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FEDERAL RESERVE BANK OF NEW YORK Certificates of Indebtedness Department [ Circular No. 509 1 ~ L December 7, 1922 J New Issues of Treasury Certificates of Indebtedness and Treasury Notes To all Banks, Trust Companies, Savings Banks, Bankers, Investment Dealers and Principal Corporations in the Second Federal Reserve District: Two new series of Treasury certificates and a new series of Treasury notes are today offered for subscription through the Federal Reserve Banks by the Secretary of the Treasury. In announcing the new offerings Secretary Mellon in a statement to the press said: "The Treasury is today announcing its December financing, which comprises, first, an offering of Treasury certificates of indebtedness in two series, one bearing 33^ per cent, interest and maturing in three months, and the other bearing 4 per cent, interest and maturing in one year, and, second, an offering of short-term Treasury notes bearing 43^ P e r cent, interest and maturing in two and one-half years. The combined offering of certificates is for $400,000,000, or thereabouts, while the offering of notes is for $300,000,000 or thereabouts, with the right reserved to the Secretary of the Treasury to allot additional notes to the extent that 4% per cent. Victory notes are tendered in payment. In connection with this financing the Secretary is sending a circular letter to the banking institutions of the country which sets forth the state of the Treasury and indicates what will be accomplished by the December operations." The text of the offerings of the new issues and a reprint of Secretary Mellon's letter to the presidents of banks and trust companies will be found on the following pages. Very truly yours, BENJ. STRONG, Governor. (New Issues) Federal Reserve Bank of New York Offering of $400,000,000 (or thereabouts) United States of America Treasury Certificates of Indebtedness Dated and bearing Interest from December 15, 1922. Series TM2-1923, 3^ Per Cent. Due March 15, 1923. Series TD-1923, 4 Per Cent. Due December 15, 1923. To all Banks, Trust Companies, Savings Banks, Bankers, Investment Dealers and Principal Corporations in the Second Federal Reserve District: The Secretary of the Treasury, under the authority of the act approved September 24, 1917, as amended, offers for subscription, at par and accrued interest, through the Federal Reserve Banks, Treasury certificates of indebtedness, in two series, both dated and bearing interest from December 15, 1922, the certificates of Series TM2-1923 being payable on March 15, 1923, with interest at the rate of three and one-half per cent, per annum on a quarterly basis, and the certificates of Series TD-1923 being payable on December 15, 1923, with interest at the rate of four per cent, per annum, payable semiannually. Applications will be received at the Federal Reserve Banks. Bearer certificates will be issued in denominations of $500, $1,000, $5,000, $10,000, and $100,000. The certificates of Series TM2-1923 will have one interest coupon attached, payable March 15, 1923, and the certificates of Series TD-1923 two interest coupons attached, payable June 15 and December 15, 1923. The certificates of said series shall be exempt, both as to principal and interest, from all taxation now or hereafter imposed by the United States, any State, or any of the possessions of the United States, or by any local taxing authority, except (a) estate or inheritance taxes, and (b) graduated additional income taxes, commonly known as surtaxes, and excess profits and warprofits taxes, now or hereafter imposed by the United States, upon the income or profits of individuals, partnerships, associations, or corporations. The interest on an amount of bonds and certificates authorized by said act approved September 24, 1917, and amendments thereto, the principal of which does not exceed in the aggregate $5,000, owned by any individual, partnership, association or corporation, shall be exempt from the taxes provided for in clause (6) above. The certificates of these series will be accepted at par, with an adjustment of accrued interest, during such time and under such rules and regulations as shall be prescribed or approved by the Secretary of the Treasury, in payment of income and profits taxes payable at the maturity of the certificates. The certificates of these series will be acceptable to secure deposits of public moneys, but do not bear the circulation privilege. The right is reserved to reject any subscription and to allot less than the amount of certificates of either or both series applied for and to close the subscriptions as to either or both series at any time without notice. The Secretary of the Treasury also reserves the right to make allotment in full upon applications for smaller amounts, and to make