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F E D E R A L R E S E R V E B A N K O F N E W Y O RK Fiscal Agent of the United States f Circular No. 4 9 3 8 1 L September 28, 1960 J O FFE R IN G OF T W O SERIES OF T R E A S U R Y BILLS $1,000,000,000 o f 91-Day Bills, Additional Amount, Series Dated July 7, 1960, Due Jan. 5, 1961 (T o Be Issued October 6, 1960) $500,000,000 o f 182-Day Bills, Dated October 6, 1960, Due April 6, 1961 T o A ll Incorporated B anks and Trust Companies, and Others Concerned, in the Second Federal R eserve D istrict: Following is the text of a notice issued by the Treasury Department, released for publication today at 4 p.m., Eastern Daylight Saving time: T h e T reasu ry Departm ent, b y this pu blic n otice, invites tenders fo r tw o series o f T reasu ry bills to the a ggregate amount o f $1,500,000,000, o r thereabouts, fo r cash and in exch a n ge for T re a su ry bills m aturing O ctober 6, 1960, in the am ount o f $1,500,509,000, as f o llo w s : 91-day bills (to m aturity date) to be issued O ctob er 6, 1960, in the am ount o f $1,000,000,000, or thereabouts, representing an addition al am ount o f bills dated July 7, 1960, and to mature January 5, 1961, origin a lly issued in the am ount o f $500,050,000, the addition al and origin a l bills to be freely interchangeable. 182-day bills, fo r $500,000,000, or thereabouts, to be dated O ctober 6, 1960, and to mature A p ril 6, 1961. T h e bills o f both series w ill be issued on a discou n t basis under com petitive and n oncom petitive bid d in g as hereinafter p rovided, and at m aturity their face amount w ill be payable w ithout interest. T h e y w ill be issued in bearer fo rm on ly, and in denom inations o f $1,000, $5,000, $10,000, $100,000, $500,000 and $1,000,000 (m aturity valu e). T en ders w ill be received at F ed eral R eserve Banks and Branches up to the clo s in g h our, tw o o ’c lo ck p.m., E ast ern D ayligh t Savin g tim e, M on day, O ctober 3, 1960. Tenders w ill not be received at the T reasu ry Departm ent, W ash ington. E ach tender must be fo r an even m ultiple o f $1,000, and in the case o f com petitive tenders the price offered must be expressed on the basis o f 100, w ith not m ore than three decim als, e.g., 99.925. F raction s m ay not 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 b y F ed eral R eserve Banks o r Branches on application 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. Tenders w ill be received w ithout deposit from in corporated banks and trust com panies and from responsible and recogn ized dealers in in vestment 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 or trust com pany. Im m ediately a fter the clo s in g hour, tenders w ill be opened at the Federal Reserve Banks and B ranches, fo llo w in g which public announcem ent w ill be m ade b y the T reasu ry Department o f the amoUnt and price range o f a ccepted bids. T h ose sub m itting tenders w ill be advised o f the acceptance o r rejection thereof. T h e Secretary o f the Treasu ry expressly reserves the right to accep t or reject any or all tenders, in w hole o r in part, and his action in any such respect shall be final. S u b ject to these reservations, noncom petitive tenders for $200,000 or less fo r the addition al bills dated July 7, 1960, (91 days re m ain in g until m aturity date on January 5, 1961) and n on com petitive tenders fo r $100,000 or less for the 182-day bills w ithout stated price from any one bidder w ill be accepted in fu ll at the average price (in three decim a ls) o f a ccepted com petitive bids tor the respective issues. Settlem ent fo r accepted tenders in a ccord a n ce w ith the bids must be made o r com pleted at the Federal R eserve Bank on O ctob er 6, 1960, in cash o r other im m ediately available funds or in a like fa ce am ount o f T reasu ry bills m aturing O ctob er 6, 1960. Cash and exch a n ge tenders w ill receive equal treatment. Cash adjustm ents w ill be made fo r differences between the par value o f m aturing bills accepted in exch a n ge and the issue price o f the new bills. T he incom e derived from T reasu ry bills, w hether interest or gain from the sale or oth er disposition o f the bills, does not have any exem ption, as such, and loss from the sale or other disposition o f T reasu ry bills does not have any special treat ment, as such, under the Internal Revenue C ode o f 1954. The bills are subject to estate, inheritance, g ift or oth er ex cise taxes, whether Federal or State, but are exem pt from a ll ta x a tion now or hereafter im posed on the principal or interest thereof by any State, or any o f the possessions o f the U nited States, or by any loca l ta x in g authority. F o r purposes o f ta x a tion the am ount o f discount' ’ at’ w hich T reasu ry bills are o rigin a lly sold b y the U nited States is con sidered to be interest. U nder Sections 454(b) and 1221(5) o f the Internal Revenue C ode o f 1954 the amount o f discou nt at w hich bills issued hereunder are sold is not con sidered to a ccru e until such bills are sold , redeem ed or o th erw ise.d isp osed ,of, and such bills are exclu ded from con sideration as capital assets. A ccord in g ly , the ow ner o f T reasu ry bills .