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. : JO JI3M ~-*m^^mmmmwmmmmmmmmmmeMimn^a*mmnm*mmimHmttmim^mrmW-M I I B — I I H n mi i« jycB^-tr^M^^MgwAtHamtt t^gg^Mblfc**'*' rfiii'**r :lut\.i'jUA.mi «™-**™W*>~M3*^H3t««(.*#Tj»y., ;mmtwi*m\m ?-.. vfftti-5(*HhMl.**l ess ^e/e<rs«s /' LIBRARY POOM 5030 JUN 14 1972 TREASURY DEPARTMENT - 2- 4 PERCENT TREASURY BONDS OF 1969 Federal Reserve District Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco Treasury Govt, Inv. Accts. Total Total Subscriptions Received $ Total Allotments 61,187,500 632,926,000 60,639,500 102,092,500 53,767,000 41,561,000 229,322,000 38,236,000 40,989,500 34,578,500 55,605,000 151,115,000 124,000 - $ 25,527,000 216,956,500 22,852,000 43,206,500 21,573,000 16,264,000 94,566,500 14,872,000 18,925,000 15,585,000 21,188,500 57,593,000 94,000 50,000,000 - $1 ,502,142,500 $619,203,000 4 PERCENT TREASURY NOTES OF SERIES B-1963 Federal Reserve District Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco Treasury Govt. Inv. Accts. Total Total Subscriptions Received $ 156,535,000 816,677,000 92,517,000 165,466,000 148,361,000 180,583,000 735,706,000 113,633,000 103,983,000 120,878,000 192,983,000 222,452,000 2,717,000 - $3,052,491,000 Total Allotment s $ 84,702,000 415,896,000 52,088,000 90,963,000 80,491,000 99,762,000 393,506,000 66,973,000 64,371,000 75,873,000 102,692,000 114,281,000 1,367,000 100,000,000 $1,742,965,000 TREASURY DEPARTMENT IMilHi^gaW««J^l.ilM!lJLIljyiM^.J»\WMMiLIIJJIlMU WASHINGTON, D.C MEDIATE RELEASE, Tuesday, March 51, 1959. A-487 The Treasury Department today announced the subscription and allotment figures with respect to the cash offering of an additional $500 million, or thereabouts, of 4 percent Treasury Bonds of 1969, dated October 1, 1957, with interest from April 1, 1959, and to mature October 1, 1969. Subscriptions from savings-type investors were allotted 65 percent, subscriptions from commercial banks for their own account were allotted 35 percent, and all other subscriptions were allotted 20 percent. Subscriptions for $25,000 or less from savings-type investors and commercial banks, and for $10,000 or less from all others, were allotted in full. Subscriptions for more than these minimums were allotted not less than the rainimums. In addition to the amount allotted to the public, $50 million of these bonds were allotted to Government Investment Accounts. On the companion cash offering of $1,500 million, or thereabouts, of 4 percent Treasury Notes of Series B-1963, to be dated April 1, 1959, and to mature May 15, 1963, subscriptions in excess of $100,000 were allotted 50 percent, but not less than $100,000 on any one subscription, and subscriptions for $100,000 or less were allotted in full. In addition to the amount allotted to the public, $100 million of these notes were allotted to Government Investment Accounts. The over-allotment for the bonds was heavier than usual due to belated subscriptions which were timely filed, but were transmitted to the Federal Reserve Banks with special Treasury bill tenders which were not opened until after the allotments were made on Thursday, March 26. This accounted for about $14 million of the bonds and about $36 million of the notes allotted. Subscriptions and allotments were divided among the several. Federal Reserve Districts and the Treasury as follows: •4 PERCENT TREASURY BONDS OF 1969 (• Federal Reserve District Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco Treasury Total Subscriptions from savingstype investors Subscriptions from coml. banks for own account $ 14,972,000 86,168,500 9,451,500 24,334,000 13,346,000 5,469,500 43,472,000 2,387,000 10,902,000 5,439,500 7,452,500 16,222,000 17,000 $ 39,445,000 324,787,500 36,396,000 69,442,000 25,845,000 28,389,000 168,216,500 27,095,000 28,195,000 25,350,000 38,832,000 128,562,000 $239,633,500 $940,555,000 - Subscriptions from all others $ 6,770,500 221,970,000 14,792,000 8,316,500 14,576,000 7,702,500 17,633,500 B,754,000 1,892,500 3,789,000 9,320,500 6,330,000 107,000 $321,954,000 » ^ V SBOEDIAXS Tuesday, March i^ck|Si3f#f 4 fha fr€^uB^f,,J5ftpartiaent today axxnouaaad tha ambaerlption and iOlftesnt figures with respect to t h % ^ s h jiffaring of am ®&diti03aal $500 million, or tfaaraaboq&s, of 4 percent Treasury Bands of 1969,fl&tadOctober 1, If57, with intarast from jpril 1, 1959, and to mature October',!, I960. l^iicriptioiEis txxm aj#tagi"typ@ investors w i t allotted 85 peraaat, aubscriplions tixm commercialtaotafttortheir oun account wara allotted 35 percent, tm& all other gubfcriptione w r a allottad SO percent. Subaoriptlo&a for $85,000 or less from savings-t^^lnv^stox^ and cosiimarcitjk tanka, aod for $10,000 or less from all othar®, wara allotted in full* jj^aoriptiona fbr.'aore than thasa aAnianana were allotted not laaa than tha jpi^adteunua« Jja addition t& tiia'Mount allottad to tha public^ $50 million of thaaa bonds I«tra\alloHktad to Government .Jttfaatoarit Acoouota* @n tot ocM|paitem aaab offaring of $1*800. Million, or thera^torts, of 4 percent fraamiry Hbtaa of fariaa S-1963, to be daftad April 1, 1959, and to aatur© Itey 15, 1963, •ubacrlptloaa la axaeaa^of $100,000 w r a allottad SO paroaot, but not leaf than $100,000 on any one subscription^ and aubaorlgftlona for $1©0,000 or less w r e allottad in full. In -addition to tha Mount aH^ftad to tha public, $100 million of thase aotaa ware' allottad to QotfarnM&t tovestmant Accountl* fbm ovar^allotiiaant for 'the bonds una heevlar than usual dua to belated subscriptions which nara tlaaly fllad, tat *w* traaamittad to the fbdaxml llaaarva Banks with special fra&aury bill taodara which w%re not opasoad .until altar the allotments were made m fterai&y, March 26 • fhl@ ^csocnmtad for about #14 million ©f the bonds and about $36 million of the notaf allotted* SubscriptIfea and allotoents vara' dlvldad among tha Bmmml fmimml Raaarve District $ and tha fraasury as follows: 4 mm^nm^^ wmm jgij^sa fadaral Beserva District Boston Hew York Hxiladelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco treasury $ubacriptiona imm mvingatypa invaatora Subscriptions fro® mml* banks for own account ,$ 14,978,000 89,188,500 8,451,000 84,334,000 15,346,000 $ 30,445,000 384,787,500 36,396,000 69,440,000 85,843,000 88,589,000 108,216,500 87,085,000 28,195,000 25,350,000 38,832,000 128,562,000 5*419,800 43,472,000 2,587,000 10,908,000 5,439,500 7,452,500 16,222,000 17,000 %tal $239,633,500 «• *. $940,555,000 Subscriptions from all others $ 6,770,500 221,970,000 14,792,000 8,316,500 14,576,000 7,7;;C,500 17,633,500 8,754,000 1,892,500 3,i ;,ooo 9,320,500 6,330,000 107,000 $321,954,000 «• 2 ** 4 n K K N T THIASUEY B0HDS OF 1969 imn i H I m JUL.II Federal Beserve District Total $ubacrip~ tiona Eaceivad mmmmmmmmmmmmmlxmmmmmmmmmmmmmmmmtmmmmmmmmtm II 'll^ll.lll^WMWMMaiMWaWMIMIBIIillllli «III I « Boston New York Philadelphia Cleveland Richmond Atlanta Chicago gt. Louis Minneapolis Kanaa© City x^aixas San Francisco Treasury Govt. Inv. Accts. $ 61,187,500 $32,926,000 80,639,500 102,092,500 53,767,000 41,561,000 229,322,000 38,236,000 40,888,500 34,578,500 55,605,000 fotal Total Allotments I • im.n i J*QJ_ , JL4*0,UwU 124,000 $ 25,527,000 218,956,500 88,852,000 43,206,500 £*X, %j I o,OQU 16,284,000 94,566,500 14,872,000 18,925,000 15,585,OCX) 21,188,500 57,593,000 94,000 50,000,000 m&#**m>¥m9m*mm*mmtmm, &,502,142,500 $619,203,000 4 ITO0EMT TREASURY NOTES OF SERIES B-1963 MMMHWMHai Federal Reserve District Boston Mew York Cleveland Richmond Atlanta St. Louis Minneapolis Kansas City San Francisco Traaaury Govt. Inv. Accts. Total Subscriptions laceived Total AHotmants mam*****-*** 'tmrr^m^^^miitmim^ommimm^nmi^m^imtti-*^^ mmmmm^^mmmmmmmmmmmmmmmmmmmmmm. \«n I | 156,535,000 816,677,000 92,517,000 185,488,000 148,561,000 180,583,000 735,708,000 113,633,000 103,983,000 120,878,000 198,983,000 222,452,000 2,717,000 $ 84,702,000 415,896,000 58,088,000 80,963,000 80,491,000 99,762,000 393,506,000 66,973,000 84,371,000 75,873,000 102,692,000 114,281,000 1,367,000 100,000,000 mm^mtmmmm^mm&mMmmmmmSmmmmmmjm Total $3,052,481,000 $1,742,965,000 TREASURY DEPARTMENT attamaaa 3S9BBS5S3 W A S H I N G T O N , D.C. RELEASE A.M. NEWSPAPERS, Tuesday, March 31, 1959. A-U86 The Treasury Department announced last evening that the tenders for two series of Treasury bills, one series to be an additional issue of the bills dated January 2, 1 and the other series to be dated April 2, 1959, which were offered on March 26, were opened at the Federal Reserve Banks on March 30. Tenders were invited for $1,200,000,000, or thereabouts, of 91-day bills and for #1400,000,000, or thereabouts of 182-day bills* The details of the two series are as follows: RANGE OF ACCEPTED COMPETITIVE BIDS: 91-day Treasury bills maturing July 2, 1959 Price High Low Average a/ E7 T6 1 99.292 a/ 99.265 " 99.282 Approx. Equiv* Annual Rate 2.801# 2.908$ 2.81*1$ 182-day Treasury bills maturing October 1, 1959 Price 98.398 b/ 98.35U " 98.361; Approx. Equiv. Annual Rate 3.169$ 3.256$ 3.236$ Excepting one tender of $100,000 Excepting two tenders totaling $200,000 percent of the amount of 91-day bills bid for at the low price was accepted 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: District Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco TOTALS Applied For > 27,82i*,000 1,251,852,000 27,30l*,000 35,307,000 7,682,000 20,668,000 207,962,000 156,000 11, 590,000 3k.33*4,000 12,32l*,000 65,767,000 $1,716,770,000 Accepted Applied For Accepted 17,82l*,000 801,602,000 17,301*, 000 35,307,000 7,682,000 20,668,000 161,562,000 H*,156,000 11,590,000 31*,331*, 000 12 ,32l*,000 65 ,767,000 fa,200,120,000c/s I 13,1*57,000 1*92,307,000 10,3la,000 1*1*, 119,000 1,638,000 2,1*82,000 92,805,000 1,557,000 2,085,000 l*,170,000 1,601,000 30,21*5,000 $696,807,000 $ 13,1*57,000 239,1*87,000 5,31*1,000 39,119,000 1,638,000 2,1*32,000 67,875,000 1,557,000 1,285,000 2,570,000 1,601,000 23,795,000 $1*00,157,0004 $ c/ Includes $182,713,000 noncompetitive tenders accepted at the average price of 99. 3/ Includes $16,293,000 noncompetitive tenders accepted at the average price of 98.361 c;03 RELEASE A . M . nmsf kvms, Tuesday, March 31s 1959. The Treasury Department annotamed last evening that the tecoerr for two series of treasury bills,one series to be an additional issue of the bills dated <• y-usTj a, 1959, and the other series to be dated April 2, 1959, which were offered on *f^rch ?6, were opened at the Federal Reserve Banks on larch 30. Tenders were invitee for ?1,200,000,000, or thereabout®, of 91-d&y bills and for 11*00,000,000, or thereabout;-, of 182-day bills. The details of the two series are as follows: EAUG& OF ACC1FTCD 91-day Treasury bills * 182-day Treasury blll^ COMPETITIVE Bir$t featuring July 2, 1959 t maturing October 1, 155'•Uiii '^--^M»»>II»'I I.I. • •MMWMi.iMiWawiiiMMMMtMwrtW'i.&wi^^ « — — ! — — « y w in n n in m n m\i t amimmmm»m9<mmmmmmmmmmm^mm9mmwmtmmmmmMmm « » Price High Low Average 99.292 a/ 99.265 99.282 2.801$ 2.908$ 2.81*1$ t ; * »•> Approx. iquiv, \nnual ate Approx. bquiv. t Animal Fat® j * III .in 98.398 b/ 98.351* ~~ 98.361* 3.16956 3.256* 3.236$ a/ isaepting one tender of 1100,000 t/ Excepting i&m tenders totaling $200,000 To percent of the amount of 91-daj bills bid for at the low price was accepted 1 percent of the asiount of 182-day bills- bid for at the lew -rica wa?^ accepted TOTAL TEMDER- APPLIED FOR km ACCI VTEE BT fWy^Kl RE^:W.:. 'CimtiCTS. District Applied For Boston New Tork Philadelphia Cleveland Mchm oneAtlanta Chicago t. louts Minneapolis Kansas City lallas San Francisco f 27,82i*,0O0 1,251,852,000 27,3014,000 35,307,000 7,682,000 20,668,000 207,962,000 ll*,l56,000 11,590,000 3l*,33li,000 12, 321*, 000 65,767,000 TOTALS -, n, _ , ,-• ^ - A.- ,- * 17,6;'!i,ooo 801,6)2,000 l?,30ii,000 35,307,000 7,682,000 20,668,000 161,562,000 1II,1S6,000 * * * • * % I • » 9 » • • I I 11,590,000 3l4,33*i,000 : 12,321I,00J • • 65,767,000 i * •lied For it.p.ev.toci f 13,l*57,OuO 1*92,307,000 10,31*1,0 U*, 119,000 1,633,000 2,1*82,000 92,805,000 1,557,000 2,085,000 1*,170,000 1,601,-0 30,2l*5,QC£ I 13,1*57,000 239,1*87,000 5,31*1,000 39,119,0a; l,638,OoO 2,1*32,000 67,875,Out< l,557,oou 1,285,000 2,570,000 l,6y1,000 "696,807,000 «l*00,l57,OOOd/ * tl,716,770,000 n,2OO,12O,OO0t/8 c/ Includes #182,713*000 noncompetitive tenders accepted at the -»VPH'e price of 99.*;1T Z/ Includes f 16,293,000 noncompetitive tenders accepted at LU.V averse price of 98.361* TREASURY DEPARTMENT WASHINGTON, D.C RELEASE A, M. NEWSPAPERS, Friday, March 27, 1959 * A-l*85 The Treasury Department announced last evening that the tenders for $2,000,000,000, or thereabouts, of 289-day Treasury bills to be dated April 1, 1959, and to mature January 15, I960, which were offered on March 23, were opened at the Federal Reserve Banks on March 26. The details of this issue are as follows: Total applied for - $3,1*38,785,000 Total accepted - 2,000,069,000 (includes $271,795,000 entered on a noncompetitive basis and accepted in full at the average price shown below) Range of accepted competitive bids: (Excepting two tenders totaling $650,000) High Low - 97.391 Equivalent rate of discount approx. 3.250$ per annum M -97.21*2 " » M » « 3.1*36$ « Average - 97.282 « n u n » 3.386$ n « (9 percent of the amount bid for at the low price was accepted) Federal Reserve District Total Applied for Total Accepted Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco $ 115,195,000 1,577 ,693,000 1U*,21*9,000 1*09,71*7,000 67,190,000 1H*,167,000 1*39,161,000 62 ,61*7,000 62 ,61*0,000 96,91*0,000 98,836,000 250,320,000 $3,1*38,785,000 $ TOTAL 51*,975,000 696,538,000 125,31*9,000 31*0,967,000 50,7l*l*,000 89,512,000 250,061,000 32,282,000 52,11*0,000 68,570,000 7l*,836,000 161*,095,000 $2,000,069,000 4 K y KtJLMll A. If. tWMBfkFU™* Friday, Har^h 27, 1959. , - , -iJ LS ' " ' ~^-m~~— ^m^M—*~*-^m~*m—.^mm^ The Treasury Department announced last evening that the tenders for f2,0uv,Cw,0Q0, or thereabouts, April 1, 1959, of 289-day asd to mature Treasury bills to January 15, I960, which vara offered on Harefc 23, were opened at the Federal Eeaerve Banks on ^arch 26. The details of this issue are as follows: Total applied for Total accepted t3,!*38,?iS,Q00 2,000,069,000 Range of accepted competitive MMt (iscludee 1271,7*5,000 entered on a noncompetitive basis and accepted in full at the average price shown ;>elo*} (Excepting ..• tenders totaling 1650, uv^; Hi#* Low 97*391 l^uivalast rate of discount approx. 3.*-'5^.-> par annus B 97.2U2 * * » * 3.1*36* * * Average 97.282 • p if 81 3.3561 • • percent of the aeount bid for at the low price was accepted) Federal laaerva District Total Total Boston Hew York Philadelphia Cleveland Hichnond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco 1 115,195,r\j&U 1,577,693, *v r"; 11*14,219, 1*09,7147,>0Q0 67,190,fGQ0 11L ? 16?,>000 ii39,l6l,r000 62 tyjt ,\A.- .J 62,6110,,000 96,9liO,1 -—-"',.'-w 98,836,,000 250,320,,000 * 1W TOTAL v-^«^ f3,138,785,000 514,975, v 696,538,^'^ 125,3149,^00 3140,967,000 89,512,000 250,061,000 <*\*-% i • 0*" • •• "' ^ 52,11*0,000 68,570,000 7l*,83^?0\X) _„, * y y v i6iiJmlyyJZm g. 2, '000,069,000 IMMEDIATE RELEASE, Thursday, March 26, 1959. A-l*81* The Treasury today announced a 65 percent allotment to savings-type investors, a 35 percent allotment to commercial banks for their own account, and a 20 percent allotment to all other subscribers for the current cash offering of an additional $500 million, or thereabouts, of 4 percent Treasury Bonds of 1969. Subscriptions for $25,000 or less from savings-type investors and commercial banks, and for $10,0C or less from all others, were allotted in full. Subscriptions for more than these minimums were allotted not less than the minimuras. In addition to the amount allotted to the public $50 million of these bonds were allotted to Government Investment Accounts. Reports received thus far from the Federal Reserve Banks show that subscriptions for the bonds total about $1,477 million, of which about $238 million were received from subscribers in the savings-type investor groups, $918 million from commercial banks for their own account and $321 million from all others. The savings-type investors whose subscriptions were given a 65 percent allotment are as follows: Pension and Retirement Funds—public and private Endowment Funds Insurance Companies Mutual Savings Banks Fraternal Benefit Associations and Labor Unions! insurance funds Savings and Loan Associations Credit Unions Other Savings Organizations (not including commercial banks) States, Political Subdivisions or instrumentalities thereof, and Public Funds On a companion cash offering of $1,500 million, or thereabouts, of 4 percent Treasury Notes of Series B-1963, the Treasury announced a 50 percent allotment on subscriptions in excess of $100,000. Subscriptions for $100,000 or less were allotted in full- Subscriptions for more than $100,000 were allotted not less than $100,000. In addition to the amount allotted to the public $100 million of these notes were allotted to Government Investment Accounts. Reports received thus far show that subscriptions for the notes total about $2,981 million. Details by Federal Reserve Districts as to subscriptions and allotments will be announced when final reports are received from the Federal Reserve Banks. - 2 Immediately after the closing hour, tenders will be opened at the Federal Reserve Banks and Branches, following which public announcement will be made by the Treasury Department of the amount and price range of accepted bids. Those submitting 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, noncompetitive tenders for $200,000 or less for the additional bills dated January 2, 1959, (91 days remaining until maturity date on July 2, 1959; and noncompetitive tenders for $50,000 or less for the 182-day bills without stated price from any one bidder will be accepted in full at the average price (in three decimals) of 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 April 2, 1959^ in cash or other immediately available funds or in a like face amount of Treasury bills maturing April 2, 1959. Cash and exchange tenders will receive equal treatment. Cash adjustments will be made for differences between the par value of maturing bills accepted in exchange and the issue price of the new bills. The income derived from Treasury bills, whether interest or gain from the sale or other disposition of 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 treatment, as such, under the Internal Revenue Code of 1954. The bills are subject to estate, inheritance, gift or other excise taxes, whether Federal or State, but are exempt from all taxation now or hereafter imposed on the principal or Interest thereof by any State, or any of the possessions of the United States, or by any local taxing authority. For purposes of taxation the amount of 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 of 1954 the amount of 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 companies) 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. 0O0 4l8, Revised, and this notice, prescribe the terms of the Treasury bills and govern the conditions of their issue. Copies of the circular may be obtained from any Federal Reserve Bank or Branch. TREASURY DEPARTMENT gffKW.i'dKMJIi^WU^JJtll^MM^ WASHINGTON, D.C RELEASE A.M'. NEWSPAPERS, Thursday, March 26, 1959. A-483 The Treasury Department, by this public notice, invites tenders for two series of Treasury bills to the aggregate amount of $1,600,000,000, or thereabouts, for cash and in exchange for Treasury bills maturing April 2, 1959, in the amount of $1,600,275,000, as follows: 91-day bills, 1/ (to maturity date) for $.1*200,000,000, or thereabouts, representing an additional amount of bills dated January 2, 1959, and to mature July 2, 1959, and to be freely interchangeable therewith. 182-day bills, for $400,000,000, or thereabouts, to be dated April 2, 1959, and to mature October 1, 1959. 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. They will be issued in bearer form only, and In denominations of $1,000, $5,000, $10,000, $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 o'clock p.m., Eastern Standard time, Monday, March 30, 1959. Tenders will not be received at the Treasury Department, Washington. Each tender must be for an even multiple of $1,000, and in the case of competitive tenders the price offered must be expressed on the basis of 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. 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 of the face amount of Treasury bills applied for, unless the tenters -are accompanied by an express guaranty of payment by an Incorporated bank or trust company, 1/ By way of explanation, it is desirable that all bills maturing on the same date be the same issue regardless of whether they have 91 days or 182 days to run at time of original issuance. mj w y wvmzmQ W* f^^^^f^^^C^^^^'t^f^lt: TREASURY DEPARTMENT Washington A RELEASE A.M. NEWSPAPERS, Thursday. March 26, 1959 r\ mi The Treasury Department, by this public notice, invites tenders for two series of Treasury bills to the aggregate amount of $1,600,000,000 , or thereabouts, for xptX cash and in exchange for Treasury bills maturing April 2. 1959 , in the amount xpqT of $1,600,275,000 , as follows: 91 -day bills, l/(to maturity date) for $ 1,200,000,000 , or thereabouts, near ~ ~ w ^~ representing an additional amount of bills dated January 2. 1959 , &n<3to mature .Tulv 2. 195$ , &*& to be freely interchangeable therewith. 182 -day hills, for $400,000,000 , or thereabouts, to be dated A-oril 2. 1959 , %&& to mature October 1, 1959 -" "585 — $ffif 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 amoun will be payable without interest. They will be issued in bearer form only, and in denominations of $1,000, $5,000, $10,000, $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 o'clock p.m., Eastern Standard time, Monday. March 50. 1959 Tenders will not be received at the Treasury Department, Washington. Each tender must be for an even multiple of $1,000, and in the case of competitive tenders the price offered must be expressed on the basis of 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 "T7 By way of explanation, it is desirable that all bills maturing on the same date b the same issue regardless of whether they have 91 days or 182 days to run at time of original issuance. - S ~ /: Q -* •*( yj ^ from the sale or other disposition of Treasury bills does not have any special treatment, as such, under the Internal Revenue Code of 1954. The bills are subject to estate, inheritance, gift or other excise taxes, whether Federal or State, but are exempt from all taxation now or hereafter imposed on the principal or interest thereof by any State, or any of the possessions of the United States, or by any local taxing authority. For purposes of taxation the amount of 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 of 1954 the amount of 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 companies) 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 of the Treasury bills and govern the conditions of their issue. Copies of the circular may be obtained from any Federal Reserve Bank or Branch. - 2 M M W wAte&m&&*&*&.*:'*if&WA-:m &<M Qj ^-' supplied by Federal Reserve Banks or Branches on application therefor. 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 per- cent of 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. Immediately after the closing hour, tenders will be opened at the Federal Reserve Banks and Branches, following which public announcement will be made by the Treasury Department of the amount and price range of accepted bids. Those submitting 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, noncompetitive tenders for $200,000 or less for the additional bills dated January 2, 1959 , (91 days remaining until maturity date on ) a n & noncompetitive tenders for $50,000 or less for the July 2. 1959 mi — 182-day bills without stated price from any one bidder will be accepted in full at the average price (in three decimals) of 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 April 2 3,959 > in cash or mx other immediately available funds or in a like face amount of Treasury bills maturing April 2, 1959 Cash and exchange tenders will receive equal treatment. pDtJ Cash adjustments will be made for differences between the par value of maturing bills accepted in exchange and the issue price of the new bills. The income derived from Treasury bills, whether interest or gain from the sale or other disposition of the bills, does not have any exemption, as such, and loss IMMEDIATE RELEASE Wednesday, March 2g5 1959 A ""^82 The Treasury announced this morning that preliminary reports of subscriptions received for the Treasury bonds and Treasury notes, for which subscription books were opened on March 23, show that approximately $1«U billion subscriptions have been received for the %.$ billion of h% Treasury bonds of October 1, 1969, and about $2.9 billion of subscriptions have been received for the $1*5 billion of h% Treasury notes due May lg, 1963 • Allotments on account of the subscriptions will be announced early tomorrow morning after receipt of final subscription reports today, which are expected to add somewhat to the preliminary figures• oOo 4. Comparison of principal items of assets and liabilities of active national banks - Continued (In thousands of dollars) Dsck 31, 1958 Sept, 24, 1958 Dec, 31 ^Increase or decrease :Increase or decrease 1957 * 8 s i n c e Sept. 24, 1958 {since Dec. 31, 1957 : Amount :Percent Amount :Percent 56,580,477 32,215,034 2,559,100 9,906 58,715,522 29,138,727 2,412,867 11,270 LIABILITIES Deposits of individuals, partnerships, and corporations: i/emanct ...... »••••••.•••••........ 61,785,222 1 ilUe • • • • • » . . . . . » . . . . . . . . . . . . . . , . . 32,614,707 Deposits of U. S. Government......... 2,565,032 Postal savings deposits.*............ 9t905 Deposits of States and political subdivisions••.••••••••............. 8,426,763 Deposits of banks.. •••••••••••• 9t809,186 Other deposits (certified and cashiers1 checks, etc*)• • . » » « « . . . . . . J.t875»3H Total deposits.• • • « « « . . . . . . . . . . . 117*086,128 Bills payable, rediscounts, and other liabilities for borrowed money* ^3,035 Other liabilities. 1.999.002 Total liabilities, excluding capital accounts...........•••••119,128,165 8,042,579 7,878,315 8,959,581 9,483,436 1,430,623 1.796.174 109,797,300 109,436,311 38, 998,291 324 2.038.444 5,204,745 399,673 5,932 -1 9.20 1,24 .23 -,01 3,069,700 3,475,980 152,165 -1,365 5.23 11,93 6,31 -12.U 384,184 849,605 4.78 9.48 548,448 325,750 6,96 3.43 -J_M220___kQ8 7,288,828 6,64 -955,256 1.954.788 112,834,035 111,429,423 6,294,130 •95.69 .A93. 44,214 5.58 7,698,742 6.91 CAPITAL ACCOUNTS Capital stocki Common.....« « » < » « . . . . . . . . . « . . . . . . . . . . 2,947,787 Preferred. 3*492 Total... 9»...... « « « « ....... . . . . . . 2.961.279 Surplus. 4,718,459 Undivided profits.9 © . . « • « « « . « . . . . . . . . . 1,711,435 Reserves.,... • ••a«e«...*..«. .......... 287.628 Total surplus, profits and reserves••*•«••»«.«.*«.......... 6f 717t522 Total capital accounts.... 9.668.801 Total liabilities and capital accounts 128»796.966 R T 0Ss tl U.S.Gov't securities to total assets Loans & discounts to total assets Percent 27.81 40.99 2,926,967 _49_ 2,802,453 <*Z60 2.930.459 2.8Q6f;g_ 4,558,635 1,862,819 268.871 4,416,426 1,618,857 251.721 6.690.325 ?16?.nr7ft/j. 6.287.004 9.091.217 122.454.819 Percent 28.81 41.37 120.522.64n Percent 26.00 41.90 20,820 159,824 -151,384 18,757 145,334 268 3.51 -89I3 -Ia98 302,033 92,578 _2Jk£07 -175,584 6.342.147 5.I8 8.274n^ NOTE: Minus sign denotes decreas, .-£=*• Statement shoving comparison of principal items of assets and liabilities of active national banks as of December 31, 1958» Septeirfoer 7h9 1958 and December 31, 1957 (In thousands of dollars) ^vUi-LDsr ox baiiKs.«• t»•••«•••« «t».««.*..*• Dec, 31, : Scptc 24, 1958 ; 1958 4,585 4,599 {Increase or decrease {Increase or decrease Dec. 31, :__eJ3ejrt_24j^L9^ 1957 { Amount { Percent Amount ; Percent -42 -14 4,627 ASSSTS 22,402,978 Co'-xniercial and industrial loans......... jjOcins on resjL es o«a.ue* («#..•»««*«•«.«..«. 13*713.325 rJJL other loans, including overdrafts«.• lZtZ25j__ Total gross loans.*«....••••... • . c 53,852,214 Less valuation reserves*«c •.». c « t -3*355*222. Net loans.»««*•«€•«•«<*•*••• • . « 52,796,224 U. S. Government securities: Direct obligations*•.•««••.«»*.... f « . 35,821,327 Obligations fully guaranteed.....t « ft * Total U. S. securities......... * * . 35.824,760 Obligations of States and political 8,845,522 subdivisions9...*..*.......*..*.. « • * Other bonds, notes and debentures... c e e 1,836,523 Corporate stocks, including stocks of 281.419 Federal Reserve banks.«»»*.«*«««•«• * * t Total securities...•«....*•...« » e « 46i288t224_ Total loans and securities..... c c « 99,584,448 Currency and coin..•«..«•.««•««•»..« cc e 1,~675»827 Reserve with Federal Reserve banks.. * 9 9 11,139,573 Balances with other banks.««...««»«• 9 % 9 ,14.049,420 Total cash, balances with other banks, including reserve balances and cash items in process of collection Other assets Total assets 21,385,093 13.205,572 17-f022-549,. 51,683,614 1-018.842 50.664,772 35,281,644 IrMQ 35.285.074 8,688,302 1,948,482 4.76 194,331 .88 3,84 1,232,783 9.88 ^26____25JBJJ0_____. 4.20 2,385,516 4.64 ^b&L _aU6§ 2>49_ 4.21 2,293.947 4.54 539,683 1.53 4,485,560 14.31 3 .j09_ 1,124 48,68 S29_,686„ JLj^LJhhShMi 1_22_ 1,017,885 507,753 16J2ZZI5S2, _24A262 2,168,600 51,466,698 _—27»l48 50,502,277 2,131,452 22,208,647 12,480,542 99 m i . 31,335,767 2_Q2 31.338.076 7,495,878 1,880,706 II • iiw "11 ' • 7 m 111 ITH 1 m 1 156,720 .111,959 1,80 1,349,644 18.01 -5.75 -44,183 -2.35 049_„ 5.38 _JL»520__^ZZr82iL. __?6Z ikSi- 414,J70 46,200r337_ M ^ 8 1 . 7 0 9 _ , 588}Q3.Z. 8,100,462 8.85 •96,"86^/959. "2.81 91,483,986 2,?19„439 38,830 2.37 -58^,706 -3.38 " 1 ,"636 i 997 1,734,533 29,777 .27 -340,247 -2,96 11,109,796 11.479,820 M<Mya±..13-^0 a 28j^_^4j4^6j4i___j2 t 36 ,. _ 3 2 _ _ 2 _ _ 2 . 9 2 26.864,820 23.361-568 26,865.134 2,347,698 2.228.292 2,173.520 128.796.966 122.454.819 120.522.640 3,503,252 119, 4o6 6.342.147 15.00 -314 5.36 174,178 5.18 8,274.326 4.8.01 6.87 - 2 stocks, bonds, and other securities of $1,800,000,000 increased $364,000,000. Other loans, including loans to farmers, loans to banks, and other loans to individ- uals (repair and modernization and installment cash loans, and single-payment loans) of $10l800*fifflD1,000 increased about 1.9 percent since September. The percentage o net loans ai&i discounts (after deduction of valuation reserves of $1,055#990,000) total assets on December 31, 1958 was 40.99 in comparison with 41.37 in September and 41.90 in December 1957. i Total investments of the banks in bonds, stocks, and other securities aggregated $46,800,000,000, an increase of $600,000,000 since September. Included in the investments were obligations of the United States Government of $35,800,000,000 ($3^423,*000 of which were guaranteed obligations). These investments, representing 27..^. percent of total assets, were increased by $540,000,000 during the period. Otter bonds, stocks, and other securities of $10,900,000,000, including $8,800,000,000 of obligations of States and other political subdivisions, showed an increase of $48,000,000 since September. Cash of $1,676,000,000, reserves with Federal Reserve banks of $11,140,000,000, and balances with other banks (including cash items in process of collection) of $14^049^000,000, a total of $26,865,000,000, showed an increase of $3,500,000,000. Bills payable and other liabilities for borrowed money of $43,000,000 showed a decrease of $955 *000,000 since September. Total capital funds of the banks on December 31 of $9,669,000,000, equal to 8,26 percent of total deposits, were $48,000,000 more than in September when they were 8,76 percent of total deposits. Included in the capital funds were capital stock of $2,951,000,000, of which $3,500,000 was preferred stock; surplus of $4,719,000,000; undivided profits of $1,711,000,000, and capital reserves of $288,000,000. TREASURY DEPARTMENT Comptroller of the Currency Washington , H RELEASE A. M. NEWSPAPERS, Wednesday, March 25, 1959> \mS KJ A-481 The total assets reported by the 4,585 active national banks in the United States and possessions on December 31, 1958 amounted to nearly $128,800,000,000, it was announced today by Comptroller of the Currency Ray M. Gidney. The total assets showed an increase of $6,342,000,000 over the amount reported by the 4,599 active national banks on September 24, 1958, the date of the previous call, and an increase of $8,274,000,000 over the amount reported by the 4,627 banks on December 31, 1957. The deposits of the banks on December 31 were $117,100,000,000, an increase of $7•300,000,000 since September. Included in the recent deposit figures were demand deposits of individuals, partnerships, and corporations of $61,800,000,000, an increase of $5,200,000,000, and time deposits of individuals, partnerships, and corporations of $32,600,000,000, an increase of $400,000,000. Deposits of the United States Government of nearly $2,600,000,000 increased $6,000,000 in the perio deposits of States and political subdivisions of $8,400,000,000 increased $384,000,000, and deposits of banks of $9,800,000,000 showed an increase of $850,000,000. Postal savings deposits were $9,900,000 and certified and cashiers1 checks, etc., were $1,900,000,000. Gross loans and discounts on December 31, 1958 of $53,800,000,000 showed an increase of $2,200,000,000 since September. Commercial and industrial loans of $22,400,000,000 increased $1,000,000,000, while loans on real estate of $13,700,000,000 increased $500,000,000. Retail automobile installment loans of $3,800,000,000, showed an increase of $17,000,000. Other types of retail installment loans of $1,368,000,000 showed an increase of $62,000,000. Loans to brokers and dealers in securities, and others for the purpose of purchasing or carrying TREASURY DEPARTMENT Comptroller of the Currency Washington RELEASE A. M. NEWSPAPERS, Wednesday, March 25, 1959* A-481 The total assets reported by the 4,585 active national banks in the United States and possessions on December 3l# 1958 amounted to nearly $128,800,000,000, it was announced today by Comptroller of the Currency Ray M. Gidney. The total assets showed an increase of $6,342,000,000 over the amount reported by the ^,599 active national banks on September 24, 1958, the date of the previous call, and an increase of $8,274,000,000 over the amount reported by the 4,627 banks on December 31, 1957. The deposits of the banks on December 31 were $117,100,000,000, an increase of $7»300,000,000 since September. Included in the recent deposit figures were demand deposits of individuals, partnerships, and corporations of $61,800,000,000, an increase of $5,200,000,000, and time deposits of individuals, partnerships, and corporations of $32,600,000,000, an increase of $400,000,000. Deposits of the United States Government of nearly $2,600,000,000 increased $6,000,000 in the period deposits of States and political subdivisions of $8,400,000,000 increased $384,000,000, and deposits of banks of $9,800,000,000 showed an increase of $850,000,000. Postal savings deposits were $9,900,000 and certified and cashiers1 checks, etc., were $1,900,000,000. Gross loans and discounts on December 31, 1958 of $53,800,000,000 showed an increase of $2,200,000,000 since September. Commercial and industrial loans of $22,400,000,000 increased $1,000,000,000, while loans on real estate of $13,700,000,000 increased $500,000,000. Retail automobile installment loans of $3,800,000,000, showed an increase of $17,000,000. Other types of retail installment loans of $1,368,000,000 showed an increase of $62,000,000. Loans to brokers and dealers in securities, and others for the purpose of purchasing or carrying stocks, bonds, and other securities of $1,800,000,000 increased $364,000,000. Other loans, including loans to farmers, loans to banks, and other loans to individ- uals (repair and modernization and installment cash loans, and single-payment loans) of $10,800,000,000 increased about 1.9 percent since September. The percentage of net loans and discounts (after deduction of valuation reserves of $1,055t990,000) t total assets on December 31, 1958 was 40.99 in comparison with 41.37 in September and 41.90 in December 1957. Total investments of the banks in bonds, stocks, and other securities aggregated $46,800,000,000, an increase of $600,000,000 since September. Included in the investments were obligations of the United States Government of $35,800,000,000 ($3,4331000 of which were guaranteed obligations). These investments, representing 27.81 percent of total assets, were increased by $540,000,000 during the period. Other bonds, stocks, and other securities of $10,900,000,000, including $8,800,000,000 of obligations of States and other political subdivisions, showed an increase of $48,000,000 since September. Cash of $1,676,000,000, reserves with Federal Reserve banks of $11,140,000,000, and balances with other banks (including cash items in process of collection) of $14,049,000,000, a total of $26,865,000,000, showed an increase of $3,500,000,000. Bills payable and other liabilities for borrowed money of $43,000,000 showed a decrease of $955,000,000 since September. Total capital funds of the banks on December 31 of $9,669,000,000, equal to 8.26 percent of total deposits, were $48,000,000 more than in September when they were 8.76 percent of total deposits. Included in the capital funds were capital stock of $2,951,000,000, of which $3,500,000 was preferred stock; surplus of $4,719,000,000; undivided profits of $1,711,000,000, and capital reserves of $288,000,000. statement snowing comparison ox pi.ui«j.F«u. j.«=»u» ~J. = — « — — « • » "——""" " ~ ,, " i Q W as of December 31. 1958. September 24, 1958 and December 3 L 1957 (In thousands of dollars) ._ _ . • ___ — : ilncrease or decrease :Increase or decrease "' Dec 31 \ Sept. 24, *j Dec. 31, ••*"- «T*- 24' 19<S8 :flinee D!Ct ^' 1957-, j 1^58 1 1958 , 1957 « " 1 - « t 1 Percent Amount » Percent Number of banks ' j_*S ' Sg2-ZZj-gZ-I-. "^ -^ Co-ercial anTiLtrial loans 22,402,978 21,385.093 g,208.647 1.017,885 ^g^ggg 9g Loans on real estate.... g.Jg.325 ff.2M.572 ^ f f S o gSSJ 3.76 9?8,402 5__. All other loans, including overdrafts... 1 7 , " S g l g ' ° g ' ^ £ % 6 & 6 2,l68 6 0 0 4 . 2 0 2.385,516 4.64 5 Total gross loans ?*SS , SJ 5j'ffi'SS ^ 'o%4 4?1 37 ^ 3.65 91.569 9_ti_ ^^S^SSSlS^i 35.821.327 35.281,644 31,335.767 539,683 1.53 MM.5* fcg ""EST SflssS^:::::::::: zs^fciii^^—i-^ *.«**«» *»* Obligations of States and political subdivisions Other bonds, notes and debentures Corporate stocks, including stocks of Federal Reserve banks Total securities.......... Total loans and securities Current and coin..... 3 Q2 J'S'L 1,836,523 1048 482 l,?«wt«K*s ?77.82Q - 7 7 - ^ ^ ^ - ^ H I H g r 06 864 959 -^^fsHsTl» ^ jJ-J&K _! 109 796 ^ ^ Q 1.880,706 x,oou,r 267,"4? 156t720 -111,959 3.590 ^ 3 7 91 483 986 2.7191489 1734,533 ' 3 8 ^ 11479 820 2*777 1.80 1.3g.«J * • £ -5.75 -44.183 -2.35 1.29 1_2Z0 5 _ _ . n - " 5.806.515 14.17. Z-*i &V»M *& 2 7 5 ? - 5 8 , 7 0 6 -3.38 .27 -O^.f? -2.96 B^^s^t/olh^bSC.!!!:::::::: J £ g _ S J & ^ ^ ° . ^ _*__*!. y,* ye,** *& Total cash, balances with other banks, including reserve balances and cash items in P ~ ^ * ^ ,«,»».**, 23.361.568 26.865,13* leCt n f —t^T^T^ 2.228.292 2,173.520 ^r^l:;;u;:::;:::::::::::::::"i;_{8:_iS6i_i_^^ l^j^l 119, 406 U*™ -g» -" 5__ 13_178 §_1_ *•* 8t274t326___3_ Comparison or principal items or assets ana liabilities or actxve naxionai Dames - uontxnuea (In thousands of dollars) ________ * LIABILITIES Deposits of individuals, partnerships, and corporations: Demand 61,785,222 Time 32,614,707 deposits of U. S. Government 2,565,032 Postal savings deposits 9,905 Deposits of States and political subdivisions 8,426,763 Deposits of banks 9,809,186 Other deposits (certified and cashiers' checks, etc,)... 