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F E D E R A L R E S E R V E BANK O F N E W YORK Fiscal Agent of the United States TCircular No. 4 9 4 5 L October 11, 1960 ] 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 21, 1960, Due Jan. 19, 1961 (To Be Issued October 20, 1960) $400,000,000 of 182-Day Bills, Dated October 20, 1960, Due April 20, 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 time: T h e T reasu ry D epartm ent, by 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 $1,400,000,000, o r thereabouts, fo r cash and in exch a n ge for T reasu ry bills m aturing O ctober 20, 1960, in the am ount o f $1,400,323,000, as f o llo w s : 91-day bills (to m aturity date) to be issued O ctober 20, 1960, in the am ount o f $1,000,000,000, or thereabouts, representing an addition al am ount o f bills dated July 21, 1960, and to mature January 19, 1961, origin a lly issued in the amount o f $400,053,000, the addition al and o rig in a l bills to be freely interchangeable. 182-day b ills, fo r $400,000,000, or thereabouts, to be dated O ctober 20, 1960, and to mature A p ril 20, 1961. T h e bills o f both series w ill be issued on a discou nt basis under com petitive and n oncom petitive bid d in g as h ereinafter provided , and at m aturity their face am ount w ill be payable w ith ou t interest. T h e y w ill be issued in bearer form 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 B ranches up to the clo s in g hour, tw o o ’ c lo ck p.m., E ast ern D a yligh t Savin g tim e, M on day, O ctober 17, 1960. Tenders w ill n ot be received at the T reasu ry D epartm ent, W ash ington. E a ch 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 by Federal R eserve Banks or B ranches 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 a ccou nt. T en ders w ill be received w ithout deposit from in corporated banks and trust com panies and from responsible and recogn ized dealers in in vestm ent securities. T en ders from others must be accom panied b y paym ent o f 2 percent o f the face am ount o f T reasu ry bills applied fo r, unless the tenders are accom panied by an express gu aranty o f paym ent by an in corporated bank or trust com pany. Im m ediately after the closin g hour, tenders w ill be opened at the Federal R eserve Banks and B ranches, fo llo w in g w hich p u b lic announcem ent w ill be made b y the T reasu ry Departm ent o f the am ount and price range o f a ccepted bids. T h ose su b m itting tenders w ill be advised o f the acceptance o r rejection thereof. T h e S ecretary o f the T reasu 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 bject to these reservations, noncom petitive tenders fo r $200,000 or less fo r the a dd ition al bills dated July 21, 1960, (91 days re m aining until m aturity date on January 19, 1961) and n on com petitive tenders fo r $100,000 or less fo r the 182-day bills w ithout 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 for the respective issues. Settlem ent fo r accepted tenders in a ccord a n ce w ith the bids must be made or com pleted at the F ederal R eserve Bank on O ctober 20, 1960, in cash or other im m ediately available funds or in a like face am ount o f T reasu ry bills m aturing O ctober 20, 1960. Cash and exch ange tenders w ill receive equal treatment. Cash adjustm ents w ill be made fo r differences betw een the par value o f m aturing bills a ccepted in exch an ge and the issue price o f the new bills. T he incom e derived from T reasu ry bills, w hether interest o r ga in from the sale o r oth er disp osition o f the bills, does not have any exem ption, as such, and loss from the sale or other disp osition o f T reasu ry bills does not have any special treat ment, as such, under the Internal Revenue C ode o f 1954. T he bills are subject to estate, inheritance, g ift o r oth er excise taxes, w hether F ed eral or State, but are exem pt fro m all ta x a tion n ow or hereafter im posed on the principal o r interest th ereof by any State, or any o f the possessions o f the U nited States, or by any lo ca l ta x in g authority. F o r purposes o f ta x a tion the am ount o f discou nt at w hich T reasu ry bills are o rigin a lly sold by the U n ited States is con sidered to be interest. U nder S ections 4 5 4(b) and 1221(5) o f the Internal Revenue C ode o f 1954 the am ount o f discou nt at w hich bills issued hereunder are sold is n ot con sidered to a ccru e until such bills are sold, redeem ed or otherw ise disposed of, and such bills are exclu d ed from 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 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, 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 yea r for w hich the return is m ade, as ord in a ry gain o r loss. T reasu ry D epartm ent C ircu la r N o. 418, R evised, and this notice, prescribe the term s o f the T reasu ry bills and govern the con ditions o f their issue. Copies o f the circu la r m ay be obtain ed 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 17, 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 October 13, 1960, representing an additional amount of bills dated July 14, 1960, and maturing January 12, 1961; and 182-day bills dated October 13, 1960, maturing April 13, 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 OCTOBER 13, 1960) Range of Accepted Competitive Bids 91-Day Treasury Bills Maturing January 12, 1961 182-Day Treasury Bills Maturing April 13, 1961 Price Approx. equiv. annual rate Price Approx. equiv. annual rate High ..................... ........ 99.337a 2.623% 98.460b 3.046% Low ....................... ........ 99.308 2.738% 98.439 3.088% Average ............... ........ 99.318 2.698%1 98.443 3.079%! a E x ce p tin g three tenders tota lin g $442,000. b E x cep tin g fou r tenders tota lin g $2,200,000. 1 O n a cou pon issue o f the same length and fo r the same am ount invested, the return on these bills w ou ld provide yield s o f 2.75 percent fo r the 91-day bills, and 3.17 percent for the 182-day bills. Interest rates on bills are quoted in term s o f bank discou nt, w ith the return related to the fa ce am ount o f the bills payable at m aturity rather than the amount invested, and their 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 terms o f interest on the am ount invested, and relate the num ber o f days rem ainin g in an interest paym ent period to the actual num ber o f days in the period, w ith sem iannual com pou n din g if m ore than one cou pon p e rio d is involved. (22 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) 182-Day Treasury Bills Maturing April 13, 1961 91-Day Treasury Bills Maturing January 12, 1961 District Accepted Applied for Boston ....................... .......... $ 24,311,000 $ 14,311,000 Applied for $ Accepted 21,236,000 $ 11,236,000 New Y o r k ................... ......... 1,323,522,000 650,022,000 828,862,000 360,892,000 Philadelphia .............. .......... 31,165,000 16,165,000 6,600,000 1,600,000 Cleveland................... .......... 37,087,000 32,087,000 20,601,000 5,501,000 Richmond ................. .......... 15,230,000 15,230,000 2,466,000 2,266,000 A tlanta......................... .......... 22,300,000 21,800,000 7,369,000 6,757,000 Chicago ..................... ......... 185,747,000 129,847,000 108,804,000 52,604,000 St. L o u is ................... .......... 25,556,000 24,166,000 8,615,000 7,615,000 Minneapolis .............. ......... 14,828,000 14,828,000 6,175,000 2,875,000 Kansas City ............... ......... 31,950,000 28,950,000 16,270,000 11,170,000 D a lla s......................... ......... 14,491,000 14,491,000 6,788,000 6,788,000 San F ran cisco............ 48,107,000 38,107,000 61,601,000 31,176,000 T o t a l............ .......... $1,774,294,000 $1,000,004,000c $1,095,387,000 c Includes $234,728,000 n on com petitive tenders a ccepted at the average price o f 99.318. d Includes $57,184,000 n on com petitive tenders a ccepted at the average price o f 98.443. $500,480,000d
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