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FEDERAL RESERVE BANK O F N EW YORK Fiscal Agent o f the United States [C ir c u la r N o . 5 0 4 9 1 L J u n e 21. 19 61 J OFFERING OF TW O SERIES OF TREASURY BILLS $1,100,000,000 o f 91-Day Bills, Additional Amount, Series Dated March 30, 1961, Due Sept. 28,1961 (To Be Issued June 29, 1961) $500,000,000 o f 182-Day Bills, Dated June 29, 1961, Due December 28, 1961 T o A ll Incorporated Banks and Trust Companies, and Others Concerned, in the Second Federal R eserv e D istrict: Following is the text o f a notice issued by the Treasury Department, released for publication today at 4 p.m., Eastern Daylight Saving time: T he Treasury Department, b y this public notice, invites tenders fo r tw o series o f Treasury bills to the aggregate amount o f $1,600,000,000, o r thereabouts, fo r cash and in exchange for T reasury bills maturing June 29, 1961, in the amount o f $1,600,554,000, as fo llo w s : 91-day bills (to maturity date) to be issued June 29, 1961, in the amount o f $1,100,000,000, o r thereabouts, repre senting an additional amount o f bills dated M arch 30, 1961, and to mature September 28, 1961, originally issued in the amount o f $600,189,000 (including $100,104,000 issued June 14, 1961), the additional and original bills to be freely interchangeable. 182-day bills, fo r $500,000,000, or thereabouts, to be dated June 29, 1961, and to mature December 28, 1961. T he 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. T h ey w ill 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 (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 Daylight Saving time, M onday, June 26, 1961. Tenders will not be received at the Treasury Department, W ashington. 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 m ore than three decimals, e.g., 99.925. Fractions may not be used. It is urged that tenders be made on the printed form s and forw arded in the special envelopes which will be supplied by Federal Reserve Banks o r Branches on application therefor. Others than banking institutions will not be permitted to submit tenders except fo r their ow n 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 b y 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 in g 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 o r rejection thereof. T he 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 M arch 30, 1961, (91 days re maining until maturity date on September 28, 1961) and noncom petitive tenders fo r $100,000 or less fo r the 182-day bills without stated price from any one bidder will be accepted in full at the average price (in three decim als) o f accepted competitive bids fo r the respective issues. Settlement fo r accepted tenders in accordance with the bids must be made or completed at the Federal Reserve Bank on June 29, 1961, in cash or other immediately available funds or in a like face amount o f Treasury bills maturing June 29, 1961. Cash and exchange tenders will receive equal treatment. Cash adjustments will 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 h e income derived fro m Treasury bills, whether interest or gain fro m the sale or other disposition o f the bills, does not have any exem ption, 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. T he bills are subject to estate, inheritance, g ift or other excise taxes, whether Federal or State, but are exempt fro m all taxa tion n ow or hereafter imposed on the principal o r interest thereof by any State, or any o f the possessions o f the United States, or by any local taxing authority. F o r 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 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. A ccordingly, the ow ner 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 f o r 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 fo r which the return is made, as ordinary gain o r 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 m ay be obtained fro m any Federal Reserve Bank o r Branch. This Bank will receive tenders for both series up to 1 :30 p.m., Eastern Daylight Saving time, Monday, June 26, 1961, at the Securities Department o f its Head Office and at its Buffalo Branch. Tender form s 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 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 (90-day bills to be issued June 23, 1961, representing an additional amount o f bills dated March 23, 1961, and maturing September 21, 1961; and 181-day bills dated June 23, 1961, maturing December 21, 1961) are shown on the reverse side o f this circular. A l f r e d H a y e s , President. ( over) R E S U L T S O F L A S T O F F E R IN G OF T R E A S U R Y B IL L S (T W O S E R IE S T O B E ISSU ED J U N E 23, 1961) Range o f A ccepted C om petitive Bids 90-Day Treasury Bills Maturing Septem ber 21,1961 181-Day Treasury Bills Maturing Decem ber 21, 1961 Approx. equiv. annual rate Price Price Approx. equiv. annual rate High ......................................... 99.425 2.300% 98.744 2.498% L o w ............................................ 99.415 2.340% 98.730 2.526% Average .................................... 