1.875.313 Total deposits 117,086,128 Bills payable, rediscounts, and other liabilities for borrowed money. 43,035 Other liabilities 1.999.002 Total liabilities, excluding capital accounts ..119,128,165 CAPITAL ACCOUNTS Capital stock: Common 2,947,787 PreferWd 3.492 Total 2.951.279 Surplus 4,718,459 Undivided profits 1.711,435 Reserves 287.628 Total surplus, profits and reserves 6.717.522 Total capital accounts 9.668.801 Total liabilities and capital accounts 128.796.966 RATIOS: Percent U.S.Gov«t securities to total assets 27#81 Loans & discounts to total assets 40.99 Capital accounts to total deposits 8.26 * * jtoount :Percent : Amount :Percent 56,580,477 32,215,034 2,559,100 9,906 58,715,522 29,138,727 2,412,867 11,270 5*204,745 399,673 5,932 -1 9.20 1.24 #23 -,01 3,069,700 3.475,980 152,165 -1,365 j,^ 5.23' 11*99* 6,31 -12.11 8,042,579 8,959,581 7,878,315 9,483,436 384,184 849,605 4.78 9*48 548,448 325,750 6,96 3.43 1.430.623 1,796.174 109,797,300 109*436,311 444.690 7,288,828 31*08 $*64 79,139 7,649,817 Jt_41 6.99 -955,256 -95.69 -39.442 -1.93 4,711 44.214 12,29 2.26 5.58 7,698,742 6,91 20,820 ,71 ~ __20.820 .71 159.824 3.51 -151,384, -8,13 18.757 6.98 145,334 -268 145.066 302,033 92,578 35.907 5.19 -7,1? 5,17 6,84 5.72 14.26 998,291 2.038.444 38, 324 1.954.788 112,834,035 111,429,423 2,926,967 3.492 2.930.459 4,558,635 1,862,819 268.871 2,802,453 3,760 2,806.213 4,416,426 1,618,857 251.721 6.690.325 9.620.784 6.287.004 9.093.217 27.197 46.017 .41 .50 430.518 575.584 6.85 6.33 122.454.819 Percent 28#81 41.37 8,76 120.522.640 Percent 26.00 41.90 8.31 6.342.147 5.18 8.274.326 6.87 6,294,130 NOTE: Minus sign denotes decrease. TREASURY DEPARTMENT W A S H I N G T O N , D.C RELEASE A. M. NEWSPAPERS, Tuesday, March 2h, 1959. A-480 The Treasury Department announced last evening that the tenders for two series Treasury bills, one series to be an additional issue of the bills dated December 26, 1958, and the other series to be dated March 26, 1959, which were offered on March 1 were opened at the Federal Reserve Banks on March 23. Tenders were invited for $1*300,000,000, or thereabouts, of 91-day bills and for $400,000,000, or thereabouts of 182-day bills. The details of the two series are as follows: RANGE OF ACCEPTED COMPETITIVE BIDS: 91-day Treasury bills maturing June 25, 1959 Price High Low Average 99.306 a/ 99.297 ~ 99.301 Approx. Equiv, Annual Rate 2.745$ 2.781$ 2.766$ 182-day Treasury bills maturing September 24, 1959 Price ,98.483 98.414 98.436 Approx. Equiv, Annual Rate 3.001$ 3.137$ 3.093$ a/ Excepting one tender of $300,000 39 percent of the amount of 91-day bills bid for at the low price was accepted 25 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: District Applied For Accepted Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco TOTALS $ 27,789,000 1,540,817,000 33,941,000 38,443,000 14,275,000 27,951,000 235,520,000 18,865,000 11,839,000 40,889,000 21,302,000 110,778,000 $ ,122,409,000 Applied For 14,789,000 $ 3,556,000 806,176,000 : 508,845,000 18,941,000 : 10,402,000 ,38,443,000 ? 13,130,000 13,714,000 i 1,619,000 25,151,000 : 3,162,000 194,600,000 83,847,000 18,865,000 6,030,000 9,973,000 4,663,000 29,364,000 5,017,000 21,302,000 2,089,000 108,802,000 28,175,000 $l,300,120,OOOb/ $670,535,000 Accepted $ 3,506,000 281,345,000 5,402,000 9,380,000 1,619,000 3,162,000 49,747,000 6,030,000 4,663.000 5,017,000 2,089,000 _J?M7£^00 $400,135,000c/ b/ Includes $259,016,000 noncompetitive tenders accepted at the average price of 99 c/ Includes $24,620,000 noncompetitive tenders accepted at the average price of ?8l436 REISASE k. M* mmmmm, Tuesday, March 24, 1959. mmmmmm9m9mmmmmmm9mrm^tim9im9m99mmmmmJmmjimi nw—» , <««-^n«. »< The Treasury Department anneuaecd last evening that toe tenders for two series ot Treasury bills, mm series to be an additional issue mttoebills dated December 26, 1958, andtoeother aeries to ba dated mrmh 26, 1959, which were offered on March 19, were opened at the federal mmmrrm Banks en March 23. Tenders were invited for $1,300,000,000, or thereabouts, of 91~day bills and for 1400,000,000, or thereabouts, of 182-day bills* The details of the two series are as followst 91-day Treasury bills 162-day Treasury bills IANGI or ACCEPTED maturing Mm 25, 1959 ag September 24> 1959 GOMPSTXTUn BIBSi Approx, Equiv. Pries WMMMWMWIN High 2. 99#301 Price 96.483 98,414 98.436 Approx. Squiv. Animal Hate 3*001$ 3*137* 3-093$ a/ Excepting one tender of VyvV)39 percent of the amount of 91-day bills bid for at the 1mm prlee was accepted 25 percent oftoeamount of 1? 2-day bills bid for at the low prlee was accepted TOTAL TSfflRBS A P P L E ® ?0R AS© ACCSPTSB SI ^D?;Si,;, KS-SRTO DISTRICTS: District Applied Far Applied For mm9mm99mmi09m*m0mm9mmmmmmmmm Boston tisv lork Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Pallas San Francisco TOTALS | 27,78? 1,51(0,817 33,9id Ik,275 27,951 235,520 000 18,865 11,839 1(0,889 000 21,302 110,778. #2,122,1(09,000 U*,78?,O0O ! • 3,556,000 8o6,176,orx? J 508,81(5,000 10,1(02,000 18,91*1,000 13,130,000 38,i*U3,000 1,619,000 13,7lU,000 3,162,000 25,151,000 83,81*7,000 194,600,000 6,030,000 18,865,000 k,663,00O 9,973,000 5,017,000 29,36U,o-C ICC,802,000 2,089,000 21,302,000 28,175,000 |1,300,120,000b/ $670,535,000 Accepted 4 M M W M I « M M M % 3,506,000 281,31(5,000 5,1(02,000 9,360,000 1,619,000 3,162,000 1(9,71(7,000 6,030,000 U,663,000 5,017,000 2,089,000 28,175,000 AOO,135,00(y Include* $259,016,000 aonecqpatltive t«nd«ri accepted at the a—rage price of 99.301 tf 9/ Include* |2l*,o20,000 noneoroetitive tendera accepted at the average price of 96.1*36 / f ili/K ^ ' W ' ^ - 3 - AQ^ local taxing authority. For purposes of taxation the amount of 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 of 1954 m. the amount of 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 companies) 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 of the Treasury bills and govern the conditions of their issue „ Copies of the circular may be obtained from any Federal Reserve Bank or Branch. ^ \mS ^ agreements with respect to the purchase or sale or other disposition of any bills of this issue, until after one-thirty o'clock p.m., Eastern Standard time, Thursday, March 26, 1959. Immediately after the closing hour, tenders will be opened at the Federal Reserve Banks and Branches, following which public announcement will be made by the Treasury Department of the amount and price range of accepted bids. Those submitting 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, noncompetitive tenders for $400,000 or less without stated price from any one bidder will be accepted in full at the average price (in three decimals) of accepted competitive bids. Payment of accepted tenders at the prices offered must be made or completed at the Federal Reserve Bank in cash or other immediately available funds on April 1, 1959, provided, however, any qualified depositary will be permitted to make payment by credit in its Treasury tax and loan account for Treasury bills allotted to it for itself and its customers up to any amount for which it shall be qualified in excess of existing deposits when so notified by the Federal Reserve Bank of its District. The income derived from Treasury bills, whether interest or gain from the sale or other disposition of 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 raent, as such, under the Internal Revenue Code of 1954. The bills are subject to estate, inheritance, gift or other excise taxes, whether Federal or State, but are exempt from all taxation now or hereafter imposed on the principal or interest thereof by any State, or any of the possessions of the United States, or by any RELEASE A. M. NEWSPAPERS, Monday, March 25, 1959. A-479 The Treasury Department, by this public notice, invites tenders for $2,000,000,000, or thereabouts, of 289-day Treasury bills, to be issued on a discount basis under competitive and noncompetitive bidding as hereinafter provided. The bills of this series will be dated April 1, 1959, and will mature January 15, 1960, when the face amount will be payable without interest. They will be issued in bearer form only, and in denominations of $1,000, $5,000, $10,000, $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 o'clock p.m., Eastern Standard time, Thursday, March 26, 1959. Tenders will not be received at the Treasury Department, Washington. Each tender must be for an even multiple of $1,000, and in the case of competitive tenders the price offered must be expressed on the basis of 100, with not more than three decimals, e. g., 99.925. Fractions may not be used. It is urged that tenders be made on the printed forms and forwarded in the special envelopes which will be supplied by Federal Reserve Banks or Branches on application therefor. Others than banking institutions will not be permitted to submit tenders except for their own account. Tenders will be received without deposit from incorporated banks and trust companies and from responsible and recognized dealers in investment securities. Tenders from others must be accompanied by payment of 2 percent of the face amount of Treasury bills applied for, unless the tenders are ac- companied by an express guaranty of payment by an incorporated bank or trust compan All bidders are required to agree not to purchase or to sell, or to moke any 4t RELEASE A. M. MBH8lAnR8. Monday, March 25, 1959* +THJ00$mmmmu*mimmmmmmmiBmmmmm*mmmmmmmtmmmmmm & - V ^/:/ MMH I > — > 1!he Treaeury Department, by this public notice, Invites tenders for $2,000,000,000, or thereabouts, of 289-day Treasury Mils, to tfe Issued on a discount basic under competitive sad noncompetitive bidding as hereinafter provided. The Mils of this series wiH "he dated ApgiT'l, 19S9, and will mature January 15, I960, when the face saioutst will be payable without interest. They will be Issued in bearer form only, and in denominations of $1,990, $5,000- $10,000, $100,000, $500,000 end $1,000,000 (maturity value) * Tenders will be received at Federal Reserve Banks and Branches up to the closing hour, oae*thirty ofeldek p.m., gaetera gta&d&rd tlaie, Thursday, March 26, 4 ' f) , . - 1959* Tenders will not be received at the Treasury Department? Washington. Each tender must be for ah even multiple of $1,000, and in the case of coiapetitive tenders the priee off ered must be expressed on the basis of 100, with not more than three decimals, e. g., 99.925. Fractions laay not be used. It is urged that tenders be made on the printed fbrms and fbru&rded in the special envelopes which will he supplied by Federal Beeerve Banks or Breaches on application therefbr. Others than l&aaking institution® irHi not be permitted to submit tenders exeept for thMr dm. account• spenders will be received TH tho t deposit from incorporated banks and trust coraspanies and from responsible and recognised dealers In investment securities, lenders fro® others <Rust. be accc»#enled ty payment of 2 per* cent of the face amount of Treasury Mils applied for, unless the tenders are aceorapaiiied by an express guaranty of payment % en incoiporated bank or trust compear • All bidders are rehired to agree not to purchase or to sell, or to make any - 2 ** agreements with respect to the purchase or sale or otnerdisposition of any MUs of this issue, until after one-thirty o'clock p.m., lastera Standard time, ftmrsday, March $6, 1959* lasaediately after the closing he^S, tenders will4be opened at the Federal He* serve Banks and Branches, following whioh public announcement will be made by the Treasury Apartment of the aaaount and prics^range of accepted bid*. Those submmTj. P /»-* mitting tenders will be. advised of the &cc^pta&ee orfrejection thereof. The Sec- retary of the Treasury expressly reserves the li^ht to aseept ©r reject any or all 'a mi ' mem *•&*> $>*9 *-*- tenders, in whole or in part, and his action in any such respect shall be final. Subject to these. re^rvmtiCMas,^nc^c<Mpetitiv^ tenders for $400,OCX) or lees without -' "" '" -—9F stated price from an,/ one bidder will <b*) accepted in full at the average price (in three decimals) of accepted competitive oias.^ FsMienfc of accepted tenders at the prices offered must bt niade.or^ completed at tthe Inderal Beserve Bank in cash or ^ other immediately^available funds on April 1, a^oS,^ provided* however, any qualified depositary will be permitted to make pa^fment by credit in its Treasury tax and loan account for Treasury bills allotted to it for itself and its customers up to any amount for which it shall be qualified in excess of existing deposits when so notified by the Federal Reserve Bank of its District. The income derived from Treasury bills, whether interest or gain from the sale or other disposition of the bills, does not have any exemption, as such, and loss from the sale or other disposition of Treasury biHs does not have any special treat ment, as such, under the Internal Revenue Code of 1954. The bills are subject to estate, inheritance, gift or other excise taxes, whether Federal or State, but are exempt from all taxation now or hereafter imposed on the principal or interest thereof by any State, or any of the possessions of the United States, or by any a* 3 — local taxing authority. For purposes of taxation the amount of 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 of 1954 the amount of 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 companies) 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. 413, Revised, and this notice, prescribe the terms of the Treasury Mils and govern the conditions of their issue. Copies of the circular may be obtained from any Federal Reserve Bank or Branch. - 2 General requirements for all three issues The Secretary of the Treasury reserves the right to reject or reduce any subscription, to allot less than the amount of bonds or notes applied for, and to make different percentage allotments to varioudblasses of subscribers. Commercial banks and other lenders are requested to refrain from making unsecured loans, or loans collateralized in whole or in part by the notes or bonds subscribed for, to cover the deposits required to be paid when subscriptions are entered, and banks will be required to make the usual certification to that effect. All subscribers to all three issues are required to agree not to purchase or to sell, or to make any agreements with respect to the purchase or sale or other disposition of the securities subscribed for under this offering, until after midnight, March 23, in the case of the notes and bonds, and until after the cloli ing hour for tenders on March 26 in the case of the bills* Any subscriptions for the notes or the bonds addressed to a Federal Reserve Bank or branch, or to the Treasurer of the United States, and placed in the mail before midnight, March 23, will be considered as timely. Full details regarding the offering of Treasury bills will be released for morning newspapers Monday, March 23. The new issues may be paid for by credit in Treasury tax and loan accounts. TREASURY DEPARTMENT WASHINGTON, D.C. IMMEDIATE RELEASE, Thursday, March 19, 1959 A - ^78 The Treasury Department announced today that it is offering for cash subscripticj $2,000 million, or thereabouts, of 289-day Treasury bills to be dated April 1, 1959, and to mature January 15, i960. $1,500 million, or thereabouts, of kfy Treasury notes of Series B-1963, at par, to be dated April 1, 1959, and to mature May 15, 1963. $500 million, or thereabouts, of additional 4$ Treasury bonds of 1969, at par, originally issued October 1, 1957, and maturing October 1, 1969, with interest from April 1, 1959. The subscription books will be open for the Treasury notes and bonds only on Monday, March 23, 1959. The Treasury bills will be sold at auction on Thursday, March 26, 1959? Treasury bills The inclusion in the current financing of a Treasury bill to be issued on an auction basis and to mature January 15, i960, is the first step in a move by the Treasury looking to the eventual establishment of a pattern of one-year maturities on quarterly dates in January, April, July and October, which after their initial issue will be redeemed at maturity and replaced with one-year obligations offered on an auction basis. Treasury notes Subscriptions to the May 1963 notes from commercial banks, for their own account, will be received without deposit, but will be restricted to 50$ of the combined capital, surplus and undivided profits of the subscribing bank and subscriptions from all others must be accompanied by payment of 2$ of the amount of notes applied for not subject to withdrawal until after allotment. Treasury bonds Subscriptions to the October 1969 bonds from commercial banks, for their own account, and from States, political subdivisions or instrumentalities thereof and public pension and retirement and other public funds will be received without'deposit, Subscriptions from all others must be accompanied by payment of 20$ of the amount of bonds applied for, not subject to withdrawal until after allotment. Subscriptions from commercial banks for their own account will be restricted in each case to an amount not exceeding 5 percent of the combined amount of time certificates of deposit (but only those issued in the names of individuals, and of corporations associations, and other organizations not operated for profit) and of savings deposits; or 15 percent of the combined capital, surplus and undivided profits, of the subscribing bank, whichever is greater. NET UNITED STATES GOLD TRANSACTIONS WITH FOREIGN COUNTRIES AND INTERNATIONAL INSTITUTIONS January 1, 1958 - December 31, 1958 (in millions of dollars at $35 per fine troy ounce) Negative figures represent net sales by the United States; positive figures, net purchases First Quarter 1958 Country Argentina ....... A us una . . . . . . . . Bank for International Settlements • • . . . Belgium Chile Denmark . . . . . . . Third Quarter 1958 $12.0 -25.9 —— — Fourth Quarter 1958 •155.2 -58.3 Calendar Year 1958 |i j! i -S7U.I1 -60.7 -28.0 |j -178.3 -1U.2 -lh3.6 -113.U -58.3 3.0 |1 iI i\ -329.1* 3.0 -17.0 \ 1J — j i -7.1 . . . . . -168.8 Italy -2.3 -123.8 ;j -7.1 -2.3 -3W.8 -30.1 -260.9 6.9 -20.0 31.7 -2.5 :| -215.2 :•; -900.0 1 -56.3 ij 1 Japan ...•••••. Netherlands . . . . . . Philippines ...... Portugal. Spain Surinam ....... Switzerland ...... United Kingdom • • • • Vatican City • • • • • All Other ..•••#• -la. 9 -62.9 -^'.h -30.1 -109.7 6.9 -20.0 • 9 367.2 -81*.2 •415.1 -17.0 International Monetary Fund Iran Second Quarter 1958 — — — -5.0 -300.0 -1.2 U -135.1 -75.1 -IJ5O.O -5o.o -1.5 -2.0 -.8 -1.1 31.7 -2.5 -100.0 ; i i l ! -.7 -3.5 -^ 8 y 9^J Total -$377.U -fil,08l.2 -SU88.5 Figures may not add to totals because of rounding -$3h7.1 1 -$2,2?U.2 TREASURY DEPARTMENT WASHINGTON, D.C. RELEASE A.M. NEWSPAPERS Friday., March 20, 1959 A-U77 The Treasury Department today made public a report of monetary gold transactions with foreign governments, central banks and international institutions for the calendar year 1958* For the year as a whole, the net sale of gold by the United States amounted to $2,29k million. A table showing quarterly and annual net transactions for 1958, by country, is printed on reverse side. RELEASE A.M. NEWSPAPERS Friday, March 20, 1959 A-U77 The Treasury Department today made public a report of monetary gold transactions with foreign governments, central banks and international institutions for the calendar year 1958. For the year as a whole, the net sale of gold by the United States amounted to $2,29U million. A table showing quarterly and annual net transactions for 1958, by country, is printed om reverse side. NET UNITED STATES GOLD TRANSACTIONS WITH FOREIGN COUNTRIES AND INTERNATIONAL INSTITUTIONS January 1, 1958 - December 31, 1958 (in millions of dollars at $35 per fine troy ounce) Negative figures represent net sales by the United States; positive figures, net purchases First Quarter 1958 Country Argentina • e . . e . e Austria . . . . . . . . Bank for International Settlements . • . 9 . Belgium •••••••• Chile . . . . . . . . . Denmark . . . . . . . . Second Quarter 1958 —— ~ Third Quarter 1958 Fourth Quarter 1958 $12.0 -25.9 $55.2 -58.3 -$i5.l -$7l*.l* -60.7 -28.0 -lli.2 -11*3.6 -113.1* -58.3 3.0 -17.0 I l! |! ;•• i Calendar Year 1958 $67.2 -81*.2 -178.3 |' i! »I -329.U 3.o -17.0 1 International Monetary Fund Iran Italy Japan .•••.•••• Netherlands Philippines . . . . . . f i -7.1 -168.8 -2.3 -123.8 -56~3 -62.9 -l*6~h -30.1 -109.7 6.9 OB«M -1*1.9 -7.1 -2.3 -31*8.8 1!i |ii !Ii -30.1 -260.9 6.9 c 5 Portugal Opain -20.0 # # . e e . e e . . . Surinam — — •.•••••• Switzerland ....•• United Kingdom • • • • Vatican City ..... All Other -5.0 -300.0 -1.2 Total -$377.U -135.1 -1*50.0 -1.5 31.7 -2.5 -2.5 il -215.? ! ! "< -900.0 -3.5 ii -3.8 -2.0 -.8 -1.1 -.7 -$1,081.2 -$1*88.5 -$3l*7.1 Figures may not add to totals because of rounding -20.0 -100.0 -75.1 -5o.o |! ! || j -$2,29l*.2 <>• - 2 Immediately after the closing hour, tenders will be opened at the Federal Reserve Banks and Branches, following which public announcement will be made by the Treasury Department of the amount and price range of accepted bids. Those submitting 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, noncompetitive tenders for $200,000 or less for the additional bills dated December 26, 1958, (91 days remaining until maturity date on June 25, 1959) and noncompetitive tenders for $50,000 or less for the 182-day bills without stated price from any one bidder will be accepted in full at the average price (in three decimals) of 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 March 26, 1959, in cash or other immediately available funds or in a like face amount of Treasury bills maturing March 26, 1959* Cash and exchange tenders will receive equal treatment. Cash adjustments will be made for differences between the par value of maturing bills accepted in exchange and the issue price of the new bills. The income derived from Treasury bills, whether interest or gain from the sale or other disposition of 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 treatment, as such, under the Internal Revenue Code of 1954. The bills are subject to estate, inheritance, gift or other excise taxes, whether Federal or State, but are exempt from all taxation now or hereafter imposed on the principal or interest thereof by any State, or any .of the possessions of the United States, or by any local taxing authority. For purposes of taxation the amount of 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 of 1954 the amount of 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 companies) 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. 0O0 4l8, Revised, and this notice, prescribe the terms of the Treasury bills and govern the conditions of their issue. Copies of the circular may be obtained from any Federal Reserve Bank or Branch. TREASURY DEPARTMENT ~ — ~ * W Jill JH''1.1 IIHLW!ll1BaaWBMngBBg~8Sm WASHINGTON, D.C. RELEASE A.M. NEWSPAPERS, Thursday, March 19, 1959 * A-476 The Treasury Department, by this public notice, invites tenders for two series of Treasury bills to the aggregate amount of $1,700,000,000, or thereabouts, for cash and in exchange for Treasury bills maturing March 26, 1959. in the amount of $1,600,759,000, as follows: 91-day bills, ^/ (to maturity date) for $ 1,300,000,000, or thereabouts, representing an additional amount of bills dated December 26, 1958, and to mature June 25, 1959, and to be freely interchangeable therewith. 182-day bills, for $400,000,000, or thereabouts, to be dated March 2b, 1959, and to mature September 24, 1959. 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. They will be Issued in bearer form only, and In denominations of $1,000. $5,000, $10,000, $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 o'clock p.m., Eastern Standard time, Monday, March 23, 1959. Tenders will not be received at the Treasury Department, Washington. Each tender must be for an even multiple of $1,000, and in the case of competitive tenders the price offered must be expressed on the basis of 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. 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 of the face amount of Treasury bills applied for, unless the tenors are accompanied by an express guaranty of payment by an Incorporated bank or trust company. Y/ By way of explanation, it is desirable that all bills maturing on the same date be the same issue regardless of whether they have 91 days or 182 days to run at time of original issuance. 7^ >:«>;§;4»;t:cw: TREASURY DEPARTMENT Washington :r.*wvAte:G*Ww RELEASE A.M. NEWSPAPERS, Thursday. March 19, 1959 / • The Treasury Department, by this public notice, invites tenders for tvo series of Treasury bills to the aggregate amount of $1,700,000,000 , or thereabouts, for —m cash in exchange ,for Treasury bills maturing of $ and 1,600,759,000 as follows: March 26, 1959 , in the amount 91 -day bills,±/(to maturity date) for $1,500,000,000 , or thereabouts, representing an additional amount of bills dated December 26, 1958 , and pEr—'— to mature June 25, 1959 , and to be freely interchangeable therewith. m 182 -day bills, for $ 400,000,000 , or thereabouts, to be dated Mkrch 26, 1959 , and to mature September 24, 1959 . 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 amoun will be payable without interest. They will be issued in bearer form only, and in denominations of $1,000, $5,000, $10,000, $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 o'clock p.m., Eastern Standard time, Monday; March 25, 1959 . Tenders will not be received at the Treasury Department, Washington. Each tender must be for an even multiple of $1,000, and in the case of competitive tenders the price offered must be expressed on the basis of 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 1/ By way of explanation, it is desirable that all bills maturing on the same date "" be the same issue regardless of whether they have 91 days or 182 days to run at time of original issuance. - 2- supplied by Federal Reserve Banks or Branches on application therefor. 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 per- cent of the face amount of Treasury bills applied for, unless the tenders are accom panied by an express guaranty of payment by an incorporated bank or trust company. Immediately after the closing hour, tenders will be opened at the Federal Reserve Banks and Branches, following which public announcement will be made by the Treasury Department of the amount and price range of accepted bids. Those submitting 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, noncompetitive tenders for $200,000 or less for the additional bills dated December 26, 1958 , (91 days remaining until maturity date on June 25, 1959 ) and noncompetitive tenders for $50,000 or less for the 182-day bills without stated price from any one bidder will be accepted in full at the average price (in three decimals) of 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 March 26, 1959 , in cash or other immediately available funds or in a like face amount of Treasury bills maturing March 26, 1959 . Cash and exchange tenders will receive equal treatment. Cash adjustments will be made for differences between the par value of maturing bills accepted in exchange and the issue price of the new bills. The income derived from Treasury bills, whether interest or gain from the sale or other disposition of 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 treatment, as such, under the Internal Revenue Code of 1954. The bills are subject to estate, inheritance, gift or other excise taxes, whether Federal or State, but are exempt from all taxation now or hereafter imposed on the principal or interest thereof by any State, or any of the possessions of the United States, or by any local taxing authority. For purposes of taxation the amount of 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 of 1954 the amount of 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 companies) 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 of the Treasury bills and govern the conditions of their issue. Copies of the circular may be obtained from any Federal Reserve Bank or Branch. TREASURY DEPARTMENT WASHINGTON, D.C. IMMEDIATE RELEASE, Monday, March 16, 1959. A-475 During February 1959, market transactions in direct and guaranteed securities of the government for Treasury investment and other accounts resulted in net purchases by the Treasury Department of $22,992,650 oOo TREASURY DEPARTMENT L 5 - ." .'"'. < 7. ^•'•irr':j-^Vr:i^^g^.'.n|liHl/1,^T!'jui,^Mij|llifwtigTg~ •—',"?,'•'••"„",',~ WASHINGTON, D.C ^ IMMEDIATE RELEASE, During January 1959, market transactions in direct and guaranteed securities of the government for Treasury Investment and other accounts resulted in netjpurc liases by the Treasury Department of oOo M&reii 4t 1*59 &#:>HA*4BiJ# TO Mm l i l f M L* SP0881 the tmllm&m wawMttoat mm ih$ Q®vm%*mmn% for t aonth *f Wmlm-jAgy 1959s &m tla* o^her account* 138,791,500.00 15*7*B.850*00 ^ 2 2 . v -j 2.65_.« 'X3 JJ.I HIiffiTt'rJt«-.»m in 'I'll V *•«!•* * in •! i wrmwiirrHT"TT ' ill n"- " - * — — ^ — ' '~ kft sTr& LVlft&Mi * f IJmramltB & <iv/K te«#te#&t« TREASURY DEPARTMENT ? r w » ' ! ~ r : . . s ~ ^ y--^-,"gr^av*"^1 ""^P, WB1> • • ^ — — p — — . _ _ , ia^a& - ,ac . WASHINGTON, D.C. RELEASE A, M. NEWSPAPERS, Tuesday, March 17, 19S9. A-U7U The Treasury Department announced last evening that the tenders for two series of Treasury bills, one series to be an additional issue of the bills dated December 18, 1958, and the other series to be dated March 19, 1959, which were offered on March 12, were opened at the Federal Reserve Banks on March 16. Tenders were invited for 11,300,000,000, or thereabouts, of 91-day bills and for $1*00,000,000, or thereabouts, of 182-day bills. The details of the two series are as follows: RANGE OF ACCEPTED COMPETITIVE BIDS: ji Jr 182-da2j Treasury bills maturing September 17, 1959 Approx. Equiv. : Annual Rate j: Price Approx. Equiv. Annual Rate i: ii : 98.1A 98.14i5 91-day Treasury bills maturing June 18, 1959 Price High Low Average 99.308 99.297 99.302 2.738£ 2.781% 2.7632 3.038$ 3.076£ 3.058% 6 percent of the amount of 91-day bills bid for at the low price was accepted 1*1* 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: District Applied For Accepted j\ Applied For Accepted Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas • San Francisco $ $ \\ $ 13,lH*,000 \x 521,667,000 j\ 9,051,000 \x 17,391,000 1,102,000 Jx \\ 3,603,000 Jx 95,639,000 jx 6,011,000 \x 5,126,000 sx 5,U3,000 jx 1,905,000 Jx 1*6,981*,000 $ 12,359,000 225,1*01*, 000 3,751,000 11,91*1,000 602,000 3,203,000 81*,l37,000 3,761,000 2,626,000 1*,61*3,000 1,755,000 1*5,579,000 TOTALS 26,651^,000 1,37^,910,000 30,730,000 56,256,000 12,612,000 Ui,151,000 231*, 608,000 1*2,177,000 19,592,000 50,591,000 38,1*85,000 91,67li,000 $2,019,1^0,000 16,1*96,000 767,188,000 15,230,000 1*9,875,000 12,1*12,000 3l*,l*l*9,000 179,123,000 1*1,1*72,000 17,602,000 1*1*, 591,000 31*, 059,000 87,79a,000 $1,300,591,OOQa/i: $727,006,000 $1*00,06l,000b/ a/ Includes $276,803,000 noncompetitive tenders accepted at the average price of 99.302 b/ Includes $27,910,000 noncompetitive tenders accepted at the average price of 98.J*5l» \y Ky 4j£.' mm . a- •• . ftttday, March 1?, vm \ The TjTMtury rapartetmt annoiiiiead last evening that the freaeury bills, OB# f f-\ v *T;f &> «>-^ai<-- rt for tiro series of series to hm an additional ;-£-B# of the 1 13, .-«M 1958, and the other aorlas to be datod March 19, 1959, vhieh were offered on March 12, were openedat tha 'Federal Seaarva Banks tm March 16. Tendera Mara invited for i1!,300,000,000, or thereabouts, of fl«*6mj bill* and for * & 0 0 , 0 Q C , 0 0 0 , O J ? t' .£rc^Ab-rHi.v.-£ of 18?-day bill®* lfee RAflRF OF ACrr.-r-T 18£~day Treasury bills maturing Sapt«bar 17, 1959 91-day Traaaury bills maturing Juna 18, 195? w*- * ft •n?^ -K Approx* Equiv. i-v /»v » ; "j % * • /.. '»•" :-*•"-. "i* r»-; «if• % 1 ?-.*\ f\ ^c .<««^W»»^'J> JUiihliilWBWBHiiWJilniiiliiiiinmiiwa *.** p-4 JtJin^iMMlWulWlllllltMMWhWI'llliliifTi III II 98«li^4 Low 99.29? 99.308 6 percent of the a m Ui percent of the mm 3*0/Uy*'r * i yjt.4 3*053% of 91-Hfey M i l e bid for at t*he lot* prie^ vms accepted • bills bid for at tha low erica ^as accented TOTAL TAMPERS APPLIES FOft ASD ACC-Pta BY FErEEIL RSSfcRVI District Applied For Beeton lew lork Philadelphia Cleveland Richmond Atlanta Ch ic& "^ St. Louis Miimeapolic Kansas City Dallas San Francisco TOTALS I 26,65b,ooo •?v;! Y f p . Accaptad MMMli|»llnmiWlii»irH|l'Hlfl«IIIHllU|ll>llllflUlllB>c I,J7I4,910,OOC» 30,730,000 56,256,000 12,612, 000 U,1£L,000 Ii2,l?7,000 19,592,000 50,591,000 38,135,000 91,6?ij,ijui' «2,019,1*1*0,000 16,1*96,000 t j/** ? tt*3 y\;- 0(j£|-!'>J£* j> v'sA^ i 15,230,000 l|9a 12,^12,000 3l3,Mi9,000 1^,123,000 la, Ji7?,ooo 17,602,QUO Mi,591,000 314,059,000 S7,79h,QOO I i Z > 13,1114,000 521,667,000 9,051,0-00 17,391,000 **> g JL\J£i , w v s 3,603.000 1 95,6J5,O0O : j 6,011,000 5,l?6,ooo * i? , ***** , W v- 5 * 1,905,000 1*6,9814,000 §1,300,591,000a /s '"UMft'ir w i l l l « MJ*mmWWPW»fWiW 12 f ;^V,000 c 4E jj , «!•-< W * * » W-* irf' v.- 3,751,000 ll,Ful,000 602,000 3,203,000 s 8 ,1*37,000 3,76l,^ic 2,626,000 !,,6L3,000 1,755,000 ««winwwtw ??7,Q06,GQQ »/ Includes 1276,803,000 noncompetitive tenders accepted at the average y Includes 127,910,000 noncompetitive tenders cc oed at the average V)ih- r -^00,06l,0«JUb/ price of WvyQc rice of 98.1*514 - 2 - *%V retirement plans to all employees. If all taxpayers were allowed deductions for retirement savings in accordance with the terms of the bills, it is estimated that the revenue loss would be $3 billion a year. For the reasons stated, it is hoped that H. R. 9 and H. R. 10 will not be adopted. With warm regards, Sincerely yours, /s/ Robert B. Anderson Secretary of the Treasury oOo TREASURY DEPARTMENT 36; O K, WASHINGTON, D.C. RELEASE A. M. NEWSPAPERS Sunday, March 15, 1959 A-473 The following letter has been sent by Treasury Secretary Robert B. Anderson to The Honorable John W. Byrnes, House of Representatives: My dear Mr. Byrnes: This is in reply to your telephone request for Treasury's current position on H.R. 9 and H. R. 10, bills "to encourage the establishment of voluntary pension plans for self-employed individuals." I am glad to reaffirm Treasury opposition, for the reasons cited below, as expressed in a report and appearance before the Committee on Ways and Means by Mr. David A. Lindsay, Assistant to the Secretary for Tax Legislation. These bills would permit employers or self-employed persons to establish their own private pension plans without requiring them to make any provision for the retirement of their employees. This is difficult to justify, especially since about two-thirds of all employees are not covered by any pension plans. There is no effective means provided under the two bills to prevent or discourage the use of the specified savings before the age of retirement. Consequently, persons with fluctuating incomes would be able to use the plan for averaging their incomes, providing an advantage not available to other taxpayers. H. R. 9 and H. R. 10 would involve very substantial revenue losses which would seriously affect our budgetary situation. We have estimated this loss at $365 million on a full year's basis, assuming eligible persons invested only part of the allowable amounts. About 80 percent of the total tax relief would go to the self-employed with incomes over $10,000. We do not believe that selective tax relief of this magnitude should be permitted at a time when general tax relief is not Adoption of H. R. 9 and H. R. 10 would be a precedent for possible. an extension of the privilege of deducting contributions to io^ RELEASE A. M. NEWSPAPERS Sunday, March 15, 1959 RS A-473 The following letter has been sent by Treasury Secretary Robert B. Anderson to The Honorable John W. Byrnes, House of Representatives: My dear Mr. Byrnes: This is in reply to your telephone request for Treasury's current position on H.R. 9 and H. R. 10, bills "to encourage the establishment of voluntary pension plans for self-employed individuals." I am glad to reaffirm Treasury opposition, for the reasons cited below, as expressed in a report and appearance before the Committee on Ways and Means by Mr. David A. Lindsay, Assistant to the Secretary for Tax Legislation. These bills would permit employers or self-employed persons to establish their own private pension plans without requiring them to make any provision for the retirement of their employees. This is difficult to justify, especially since about two-thirds of all employees are not covered by any pension plans. There is no effective means provided under the two bills to prevent or discourage the use of the specified savings before the age of retirement. Consequently, persons with fluctuating incomes would be able to use the plan for averaging their incomes, providing an advantage not available to other taxpayers. H. R. 9 and H. R. 10 would involve very substantial revenue losses which would seriously affect our budgetary situation. We have estimated this loss at $365 million on a full yearfs basis, assuming eligible persons invested only part of the allowable amounts. About 80 percent of the total tax relief would go to the self-employed with incomes over $10,000. We do not believe that selective tax relief of this magnitude should be permitted at a time when general tax relief is not possible. Adoption of H. R. 9 and H. R. 10 would be a precedent for an extension of the privilege of deducting contributions to - 2retirement plans to all employees. If all taxpayers were allowed deductions for retirement savings in accordance with the terms of the bills, it is estimated that the revenue loss would be $3 billion a year. For the reasons stated, it is hoped that H. R. 9 and H. R. 10 will not be adopted. With warm regards, Sincerely yours, /s/ Robert B. Anderson Secretary of the Treasury oOo 36J >?.. ^yyiM^^y A r sy {..y-^y *\ ' r% --^ ,.J*J \J tmm • j % dear Mr« Syraes: - - - • • - • - / • ; </ ^ ffais is in reply to yourfcelepboaerequest for treasury's current position cm 1* 1« 9 as& H. H. 10, bills to encourage thefl^rtH#M:rihi^w%of voluntery pe^aicsi. plaa&s for si£Lf-OTpioyed individuals". X am glad to reaffirm Treasury apposition, for the reasons cited belos*. &s @XBar@£&a4* toNPMPfln_ttlte by Mr. David A. Lindsay, Aasisteat to tbe Secretary f o r * * ! * lattarV^V rap^^^*"^^^^^^y» and lto«»ry Tiiese M i l s would pexmlt esaploy^rs or self-ec^loyed fersoiis to establish tiieir m m private pension plans without requiring them to saute ^yay proTisiou turn Wm retiresient of their sj^loyees. !Htts is difficult to justify, e$p§ci&&2^ sine© about tw~tbirds of a n employees are not covered by a®y peiision ] 0 A & 8 . !0tere is no €f£Mtrl*» sKMUft pfwi#&4 im&ar ttee two M i l s to pBevwofe or dtscoanc» the n$e of the specified sssrixijpi before tte age of vtt&raaBOfc* Ccm^g^rtiy # peraosis witfa ftnAmMiii tAocnes <mti& be able to sn&e -tte yaUm fbr aamrag&ag tfelr l*s*asBes, providii^ « advaat^^e not available to otter taxpayers. X* H. 9 and 1. R, 10 w u l d ismLro ^@ry substaati&X revenue IOOMS idaicii w u l d seriously a£Fect oar Imdgetary aitmtloii. We b&ve estimted t M s 1 M S at $355 millicm aa m* full ymx'm basis, asswdiag eligible persons invested aaly part of the allocable - 2 aaounts. About So percent of tte total tax relief would go to the self-esagployed ^ith incoasses over $10,000 • We do not believe tbat selective tax relief of this magnitude should be peimittcd at a time *te& general tax relief is not possible. Adoption of X* E* 9 and E. B* 10 would be a preeede&t for an eactension osf tte f H y f l f y of detoctlB|| contributions to retirement ^**rm* to ell csaailovees. If ell taitoavers were allowed deductions for retirOTeiit saviia^s in accord^jace vltfc tte terras of tte bills, it is estimated that tte revenue loss vculd be $3 billion a year. For tte reasons stated, it is hoped that X. B. 9 &ad ¥ill not be adopted • With warm regards, Sincerely yours, • H. 10 - 2 - Commodity Period and Quantity : Unit 2 Imports of : as of :Quantity;Feb. 28. 