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FE D E R A L RESERVE BANK O F N EW YORK Fiscal A gent o f the United States r C ir c u la r N o . 5 0 0 3 1 F e b r u a r y 21, 1961 J L OFFERING OF TWO SERIES OF TREASURY BILLS $1,000,000,000 of 91-Day Bills, Additional Amount, Series Dated Dec. 1, 1960, Due June 1, 1961 (To Be Issued March 2, 1961) $500,000,000 of 182-Day Bills, Dated March 2, 1961, Due August 31, 1961 To All Incorporated Banks and Trust Companies, 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: T h e Treasury Department, by this public notice, invites tenders f o r tw o series o f Treasury bills to the aggregate amount o f $1,500,000,000, o r thereabouts, fo r cash and in exchange for Treasury bills m aturing M arch 2, 1961, in the amount o f $1,506,404,000, as fo llo w s : 91-day bills (to maturity date) to be issued M arch 2, 1961, in the amount o f $1,000,000,000, or thereabouts, repre senting an additional amount o f bills dated December 1, 1960, and to mature June 1, 1961, originally issued in the amount o f $500,211,000, the additional and origi nal bills to be freely interchangeable. 182-day bills, fo r $500,000,000, or thereabouts, to be dated M arch 2, 1961, and to mature August 31, 1961. T h e 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 T h ey w ill be issued in bearer fo rm only, and in denominations o f $1,000, $5,000, $10,000, $100,000, $500,000 and $1,000,000 (m aturity valu e). Tenders w ill be received at Federal Reserve Banks and Branches up to the closing hour, one-thirty o ’clock p.m., Eastern Standard time, M onday, February 27, 1961. Tenders will not be received at the Treasury Department, W ashington. Each tender must be fo r 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 o n the printed form s and forw arded in the special envelopes which w ill be supplied b y Federal Reserve Banks o r Branches on application therefor. O thers than banking institutions will not be permitted to submit tenders except f o r their ow n account. Tenders w ill 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 b y an incorporated bank or trust company. Immediately after the closing hour, tenders w ill be opened at the Federal Reserve Banks and Branches, follow in g which public announcement w ill be made b y the Treasury Department o f the amount and price range o f accepted bids. T h ose sub mitting tenders w ill be advised o f the acceptance o r rejection thereof. T h e Secretary o f the Treasury expressly reserves the right to accept or reject any or all tenders, in w hole or in part, and his action in any such respect shall be final. Subject to these reservations, noncompetitive tenders fo r $200,000 or less fo r the additional bills dated December 1, 1960, (91 days re maining until maturity date on June 1, 1961) and noncom petitive tenders fo r $100,000 or less f o r the 182-day bills without stated price fro m any one bidder w ill be accepted in full at the average price (in three decim als) o f accepted competitive bids for the respective issues. Settlement fo r accepted tenders in accordance with the bids must be made or completed at the Federal Reserve Bank on M arch 2, 1961, in cash or other immediately available funds or in a like face amount o f Treasury bills maturing M arch 2, 1961. Cash and exchange tenders w ill receive equal treatment. Cash adjustments w ill be made fo r differences between the par value o f maturing bills accepted in exchange and the issue price o f the new bills. T he income derived from Treasu ry bills, whether interest or gain fro m the sale o r other disposition o f the bills, does not have any exemption, as such, and loss fro m the sale o r other disposition o f Treasury 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 or other excise taxes, whether Federal or State, but are exem pt fro m all taxa tion now or hereafter imposed on the principal or interest thereof b y any State, or any o f the possessions o f the United States, o r b y any local taxing authority. F o r purposes o f taxa tion the amount o f discount at which Treasu ry bills are originally sold by the United States is considered to be interest. U nder Sections 4 5 4 (b ) and 1221(5) o f the Internal Revenue Code o f 1954 the amount o f discount at w hich 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 ow ner o f Treasury bills (other than life insurance com panies) issued hereunder need include in his income ta x return only the difference between the price paid f o r such bills, whether on original issue or on subsequent purchase, and the amount actually received either upon sale o r redemption at maturity during the taxable year f o r which the return is made, as ordinary gain or loss. Treasury Department Circular N o. 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 o r Branch. This Bank will receive tenders for both series up to 1 :30 p.m., Eastern Standard time, Monday, February 27, 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 form s 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 f o 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’ 23, 1961, representing an additional amount o f bills dated November 25, 1960, and maturing May 25, 1961; and 182-day bills dated February 23, 1961, maturing August 24, 1961) are shown on the reverse side o f this circular. A lfred H ayes , President. (o v e r) RESULTS OF LAST OFFERING OF TREASURY BILLS (TWO SERIES TO BE ISSUED FEBRUARY 23, 1961) Range of Accepted Competitive Bids 91-D ay Treasury Bills Maturing M ay 25,1961 182-Day Treasury Bills Maturing August 24,1961 Approx. equiv. annual rate Price H igh .......................... Price Approx. equiv. annual rate 2.441% 98.657 2.656% L o w ............................ ................. 99.364 2.516% 98.637 2.696% Average .................... .................. 99.369 2.496% 1 98.641 2.688% 1 * Excepting one tender o f $300,000. 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 2.55 percent for the 91-day bills, and 2.76 percent for the 182-day bills. Interest rates on bills are quoted in terms of 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. (39 percent o f the amount o f 91-day bills bid for at the low price was accepted.) (27 percent o f the amount o f 182-day bills bid fo r at the low price was accepted.) Total Tenders Applied for and Accepted (By Federal Reserve Districts) 91-Day Treasury Bills Maturing M ay 25, 1961 Accepted Applied for District Boston ........................... ........ $ 32,296,000 182-Day Treasury Bills Maturing August 24,1961 $ 17,894,000 Applied for $ 16,273,000 Accepted $ 6,273,000 N ew Y o r k ..................... ........ 1,482,481,000 715,841,000 990,304,000 405,884,000 Philadelphia ................ ........ 29,270,000 14,194,000 9,485,000 4,285,000 C leveland....................... ........ 34,468,000 31,418,000 25,741,000 15,741,000 Richmond ..................... ........ 16,678,000 12,678,000 2,614,000 2,614,000 A tlan ta ........................... ........ 28,885,000 27,665,000 4,680,000 4,070,000 Chicago ......................... ........ 211,128,000 139,108,000 70,667,000 28,667,000 20,536,000 5,262,000 4,762,000 16,392,000 6,720,000 3,220,000 29,806,000 17,845,000 10,815,000 15,855,000 15,855,000 4,183,000 4,183,000 San F ra n cisco.............. ........ 70,515,000 58,965,000 27,033,000 9,531,000 T o t a l.............. ........ $2,004,676,000 $1,180,807,000 $500,045,000 St. L o u i s ....................... ........ 21,258,000 $1,100,352,000b b Includes $239,608,000 noncompetitive tenders accepted at the average price of 99.369. 'Includes $51,560,000 noncompetitive tenders accepted at the average price of 98.641.
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