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F E D E R A L R E S E R V E BANK O F N E W YORK Fiscal A gent of the United States [ Circular No. 5 1 2 6 *1 December 21, 1961 J O FFE R IN G OF TW O SERIES OF T R E A S U R Y BILLS $1,100,000,000 o f 91-Day Bills, Additional Amount, Series Dated October 5, 1961, Due April 5, 1962 (To Be Issued January 4, 1962) $600,000,000 o f 182-Day Bills, Dated January 4, 1962, Due July 5, 1962 T o A ll In corporated Banks and T rust Companies, and O thers Concerned, in the Second Federal R eserv e D istrict: F o llo w in g is the te x t o f a n o tice issu ed b y the T r e a s u r y D e p a rtm e n t, relea sed fo r p u b lica tio n to d a y at 4 p .m ., E a stern S tan d ard t i m e : The Treasury Department, by this public notice, invites tenders for two series of Treasury bills to the aggregate amount o f $1,700,000,000, or thereabouts, for cash and in exchange for Treasury bills maturing January 4, 1962, in the amount of $1,700,208,000, as fo llo w s: 91-day bills (to maturity date) to be issued January 4, 1962, in the amount of $1,100,000,000, or thereabouts, representing an additional amount o f bills dated O cto ber 5, 1961, and to mature April 5, 1962, originally issued in the amount of $600,246,000, the additional and original bills to be freely interchangeable. 182-day bills, for $600,000,000, or thereabouts, to be dated January 4, 1962, and to mature July 5, 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 (maturity value). Tenders w ill be received at Federal Reserve Banks and Branches up to the closing hour, one-thirty o’clock p.m., East ern Standard time, Friday, December 29, 1961. Tenders will not be received at the Treasury Department, Washington. 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 more than three decimals, e.g., 99.925. Fractions may not be used. It is urged that tenders be made on the printed forms and forwarded in the special envelopes which will be supplied by Federal Reserve Banks or Branches on application therefor. Banking institutions generally may submit tenders for ac count o f customers, provided the names o f the customers are set forth in such tenders. Others than banking institutions will not be permitted to submit tenders except for their own account. Tenders will be received without deposit from incorporated banks and trust companies and from responsible and recognized dealers in investment securities. Tenders from others must be accompanied by payment of 2 percent o f the face amount of 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 ing which public announcement w ill 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 for the additional bills dated October 5, 1961 (91 days remaining until maturity date on April 5, 1962) and noncompetitive tenders for $100,000 or less for the 182-day bills without stated price from any one bidder w ill be accepted in full at the average price (in three decimals) o f accepted competitive bids for the respective issues. Settlement for accepted tenders in accordance with the bids must be made or completed at the Federal Reserve Bank on January 4, 1962, in cash or other immediately available funds or in a like face amount of Treasury bills maturing January 4, 1962. Cash and exchange tenders will receive equal treatment. Cash adjustments w ill 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. The bills are subject to estate, inheritance, gift 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. For 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 454(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 of, and such bills are excluded from consideration as capital assets. Accordingly, the owner of Treasury bills (other than life insurance com panies) issued hereunder need include in his income tax return only the difference between the price paid for 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 for which the return is made, as ordinary gain or loss. Treasury Department Circular No. 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. T h is B an k w ill r e ce iv e ten d ers fo r b o th series up to 1 :30 p .m ., E a stern S ta n d a rd tim e, F rid a y , D ecem ber 29, 1961, at the Securities Departm ent o f its H e a d O ffice and at its B u ffa lo B ra n ch . T e n d e r fo rm s fo r the respective series are enclosed. Please use the appropriate form s to submit tenders and return them in an envelope marked “ T ender fo r T reasu ry B ills.” T enders may be submitted by telegraph, subject to written confirm ation; they m ay not be submitted by telephone. Paym ent 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. T h is circu la r w a s p rin ted b e fo r e th e resu lts o f the b id d in g fo r T r e a s u r y b ills to b e issu ed D e c e m b e r 28, 1961, w ere a v a ila b le ; th o se resu lts w ill be a n n o u n ce d after relea se b y the T r e a s u r y D e p a rtm e n t. A lfred H a y e s , President. Closing date for receipt of tenders is Friday, December 29.