1959 •solute Quotas; sanuts, shelled, unshelled, ilanched, salted, prepared, or reserved (incl* roasted peamts but not peanut butter) ... re. rye flour, and rye meal • ltter substitutes, including Dutter oil, containing 45$ or more butterf at 12 mos. from August 1, 1958 12 mos. from July 1, 195B Canada Other Countries Calendar Year 1,709,000 Pound 182,280,000 3,720,000 Pound Pound 182,178,566^ 1,200,000 Pound Quota Filled 16,633,591 2,231,680 702,000 Pound Pound Pound 3,810,055* (^uota Filled (^uota Filled 1,518,323* Oct. 31, 1959 Argentina Paraguay Other Countries - Imports through March 9. TREASURY DEPARTMENT Washington, D. C* *"> S*. IMMEDIATE RELEASE A-472 Thursday, March 12, 1959. The Bureau of Customs announced today preliminary figures showing the imports for consumption of the commodities listed below within quota limitations from the beginning of the quota periods to February 28, 1959, inclusive, as follows: Commodity Period and Quantity : Unit : Imports : of : as of ;Quantity; Feb. 28. IV5V Tariff-Rate Quotas; Cream, fresh or sour Calendar Year Whole milk, fresh or sour Calendar Year 3,000,000 Gallon Cattle, 700 lbs. or more each (other than dairy cows)..... 1,500,000 Gallon 23 29 Jan. 1, iy59 March 31, 1959 120,000 Head 21,068 12 mos. from April 1, 1958 200,000 Head 16,683 Fish, fresh or frozen, filleted, etc., cod, haddock, hake, pollock, cusk, and rosefish ... Calendar Year 36,919,874 Pound Quota Filled Tuna fish .« Calendar Year To be announced Pound 6,5B3,954 Cattle, less than 200 lbs. each. White or Irish potatoes: Certified seed..••••••• Other 12 mos. from 114,000,000 Sept. 15, 1958 36,000,000 Pound Pound 54,039,603 3,248,343 Walnuts ......... Calendar Year 5,000,000 Pound 1,108,605 Alsike clover seed 12 mos. from July 1, 1958 3,000,000 Pound 2,595,7S9 12 mos. from July 1, 1958 80,000,000 Pound 3,373,530 Pound 3,811,958 Peanut oil Woolen fabrics Calendar Year To be announced (1) Imports for consumption at the quota rate are limited to 9,229,968 pounds during the first three months of the calendar year. (continued) TREASURY DEPARTMENT Washington, D. C. < ^ 4 ^MEDIATE RELEASE A-472 hiursday, March 12, 1959* The Bureau of Customs announced today preliminary figures showing the imports for onsumption of the commodities listed below within quota limitations from the beginning f the quota periods to February 28, 1959, inclusive, as follows: Commodity Period and (Quantity : Unit : Imports : of : as or :Quantity: Feb. 28. 195V 'ariff-Rate ljuotas: J !ream, fresh or sour Calendar Year hole milk, fresh or sour Calendar Year 3,000,000 Gallon 29 Jan. 1, 1959 March 31, 1959 120,000 Head 21,068 12 mos. from April 1, 1958 200,000 Head 16,683 ^lsh, fresh or frozen, filleted, etc., cod, haddock, hake, pollock, cusk, and rosefish •. • Calendar Year 36,919,874 Pound Puna fish Calendar Year To be announced Pound 6,583,954 Jattle, 700 lbs. or more each (other than dairy cows) , battle, less than 200 lbs. each. 1,500,000 Gallon 23 Quota Filled /ilhite or Irish potatoes: I Certified seed jOther 12 mos. from 114,000,000 Sept. 15, 1958 36,000,000 Pound Pound 54,039,603 3,248,343 Walnuts Calendar Year 5,000,000 Pound 1,108,605 /U.sike clover seed 12 mos. from July 1, 1958 3,000,000 Pound 2,595,789 12 mos. from July 1, 1958 80,000,000 Pound 3,378,580 Pound 3,811,958 Peanut oil tfoolen fabrics Calendar Year To be announced (1) Imports for consumption at the quota rate are limited to 9,229,968 pounds during the first three months of the calendar year. (continued) (D - 2 - Commodity Period and Quantity : Unit : Imports : of : as of :Quantity;Feb. 28. 1959 bsolute Quotas: eanuts, shelled, unshelled, blanched, salted, prepared, or ^preserved (incl* roasted peasfnuts but not peanut butter) •••• :ye, rye flour, and rye meal •• hitter substitutes, including butter oil, containing 45$ or more butterfat rung oil * - Imports through March 9. 12 mos. from August 1, 1958 12 mos. from July 1, 195B Canada Other Countries Calendar Year Feb. 2, 1959 Oct. 31, 1959 Argentina Paraguay Other Countries 1,709,000 Pound 1,518,323* 182,280,000 3,720,000 Pound Pound 182,178,566* 1,200,000 Pound Quota Filled 16,633,591 2,231,680 702,000 Pound Pound Pound 3,810,055* c^uota Filled Quota Filled CM CO (J) COTTON WASTES '(In pounds) COTTON CARD STRIPS made from cotton, having-a etaple-of less than 1-3/16 ^ch" ^_1®^* S?1®^ WASTE, LAP WASTE, SLIVER WASTE, AND ROVING iiASTE, 'WHETHER OR NOT MANUFACTURED OR OTHERWISE ADVANCED IN VALUEi Provided, however., that not more than 33-1/3 percent of the quotas shall be filled by cotton wastes other than comber wastes made from cottons of 1-3/16 "ches or more in staple length in the case of the following countries: United Kingdom, France, Netherlands, Switzerland* Belgium, Germany, and Italys Country of Origin Established TOTAL QUOTA United Kingdom • • . . * 4,323,457 Canada 239,690 France . . . . . . . • • 227>420 British India . . . . . . 69,627 Netherlands . . . . . . . 68,240 Switzerland . . . . . . . 44,388 Belgium 38,559 Japan • • • • • • • • • • 341,535 China . . . . . . . . . . 17,322 Egypt f,135. Cuba o,544 Germany . . . . • • • • • 76,329 Italy . . . . . . . . . . , 21,263 5,482,509 1/ Included in total imports, column 2, prepared in the Bureau of Customs. Imports 1/ Established Total Imports .-,.1958 s Sept. 20, 1958, to s 33-1/3? of .s -Sept. r-. 20, i March <}. 1959 \ Total Quota : to March 9. 1959 1,448,232 239,690 1,441,152 1,441,152 75,807 25,302 22,747 14,796 12,853 24,935 25,443 7.088 24,935 1,744,739 1,599,886 1,472,667 Washing-ton, D. C. IMMEDIATE RELEASE A-471 Thursday, March 12. 1959. Preliminary data on imports for consumption of cotton and cotton waste chargeable to the quotas established by the President's Proclamation of September 5, 1939, as amended COTTON (other than linters) (in pounds) Cotton under 1-1/8 inches other than rough or harsh under 3/4" Imports September 20, 1958 - March 9, 195V Country of Origin E{-ypt and the AngloEgyptian Sudan .... Peru British India China Mexico Brazil Union of Soviet Socialist Republics Argentina Haiti Ecuador Established Quota 783,816 247,952 2,003,U83 1,370,791 8,883,259 618,723 475,124 5,203 237 9,333 Inroorts Country of Origin Established Quota1 Honduras Paraguay Colombia 9,672 Iraq British East Africa ... 3,883,259 Netherlands E. Indies . 618,723 Barbados l/Other British W. Indies 111,348 Nigeria 2/0ther British W. Africa 3/0ther French Africa ... Algeria and Tunisia „.. Trinidad, and Tobago. l/ Other than Barbados, Bermuda, Jamaica, 2/ Other than Gold Coast and Nigeria. 3/ Other than Algeria, Tunisia, and Madagascar. Cotton 1-1/8" or more Imports August 1, 1958 - March 9, 1959 Established Quota (Global) - 45,656,420 Lbs. Staple Length 1-3/8" or more 1-5/3-" o r more and under 1-3/8" (Tanguis) 1-1/8" or more and under 1-3/8" Allocation 39,590,778 Imports 39,590,778 1,500,000 1,500,000 4,565,642 4,565,642 752 - 871 124 195 2,240 71,388 21,321 5,377 16,004 689 Imports — — - TREASURY DEPARTMENT Washington, D. C. IMMEDIATE RELEASE Thursday, March 12, 1959. A-471 Preliminary data on imports for consumption of cotton and cotton waste chargeable to the quotas established by the President's Proclamation of September y> 1939* as amended COTTON (other than linters) (in pounds) Cotton under 1-1/8 inches other than rough or harsh under 3 A " Imports September 20, 1958 - March 9, 1959 Country of Origin Ef';ypt and the AngloErvotian Sudan ........ Peru British India China Mexico Brazil Union of Soviet Socialist Republics .. Argentina Haiti • Ecuador Established Quota Imports Honduras Paraguay Colombia 9,672 Iraq British East Africa ... 8,883,259 Netherlands E. Indies . 618,723 Barbados l/Other British W. Indies 111,348 Nigeria 2/0ther British W. Africa 3/Other French Africa ..0 Algeria and Tunisia .•• Trinidad, and Tobago, e o » . 783,816 247,952 2,003,^83 1,370,791 8,883,259 618,723 475,12^ 5,203 237 9,333 Established Quota Country of Origin a « o « . » « . . » . » • e o o . • . l/ Other than Barbados, Bermuda, Jamaica, 2/ Other than Gold Coast and Nigeria. 3/ Other than Algeria, Tunisia, and Madagascar* Cotton 1-1/8" or more Imports August 1, 1958 - March 9, 1959 Established Quota (Global) - 45,656,420 Lbs. Staple Length 1-3/8" or more I-5/32" or more and under 1-3/8" (Tanguis) 1-1/8" or more and under 1-3/8" Allocation 39,590,778 Imports 39,590,778 1,500,000 1^500,000 4,565,642 4,565,642 752 • 871 124 195 2,240 71,388 21,321 5,377 16,004 689 O CO •If cP en O COTTON CARD STRIPS made from cotton, having-a staple of less than 1-3/16 inches in length, COMBER WASTE, LAP WASTE, SLIVER WASTE, AND ROVING YifASTE, WHETHER OR NOT MANUFACTURED OR OTHERWISE ADVANCED IN VALUE* Provided, however, that not more than 33-1/3 percent of the quotas shall be filled by cotton wastes other than comber wastes made from cottons of 1-3/16 inches or more in staple length in the case of the following countriest United Kingdom, France, Netherlands, Switzerland^ Belgium, Germany, and Italys COTTON WASTES (In pounds) s Established Country of Origin s TOTAL QUOTA - ••'" * United Kingdom . Canada • • • . • France . . . . . . British India . . . Netherlands . . . . Switzerland . . . . Belgium . . . . . . . . . Japan • • . China . . . . . . . Egypt c . . . e . . Cuba o o . . Germany . . . . . . e . . Italy . . . . . 4,323,457 239,690 227,420 69,627 68,240 44,388 38,559 341,535 17,322 8,135 6,544 76,329 21.263 5,482,509 1/ Included in total imports, column 2. Prepared in the Bureau of Customs. : Total Imports s Established s Imports • Sept. 20, 1958, to % 33-1/3? of : Sept. 20, 1958 : March 9> 1959 s Total Quota : to March 9P 1959 1,448,232 239,690 1,441,152 1,441,152 75,807 25,302 22,747 14,796 12,853 24,935 25,443 7.088 1,744,739 1,599,886 24,935 6,ftfi0 1,472,667 V CD CO 'CD mmmt TREASURY DEPARTMENT Washington, D. C. 35:, M E D I A T E RELEASE Thursday, March 12, 1959. A-470 The Bureau of Customs announced today the following preliminary figures showing the imports for consumption from January 1, 1959, to February 28, 1959, inclusive, of commodities for which quotas were established pursuant to the Philippine Trade Agreement Revision Act of 1955: Commodity Established Annual (^uota quantity Buttons 765,000 Unit of :: Imports as of (quantity ;: February 28, 1959 Gross 62,007 Cigars 180,000,000 Number 629,154 Coconut oil 403,200,000 Pound 22,661,027 Cordage 6,000,000 Pound 864,398 (Refined Sugars 1,904,000,000 (Unrefined ....... Pound Tobacco 5,850,000 Pound 5,778,000* 269,712,000* ^•Information furnished by Department of Agriculture. 1,995,878 TREASURY DEPARTMENT Washington, D. C. IMMEDIATE RELEASE Thursday, March 12, 1959 * A-470 The Bureau of Customs announced today the following preliminary figures showing the imports for consumption from January 1, 1959, to February 28, 1959, inclusive, of commodities for which quotas were established pursuant to the Philippine Trade Agreement Revision Act of 1955: : Established Annual : Unit of : Imports as of Commodity : Quota Quantity :Quantity : February 28, 1959 Buttons 765,000 Gross 62,007 Cigars 180,000,000 Number 629,154 Coconut oil 403,200,000 Pound 22,661,027 Cordage 6,000,000 Pound 864,398 (Refined 5,778,000* Sugars (Unrefined 1,904,000,000 Pound Tobacco 5,850,000 Pound 1,995,878 information furnished by Department of Agriculture. 269,712,000* U&3DIATE R3LEASS THURSDAY, MARCH 12, 1959. 'J} S^ TREASURY DSEPARTWKNT Washington, 0. 0. A-469 PRELIMINARY DATA ON D/PORTS FOR COJIOTimoN o? USWJANUPACTUWD W A D AM) ZIMC CHARGKABL* TO TH£ QUOTAS JESTABLISHED BY PRSSIDSWIAL PROCLAMATION WO. 3257 0? s m s M B X R 22, 1953 *»rA«.i*ttjai QUARTERLY QUOTA PERIOD - Jttmwry x „ lfcroh ^ ^ DEPORTS • jmUajf»y 2 - March 10, I959 ITEM 391 Countmy of Production Australia IT£M_J?2 _ t Load bullion or "baao""Bullion, 1 lead In pig? and bars, load Lead.boarins orea, fliw duot, 1 dro™, rooial.vl load, «ora? and w t f . , lead, anti.onlal load, a * U 1 moaUl .orap load, typ, M t a l , _ J ^^lloy.^or^^binationa of Quartarfy ttiota™ ^ - itortaFly T E 7 t T ~ ~ — Dutiable Load Inport* t D a t U b U Ltvid toorta (Pounds) " ~(pYundVJ' 10,080,000 10,080,000 23,680,000 19,180,113 J™LJ21^ ITZM 394 t : zino-b^rln.? or*, of all kind,,, Zlno U blooka, p l „ . or .lab,: : except pyrlUe containing not \ old ond ^ o u t zino, n t ' , y»r 3# of zlno , only to bt reaanufactumd, rino 0 , t dr09fl, ^ zinQ Mml™* laJartirtTcSS ~ IgarUrl/ C a o ^ 1 Dutlablo Z*nc or l$?. t*_ : B7 '^l.Tht report j \p"ound«TJ" (Pounds) ~~ Balglon Congo 5,440,000 5,275,701 Bolcdjua nund Luxemburg (total) Bolivia 5,040,000 5,040,000 Ovnadn. 13,440,000 13,440,000 15,920,000 8,659,418 £$,480,000 64,577,439 Ttily Ifoxloo P«ra Dn. So. Africa Yugoslovla All othar foreign countries (total) 36,880,000 16*,i6cvi/Q0 14,880,000 16,160,000 PliZMIUD IN TH>; BliXlMJ 0? CUSTOMS 7,520,000 37,840,000 24,803,192 3,600,000 3,600,000 28,772,834 70,480,000 61,994,548 6,320,000 6,320,000 9,296,158 35,120,000 31,521,806 3,760,000 3>107,941 17,840,000 17,840,000 6,080,000 7,87^,779 mi 6,560,000 12,880,000 7,520,000 1,219,686 15,760,000 15,760,000 6,090,000 6,080,000 6,080,000 TREASURY DEPARTMENT Washington, D. C. IMMEDIATE RELEASE THURSDAY, MARCH 12, 1959. A-469 PRELIMINARY DATA ON IMPORTS FOR CONSUMPTION 07 UNMANUFACTURED LEAD AND ZINC CHARGEABLE TO THE QUOTAS ESTABLISHED BY PRESIDENTIAL PROCLAMATION NO. 3257 OF SEPTEMBER 22, 1958 QUARTERLY QUOTA PERIOD - January 1 - March 31, 1959 IMPORTS • Jsmuajfy 2 - March 10, I959 ITEM Country of Produotlon Australia 391 ITEM 392 1 Lead bullion or base bullion, 1 lead in pigs and bars, load Lead-bearing ores, fluo duot,t dross, ro alalia ad lead, BO rap and mattes 2 lead, antl&onlal load, antlt aonlal scrap load, typo Hiatal, s all alloys or combinations of 1 load n.s.p.f. : Quarterly Quota 2Quarterly Quota Dutiable Lead Imports 2 Dutlablt Load Imports (Pounds) (pounds) 10,080,000 10,080,000 23,680,000 ITEM 393 ITEM Zlno-bearing ores of all kinds,1 Zlno In blooks, pigs, or slabs; except pyrites containing not t old and worn-out zlno, fit over 3# of zlno t only to be rsuanufaotursd, zlno t dross, and zlno skinmlngs Quarterly Quota Dutiable Zinc (Pounds) Imports Belgium and Luxotaburg (total) 5,040,000 Canada. 13,440,000 13,440,000 15,920,000 Mexico Peru l6,16o/./00 16,160,000 Un. So. Afrloa 14,880,000 7,876,779 Yugoslorla 6,560,000 PREPARZD IN THZ BUREAU OF CUSTOMS Imports 5,440,000 5,275,701 7,520,000 7,520,000 37,840,000 24,803,192 5,040,000 8,659,618 66,480,000 64,577,439 Italy All other forel&i oountriet (total) t Quarts rly Quota x By Weight (Pounds) 19,180,113 Belgian Congo Bolivia 394 t t 1,219,686 36,880,000 28,772,834 12,880,000 9,296,158 35,120,000 15,760,000 15,760,000 6,080,000 6,080,000 70,480,000 17,840,000 3,600,000 3,600,000 61,994,548 6,320,000 6,320,000 31,521,806 3,760,000 17,840,000 6,090,000 3,107,941 6,080,000 CD - 2 Immediately after the closing hour, tenders will be opened at the Federal Reserve Banks and Branches, following which public announcement will be made by the Treasury Department of the amount and price range of accepted bids. Those submitting 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, noncompetitive tenders for $200,000 or less for the additional bills dated December 18, 1958, (91 days remaining until maturity date on June 18, 1959) and noncompetitive tenders for $50,000 or less for the l82~day bills without stated price from any one bidder will be accepted in full at the average price (in three decimals) of accepted competitive bids for the respective issues. Settlement for accepted tenders in accordance with the bids must be made or completed at the in Federal Reserve Bank on March 19, 1959, cash or other immediately available funds or in a like face amount of Treasury bills maturing March 19, 1959. Cash and exchange tenders will receive equal treatment. Cash adjustments will be made for differences between the par value of maturing bills accepted in exchange and the issue price of the new bills. The income derived from Treasury bills, whether interest or gain from the sale or other disposition of 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 treatment, as such, under the Internal Revenue Code of 195^. The bills are subject to estate, inheritance, gift or other excise taxes, whether Federal or State, but are exempt from all taxation now or hereafter imposed on the principal or interest thereof by any State, or any of the possessions of the United States, or by any local taxing authority. For purposes of taxation the amount of 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 of 195^ the amount of 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 companies) 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, oOo 4l8, Revised, and this notice, prescribe the terms of the Treasury bills and govern the conditions of their issue. Copies of the circular may be obtained from any Federal Reserve Bank or Branch. 35 TREASURY DEPARTMENT wzztsssxgBssmBBtaeamamfmmmmmmm WASHINGTON, D.C. RELEASE A.M. NEWSPAPERS, Thursday, March 12, 1959. A-468 The Treasury Department, by this public notice, invites tenders for two series of Treasury bills to the aggregate amount of $1,700,000,000, or thereabouts, for cash and in exchange for Treasury bills maturing March 19, 1959, in the amount of $1,600,423,000, as follows: 91-day bills,!/ (to maturity date) for $1,300,000,000, or thereabouts, representing an additional amount of bills dated December 18, 1958, and to mature June 18, 1959, and to be freely interchangeable therewith. 182-day bills, for $ 400,000,000, or thereabouts, to be dated March 19, 1959, and to mature September 17, 1959. 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. They will be issued in bearer form only, and in denominations of $1,000. $5,000, $10,000, $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 o'clock p.m., Eastern Standard time, Monday, March 16, 1959. Tenders will not be received at the Treasury Department, Washington. Each tender must be for an even multiple of $1,000, and in the case of competitive tenders the price offered must be expressed on the basis of 100, with not more than three decimals, e. g., 99-925. Fractions may not be used. It is urged that tenders be made on the printed forms and forwarded in the special envelopes which will be supplied by Federal Reserve Banks or Branches on application therefor. Others than banking institutions will not be permitted to submit • tenders except for their own account. Tenders will be received without deposit from incorporated banks and trust companies and from responsibl) and recognized dealers in investment securities. Tehders from others must be accompanied by payment of 2 percent of the face amount of Treasury bills applied for, unless the ten$i£is are accompanied by an express guaranty of payment by an incorporated bank or trust company. 17 By way of explanation, it is desirable that all bills maturing on the same date be the same issue regardless of whether they have 91 days or 182 days to run at time of original issuance. •vv 'M'*» #^At:«j TRFASURY DEPARTMENT ffigmto^^ Washington RELEASE A.M. NEWSPAPERS, i~T ~~ W / ^ Thursday, March 12, 1959 • / ' / ^ ^-- _ _ The Treasury Department, by this public notice, invites tenders for two series of Treasury bills to the aggregate amount of $ 1,700,000,000 , or thereabouts, cash and in exchange for Treasury bills maturing March 19. 1959 , iu the amount of $1.600,423.000 > as follows: 91 -day bills £/ (to maturity date) for $1,500,000,000 , or thereabouts, representing an additional amount of bills dated December 18, 1958 , and to mature June 18, 1959 > QXX L ^ ^° ^e freely interchangeable therewith. 3©3dc 182 -^ay bills, for $400,000,000 March 19. 1959 > or thereabouts, to be dated > *-*<*• to mature September 17, 1959 * 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 will be payable without interest. They will be issued in bearer form only, and denominations of $1,000, $5,000, $10,000, $100,000, $500,000 and $1,000,000 (mat value). Tenders will be received at Federal Reserve. Banks and Branches up to the closi hour, one-thirty o'clock p.m., Eastern Standard time, Monday, March 16, 1959 XfcKX) Tenders will not be received at the Treasury Department, Washington. Each tender must be for an even multiple of $1,000, and in the case of competitive tenders price offered must be expressed on the basis of 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 1/ By way of explanation, it is desirable that all bills maturing on the same date be the same issue regardless of whether they have 91 days or 182 days to run at time Of original issuance. /^^X supplied by Federal Reserve Banks or Branches on application therefor. 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 per- cent of 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. Immediately after the closing hour, tenders will be opened at the Federal Reserve Banks and Branches, following which public announcement will be made by the Treasury Department of the amount and price range of accepted bids. Those submitting 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, noncompetitive tenders for $200,000 or less for the additional bills dated December 18 1958 > (91 days remaining until maturity date u pwf~* on June 18, 1959 ) a n & noncompetitive tenders for $50,000 or less for the 182-day bills without stated price from any one bidder will be accepted in full at the average price (in three decimals) of accepted competitive bids for the respective issues. Settlement for accepted tenders in accordance with the bids must be made or completed at the Federal Reserve Eank on March 19, 1959 > in cash or 3$dlx) other immediately available funds or in a like face amount of Treasury bills maturing March 19, 1959 Cash and exchange tenders will receive equal treatment. Cash adjustments will be made for differences between the par value of maturing bills accepted in exchange and the issue price of the new bills. The income derived from Treasury bills, whether interest or gain from the sale or other disposition of 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 treatment, as such, under the Internal Revenue Code of 1954. The bills are subject to estate, inheritance, gift or other excise taxes, whether Federal or State, but are exempt from all taxation now or hereafter imposed on the principal or interest thereof by any State, or any of the possessions of the United States, or by any local taxing authority. For purposes of taxation the amount of 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 of 1954 the amount of 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 companies) 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 of the Treasury bills and govern the conditions of their issue. Copies of the circular may be obtained from any Federal Reserve Bank or Branch. STATUTORY DEBT LIMITATION AS O F February 28, 1959 34, Washington, M a T . JL? J 5 3 Section 21 of Second Liberty Bond Act, as amended, provides that the face amount of obligations issued under authority ,v by ». the .. United States < > e * f * / * ^ c * *"*£ gw# of that Act, and the face amount of obligations guaranteed as to principal and interest $283,000,000,00) anreed nhlioflMnn* a* mau k* h^lH hv the Secretary of the Treasury), "shall not exceed in the aggregate $28},UUU,UOU,0ffl s. For purposes of this section the curreit red'emptiVn'vaTue of any^Slfgadon"issued'on a discount basis whicK is redeemable prior to maturity at the option of the holdd shall be considered as its face amount." The Act of February 26, 1958, (P.L. 85-336 85th Congress) i^ovides that during ttt period beginning on February 26, 1958 and ending June 30, 1959, the above limitation ($283,000,000,000) shall be temporary increased by $5,000,000,000. The following table shows the face amount of obligations outstanding and the face amount which can still be issued under this limitation : . AA ,, ,. • $288,000,000.00) L Total face amount that may be outstanding at any one time v*,w^ t ^ , ^.w, OutstandingObligations issued under Second Liberty Bond Act, as amended Interest-bearing : Treasury bills $31,832,266,000 Certificates of indebtedness. Treasury notes BondsTreasury * Savings (current rederap. value) Depositary. M Investment series .„ Special FundsCertificates of indebtedness Treasury notes. Treasury bonds Total interest-bearing .. Matured, interest-ceased 37,957,135,000 25.298.531.000 84, 169, 884, 650 51,048,72^,321 184,983,500 8 . 8 ^ 1 . 9 7 0 .000 ..... $ 95,087,932,000 1^,235,562,^71 21,276,497,000 15,655,845• 000 6 , 9 3 7 , 500 ,000 2 8 3 1 1 9 3 , 3 3 6 ,471 673,920,7^0 .. Bearing no interest: United States Savings Stamps Excess profits tax refund bonds Special notes of the United States: Internat'l Monetary Fund series Total ... « 43.869.842.000 50,937,300 858,451 762,000,000 813.795.751 284,681,058,948 Guaranteed obligations (not held by Treasury): "interest-bearing: 111,341,150 Debentures: F.H.A Matured, interest-ceased.. 967.150 Grand total outstanding .,.. Balance face amount of obligations issuable under above authority 112,308,300 284.793.367.248 3,206,632,752 Reconcilement with Statement of the Public Debt ...??fe^S^...??J...r.?.5?. (Dnte) (Daily Statement of the United States Treasury, February...27J...1?.5?. ) (Date) OutstandingTotal gross public debt Guaranteed obligations not owned by the Treasury. Total gross public debt and guaranteed obligations. Deduct - other outstanding public debt obligations not subject to debt limitation A-467 M 285,103,661,177 112^08.300 285,215,969 >77 422,602.223 284,793.367,2W STATUTORY DEBT LIMITATION AS OF February 28, 1959 34t, Washington, M a r . 9, 1959 itions issued under authority Section 21 of Second Liberty Bond Act, as amended, provides that the face amount of <>bli£ati< of that Act, and the face amount of obligations guaranteed as to principal and interest by the United States (except such guarnteed^ u , ' M "" n ' a<!m a v k ~K " uk " *K* s-r«.r*rv of the Treasury), "shall not exceed in the a/ (Act , redemption shall I ?n«easedby $57000,000,000. The following table shows the face amount of obligations outstanding and the face amount which can still be issued under this limitation : Total face amount that may be outstanding at any one time OutstandingObligations issued under Second Liberty Bond Act, as amended $288,000,000,000 <K*^v t v>, , , Interest-bearing: Treasury bills $31,832,266,000 Certificates of indebtedness Treasury notes BondsTreasury • Savings (current redemp. value) Depositary. Investment series Special FundsCertificates of indebtedness Treasury notes. Treasury bonds Total interest-bearing Matured, interest-ceased 37«957»135»000 2S.298.531.000 $ 95.087,932,000 84,169,884,650 51»048,724,321 184,983,500 8.831.970.000 144,235,562,471 21,276,497,000 15,655,845,000 6,937,500,000 Bearing no interest: United States Savings Stamps Excess profits tax refund bonds Special notes of the United States: Internat'l Monetary Fund series Total 43.869.842.000 283,193,3-A>t**'(1 0(j.y£b. (*& 50,937,300 858,451 762,000,000 813.795.751 284,681,058,9^8 Interest-bearing: Debentures: F.H.A 111,3^1,150 Matured, interest-ceased 7O( ,Ij^J Grand total outstanding .,• , Balance face amount of obligations issuable under above authority 112,308,300 Guaranteed obligations (not held by Treasury): Reconcilement with Statement of the Public Debt...?S^!™HZ...?i§.«...i!:?.5?. (Date) (Daily Statement of the United States Treasury, F e b r u a r y . . 2.7.JL.1.9.39. (Date) OutstandingTotal gross public debt , Guaranteed obligations not owned by the Treasury. Total gross public debt and guaranteed obligations. Deduct - other outstanding public debt obligations not subject to debt limitation A-467 284.793.367.248 3,206,632,752 ) 285,103,661,177 112.308.300 285,215,969,477 422.602.229 284,793,367,248 TREASURY DEPARTMENT HMWHwyiwrmaga MMMim>lMBIMllMtMM>KM»«««|^^ W A S H I N G T O N , D.C RELEASE A. M. NEWSPAPERS, Tuesday,, March 10, 1959* A-l*66 The Treasury Department announced last evening that the tenders for too series of Treasury bills, one series to be an additional issue of the bills dated December 11 1958, and the other series to be dated March 12, 1959, which were offered on March 5, were opened at the Federal Reserve Banks on March 9* Tenders were invited for $1,300,000,000, or thereabouts, of 91-day bills and for $1*00,000,000, or thereabouts, of 182-day bills. The details of the too series are as follows: RANGE OF ACCEPTED COMPETITIVE BIDS: 91-day Treasury bills maturing June 11, 1959 Price Approx. Equiv. Annual Rate : : 182-day Treasury bills maturing September 10, 1959 Price Approx. Equiv, Annual Rate MMMMMBIIMMMMNMHM«MMMMta«l High Low Average 99.288 99*223 99.226 2.817$ 3.071$ 3.062$ 98.312 a/ 98.292 " 98.291* 3.339$ 3.378$ 3.375$ a/ Excepting 2 tenders totaling $200,000 ""8 percent of the amount of 91-day bills bid for at the low price was accepted 98 percent of the amount of 182-day bills bid for at the low price was accepted TOTAL TENDERS APPLIED FOR AND ACCEFfED BY FEDERAL RESERVE DISTRICTS District Applied For Accepted Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco TOTALS $ 37,300,000 1,61*0,608,000 33,152,000 1*7,869,000 12,730,000 k2,279,000 222,1*39,000 21*,996,000 18,185,000 1*3,895,000 18,1*82,000 112,298,000 $2,254,233,000 $ Applied For 27,300,000 $ 6,810,000 879,727,000 756,299,000 9,877,000 11,639,000 1*1,199,000 29,576,000 12,730,000 768,000 37,130,000 5,91*6,000 138,257,000 11^,578,000 23,1*96,000 3,21*7,000 15,025,000 1,288,000 28,679,000 8,316,000 I8,lll*,000 2,39U,000 69,1*32,000 23,61*1;, 000 $1,300,966,000b/: $967,505,000 Accepted $ 6,810,000 295,21*5,000 784,000 17,565,000 768,000 5,896,000 60,099,000 2,032,000 1,088,000 5,327,000 2,31*1*, 000 2,31*1,000 $1*00,299,000c/ b/ Includes $259,862,000 noncompetitive tenders accepted at the average price of 99.226 c/ Includes $28,196,000 noncompetitive tenders accepted at the average price of 98.291* 34* mtM&M A . H. day, Mfcroi* 10, jfjflK of froaaisty filial, one fortooaariaa dated Baoon&or U , offarai mn March 5, to bo an a4dltie&al itiut m m opmmd at tte or tharoabouta, of'li^dfty'billa. The lSi*4ay Trmmv&j bilia M t w u g S< fcogfeor 10, 1959 $ n«'^Mi»WMWJ^ili>i|«W»iiiWW»|llli«»««Ml'Wl»i>iiii)»'iiM»»i'i» JWMK>Ji)lW»Wi|l<UW|tl^i^iWl>'W'»W^WMl«i:'liW«*» »|M(ife|l>MWJ)WIOll)l>ll|ril^>.t|»»IMIItl«lliltlliii|iiail>>i( wff»»fi»ni«am iiwiipii)i|iiiWMi't(Bi«wuwwwtw.i MM 3* J* .Low £A.i% **• mt9*m9*n9mmmm9m9mm*9*999mm. 3«. TO?* I JESBISS A»?J,I&3 FOR *HJ JMJOSPtSC I f ? S M » L w*0ti*3jOt iiiii'jftMgmi WW York milmdelpl Clrwrtand Atlanta Chicago $t. Umim finn«apoli» Kaosfta City DftllM 9an Frarwisco TOTALS Mmmm}9*9.m*vmWm9\..Wmmm%* 33iASt t 000 t*? f 8#,00© &i,27f,OO0 182*439,000 ^996fi 1*3,6?$,0©0 18,482,000 112,298,000 §2,254,233,000 mmm B79$m$mm t its fv*..'^ 15,025,000 28,679,008 IS, llii, 000 69,432,000 U, 300,966,000b/1 :«^*MMaMan«NNMmMINM«MMMaMM. F &M9>$xm9mmM*.m)*mn\mmmn*<mttM m•$m>ww^ 11,639,000 29,S?6,< 5*946*000 il4,5?8,0G0 3,247,000 4,286,000 8,316,000 2,394,000 23,644.000 1967,505,000 IMaWWAHIMMIMMMMW' •M#MMMMM#MMWMMa«WWilMMiM» I 6,810,000 m,mmt$,<m \i 784,000 X?,565.095 766,090 $,696,000 60,099,0^ 2,632,030 1,088,000 5,327,000 2,3*4,000 U * 2,341.000 00,299foW y Imlxs&m $259,^62,000 aoncoRp«titiv© U n d o * * aoaaptud m% tte av*r&g9 prlca of 99922b y Xaolodaa ;2^,196,000 noncompetitive toixioro acoo^tod a t th* averaga prtem of 9 8 , 2 & y\ XD .% y. TREASURY DEPARTMENT WASHINGTON, D.C. RELEASE A. M. NEWSPAPERS Monday9 March 9 * 1959 iA< A-465 The United States Treasury and the Federal Reserve System announced today that they are seeking further data and information in connection with a technical study of the Government securities market which they are conducting jointly. This factual inquiry, which is focusing especially on developments in the market last summer, is the outgrowth of several preliminary studies by the Treasury, the Federal Reserve System, and interested market groups. It is hoped that the results will point the way to improving the market's functioning and to preventing speculative excesses in the market. Data will be requested from major lenders to, and participants in, the Government securities market, including banks, non-financial corporations, dealers, and brokers. These reports are intended to provide a more complete record pertaining to the financing of market transactions* There also will be informal consultations with informed individuals about the functioning of the market. The consultations are designed to obtain the benefit of a broad cross section of opinion on underlying forces shaping performance of the market and on means for improving market mechanisms and functioning,, It is expected that the joint study will be completed and made public about midyear. mL. \mJ PRESS RELEASE mmmmmmmmm-m--mmmmmm-m-mmm. ~a ^^ /9 &L 'fctv^p^ /y - tl (f^ The United States treasury and the Federal Eeserve System announced today that they are seeking further data and information in connection with a technical study of the Government securities market which they are conducting jointly. This factual inquiry, which la focusing especially on developments in tte market last summer, la tte outgrowth of several preliminary studies by tte Treasury, tte Federal Reserve System, and interested market groups* It is hoped that tte results will point the nay to iiaproving the market1s functioning and to preventing speculative excesses in the market, Data will be requested from major lenders to, and participants in, tte Government securities market, including banks, nonfinancial corporations, dealers, and brokers. These reports are intended to provide a more complete record pertaining to tte financing of market transactions* there also will be informal consultations with informed individuals about tte functioning of the market, the consultations are designed to obtain tte benefit of a broad cross section of opinion on underlying forces shaping performance of tte market and on means for disproving market mechanisms and functioning. y i km.-.- $£&*£*>• It is anticipated that the joint study will be completed and made public about midyear* - 2 Mineral Deposit Mineral Form Claimed for Depletion Purposes by Taxpayer Year or Years involved PERCENTAGE DEPLETION Computed hy •: percent :Taxpayer to Dovgrnment TaxpayeF "; Government Differential i < $2,000, *A8 $12,002,683 6003 $5,001,165 iron Ore Steel Unknown Limestone Lime Limestone & Chemical Plant (Specific Product Unknown) 1953-1957 1951-1953 106,231 8,064,000 347,230 37,680,000 327 467 106,231 19,263,000 Linestone Cement Cement 3 years 1953-1956 1,983,500 919,923 9,450,000 2,931,060 1+76 319 5,353,730 1,045,750 Limestone & Shale/Clay Cement Cement 1951-195^ 1951-1955 3,201,678 1,506,21*8 13,702,811 4,009,901 423 266 5,760,963 1,020,192 Perlite Abrasives & Aggregates Unknown 2,570 15,527 604 3,535 Quartzite Silica 195^-1955 169,035 711,523 1+21 238,175 Salt 3rine Chlorine & Caustic Soda Salt & Salt Products 3 years k years 857,874 1,770,1^98 ll,555,6to 8,290,912 1347 1+68 Sandstone Silica Products 1951-1955 70,169 243,923 343 111,181 Sana & Gravel Construction Use Construction Use 1953-1955 1953-1955 7,750 10,315 62,069 801 93,935 911 28,340 43,763 Tile 1951-195^ 11,805 214,585 1818 \. <->. 104,327 1951-1953 78,612 171,620 218 63,962 Unknown Unknown 3 years 2 years 100,000 8,080 1,730,kSk 8,667 312,000 312 26,779 3,508,283 43,595 Shale Shells, Oyster/ Road Construction Clara, Etc* Solite Light-weight Aggregate Light-weight Aggregate Stone, Crushed Hough Construction Rough Construction r- 331 2 °3 503 6,633,876 3,260,207 114,CCO 8,725 924,500 17,500 March 3, 1959 Table III Claims of individual companies illustrating potential tax loss resulting from extension of percentage depletion to manufactured products Mineral Deposit Mineral Form Claimed for Depletion Purposes by Taxpayer Year or Years Involved PERCENTAGE DEPLETION Computed by *\ Percent - : ^'Taxpayer to* Tax Government Taxpayer •Government :Differential $ 35,000 $ 232,420 664$ $ 102,600 Unknown Unknown 39,600 31,700 95,400 109,600 241 346 29,000 to, 500 Brick & Tile Products Brick & Tile Products 1951-1956 1951-195^ 59,359 23,953 523,931 175,525 883 733 2to,345 97,953 Clay, Fire Fire Brick, Mortar Fire Brick, Structural Brick 1953-1956 1951-1953 2,250,000 350,000 9,339,545 1,773,291 415 507 4,1*6*8,168 717,220 Clay, Fire and Shale Various Clay Products Various Clay Products 1951-195^ 1951-1953 44,019 9,786 537,779 123,720 1222 1264 250,871 66,7QO Coking Coal Coke & By-products Unknown 11*0,700 258,000 183 83,100 Dolomite Refractory Brick, Ground Dolomite 1955-1956 312,^59 844,1*85 270 276f$%9 21^,723 344,148 160 67,300 96,375 36,173 438,525 106,553 Bauxite Aluminum Sulfate (Alum) Unknown Bentonite Caulking Clay Caulking Clay Clay, Brick and Tile Fullers Earth Uncertain, Mineral Primar-Unknown ily Used as an Absorbent or as Rotary Drilling Mud Granite Building Stone Monuments 1951-1957 Unknown Gypsum Watlboard, Plaster, & other Construction Uses Unknown 2,125,000 12,815,000 455 295 177,907 36,000 603 6,783,900 Co Table II - Continued Mineral Manufactured product or products Rough construction Ceramics, Paints, filler, lnsectldltes, other Stone Talc Depletion rate on mineral 15 Mineral production l/ (Thousands of tons) Value. 1/ mineral Estimated value manufactured product Difference In value $ 62,925 $109,339 $ 218,678 $ 109,339 739 4,859 15,026 Estimated tax differential 5/ $ 2,843 $ 5,467 122 10,167 Total Note: Estimated Increase in the depletion deduction k/ $1,150,061 $598,032 Coal, Petroleum, Gas, and various other minerals are not represented because of Insufficient data from vhlch comparable statistics could be estimated. 1/ Production and crude value figures are either taken directly or derived from figures In tte U. C. Bureau of Mines 1956 Mlr.^3 Year***. 2/ 2^ percent Is the depletion rate for the domestic production of bauxite. An assumed depletion rate of 17 percent Is used to compute the -' esU^ted increase in Sletlon deduction. This 1c because approximately 7 0 percent of mined bauxite used In aluminum production la produced by U. S. manufacturer In the Caribbean area and subject to a depletion rate of 15 percent. 