reduced allotments upon, or to reject, applications for larger amounts, and to make classified allotments and allotments upon a graduated scale; and his action in these respects will be final. Allotment notices will be sent out promptly upon allotment, and the basis of allotment will be publicly announced. Payment at par and accrued interest for certificates allotted must be made on or before December 15, 1922, or on later allotment. After allotment and upon payment Federal Reserve Banks may issue interim receipts pending delivery of the definitive certificates. Any qualified depositary will be permitted to make payment by credit for certificates allotted to it for itself and its customers up to any amount for which it shall be qualified in excess of existing deposits, when so notified by the Federal Reserve Bank of its district. Treasury certificates of indebtedness of Series TD and TD2-1922, both maturing December 15, 1922, and 4% per cent. Victory notes bearing the distinguishing letters A, B, C, D, E, or F, prefixed to their serial numbers, called for redemption on December 15, 1922, will be accepted at par, with an adjustment of accrued interest, in payment for any certificates of the Series TM2-1923 or TD-1923 now offered which shall be subscribed for and allotted. Victory notes in coupon form must have May 20, 1923, coupons attached, and if in registered form must be duly assigned to the Secretary of the Treasury for redemption, in accordance with the general regulations of the Treasury Department governing assignments. As fiscal agents of the United States, Federal Reserve Banks are authorized and requested to receive subscriptions and to make allotment on the basis and up to the amounts indicated by the Secretary of the Treasury to the Federal Reserve Banks of the respective districts. f~" Yours very truly, BENJ. STRONG, New York, December 7, 1922 Governor. ** (New Issue) * Federal Reserve Bank of New York Offering of $300,000,000 (or thereabouts) United States of America Four and One-Half Per Cent. Treasury Notes SERIES C-1925 Dated and bearing interest from December 15, 1922. Due June 15, 1925. To all Banks, Trust Companies, Savings Banks, Bankers, Investment Dealers and Principal Corporations in the Second Federal Reserve District: * —> T h e Secretary of the Treasury offers for subscription, at par and accrued interest, through the Federal Reserve Banks, Treasury notes of Series C-1925, of an issue of gold notes of the United States authorized b y the Act of Congress approved September 24, 1917, as amended. T h e notes will be dated and bear interest from December 15, 1922, will be payable J u n e 15, 1925, and will bear interest a t the rate of four and one-half per cent, per annum, payable semiannually on June 15 a n d December 15 in each year. Applications will be received a t the Federal Reserve Banks. Bearer notes with interest coupons attached will be issued in denominations of $100, $500, $1,000, $5,000, $10,000, and $100,000. T h e notes are not subject to call for redemption before maturity, and will not be issued in registered form. T h e principal and interest of the notes will be payable in United States gold coin of the present standard of value. T h e notes of said series shall be exempt, both as to principal and interest, from all taxation now or hereafter imposed by the United States, any State, or any of the possessions of the United States, or by any local taxing authority, except (a) estate or inheritance taxes, and (b) graduated additional income taxes commonly known as surtaxes, and excess-profits and war-profits taxes, now or hereafter imposed by the United States, upon the income or profits of individuals, partnerships, associations, or corporations. Notes of this series will be accepted a t par, with an adjustment of accrued interest, during such time and under such rules and regulations as shall be prescribed or approved by the Secretary of the Treasury, in p a y m e n t of income and profits taxes payable at or within six months before the maturity of the notes. Any of the notes which have been owned by any person continuously for at least six months prior to the date of his death, and which upon such date constitute part of his estate, shall, under rules and regulations prescribed by the Secretary of the Treasury, be receivable by the United States at par and accrued interest in payment of any estate or inheritance taxes imposed by the United States, under or by virtue of any present or future law upon such estate or the inheritance thereof. T h e notes of this series will be acceptable to secure deposits of public moneys, b u t do not bear the circulation privilege. T h e right is reserved to reject any subscription and to allot less t h a n the amount of notes applied for and to close the subscriptions a t any time without notice. T h