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FED ERAL RE SER VE BANK O F NEW YORK Fiscal Agent of the United States r Circular N o . 5 0 3 4 1 I M a y 10, 1 9 6 1 J OFFERING OF TWO SERIES OF TREASURY BILLS $1,100,000,000 of 91-Day Bills, Additional Amount, Series Dated Feb. 16, 1961, Due Aug. 17, 1961 (To Be Issued May 18, 1961) $500,000,000 of 182-Day Bills, Dated May 18, 1961, Due November 16, 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 Daylight Saving tim e: T h e T r e a s u ry D epa rtm en t, b y this p u b lic n otice, invites tenders fo r tw o series o f T rea su ry bills to the a g g re g a te am ount o f $1,600,000,000, o r th erea b ou ts, fo r cash and in ex ch a n g e for T re a su ry b ills m a tu rin g M a y 18, 1961, in th e a m ou n t o f $1,601,214,000, as fo llo w s : 91-day bills ( t o m aturity d a te) to be issued M a y 18, 1961, in the a m ou n t o f $1,100,000,000, o r th erea b ou ts, rep re sen tin g an addition al a m ou n t o f bills dated F eb ru a ry 16, 1961, and t o m ature A u g u s t 17, 1961, o rig in a lly issued in the a m ou n t o f $500,436,000, the add ition a l and origin a l bills to be fre e ly in terch angeable. 182-day bills, fo r $500,000,000, o r th ereabouts, to be dated M a y 18, 1961, and to m ature N o v e m b e r 16, 1961. T h e bills o f b o th series w ill be issued on a discou n t basis u nder co m p etitive and n o n com p etitiv e b id d in g as h erein a fter p r o vided, and at m atu rity their fa ce a m ou n t w ill b e pa ya b le w ith ou t interest. T h e y w ill be issued in b ea rer fo r m o n ly , and in de n om in ation s o f $1,000, $5,000, $10,000, $100,000, $500,000 and $1,000,000 (m a tu rity v a lu e ). T e n d e rs w ill be re ce iv ed at F ed eral R e serv e Banks and B ra n ch es up t o the c lo s in g hour, o n e-th irty o ’ c lo c k p.m ., E astern D a y lig h t S a v in g tim e, M o n d a y , M a y 15, 1961. T en d ers w ill not be re ce iv e d at the T re a su ry D ep a rtm en t, W a s h in g to n . E ach ten der m u st be fo r an even m u ltiple o f $1,000, and in th e ca se o f com p etitive tenders the price offered m u st be exp ressed on the basis o f 100, w ith n o t m o re than three decim als, e.g., 99.925. F raction s m a y n o t b e used. It is u rg ed that tenders be m ade on the printed fo rm s and fo rw a rd ed in the special en velop es w hich w ill b e ' sup plied b y F ed eral R eserve B anks o r B ran ch es on a pp lication th erefor. O th ers than ban k in g in stitu tions w ill n ot be perm itted to subm it ten ders e x ce p t fo r th eir o w n a ccou n t. T e n d e rs w ill be receiv ed w ith ou t dep osit fr o m in corp ora ted banks and trust c o m pan ies and fro m resp on sib le and re co g n iz e d dealers in in vestm ent securities. T e n d e rs fro m oth ers m u st b e a ccom p a n ied b y p a y m en t o f 2 p e rce n t o f the face a m ou n t o f T r e a s u ry bills applied fo r, unless the ten ders are a ccom p a n ied b y an exp ress guaranty o f p a ym en t b y an in co rp o ra ted ba n k o r trust com p a n y . Im m ed ia tely after the clo s in g h our, ten ders w ill be op en ed at the Federal R e se rve B anks and B ra n ch es, fo llo w in g w hich public a n n ou n cem en t w ill b e m ade b y the T rea su ry D ep a rtm en t o f the a m ou n t a n d p rice ran ge o f a ccep ted bids. T h o s e subm itting tenders w ill be advised o f the a ccep ta n ce o r re je ctio n th ereof. T h e S ecreta ry o f th e T rea su ry ex p ressly reserves the rig h t to a ccep t o r r e je c t a n y o r all ten ders, in w h o le o r in part, and his a ction in a n y su ch resp ect shall be final. S u b je ct to these reser v a tion s, n o n co m p e titiv e ten ders fo r $200,000 o r less f o r th e a d d i tional bills dated F eb ru a ry 16, 1961, (91 d a y s rem ain in g until m atu rity date on A u g u s t 17, 1961) and n o n co m p e titiv e tenders fo r $100,000 o r less fo r th e 182-day bills w ith ou t stated p rice from any o n e b id d er w ill b e a ccep ted in full at th e a vera ge p r ice (in three decim a ls) o f a ccep ted com p etitive b id s fo r the re sp ective issues. S ettlem ent fo r a ccep ted ten ders in a cco rd a n ce w ith the b id s m u st be m ade o r com p leted at the F ed era l R e serv e Bank on M a y 18, 1961, in cash o r o th e r im m ed iately availa b le fu n ds o r in a like face a m ou n t o f T rea su ry bills m a tu rin g M a y 18, 1961. Cash and e x ch a n g e ten ders w ill receiv e eq u a l treatm ent. Cash adju stm en ts w ill be m ade fo r d ifferen ces b etw een th e par valu e o f m a tu rin g bills a ccep ted in ex ch a n g e and th e issue price o f the n ew bills. T h e in co m e derived fr o m T rea su ry bills, w h eth er in terest o r gain fr o m th e sale o r oth er d isp osition o f th e bills, d o e s n o t have a n y exem p tion , as such, and loss fr o m th e sale o r oth er d isp o si tion o f T rea su ry bills d o e s n o t have a n y special treatm en t, as such, u nder the Internal R even u e C o d e o f 1954. T h e bills are su b ject to estate, in heritance, g ift o r oth er e x cis e taxes, w