3/ It is assumed that equal tonnage of clay and shale is used In the production of cement; therefore, a 10 percent depletion rate Is used ~ to determine the estimated Increase In depletion deduction. kl The figure for "Estimated Increase In Depletion Deduction" assumes that the net Income limitation does not apply. £/ The figure for "Estimated Tax Differential" assumes a corporate tax rate of 52 percent. Match 3, 1959 CO 4- C Table II Annual potential tax loss resulting from extension of percentage depletion to designated manufactured products for 19 mineral categories (All dollar figures are in thousands of dollars) Mineral Depletion : production l/ : « :: rate <jn : (Thousands : mineral : of : • tons) : • Mineral Bauxite Bentonite Clay, brick & tile Clay, fire Cley & shale Diatomaceous Earth Fullers Earth Granite Gypsum Iron ore Kaolin Limestone Limestone Salt Sand & Gravel Sandstone Marl, slag, gypsum, etc. :: Manufactured product or products 1 Aluminum Clay products Brick & Tile, Other products Refractory Clay products Cement 15 Filtration, filler, insulation, misc. Mineral oils, absorbent uses,other Building stone Building board and plaster Steel Paper filling & coating, other Cement Lime Chlorine, Soda ash Road construction Finished stone Cement 23 2/ 15 • 6,743 1,571 Value, 1/ mineral '" Estimated : Difference : ' value in :» ' manufactured ] : : value : product ] $ 45,852 18,415 $71^,444 55,245 $ 670,592 36,830 Estimated increase j: in the : depletion : deduction kf $114,001 5,524 Estimated tax differential 5/ $ 59,281 2,872 - 5 34,385 41,516 145,306 103,790 5,190 2,699 15 11,803 9,067 53,750 9,302 208,608 87,954 154,858 78,652 23,229 7,865 12,079 4,090 426 & 5 3/ - 15 250 2,282 7,740 5,458 819 15 418 13,318 229,065 4,439 163,618 346 29,636 8,879 65,447 666 15 _ 24,543 12,762 15 15 14,652 96,730 41,913 749,657 321,652 4,804,450 279,739 ^,054,793 41,961 608,219 21,820 316,274 15 15 15 10 5 15 2,250 61,008 10,577 1^,565 624,697 13,447 34,504 85,230 14,660 45,876 595,101 33,998 51,756 785,774 135,727 339,994 3,570,606 46,388 17,252 700,544 121,067 294,118 2,975,505 12,390 2,588 105,082 18,160 29,412 148,775 1,858 1,346 54,643 9,443 15,294 77,363 5 11,901 11,901 115,44o 103,539 5,177 2,692 - Continued - 966 CO CO TaDJLe JL. uoaciuutiu Mineral Quartzite Rare minerals Salt Sand and gravel Sandstone Shale Shells Stone Stone, crushed Number of cases 8 3 14 16 5 9 2 2 4 Potential tax loss Total 1,583,374 527,183 11,186,529 640,948 245,454 565,819 88,656 138,129 847,700 Unallocable Allocable : : by year : by year : 473,296 208,884 92,268 60,809 138,129 538,417 Deposits containing various minerals used in production of diverse chemical products 10 21,819,825 Mineral items that cannot be disclosed TOTAL 380 1951 1,110,078 95,921 527,183 10,977,645 1,495,911 548,680 12,299 245,454 505,010 42,634 88,656 16,095 1952 1953 1954 1955 315,891 546 1,594,561 126,627 55,880 229,663 30,052 132,801 678 1,662,583 165,089 59,992 99,738 17,800 225,673 22,548 1,861,120 126,804 66,390 70,036 11,481 197,346 1,858,705 103,259 32,407 39,053 13,228 1956 65,677 253,327 1,977,855 13,852 21,385 19,169 1957 68,220 250,084 451,910 750 9,400 4,717 1,953,010 1,807,640 145,370 296,948,056 14,887,487 282,060,569 4,734,280 3,644,899 8,469 75,000 CO CO 309,283 35,000 67,552 68,284 72,361 66,086 21,819,825 5,730,727 1958 a 2,638,511 2,532,638 1,557,945 980,825 39,454,637 49,214,738 44,019,287 37,114,575 31,l6l,087i 145,370 40,040,484 38,748,445 2,307,316 1/ Figure withheld to avoid disclosing individual company confidential data, value included with "Mineral items that cannot be disclosed." 2/ Includes $1,736,390 allocable to 1947-1950. March 3, l|p5! 00 CO Tabic I Total potential tax loss resulting from the extension of percentage depletion to manufactured products as reflected in cases currently in litigation or pending administratively • \M T1»>«0 1 ri xuc* i a x ' o f * leases | • " ••»""• Potential tax lose 'Number ] • -- Total Asbestos 1 (D Bentonite 4 422,255 Clay, brick & tile 80 14,428,395 Clay, brick and tile shale 2 27,639 Clay, fire 19,405,252 50 Clay, fire brick and tile shale 1,843,887 10 Coal 612,088 12 Coal & Iron ore 9,566.675 2 Diss pore 1 Diatomacoous earth 2 (i) Dimension stone 2 37,819 Dolomite 7 3,609,963 Gilsonite 1 (1) Granite 506,511 7 Oypsua 8,895,242 4 Limestone 90 111,069,905 Limestone - clay/ shale 84,567,281 22 LlDestone and dolomite 881,728 4 Oil and gas 1,476,789 6 :Unallocable Allocable :by year : by year 324,140 98,115 1,031,819 13,396,576 2,408,025 39,746 443,873 - 27,639 16,997,227 1,804,141 168,215 9,566,675 ! 1951 • ! 1952 » 62,000 1,111,190 •» ! 1953 • 25,617 1,062,302 a ! 195^ \ 1956 1 1957 !! 1958 a 36,185 1,575,466 50,579 3,139,^58 90,335 2,339,058 37,653 2,609,043 21,771 1,458,302, 101,757 - « 9,294 3,15^, 1 M 9,732 3,153,666 7,925 1,606,233, 81,158 319,800 375,276 28,992 276,996! 27,511 1,748,224 2,337,376 2,123,863 208,215 166,065 185,800 60,727 2,166,983 271^89 50^33 4,403,923 2/2,995,769 1955 • 2,792,559 - \ 9m a m 688 • 552 • a - • a a H 142,994 37,819 3,466,969 - . 877,776 757,999 37,285 86,229 656,555 24,958 540,189 191,000 315,511 280,969 8,614,273 3,336,467 107,733,438 14,848,674 12,325,263 51,666 63,316 23,757 8,330.346 13,93i?,364 16,806,371 2,694,463 81,872,818 8,124,905 12,326,284 12,507,148 12,575,815 881,728 18,845 1,457,9^ 99#64l - 63,666 142,497 12,861 206,150 352,150 76,150 a 15,696 44,439 . 260,170 17*277,448 14,686,074 16,880 a 16,034,552 1,819,692 15,122,815 11,540,485 9,^55,366 220,000 3^0,047 396,598 m ^13,^95 m a 33o - 18 In view of the recent decision of the Federal District Court for the Western District of Texas in the La Gloria Oil and Gas Company case, such legislation may also be needed to prevent substantial revenue loss. The La Gloria case holds, contrary to the position advanced by the Treasury, that the depletion allowance in the case of natural gas is based upon the amount received for products, such as propane and butane, removed in a "cycling plant" rather than on the basis of the value of the wet gas at the well. Under this decision, which is now on appeal to the Fifth Circuit by the Government, the depletion allowance for natural gas is increased appreciably. The implications of the La Gloria case, if upheld on appeal, could be far reaching. For example, integrated members of the oil and gas industries might claim that they are entitled to base their depletion allowances upon the value of refined petroleum products, such as kerosene, gasoline and lubricating oils, rather than, as presently is the case, upon the value of the natural gas or crude oil in the vicinity of the well. The draft bill takes the position that gross income for depletion purposes in the case of oil or gas is the gross income attributable to the oil or gas in the crude state in the vicinity of the well. Thus, the draft bill -would codify current administrative practice of the Internal Revenue Service that depletion for the oil and gas industries is based upon the value of the crude oil or gas rather than the processed product. 33o - 17 the draft, no attempt was made to cut back those instances of special treatment, although in the case of cement the technical language of the bill may have inadvertently reached such a result. If so, and if the Committee wishes to codify the existing administrative practice for cement, the Treasury would not object. However, it may be appropriate to point out that such administrative and statutory exceptions may be difficult to justify, particularly because they may form the basis for pleas by other mineral producers for special^ treatment. It is our hope, therefore, that if Congress should choose to continue the existing exceptions, it will not regard them as a precedent for further statutory exceptions to the general rule for determining the cut-off point for depletion. The Importance of the Proposed Oil and Gas Legislation I should now like to discuss briefly our proposed draft of legislation specifying the "cut-off" points for determining percentage depletion in the case of oil and gas. The Treasury recommendations in this area were released to the public for the first time March 3rd. As the affected industries will need time to prepare their comments, we understand that this subject will not be covered in the present hearings. We do want to stress, however, the importance of this proposed legislation pertaining to the oil and gas industries and request that the matter be given early consideration by the Ways and Means Committee. The legislation is needed in order to pix>vide consistent treatment for oil and gas with that suggested for minerals generally. 334 - 16 - such a cut-off provision, a statute specifying allowable treatment processes by name would be of little help in solving the problems which have arisen under present law. 2. The draft bill "which was submitted to the Congress last year relating to brick and tile clay and cement rock specifically listed filtering of slurry in the wet process as a mining process in the case of cement. The draft bill now before this Committee does not specifically refer to filtering of slurry. Concern has been expressed as to whether there is any intent to give the cement industry less favorable treatment tinder the present bill than under the bill which r this Department transmitted to the Congress last year. You may recall that the bill which was submitted last year was intended to reflect established practice as set forth in a 1953 Revenue Ruling and as established by practice in the case of processes not covered by the ruling - that is, to allow crushing and grinding (including the filtering of slurry in the wet process) prior to burning in the kiln. The Department did not Intend, in drafting this bill, to cut back on the processes which have been recognized as mining in the case of the cement industry. In this connection I would like to discuss a problem which has given us a good deal of concern. There are instances, both in the present statute and under administrative practice, where mineral producers are allowed depletion on processes which would be considered manufacturing under the general rules of our draft bill. In preparing - 15 1. The draft bill states that any treatment process which follows a process that is not considered as mining will not be considered as mining. This is the cut-off clause of the bill which is designed to prevent mineral producers from claiming that certain processes are mining processes after manufacturing has begun. The fear has been expressed that this provision may deny depletion on subsequent mining processes when the chain of mining processes is broken by a non-mining process which really should be treated as a neutral process. For example, coal may be sprayed with paint, or confetti printed with the name of the company may be sprinkled in with the coal. These nonmining processes may occur before the coal is screened and loaded for shipment, processes now recognized as mining. Concern has been expressed that the cut-off clause, as now drafted, may exclude such processes from the depletion base merely because they occur after such an insignificant non-mining process. The Department does not intend to disallow otherwise allowable processes under the cut-off clause merely because of the intervention of a neutral process of this type and the bill can be easily clarified in this area without substantially changing the importeunt cut-off provision. I would like to stress again why this provision is needed. It is needed to prevent processes such as crushing, grinding and loading for shipment, which are recognized as mining processes when applied to a crude mineral, from being treated as mining processes when applied after manufacturing has begun. Without -1^ - necessary to make the mineral or ore suitable for shipment are those which are necessary to bring the mineral or ore to the physical form and condition in which it is capable of being transported as distinguished from those processes applied to make the mineral or ore saleable. The draft bill contains a very important cut-off clause which states that any process which follows a process not considered as mining shall also not be considered as mining. The reasoning behind this provision is that after the application of manufacturing processes, the mineral or ore is no longer in crude fonn, and, therefore, any subsequent process regardless of its nature should not be treated as mining. For example, in the case of cement manufacturers, this cut-off clause would deny crushing and grinding of the clinker after burning in the kiln since burning in the kiln is a manufacturing process. Questions Raised Concerning Draft Bill on Mining Since the release by this Committee of the draft bill on mining processes, we have had the opportunity to confer with a number of persons representing individual mineral producers and groups of mineral producers regarding possible problems under the bill. These discussions have been very helpful to us, and I am pleased to say that many of the questions raised do not appear to present any real differences of opinion and can be clarified. I would like to discuss two of those questions which are of particular significance. - 13 - 33J. mining, as they have in the past, where such processes are necessary to, or are an integral part of, separating the mineral from waste-termed "beneficiation by concentration" in the draft bill. Moreover, such manufacturing processes will be treated as mining where they are necessary to, or an integral part of, certain other specifically named beneficiation processes. These processes are cyan j elation, crystallization, precipitation, and leaching. As previously indicated, the present statute differentiates between certain processes which will be considered mining processes when applied to "minerals which are customarily sold in the forn 02" a crude mineral product," and certain other processes which will be considered mining processes when applied to "ores which are not customarily sold in the form of the crude mineral product." The draft bill would erase the distinction by setting up a single category of processes recognized as mining for minerals and ores. This will not only simplify administration of the law, but will also liberalize the law by permitting producers of ores to treat as mining processes those processes necessary to bring a mineral or ore to the physical form and condition in which it is suitable for shipment, and loading for shipment. Under the present statute these processes are treated as mining only in the case of minerals customarily sold in the crude form. In addition, the revised language provides, consistent with administrative practice, that the processes which will be regarded as SJ - 12 - the case of coal, sulfur recovered by the Frasch process, quicksilver ores, talc, magnesite, and phosphate rock which are treated as mining in the present statute are also treated as mining in the draft bill. Similarly, the draft bill continues to treat as mining certain other processes which present law specifically designates as mining, such as cyanidation, leaching, crystallization, and precipitation. In addition, the definition of processes considered to be mining is broadened in the draft bill to include those processes which have been treated as mining under established administrative practice. For example, under administrative practice, sorting, screening, and washing have been treated as mining processes even though they are not expressly named in the statute. The draft bill specifically provides that these processes are considered to be mining. The draft bill also specifies various treatment processes which shall not be considered mining. The list of disallowed processes includes all those which present law specifically describes as nonmining processes, such as roasting, thermal and electric smelting, and refining. In addition the list includes such processes as calcining, polishing, and fine pulverization, which the Department has always treated as non-mining processes in its administration of the law. Although the draft bill specifically provides that certain processes will not be considered mining processes as such, it also provides that any of the disallowed manufacturing processes will be treated as - 11 - products. Under these circumstances integrated producers will be encouraged to absorb the nonintegrated producers so as to eliminate existing markets for the crude mineral product, particularly in those mineral industries where there are now relatively limited sales of the crude mineral. II. DESCRIPTION OF DRAFT BILL ON MINING The draft bill on mining is intended to restore the rules for computing gross income from mining which were applied prior to the recent court decisions. No attempt has been made to roll back those processes which are treated as mining under express provisions of the statute or by administrative practice. This bill does not deal with rates of depletion or any other depletion questions with one limited exception. In order to avoid competitive inequalities, the draft bill provides that all clay producers whose clay is used in the manufacture of ordinary brick and tile products will be entitled to a five percent depletion rate. In broad outline, the draft bill eliminates the commercially marketable product test for determining what processes enter into mining. Instead of the marketability test, which is the source of most of the trouble under the present statute, the draft bill specifies the allowable mining processes and also those which are not allowable as mining. Nov let us examine the bill in closer detail, beginning with the definition of mining and non-mining processes. Certain processes in - 10 - yio commercially marketable product test. For example, under the court decisions a mineral assigned a lower depletion rate may obtain a greater depletion allowance than a mineral assigned a higher depletion rate. This is because the lower depletion rate when applied to the income from an expensive manufactured product may produce a larger deduction than the higher depletion rate when applied to the income from an inexpensive crude mineral which may qualify as a marketable product. The existing law provides, in the case of minerals which are customarily sold in the form of the crude mineral product, that a producer may treat as mining those processes necessary to bring a mineral to form and condition suitable for shipment. Present law creates a discrimination against producers of ores not customarily sold as crude minerals. Such producers of ores may not treat as mining processes those processes necessary to bring a mineral to foim and condition suitable for shipment, and loading for shipment. k. Trend Toward Economic Integration If the trend of the cases continues it appears that in cases where substantially all the producers of a particular mineral are integrated producers, they may be allowed to claim depletion on their finished product. The best example of this treatment is found in the brick and tile clay industry where substantially all the producers of clay process their clay into bricks and other finished clay 32/ - 9manufacturers in the taxpayer's local area or is the test of first marketability of a product to be made on an industry-wide or national basis. The problem is further complicated where the producer is extracting a mineral which is found in many different grades. Present law sets forth a category for minerals which are customarily sold in the crude form, and describes particular processes which will be considered ordinary treatment processes for those minerals. Present law also sets forth a category for ores which are not customarily sold in the crude form, and describes certain other processes which will be considered ordinary treatment processes for these ores. Experience has shown that these two distinct categories create difficult administrative problems particularly because there are some products which do not fit in either category. Examples are brick and tile clay, and cement rock, which do not fall in the ore category because they are not technically ores, and which also do not fall in the mineral category because they are customarily sold in a processed rather than a crude form. 3- Inequitable Treatment of Certain Taxpayers As you all know, there are varying rates of depletion, ranging from 5 to 23-1/2 percent in the case of minerals other than oil and gas. These varying rates reflect the considered judgment of Congress that in the light of all the circumstances certain minerals should receive a higher rate of depletion than others. In certain instances, however, the Congressional purpose may well be defeated by the - 8- 32o deduction which individual taxpayers will obtain if they succeed in their claims that the depletion allowance is based on income from manufacturing processes. 2. Administrative Difficulty The language of the present statute creates substantial administrative problems, most of which stem from the definition of ordinary treatment processes in teims of processes normal ly applied to obtain "the commercially marketable mineral product or products." As I have already indicated, in some cases the courts have held that the term "commercially marketable mineral product or products" means that a taxpayer is entitled to depletion on virtually all the processes which he applies to produce the particular product or products which he markets. This extreme view may solve most of the administrative problems otherwise involved in applying a depletion cut-off rule, but not all of the court decisions have gone this far. Several courts have indicated that only those processes required to reach the first commercially marketable product rather than the particular product or products produced by the taxpayer are to be considered mining. However, these decisions leave substantial questions unresolved. For example, is the "first marketable product" the first saleable product actually manufactured by the taxpayer even though he processes the product further before selling it, or does it mean the first product "which he might have made? If the latter, is such first marketable product determined on the basis of sales of other - 7taxpayers concerned. If these taxpayers prevail in their claims, additional refund claims for all years not closed by the statute of limitations can be anticipated. Table II sets forth the annual estimated tax loss which could result if the depletion base for mining is extended to include manufactured products across the board. The Treasury believes that the estimated annual loss of revenue shown is modest. Because of lack of available data, this estimate does not include losses "which might result if depletion were based on the gross income from products manufactured from such minerals as coal, petroleum, and gas. Table II covers 19 categories of minerals and ores. It shows that the Government may for these categories sustain an annual revenue loss of 603 million dollars. This estimate is based upon the assumption, which we hope will not materialize, that producers of the designated minerals and ores will obtain depletion not only on such manufactured products such as brick and cement, but also on such items as finished steel products. Unfortunately, the language in a number of the recent court decisions suggests that there is a real and present danger that existing law may be interpreted to go so far. Table III lists individual producers of finished mineral products who have obtained or are currently claiming percentage depletion on manufactured products. It sets forth the amount of tax contested in a number of actual tax cases. I particularly want to call your attention to the substantial percentage increase in the depletion -6 - "<?„ 1. Loss of Revenue A survey has recently been conducted by the Treasury to determine, to the extent possible, ^ihat the revenue effects might be if the depletion allowance is extended to the sales price of finished manufactured products. The results of this survey are shown in Tables I, II, and III vhich appear at the end of this statement. Table I sets forth, by mineral, the dollar amounts of tax currently in controversy on this issue at the administrative level in the Internal Revenue Service and in litigation in the Federal Courts of the United States. In general, Table I covers the taxable years 1951 through 1957. It shows that the Government could sustain a tax loss of nearly 297 million dollars for these years if all taxpayers whose claims are now on file were to recover the amounts claimed. This figure does not, however, represent the total possible tax loss for the years 1951 through 1957^ For example, the figure of 297 million does not include tax losses already sustained as a result of litigated court cases, nor does it include the losses already incurred administratively as a result of the settlement of cases on the basis of a number of court decisions establishing a "cut-off" for a particular mineral, such as brick and tile clay. Furthermore, Revenue Agents in the field have indicated that many of the claims for refund presently on file represent only "test" cases for the particular - 5the sale of finished and packaged crayons; in the case of slate, on the income from the sale of roofing, shingles and in the case of refractory clay, upon the income from the sale of highly expensive finished refractory and ceramic products. A case is now pending before the Court of Claims in which a taxpayer mining salt contends that all processes applied to arrive at a refined table salt packaged in various sized containers are ordinary treatment processes. If the taxpayer prevails in this claim his depletion deduction in the case of small containers of salt will be well over 100 times the deduction allowable on crude salt. If the present trend continues, it is entirely possible that taxpayers mining iron ore and bauxite will claim that all the processes applied to arrive at pig iron and pig aluminum are ordinary treatment processes. In fact, it is conceivable that fully integrated operators might successfully claim depletion on products involving even further processing into other manufactured products. I. MAJOR PROBLEMS UNDER EXISTING LAW The trend of the decided cases ha3 created four major problem areas under the existing statute which I would like to outline briefly before discussing the draft bill. These are (l) substantial loss of revenues, (2) increased difficulty in administering the statute, (3) inequitable treatment as between taxpayers in different industries, and (h) acceleration of the trend towards fully integrated operations. - kthe purpose underlying the deduction for depletion is to compensate the taxpayer for the exhaustion of a mineral reserve. Consistent with this purpose, the Treasury Department has long interpreted the statute to mean that the gross income to be used in the computation of the depletion deduction is the gross income attributable to treatment processes equivalent to those specifically named in the statute. Accordingly, the Department has maintained that any other or further processing of the mineral to market a finished product should be disallowed as manufacturing or non-mining. In recent years taxpayers have successfully contended in a series of court cases for a broader interpretation of the term "ordinary treatment processes." In many cases the courts have held that this teim embraces virtually all processes which a taxpayer applies to produce the particular product or products which he markets. The courts have held that the processes specifically designated in the statute are illustrative only and do not limit the applicability of the texm "ordinary treatment processes" to those specifically named. The effect of these decisions is that depletion may be taken on the costs and profits attributable to the production and sale of expensive manufactured products. A few examples from litigated cases will illustrate this point: In the case of brick and tile clay, depletion has been based upon the income from the sale of finished building brick; in the case of limestone, on the income from the sale of bagged cement and lime; in the case of talc, on the income from 10 - - 3As you know the Department has submitted two drafts of proposed legislation, one dealing with all minerals except oil and gas, and one dealing only with oil and gas. Together these draft bills would specify for all minerals the processes "which shall be treated as mining for the purpose of measuring the amount of gross income derived frommLneral extraction. While both drafts are designed to accomplish the same purpose, there are technical problems "which make it necessary to prescribe separate statutory rules for oil and gas on the one hand and for all other minerals on the other. I should like first to discuss the area of minerals other than oil and gas. The Internal Revenue Code provides that in the case of minerals other than oil and gas, gross income for depletion purposes means "gross income from mining." Mining is in turn defined to mean not merely the extraction of the minerals or ores from the ground, but also "the ordinary treatment processes normally applied by mine owners or operators in order to obtain the commercially marketable mineral product or products." In addition, the statute specifies cer- tain processes which shall be considered "ordinary treatment processes" and certain other processes "which shall not be considered ordinary treatment processes. In general this means treating as mining the extraction of the ore or mineral from the ground, the separation of the ore or mineral from waste material or from other ores or minerals, and the loading of the ore or mineral for shipment. As stated by the Supreme Court in Helvering v. Bankline Oil Co. (1938) 303 U.S. 362, < \ .-••-•> <yy - 2mining operations. Two tons of iron ore which this producer extracts from the ground can be processed into about one ton of pig iron, and the one ton of pig iron can then be processed into about one ton of steel products. The selling price of two tons of iron ore is about $16. The selling price of one ton of pig iron is about $60. The selling price of one ton of steel products will vary widely depending upon the product involved. It ranges generally from about $110 for a ton of simple structural steel to $295 for a ton of structural steel bolts. The Treasury Department takes the position that a producer of steel products is entitled to compute his depletion deduction on the value of the iron ore. In this example, the depletion deduction would be $2.^0. If producers were peimitted to compute their depletion deduction on the value of the pig iron, the deduction in this example would be $9, which is about four times the deduction based on the value of the iron ore. At least one producer takes the position that it is entitled to compute its depletion deduction on the selling price of its finished steel products. If this extreme position were to prevail, the deduction in the case of the structural steel would be $16.50, which is almost seven times the deduction based on the value of the iron ore, and $4^.25 in the case of the structural steel bolts, -which is over 18 times the deduction based on the value of the iron ore. TREASURY DS?AR?;.2iTT WASHINGTON ^, v5l^ Statement by David A. Lindsay, Assistant to the Secretary, before the House V,rays and L'eans Committee, on amendments to the Internal Revenue Code specifying the treatment processes v.tiich shall be considered mining for the purpose of computing percentage depletion in the case of mineral products, 10:00 A.K.,EST, Thursday, March $9 1959. Mr. Chairman, and members of the Ways and Means Committee: I want to thank you for this opportunity to present the Administration's legislative recommendations concerning the computation of gross income from mining. In the Budget Message of the President, submitted to the Congress on January 19, 1959> the President stated that the Treasury Department would recommend an amendment to the Internal Revenue Code specifying the treatment processes which shall be considered mining for the purpose of computing percentage depletion in the case of mineral products. The Secretary of the Treasury has since submitted to the Congress two drafts of proposed legislation which we believe will resolve the difficult problems involved in determining the point at which to measure the amount of income which is derived from mining, or mineral extraction. The problem which has arisen in this area is an extremely important one, which could in time involve literally hundreds of millions of dollars in revenue. In our view, this legislative recommendation is one of the most important pieces of tax legislation which will be considered by the Congress this year. Let me illustrate with a simple example the nature of the problem •which we have before us. A producer of steel products who mines the Iron ore used in his business is entitled to a percentage depletion deduction equal to 15 percent of his gross income derived from his A-u61| - 2 Immediately after the closing hour, tenders will be opened at the Federal Reserve Banks and Branches, following which public announcement will be made by the Treasury Department of the amount and price range of accepted bids. Those submitting 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, noncompetitive tenders for $200,000 or less for the additional bills dated December 11, 1958, (91 days remaining until maturity date on June 11, 1959) and noncompetitive tenders for $50,000 or less for the 182-day bills without stated price from any one bidder will be accepted in full at the average price (in three decimals) of 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 March 12, 1959* in cash or other immediately available funds or in a like face amount of Treasury bills maturing March 12, 1959. Cash and exchange tenders will receive equal treatment. Cash adjustments will be made for differences between the par value of maturing bills accepted in exchange and the issue price of the new bills. The income derived from Treasury bills, whether interest or gain from the sale or other disposition of 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 treatment, as such, under the Internal Revenue Code of 1954. The bills are subject to estate, inheritance, gift or other excise taxes, whether Federal or State, but are exempt from all taxation now or hereafter imposed on the principal otf Interest thereof by any State, or any of the possessions of the United States, or by any local taxing authority. For purposes of taxation the amount of 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 of 1954 the amount of 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 companies) 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. 0O0 4l8, Revised, and this notice, prescribe the terms of the Treasury bills and govern the conditions of their issue. Copies of the circular may be obtained from any Federal Reserve Bank or Branch. TREASURY DEPARTMENT WASHINGTON, D.C. RELEASE A.M. NEWSPAPERS, Thursday, March 5, 1959* A-463 The Treasury Department, by this public notice, invites tenders for two series of Treasury bills to the aggregate amount of $1,700,000,000, or thereabouts, for cash and In exchange for Treasury bills maturing March 12, 1959. in the amount of $1,599,851,000, as follows: 91-day bills,1/ (to maturity date) for $1,300,000,000, or thereabouts, representing an additional amount of bills dated December 11, 1958, and to mature June 11, 1959, and to be freely interchangeable therewith. 182-day bills, for $400,000,000, or thereabouts, to be dated March 12, 1959, and to mature September 10, 1959. 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. They will be issued in bearer form only, and In denominations of $1,000, $5,000, $10,000, $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 o'clock p.m., Eastern Standard time, Monday, March 9, 1959. Tenders will not be received at the Treasury Department, Washington. Each tender must be for an even multiple of $1,000, and In the case of competitive tenders the price offered must be expressed on the basis of 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 villi be supplied by Federal Reserve Banks or Branches on application therefor. 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 responsib] and recognized dealers In investment securities. Tenders from others must be accompanied by payment of 2 percent of the face amount of Treasury bills applied for, unless the tenct^s are accompanied by an express guaranty of payment by an Incorporated bank or trust company, 1/ By way of explanation, it is desirable that all bills maturing on t same date be the same Issue regardless of whether they have 91 days 182 days to run at time of original issuance. TREASURY DEPARTMENT Washington A -- u / RELE/VSE A.M. NEWSPAPERS, I ~ (Thursday, March 5, 1959 • — m The Treasury Department, by this public notice, invites tenders for two series of Treasury bills to the aggregate amount of $ 1,700,000,000 , or thereabouts, for m cash and in exchange for Treasury bills maturing of $1.599,851,000 , as follows: March 12, 1959 , in the amount 91 -day bills Jr (to maturity date) for $ 1,300,000,000 , or thereabouts, -%w- *y 'm representing an additional amount of bills dated y December 11, 1958, and ^ m to mature June 11, 1959 , and to be freely interchangeable therewith. ^ m 182 -day bills, for $ 400,000,000 , or thereabouts, to be dated March 12, 1959 , and to mature September 10, 1959 . lick* ' " iP^ 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 amoun will be payable without interest. They will be issued in bearer form only, and in denominations of $1,000, $5,000, $10,000, $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 o'clock p.m., Eastern Standard time, Monday, March 9, 1959 . Tenders will not be received at the Treasury Department, Washington. Each tender must be for an even multiple of $1,000, and in the case of competitive tenders the price offered must be expressed on the basis of 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 y By way of explanation, it is desirable that all bills maturing on the same date be the same issue regardless of whether they have 91 days or 182 days to run at time of original issuance. - 2 - supplied by Federal Reserve Banks or Branches on application therefor. 