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FEDERAL RESERVE BANK O F NEW YORK Fiscal Agent of the United States r C i r c u la r N o . 4 9 1 4 1 L J u ly 2 0 , I 9 6 0 J OFFERING OF TWO SERIES OF TREASURY BILLS $1,000,000,000 of 91-Day Bills, Additional Amount, Series Dated Apr. 28, 1960, Due Oct. 27, 1960 (To Be Issued July 28, 1960) $400,000,000 of 182-Day Bills, Dated July 28, 1960, Due January 26, 1961 To All Incorporated Banks and Trust Companies, and Others Concerned, in the Second Federal Reserve District: Following is the text of a notice issued by the Treasury Department, released for publication today at 4 p.m., Eastern Daylight Saving tim e: T h e Treasury Department, by this public notice, invites tenders for tw o series o f Treasury bills to the aggregate amount o f $1,400,000,000, or thereabouts, for cash and in exchange for Treasury bills maturing July 28, 1960, in the am ount of $1,401,176,000, as follow s: 91-day bills (to maturity date) to be issued July 28, 1960, in the amount o f $1,000,000,000, or thereabouts, repre senting an additional amount o f bills dated April 28, 1960, and to mature O ctober 27, 1960, originally issued in the amount o f $400,225,000, the additional and orig inal bills to be freely interchangeable. 182-day bills, for $400,000,000, o r thereabouts, to be dated July 28, 1960, and to mature January 26, 1961. T h e bills o f both series w ill be issued on a discount basis under com petitive and noncom petitive bidding as hereinafter pro vided, and at maturity their face amount w ill be payable without interest. T h ey will be issued in bearer form only, and in de nominations o f $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-thirty o ’ clock p.m., Eastern Daylight Saving time, M onday, July 25, 1960. Tenders will not be received at the Treasury Department, W ashington. Each tender m ust be for 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 forwarded in the special envelopes which w ill be supplied by Federal Reserve Banks or Branches on application therefor. Others than banking institutions w ill not be permitted to submit tenders except for their ow n account. Tenders w ill be received without deposit from incorporated banks and trust co m panies and from responsible and recognized dealers in investment securities. Tenders from others must be accom panied by pay ment o f 2 percent o f the face am ount o f Treasury bills applied for, unless the tenders are accom panied b y an express guaranty o f payment by an incorporated bank or trust company. Immediately after the closing hour, tenders will be opened at the Federal Reserve Banks and Branches, follow in g which public announcement w ill be made by the Treasury Departm ent o f the amount and price range o f accepted bids. T h ose submitting tenders w ill be advised o f the acceptance or rejection thereof. T h e Secretary o f the Treasury expressly reserves the right to accept or 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 reser vations, noncom petitive tenders for $200,000 or less for the addi tional bills dated April 28, 1960, (91 days remaining until maturity date on O ctober 27, 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 com petitive bids for the respective issues. Settlement for accepted tenders in accordance with the bids must be made or com pleted at the Federal Reserve Bank on July 28, 1960, in cash or other immediately available funds or in a like face amount o f Treasury bills maturing July 28, 1960. 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. T h e incom e derived from Treasury bills, whether interest or gain from the sale or other disposition o f 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 o f 1954. T he bills are subject to estate, inheritance, gift or other excise taxes, whether Federal or State, but are exempt from all taxation n ow or here after im posed on the principal or interest thereof by any State, or any o f the possessions o f the United States, o r b y any local taxing authority. F or purposes o f taxation the amount o f dis count at which Treasury bills are originally sold b y the United States is considered to be interest. Under Sections 454(b) and 1221(5) o f the Internal Revenue Code o f 1954 the amount o f 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. A ccordin gly, the ow ner o f Treasury bills (other than life insurance com panies) issued hereunder need include in his incom e 