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FEDERAL RESERVE BANK OF N EW YORK Fiscal Agent of the United States rCircular No. 5 9 3 2 1 L January 18, 1967 J OFFERING OF TWO SERIES OF TREASURY BILLS $500,000,000 of 273-Day Bills, Additional Amount, Series Dated October 31,1966, Due October 31,1967 (To Be Issued January 31, 1967) $900,000,000 of 365-Day Bills, Dated January 31, 1967, Due January 31, 1968 To A ll 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 Standard tim e: The Treasury Department, by this public notice, invites tenders for tw o series of Treasury bills to the aggregate amount o f $1,400,000,000, or thereabouts, for cash and in exchange for Treasury bills maturing January 31, 1967, in the amount of $1,001,391,000, as follow s: 273-day bills (to maturity date) to be issued January 31, 1967, in the amount of $500,000,000, or thereabouts, representing an additional amount of bills dated O ctober 31, 1966, and to mature O ctober 31, 1967, originally issued in the amount o f $904,640,000, the addi tional and original bills to be freely interchangeable. 365-day bills, for $900,000,000, or thereabouts, to be dated January 31, 1967, and to mature January 31, 1968. The bills of 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. T h ey will be issued in bearer form only, and in denominations of $1,000, $5,000, $10,000, $50,000, $100,000, $500,000 and $1,000,000 (maturity value). Tenders will be received at Federal Reserve Banks and Branches up to the closing hour, one-thirty p.m., Eastern Standard time, Tuesday, January 24, 1967. Tenders will not be received at the Treasury Department, W ashington. Each tender must be for an even multiple o f $1,000, and in the case of competitive tenders the price offered must be expressed on the basis of 100, with not m ore than three decimals, e.g., 99.925. Fractions may not be used. (N otwithstanding the fact that the one-year bills will run for 365 days, the discount rate will be computed on a bank discount basis of 360 days, as is currently the practice on all issues o f Treasury bills.) 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 account 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 of payment by an incorporated bank or trust company. Imm ediately after the closing hour, tenders will be opened at the Federal Reserve Banks and Branches, follow ing which public announcement will be made by the Treasury Department of the amount and price range of accepted bids. Those sub mitting tenders will be advised of the acceptance or rejection thereof. The Secretary of 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, noncom petitive tenders for each issue for $200,000 or less without stated price from any one bidder will 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 31, 1967, in cash or other immediately available funds or in a like face amount of Treasury bills maturing January 31, 1967. Cash and exchange tenders will receive equal treatment. Cash adjust ments will be made for differences between the par value of maturing bills accepted in exchange and the issue price o f the new bills. The incom e 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 of 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 im posed on the principal or interest thereof by any State, or any of the possessions o f the United States, or by any local taxing authority. F or purposes o f taxation 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) of 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. A ccordin gly, the ow ner of Treasury bills (other than life insurance com panies) issued hereunder need include in his incom e 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 N o. 418 (current revision) 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, Tuesday, January 24, 1967, 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 the enclosed yellow envelope marked “ Tender for Special Treasury Bills.” Tenders may be submitted by telegraph, subject to written confirm ation; 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. A lfred H ayes, President.
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