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 of 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. Immediately after the closing hour, tenders will be opened at the Federal Reserve Banks and Branches, following which public announcement will be made by the Treasury Department of the amount and price range of accepted bids. Those submitting 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, noncompetitive tenders for $200,000 or less for the additional bills dated December 11, 1958 , (91 days remaining until maturity date on June 11, 1959 ) and noncompetitive tenders for $50,000 or less for the 182-day bills without stated price from any one bidder will be accepted in full at the average price (in three decimals) of 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 March 12, 1959 , in cash or other immediately available funds or in a like face amount of Treasury bills matures March 121 1959 Cash and exchange tenders will receive equal treatment. Cash adjustments will be made for differences between the par value of maturing bills accepted in exchange and the issue price of the new bills. The income derived from Treasury bills, whether interest or gain from the sale or other disposition of 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 treatment, as such, under the Internal Revenue Code of 1954. The bills are subject to estate, inheritance, gift or other excise taxes, whether Federal or State, but are exempt from all taxation now or hereafter imposed on the principal or interest thereof by any State, or any of the possessions of the United States, or by any local taxing authority. For purposes of taxation the amount of 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 of 1954 the amount of 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 companies) 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 of the Treasury bills and govern the conditions of their issue. Copies of the circular may be obtained from any Federal Reserve Bank or Branch. The United States has played a leading role in the Bank and Fund since their inception. Other members are looking to us for early action in this move to strengthen the financial resources of these two institutions. In his message to the Congressj President Eisenhower pointed out that there was real urgency for prompt action. I would also emphasize that it is most important for the United States Government to maintain the posture of leadership which it now occupies in connection with these proposals which are designe to insure further progress toward realizing a better life for the peoples of the free world. It is my earnest hope that the Congress will promptly authorize the proposed increase in the capital of the Bank and in the United States sjibscription in the Bank and quota in the Fund. oOo 22 increased without Congressional action. The bill proposes to authorize me, as Governor for the United States, to agree to an increase in the Bankfs capital to $21 billion and an increase of 100 per cent in the U.S. capital subscription. As I have already noted, this does not call for any cash expenditui| by the United States. It does not mean that the Treasury will have to issue any additional securities. We have had authority on the books for 12 years to issue Treasury securities if needed to meet our contingent obligations to the Bank. We have not had to use that authority, and we do not expect to - use the authority to be given by the bill before you. I believe that in the interests of the United States foreign economic policy, we should give this additional assurance to the investors who purchase the Bank's securities, so as to enable it to continue its great work of financing the economic growth of the less developed countries of the free world. * * * * * With these increases in our subscription to the Bank and our quota in the Fund, we will be making an important contribution to the economic wellbeing of the entire free world. The enlarged resources of the Fund should enable it to deal with the foreign exchange difficulties and emergencies which may arise in the coming years. The increase in the capital of the Bank will enable it to continue to finance its lending operations through the sale of its bonds to American and other investors. These two institutions have amply demonstrated over the last 12 years that they can and do prudently and efficiently use the resources entrusted to them to advance the economic development of the less industrialized areas and to promote and maintain sound international exchange and financial policies. - 21the subscriptions of the present members by 100 per cent. The increase in th4< capital to $21 billion will provide shares for the increased subscriptions and also provide about $1 billion of shares to take care of the admission of new members and adjustments in the subscriptions of various members which may be made from time to time in the future. The 100 per cent increase in the subscriptions will more than double the security behind the Bank's bonds. The proposal provides that the Bank will not call up any part of the increased capital subscriptions unless it is necessary to meet obligations of the Bank, which as I have already indicated is a very remote contingency. Unlike the original subscriptions to the Bank, the first 20 per cent of the additional capital will not be called up for use in the Bankfs operations, but will simply be added to the contingent obligations of the members in the form of subscribed but uncalled capital. In this way, there will be no cash expenditure required of the United States Government or other member countries. The United States will be increasing its contingent liability by $3,175 billion. There are two other features of the proposal which should be mentioned. While the general increase in capital is 100 per cent, the capital subscriptions of Germany, Canada and Japan are to be increased in larger proportions. This corresponds to the special increases proposed for the quotas of these countries in the Fund. Their additional capital subscriptions will raise the liability of these three countries to an amount more in line with their current standing in the world economy. Secondly, the increase in capital subscriptions is not to be effective unless at least $7 billion of new capital is subscribed. In other words, the proposed greater contingent obligation of the United States to the Bank will become effective only if the members holding the bulk of the stock enlarge their liability at least proportionally. The Bretton Woods Agreements Act provides that the Governor for the United States may not vote for an increase in the Bank's capital without the authorization of Congress, and the United States subscription also cannot be - 20 The maximum contingent liability of the United States under the Bank's Articles is at present $2.5U billion. As I mentioned, against this the Bank has outstanding a funded debt of $1.8 billion. Currently, the Bank is lending at a rate of $700 to $800 million a year. Its borrowings in the last year amounted to $650 million, as Chart h shows, and may reach a larger amount in coming years. Continuation of the Bank's lending at its present rate can be successfully carried out only if more and more investors can be convinced that the bonds of the Bank are and will continue to be of the highest quality. In the judgment of the management of the Bank, most of the United States institutional investors and many of the non-United. States investors in the Bank's dollar securities have been willing to take up, at reasonable rates of interest, the increasingly large and frequent offerings of the Bank's bonds chiefly because the bonds have the backing of the $2.5U billion representing the uncalled 80 per cent portion of the United States subscription. At the current rate of lending and borrowing the Bank within the next two years will reach the linit of the United States guarantee. As the amount of funded debt of the Bank approaches this point, the Bank is likely to find increasing hesitancy on the part of the market to take up its new issues of bonds. Some investors are already expressing concern over the relatively small remaining margin of the guarantee fund. The increase in the Bank's capital recommended by the Directors of the Bank will give renewed assurance to investors that the Bank's bonds are and will continue to be of the highest quality, and should provide the basis for continued, favorable reception of the Bank's securities. This is the reason that we propose an increase in our subscription to the Bank along with an increase in the subscriptions of the other member countries. The proposal which the Board of Governors of the Bank has approved by unanimous vote consists of two basic parts. The first is to increase the total authorized capital of the Bank to $21 billion. The second is to increase - 19 cannot meet these obligations from its own sources. There has been no call on the 80 per cent capital, and there is little likelihood of a call unless there should be a drastic deterioration of the international financial situation. In accordance with its Articles of Agreement, the Bank has since the beginning of its operations charged, a special commission of one per cent on all loans. The money obtained from these commissions has been placed in a Special Reserve and invested in U.S. Government securities. This Fund now amounts to $121 million. The Bank has also followed, the policy, concurred in by the Governors, of adding its annual net earnings to a Supplemental Reserve Against Losses and this Supplemental Reserve is $260 million. The reserve policy which has been followed gives added reason for believing that the Bank will not have to call up additional capital to meet its obligations. Why under these circumstances are we requesting the Congress to approve an increase in the Bank's capital and an increase in the U.S. subscription? The answer is that only through these increases can the Bank continue issuing the dollar bonds which will provide funds for large-scale lending operations. Chart 4 I. EX m. EX ©©KEOOTM© NOf| *$-**» •* 4 ^-.u.mnmm^m* 250 i ) .' - 7 - _. to 25 23 59 24 12 47 48 lOO 150 110 73 150 75 450 615 __! - 18 The two per cent and the 18 per cent of capital are available for the Bank's operations. Up to date, the Bank has used the entire two per cent and approximately $1 billion out of a total of $1.7 billion of the 18 per cent subscribed capital. Member countries have agreed, to make available to the Bank an additional $260 million within the next few years. About $1£0 million of the 18 per cent capital remains to be released by various member countries, almost all of which are importers of capital. The bulk of the Bank's funds for financing its operations has come not from its own capital but from the sale of securities to investors in the United. States and abroad. It now has outstanding in bond issues $1.8 billion, of which $1.5 billion are denominated in dollars and the balance in Swiss francs, Deutsche marks, Canadian dollars, Netherlands guilders and. sterling. The bonds denominated in dollars have not all been sold to American investors. Some short-term issues have been sold, entirely outside of the United States to foreign investors, largely central banks, which have used, the Bank's bonds as a form of dollar investment of their monetary reserves. Moreover, foreign private investors have purchased the Bank's bonds for ordinary investment purposes, in the same way as have American investors. The Bank estimates that approximately 60 per cent of its bond financing has come from American investors and the balance from abroad. Investors have recognized that the Bank has operated, prudently and. that its loans have been sound. This has done much to establish the high quality of the Bank's bonds. However, the ability of the Bank to sell its bonds to institutional and individual investors depends in large part on the fact that back of the Bank's own assets is the contingent liability of the member governments to meet the obligations of the Bank through possible calls on the uncalled 80 per cent portion of the capital. In other words, this 80 per cent portion of the Bank's capital constitutes a guarantee undertaken jointly and. severally by all the member governments to supply dollars or other currencies needed to meet the Bank's obligations in the unlikely event that the Bank - 17 follows a period of intense study, engineering examination and negotiation. The loans which the Bank has made have been sound and the Bank has had no defaults. We believe that the Bank's activities are important for the basic objective of the United. States in assisting the economic development of the less-developed countries. The Bank also gives extensive technical services to its members, assisting them in the formulation of projects and the direction of their capital investments into appropriate channels. These technical services are performed in several ways, notably by sending well-planned technical missions to the member country to survey the entire economy. These surveys are an important guide to the Bank's lending activities. The Bank obtains most of the funds for its loans from the paid-in capital subscriptions of its members and the sale of its own bonds to investors. The uncalled capital comprises a guarantee fund which is the indispensable backing for the Bank's bonds. I shall have to go into the financial structure of the Bank in some detail to make clear exactly what is proposed in the bill before you, which would give the consent of the United States to an increase in its subscription and an increase in the total capital of the Bank, so as to enlarge the guarantee fund. The Bank's capital is divided into three parts. The first part, two per cent of every member's subscription, must be paid to the Bank in dollars at the time the country joins the Bank. The second part, 18 per cent, is paid in by members in their own currencies and may be used by the Bank only with the consent of the member and under the conditions specified by it. The third part, 80 per cent of the capital, comprises the uncalled capital or guarantee fund. It may be called by the Bank only to meet its obligations on securities which it has issued or guarantees which it has given. - 16 Chort 3 I R. D. LOANS 770 $ Mil. or Equiv. 1947 '49 DisburS.M300 199 68 '51 '53 # 55 '57 75 129 226 240 298 284 289 439 541 The largest single item for which the Bank has made loans is the construction of electric power plants and the distribution of electrical energy. This single purpose accounts for about one-third of the development loans. About another third has been loaned for the improvement of transportation facilities, ports, harbors, railways and highways. The balance of the loans have been for various industrial projects and agricultural reclamation and improvement purposes. The Bank's activities are worldwide. It has made over 200 separate loans amounting to $ii.3 billion in the course of its 12 years of activity, and these loans have gone to k9 different countries. The Bank lends only to member countries, or with the guarantee of member countries. When it lends to private business, the loan must be guaranteed by the government of the country in which the project is located. Each loan - 15V. This concludes my discussion of the Fund. The bill before you proposes to authorize me, as U.S. Governor for the Fund, to consent to an increase of 50 per cent in the quota of the United States, and it makes financial provision for this increase through a public debt transaction in the same way as the original Bretton Woods Agreements Act did. In my opinion it is essential that the Fund should have these enlarged resources promptly. International Bank I turn now to the proposed increase in the capital of the International Bank and in the U.S. subscription to the capital. The members of the Committee, I am sure, are generally familiar with the work of the Bank. Its function is less complex than that of the International Monetary Fund. The Bank advises member countries in the field of economic development, and makes long-term loans to finance such development. The reconstruction phase of the Bank's activities ended a few years after its organization. In this period the Bank made important loans to assist reconstruction in France, Denmark, Luxembourg and the Netherlands. Since that time, it has devoted its loans entirely to economic development. Chart 3 shows commitments and disbursements by years. The Bank has made a few loans to European countries for special purposes, such as the economic development of Southern Italy and the construction of power plants in Austria. But the bulk of its loans have been for development purposes in Asia, Africa, the Middle East and Latin America. - 01* Every country will be required to pay 25 per cent of its increase in quota to the Fund in gold. This means that while the increase in the quota of a country gives it additional drawing privileges on the Fund, each country is also required to add proportionately to the Fund's gold reserve. The United States will pay $3hh million in gold and the other members as a group will pay a total of about $900 million. Gold is the basic and most liquid resource of the Fund. The Fund has sold gold to the United. States to obtain dollars in the past and it will undoubtedly do so again when conditions warrant. Similarly, with gold the Fund can buy sterling or marks or any other currency when its holdings of the currency are low. The Fund is an international cooperative effort; other countries will make their payments to the Fund and in the aggregate these will be large. The increase in Fund quotas will be effective only as the member countries increase their subscriptions to the Bank. This will maintain the parallelism between the Fund, and the Bank which has existed since their foundation, each institution working in its own field and the two aiming at a prosperous and expanding economy for the free world. I should make clear that the proposed increase in the quota of the United States does not mean that the Fund will spend these new resources at once. The United States will pay one-fourth of its quota increase in gold, but the balance will be held in non-interest-bearing demand notes, which will not represent a cost to the United States until such time as the Fund cashes them. Moreover, when the Fund's holdings of dollars increase as a result of repayments, the Fund returns cash to the U.S. Treasury and takes new notes. In this way, the cost of our participation in the Fund is kept to the minimum, as required by the Bretton Woods Agreements Act. As I mentioned earlier, there have been a number of years in which the Fund returned more dollars to the U.S. Treasury than it took out for new drawings. - 13 the least successful have had beneficial results. In my view, these stabilr--' zation activities are one of the most important and. beneficial parts of 1he Fund's work. The large and important financial operations of the Fund in the past few years have made it clear that consideration should be given as to the adequacy of Fund resources to meet foreign exchange emergencies and other demands in the future. It was this situation which led the President last August to direct me to propose to the Board of Governors of the Fund "that prompt consideration be given to the advisability of a general increase in the quotas assigned to the member governments.,f In October, I introduced a resolution at the New Delhi Meeting of the Governors calling on the Executive Directors to study and report on this question, and the resolution was unanimously adopted. The Directors did so and on December 21, 1958 submitted their report to the Governors accompanied by appropriate resolutions. Copies of this report have been supplied to the members of this Committee. On the closing date for voting, Governors with 99 per cent of voting power had approved the resolutions. The resolutions proposed by the Fund for action by the governments can be summarized very briefly. It is proposed to increase the quotas of most countries by 50 per cent. This would increase the United States quota by $1,375 billion from $2.75 billion to $U.125 billion. Very small quotas will be adjusted to bring them up to a reasonable level. The quotas of three countries—Canada, Germany and Japan—will be increased substantially more than 50 per cent. I am sure you will agree that the willingness of these three countries to make this relatively larger contribution to the Fund's resources is a vivid evidence of the importance which members attach to the role of the Fund. Deutsche marks and Canadian dollars have been among the currencies which Fund members have drawn. — 12 — 0.p. > At a number of points I have mentioned that the Fund uses its resources to assist members to maintain or attain the objectives set forth in the Articles of Agreement—including stable and convertible currencies, freedom from restrictions on payments, and expanding world trade. To this end, countries seeking to draw on the Fund or enter into stand-by arrangements beyond the amount of the gold payment must satisfy the Fund as to the policies and measures which are expected to restore or maintain internal and external stability. In some instances, for example where the country has need of assistance only to meet a seasonal exchange shortage, a sijnple reaffirmation of existing policies is sufficient. But in other cases, where the balance of payments difficulties are large and persistent and arise from substantial imbalance in the domestic economy usually reflected in severe inflation, what is needed is a comprehensive stabilization program, including action in the fiscal, credit, and exchange fields. The Fund consults closely with any member which requests its advice in working out such a program. If an adequate program is developed and the member assures the Fund that it will be carried out, the Fund will make its resources available through a drawing or a stand-by arrangement or both. In some instances, U.S. banks and agencies of the U.S. Government have joined in assisting the stabilization effort as have also the Organization for European Economic Cooperation and some European governments. Many examples of this work of the Fund could be cited, including Argentina, Brazil, Chile, France, Haiti, Paraguay and Turkey. These stabilization programs are difficult and complex efforts. The Fund, as an international institution, is able to bring to bear a degree of objective judgment and to insist on rigorous corrective measures in a way which no government could successfully attempt in advising another government. The Fund keeps the programs under close review and consults with the member country as to the progress being made. They have not all been carried out to the full extent of the original plan. But even - 11 never be predicted which country will need the Fund's aid or precisely how il much it will need. But the Fund must have adequate resources when help is needed, and be ready to act promptly. As shown in Chart 2, at the end of 1958 the Fund's gold and dollar resources amounted to $2.3 billion, against which there were stand-by commitments of $911 million. The net amount of $l.k billion was small in relation to potential demands. As I have explained, the Fund's resources were reduced to this level principally by the large drawings and stand-by commitments arising out of the exchange crises of 1956-57. At their present level, the Fund would not be in a position to meet a recurrence of a drain of that magnitude. But the Fund must be able to cope with big demands, no matter how frequently or how unexpectedly they occur. In addition to making cash advances, the Fund enters into stand-by arrangements with members. These stand-by arrangements provide an assured line of credit, giving the country the right to draw up to a specified amount within a stated time, usually a year but sometimes six months. Stand-by arrangements have been used to assist countries to maintain the par value of their currencies, or to undertake important financial reforms, such as the establishment of new exchange systems or the elimination of complex multiple currency practices. An important example is the large stand-by arrangement presently outstanding in favor of the United Kingdom. Another is the one recently concluded with the Argentine Republic. The Fund at the end of 1958 had outstanding commitments amounting to $911 million under these stand-by arrangements. At times the fact that a country has a stand-by arrangement provides in itself sufficient reassurance, and there is no need actually to draw against it. For example, the United Kingdom has not drawn against its stand-by arrangement and the Netherlands did not draw throughout the life of the arrangement entered into in 1957* - 20 - dn^u convertibility of major European currencies should facilitate drawings of these currencies. However, the Fluid's holdings of gold and U.S. dollars will continue to be the most essential elements in its operations. With gold the Fund can obtain any needed currency. Moreover, if a country with a major currency should encounter foreign exchange difficulties, it would ordinarily draw dollars from the Fund to carry out support operations. The Fund must be in a liquid position if it is to operate satisfactorily as a second line of reserves for its members. This means that it must have adequate amounts of dollars and other major currencies which members can draw to help surmount their foreign exchange difficulties. The members must have the assurance that under appropriate conditions they can count upon the Fund to come to their aid when th€*y have balance of payments deficits, or are undertaking important programs of financial and economic stabilization. It can Chart 2 F GOLD AND DOLLARS - 9 - viously used the Fund's assets had for the most part repurchased their currencies from the Fund. At the end of 1955, outstanding drawings on the Fund had been reduced to a total of $23U million. The outstanding amounts consisted mainly of drawings made in 1953 and 195U by Japan and various Latin American countries• Two developments account for the very great increase in use of Fund resources in the last three years. First, a period of acute exchange difficulties began late in 1956 with the Suez situation and culminated in the exchange crisis of May-September 1957, "which led to very large demands on the Fund. In little more than a year, dollar drawings amounted to $1.6 billion, and stand-by commitments reached almost another billion dollars. Second, the Fund has been very active in assisting member countries to carry out stabilization programs. In these circumstances of severe exchange crisis and of monetary and exchange stabilization, the Fund has made its resources decisively available. The Fund's resources were thus a vital element in surmounting major financial emergencies which would have had damaging effects on a worldwide basis if they had not been brought quickly to an end, and in supporting important efforts by countries to restore financial stability. Chart 1 shows that the Fundts resources revolve. Its transactions are not long-term loans, which will be outstanding for many years. They are transactions which are reversed within a relatively short period of time. The quality of the resources is not impaired in this process, since repurchases„ are made in gold and convertible currencies. Of the total drawings to date, the currency used has been mainly the dollar. There have also been substantial drawings of sterling and deutsche marks and small drawings of Canadian dollars, Belgian francs and Dutch guilders. Belgium, the Netherlands, and the United Kingdom, have been in the position of drawing dollars from the Fund at times when they needed dollars, but also at other times having their currencies drawn by other countries which needed them. The recently widened - 8the volume of the Fund's exchange transactions since it started operations. This chart also shows the rate at which resources were returned to the Fund. As repayments are made, the country whose currency has been used, in the repayment takes back the cash in excess of the Fund's working balances, in exchange for non-interest-bearing notes. Large amounts of dollars have flowed back to the U.S. Treasury in this way during periods when repayments in dollars have exceeded new drawings. When a member country requests assistance from the Fund, it buys a currency it needs for a relatively short period of time by selling its own currency to the Fund in exchange. For example, under the arrangement recently agreed to with Argentina, as that country needs dollars to meet a temporary foreign exchange deficit, it buys the dollars from the Fund and pays the equivalent in pesos to the Fund. The same procedure would be used to obtain, say, deutsche marks or sterling. This type of transaction is what is meant by a drawing on the Fund. The total of the Fund's assets does not change, but the currency composition of the Fund does change with each transaction. Then after a period of tjume the country which has drawn from the Fund repurchases its own currency from the Fund, using gold or convertible currency for this purpose. In this way the Fund's assets are restored to their original position. If you will look at Chart 1, you will see that in 19U7 the Fund had exchange transactions of $1|68 million. The annual amount decreased in 19U8 and 19U9, and Fund transactions were relatively small in amount up to 1956. This was partly because the large requirements of postwar reconstruction were being met principally from other sources; and also because in the strong economic upsurge in the latter part of this period, Fund members as a whole did not need short-term assistance. Moreover, in the earlier years the Fund, as a new institution, proceeded cautiously in working out policies on the use of its resources. In fact, if you will look at the dotted line on the chart, you will see that between 1950 and. 1956, the member countries which had pre- - 7 The result has been that Fund quotas have shrunk greatly in relation to the pressures on foreign exchange reserves to which Fund members are subjected. Taking one simple measure, the percent of quotas to total imports, the quotas of most members are less than 10 percent of their annual imports. In time of need a country finds that the temporary assistance it can hope to obtain from the Fund is scarcely equal to one month's imports. This illustrates vividly the need for increased quotas and larger total resources if the Fund is to be able to meet large and sudden foreign exchange situations, and if members are to regard their quotas as reasonably adequate second lines of reserves. Chart I The Fund's holdings of gold and dollars and other useful currencies comprise a pool or reserve available to be U3ed quickly when needed. The experience of the Fund, since it3 creation, has shown that the need for Fund assistance has fluctuated greatly over the years. On Chart 1, you will see -6the national incomes and the monetary reserves of the member countries. On <~Q this basis the United States quota was set at $2.75 billion. Since 19UU, the relevant magnitudes of the factors affecting the balances of payments of the member countries have changed enormously. There have been very large increases in national incomes, in the volume and. value of world trade, in price levels, and in monetary reserves. With the increase in the value of trade and financial transactions, the magnitudes of the fluctuations in foreign exchange earnings and in reserves have also increased. In 1937, for example, as Table 2 shows, total imports of the free world, amounted to about $27 billion, compared, with about $100 billion at present. This great expansion in the total value of world, trade has resulted from the combined. effects of the increase in prices since the war, and the larger volume of goods traded. Both factors have been important. Along with this very large increase in the value of world trade, there has been a corresponding growth in various service transactions (such as tourist expenditures) and in capital movements between countries. Table 2. Free World Trade, 1937 and 1950 through 1958 (Expressed, in millions of United States dollars) Calendar - Yea ^ s .. Exports (f.o.b.) Imports (c.i.f.) 100, W U 93,6U7 107,1*29 98,206 77,677 7U,875 79,608 76,569 KS 76,573 81,399 1950 56,690 59,338 1958 (est.) 9U,000 99,000 \lll 1956 Kf? 8U,317 88,980 S 1953 j?l? 1937 73 891 > 80,196 2U,199 27,275 Source: Based on International Finsmcial Statistics -5Table 1. International Monetary Fund: Transactions outstanding on December 31, 1958 (Time elapsed from purchase to December 31, 1958) ^ ^0 Amount in millions of US$ Up to and. including 12 months 3U9.13 13 to 18 months 203.83 19 to 2U months 987.27 25 to 30 months 88.38 31 to 36 months 17.00 37 to U8 months 25.00 U9 to 60 months 20,25 over 60 months 2.50 Total outstanding, Dec. 31, 1958 1,693.36 Fluctuations in the balances of payments of the member countries can be of considerable size. These fluctuations have occurred over the years for a variety of rfeasons, including shifts in trade and investment, political events, and the interaction upon each other*s economies of changes in price levels and reserve positions of the member countries. The resulting increases or decreases in reserves can be very large and can occur very quickly. Fund assistance gives a member country a breathing spell in which it can make the necessary adjustment in its internal and external policies so as to restore equilibrium without unduly increasing restrictions on international transactions . The proposed legislation involves no change in the method of operating the Fund and no change in its policies. What is proposed is to give the Fund more adequate resources to attain its objectives under present world conditions. The existing quotas, which at the end of 1958 amounted to $9.2 billion, were based on data for the period preceding the Bretton Woods Conference. These data included factors such as prewar foreign trade, the relative size of e -h- $9 The International Monetary Fund. The International Monetary Fund was created as a permanent international organization to promote sound foreign exchange policies through the elimination of exchange restrictions, to assist in the establishment and maintenance of convertible currencies, and to give greater assurance of stability in exchange markets. The Fund, has worked toward these objectives by annual consul- tations with members, technical advice in setting up stabilization programs, and short-term advances to, or stand-by arrangements with,member countries. These activities have grown in scope and increased in effectiveness in the past twelve years, and have been accompanied by real progress by member countries in achieving good, results in the foreign exchange field. The Fund does not finance long-run development programs nor is it intended to provide long-range economic assistance to improve the standards of living of its member countries. In simple terms, the Fund is a short-term credit institution which assists the monetary authorities of the member countries to carry out sound financial policies. Fund advances are repayable in three to five years at the outside limit. As Table 1 shows, the presently outstanding drawings are within these limits, almost all earlier drawings having been repaid. The Fund's resources in gold, dollars, and other leading currencies are regarded by the members as a secondary line of reserves which can be drawn upon under appropriate conditions to supplement their own reserves of gold and foreign exchange at times when they have encountered temporary difficulties. - 3The Bretton Woods Agreements Act provides that Congress must authorize increases in the capitalization of the Bank, the United States subscription to the capital of the Bank and the United States quota in the Fund. The proposed amendments to the Bretton Woods Agreements Act as contained in H.R. kk$2 and H.R. UU53 are intended to give such authorization. It is our view that these recommended increases, together with the proposed, increases in the subscriptions and. quotas of the other members, should be sufficient to permit these bodies to continue their useful work in the foreseeable future. This is the only approach which has been made to member governments for additional resources since the two institutions began operations in 19U6. I might at this point note that the contribution which we make in the form of capital to the Fund and the Bank is the only financial support we give to these institutions. Within the framework of their capital structure they are self-supporting. No periodic appropriation is needed, to cover our financial participation. The Bank and the Fund defray their expenses out of the income earned from their operations. Moreover, as I shall point out presently, the increase in our subscriptions will involve a present cash outlay by the United States that is large but is a relatively small proportion of the total new subscriptions. No budgetary provision is needed in the case of the Bank and while in the case of the Fund the entire additional quota of $1,375 billion is included in the budget, only the gold payment of $31*1; million really represents an immediate cash expenditure. Since the purposes and operations of the Fund and the Bank differ and the budgetary consequences of increasing our subscription also differ, I shall take up the two institutions successively and explain the differences in the procedures contemplated by the President's message. 