e Secretary of the Treasury also reserves the right to make allotment in full upon application for smaller amounts, and to make reduced allotments upon, or to reject, applications for larger amounts, and to make classified allotments and allotments upon a graduated scale; and his action in these respects will be final. Allotment notices will be sent out promptly upon allotment, and the basis of allotment will be publicly announced. P a y m e n t at par and accrued interest for notes allotted must be made on or before December 15, 1922, or on later allotment. After allotment and upon p a y m e n t Federal Reserve Banks may issue interim receipts pending delivery of the definitive notes. Any qualified depositary will be permitted to make payment by credit for notes allotted to it for itself and its customers up to a n y a m o u n t for which it shall be qualified in excess of existing deposits, when so notified by the Federal Reserve Bank of its district, except upon subscriptions for which Victory notes are tendered in payment. Treasury certificates of indebtedness of Series T D and TD2-1922, both maturing December 15, 1922, and 4 % per cent. Victory notes, whether or not called for redemption, will be accepted a t the Federal Reserve Banks a t par, with an adjustment of accrued interest, as of December 15, 1922, in p a y m e n t for any Treasury notes of the Series C-1925 now offered which shall be subscribed for and allotted. Victory notes in coupon form must have M a y 20,1923, coupons attached, and if in registered form must be duly assigned to the Secretary of the Treasury for redemption, in accordance with t h e general regulations of the Treasury D e p a r t m e n t governing assignments. T h e amount of the offering will be $300,000,000, or thereabouts, with the right reserved to the Secretary of the Treasury to allot additional notes to the extent t h a t payment is tendered in Victory notes pursuant to this circular. As fiscal agents of the United States, Federal Reserve Banks are authorized and requested to receive subscriptions and to make allotments thereon on the basis and up to the amounts indicated by the Secretary of the Treasury to the Federal Reserve Banks of the respective districts. Very truly yours, B E N J . STRONG, N e w York, December 7, 1922 Governor. Reprint of Secretary Mellon's Letter to the Presi lents of Banking Institutions on the December 15, 1922, Offerings of Treasury Certificates and Treasury Notes Washington, D. C, December 7, 1922. DEAR SIR: The Treasury is today announcing its December of about $697,000,000 at the beginning of the fiscal financing, which comprises, first, an offering of year, and at the same time holds out a real hope that Treasury certificates of indebtedness in two series, by the end of the year the deficit can be entirely overboth dated December 15, 1922, one bearing 3% per come by still further reductions in expenditure and cent, interest and maturing in three months and the increases of receipts, arising partly from further realiother bearing 4 per cent, interest and maturing in zation on Government owned securities and property one year, and, second, an offering of short-term and partly from increased collections of customs and Treasury notes, dated December 15, 1922, bearing internal taxes. The actual receipts and expenditures 4i}/2 per cent, interest and maturing in two and one- of the Government for the first five months of the half years. Subscriptions are being received through current fiscal year, through November 30, 1922, supthe Federal Reserve Banks, acting as fiscal agents of port these estimates. Total ordinary receipts to that the United States. The combined offering of certifi- date on the basis of daily Treasury statements cates is for $400,000,000, or thereabouts, while the amounted to $1,404,776,456.64 as compared with offering of notes is for $300,000,000, or thereabouts, total expenditures chargeable against ordinary rewith the right reserved to the Secretary of the ceipts, amounting to $1,514,314,770.80, leaving a Treasury to allot additional notes to the extent that deficit for the first five months of only $109,538,314.16. 4% P e r cent. Victory notes are tendered in payment. By the end of December this deficit should be overThe terms of the offering are fully set forth in Treasury come by the quarterly payment of income and profits Department Circulars 314 and 315, both dated taxes which falls due in that month, thus leaving a December 7, 1922, copies of which are enclosed for balanced budget, or perhaps even a small surplus, for the first six months of the fiscal year 1923. The your ready reference.