note that closing time is 1 :3 0 p .m ., Eastern Standard time. RESULTS OF LAST OFFERING OF TREASURY BILLS (TWO SERIES ISSUED OCTOBER 22, 1959) Range of Accepted Competitive Bids 91-Day Treasury Bills Maturing January 21, 1960 Price Approx. equiv. annual rate Price Approx. equiv. annual rate 98.971“ 4.071% 97.742 4.466% ....................... ........ 98.960 4.114% 97.714 4.522% ................. ........ 98.964 4.099% 97.730 4.490% High ........................ ........ Low 182-Day Treasury Bills Maturing April 21, 1960 Average Excepting one tender of $230,000. (88 percent o f the amount o f 182-day bill bid for at the low price was accepted.) (5 percent o f the amount o f 91-day bills bid for at the low price was accepted.) Total Tenders Applied for and Accepted (By Federal Reserve Districts) 91-Day Treasury Bills Maturing January 21, 1960 Applied for District Boston ............................ $ 33,072,000 182-Day Treasury Bills Maturing April 21, 1960 Accepted $ 29,377,000 Applied for $ 3,295,000 Accepted $ 3,295,000 1,341,278,000 628,743,000 549,383,000 289,663,000 Philadelphia ................. 33,308,000 18,208,000 7,689,000 2,689,000 Cleveland ....................... 35,924,000 27,589,000 13,042,000 8,042,000 R ic h m o n d ..................... 18,322,000 13,243,000 5,843,000 3,843,000 Atlanta ........................... 22,796,000 18,523,000 5,067,000 4,967,000 C h ic a g o .......................... 243,610,000 121,255,000 66,463,000 40,123,000 St. Louis ....................... 22,487,000 22,487,000 5,694,000 5,694,000 Minneapolis ................. 12,585,000 9,295,000 2,655,000 2,455,000 Kansas C i t y ................. 39,160,000 25,110,000 7,904,000 6,804,000 Dallas ............................ 19,757,000 19,584,000 6,781,000 6,281,000 San Francisco ............. 75,560,000 66,873,000 26,210,000 26,210,000 $700,026,000 $400,066,000'' N ew Y ork ..................... Total ............. $1,897,859,000 $1,000,287,000” b Includes $258,182,000 noncom petitive tenders accepted at the average price o f 98.964. 0 Includes $54,466,000 noncom petitive tenders accepted at the average price o f 97.730. a f Y ? 97 TIPS FOR TELLERS m BOND OFFICERS AliOUT IMTEII STATES SAVINGS ItOVDS NEW O LD B O N D S A R E T H E " B E S T -E V E R " B O N D S IM P R O V E D T O O • Substantial im provem ents in the term s o f Series E and H Ju n e Savings Bonds, effective I , 1959, make it im p o rta n t f o r the p ublic to know the features which make bo th e v e r. old and This new bonds fo ld e r helps to b e tte r than answer the questions yo u r patrons will ask. Th e Tre asu ry co o p e ra tio n in thanks you explaining fo r the your new helpful term s to bo n d owners, new buyers, a nd the general public. Septem ber 23, 1959. SERIES E New E Bonds with issue dates, June 1959 or after: Earn 3 % when held to maturity com pared to the former 3|4 % (compounded semiannually). Mature in 7 years and 9 months— 1 year and 2 months earlier than the former 8 years and 1 I months. The higher inter est rate means a shorter time to maturity. Pay a higher return for shorter terms of holding. 3 % when held 2 years as against 2 Y+% before. 3J/2 % when held 4 Y l years as against 3J/6 % before. Same denominations as before— $25, $50, $100, $200, $500, $1,000, $10,000. Same prices as before— $18.75 for a $25 bond; $37.50 for a $50 bond; $75 for a $ 100 bond; etc. Extension privilege for 10 additional years of holding is provided. Interest rates and other terms and conditions to be deter mined as they approach maturity. New terms apply regardless of what is printed on the bond if the issue date is June 1959 or after. A s newly printed bonds become available they will carry the new terms, but new terms apply regardless on bonds back to June 1959. Accurate payment will be assured by the table of redemption values furnished all paying agents, on which current redemption values are automatically keyed to the issue date on each bond sold. Those who have purchased bonds beginning June 1959, but before the newly