29^ Mr. C. Douglas Dillon, is the Alternate Governor. The day-to-day work of the institutions is carried on by Boards of Executive Directors located in Washington and by the managements consisting of a president in the case of the Bank and a managing director in the case of the Fund, with technical staffs. The U.S. Executive Director for the Bank is Mr. T„ Graydon Upton and for the Fund is Mr. Frank A. Southard, Jr. The Bretton Woods Agreements Act created the National Advisory Council on International Monetary and Financial Problems to coordinate and supervise United. States participation in the Bank and the Fund and other international financial matters. The members are the Secretary of the Treasury as Chairman, the Secretaries of Stats and Commerce, the Chairman of the Board of Governors of the Federal Reserve System, and the President of the ExportImport Bank. In accordance with the provisions of that Act the Council has regularly reported to the Congress on the activities of these institutions, and. in its special reports has dealt with the basic questions of policy relating to them. All of these reports, under the present Administration and previous Administrations, have expressed the judgment that the Fund and the Bank have played major and successful roles in fostering sound financial policy and promoting economic development. These reports have also indicated that the two institutions, in carrying out their policies in accordance with their Articles of Agreement, have been fulfilling some of the important objectives of the United States in foreign financial and economic policy. Members of the Senate and House participated in the formulation of the Articles of Agreement. My predecessors as well as I, as United States Governor, have invited members of the Senate and House to attend the Annual Meetings of the Boards of Governors as members of the United States Delegation. Members of Congress have attended every Annual Meeting, including the more recent ones abroad at Mexico City, Istanbul and New Delhi. This Congressional participation has been most welcome and helpful. - 2 yjr. C. Douglas Dillon, is the Alternate Governor. The day-to-day work of the institutions is carried on by Boards of Executive Directors located in Washington and by the managements consisting of a president in the case of the Bank and a managing director in the case of the Fund, with technical staffs. The U.S. Executive Director for the Bank is Mr. T. Graydon Upton and for the Fund is Mr. Frank A. Southard, Jr. The Bretton Woods Agreements Act created the National Advisory Council on International Monetary and. Financial Problems to coordinate and supervise United States participation in the Bank and the Fund and other international financial matters. The members are the Secretary of the Treasury as Chairman, the Secretaries of State and Commerce, the Chairman of the Board of Governors of the Federal Reserve System, and the President of the ExportImport Bank. In accordance with the provisions of that Act the Council has regularly reported to the Congress on the activities of these institutions, and in its special reports has dealt with the basic questions of policy relating to them. All of these reports, under the present Administration and previous Administrations, have expressed the judgment that the Fund and the Bank have played major and successful roles in fostering sound financial policy and promoting economic development. These reports have also indicated that the two institutions, in carrying out their policies in accordance with their Articles of Agreement, have been fulfilling some of the important objectives of the United States in foreign financial and economic policy. Members of the Senate and. House participated in the formulation of the Articles of Agreement. My predecessors as well as I, as United States Governor, have invited, members of the Senate and House to attend the Annual Meetings of the Boards of Governors as members of the United States Delegation. Members of Congress have attended every Annual Meeting, including the more recent ones abroad, at Mexico City, Istanbul and New Delhi. This Congressional participation has been most welcome and helpful. - 3The Bretton Woods Agreements Act provides that Congress must authorize increases in the capitalization of the Bank, the United States subscription to the capital of the Bank and the United States quota in the Fund. The proposed amendments to the Bretton Woods Agreements Act as contained in H.R. W*52 and H.R. UU53 are intended to gire such authorization. It is our view that these recommended increases, together with the proposed increases in the subscriptions and. quotas of the other members, should be sufficient to permit these bodies to continue their useful work in the foreseeable future. This is the only approach which has been made to member governments for additional resources since the two institutions began operations in 191*6. I might at this point note that the contribution which we make in the form of capital to the Fund and the Bank is the only financial support we give to these institutions. Within the framework of their capital structure they are self-supporting. No periodic appropriation is needed, to cover our financial participation. The Bank and the Fund, defray their expenses out of the income earned from their operations. Moreover, as I shall point out presently, the increase in our subscriptions will involve a present cash outlay by the United States that is large but is a relatively small proportion of 'the total new subscriptions. No budgetary provision is needed in the case of the Bank, and while in the case of the Fund the entire additional quota of $1,375 billion is included in the budget, only the gold payment of $3kh million really represents an immediate cash expenditure. Since the purposes and operations of the Fund and the Bank differ and the budgetary consequences of increasing our subscription also differ, I shall take up the two institutions successively and explain the differences in the procedures contemplated by the President's message. - hThe International Monetary Fund The International Monetary Fund was created as a permanent international organization to promote sound foreign exchange policies through the elimination of exchange restrictions, to assist in the establishment and maintenance of convertible currencies, and to give greater assurance of stability in exchange markets. The Fund, has worked toward these objectives by annual consultations with members, technical advice in setting up stabilization programs, and short-term advances to, or stand-by arrangements with,member countries. These activities have grown in scope and increased in effectiveness in the past twelve years, and have been accompanied by real progress by member countries in achieving good, results in the foreign exchange field. The Fund does not finance long-run development programs nor is it intended to provide long-range economic assistance to ijnprove the standards of living of its member countries. In simple terms, the Fund is a short-term credit institution which assists the monetary authorities of the member countries to carry out sound financial policies. Fund advances are repayable in three to five years at the outside limit. As Table 1 shows, the presently outstanding drawings are within these limits, almost all earlier drawings having been repaid. The Fund's resources in gold, dollars, and other leading currencies are regarded by the members as a secondary line of reserves which can be drawn upon under appropriate conditions to supplement their own reserves of gold and foreign exchange at times when they have encountered temporary difficulties. -5Table 1. International Monetary Fund: Transactions outstanding on December 31* 1958 (Time elapsed from purchase to December 31* 1958) Amount in millions of US$ Up to and. including 12 months 3U9.13 13 to 18 months 203.83 19 to 2k months 987.27 25 to 30 months 88.38 31 to 36 months 17.00 37 to U8 months 25.00 U9 to 60 months 20.25 over 60 months 2.50 Total outstanding, Dec. 31> 1958 1,693.36 Fluctuations in the balances of payments of the member countries can be of considerable size. These fluctuations have occurred over the years for a variety of reasons, including shifts in trade and investment, political events, and the interaction upon each other*s economies of changes in price levels and reserve positions of the member countries. The resulting increases or decreases in reserves can be very large and can occur very quickly. Fund assistance gives a member country a breathing spell in which it can make the necessary adjustment in its internal and external policies so as to restore equilibrium without unduly increasing restrictions on international transactions . The proposed legislation involves no change in the method of operating the Fund, and no change in its policies. What is proposed is to give the Fund more adequate resources to attain its objectives under present world conditions. The existing quotas, which at the end of 1958 amounted to $9.2 billion, were based on data for the period preceding the Bretton Woods Conference. These data included factors such as prewar foreign trade, the relative size of - 6 the national incomes and. the monetary reserves of the member countries. On this basis the United States quota was set at $2.75 billion. Since 19UU, the relevant magnitudes of the factors affecting the balances of payments of the member countries have changed enormously. There have been very large increases in national incomes, in the volume and value of world trade, in price levels, and in monetary reserves. With the increase in the value of trade and. financial transactions, the magnitudes of the fluctuations in foreign exchange earnings and in reserves have also increased. In 1937, for example, as Table 2 shows, total imports of the free world amounted to about $27 billion, compared with about $100 billion at present. This great expansion in the total value of world trade has resulted from the combined effects of the increase in prices since the war, and the larger volume of goods traded. Both factors have been important. Along with this very large increase in the value of world trade, there has been a corresponding growth in various service transactions (such as tourist expenditures) and in capital movements between countries. Table 2. Free World Trade, 1937 and 1950 through 1958 (Expressed in millions of United States dollars) Calendar Years Exports (f.o.b.) Imports (c.i.f.) 1958 (est.) 1957 1956 9U,000 ioo,U8U 93,6U7 99,000 107,U29 98,206 1955 195U 1953 8U,317 77,677 7U,875 1952 1951 1950 73,891 76,573 56,690 88,980 79,608 76,569 80,196 81,399 59,338 1937 2U,199 27,275 Source: Based on International Financial Statistics - 6- - 7The result has been that Fund quotas have shrunk greatly in relation to. the pressures on foreign exchange reserves to which Fund members are subjected. Taking one simple measure, the percent of quotas to total imports, the quotas of most members are less than 10 percent of their annual imports • In time of need a country finds that the temporary assistance it can hope to obtain from the Fund is scarcely equal to one month's imports. This illustrates vividly the need for increased quotas and larger total resources if •S. the Fund is to be able to meet large and sudden foreign exchange situations, and if members are to regard their quotas as reasonably adequate second lines of reserves. Chart I I. M F EXCHANGE TRANSACTIONS The Fund's holdings of gold and dollars and other useful currencies comprise a pool or reserve available to be used quickly when needed. The experience of the Fund, since its creation, has shown that the need for Fund assistance has fluctuated greatly over the years. On Chart 1, you will see - 8the volume of the Fund's exchange transactions since it started operations. This chart also shows the rate at which resources were returned to the Fund. As repayments are made, the country whose currency has been used in the repayment takes back the cash in excess of the Fund's working balances, in exchange for non-interest-bearing notes. Large amounts of dollars have flowed back to the U.S. Treasury in this way during periods when repayments in dollars have exceeded new drawings. When a member country requests assistance from the Fund, it buys a currency it needs for a relatively short period of time by selling its own currency to the Fund in exchange. For example, under the arrangement recently agreed to with Argentina, as that country needs dollars to meet a temporary foreign exchange deficit, it buys the dollars from the Fund and pays the equivalent in pesos to the Fund. The same procedure would be used to obtain, say, deutsche marks or sterling. This type of transaction is what is meant by a drawing on the Fund. The total of the Fund's assets does not change, but the currency composition of the Fund does change with each transaction. Then after a period of time the country which has drawn from the Fund repurchases its own currency from the Fund, using gold or convertible currency for this purpose. In this way the Fund's assets are restored to their original position. If you will look at Chart 1, you will see that in 19U7 the Fund had exchange transactions of $U68 million. The annual amount decreased in 19U8 and 191*9, and Fund transactions were relatively small in amount up to 1956. This was partly because the large requirements of postwar reconstruction were being met principally from other sources; and also because in the strong economic upsurge in the latter part of this period, Fund members as a whole old not need short-term assistance. Moreover, in the earlier years the Fund, as a new institution, proceeded cautiously in working out policies on the use of its resources. In fact, if you will look at the dotted line on the chart, you will see that between 1950 and 1956, the member countries which had pre- - 9 - viously used the Fund's assets had for the most part repurchased their currencies from the Fund. At the end of 1955, outstanding drawings on the Fund had been reduced to a total of $23U million. The outstanding amounts consisted mainly of drawings made in 1953 and 195U by Japan and various Latin American countries. Two developments account for the very great increase in use of Fund resources in the last three years. First, a period of acute exchange difficulties began late in 1956 with the Suez situation and culminated in the exchange crisis of May-September 1957* which led to Y&ry large demands on the Fund. In little more than a year, dollar drawings amounted to $1.6 billion, and stand-by commitments reached almost another billion dollars. Second, the Fund has been very active in assisting member countries to carry out stabilization programs. In these circumstances of severe exchange crisis and of monetary and exchange stabilization, the Fund has made its resources decisively available. The Fundus resources were thus a vital element in surmounting major financial emergencies which would have had damaging effects on a worldwide basis if they had not been brought quickly to an end, and in supporting important efforts by countries to restore financial stability. Chart 1 shows that the Fund's resources revolve. Its transactions are not long-term loans, which will be outstanding for many years. They are transactions which are reversed within a relatively short period of time. The quality of the resources is not impaired in this process, since repurchases are made in gold and convertible currencies. Of the total drawings to date, the currency used has been mainly the dollar. There have also been substantial drawings of sterling and deutsche marks and small drawings of Canadian dollars, Belgian francs and Dutch guilders. Belgium, the Netherlands, and the United Kingdom, have been in the position of drawing dollars from the Fund at times when they needed dollars, but also at other times having their currencies drawn by other countries which needed them. The recently widened - 10 - convertibility of major European currencies should facilitate drawings of these currencies. However, the Fund's holdings of gold and U.S. dollars will continue to be the most essential elements in its operations. With gold the Fund can obtain any needed currency. Moreover, if a country with a major currency should encounter foreign exchange difficulties, it would ordinarily draw dollars from the Fund to carry out support operations. The Fund must be in a liquid position if it is to operate satisfactorily as a second line of reserves for its members. This means that it must have adequate amounts of dollars and. other major currencies which meabers can draw to help surmount their foreign exchange difficulties. The members must have the assurance that under appropriate conditions they can count upon the Fund to come to their aid when they have balance of payments deficits, or are undertaking important programs of financial and economic stabilization. It can Chart 2 11 never be predicted which country will need the Fund's aid or precisely how much it will need. But the Fund must have adequate resources when help is needed, and be ready to act promptly. As shown in Chart 2, at the end of 1958 the Fund's gold and dollar resources amounted to $2.3 billion, against which there were stand-by commitments of $911 million. The net amount of $l.li billion was small in relation to potential demands. As I have explained, the Fund's resources were reduced to this level principally by the large drawings and stand-by commitments arising out of the exchange crises of 1956-57. At their present level, the Fund would not be in a position to meet a recurrence of a drain of that magnitude. But the Fund must be able to cope with big demands, no matter how frequently or how unexpectedly they occur. In addition to making cash advances, the Fund enters into stand-by arrangements with members. These stand-by arrangements provide an assured line of credit, giving the country the right to draw up to a specified amount within a stated time, usually a year but sometimes six months. Stand-by arrangements have been used to assist countries to maintain the par value of their currencies, or to undertake important financial reforms, such as the establishment of new exchange systems or the elijaaination of complex multiple currency practices. An important example is the large stand-by arrangement presently outstanding in favor of the United Kingdom. Another is the one recently concluded with the Argentine Republic. The Fund at the end of 1958 had outstanding commitments amounting to $911 million under these stand-by arrangements. At times the fact that a country has a stand-by arrangement provides in itself sufficient reassurance, and there is no need actually to draw against it. For example, the United Kingdom has not drawn against its stand-by arrangement and the Netherlands did not draw throughout the life of the arrangement entered into in 1957. - 12 At a number of points I have mentioned that the Fund uses its resources to assist members to maintain or attain the objectives set forth in the Articles of Agreement—including stable and convertible currencies, freedom from restrictions on payments, and expanding world trade. To this end, countries seeking to draw on the Fund or enter into stand-by arrangements beyond the amount of the gold payment must satisfy the Fund as to the policies and measures which are expected to restore or maintain internal and external stability. In some instances, for example where the country has need of assistance only to meet a seasonal exchange shortage, a simple reaffirmation of existing policies is sufficient. But in other cases, where the balance of payments difficulties are large and persistent and arise from substantial imbalance in the domestic economy usually reflected in severe inflation, what is needed is a comprehensive stabilization program, including action in the fiscal, credit, and exchange fields. The Fund consults closely with any member which requests its advice in working out such a program. If an adequate program is developed and the member assures the Fund that it will be carried out, the Fund will make its resources available through a drawing or a stand-by arrangement or both. In some instances, U.S. banks and agencies of the U.S. Government have joined in assisting the stabilization effort as have also the Organization for European Economic Cooperation and some European governments. Many examples of this work of the Fund could be cited, including Argentina, Brazil, Chile, France, Haiti, Paraguay and Turkey. These stabilization programs are difficult and complex efforts. The Fund, as an international institution, is able to bring to bear a degree of objective judgment and to insist on rigorous corrective measures in a way which no government could successfully attempt in advising another government. The Fund keeps the programs under close review and consults with the member country as to the progress being made. They have not all been carried out to the full extent of the original plan. But even - 13 the least successful have had beneficial results. In my view, these stabilization activities are one of the most important and beneficial parts of 1he Fund's work. The large and important financial operations of the Fund in the past few years have made it clear that consideration should be given as to the adequacy of Fund resources to meet foreign exchange emergencies and other demands in the future. It was this situation which led the President last August to direct me to propose to the Board of Governors of the Fund wthat prompt consideration be given to the advisability of a general increase in the quotas assigned to the member governments." In October, I introduced a resolution at the New Delhi Meeting of the Governors calling on the Executive Directors to study and report on this question, and the resolution was unanimously adopted. The Directors did so and on December 21, 1958 submitted their report to the Governors accompanied by appropriate resolutions. Copies of this report have been supplied to the members of this Committee. On the closing date for voting, Governors with 99 per cent of voting power had approved the resolutions. The resolutions proposed by the Fund for action by the governments can be summarized very briefly. It is proposed to increase the quotas of most countries by 50 per cent. This would increase the United States quota by $1,375 billion from $2.75 billion to $U.125 billion. Very small quotas will be adjusted to bring them up to a reasonable level. The quotas of three countries—Canada, Germany and Japan—will be increased substantially more than 50 per cent. I am sure you will agree that the willingness of these three countries to make this relatively larger contribution to the Fund's resources is a vivid evidence of the importance which members attach to the role of the Fund. Deutsche marks and Canadian dollars have been among the currencies which Fund members have drawn. -litEvery country will be required to pay 25 per cent of its increase in quota to the Fund in gold. This means that while the increase in the quota of a country gives it additional drawing privileges on the Fund, each country is also required to add proportionately to the Fund's gold reserve. The United States will pay $3hh million in gold and the other members as a group will pay a total of about $900 million. Gold is the basic and most liquid resource of the Fund. The Fund has sold gold to the United States to obtain dollars in the past and it will undoubtedly do so again when conditions warrant. Similarly, with gold the Fund can buy sterling or marks or any other currency when its holdings of the currency are low. The Fund is an international cooperative effort; other countries will make their payments to the Fund and in the aggregate these will be large. The increase in Fund quotas will be effective only as the member countries increase their subscriptions to the Bank. This will maintain the parallelism between the Fund and the Bank which has existed since their foundation, each institution working in its own field and the two aiming at a prosperous and expanding economy for the free world. I should make clear that the proposed increase in the quota of the United States does not mean that the Fund will spend these new resources at once. The United. States will pay one-fourth of its quota increase in gold, but the balance will be held in non-interest-bearing demand notes, which will not represent a cost to the United States until such time as the Fund cashes them. Moreover, when the Fund's holdings of dollars increase as a result of repayments, the Fund returns cash to the U.S. Treasury and takes new notes. In this way, the cost of our participation in the Fund is kept to the minimum, as required by the Bretton Woods Agreements Act. As I mentioned earlier, there have been a number of years in which the Fund returned more dollars to the U.S. Treasury than it took out for new drawings. - 15 - This concludes my discussion of the Fund. The bill before you proposes to authorize me, as U.S. Governor for the Fund, to consent to an increase of 50 per cent in the quota of the United States, and it makes financial provision for this increase through a public debt transaction in the same way as the original Bretton Woods Agreements Act did. In my opinion it is essential that the Fund should have these enlarged resources promptly. International Bank I turn now to the proposed increase in the capital of the International Bank and in the U.S. subscription to the capital. The members of the Committee, I am sure, are generally familiar with the work of the Bank. Its function is less complex than that of the International Monetary Fund. The Bank advises member countries in the field of economic development, and makes long-term loans to finance such development. The reconstruction phase of the Bank's activities ended a few years after its organization. In this period the Bank made important loans to assist reconstruction in France, Denmark, Luxembourg and the Netherlands. Since that time, it has devoted its loans entirely to economic development. Chart 3 shows commitments and disbursements by years. The Bank has made a few loans to European countries for special purposes, such as the economic development of Southern Italy and the construction of power plants in Austria. But the bulk of its loans have been for development purposes in Asia, Africa, the Middle East and Latin America. -16Chart 3 The largest single item for which the Bank has made loans is the construction of electric power plants and the distribution of electrical energy. This single purpose accounts for about one-third of the development loans. About another third has been loaned for the improvement of transportation facilities, ports, harbors, railways and. highways. The balance of the loans have been for various industrial projects and agricultural reclamation and improvement purposes. The Bank's activities are worldwide. It has made over 200 separate loans amounting to $U.3 billion in the course of its 12 years of activity, and these loans have gone to 1|9 different countries. The Bank lends only to member countries, or with the guarantee of member countries. When it lends to private business, the loan must be guaranteed by the government of the country in which the project is located. Each loan - 18 The two per cent and the 18 per cent of capital are available for the Bank's operations. Up to date, the Bank has used the entire two per cent and approximately $1 billion out of a total of $1.7 billion of the 18 per cent subscribed capital. Member countries have agreed to make available to the Bank an additional $260 million within the next few years. About $U50 million of the 18 per cent capital remains to be released by various member countries, almost all of which are importers of capital. The bulk of the Bank's funds for financing its operations has come not from its own capital but from the sale of securities to investors in the United. States and abroad. It now has outstanding in bond issues $1.8 billion, of which $1.5 billion are denominated, in dollars and the balance in Swiss francs, Deutsche marks, Canadian dollars, Netherlands guilders and sterling. The bonds denominated in dollars have not all been sold to American investors. Some short-term issues have been sold, entirely outside of the United States to foreign investors, largely central banks, which have used, the Bank's bonds as a form of dollar investment of their monetary reserves. Moreover, foreign private investors have purchased, the Bank's bonds for ordinary investment purposes, in the same way as have American investors. The Bank estimates that approximately 60 per cent of its bond financing has come from American investors and the balance from abroad. Investors have recognized that the Bank has operated prudently and that its loans have been sound. This has done much to establish the high quality of the Bank's bonds. However, the ability of the Bank to sell its bonds to institutional and individual investors depends in large part on the fact that back of the Bank!s own assets is the contingent liability of the member governments to meet the obligations of the Bank through possible calls on the --^aJlgd 80 per cent portion of the capital. In other words, this 80 per cent portion of the Bank's capital constitutes a guarantee undertaken jointly and severally by all the member governments to supply dollars or other currencies needed to meet the Bank's obligations in the unlikely event that the Bank - 19 cannot meet these obligations from its own sources. There has been no call on the 80 per cent capital, and there is little likelihood of a call unless there should be a drastic deterioration of the international financial situation. In accordance with its Articles of Agreement, the Bank has since the beginning of its operations charged a special commission of one per cent on all loans. The money obtained from these commissions has been placed in a Special Reserve and invested in U.S. Government securities. This Fund, now amounts to $121 million. The Bank has also followed the policy, concurred in > bjOthe Go^RmorsT of ad&teig its^ftnual net <«fernin|S to a Supplemental Reflrve Against Losses and. this Supplemental Reserve is $260 million. The reserve policy which has been followed gives added reason for believing that the Bank will not have to call up additional capital to meet its obligations. Why under these circumstances are we requesting the Congress to approve an increase in the Bank's capital and an increase in the U.S. subscription? The answer is that only through these increases can the Bank continue issuing the dollar bonds which will provide funds for large-scale lending operations. Chart 4 • • aa#» Wm. • $ Mil. or Equiv. mmW* Calendar 1947 - 1958 663 Total Period 600 Non-Dollar 400 497 <%m Dollar 250 209 200 176 pajaaaj 135 107 98 87 Wmf-i 24 a-L mi Non-$ 9.99 - mm ISO '4? 4 " '53 '51 7 100 tO ISO 25 HO 23 75 '57 '55 59 ISO 24 - 12 7S 47 4SO 48 61S The maximum contingent liability of the United States under the Bank's Articles is at present $2.5U billion. As I mentioned, against this the Bank has outstanding a funded, debt of $1.8 billion. Currently, the Bank is lending at a rate of $700 to $800 million a year. Its borrowings in the last year amounted to $650 million, as Chart k shows, and may reach a larger amount in coming years. Continuation of the Bank's lending at its present rate can be successfully carried out only if more and more investors can be convinced that the bonds of the Bank are and. will continue to be of the highest quality. In the judgment of the management of the Bank, most of the United States institutional investors and many of the non-United. States investors in the Bank's dollar securities have been willing to take up, at reasonable rates of interest, the increasingly large and frequent offerings of the Bank's bonds chiefly because the bonds have the backing of the $2.5U billion representing the uncalled 80 per cent portion of the United States subscription. At the current rate of lending and. borrowing the Bank within the next two years will reach the limit of the United. States guarantee. As the amount of funded debt of the Bank approaches this point, the Bank is likely to find increasing hesitancy on the part of the market to take up its new issues of bonds. Some investors are already expressing concern over the relatively small remaining margin of the guarantee fund. The increase in the Bank's capital recommended by the Directors of the Bank will give renewed assurance to investors that the Bank's bonds are and will continue to be of the highest quality, and should provide the basis for continued favorable reception of the Bank's securities. This is the reason that we propose an increase in our subscription to the Bank along with an increase in the subscriptions of the other member countries. The proposal which the Board of Governors of the Bank has approved by unanimous vote consists of two basic parts. The first is to increase the total authorized capital of the Bank to $21 billion. The second is to increase - 21 the subscriptions of the present members by 100 per cent. The increase in the capital to $21 billion will provide shares for the increased subscriptions and also provide about $1 billion of shares to take care of the admission of new members and adjustments in the subscriptions of various members which may be made from time to time in the future. The 100 per cent increase in the subscriptions will more than double the security behind the Bank*s bonds. The proposal provides that the Bank will not call up any part of the increased capital subscriptions unless it is necessary to meet obligations of the Bank, which as I have already indicated is a very remote contingency. Unlike the original subscriptions to the Bank, the first 20 per cent of the additional capital will not be called up for use in the Bank's operations, but will simply be added to the contingent obligations of the members in the form of subscribed but uncalled capital. In this way, there will be no cash expenditure required of the United States Government or other member countries. The United States will be increasing its contingent liability by $3,175 billion. There are two other features of the proposal which should be mentioned. While the general increase in capital is 100 per cent, the capital subscriptions of Germany, Canada and Japan are to be increased in larger proportions. This corresponds to the special increases proposed for the quotas of these countries in the Fund. Their additional capital subscriptions will raise the liability of these three countries to an amount more in line with their current standing in the world economy. Secondly, the increase in capital subscriptions is not to be effective unless at least $7 billion of new capital is subscribed. In other words, the proposed greater contingent obligation of the United States to the Bank will become effective only if the members holding the bulk of the stock enlarge their liability at least proportionally. The Bretton Woods Agreements Act provides that the Governor for the United States may not vote for an increase in the Bank's capital without the authorization of Congress, and the United States subscription also cannot be - 22 -" 9*- "1 increased without Congressional action. The bill proposes to authorifce^me, as Governor for the United States, to agree to an increase in the Bank's capital to $21 billion and an increase of 100 per cent in the U.S. capital subscription. As I have already noted, this does not call for any cash expenditure by the United States. It does not mean that the Treasury will have to issue any additional securities. We have had authority on the books for 12 years to issue Treasury securities if needed to meet our contingent obligations to the Bank. We have not had to use that authority, and we do not expect to use the authority to be given by the bill before you. I believe that in the interests of the United States foreign economic policy, we should give this additional assurance to the investors who purchase the Bank's securities, so as to enable it to continue its great work of financing the economic growth of the less developed countries of the free world. With these increases in our subscription to the Bank and our quota in the Fund, we will be making an important contribution to the economic wellbeing of the entire free world. The enlarged resources of the Fund, should enable it to deal with the foreign exchange difficulties and emergencies which may arise in the coming years. The increase in the capital of the Bank will enable it to continue to finance its lending operations through the sale of its bonds to American and other investors. These two institutions have amply demonstrated over the last 12 years that they can and do prudently and efficiently use the resources entrusted to them to advance the economic development of the less industrialized areas and to promote and maintain sound international exchange and financial policies. -23- rn The United States has played a leading role in the Bank and Fund since their inception. Other members are looking to us for early action in this move to strengthen the financial resources of these two institutions. In his message to the Congress, President Eisenhower pointed out that there was real urgency for pronpt action. I would also emphasize that it is most important for the United States Government to maintain the posture of leadership which it now occupies in connection with these proposals which are designed to insure further progress toward realizing a better life for the peoples of the free world. It is my earnest hope that the Congress will promptly authorize the proposed increase in the capital of the Bank and in the United States subscription in the Bank and quota in the Fund. oOo -9 - 2Bi same general area, his gross income from the property may be determined with reference to the arms-length agreement between the aforementioned taxpayer and plant operator. Therefore, such integrated operators gross income from the property is based on the value of crude wet gas and does not include any amount attributable to the operation of his plant. However, in cases where there is an integrated operator and no contracts upon which to base the gross income determination, the administrative practice has been to apply the "Fiske Formula" as has previously been discussed. In applying this formula, separation by means of separators in the cycling plant has not generally been treated as conversion. The draft bill continues this exception. Lm <m> ~J -8 processes are not considered conversion beyond the crude state. Any processes which are applied which are not necessary to bring the oil to "pipeline standards" constitute "conversion beyond the crude state" under the draft bill- This position is in accord with the administrative practice in such situations. In the case of gas, in some instances the gas is run through a field separator when it is recovered from the ground. Under administrative practice, this process has never been considered as conversion and it is not so considered in the draft bill. The field separator is merely a simple mechanical device in the vicinity of the well by means of which some of the heavier hydrocarbons condense into liquids through reduction in pressure and temperature. As a general rule, the administrative practice of the Service has been to consider separation by means of separators in a plant as conversion beyond the crude state. In the case of a nonintegrated operation, where a taxpayer sells his wet gas to a cycling plant operator or gasoline plant operator, such taxpayerfs gross Income from the property is determined to be the amount received from the plant operator. This amount is assumed to be the value of the crude wet gas as delivered to the plant operator, and thus no portion of the value added by the plant operation has been treated by the Service as includible in gross income from the property. Furthermore, If there is an Integrated operator in the the crude state". Such terra is defined as any refining, fractionation, absorption, separation or other processing except for certain processes which have not been treated as conversion in administrative practice. Thus, under the draft bill, all processing of the oil or gas after its extraction from the ground, other than certain preliminary separating processes, is considered to be "conversion beyond the crude state". In the case of oil, when the oil is extracted from the ground, it is often not in suitable form and condition to be sold at the posted prices. It generally first goes through a mechanical separator and then to a settling or stock tank. If the oil is in a water emulsion, it may be treated with a chemical which merely helps the water to settle out of the emulsion in the tank. From the tank, the oil is generally delivered to the purchaser fs pipeline as crude oil. The oil is first measured in the tank, both as to quantity and quality, and the price received is based on these measurements. Therefore, the draft bill excludes from the term "conversion beyond the crude state" those processes which are applied to bring the oil up to the quality usually reflected by posted prices, that is up to "pipeline standards". Thus, if the oil goes through a mechanical separator, or if the oil is placed in a tank in order to settle out water and basic sediment, for the purpose of bringing it to "pipeline standards", these C C "f - 6products are sold by applying the "Fiske Formula". Under this formula, the amount for which the finished products are sold is reduced by the costs attributable to conversion, depreciation on equipment used in effecting the conversion, and a reasonable return on the investment in the plant in which the conversion is effected. The draft bill also provides that amounts attributable to transportation of the wet gas must be eliminated from the amount for which the finished products are sold. In cases in which portions of the oil or gas produced by the taxpayer are sold at different stages of production, the gross income from the property with respect to each such portion will be determined in accordance with the applicable provision of the draft bill. Thus, if a taxpayer producing crude oil sells half of such oil in the crude state prior to transportation and the balance In the crude state after transportation, gross Income from the property will be the sum of the amount for which the untransported crude oil Is actually sold and the representative market price of the transported crude oil prior to transportation. After setting forth the rules for determining gross income from the property where the oil or gas is converted beyond the crude state, the draft bill defines the term "conversion beyond - 5if he entered into a contract to sell his untransported crude wet gas to a processor. 