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FEDERAL RESERVE BANK O F N EW YORK Fiscal Agent of the United States Circular No. 5 0 7 5 August 28, 1961 OFFERING OF TW O SERIES OF TREASURY BILLS $1,100,000,000 o f 91-Day Bills, Additional Amount, Series Dated June 8, 1961, Due Dec. 7, 1961 (To Be Issued September 7, 1961) $600,000,000 o f 182-Day Bills, Dated September 7, 1961, Due March 8, 1962 T o A ll Incorporated Banks and Trust Companies, and Others Concerned, in the Second Federal R eserve D istrict: Following is the text of a notice issued by the Treasury Department, released for publication today at 4 p.m., Eastern Daylight Saving tim e: T h e Treasury Department, b y this public notice, invites tenders fo r tw o series o f Treasury bills to the aggregate amount o f $1,700,000,000, o r thereabouts, f o r cash and in exchange for Treasury bills m aturing September 7, 1961, in the amount o f $1,701,021,000, as fo llo w s : 91-day bills (to maturity date) to be issued September 7, 1961, in the amount o f $1,100,000,000, or thereabouts, repre senting an additional amount o f bills dated June 8, 1961, and to mature December 7, 1961, originally issued in the amount o f $500,354,000, the additional and original bills to be freely interchangeable. 182-day bills, f o r $600,000,000, or thereabouts, to be dated September 7, 1961, and to mature M arch 8, 1962. T h e 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 w ithout 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 D aylight Saving time, Friday, September 1, 1961. Tenders w ill 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 more than three decimals, e.g., 99.925. Fractions m ay not be used. It is urged that tenders be made on the printed form s and forw arded in the special envelopes which w ill 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 own 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 b y 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 w ill be made by the Treasury Department o f the amount and price range o f accepted bids. Those sub m itting tenders will be advised o f the acceptance or 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 for $200,000 or less f o r the additional bills dated June 8, 1961 (91 days remain ing until maturity date on Decem ber 7, 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 f o 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 September 7, 1961, in cash o r other immediately available funds or in a like face amount o f Treasury bills maturing September 7, 1961. Cash and exchange tenders w ill 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 he income derived fro m Treasury bills, whether interest o r gain from the sale or other disposition o f the bills, does not have any exemption, as such, and loss fro m 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, o r 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 o r otherwise disposed o f , and such bills are excluded fro m consideration as capital assets. A ccordin gly, the ow ner o f Treasury bills (oth er than life insurance com panies) issued hereunder need include in his income tax return only the difference between the price paid fo 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 m ay be obtained fro m any Federal Reserve Bank or Branch. This Bank will receive tenders for both series up to 1 :30 p.m., Eastern Daylight Saving time, F rid ay, S e p te m b e r 1,1961, at the Securities Department of 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 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. This circular was printed before the results of the bidding for Treasury bills to be issued August 31, 1961, were available; those results will be announced after release by the Treasury Department. Closing A lfred H ayes, President. date for receipt of tenders is Friday, September 1.