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 w hich 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 o f the circular m ay be obtained from any Federal Reserve Bank or Branch. This Bank will receive tenders for both series up to 1 :30 p.m., Eastern Daylight Saving time, Monday, July 25, 1960, 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 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 fo r the Treasury bills cannot be made by credit through the Treasury T a x and Loan Account. Settlement must be made in cash or other immediately available funds or in maturing Treasury bills. Results of the last offering of Treasury bills (91-day bills to be issued July 21, 1960, representing an additional amount of bills dated April 21, 1960, and maturing October 20, 1960; and 182-day bills dated July 21, 1960, maturing January 19, 1961) are shown on the reverse side of this circular. A l f r e d H a y e s , President. ( over) RESULTS OF LAST OFFERING OF TREASURY BILLS (TW O SERIES TO BE ISSUED JULY 21, 1960) Range o f A ccepted Competitive Bids 91-Day Treasury Bills Maturing O ctober 20, 1960 182-Day Treasury Bills Maturing January 19, 1961 Price Approx. equiv. annual rale Price High ......................... ......... 99.423a 2 .2 8 3 % 98.684 2 .603% L o w ........................... ......... 99.410 2 .3 3 4 % 98.670 2 .6 3 1 % .................. ......... 99.417 2 .3 0 7 % 1 98.673 2 .6 2 5 % 1 Average Approx. equiv. annual rate a E xceptin g one tender o f $4,268,000. 1 O n a coupon issue o f the same length and for the same amount invested, the return on these bills would provide yields o f 2.35 percent for the 91-day bills, and 2.70 percent for the 182-day bills. Interest rates on bills are quoted in terms o f bank discount with the return related to the face am ount o f the bills payable at maturity, rather than the amount invested, and their length in actual number o f days related to a 360-day year. In contrast, yields on certificates, notes, and bonds are com puted in terms o f interest on the amount invested, and relate the number o f days remaining in an interest payment period to the actual number o f days in the period, with semiannual com pounding if m ore than one coupon period is involved. (5 9 percent o f the amount of 91-day bills (14 percent of the amount of 182-day bills bid for at the low price was accepted.) bid for at the low price was accepted.) T otal Tenders A pplied fo r and Accepted (B y Federal Reserve Districts) 91-Day Treasury Bills Maturing October 20, 1960 Applied for District Boston .............................. $ 30,191,000 182-Day Treasury Bills Maturing January 19, 1961 Accepted. $ 16,921,000 Applied for $ 3,756,000 Accepted $ 2,358,000 New Y o r k ....................... 1,250,676,000 640,386,000 673,981,000 312,312,000 Philadelphia.................... 28,119,000 12,719,000 6,848,000 1,698,000 Cleveland ......................... 25,881,000 20,081,000 14,187,000 5,526,000 R ichm ond......................... 11,694,000 10,334,000 12,055,000 2,094,000 A t la n ta .............................. 19,362,000 14,568,000 3,745,000 2,631,000 ........................... 195,128,000 127,218,000 93,732,000 40,861,000 St. Louis ......................... 26,821,000 21,296,000 5,618,000 4,918,000 M inneapolis..................... 14,067,000 10,067,000 4,951,000 2,351,000 Kansas C i t y .................... 38,828,000 35,328,000 9,690,000 4,553,000 Dallas ................................ 12,019,000 12,019,000 3,381,000 3,381,000 San F ran cisco................ 81,156,000 79,204,000 37,508,000 17,380,000 Chicago Total .............. $1,733,942,000 $1,000,141,000b $869,452,000 Includes $230,023,000 noncompetitive tenders accepted at the average price of 99.417. c Includes $52,499,000 noncompetitive tenders accepted at the average price of 98.673. $400,063,000° At Circular No, U91U F R ed era l o f N eser v e ew Yo B ank rk REMINDER Wrapped Coin Service To Be Discontinued October 1, 1960 You were informed by letter dated January 2 0, 1960, that this Bank would discontinue furnishing wrapped coin as of October 1, 1960. This reminder is to notify you again of this fact. If you plan to continue furnishing wrapped coin to your customers and have not completed arrangements to continue the service, our Bank Relations Department will be glad to furnish you with information about available wrapping equipment and to suggest simplified procedures for its use. Cash Department