printed bonds are avail[ 11 able, may exchange their old bonds for the new if desired, but they get the benefit of the new terms regardless. A ll outstanding E Bonds with issue dates prior to June 195 9: Earn at least more than before from now to next maturity, with lesser im provement in yields if redeemed earlier. The improved rates start with the next full interest period beginning on or after June 1959. There is no retroactive in crease in interest rates for periods prior to June 1959. Term to maturity or extended maturity is unchanged. The higher rate for the re maining time means an increase in the new as against the former redemption values. Here is how the improved rates to the next maturity will apply. The improvement de pends on the former rates on these bonds for holding to maturity or for the full ex tension. I. Unmatured bonds reaching original ma turity beginning December 1959 (dated December 1949 through May 1959). (a) V2 %> more on former 3 * 4 % bonds with issue dates of February 1957 through May 1959 (new maturity values ranging from $103.20 to $104.24 vs. old $ 1 0 0.00 ). (b ) y%°/o more on former 3 % bonds with issue dates of May 1952 through January 195 7 (new ma turity values ranging from $101.08 to $103.60 vs. old $ 1 0 0.00 ). (c) 6 /1 0 % more on former 2 .9 % bonds with issue dates of Decem ber 1949 through April 1952 (new maturity values ranging from $100.32 to $101.48 vs. old $ 100. 00 ). [ 2 ] Example: 1955 Former 3 % bond dated June Investment yield from now on (as of June 1, 1959) If held for: 1 more y e a r . . . . 3 more years. . . . 5 ^ more years. . (maturity) Formerly Now 3 .3 8 % 3.27 3.49 3 .4 7 % 3.52 3.99 Continuing to hold unmatured bonds. In all cases it is more advantageous to hold these bonds to original maturity and be yond to extended maturity (see descrip tion of improved extension below) than to cash them in to buy new ones. 2. Bonds maturing, (reaching original ma turity June to November 1959) dated June to November 1949 see description of improved extension below. 3. Matured bonds which reached original maturity before June 1959 (dated May 1941 through May 1949). (a) V i% more on former 3 % (exten sion) bonds with issue dates of May 1942 through May 1949 (new ex tended maturity values ranging from $136.36 to $141.12 vs. old $ 1 3 4 .6 8 ). (b ) 6 /1 0 % more on former 2 .9 % (extension) bonds with issue dates of May 1941 through April 1942 (new extended maturity values ranging from $134.52 to $135.32 vs. old $ 1 3 3 .3 3 ). Example: Former 3 % (extension) dated December 1943 bond Investment yield from now on (as of June I. 1959) If held for: Formerly I more y e a r .......... .....3 .0 4 % 3 more years.......... .....3.00 41/2 more years. . . 3.04 (extended maturity) [ 3 ] Now 3 .1 4 % 3.34 3.54 Continuing to hold matured bonds. It is more advantageous to hold all former 2 .9 % (extension) bonds to extended ma turity than to cash now and buy new bonds — (b ) above. It is also more advantageous in most cases to continue to hold former 3 % (extension) bonds— (a) above. All of these bonds earn 3 V l % or slightly more on their current re demption value if held to extended maturity. Many will reach extended maturity before the new bonds (dated June 1959 or after) earn 3 ^ 2 % ( at ^V l years). However, even if the new bond does catch up, the difference in practically all cases is negligible. In addition, for income tax purposes, most people treat the total interest earned since issue date, as income for the year in which the bonds are redeemed. They prefer this to paying a tax each year as interest accrues. The interest on matured bonds amounts to 25 percent or more of their total value and even at the lowest income tax rate the tax payable upon redemption mounts up. How ever, continuing to hold these bonds means that this tax money stays invested and earns more interest. Therefore, in most cases there is no gain at all from redeeming the old bonds to buy new ones. 4. Improved extension on bonds with issue dates of June 1949 through April 