03ie term "the same general area", as used in the draft bill, limits the area to the general geographic area in which the taxpayer is located. However, such term is not necessarily limited to the particular field in which the taxpayer is located. (ii) If there are no contracts in the same general area as the taxpayer, gross income from the property will be computed by eliminating from the amount for which the taxpayer sells the finished products, any portion attributable to transportation or conversion beyond the crude state. The draft bill provides that the portion attributable to transportation and conversion shall be excluded in determining gross income from the property In accordance with regulations prescribed by the Secretary or his delegate. It is contemplated that the regulations will conform to the administrative practice now being followed in the case of cycling plants. This practice has been to eliminate amounts attributable to processing from the amount for which the finished plant Cm. \mi Lmm - kwith reference to the percentage of the selling price of the finished plant products allocated to the producer under representative contracts between gas producers and gas processors in the same general area as the taxpayer. For example, if taxpayer A is producing wet gas and processing it to obtain finished products prior to sale, and if taxpayer B who is located in the same general area Is producing wet gas which he is delivering to processor C in return for 50 percent of the amount for which C sells his finished plant products, then 50 percent of the amount for which A sells his finished products will be treated as his gross income from the property. The draft bill further provides that the percentage is to be varied or adjusted, if necessary, to fit the peculiar conditions of the particular case. Thus, in determining whether taxpayer A is to use the 50 percent figure, or a greater or lesser figure, it Is necessary to consider the comparability of the wet gas of A and B, whether the 50 percent figure includes any transportation which is being furnished by B, and any other such factors that indicate that A might obtain a different percentage - 3 - C \J JL (a) If oil is processed beyond the crude state prior to sale, gross income from the property is equal to the representative market or field price for the oil. The same rule applies whether or not the oil is transported from the vicinity of the well in addition to being processed beyond the crude state prior to sale. However, if the applicable representative market or field price represents the price that would be paid at some delivery point beyond the well rather than at the well, such price must be adjusted to remove any amount attributable to transportation to the delivery point. (b) If gas is processed beyond the crude state prior to, sale, the first method for determining gross income from the property Is the representative market or field price as in the case of oil. However, in the case of certain types of gas, there may be no posted prices. Therefore, the draft bill sets forth alternative methods for determining gross income from the property where there is no representative market or field price. These are as follows: (i) Under the first alternative, gross income from the property is to be determined (l) If oil or gas is sold prior to transportation and conversion beyond the crude state, gross income from the property is equal to the amount for which the oil or gas is sold. (2) If the oil or gas is sold in the crude state but is transported prior to sale-(a) gross income from the property is equal to the representative market or field price for the oil or gas at the well; or (b) if there is no representative market or field price at the well, gross income from the property is equal to the amount for which the oil or gas is sold minus the portion thereof attributable to transportation. The portion attributable to transportation is-(i) if the taxpayer transports the oil or gas, the costs of the transportation plus a reasonable return on the investment in the transportation equipment, or (ii) if a common carrier or a contract carrier transports the oil or gas, the amount paid for the transportation by the taxpayer. (3) The draft bill contains separate provisions relating to oil which is processed beyond the crude state and gas which is processed beyond the crude state prior to sale. O £• „4 £-, v> v-' SUMMARY OF PROVISIONS AND DISCUSSION OF LEGISLATION TO PROVIDE DEPLETION "CUT-OFF" POINTS FOR OIL AND GAS PRODUCERS The Treasury proposal amends subsection (c) of section 6l3 by establishing "cut-off" points in the case of oil and gas for the computation of gross income from the property upon which the percentage depletion allowance is based. The draft bill takes the position that gross income from the property in the case of oil or gas is the gross income attributable to the oil or gas prior to transportation from the immediate vicinity of the well and prior to conversion beyond the crude state. Thus, the draft bill would codify the current position of the Service and the administrative practice that gross Income from the property is the value of the crude oil or gas rather than the processed product. The argument that certain processing does not constitute "manufacturing" will not be available to taxpayers under the draft bill because the draft states as a general proposition that income from all processing beyond the crude state Is not to be includible in determining gross income from the property. The draft bill then sets forth methods of determining the value of the untransported crude oil or gas under various circumstances o These are as follows: have required some companies to pay tax although they had no true net earnings while imposing a disproportionately low tax based on investment income in the case of other companies with large profits. The staff of the Treasury will be ready to assist the Committee at its request in its further consideration of the bill and related aspects of its work on the taxation of life insurance companies. - 16 - P 1 ^/ step 2 or underwriting gain portion of the tax base. It would not be permitted to reduce the net investment income base. Other features of the bill In computing the net operating gain, the companies are allowed a special deduction of 2 percent of net premiums on group life and group accident and health insurance business. This allowance is patterned after the reserve requirements of two States for purposes of strengthening the financial safety of companies conducting this kind of business. The bill also permits companies using the preliminary term method of computing reserves to determine their income tax as if they were on the stronger net level premium reserve basis. This feature would generally be of assistance to smaller companies. In view of the more adequate taxation which the bill provides of the entire net operating gain from all sources, it also extends the generally applicable individual dividend-received credit and exclusion to stockholders of life insurance companies. Conclusion The income tax liability under H. R. k2k^f as compared with the liability under past formulas, would be more in accordance with the true taxable capacity of life insurance companies. The bill would remove the inequities and inadequacies of the past formulas which fe_. \y ^y - 1* dividends, mifrht greatly minimi.?,a their tax liabilities in a manner not available to the stock companies. To meet this objection, the bill h?s provided thnt policy dividends may be deducted from the step 2 tax but are not allowed to reduce the investment income base. The portion of the tax base established in step 2 consists chiefly of underwriting gain arising primarily from the excess of premiums paid over mortality cost and other expenses. Consequently, it represents moneys contributed by the policyholders themselves which it would be inappropriate to tax if returned to the policyholders. On the other hand, the investment income base represents income received from third parties which it would be inappropriate to exempt after a reasonable allowance is made for the amount of interest required to build up policy reserves and meet other interest obligations on a sound and competitive basis. Because of the redundant premiums charged by mutual life insurance companies, they have an additional cushion besides their surplus with which to meet possible adverse operating experience. Stock companies, with their lower initial premiums, do not have this cushion and, consequently, must maintain a larger surplus. In recognition of this situation, the bill provides a deduction of 10 percent of the net increase in reserves on nonparticipating life insurance contracts. This special deduction is limited to the C \mJ *y - Ik - Phase 3 - Tax upon distributions of stock companies The third step provided under the bill provides a supplement for the partial tax on underwriting gains under step 2. One-half of the underwriting gains are taxed currently under step 2 but tax is postponed on the other half in view of the uncertainty as to the ultimate earnings results. Tax is deferred on this portion of the underwriting gain so long as it is kept in the company for the protection of policyholders or until it is accumulated beyond stated limitations. The tax on distributions would apply under any of the following conditions: (1) if the company pays cash dividends or cash distributions to stockholders which are in excess of the amounts of investment income and underwriting income which have previously been taxed, (2) if the cumulative amount on which tax is postponed exceeds 25 percent of life insurance reserves or 60 percent of the net premium income, whichever is greater, or (3) if the company ceases to be a life insurance company. Provisions for equalization of stock and mutual companies One of the major considerations in the formulation of an equitable long-range formula for the taxation of life insurance companies is the comparative treatment of mutual and stock companies. Throughout the development of this legislation, stock companies have been concerned that the mutuals, by increasing the size of their - 13 The 50 percent reduction also has the effect of applying a reduced rate of tax on underwriting gains so long as they are kept in the company for the protection of policyholders. Consequently, the incentive to alter reserves and adopt other changes in business or accounting practice merely for tax purposes is correspondingly reduced. If the net operating gain is less than the taxable investment income or if there is an actual net operating loss, the bill provides for the appropriate recognition of underwriting losses. The amount by which the net operating gain is less than the taxable investment income margin may be subtracted in full from the step 1 income base. If there is a net operating loss for the year there would be no tax liability. This feature of the bill should be of particular importance to small new companies, which characteristically have net operating losses in the early years when the business is being established. These small new companies have been required in the past to pay tax on their investment income regardless of the fact that they may have had an over-all loss situation. * The bill also provides for a three-year carryback and a fiveyear carryforward of net operating losses in a manner comparable to that applicable to corporations generally. - 12 - ? c; ^ t_ W lw/ Phase 2 of the bill reaches such underwriting profits by means of a simple and direct procedure. The company would first compute its net operating gain from all sources. Net operating gain would represent gross receipts from all sources less all expenses and all additions to reserves and benefit payments to policyholders. From the amount of net operating gain thus determined, the company would deduct the taxable investment computed in phase 1, since this amount has already been included in the company's tax base. The excess would represent primarily underwriting profit, plus whatever excess of investment income over interest requirements was not reached in step 1. After determining the excess of the net operating gain over taxable investment income, the company would add one-half of the excess to its taxable investment income base to arrive at the combined tax base under phases 1 and 2. The 50 percent reduction in the so-called underwriting gain for purposes of current taxation takes account of the point on which the life insurance industry has insisted that it is difficult, if not impossible, to establish with certainty the true net income of a life insurance company on an annual basis. This uncertainty is said to reflect the long-term nature of the contracts and the resulting need to retain what may temporarily appear as income in the current year as surplus or contingency reserves. y sJ * - \mJ £ _ - 11 - In computing the deduction rate, the industry average assumed rate is permitted as a possible relief measure to avoid a possible tax penalty on a company that has been more conservative than the industry consensus. On the other hand, in permitting a company to use its own assumed rate, where this is higher than the industry average, the bill provides for unusual needs of individual companies. Since the deduction rate is a combination of the earned and assumed rate, the effect of varying reserve interest assumptions on the deduction rate would appear to be minor. Consequently, this provision of the bill serves to minimize the problem of possible reserve manipulation for tax reasons. Phase 2 - Excess of net operating gain over the taxable margin of investment income (chiefly underwriting gains) The second phase of the proposed tax formula deals with a problem presented by past formulas based on investment income only, namely, the omission from the tax base of underwriting gains. Important changes within the life insurance industry since 1921 have increasingly outmoded the old formulas based on the concept that the only income of life insurance companies is their investment earnings. Between kO and 50 percent of the life insurance now in force involves relatively little investment income. Yet it may produce substantial underwriting profit or loss. f*. r- r ^ ; *-. \mJ .A. - 10 the mean of the actual rate earned by the company on its investments and the rate of interest assumed by the company in computing its reserves (or the industry assumed rate, if higher). In no case is the deduction rate to be higher than the earned rate. In applying the "deduction rate," the policy reserves are adjusted to the extent the deduction rate differs from the actual assumed rate used in computing reserves. This adjustment is designed to make the reserves consistent with the deduction rate used. If the deduction rate is higher than the assumed rate, as would almost always be the case, the reserves are adjusted downward. The adjustment of reserves is carried out on the basis of a statutory rule, the validity of which has been demonstrated by industry experience. Under this rule, for each 1 percentage point by which the deduction rate exceeds the assumed rate, the reserves are reduced by 10 percent. The use of a deduction rate which combines an assumed rate and the actual earnings rate of the company not only takes account of interest needed to maintain solvency. It also recognizes that competition within the industry generally requires companies to build into their premium structure a credit to policyholders for interest which is somewhat greater than the more conservative rate generally assumed in building up reserves. 0'^: i C v> -/ - 9 - approach in determining the amount of investment income subject to tax after deducting all interest needed for solvency and competitive requirements. Under both the 1955 stopgap and the 19^2 formula, the deduction for required interest is a specified percentage of investment income, fixed by statute or determined on the basis of an industry-wide ratio of interest needs to earnings. This percentage deduction is 85 percent under the 1955 stopgap, and about 15-l/2 percent under the 19^2 formula for 1958. Under each of these formulas the percentage deduction is the same for each company regardless of its own experience or situation. H. R. 42^-5 provides a deduction for investment income required to meet reserve and other policy contract obligations in a manner which reflects each individual company's surplus position and the relationship between its earned and assumed rates of interest. Part of this deduction is for interest paid on policyholder deposits, policy dividend accumulations, and similar indebtedness. Past formulas have subjected this deduction like the reserve interest needs to an averaging process. The most important part of the deduction for required interest is for reserve interest needed to build up life insurance and annuity reserves. In this important area the bill provides that the deduction is computed as a certain percentage, termed a "deduction rate," of each company1s adjusted insurance reserves. This deduction rate is 24 d - 8recognition of the existing exemption of qualified pension trusts and the fact that small business employers frequently insure their pension plans through insurance companies rather than set up pension trusts. It is estimated that H. R. ^2^5 would produce between $5^0 and $560 million revenue on the 1958 income of life insurance companies. This compares with the $500 million under the I9U2 formula and $319 million under the 1955 stopgap, if extended. Some $500 million of the total would arise from the step 1 tax on investment income. The 1958 estimate takes no account of the tax on capital gains or distributions which might arise in future years. Of the total estimated tax under H. R. 42^5, about 72 percent would be paid by the mutuals and 28 percent by the stock companies. This represents a small shift of burden percentagewise to stock companies. However, it brings the shares of tax more closely in line with the shares of business in force. Basically, H. R. 42*4-5 embodies a net operating gain or total net income approach. The following more detailed discussion indicates how the bill provides for arriving at a tax on the net operating gain in three steps, with features which help meet the special problems encountered in the taxation of the income of life insurance companies. Phase 1 - Determination of taxable margin of investment income One of the major features of H. R. k2k^ is Q n improved formula for measuring the taxable portion of net investment income. In general outline, the proposed formula appears to afford the best available 24d - 7 investment income tax as a kind of stabilizer or minimum to prevent mutual companies from deriving an undue tax or competitive advantage by deducting policy dividends. The proposed recognition of only half the "underwriting gain" on a current basis takes account of the long-term nature of the insurance business and the resulting difficulty in making a final determination of profit in any one year. This approach postpones the tax on the other half of such income if it is kept in the company for the protection of the policyholders. No tax is imposed on this other half until it exceeds certain limits or is paid in cash to stockholders. For the assistance of small companies, the bill provides a special deduction equal to 5 percent of investment income, up to a maximum deduction of $25,000. This allowance is similar to the additional 2-l/2 percent deduction on net investment income up to $1 million under the 1955 law, but is more liberal for the smaller companies. For future years, H. R. k2k5 also provides a special deduction for investment income on qualified pension plan reserves in computing the investment income tax base. This deduction, equal to the actual earnings rate of the company on pension plan reserves, is made gradually effective in three steps, becoming one-third effective in 1959 and fully effective in 1961. This special treatment is in y A . L-1 l - 0 - The bill differs from the present treatment in several important respects. The proposed new formula provides an improved approach in measuring the deduction for interest needs and the taxable margin of investment income. The deduction is determined with reference to the situation of the individual company rather than on the basis of a fixed percentage based on an industry average, as do the 1955 stopgap and 19^2 formula. The bill recognizes that underwriting gains are part of the income of life insurance companies. Trends in the industry toward group, credit, and term insurance which produce underwriting profits but relatively little investment income make it increasingly unrealistic to confine the tax base to investment income. The bill also recognizes underwriting losses. If the net operating gain computed in step 2 is less than the investment income base, the net operating gain is the tax base. If there is a net operating loss, there would be no tax liability. Present law imposes a tax on investment income even if the company is operating over-all at a loss. Policy dividends would be deductible in computing net operating gain but not to the extent this would reduce the net operating gain below the taxable investment income. This is intended to keep the 24.. companies have contended that the mutuals, by increasing the size of their dividends, would greatly minimize their tax burdens in a manner not available to the stock companies. As a result of the conversations with industry representatives, stock and mutual alike, the Treasury suggested a combination formula which would combine elements of the net investment income and total income approaches. This suggestion was outlined by Under Secretary Scribner in his statement before the Subcommittee of the Ways and Means Committee November 17, 1958. It invoked favorable response, some of which is reflected in the public hearings of the Subcommittee. The combination approach, with some constructive modifications, was adopted by the Ways and Means Committee and is contained in the bill now before your Committee. In brief, the bill would tax life insurance companies on an income base consisting of three parts: (1) the taxable investment income margin above interest needs, (2) one-half the excess of net operating gain over the investment income margin (this part would comprise chiefly underwriting gain), and (3) to the extent distributed to shareholders, the other half of the "underwriting gain" on which tax was postponed in step 2. Capital gains of life insurance companies would be taxed separately at a 25 percent rate, beginning in 1959* Gains would be measured with reference to the December 31> 1958 market value or cost, whichever is higher. - k - In April of 1953 the Secretary of the Treasury in similar letters to the Chairman of this Committee and the Chairman of the House Ways and Means Committee submitted suggestions for the development of a permanent tax formula for life insurance companies. These proposals became the basis of intensive study and helpful discussions within the life insurance industry. In the April 1958 letter, the Treasury recommended that the Congress consider alternative methods for taxing life insurance companies, giving first consideration to a "net operating gain" or "total income" approach which would reach underwriting profits. In the course of subsequent consultations with industry representatives, it was urged that a change to the total income approach would shift much of the burden of taxes to stock companies and permit mutual companies to avoid a share of the tax, thus placing stock companies at a competitive disadvantage. Stock companies typically write nonparticipating life insurance contracts (with fixed net premiums and no dividends to policyholders), and have relatively lower reserves and higher surpluses than mutual companies. Mutual companies write participating life insurance contracts, charging higher premiums at the outset but distributing dividends to policyholders throughout the life of the policies. Since the total income approach would start from "net gain from operations after payment of dividends to policyholders," the stock - 3In 19^7 the then applicable law, adopted in 19^2, resulted in no Federal income tax on the life insurance business. In the last ten years a series of "stopgap" formulas were adopted. The latest of these, adopted in 1955, taxed each life insurance company on a fraction of its net investment income after a reserve and other policy liability deduction of 87-1/2 percent on the first $1 million of net investment income and 85 percent on net investment income in excess of $1 million. The 1955 stopgap formula was originally enacted for one year only and was extended on a year-to-year basis. For any year in which it is not extended, the 19*4-2 formula automatically reapplies. The present situation, therefore, is that in the absence of further legislation, the 19*4-2 formula would apply to 1958 income, resulting in revenues of about $500 million. The 1955 stopgap, if extended, would produce $319 million. The latest extension of the 1955 stopgap was adopted, as the Committee will recall, in March of 1958, applicable to income for the calendar year 1957• While the Treasury went along with the extension of the 1955 stopgap to 1957 income, it was made clear that recommendations for permanent legislation would be submitted by the Treasury Department in the near future. The Department has opposed a further extension of the 1955 stopgap. - 2r" investment income of $3.75 billion, total income from premiums and investments of around $20 billion, and a net operating gain of some $1.2 billion. Insurance in force was on the order of $500 billion. The number of life insurance companies has been increasing rapidly in recent years, having more than doubled since 1950. Of about 1,350 life insurance companies in operation in 1958, less than 200 were mutual and about 1,200 were stock companies. Mutual companies hold about three-fourths of the assets of the industry, have about 63 percent of the insurance in force, and account for some 58 percent of the net operating gain after policy dividends. There have always been certain difficulties in applying the same tax formula to both stock and mutual companies, and it is important that the tax law should not damage the competitive situation of either type of company. Since 1921, life insurance companies, both stock and mutual, have been taxed only on a portion of their net investment income, after deducting an allowance designed to cover the interest required to meet obligations to policyholders. The various tax formulas have ignored premium receipts and the underwriting profit which results when premiums exceed actual mortality costs, other policyholder claims or benefits, and related expenses. Capital gains and losses of life insurance companies have also been disregarded for tax purposes. TREASURY DEPARTMENT WASHINGTON Statement by David A. Lindsay, Assistant to the Secretary of the Treasury, before the Senate Finance Committee, on H. R. 42^5, relating to the taxation of the income of life insurance companies, March 3> 1959 MR. CHAIRMAN AND MEMBERS OF THE COMMITTEE: I welcome this opportunity to appear before your Committee and to present the views of the Treasury Department on H. R. 42*4-5, the Life Insurance Company Income Tax Act of 1959* The Treasury Department supports this important measure. We believe that it provides an equitable, long-range basis for the taxation of life insurance companies. Before commenting on the proposed legislation in greater detail, I wish to express the appreciation of the Treasury Department for the careful and objective study which your Committee and the Congress have given to this difficult area over the years. These studies and discussions have contributed greatly to the present understanding of the problems involved in the taxation of life insurance companies. The formulation of a reasonable net income basis for taxing life insurance companies has been complicated by the fact that the industry comprises both stock and mutual sectors which represent alternative and competitive ways of conducting the life insurance business. At the end of 1958 the life insurance industry had assets of around $107 billion. Its investment portfolios have been growing at a rate of about 6 percent annually. For 1958, the industry had net A-461 24 TREASURY DEPARTMENT mwmnmr W A S H I N G T O N , D.C. RELEASE A. M. NEWSPAPERS, Tuesday, March 3, 1959* A-460 The Treasury Department announced last evening that the tenders for two series of Treasury bills to be dated March 5, 1959, which were offered en February 26, were op4 at the Federal Reserve Banks on March 2. Tenders were invited for $1,500,000,000, oi* thereabouts, of 91-day bills and for $400,000,000, or thereabouts, of 182-day bills. The details of the two series are as follows: RANGE OF ACCEPTED 91-day Treasury bills COMPETITIVE BIDS: maturing June 4, 1959 Price High Low Average 99.305a/ 99.280"" 99*288 Approx. Equiv. Annual Rate 2.7492 2.848$ 2.8l6$ 182-day Treasury bills maturing September 3, 1959 Price Approx. Equiv. Annual Rate 98.443b/ 98.418"" 98.427 3-< 3.129$ 3.111$ a/ Excepting one tender of $200,000 ]>/ Excepting two tenders totaling $1,015,000 68 percent of the amount of 91-day bills bid for at the low price was accepted 85 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: District Applied For Accepted Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco TOTALS $ 22,491,000 1,561,066,000 36,733,000 34,574,000 11,674,000 25,416,000 199,036,000 21,219,000 12,767,000 42,201,000 21,142,000 101,554,000 ,089,873,000 $ 11,491,000 t $ 5,305,000 526,675,000 1,059,596,000 s 10,161,000 17,773,000 : 25,876,000 29,574,000 t 2,226,000 11,674,000 : 4,529,000 24,636 ,000 : 107,161,000 162,116 ,000 : 5,025,000 21,219 ,000 J 7,061,000 11,767,000 * 6,115,000 37,921,000 i 2,369,000 21,142,000 . 21,971,000 91,554,000 t $1,500,463,OOOo/ $724,474,000 Applied For Accepted $ 5,305,000 255,675,000 5,101,000 20,876,000 2,226,000 3,395,000 77,961,000 4,775,000 2,686,000 6,115,000 2,369,000 13,896,000 1 • r $4OO,38O,O00d/ '— c/ Includes $235,601,000 noncompetitive tenders accepted at the average price of 99 3/ Includes $24,879,000 noncompetitive tenders accepted at the average price of 98.427 1r H8LSASE A. K. MMSPAPEES, ftossday. ffareh 3, 1959. , |\ * \i'y \ The Treasury Department announced last evening that the tenders for two series of treasury bills to be dated March 5> 1959, which were offered on February 26, were opened it the Federal Reserve Banks on SCareh 2* fenders were invited for 11,500,000,000, or thereabouts, of 91-day bills and for 1400,000,000, or thereabouts, of 182-day bills. fhe details of the tiro series are a® follows? RANGE OF ACCEPTED 91~day Treasury bills i 182-day treasury bills GtmVtlfVfE B U M * maturing tfune L 1959 % maturing September 3* 1959 mmmmmmmmmm9m9Emmmmm9mmm99mantm\\\ High Low Average 99.305s/ 99.26XT 99.288 %j Excepting one tender V Excepting two tenors 68 percent of the amount 85 percent of the amount \ \t\h mmmm^ ni Approx. Equiv. Annual late 2.?49jg ?.848$ 2*Bl6% awawaaaaaaMaanaaaa]aaMwawaa«aMaaa» s % tt i . t Price 98.443£/ 98.418 98.427 Approx. Equiv. Annual Hate 3.080$ 3.129$ 3.111$ of #200,000 totaling #1,015,000 of 91*day bills bid for at the low price was accepted of 182-day billi bid for at the low price was accepted TOTAL TENDERS APPLIED F08 kW ACCEPTED BT FEBEfiAL BESERYE DISTRICTS. District Applied For Accepted t Applied For aaawkMMaManwiMpM aAaaaaaMawatMalWiWMMi mmmmmvtii mm 'iniimwi im m inn Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San vrancisco TOTALS | 22,491,000 1,561,066,000 36,733,000 34,574,000 ll,67l»,000 25,416,000 199,036,000 21,219,000 12,767,000 42,201,000 21,142,000 101,554,000 ^2,089,873,000 * 11,491,000 : # 5,305,000 1,059,596,000 t 526,675,000 17,773,000 s 10,161,000 29,574,000 j 25,876,000 11,674,000 s 2,226,000 21,636,000 s 4,529,000 162,116,000 t 107,161,000 21,219,000 s 5,025,000 11,767,000 : 7,061,000 37,921,000 t 6,115,000 21,142,000 S 2,369,000 91,554,000 i 21,971,000 £1,500,463,000^* f724,474,000 i II mmmmmmmmmAmmmmmmtmSmmmimmmtm —awim » «w«taB—— iMwaaiaaiimawiaalMaaa* ""••''•"•'"•"'••"••••a $ 5,305,000 255,675,000 5,101,000 20,876,000 2,226,000 3,395,000 77,961,000 4,775,000 2,686,000 6,115,000 2,369,000 13,896,000 $400,380,OOOd/ •••""«"•""••••••«"• cf Inclxides ^35,601,000 noncompetitive tenders accepted at the average price of 99.288 a/ Includes 124,879,000 noncompetitive tenders accepted at the average price of 98.427 ^U% U)JM. IMMEDIATE RELEASE, Friday, February 27, 1959 A-459 Under Secretary of the Treasury Julian B. Baird and Ambassador Fernando Berckemeyer of Peru today signed a one-year extension of the exchange agreement between the U. S. Treasury and the Government and Central Bank of Peru. Under the exchange agreement, Peru may request the United States Exchange Stabilization Fund to purchase Peruvian soles up to the equivalent of $17.5 million should the occasion for such purchases arise. Any soles acquired by the Treasury would subsequently be repurchased by Peru for dollars. A similar agreement, in the amount of $12.5 million, was made in February 1954, and replaced in February 1958 by the present agreement in the amount of $17.5 million. The agreement is designed to assist Peru in continuing efforts to achieve economic stability and freedom for trade and exchange transactions. Peruvian authorities have stated that they intend to permit the international value of the Peruvian sol to be determined by basic supply and demand forces in the exchange market while at the same time conducting exchange operations so as to minimize fluctuations arising from purely temporary or erratic forces. In connection with this program, the International Monetary Fund has announced a stand-by arrangement in the amount of $13 million to replace the present agreement of $25 million under which $12 million has been drawn. Peru is also renewing lines of credit in the amount of $17.5 million with U. S. commercial banks. oOo X , c 'l y I A ' ! \ BRATT PRESS RELEASE >* ' Under Secretary of the Treasury Julian B. Baird and Ambassador Ifernando Berckemeyer of Peru today signed a one«»year extension of the exchange agreement between the U # S. Treasury and the Government and Central Bank of Peru# Under the exchange agreement, Peru may request the United States Exchange Stabilization JUnd to purchase Peruvian seles up to the equivalent of $17• 5 million should the occasion for such purchases arise. Any sales acquired by the Treasury would subsequently be repurchased by Peru for dollars. A similar agreement, in the amount of $12# 5 million, was initiated in February 1954, and replaced in ffebruary 1958 by the present agreement in the amount of $17 «5 million. The agreement is designed to assist Peru in continuing efforts to achieve economic stability and freedom for trade and exchange transactions. Peruvian authorities have stated that they intend to permit the international value of the Peruvian sol to be determined by basic supply and demand forces in the exchange market while at the same time conducting exchange operations so as to minimize fluctuations arising from purely temporary or erratic forces • In connection with this program, the International Monetary Eind has announced a stand-by arrangement in the amount of $13 million to replace the present agreement of $25 million under which $12 million has been drawn* Peru is also renewing lines of credit in the amount of $17»5 million with U # S # commercial banks^and there is $ffHtg%llifli fWllftlMlug—^qila^yfcJh^jriJ I L O P craAi,^ttu^fefrarjgefrtayrtfie~Kcport^Biport Bank in Auguat 1958/ + f«> y.ymp,^K^ -8- 23 i which will allow the institution, when it shall have proved itself worthy, to float its own bonds on private capital markets, thus helping to increase the total flow of development capital into Latin America. It is hoped, also, that the new institution will play a significant role in the field of technical assistance and cooperation. The institution should have facilities to provide technical assistance in economic development planning and activities. It would be out? hope that the new institution would be so staffed that, when requested, it could provide advice on development priorities and provide assistance in the preparation of specific project proposals. It may also wish to consider the establishment of facilities for training officials of member countries and to provide seminars in development planning and operations. The new institution might enter into appropriate agreements with other institutions which provide technical advice and assistance. In addition to the regular loan department of the proposed Bank, we are studying with our Latin American friends the possibility of having a relatively small "soft loan" or special loan section of the institution which would be able to grant certain special loans in situations where granting a normal loan might not be justified. Such a section would be supported by subscriptions from all the member countries and represent a unique blending in a single institution of the power to make hard loans and the power to make special loans. The results of these negotiations involve many countries other than our own. I am optimistic that within a few weeks we will have agreed upon the framework of a banking institution which could promise much for the future development of Latin America. When this framework, in the form of a final act, has been formerly signed at the conclusion of our negotiations in Washington by the representatives of the negotiating countries, it will be submitted to all of the governments for approval through their normal constitutional procedures. The opportunity I have had to work closely with representatives of all of the American Republics in the past few weeks* has given me a new awareness of the cooperative spirit which permeates our hemisphere. That spirit offers the prospect of closest cooperation not only between the United States and our southern neighbors but among the individual countries of the area as well. oOo fi— V ^ v > - 7The International Monetary Fund, however, was specifically designed to assist countries in balance of payments difficulties, It is staffed by highly competent technicians skilled in the diagnosis of fiscal and monetary problems. It is able to point out that the limited assistance It can make available will give no lasting benefit as long as the recipient country is not following fiscal and monetary policies which promise recovery from the balance of payments situation in which it finds itself. The International Monetary Fund has been extremely active in Latin America in the last two or three years. You know that the President has asked for authority to increase the U. S. quota in the IMF by 50$, in conjunction with similar increases by all the other member countries. The Fund will thus be in a position to continue to lend valuable assistance to countries. with temporary exchange difficulties. The President also has asked for an increase of over $3 billion in the United States subscription to the International Bank for Reconstruction and Development. This subscription will not require any cash transfer to the Bank; it represents an increase in the "callable capital" or guarantee fund against which the International Bank is able to sell its bonds in private capital markets. This brings me back to the new Inter-American Development Banking Institution which I mentioned briefly. Since we are still in the stage of negotiation, it is difficult for me to say much about the U. S. position. But the intention of the Latin American countries and of ourselves is to create a development bank which will concentrate all of its attention on the development problems of Latin America alone. This new institution is expected to supplement existing sources of public capital. We hope that It will differ from existing Institutions in several ways. In the first place, we hope it will be thoroughly inter-American in the sense that all of the member countries will make a meaningful contribution to its capital and will play an important role in guiding its operations. The United States has proposed that the institution have two segments of capital, very carefully segregated. The larger segment would be used to make ordinary loans of the type that existing Institutions or private banks might make. We have proposed that the cash subscriptions to this ordinary loan M department be supplemented by a subscription of "callable capital - 6- 23o I would like to cite, however, a recent report of the Committee for Economic Development entitled "DEFENSE AGAINST INFLATION." As you know this report directs itself to the United States situation; inflation is a problem for all of us and v/e are keenly aware that the developed countries are not immune from its effects. The first sentence of that report states that, "Inflation is one of the major unsolved economic problems of our times." Further along in the summary, the report says: "There is some tendency to believe that the acceptance of inflation is necessary to maintain high employment. But, there is no evidence to support this belief. There have been periods in this country's history when the economy grew at a rapid rate while prices were rising, but there were other periods of rapid growth when prices v/ere stable or falling." But, I think the following sentences are more useful in our consideration of our common problems. The report continues: "Even during the periods of rising prices /In the United States/ there was no general expectation that inflation would continue.... If we learn to accept inflation, the forces making for economic growth will certainly not be strengthened — the likelihood is that they will be weakened." There is a lot we do not know about inflation and a lot that we do not know about the relationship of inflation and rapid economic development, but where inflation has come to be accepted as a continuing phenomenon the forces of development will be weakened rather than strengthened. We must guard against this expectation of inflation permeating the economic life of our countries. As Secretary Anderson said recently in testimony before the Joint Economic Committee: "If we ever reach the point where people believe that to speculate is safe but to save is to gamble then we are indeed in trouble." Because we. firmly believe that domestic inflation is a serious barrier to the acceleration of economic development, the U. S. Government has been pleased when countries seeking the assistance of the United States because of balance of payments difficulties have approached the International Monetary Fund before entering into negotiations with United States Government agencies. The IMF, as an international institution staffed by international civil servants, is frequently able to obtain the agreement of the applicant country to corrective domestic economic measures. Commitments c$n be given to an international institution which it would be politically difficult for a sovereign government to give to another sovereign government. 