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FEDERAL RESERVE BANK OF NEW YORK F is ca l A g e n t o f the U n ite d S tates Circular No. 5 0 9 8 1 October 18, 1961 J OFFERING OF TWO SERIES OF TREASURY BILLS $1,100,000,000 of 91-Day Bills, Additional Amount, Series Dated July 27, 1961, Due Jan. 25, 1962 (To Be Issued October 26, 1961) $600,000,000 of 182-Day Bills, Dated October 26, 1961, Due April 26, 1962 To All Incorporated Banks and Trust Companies, and Others Concerned, in the Second Federal Reserve District: Follow ing 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 T reasu ry D epartm ent, by this pu blic n otice, invites tenders fo r tw o series o f T reasu ry bills to the aggregate amount o f $1,700,000,000, or thereabouts, fo r cash and in exch ange for T reasu ry bills m aturing O ctober 26, 1961, in the am ount o f $1,600,105,000, as f o l lo w s : 91-day bills (to m aturity date) to be issued O ctober 26, 1961, in the am ount o f $1,100,000,000, or thereabouts, representing an addition al amount o f bills dated July 27, 1961, and to mature January 25, 1962, origin a lly issued in the amount o f $500,080,000, the addition al and o rigin a l bills to be freely interchangeable. 182-day bills, fo r $600,000,000, or thereabouts, to be dated O ctob er 26, 1961, and to m ature A p ril 26, 1962. T h e bills o f both series w ill be issued on a discou nt basis under com petitive and noncom petitive bidd in g as hereinafter provided, and at m aturity their face am ount w ill be payable w ithout interest. T h ey w ill be issued in bearer form only, and in denom inations o f $1,000, $5,000, $10,000, $100,000, $500,000 and $1,000,000 (m aturity va lu e). T en ders w ill be received at Federal R eserve Banks and B ranches up to the clo s in g hour, tw o o ’clo ck p.m., E a st ern D ayligh t Savin g time, M on day, O ctober 23, 1961. T enders w ill not be received at the T reasu ry Departm ent, W ash ington. E a ch tender m ust be fo r an even m ultiple o f $1,000, and in the case o f com petitive tenders the price offered must be expressed on the basis o f 100, w ith not m ore than three decim als, e.g., 99.925. F raction s m ay not be used. It is urged that tenders be m ade on the printed form s and forw a rded in the special envelopes w hich w ill be supplied by Federal R eserve Banks or B ranches on a pplication therefor. O thers than banking institutions w ill not be perm itted to subm it tenders excep t for their ow n account. T en ders w ill be receiv ed w ithout deposit from in corporated banks and trust com panies and from responsible and recogn ized dealers in in vestm ent securities. Ten ders from others must be accom panied by paym ent o f 2 percent o f the face am ount o f T reasu ry bills applied fo r, unless the tenders are accom panied by an express guaranty o f paym ent by an in corporated bank or trust com pany. Im m ediately after the closin g hour, tenders w ill be opened at the F ederal R eserve Banks and Branches, fo llo w in g w hich pu blic announcem ent w ill be made by the T reasu ry Departm ent o f the am ount and price range o f accepted bids. T h ose sub m itting tenders w ill be advised o f the acceptance or rejection thereof. T h e Secretary o f the T reasu ry exp ressly 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. Su bject to these reservations, noncom petitive tenders for $200,000 o r less fo r the a ddition al bills dated July 27, 1961 (91 days rem aining until m aturity date on January 25, 1962) and noncom petitive tenders fo r $100,000 or less fo r the 182-day bills w ithout stated price from any one bidder w ill be accepted in fu ll at the average price (in three decim als) o f accepted com petitive bids fo r the respective issues. Settlement for a ccepted tenders in a ccord a n ce w ith the bids must be made or com pleted at the F ederal R eserve Bank on O ctober 26, 1961, in cash or other im m ediately available funds or in a like face am ount o f T reasu ry bills m aturing O ctober 26, 1961. Cash and exch ange tenders w ill receive equal treatment. Cash adjustm ents w ill be made for _differences betw een the par value o f m aturing bills accepted in exch ange and the issue price o f the new bills. T he incom e derived from T reasu ry bills, whether interest or gain from the sale or other disp osition o f the bills, does not have any exem ption, as such, and loss from the sale or other d isposition o f T reasu ry bills does not have any special treat ment, as such, under the Internal Revenue C ode o f 1954. The bills are subject to estate, inheritance, g ift or other excise taxes, whether Federal or State, but are exem pt from all ta x a tion now or h ereafter im