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FE D ERAL RESERVE BANK O F N EW YORK Fiscal Agent of the United States Circular N o. 5 5 3 3 1 August 12,1964 J OFFERING OF TWO SERIES OF TREASURY BILLS $1,200,000,000 o f 91-Day Bills, Additional Amount, Series Dated May 21,1964, Due November 19,1964 (To Be Issued August 20, 1964) $900,000,000 of 182-Day Bills, Dated August 20, 1964, Due February 18, 1965 To All Incorporated Banks and Trust Companies, and Others Concerned, in the Second Federal Reserve District: Following is the text of a notice issued by the Treasury Department, released for publication today at 4 p.m., Eastern Daylight Saving time: The tenders am ount change am ount T reasu ry D epartm ent, by this public notice, invites for tw o series of T reasu ry bills to the aggregate of $2,100,000,000, or thereabouts, for cash and in e x for T reasury bills m aturing A u g u st 20, 1964, in the of $2,103,036,000, as fo llo w s: 91-day bills (to m aturity date) to be issued A u g u st 20, 1964, in the am ount of $1,200,000,000, or thereabouts, representing an additional am ount of bills dated M ay 21, 1964, and to mature N ovem ber 19, 1964, originally issued in the am ount of $900,490,000 (an additional $100,086,000 was issued July 29, 1964), the additional and original bills to be freely interchange able. 182-day bills, for $900,000,000, or thereabouts, to be dated A u g u st 20, 1964, and to mature February 18, 1965. T h e bills of both series will be issued on a discount basis under com petitive and noncom petitive bidding as hereinafter provided, and at m aturity their face am ount will be payable without interest. T h e y will be issued in bearer form only, and in denom inations of $1,000, $5,000, $10,000, $50,000, $100,000, $500,000 and $1,000,000 (m aturity valu e). T en ders will be received at Federal R eserve Banks and Branches up to the closing hour, one-thirty p .m ., Eastern D a yligh t Saving time, M on d ay, A u gu st 17, 1964. T enders will not be received at the T reasury D epartm ent, W ash in g ton . Each tender m ust be for an even multiple of $1,000, and in the case of com petitive tenders the price offered m ust be expressed on the basis of 100, with not m ore than three decimals, e.g., 99.925. Fractions m ay not be used. It is urged that tenders be m ade on the printed form s and forwarded in the special envelopes which will be supplied by Federal Reserve Banks or Branches on application therefor. Banking institutions generally m ay subm it tenders for account of custom ers, provided the nam es of the custom ers are set forth in such tenders. O th ers than banking institu tions will not be perm itted to submit tenders except for their ow n account. T en ders will be received without deposit from incorporated banks and trust com panies and from respon sible and recognized dealers in investm ent securities. Tenders from others m ust be accom panied by paym ent of 2 percent of the face am ount of Treasury bills applied for, unless the tenders are accom panied by an express guaranty of paym ent by an incorporated bank or trust com pany. Im m ediately after the closin g hour, tenders will be opened at the Federal R eserve Banks and Branches, follow ing which public announcem ent will be m ade by the T reasury D ep art ment of the am ount and price range of accepted bids. T h o se subm itting tenders will be advised of the acceptance or rejec tion thereof. T h e Secretary of the T reasu ry expressly re serves 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, noncom petitive tenders for $200,000 or less for the additional bills dated M ay 21, 1964 (91 days rem aining until m aturity date on N ovem ber 19, 1964) and noncom petitive tenders for $100,000 or less for the 182-day bills w ithout stated price from any one bidder will be accepted in full at the average price (in three deci m als) of accepted com petitive bids for the respective issues. Settlem ent for accepted tenders in accordance with the bids must be m ade or com pleted at the Federal R eserve B ank on A u g u st 20, 1964, in cash or other im m ediately available funds or in a like face am ount of T reasury bills m aturing A u g u st 20, 1964. Cash and exchange tenders will receive equal treat ment. Cash adjustm ents w ill be m ade for differences be tween the par value of m aturing bills accepted in exchange and the issue price of the new bills. T h e incom e derived from T reasury bills, w hether interest or gain from the sale or other disposition of the bills, does not have any exem ption, as such, and loss fro m the sale or other disposition of T reasury bills does not