99.419 2.325% 1 98.733 2.519% 1 1 O n a coupon issue o f the same length and fo r the same amount invested, the return on these bills would provide yields o f 2.37 percent fo r the 90-day bills, and 2.59 percent fo r the 181-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 com pounding if more than one coupon period is involved. (32 percent of the amount o f 90-day bills bid for at the low price was accepted.) (65 percent of the amount of 181-day bills bid for at the low price was accepted.) T o ta l Tenders A pplied for and A ccepted (B y Federal R eserve D istricts) 90-Day Treasury Bills Maturing Septem ber 21, 1961 District Applied for Boston ........................... ....... N ew Y o r k ..................... ....... $ 37,871,000 1,425,965,000 181-Day Treasury Bills Maturing Decem ber 21, 1961 Accepted $ 17,701,000 Applied for $ 5,112,000 Accepted $ 4,962,000 591,537,000 823,715,000 382,915,000 8,410,000 9,940,000 4,908,000 39,577,000 34,577,000 23,996,000 13,876,000 Richmond ..................... ....... 10,864,000 10,371,000 3,398,000 2,548,000 A tlan ta........................... ....... 20,817,000 16,542,000 6,574,000 4,869,000 Chicago ......................... ....... 276,623,000 228,923,000 94,191,000 46,396,000 St. L o u is ....................... ....... 37,868,000 35,868,000 6,483,000 5,629,000 M inneapolis.................. ....... 16,998,000 11,478,000 5,758,000 3,258,000 Kansas City ................ ....... 50,567,000 41,847,000 19,164,000 12,329,000 D a lla s............................. ....... 16,493,000 13,713,000 4,555,000 3,980,000 San F ra n cisco.............. 98,444,000 89,904,000 24,194,000 15,044,000 Philadelphia ................ Cleveland....................... ....... T o ta l.............. ....... $2,055,497,000 $1,100,871,000a a Includes $232,919,000 noncompetitive tenders accepted at the average price o f 99.419. b Includes $61,629,000 noncompetitive tenders accepted at the average price o f 98.733. $1,027,080,000 $500,714,000b At Circular No. 5049 F e d e r a l R e s e r v e Ba n k o r N ew Yo r k N E W Y O R K 4 5 , N.Y. RECTOR 2 -5 7 0 0 June 21, 1961 To All Member Banks of the Second Federal Reserve District: The Federal Reserve System has proposed a classification of savings and other time deposits to guide commercial banks adopting automated accounting systems or considering other changes in their deposit accounting procedures. The proposed classification was published in the May issue of the Federal Reserve Bulletin, and a reprint of the article is enclosed. The classification comple ments a similar proposal for classifying demand deposits that we mailed to you in May i960. Although automation of time deposits is not most banks, some banks already have adopted some form system for such deposits, while others have requested of information that should be provided for in any new a high-priority project at of automatic accounting guidance as to the types accounting system. The enclosed schedule of time and savings deposits classification is presented for your consideration in the belief that its use will be mutually beneficial. Even if your bank now has no plans for automating accounting procedures for time and savings deposits, you may find these classifications of value. If each deposit account is coded, according to its proposed classi fication, and the code maintained on the current balance cards, statistical reports, such as the quarterly call report, can be completed much more quickly. The problem of how to classify a particular account need then be resolved only once in its lifetime, rather than four times a year. The classification system provides no actual code numbers, since each bank will wish to incorporate codes compatible with its established system. A minimum 2-digit system from 01 to 20 would encompass all the recommended cate gories. Such a code structure could be expanded over a wider numeric range, including more digits, to provide for additional information, such as maturity breakdown, type of business, or location of holder. If you have any questions about the coding system or would like assistance in adapting it to your own needs, the Financial and Trade Statistics Division of our Research Department will be glad to help you. Additional copies of the enclosure are available in whatever volume you desire. ALFRED HAYES, President. Enclosure Classification System for Savings and Other Time Deposits T h e F e d e r a l R e s e r v e S y s t e m has pro posed a classification of savings and other time deposits to guide commercial banks adopting automated accounting systems or considering other changes in their deposit accounting procedures. This classification, shown in the next column, complements the one for demand deposits described in the Federal Reserve B u l l e t i n for July 1960. pages 735-38. PRO P O SE D C L A S S IF IC A T IO N O F S A V IN G S A N D O T H E R T IM E DEPOSITS I. Savings deposits1 A . D om estic nonprofit organizations B. Other savings deposits II. Deposits accumulated for payment o f personal loans III. Christmas savings and similar accounts IV. Negotiable time certificates o f deposit A . Issued to dom estic holders B. Issued to foreign holders1 V. Other time deposits o f individuals, partnerships, and corporations in the United States A . N onprofit organizations B. Individuals and noncorporate nonfinancial business C. C orporate nonfinancial business D . Financial business 1. Trust departments o f banks a. Own bank b. Other com m ercial banks 2. Other financial business PU R PO SE The new classification is designed to provide not only the information about deposits that appears now on reports to bank supervisory or other Government agencies, but also some other types of information that would be useful for analytical purposes. It is in tended to help banks that are considering automation by indicating what types of in formation their bookkeeping systems should be able to produce. It should be empha sized that the proposed classification does not involve any request for additional data from banks. While automation of time deposits