posed on the principal or interest th ereof by any State, or any o f the possessions o f the U nited States, or by any loca l ta x in g authority. F or purposes o f ta x a tion the am ount o f discount at w hich T reasu ry bills are origin a lly sold by the U nited States is con sidered to be interest. U nder Sections 454(b) and 1221(5) o f the Internal Revenue C ode o f 1954 the am ount o f discount at w hich bills issued hereunder are sold is not con sidered to accru e until such bills are sold, redeem ed or otherw ise disposed of, and such bills are exclu ded from con sideration as capital assets. A ccord in g ly , the ow ner o f T reasu ry bills (oth er than life insurance co m panies) issued hereunder need include in his incom e ta x return on ly the difference between the price paid for such bills, w hether on origin a l issue or on subsequent purchase, and the amount actually received either upon sale or redem ption at m aturity durin g the taxable year fo r w hich the return is made, as ordinary gain or loss. T reasu ry D epartm ent C ircu lar N o. 418, Revised, and this notice, prescribe the terms o f the T reasu ry bills and govern the con ditions o f their issue. Copies o f the circu lar may be obtained from any Federal R eserve Bank or Branch. This Bank will receive tenders for both series up to 2 p.m., Eastern Daylight Saving time, Monday, October 23, 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 for the Treasury bills cannot be made by credit through the Treasury Tax and Loan Account. Settlement must be made in cash or other immediately available funds or in maturing Treasury bills. R e su lts o f the last o ffe r in g o f T r e a s u ry b ills (9 1 -d a y b ills to be issued O c t o b e r 19, 1961, re p re se n tin g an a d d ition a l a m ou n t o f b ills dated J u ly 20, 1961, and m a tu rin g J a n u a ry 18, 1962; and 182-day b ills dated O c t o b e r 19, 1961, m a tu rin g A p r il 19, 1962) are s h o w n o n the rev erse side o f this circu lar. 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 O F T R E A S U R Y B IL L S O C T O B E R 19, 1961) (T W O S E R IE S T O B E ISSU E D Range o f A ccepted Com petitive Bids 91-Day Treasury Bills Maturing January 18, 1962 Price H igh L ow 182-Day Treasury Bills Maturing April 19, 1962 Approx. equiv. annual rate Price Approx. equiv. annual rate 99.405 2.354% 98.624a 2.722% ...................... ........ 99.395 2.393% 98.613 2.744% ................ ........ 99.398 2.382%1 98.618 2.734%* ...................... ........ Average a E xcep tin g three tenders tota lin g $960,000. 1 On a cou pon issue o f the same length and fo r the same am ount invested, the return on these bills w ou ld provide yield s o f 2.43 percent fo r the 91-day bills, and 2.81 percen t fo r the 182-day bills. Interest rates on bills are quoted in terms o f bank discount, w ith the return related to the fa c e am ount o f the bills payable at m aturity rather than the amount invested, and their length in actual num ber o f days related to a 360-day year. In contrast, yield s on certificates, notes, and bonds are com puted in term s o f interest on the am ount invested, and relate the num ber o f days rem aining in an interest paym ent p eriod to the actual num ber o f days in the period, w ith sem iannual com pou n din g if m ore than one cou pon p eriod is in volved. (44 percent of the amount of 91-day bills bid for at the low price was accepted.) (84 percent of the amount of 182-day bills bid for at the low price was accepted.) T otal Tenders A p p lied fo r and A ccepted (B y Federal Reserve Districts) 91-Day Treasury Bills Maturing January 18, 1962 Applied for District Boston .......................... ........ $ 33,449,000 182-Day Treasury Bills Maturing April 19, 1962 Accepted $ 15,697,000 Applied for $ 3,744,000 Accepted $ 3,204,000 New Y o r k .................... ........ 1,645,453,000 714,015,000 899,723,000 457,613,000 Philadelphia ................ ........ 31,575,000 11,355,000 7,633,000 2,533,000 .................... ........ 29,446,000 26,022,000 30,484,000 25,234,000 Richm ond .................... ........ 10,620,000 10,320,000 7,758,000 7,758,000 Cleveland ........................ ........ 18,855,000 15,485,000 5,739,000 4,939,000 Chicago ........................ ........ 192,390,000 122,108,000 94,307,000 57,207,000 St. L o u i s ...................... ........ 52,731,000 31,189,000 8,239,000 7,239,000 Minneapolis ................ ........ 25,924,000 14,944,000 6,229,000 3,379,000 Kansas C ity ................ ........ 45,896,000 36,049,000 15,818,000 6,928,000 .......................... ........ 