have any special treatm ent, as such, under the Internal R evenue Code of 1954. T h e bills are subject to estate, inheritance, gift or other excise taxes, whether Federal or State, but are exem pt from all taxation now or hereafter im posed on the principal or interest thereof by any State, or any of the possessions of the U nited States, or by any local taxing authority. For purposes of taxation the am ount of discount at w hich T re a s ury bills are originally sold by the U nited States is con sidered to be interest. U nd er Sections 4 5 4 (b ) and 1 22 1(5) of the Internal R evenue Code of 1954 the am ount of discount at which bills issued hereunder are sold is not considered to accrue until such bills are sold, redeem ed or otherwise disposed of, and such bills are excluded from consideration as capital assets. A cco rd in gly , the ow ner of T reasury 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, w hether on original issue or on subsequent purchase, and the am ount actually received either upon sale or redem ption at m aturity during the taxable year for which the return is made, as ordinary gain or loss. T reasury D epartm ent Circular N o . 418 (current revision) and this notice prescribe the term s of the T reasu ry bills and govern the conditions of their issue. Copies of the circular m ay be obtained from any Federal R eserve B ank or Branch. This Bank will receive tenders for both series up to 1 :30 p.m., Eastern Daylight Saving time, Monday, August 17, 1964, 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 August 13, 1964, representing an addi tional amount of bills dated May 14, 1964, and maturing November 12, 1964; and 182-day bills dated August 13, 1964, maturing February 11, 1965) are shown on the reverse side of this circular. 19 A lfred H ayes , President. ( o ver) 14 FI FTI ETH A N N I V E R S A R Y 19 6 4 RESULTS OF LAST OFFERING OF TREASURY BILLS (TW O SERIES TO BE ISSUED AUGUST 13, 1964) Range of Accepted Competitive Bids 91 -Day Treasury Bills Maturing November 12,1964 High .................. ................ 182-Day Treasury Bills Maturing February 11,196 Price A pprox. equiv. annual rate 99.118a 3.489% 98.186b 3.588% Price Approx. equiv. annual rate Low .................... ................ 99.111 3.517% 98.170 3.620% Average .............. ................ 99.113 3.510%! 98.174 3.611%i a E x ce p tin g one tender of $300,000. b E xcep tin g one tender of $200,000. 1 O n a coupon issue of the sam e length and for the sam e am ount invested, the return on these bills would provide yields of 3.59 percent for the 91-d a y bills, and 3.73 percent for the 182-day bills. Interest rates on bills are quoted in term s of bank discount, with the return related to the face am ount of the bills payable at m aturity rather than the am ount invested, and their length in actual number of days related to a 360-d ay year. In contrast, yields on certificates, notes, and bonds are com puted in term s of interest on the am ount invested, and relate the num ber of days rem aining in an interest paym ent period to the actual num ber of days in the period, with semiannual com p ound ing if m ore than one coupon period is involved. (69 percent of the amount of 91-day bills bid for at the low price was accepted.) (54 percent of 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 November 12,1964 Accepted Applied for District Boston .......................... $ 43,489,000 182-Day Treasury Bills Maturing February l l f 1965 $ 27,289,000 Applied for $ 4,566,000 Accepted $ 4,474,000 1,487,775,000 763,545,000 1,263,425,000 676,165,000 ................ 33,465,000 19,845,000 9,334,000 4,334,000 Cleveland...................... 25,887,000 25,887,000 44,229,000 39,229,000 Richmond .................... 14,398,000 14,398,000 2,002,000 2,002,000 A tlan ta.......................... 37,754,000 33,872,000 13,924,000 10,924,000 Chicago ........................ 174,729,000 136,714,000 123,294,000 60,774,000 St. Louis ...................... 34,318,000 28,698,000 8,738,000 7,008,000 Minneapolis ................ 24,046,000 19,926,000 6,423,000 4,923,000 Kansas City ................ 33,383,000 32,228,000 10,949,000 10,949,000 D a lla s............................ 32,499,000 24,879,000 9,369,000 8,909,000 71,200,000 New Y o r k .................... Philadelphia San Francisco ............ 155,601,000 73,491,000 100,100,000 Total ............ $2,097,344,000 $ 1,200,772,000" $1,596,353,000 c Includes $257,912,000 noncompetitive tenders accepted at the average price of 99.113. d Includes $62,718,000 noncompetitive tenders accepted at the average price of 98.174. $900,891,000d