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FED ERAL RESER VE BANK O F N EW YO R K Fiscal Agent o f the United States C ir c u la r N o. 5 1 0 8 N o v e m b e r 15, 1961 OFFERING OF TWO SERIES OF TREASURY BILLS L,100,000,000 o f 91-Day Bills, Additional Amount, Series Dated Aug. 24, 1961, Due Feb. 23, 1962 (To Be Issued November 24, 1961) $600,000,000 o f 181-Day Bills, Dated November 24, 1961, Due May 24, 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 Standard time: The Treasury Department, by this public notice, invites tenders fo r tw o series o f Treasury bills to the aggregate amounr o f $1,700,000,000, or thereabouts, for cash and in exchange for Treasury bills maturing Novem ber 24, 1961, in the amount of $1,701,049,000, as fo llo w s : 91-day bills (to maturity date) to be issued Novem ber 24, 1961, in the amount o f $1,100,000,000, or thereabouts, representing an additional amount o f bills dated August 24, 1961, and to mature February 23, 1962, originally issued in the amount o f $600,092,000, the additional and original bills to be freely interchangeable. 181-day bills, fo r $600,000,000, or thereabouts, to be dated Novem ber 24, 1961, and to mature M ay 24, 1962. The 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. They 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 Standard time, Monday, Novem ber 20, 1961. Tenders will 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 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 or Branches on application therefor. Others than banking institutions will not be permitted to submit tenders except fo r their own 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 by 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 or rejection thereof. The Secretary o f the Treasury expressly reserves the right to accept or reject any or all tenders, in whole or in part, and his action in any such respect shall be final. Subject to these reservations, noncompetitive tenders for $200,000 or less fo r the additional bills dated August 24, 1961 (91 days remain ing until maturity date on February 23, 1962) and noncom petitive tenders fo r $100,000 or less fo r the 181-day bills without stated price from any one bidder will be accepted in full at the average price (in three decimals) o f accepted competitive bids fo r the respective issues. Settlement for accepted tenders in accordance with the bids must be made or completed at the Federal Reserve Bank on November 24, 1961, in cash or other immediately available funds or in a like face amount o f Treasury bills maturing Novem ber 24, 1961. Cash and exchange tenders will receive equal treatment. Cash adjustments will be made for differences between the par value o f maturing bills accepted in exchange and the issue price o f the new bills. The income derived from Treasury bills, whether interest or gain from the sale or other disposition o f the bills, does not have any exemption, 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 from all taxa tion now or hereafter imposed on the principal or interest thereof by any State, or any o f the possessions o f the United States, or by any local taxing authority. F or 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 which 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 owner 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 fo 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 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 may be obtained from any Federal Reserve Bank or Branch. This Bank will receive tenders for both series up to 1 :30 p.m., Eastern Standard time, Monday, November 20, 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. Results of the last offering of Treasury bills (91-day bills to be issued November 16, 1961, representing an additional amount of bills dated August 17, 1961, and maturing February 15, 1962; and 182-day bills dated November 16, 1961, maturing May 17, 1962) are shown on the reverse side of this circular. A lfred H ayes, President. Please note that the issue date of the 91-day bills is Friday, November 24, 1961, and the maturity date, Friday, February 23, 1962, because the usual Thursday dates of issue and maturity would fall on holidays. Please also note that, because the issue date of the 26-week bills is Friday, November 24, 1961, such bills will be 181-day bills. ( over) R E S U L T S OF 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 IS S U E D N O V E M B E R 16, 1961) Range of Accepted Competitive Bids 91-Day Treasury Bills Maturing February 15, 1962 182-Day Treasury Bills Maturing May 17, 1962 A p p rox. equiv. annual rate P rice P rice A p p rox. equiv. annual rate High ........................ ................. 99.372“ 2.484% 98.638b 2.694% L o w .......................... ................. 99.361 2.528% 98.614 2.742% Average .................. ................. 99.364 2.516% 1 98.624 2.721% 1 a Excepting three tenders totaling $350,000. b Excepting tw o tenders totaling $200,000. 1 On a coupon issue o f the same length and for the same amount invested, the return on these bills would provide yields o f 2.57 percent fo r the 91-day bills, and 2.80 percent for the 182-day bills. Interest rates on bills are quoted in terms o f bank discount, with the return related to the face amount of 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 compounding if m ore than one coupon period is involved. (63 percent of the amount of 91-day bills bid for at the low price was accepted.) (2 percent o f the amount of 182-day bills bid for at the low price was accepted.) Total Tenders Applied for and Accepted (By Federal Reserve Districts) 91-Day Treasury Bills Maturing February 15, 1962 Applied, fo r District Boston ........................ ........ $ 47,453,000 182-Day Treasury Bills Maturing May 17, 1962 A ccepted $ 16,981,000 A pplied fo r $ 8,027,000 A ccepted $ 7,927,000 New Y o r k .................. ........ 1,571,915,000 753,437,000 869,854,000 Philadelphia .............. ........ 29,159,000 13,852,000 7,373,000 2,373,000 Cleveland.................... ......... 64,013,000 45,700,000 40,590,000 36,590,000 Richmond ................... ........ 30,070,000 15,961,000 2,543,000 2,543,000 Atlanta......................... ....... 24,704,000 21,754,000 8,290,000 8,290,000 Chicago ....................... ....... 233,756,000 100,142,000 96,750,000 44,810,000 St. Louis ..................... ....... 27,564,000 19,964,000 8,005,000 7,005,000 Minneapolis................. 28,867,000 17,997,000 6,743,000 4,143,000 Kansas City ............... ....... 47,078,000 26,743,000 14,413,000 14,315,000 Dallas........................... ....... 22,725,000 20,022,000 5,475,000 5,475,000 San Francisco............. 96,617,000 47,599,000 28,716,000 26,300,000 T otal............. ....... $2,223,921,000 $1,100,152,000c c Includes $257,511,000 noncompetitive tenders accepted at the average price of 99.364. d Includes $60,978,000 noncompetitive tenders accepted at the average price of 98.624. $1,096,779,000 440,234,000 $600,005,000d
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