has a relatively low priority at most banks, some banks have already adopted automatic or semiautomatic accounting systems for such deposits, particularly savings deposits. Many others, having such installations under consideration or in the planning stages, have requested Federal Reserve guidance as to types of information about savings and time deposits that new accounting systems should be able to provide. VI. D omestic government A . U. S. Government 1. Postal Savings System 2. Other U . S. Government deposits B. States and political subdivisions VII. Banks in the United States A . Com m ercial banks (excluding trust depart ments o f com m ercial banks) B. Mutual savings banks VIII. Other time deposits o f foreign holders1 A . Foreign governments and official institutions, central banks, and international institutions B. Banks in foreign countries (including balances o f foreign branches o f other Am erican banks) C . Other foreign holders ■ A ll banks o r banking offices having liabilities to foreigners on their o w n accou n t o r fo r the accou n t o f others averaging SS00.000 o r m ore o ver any 6-m onth p eriod are required to report t o the Treasury on these liabilities b y country. T h e Treasury F orm B - l provides a 2-digit country c o d e , w hich co u ld be used t o identify each o f the approxim ately 60 countries fo r w hich a separate figure must be sub m itted. Banks reporting o n this fo r m also need t o provide a 3-way breakdow n o f foreign-held savings deposits (item I) and negotiable tim e certificates issued t c foreigners (item I V -B ) identical with that show n fo r foreign holdings o f oth er time deposits (item VIII). N ote .— Banks desiring t o segregate nonnegotiable time certificates o f deposit from tim e deposits, o p e n account, m ay wish to develop additional cod es within this classification structure o r to use an overpunch if a punch card tabulating system is used. Banks desiring t o incorp orate a maturity classification, such as that established in R eg ulation Q fo r determ ining interest rate ceilings, m ay wish t o develop additional cod es within this classification structure. A classification based o n time t o m aturity m ight be o f special interest fo r internal m anagem ent purposes. 539 R E P R IN T E D FROM F E D E R A L R E SE R V E B U L L E T IN F O R MAY 1961 540 In preparing the new classification, a Sys tem technical committee obtained the advice of representative member banks and in terested Government agencies. The Bank ing Committee of the Budget Bureau’s Ad visory Council on Federal Reports reviewed an earlier version of the classification. The final version reflects the many helpful sug gestions obtained. S U P P L E M E N T A L C A T E G O R IE S O F D EPO SITS To meet important current or potential needs for data, the proposed classification includes the supplemental categories listed below. These are in addition to the various cate gories o f savings and time deposits used in regular reports to (1 ) bank supervisory authorities and (2 ) the Treasury, in reports of liabilities to foreigners on Treasury Form B -l. 1. Domestic nonprofit organizations (items I-A and V-A in list). A segregation of both savings and time deposits of domes tic nonprofit organizations appears needed in view of the growing financial importance of these organizations and the presumed volatility of their deposits, particularly in re sponse to changes in relative yields among various outlets for short-term funds. In general, nonprofit organizations are readily identifiable from the account name, and segregating their accounts should present no appreciable difficulties for banks. 2. Christmas savings and similar ac counts (item III). This category would segregate an important segment of savings that is of a purely temporary nature. Segre gating these accounts would generally be compatible with bank accounting practices, FEDERAL RESERVE BULLETIN • M A Y 1961 which usually involve a separate ledger for these accounts. 3. Negotiable time certificates (item IV ). In late February 1961 a number of large banks in New York City and in other parts of the country began to compete for cor porate funds by issuing negotiable time certificates. Since then they have issued an appreciable volume of these certificates. In view of their negotiable form, and of the possibility that an important secondary mar ket for them may develop, the proposed classification provides only two subclassifica tions. These are by type of holder to whom the certificates are issued initially, that is, foreign and domestic. 4. Financial and nonfinancial business (items V-B through V -D ). The subclassifi cations of other domestically held time de posits of individuals, partnerships, and cor porations are designed to provide types of information needed for the Board’s quar terly series showing principal financial flows in the United States. The proposed categories would provide less detail than it would be desirable to have. But categories have been held to a minimum in view of the difficulty of identifying and classifying cer tain types of accounts. The classification system provides no suggested code numbers, because each bank will wish to incorporate codes com patible with its established system. A mini mal 2-digit system from 01 to 20 would encompass all the recommended categories. Such a code structure could be expanded over a wider numeric range, including more digits, to provide for additional information such as maturity breakdown, type of busi ness, or location of holder.
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