hether F ed eral o r State, but are ex em p t fr o m a ll ta xation n o w o r h e re after im p osed on th e principal o r in terest th e re o f b y a n y State, o r a n y o f th e p ossession s o f th e U n ited States, o r b y a n y lo ca l taxing authority. F o r p u rp oses o f taxation the a m ou n t o f d is cou n t at w h ich T rea su ry bills are o rig in a lly sold b y th e U n ited States is co n sid e re d to be interest. U n d er S ection s 4 5 4 (b ) and 1221(5) o f the In tern al R even u e C o d e o f 1954 the a m ou n t o f dis co u n t at w hich bills issued hereun der are s o ld is n ot co n sid e re d t o a ccru e until su ch bills are sold , red eem ed o r oth erw ise dis posed o f, and su ch bills are exclu d ed fr o m con sid era tion as capital a ssets. A c c o r d in g ly , the o w n e r o f T r e a s u ry bills (o th e r than life insurance co m p a n ie s ) issued h ereun der need in clu d e in his in co m e ta x return o n ly th e differen ce betw een th e p rice paid fo r such bills, w h eth er on origin al issue or on su b seq u en t p u r chase, and th e a m ou n t actu a lly receiv ed either u p on sale or red em p tion at m atu rity d u rin g the ta x a b le yea r fo r w h ich the return is m ade, as ord in a ry gain or loss. T rea su ry D epa rtm en t C ircu lar N o. 418, R evised , and this n otice, p rescrib e the term s o f the T rea su ry bills a n d g o v e r n the co n d itio n s o f their issue. C op ies o f the circu la r m a y be obtain ed fro m a n y F ed era l R e serv e Bank o r B ranch. This Bank will receive tenders for both series up to 1 :30 p.m., Eastern Daylight Saving time, Monday, M ay 15, 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. Paym ent 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 hills (91-day bills to be issued M ay 11, 1961, representing an additional amount o f bills dated February 9, 1961, and maturing August 10, 1961; and 182-day bills dated May 11, 1961, maturing November 9, 1961) are shown on the reverse side o f this circular. A l f r e d H a y e s , President. ( over) RESULTS OF LA ST O FFE R IN G OF T R E A S U R Y BILLS (T W O SERIES TO BE ISSUED M A Y 11, 1961) Range of Accepted Competitive Bids 91 -D ay Treasury Bills Maturing August 10,1961 182-Day Treasury Bills Maturing N ovem ber 9,196 Approx. equiv annual rate Price Approx. equiv. annual rate H igh ....................... ........ 99.444 2.200% 98.786s 2.401% L o w .......................... ........ 99.432 2.247% 98.773 2.427% ................. ........ 99.436 2.232%* 98.775 2.423 % x Average Price a E x c e p tin g o n e ten der o f $100,000. 1 O n a c o u p o n issue o f the sam e len gth and fo r the sam e a m ou n t in vested, the return on these bills w ou ld p ro v id e yie ld s o f 2.28 p ercen t fo r th e 9 1 -d a y bills, and 2.49 p ercen t fo r the 182-day b ills. In terest rates o n bills are q u o te d in term s o f b a n k d iscou n t, w ith the return related to the fa ce a m ou n t o f the bills pa ya b le at m a tu rity rather than the a m ou n t in vested, and th eir len g th in actu al n u m ber o f days rela ted t o a 360-day year. In con tra st, yield s on certificates, n otes, and b o n d s are com p u ted in term s o f interest on the a m ou n t in vested, and relate the n u m b er o f d a y s rem ain in g in an in terest p a ym en t p eriod to the actual n u m ber o f days in th e p eriod , w ith sem iannual c o m p o u n d in g if m o re than o n e co u p o n p e rio d is in v olv ed . (57 percent o f the amount o f 91-day bills bid for at the low price was accepted.) (76 percent o f the amount o f 182-day bills bid for at the low price was accepted.) Total Tenders Applied for and Accepted (By Federal Reserve Districts) 91-D ay Treasury Bills Maturing August 10,1961 District Boston Applied for ............................ New Y o r k ..................... Philadelphia $ 25,105,000 1,381,644,000 182-Day Treasury Bills Maturing N ovem ber 9,1961 Accepted $ 15,105,000 699,963,000 Applied for $ 2,838,000 965,550,000 Accepted $ 2,428,000 424,350,000 ................. 28,273,000 13,273,000 8,738,000 3,713,000 Cleveland ....................... 27,947,000 22,947,000 23,024,000 10,664,000 ..................... 9,467,000 9,467,000 2,382,000 2,382,000 Atlanta ............................ 28,126,000 24,496,000 2,947,000 2,723,000 C h ic a g o ............................ 225,864,000 189,714,000 68,139,000 30,426,000 St. Louis ....................... 23,286,000 19,286,000 5,677,000 4,677,000 M in n ea p olis................... 16,325,000 11,395,000 4,877,000 2,377,000 Kansas C i t y ................... 45,630,000 44,290,000 9,661,000 7,561,000 D a lla s .............................. 14,306,000 13,606,000 3,638,000 3,638,000 San F r a n c is c o ............... 50,656,000 36,796,000 17,683,000 5,333,000 ............. $1,876,629,000 Richmond Total $1,100,338,000'- $1,115,154,000 b Includes $197,106,000 noncom petitive tenders accepted at the average price o f 99.436. c Includes $37,129,000 noncom petitive tenders accepted at the average price o f 98.775. $500,272,000°
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