1957 (reaching maturity June 1959 and after) on which a 3 % extension had already been promised. Earn 3 2 4 % for the entire extension if held to extended maturity (new ex tended maturity values ranging from $145.00 to $150.20 vs. old $1 3 4.6 8 ). Extension period is 10 years, the same as before. For shorter periods of holding during extension, earning rates will begin at approximately 3 / i% for the first year of holding and increase uniform ly to 3 Ya % at maturity. [4 ] Redemption value o f a bon d at the b e ginning o f the new extension will be the base on which interest will accrue during the 1 0 -year extension period. 5. Other extension privileges ( a ) Bonds with issue dates o f May 195 7 and after (including the new b onds) will have a 1 0 -year exten sion privilege, with interest rates and other terms and conditions to be determined as they approach maturity. ( b ) Bonds with issue dates o f May 1941 through May 1949 (already in their first extension period prior to June 1959, reaching extended maturity beginning May 1961 ) will have a second 1 0 -year extension privilege. Interest rates and other terms and conditions will be deter mined as they approach their pres ent extended maturity. In addition to the tax advantage in continued holding o f old bonds, b y allowing the tax m oney to earn more interest, there is also an advantage in deferring the tax for people who expect to be in a lower tax bracket when they redeem their bonds after retirement. SERIES H Series H bonds pay interest b y check every six months New H bonds with issue dates of June 1959 or after have also been improved. Earn 3 24 % the same as E bonds when held to maturity. Mature in 10 years as before. Pay a higher return for shorter terms o f holding. 3 j/4 % form er 3 Vi % form er when held 3% . when held 3 %. [5 ] 3 years as against 5 years as against Same denominations as before— $500, $1,000, $5,000, $10,000. Price as well as redemption value at all times (including maturity) is par as before. High current income Interest checks after the first three will be level, providing 4 % current income after 1 Yl years o f holding. All outstanding H bonds with issue dates prior to June 1959 Earn J/ 2 % m ore than before from now on to maturity, with lesser improvement in yields if redeemed earlier. The im proved rates start with the next full interest period beginning on or after June 1959. Term to maturity is unchanged. The higher rate means an increase in the amounts of the remaining interest checks over the former scheduled amounts o f checks to provide the Yl % increase in yield if the bon d is held to maturity. Example: Former 3 % 1955 bond dated June Amounts o f remaining semiannual checks (after June 1, 1959 for $1,000 b on d ) Checks First 3 ch eck s____ Next 4 c h e c k s . . . . Last 5 c h e c k s . . . . Formerly Now $17.00 17.00 17.00 $17.50 19.10 21.00 Continuing to hold outstanding bonds to maturity is more advantageous in all cases than cashing them in to buy new ones. OTHER SERIES H olders o f matured and maturing Series F and G bonds other than com mercial banks may apply the redemption proceeds to the purchase o f new Series E or Series H bonds without regard to limit on holdings (see b e lo w ). [61 LIMIT O N HOLDINGS Investors in Series E and H bonds, other than com mercial banks, may purchase and hold $10,000 face amount (original maturity) o f each series in each calendar year. * * * In conversations with bond holders or prospec tive buyers, they can be assured that Savings Bonds are sound investments for many other reasons besides their attractive interest return. Their most outstanding features are: Indestructibility— the Treasury will replace any bonds that are lost, stolen, mutilated, or destroyed. Guaranteed rate o f return over a period o f years. Guaranteed redemption values— not subject to the risks o f market fluctuations. Can be cashed anywhere in the country. Backed by the full faith and credit o f the United States. I 7]
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