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FED ER A L RESERVE BANK O F N EW YORK F iscal A g e n t o f the U nited States r C ircular N o. 4 9 9 6 ~[ L F ebruary 6, 1961 J OFFERING OF TW O SERIES OF TREASURY BILLS $1,100,000,000 of 91-Day Bills, Additional Amount, Series Dated Nov. 17, 1960, Due May 18, 1961 (To Be Issued February 16, 1961) $500,000,000 of 182-Day Bills, Dated February 16, 1961, Due August 17, 1961 To All Incorporated Banks and Trust Companies, and Others Concerned, in the Second Federal Reserve District: F o llo w in g is the text o f a notice issued b y the T reasu ry D epartm ent, released fo r publication today at 4 p.m ., Eastern Standard tim e : The Treasury Department, by this public notice, invites tenders for tw o series o f Treasury bills to the aggregate amount o f $1,600,000,000, or thereabouts, for cash and in exchange for Treasury bills maturing February 16, 1961, in the amount of $1,601,639,000, as fo llo w s : 91-day bills (to maturity date) to be issued February 16, 1961, in the amount o f $1,100,000,000, or thereabouts, representing an additional amount o f bills dated N o vember 17, I960, and to mature M ay 18, 1961, originally issued in the amount o f $499,975,000, the additional and original bills to be freely interchangeable. 182-day bills, for $500,000,000, or thereabouts, to be dated February 16, 1961, and to mature August 17, 1961. The bills o f both series w ill be issued on a discount basis under competitive and noncompetitive bidding as hereinafter provided, and at maturity their face amount w ill be payable without interest. They 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 (maturity value). Tenders w ill be received at Federal Reserve Banks and Branches up to the closing hour, one-thirty o’clock p.m., East ern Standard time, Friday, February 10, 1961. Tenders w ill not be received at the Treasury Department, Washington. Each tender must 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 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 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 own account. Tenders will 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 by 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 ing 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 w ill be advised o f the acceptance or rejection thereof. The Secretary o f 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 reservations, noncompetitive tenders for $200,000 or less for the additional bills dated November 17, 1960, (91 days re maining until maturity date on M ay 18, 1961) and noncom petitive 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 February 16, 1961, in cash or other immediately available funds or in a like face amount o f Treasury bills maturing February 16, 1961. 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 or other disposition o f the bills, does not have any exemption, as such, and loss from the sale or other disposition o f Treasury bills does not have any special treat ment, as such, under the Internal Revenue Code o f 1954. The bills are subject to estate, inheritance, gift or other excise taxes, whether Federal or State, but are exempt 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. For 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 454(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 of, and such bills are excluded from consideration as capital assets. Accordingly, the owner 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 for such bills, whether on original issue or on subsequent purchase, 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 o f the circular may be obtained from any Federal Reserve Bank or Branch. T h is Bank w ill receive tenders for both series up to 1 :30 p.m., Eastern Standard time, Friday, February 10, 1961, at the Securities D epartm ent o f its H ead O ffice and at its B uffalo Branch. T en d er form s for the respective series are enclosed. Please use the appropriate form s to subm it tenders and return them in an envelope marked “ T en d er for T reasu ry B ills.” Ten ders may be subm itted b y telegraph, su bject to w ritten confirmation; they may not be submitted by telephone. Paym ent jo 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 maturing Treasury bills. T h is circular was printed before the results o f the b id din g fo r T reasu ry bills to be issued February 9, 1961, were a vailable; those results w ill be announced after release b y the T reasu ry Departm ent. A lfred H ayes, President. Closing date for receipt of tenders is Friday, February 10.