* There will become payable on December 15, 1922, prospects for the second half of the year are likewise about $700,000,000 of 4% per cent. Victory notes favorable. The budget estimates for the next fiscal called for redemption on that date, and about year 1924, indicate a surplus of about $180,000,000, $200,000,000 of Treasury certificates of indebtedness and though it is still too early to forecast the actual maturing on that date. At the same time, about results, this indicated surplus gives some margin to $100,000,000 will be payable as interest on the public take care of any deficit that may possibly remain at debt. Against these payments, aggregating about the close of the present year, or, if this year closes $1,000,000,000, the Treasury already has available with a balanced budget or a small surplus, can be balance amounting to about $275,000,000, and it applied to the retirement of debt maturing within the expects to receive during December about $275,000,000 fiscal year 1924. For both years 1923 and 1924, the in income and profits taxes. The notes and certificates budget provides for the regular sinking fund requirenow offered will provide for the remainder of the ments and other public debt expenditures chargeable December 15th maturities and leave a margin to against ordinary receipts, so that any surplus that cover the Treasury's immediate cash requirements can be realized in either year will mean additional and such balance of the 1918 War-Savings certificates retirements of debt. The Treasury is accordingly financing its December as may have to be redeemed in cash at the first of the year. The Treasury has already announced maturities on a short term basis, believing that the special arrangements for the exchange of these matur- prospects for the next year or two indicate the probing War-Savings certificates into the new Treasury ability of substantial retirements of early maturing Savings certificates, and through these exchanges and debt out of current receipts, and that by reason of the proceeds of the current offering, expects to provide the redemption on December 15th of $900,000,000, for the greater part of the War-Savings maturity, or thereabouts, of short term Government obligations, leaving such further refunding as may be necessary these new issues of short term notes and certificates, for the purpose to be accomplished after the turn of in a smaller aggregate amount and with maturities the year when market conditions are favorable. With adapted to the varying needs of investors, will offer the completion of the December financing, the exceptionally attractive opportunities for reinvestment. With this in view the Treasury is offering in the Treasury will thus have provided for most of the short dated debt maturing this fiscal year. Aside from the official circulars to accept Treasury certificates maturbalance of War-Savings certificates that may remain ing December 15, 1922, and Victory notes called for to be refunded there will only be the issues of Treasury redemption on that date, in payment for the new certificates maturing March 15 and June 15, 1923, three months or one year certificates, and to accept both covered by the estimated tax payments to be certificates maturing December 15th and 4% per cent. received in those months, and the remaining uncalled Victory notes, whether or not called for redemption, in Victory notes, amounting to about $894,000,000, on payment for the new two and one-half year Treasury November 30, 1922. Exchanges of these notes for notes. By subscribing liberally to the new offerings the new Treasury notes now offered, and advance in the first instance, and extending every possible redemptions and retirements for the sinking fund and facility to your customers to invest in the notes and on other accounts, may be expected to reduce the certificates through cash purchase or by exchange of outstanding amount of uncalled Victory notes still Victory notes or maturing certificates, you will be rendering an important service to the Treasury as further before their maturity. I think you will find it interesting in this connection well as to your customers, and at the same time will to know about the improved prospects of the Treasury be helping to accomplish what all of us most desire for this fiscal year and the next fiscal year. The in these operations, namely, the widest possible disbudget which was presented to Congress on Monday tribution of the Government's securities among inshows that according to the latest revised estimates vestors throughout the country. of receipts and expenditures the deficit for the current Cordially yours, fiscal year has already been reduced to about A. W. MELLON, Secretary of the Treasury. $^74,000,000 as compared with an indicated deficit To the President of the Banking Institution addressed. http://fraser.stlouisfed.org/ 'Tin li xt i.f Treasury circulars 314 and 315 will l»e found on pages i and 8. Federal Reserve Bank of St. Louis
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