(o th e r .than life insurance co m panies) issued hereunder need include in his incom e ta x return on ly the difference betw een, the price paid fo r such bills, whether on origin a l issue or on subsequent purchase, and the am ount actually received either .upon, sa le o r redem ption at m aturity du rin g the ta xab le year fo r w hich the return is m ade, as ord in a ry gain or loss. ........................... T reasu ry Departm ent C ircu lar N o. 418, R evised, and this notice, prescribe the terms o f the T reasu ry bills and govern the con dition s o f their issue. Copies o f the circu la r m ay be obtained from any F ed eral R eserve Bank or Branch. This Bank will receive tenders for both series up to 2 p.m., Eastern Daylight Saving time, Monday, October 3, 1960, at the Securities Department of 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 for the Treasury bills cannot be made by credit through the Treasury Tax 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 September 29, 1960, representing an additional amount of bills dated June 30, 1960, and maturing December 29, 1960; and 182-day bills dated September 29, 1960, maturing March 30, 1961) are shown on the reverse side of this circular. A lfred H ayes, President. ( over) RESULTS OF LAST OFFERING OF TREASURY BILLS (TWO SERIES TO BE ISSUED SEPTEMBER 29, 1960) Range of Accepted Competitive Bids 91-Day Treasury Bills Maturing December 29,1960 Price 182-Day Treasury Bills Maturing March 30, 1961 Approx. equiv. annual rate Price Approx. equiv. annual rate High ................... ......... 99.433 2.243% 98.640 2.690% Low ..................... .......... 99.419 2.298% 98.610 2.749% Average .............. ......... 99.422 2.286%* 98.620 2.729%! 1 O n a cou pon issue o f the same length and fo r the sam e am ount invested, the return on these bills w ou ld provide yield s o f 2.33 percent for the 91-day b ills, and 2.81 percent fo r the 182-day bills. Interest rates on bills are quoted in term s o f bank discount, with the return related to the fa ce am ount o f the bills payable at m aturity rather than the amount invested, and th eir length in actual num ber o f days related to a 360-day year. In con trast, yield s on certificates, notes, and bonds are com pu ted in term s o f interest on the am ount invested, and relate the num ber o f days rem ainin g in an interest paym ent p eriod t o the actual num ber o f days in the p eriod, w ith sem iannual com p ou n d in g i f m ore than one cou pon p e rio d is in volved. (57 percent of the amount of 91-day bills bid for at the low price was accepted.) (The entire amount of 182-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 December 29,1960 District Accepted Applied for Boston ......................... ........ $ 25,711,000 182-Day Treasury Bills Maturing March 30, 1961 $ 14,102,000 Applied for $ 1,729,000 Accepted $ 1,729,000 New Y o r k ................... ........ 1,523,542,000 693,874,000 672,340,000 371,915,000 Philadelphia ............... ......... 26,513,000 10,699,000 9,902,000 3,692,000 Cleveland ................... ........ 25,909,000 25,659,000 20,375,000 20,050,000 Richmond ................... ......... 11,711,000 11,278,000 7,997,000 4,997,000 A tlanta......................... ......... 16,549,000 13,349,000 5,016,000 4,566,000 Chicago ....................... ........ 222,339,000 148,190,000 67,725,000 39,225,000 St. L o u is ..................... ........ 20,687,000 13,242,000 5,842,000 3,942,000 Minneapolis ................ ........ 15,041,000 8,541,000 5,494,000 1,494,000 Kansas C i t y ................ ........ 28,967,000 16,282,000 10,625,000 10,425,000 D a lla s........................... ........ 9,857,000 9,857,000 2,977,000 2,777,000 40,694,000 35,790,000 38,758,000 35,258,000 San Francisco ............ Total ..................... $1,967,520,000 $1,000,863,000* a Includes $191,640,000 n on com petitive tenders a ccep ted at the a vera ge p rice o f 99.422. h Includes $42,462,000 n on com petitive tenders a ccep ted at the a vera ge price o f 98.620. $848,780,000 $500,070,000b
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