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FEDERAL RESERVE BANK O F NEW YORK Fiscal Agent o f the United States [ C ir c u l a r N o. 5 0 0 0 1 L F e b r u a r y 15, 1961 J OFFERING OF TWO SERIES OF TREASURY BILLS $1,100,000,000 of 91-Day Bills, Additional Amount, Series Dated Nov. 25, 1960, Due May 25, 1961 (To Be Issued February 23, 1961) $500,000,000 of 182-Day Bills, Dated February 23, 1961, Due August 24, 1961 To All Incorporated Banks and Trust Com panies, and Others Concerned, in the Second Federal Reserve District: Following is the text o f a notice issued by the Treasury Department, released for publication today at 4 p.m., Eastern Standard tim e: The Treasury Department, by this public notice, invites tenders for two series o f Treasury bills to the aggregate amount of $1 600,000,000, or thereabouts, for cash and in exchange for Treasury ’bills maturing February 23, 1961, in the amount of $1 603 040 000, as follow s: . , v ' . . t- l oi m ci 91-day bills (to maturity date) to issued February IS, 1961, in the amount o f $1,100,000,000, or thereabouts, representing an additional amount o f bills dated November 25, 1960, and to mature May 25, 1961, originally issued in the amount o f $501,794,000, the additional and origi nal bills to be freely interchangeable. 182-day bills, for $500,000,000, or thereabouts, to be dated February 23, 1961, and to mature August 24, 1961. The bills o f both series will be issued on a discount basis under competitive and noncompetitive bidding as hereinafter provided, and at maturity their face amount will 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 will be received at Federal Reserve Banks and Branches up to the closing hour, one-thirty o’clock p.m., Eastern Standard time, Monday, February 20, 1961. Tenders will not be re ceived at the Treasury Department, Washington. Each tender must be for an even multiple of $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 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 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 will be opened at the Federal Reserve Banks and Branches, following which public announcement will be made by the Treasury Department o f the amount and price range o f accepted bids. Those sub mitting tenders will 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 f ° r the additional bills dated November 25, 1960, (91 days remaining until maturity date on May 25, 1961) and noncompetitive tenders for $ i00,000 or less for the 182-day bills without state(j price from any one bidder will be accepted in full at the average price (in three decimals) o f accepted competitive bids f or the respective issues. Settlement for accepted tenders in accordance with the bids must be made or completed at the Federal Reserve Bank on February 23, 1961, in cash or other immediately available funds or in a like face amount of Treasury bills maturing February 23, 1961. 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 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, g ift 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 of 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 o f, 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 of 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. This Bank will receive tenders for both series up to 1 :30 p.m., Eastern Standard time, Monday, February 20, 1961, 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 ax and Loan Account. Settlement must be made in cash or other immediately available funds or in maturing Treasury bills. Results o f the last offering o f Treasury bills (91-day bills to be issued February 16, 1961, representing an additional amount o f bills dated November 17, 1960, and maturing May 18, 1961; and 182-day bills dated February 16, 1961, maturing August 17, 1961) are shown on the reverse side o f this circular. A lfred H a y e s , President. ( over) RESULTS OF LAST OFFERING OF TREASURY BILLS (TWO SERIES TO BE ISSUED FEBRUARY 16, 1961) Range o f A ccepted C om petitive Bids 91-Day Treasury Bills Maturing M ay 18, 1961 182-Day Treasury Bills Maturing August 17, 1961 A p p ro x . equiv. annual rate P rice P rice A p p ro x . equiv. annual rate H igh .......................... ................. 99.384a 2.437% 98.666 2.639% L o w ............................ ................. 99.374 2.476% 98.656 2.658% Average .................... ................. 99.378 2.462% 1 98.659 2.652% 1 a Excepting two tenders totaling $988,000. 1 On a coupon issue o f the same length and for the same amount invested, the return on these bills would provide yields o f 2.51 percent for the 91-day bills, and 2.73 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 amount 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 computed 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 compounding if more than one coupon period is involved. (13 percent o f the amount o f 91-day bills bid for at the low price was accepted.) (23 percent o f the amount o f 182-day bills bid for at the low price was accepted.) T ota l Tenders A pplied for and A ccepted (B y Federal R eserve D istricts) 91-Day Treasury Bills Maturing M ay 18, 1961 A ccepted Applied f o r D istrict Boston ........................... ........ $ 30,620,000 182-Day Treasury Bills Maturing August 17,1961 $ 15.685,000 A pplied f o r $ A ccepted 13,014,000 $ 12,176,000 N ew Y o r k ..................... ........ 1,508,285,000 769,138,000 1,091,384,000 387,239,000 Philadelphia ................ ........ 27,404,000 12,279,000 10,802,000 5,452,000 C leveland....................... ........ 60,846,000 45,846,000 25,950,000 25,900,000 Richmond ..................... ........ 10,420,000 10,420,000 1,502,000 1,252,000 A tlan ta........................... ........ 24,046,000 18, 976,000 5,857,000 5,627,000 107,474,000 72,561,000 32,295,000 Chicago ......................... St. L o u is ....................... ........ 18,987,000 15,982,000 7,375,000 3,828,000 M inneapolis.................. ........ 19,689,000 13,314,000 5,730,000 2,105,000 Kansas City ................ ........ 38,926,000 26,706,000 16,433,000 6,460,000 D a llas............................. ........ 18,480,000 14,405,000 4,896,000 3,221,000 San F ran cisco.............. 75,565,000 50,474.000 31,143,000 14,838,000 $1,286,647,000 $500,393,000 T o ta l.............. ........ $2,035,627,000 $1,100,699,000b b Includes $209,505,000 noncompetitive tenders accepted at the average price of 99.378. c Includes $41,958,000 noncompetitive tenders accepted at the average price of 98.659.
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