15,130,000 15,130,000 4,840,000 4,840,000 119,395,000 87,719,000 27,558,000 19,483,000 $1,112,072,000 $600,357,000* Atlanta Dallas San Francisco ............ Total ............ ........ $2,220,864,000 $1,100,033,000b t>Includes $241,400,000 noncompetitive tenders accepted at the average price of 99.398. c Includes $60,200,000 noncompetitive tenders accepted at the average price of 98.618. FEDERAL RESERVE BANK OF NEW YORK O ctob er 18, 1961 PROPOSED AMENDMENTS TO REGULATION U To A l l B an ks, Members o f N a t io n a l S e c u r i t i e s E x ch a n g e s, and O th e rs I n t e r e s t e d , in th e S econ d F e d e r a l R e s e r v e D i s t r i c t : The B oard o f G o v e rn o rs o f th e F e d e r a l R e s e r v e System i s c o n s i d e r i n g p r o p o s e d amendments t o i t s R e g u la t i o n U, in t e n d e d t o p r e v e n t c r e d i t t h a t m igh t be e x te n d e d by banks u n d er s e c t i o n 2 2 1 .2 ( f ) , ( g ) , o r ( h) o f R e g u la t io n U from b e in g u s e d t o f i n a n c e t r a n s a c t i o n s in " s p e c i a l ca s h a c c o u n t s " u n d e r s e c t i o n 2 2 0 .4 ( c ) o f R e g u la t io n T. P r in t e d b e lo w i s an e x c e r p t fro m th e F e d e r a l R e g i s t e r o f O c to b e r 1 4 , 1 9 6 1 , c o n t a in i n g a n o t i c e o f p r o p o s e d r u l e m aking, s e t t i n g f o r t h th e r e a s o n s f o r , and th e t e x t o f , th e p r o p o s e d am endm ents. The n o t i c e s t a t e s t h a t comments and s u g g e s t i o n s r e g a r d in g th e p r o p o s e d amendments may be f i l e d w it h th e B oard o f G o v e rn o rs n o t l a t e r th a n November 1 3 , 1 9 6 1 . Any comments o r s u g g e s t i o n s y o u may have s h o u ld be s e n t t o t h i s Bank f o r t r a n s m i t t a l t o th e B o a rd . HOWARD D. CROSSE, V ic e P r e s i d e n t . FEDERAL RESERVE SYSTEM f 12 CFR Part 221 J [R eg. U ] L O A N S BY B A N K S F O R PURPOSE O F P U R C H A S IN G O R C A R R Y IN G R EG ISTERED S TO C K S Proposed Exceptions to General Rule The B oard o f Governors o f the Federal Reserve System recently has considered situations arising under paragraph ( f ) o f $221.2 o f P a rt 221 (R egulation U ) , which exempts a specified class o f bank loans from the m argin requirements and other require ments o f § 221.1. In order to prevent credit that m ight be extended b y banks under that exem ption (o r the exemptions provided by paragraphs ( g ) and (h ) o f § 221.2) from being used to finance transactions in “ special cash accou nts” under § 2 2 0 .4 (c) o f P a rt 220 (R egulation T ) , it is proposed to amend paragraphs ( f ) , ( g ) , and (h ) o f i 221.2 to read as follow s: § 221.2 * Exceptions to general rule. * * * * ( f ) A n y tem porary advance to finance the purchase or sale o f securities fo r prom pt delivery which is to be repaid in the ordinary course o f business upon com pletion o f the transaction, provided the loan is not made to a person described in § 221.3 (q ) or fo r the purpose o f enabling the borrower to pay fo r securities purchased in a special cash ac count subject to § 2 2 0 .4 (c) o f this chapter (R egulation T ) ; ( g ) A n y loan against securities in transit, or surrendered fo r transfer, which is payable in the ordinary course o f business upon ar rival o f the securities or upon com pletion o f the transfer, provided the loan is not made to a person described in $ 221.3 ( q ) or fo r the purpose o f enabling the borrower to pay fo r securities purchased in a special cash account subject to § 2 2 0 .4 (c) o f this chapter (R egulation T ) ; (h ) A n y loan which is to be repaid on the calendar day on which it is made, provided the loan is not made to a person described in § 221.3 (q ) or fo r the purpose o f enabling the borrower to pay fo r securities purchased in a special cash account subject to § 2 2 0 .4 (c) o f this chapter (E egulation T ) ; This notice is published pursuant to sec tion 4 o f the Adm inistrative Procedure A ct and section 2 o f the rules o f procedure o f the B oard o f Governors o f the Federal Reserve System (12 CFR 262.2). The p ro posed change is authorized under the au thority cited at 12 CFR P art 221. N ot later than Novem ber 13, 1961, com ments and suggestions regarding the pro posed amendments may be filed with the Board. Communications should be addressed to the Secretary, B oard o f Governors o f the Federal Reserve System, W ashington 25, D.C. Dated at W ashington, D.C., this 9th day o f October 1961. B oard F [S eal] M of ederal e r r it t S G overnors of th e R eserve S y s t e m , herm an , Secretary. [F .R . D oc. 6 1 -9 8 6 0 ; Filed, O ct. 13, 1 9 6 1 ; 8 :5 0 a.m .]
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