23 - 5 - in placing their funds abroad. If inflation is rampant in their own country, they know that by placing their money abroad they can expect over a period of time, an exchange profit which may in many cases be equal to or greater than the profits they could reasonably expect by reinvesting domestically. Both a greater degree of economic stability and a greater degree of political stability would contribute to a consistent policy of more domestic reinvestment of capital accumulated in many countries. The removal of domestic savings is doubly harmful. Not only is local investment deprived of financing by this capital outflow, but the outflow also represents a foreign exchange loss, offsetting in part the inflow of private and public capital designed to encourage development. Misdirection of investment takes many other forms as well. Investment in real estate is favored in many countries over investment in more highly productive enterprises. Again, I believe this preference can be traced to inflation. Speculative investments in land and buildings have been made as attempted hedges against Inflation in many countries. Misdirection of investment takes many more subtle forms. In the presence of rapid inflation, quick profits are possible in retail and wholesale trade. Moreover, capital invested in stocksof goods remains relatively liquid as compared with capital invested in factories. Another point might be mentioned. Private investors are increasingly reluctant to invest in any activity subject to official regulation of rates. Rates for electric power and transportation, for example, are set by the government In many countries. In an inflationary situation, officially regulated rates almost inevitably lag behind increases in costs. As a result, it is difficult to make adequate profits and may be Impossible to accumulate adequate capital for replacement or expansion of the physical assets involved. A shortage of power facilities is found in many countries. As private investment is squeezed out of these fields, the vacuum tends to be filled by public investment. Since in many of the countries involved government revenue does not cover current government operating expenses, government investment is very likely to be Inflationary investment. Because of the limits on the length of these remarks, I will not expand further on the ways in which inflation tends to restrict and distort Investment. I 9 - 4 - nO4 Still speaking in simple "black and white" terms, the type of development I have just outlined can be avoided in one of two ways -or, of course, by a combination of the two. If the money spent on investment comes (l) from domestic savings, or (2) from foreign.investments — then, the added spending of those working in the investment area is (l) offset by the "non-spending" of the domestic savers, or (2) can be satisfied by additional imports financed by the foreign investment. The best available estimate indicates that total gross investment in Latin America in 1957 amounted to about $10 billion. Of this amount, foreign investment accounted for about $2 billion or 20$ of the total. Certain special capital payments to Latin America, and specifically to Venezuela, probably distorted this relationship in the year chosen. Over a longer period, it has been estimated that foreign investment may have accounted for about 10fo of the total gross investment in the Latin American area. It is not unreasonable to assume that the flow of private capital into Latin America is capable of further expansion. Private capital flow will continue to be supplemented by the flow of capital through public sources. As you know, public capital is invested through agencies such as the Export-Import Bank, the International Bank for Reconstruction and Development, The Development Loan Fund, and the prospective bank on which we are now working. The expansion of foreign investment from both private and public sources should keep pace with the total growth of sound development investment opportunities in Latin America. The United States Government has indicated that it will use its best efforts to insure that this is so. A major unsolved problem is whether domestic savings and domestic capital in Latin America will also be marshalled at a rate which will permit the acceleration of economic development in the area. As I have suggested, domestic capital now represents, and must continue to represent, by far the major share of total investment. This is not to say that a fixed and unchanging relationship between domestic capital and foreign capital can be postulated. But, the preponderant share must certainly come from domestic sources, if only to insure that the burden of servicing external debt does not become substantially heavier than it now is. It is characteristic of highly inflationary economies that Investment is likely to be misdirected. The worst form of misdirection is when capital accumulated domestically is not invested at all in the country from which it is derived. The incentive for investing abroad is safety rather than maximum earnings. While we might wish that patriotic interest in domestic development would induce capitalists to invest in their own country, it is not difficult to understand their economic thinking agriculture, in the extractive industries, in transforming their own raw materials into finished goods, and in the tasks of daily living. In some cases the resulting dreams of industrialization leap well beyond practical possibilities; or at least, beyond shortterm practical possibilities. Some under-developed countries see the present position of the industrialized countries but do not fully appreciate the fact that the present position of the more developed countries represents the result of many decades of step-by-step progress in working for political stability, in broadening and deepening the educational background of their populations, in eliminating social barriers to initiative, and in founding and nurturing thousands of small enterprises which contribute so importantly to the total output of their economies. These countries also required, and continue to require, a very large volume of savings every year to finance current investment. In its eagerness to move forward rapidly into industrialization, a less developed country may try to do more than it can afford in real terras and in financial terms. The result can be to build up dangerous inflationary pressures which delay rather than hasten the progress which is sought. Let me explain what I mean in a very brief and over-simplified way: industrial development requires investment. Investment means spending money, and industrial investment of the highly technical type which Latin America needs means spending a great deal of money. The money spent on building factories, hydroelectric plants, port facilities9 roads and all the other necessary elements of industrial expansion enters the economy (in the final analysis) through wages. Additional purchasing power Is generated at a time when the spending process - the investment - is not creating any new consumption goods. More money bidding for an unchanged volume of goods means either rising prices or rising imports, or both. If prices of consumer goods were to rise, workers would demand higher v/ages. Costs of production would increase and exporters would find it harder to sell their goods abroad. Perhaps they would find the inflating home market more attractive than competitive foreign markets, and the countryfs exports would begin to fall off. In such circumstances, a first class balance of payments problem might be just around the corner. Perhaps the country may now decide to adopt a complex multiple exchange rate system, or rigid exchange controls, in the hope of tempering the threatening shortage of foreign exchange. In a short time, this "solution" would add serious additional complications - and government controls, rigidity, and distortions would follow quickly. Sound Industrial development would be severely hampered and might come to a complete stop. - 2 Washington preparing a series of proposals to be submitted to the full "Committee of 21" at its second meeting to be held in Argentina later this year. At the same time, representatives of all of the Latin American countries and of the United States are negotiating in Washington to draft a charter for a new inter-American development banking institution. I have the privilege of leading the United States delegation in these latter negotiations, and I hope to make a few remarks about our progress. I know, from my previous activity in Philadelphia, a good deal about the importance of Latin American trade to the city and to the Port of Philadelphia. I am sure you are equally aware of these facts. Nearly one-quarter, by value, of the cargoes that enter the Port of Philadelphia come from Latin America and a little more than one-quarter of the cargoes that leave Philadelphia are destined for Latin America. For the United States as a whole, just under 30$ of our import and export trade combined is carried on with Latin American countries. At the end of 1957, the book value of all United States investments in Latin America, public and private, direct and portfolio, amounted to more than $12 billion. This was just under one-quarter of total U. S, investment abroad. Direct private investments by U. S. firms in Latin America represented some 35$ of oi direct private investments throughout the world. While these figures are impressive, they should not surprise us. Latin America, as you know, has recently passed the United State's in total population. Population studies show that, if present trends continue, the population of Latin America could reach 590 million in the year 2000, or about double the prospective population of the United States and Canada combined at that time. The area produces man]/ raw materials needed for industrial consumption both in the United States and throughout the world. It produces food stuffs and beverages which are common items of American consumption. On the import side, Latin America is dependent for a vast range of manufactured goods on the industrial capacity of the United States and other highly industrialized countries. Latin America, as is true of ail the less developed areas of the world, is going through what someone has called the "revolution of ^ rising expectations." Modern methods of transportation and communication have spread to all corners of the world an awareness of the standard of living which has been attained in the United States and in the countries of Western Europe. The less developed countries have come to recognize that the more advanced countries have learned to increase production manyfold by harnessing mineral power and water power to supplement human power. They see that the advanced countries have developed machinery to serve them in a hundred ways,... In transportation, in mechanization of TREASURY DEPARTMENT Washington Lm. \m/ Km/ REMARKS BY ASSISTANT SECRETARY OF THE TREASURY T. GRAYDON UPTON, AT A LUNCHEON MEETING OF THE FEDERAL BAR ASSOCIATION, WIDENER BUILDING, PHILADELPHIA, PENNSYLVANIA, THURSDAY, FEBRUARY 26, 1959 ASPECTS OF ECONOMIC DEVELOPMENT IN LATIN AMERICA Since I left Philadelphia for Washington some eights weeks ago, I have felt very close to our Latin American neighbors. : I do not refer to the fact that Washington is over a hundred miles farther south — but rather to the fact that, although my responsibilities in the Treasury deal with U. S. financial relationships with the entire world, I believe that no less than 75$ of my time in" these first two months has been taken up with consideration of our relationships with Latin America. You will recall that it was just a little less than a year ago that Vice President Nixon, after representing the United States at the inauguration of President Frondizi of Argentina, made a tour of the capital cities of most of the South American countries. In July Dr. Milton Eisenhower, accompanied by a small group of government officials, visited the Central American countries. In August, Secretary of State Dulles made a special journey to Brazil. All of these visits reflected the interest of the United States, both the general public and the Administration, in the progress and problems of our Latin American neighbors. It was during this period, also, that President Kubitschek of Brazil introduced what has come to be known as "Operation Pan America". The Brazilian President chose this phase in calling upon the American republics to review the status of economic cooperation in this hemisphere. As the first step in Operation Pan America, a meeting of Latin American Foreign Ministers took place in Washington last September. This was followed by a four-week meeting of Special Representatives charged with the task of devising ways and means of increasing economic cooperation throughout the hemisphere and of facilitating the economic development of Latin American countries. This meeting was generally referred to as the "Committee of 21.' When that Committee adjourned, it established a working group which including delegations from fourteen of the countries of the original n Agroup -H 58 of twenty-one. This "Committee of l4 is presently at work in Aspects of Economic ifeveloggicnt in h&tin AnsrSca Since I left Philadelphia for Washington so:ie eight weeks ago, I ha ye felt very close to our Latin American neighbors. I do not refer to the fact that Washington is a hundred miles farther south but rather to the fact that, although my responsibilities in the Treasury deal with u. S# financial relationships with the entire world, I believe that no less than 7$% of my time in these first two months has been taken up with consideration of our relationships with Latin America. You will recall that it was just a little less than a year ago that Vice President Nixon, after representing the United States at the inauguration of President Ftaondissi of Argentina, made a tour of the capital cities of most of the South American countries. In July, !-r. Milton Eisenhower, aiasoeipanied hy a small ^rovp of government officials, visited the Central American countries* In August, Secretory of State Dulles siade a special journey to Brasil* All of these visits reflected the interest of the T7nited States, both the general public and the Administration, in the progress and problems of our Latin American neighbors• It was during this period, also, that President Kubitschel. of Brazil introduced what has come to be known as lf Operation Pan America". The Brazilian President chose tills phrase in calling upon the American republics to review the status of econoiaic cooperation in this herd, sphere. As the first step in Operation Pan Aaerica, a meeting of Latin American foreign Ministers took place in Washington last September. This was followed by a four-week meeting of Special Representatives charged with the task of devising ways and ncans of increasing economic r- ^ <f - 2 * - cooperation throughout the hemisphere and of facilitating the economic development of Latin -Ancrican countries* This was* generally referred to as the ^Oomgnittee of 21.n When *m fi § that CofSfdttee adjourned, it established a working group which inoluilt^ delegations frois fourteen of the countries of the original twenty-one. This TTO^.V. of ?f Cormiittee of lit11 is presently at work in Washington preparing a series of proposals to be submitted to tte full Connittee V of 21 at its second meeting to be held in Argentina later this year. At the same time, representatives of all of the Latin American countries and of the United States are negotiating in "Washington to draft a charter for a new inter-American development banking institution. I have the privilege of leading the United States delegation in these latter negotiations, and I hope to make a few remarks about our progress. I know, frtm -sty previous activity in Philadelphia, a good deal about the importance of Latin American irade to the city and to the Port of Philadelphia. T am sure you are equally aware of these facts. Nearly one-quarter, by value, of tte cargoes that enter the Port of Philadelphia come fror. Latin America and a little rcore than one-quarter of the cargoes that leave Philadelphia are destined for Latin Africa. For the United States as a whole, just under 30£ of our import and export trade combined is aarried on with Latin American c: ntrle". At the end of 1^?7, the book value of all -hr'-ted States Investments in Latin Ansrica, public and private, direct and portfolio, anointed to -ore than $12 billion. This was just under one-quarter of total '?• $. investment abroad. Direct -rivate investments bv Tl# S. firms in Lat:'.i - 3 America represented sosie J$% of our direct private investments throughout the world. While these figures are impressive, they should not surprise us. Latin America, as you know, has recently passed the Jnited States in total population. :pot>ulation studies show that, if present trends continue, the population of Latin America could reach $90 million in the year 2000, or about double the prospective population of the United States and Canada combined at that time. The area produces many raw materials needed for industrial consumption both in the United States and throughout tte world* It produces food stuffs and beverages which are coissaon items of American consumption. On the import side, Latin America is dependent for a vast range of mnufactured goods on the industrial capacity of the United States and other highly industrialized countries* Latin America, as is true of all the less developed areas of the world, is going through what someone has called the "revolution of rising expectations•" Modern methods of transportation and coismunication have spread to all corners of the world an awareness of the standard of living which has been attained in the United States and in the countries of Western Europe. The less developed countries have coise to recognize that the more advanced countries have learned to increase production manyfold by harnessing mineral power and water power to supplement human power. They see thr.t the advanced countries have developed machinery to serve them in a hundred ways in transportation, in mechanization o" agriculture, in the extractive industries, In transforming their own - k ti — &m. ^y raw materials into finished goods, and in the tasks of daily living* InMjftHg^cases the resulting dreads of industrialization leap well beyond practical possibilities $ or at least, beyond short-term practical possibilities.'^OT^feer-developed countries see the present position of the industrialized countries but do not fuHy apnreaiate the fact that the present position f of the ffril led 'Ptaiotif' torn* rejpresents the result of many decades of step-by-step progress in working for political stability, in broadening and deerjerdxig the educational background of trasr population, in eliminating social 111/* ^ ft TyyMmm barriers to iass^i^ye, and in -founding and nurturing thousands of _11 enters *hich co^ute i i^ortan*^ to the total output ofN^Keeonota^ir' II f!S%^also'"' required, and continue/ to require, a very large volume of savings e^ery ye&r to finance current investment. \ In its eagerness to move forward rapidly into industrialization, a less developed country may try to do more than it can afford in real terms and in financial terms* The result can be to build up dangerous inflationary pressures which delay rather than hasten the progress which is sought* Let no explain what I mean in a very brief and over-simplified way: industrial development requires investment* Investment means spending money, and Industrial investment of the highly technical type which latin Ajaerica needs means spending a great deal of money. The money spent on building factories, hydro-electric plants, port facilities, roads and all the other necessary elements of industrial expansion enters the econoxsy (in the final analysis) t-irough wages. Additional - 5 purchasing poster Is generated at a time when the spending process tte investment - is not creating any new consumption goods. More mommy bidding for an unchanged volume of ^oods means either rising prices or rising .uaporta, or both* If prices of consumer goods were to rise, workers would deaaand higher wages* Costs of production would increase and exporters would find it harder to sell their goods abroad* Perhaps they would find the inflating home market more attractive than coapetitlve foreign markets, and tte country's exports would begin to fall off* In such circumstances, a first class balance of payi^ents problem might be just around tte corner* Perhaps tte country may now decide to adopt a complex multiple exchange rate system, or rigid exchange controls, in the hope of tempering the threatening shortage of foreign exchange. In a short time, this ^solution® would add serious additional complications - and government controls, rigidity, and distortions would follow quickly. Sound industrial development would be severely hampered and might ccs^e to a complete stop* Still speaking in simple sblaek and white-1 terms, tte type of development I have just outlined can be avoided in one of two ways or, of course, by a combination of the two. If the money ©pent on investment comes (1) from domestic savings, or (2) from foreign Investments — then, the added spending of those working in tte investment area is (1) offset by the "non-spending" of tte domestic savers, or (2) can be satisfied by additional imports financed by the foreign investment* Theranount of Jjiye^tt^^ indeed*^ The bert 6 - ^ " ^ available estimate indicates that total gross investment in Latin America In 1957 amounted to about $10 billion* Of this amount, foreign investment accounted for about $2 billion or 205b of tte total* Certain special capital payments to Latin America, and specifically to Veneauola/ probably distorted this relationship in tte yemr chosen* Over a longer period, It has been estimated that foreign investment ma$r have accounted for about 10£ of the total gross investment in the Latin African area* It is not unreasonable to assume that the flow of private capital into Latin America is capable of further expansion* Private capital flow will continue to .^..AA^T i^3^±tJkhr^ ^k^'^-t^X *******&'*&&- ';4'-' be supplemented by the flow of «pikS#e capital ft^ug^<fie"lb$#t-Import \ 'J&*+}> J^p^Hm<^ <£AU>L£:iit&Ar^^ Bank, the International Bank for Reconstruction aid Osvislopifentjfarid %h»Um0j**:%ar^I on which we are now working* -i¥iM»^«i^^ , "|fhe expansion of foreign investment; should kBmp pace with tte total gxwfch of sound development investment opportunities in Latin America* Tte "Jnited States Government has indicated that it will use its best efforts to Insure that this is so. A major unsolved problem Is whether domestic savings and domestic capital in Latin America will also be marshalled at a rate which will permit the acceleration of economic development in the area* As I have suggested, domestic capital now represents, and must continue to represent, by far the r,a;ior share of total investment* This is not to say that a fixed and unchanging relationship between domestic capital and foreign capital can be postulated. But, tte preponderant share must certainly cone from domestic sources, if only to insure that the /L y^ ^y^~•-; Jy -7- <?, Gmm i burden of servicing external debt does not become substantially heavier than it now is* It is characteristic of highly inflationary economies that investment is likely to be misdirected. The worst form of misdirection, is when capital accumulated domestically is not invested at all in the country fttm which it is derived. [jgHbMKFi^^ substantial amount© ^ very for In- vestment---ii±fflaH-!I!§n countries«J The incentive ^bgsafety rather than maximum earnings. While we night wish that patriotic interest in domestic development would Induce capitalists to invest in their own coantry, It is not difficult to understand their economic thinking in placing their ftmds abroad. If inflation is rampant in their own country, they know that by placing their mummy abroad they can expect, ever a period of time, an exchange profit which may in many cases be equal to or greater than the profits they could reasonably expect by reinvesting domestically. Both a greater degree of economic stability and a greater degree of political stability would contribute to a consistent policy ©f^domestie reinvestment of capital accumulated In many ^-w=fck- g j m ^4^ r i f a^i countries* harmful* The removal of domestic savings is doubly Hot only is local investment deprived of financing by this capital outflow, but the outflow also represents a foreign exchange loss, offsetting in part the inflow of private and public capital designed to encourage development* Misdirection of investment takes many other foi^is as well. In- vestment in real estate is favored in many countries over investment in more highly productive enterprises* Again, I believe this preference y r ^ - 8 can be traced to inflation. wii^L«e^sd(lind and buildings have proved -to-be oxoollrotr hedges against inflation zander many -mApGWWUicefrr Misdirection of investsaent takes many more subtle forms* In toe presence of rapid inflation, quick profits are possible in retail and wholesale trade* Moreover, capital invested in stocks of goods remains relatively liquid as compared with capital invested in factories* Another point might be mentioned* reluctant to invest in my rates* Private investors are increasingly activity subject to official regulation of Hates for electric power mid transportation, for example, are set by the government in many countries. In an inflationary situation, officially regulated rates almost inevitably lag behind increases in costs. As a result, it is difficult to make adequate profits and may be impossible to accumulate adequate capital for replacement or expansion of the physical assets involved. A shortage of power facilities is found in many countries. As private investment is squeezed out of these fields, the vacuum tends to be filled by public investment* Since in many of the countries involved governmsnt revenue does not cover current government operating expenses, government investment is very likely to be inflationary investment* Because of the limits on the length of these remarks, I will not expand further on the ways in which inflation tends to restrict and distort investment* - 9 I would like to cite, however, a recent report of the Committee for Economic Development entitled "DK3EHSE AGAINST INHATIOJf** As you know this report directs itself to the Salted States situation; inflation is a problem for all of us and we are keenly aware that the developed countries are not immune from its effects* The first sentence of that report states that, *Inflation is one of the major unsolved economic problems of our times*H report says* Birther along in the summary, the '•There is some tendency to believe that the acceptance of inflation is necessary to maintain high employment* no evidence to support this belief* Bat, there is Biere have been periods in this country's history when the econea^ grew at a rapid rate while prices were rising, but there were other periods of rapid growth when prices were stable or falling•* But, I think the following sentences are more useful in our consideration of our common iroblems* continues: M The report ®ven during the periods of rising prices f±a the United States/ there was no general expectation that inflation would continue. If we learn to accept Inflation, the forces making for economic growth will certainly not be strengthened — the likelihood is that they will be weakened*" There is a lot we do not know about inflation and a lot that we do not know about the relationship of inflation and rapid economic development, but where Inflation has come to be accepted as a continuing phenofltenon the forces of development will be weatoed rather than strengthened. We must guard against this expectation of in- flation permeating the economic life of our countries. As Secretary Anderson said recently in testimony before the Joint Economic Committee: - 10 w If we ever reach the point where people believe that to speculate is safe but to save is to gamble then we are indeed in trouble** Because we firmly believe that domestic Inflation in HITO i(nnr) nnsuniiii^iff is a serious barrier to the acceleration of economic development, the #*S* Government has been pleased when countries seeking the assistance of the United States because of balance of payments difficulties have approached the International Monetary Rind before entering into negotiation® with tfeited States Government agencies* the IMF, as an international institution staffed by international civil servants, is frequently able to obtain the agreement of the applicant country to corrective domes tic economic measures. Commitments can be given to an international institution which It would be politically difficult for &B& sovereign government to give to another sovereign government* Ihe International Monetary Hind, however, was specifically designed to assist countries in balance of payments difficulties. It is staffed by highly competent fachnleftl puujjlff' skilled in the diagnosis of fiscal and monetary problem* It is able to point out that the limited as- sistance it can make available will give no lasting benefit as long as the recipient country is not following fiscal and monetary policies which promise recovery fron the balance of payments situation in which it finds itself* The International Monetary Rind has been extremely active in Latin America in the last two or three years* Tou know that the President has asked for authority to increase the U*S # quota in the IMF by $0St, in - 11 - conjunction with sioils-™ increases by all the other member countries* The Bind will thus be it. a position to continue to lend valuable assistance to countries with temporary exchange difficulties* The President also has asked for an increase of over $3 billion in tte United States subscription to the International Bank for Reconstruction and Development* This subscription will not require any cash transfer to the Bank; it represents an increase in the "callable capital" or guarantee fund against which tte International Bank is able to sell its bonds in private capital markets* This brings me back to the new Inter-American Development Banking Institution which 1 mentioned briefly* Since we are still in the stage of negotiation, it is difficult for me to say much about the U*S position. But the intention of the latin American countries and of ourselves is to create a development bank which will concentrate all of its attention on the development problems of Latin America alone* is new institution is to supplement J^jat^ntii^rnriM rmn\ ft£oit= r^axxcl the ^Kport"!fepp3 A.. We hope that it will differ from existing institutions in several ways* In the ilrst place, we hope it will be thoroughly Liter-American in the seme that all of the raember countries will make a meaningful contribution to its capital and will play an important role in guiding Its operations* The United States has proposed that the institution have two segments of capital, very carefully segregated* The larger regment would be used to make ordinary loans of the type that existing - 12 - C 'y institutions or private banks might make* eA*r--:f-ffygji k ^ a a ^ y - ^ Trfiir . act seek to diaplaiwTany su^h d^ We have proposed that the sash subscriptions to this ordinary loan department be supplemented by a subscription of "callable capital" which will allow the institution, when it shall have proved Itself worthy, to float its own bonds on private capital markets, thus helping to increase the total flow of development capital into Latin America* It is hoped, also, that the new institution will play a significant role in the field of technical assistance and cooperation. The institution should have facilities to provide technical assistance in economic development planning and activities. It would be our hope that the new institution would be so staffed that, when requested, it could provide advice on development priorities and provide assistance in the preparation of specific project proposals* It may also wish to consider the establishment of facilities for training officials of aember countries and to provide seminars in development planning and operations* The new institution might enter into appropriate agreements with other institutions which provide technical advice and assistance* In addition to the regular loan dep^rtwent of the proposed Bank, we are studying with our Latin American friends the possibility of having a relatively small "soft loan" or special loan section of the institution which would be able to grant certain special loans in 13 - £1 situations where granting a normal loan might not be justified* Such a section would be supported \sy subscriptions from all the member countries and represent a unique blending in a single institution of the power to make hard loans and tte power to make special loans* our own. t am optimistic that within a few weeks we will have agreed upon the framework of a banking institution which could promise much for the future development of Latin America. When this framework, in the form of a final act, has been formerly signed at the conclusion of our negotiations in Washington by the representatives of the negotiating countries, it will be submitted to all of the governments for approval through their normal constitutional procedures* The opportunity I have had to work closely with representatives of all of the American Republics in the past few weeks has given me a new awareness of the cooperative spirit which permeates our hempistere* That spirit offers the prospect of closest cooperation not only between the United States and our southern neighbors but among the individual countries of the area as well* - 2 the amount and price range of accepted bids. Those submitting 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, noncompetitive tenders for $200,000 or less for the 91-day bills and noncompetitive tenders for $50,000 or less for the 182-day bills without stated price from any one bidder will be accepted in full at the average price (in three decimals) of 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 March 5, 1959* In cash or other immediately available funds or In a like face amount of Treasury bills maturing March 5, 1959. Cash and exchange tenders will receive equal treatment. Cash adjustments will be made for differences between the par value of maturing bills accepted in exchange and the issue price of the new bills. The income derived from Treasury bills, whether interest or gain f-rom the sale or other disposition of 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 treatment, as such, under the Internal Revenue Code of 1954. The bills are subject to estate, inheritance, gift or other excise taxes, whether Federal or State, but are exempt from all taxation noxtf or hereafter imposed on the principal or interest thereof by any State, or any of the possessions of the United States, or by any local taxing authority. For purposes of taxation the amount of 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 of 1954 the amount of 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 companies) 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 oOo No. 4l8, Revised, and this notice, prescribe the terms of the Treasury bills and govern the conditions of their issue. Copies of the circular may be obtained from any Federal Reserve Bank or Branch. RELEASE A.M. NEWSPAPERS, Thursday, February 26, 1959. A-457 The Treasury Department, by this public notice, invites tenders for two series of Treasury bills to the aggregate amount of $1,900,000,000, or thereabouts, for cash and in exchange for Treasury bills maturing March 5, 1959, in the amount of $1,799,836,000, as follows: 91-day bills, for $1,500,000,000, or thereabouts, to be dated March 5, 1959, and to mature June 4, 1959. 182-day bills, for $ 400,000,000, or thereabouts, to be dated March 5, 1959, and to mature September 3, 1959. 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. They will be Issued in bearer form only, and in denominations of $1,000, $5,000, $10,000, $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 o'clock p.m., Eastern Standard time, Monday, March 2, 1959. Tenders will not be received at the Treasury Department, Washington. Each tender must be for an even multiple of $1,000, and in the case of competitive tenders the price offered must be expressed on the basis of 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. 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 riecognized dealers in investment securities. Tenders from others must be accompanied by payment of 2 percent of 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. Immediately after the closing hour, tenders will be opened at the Federal Reserve Banks and Branches, following which public announcement will be made by the Treasury Department of 2nt1 u K__g-0-cxx TREASURY DEPARTllGNT Washington RELEASE A.M. NEWSPAPERS, Thursday, February 26, 1959 The Treasury Department, by this public notice, invites tenders for two series of Treasury bills to the aggregate amount of $1,900,000,000 , or thereabouts, fo _BSt cash and in exchange for Treasury bills maturing March 5, 1959 , in the amount of $ 1.799.856.000 y as follows: 91 -day bills, for $ 1,500,000,000 , or thereabouts, to be dated March 5, 1959 , and to mature June 4, 1959 182 -day bills, for $400,000,000 , or thereabouts, to be X$C_QCp dated March 5, 1959 , and to mature September 5, 1959 . 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. They will be issued in bearer form only and in denominations of $1,000, $5,000, $10,000, $100,000, $500,000 and $1,000,0 (maturity value). Tenders will be received at Federal Reserve Banks and Branches up to the closing hour, one-thirty o'clock p.m., Eastern Standard time, Monday, March 2, 1959 . _5EB& Tenders will not be received at the Treasury Department, Washington. Each tender must be for an even multiple of $1,000, and in the case of competitive tenders t price offered must be expressed on the basis of 100, with not more than three C. mL "t - decimals, e. g., 99«925>« 2 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. 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 of 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. Immediately after the closing hour, tenders will be opened at the Federal Reserve Banks and Branches, following which public announcement will be made by the Treasury Department of the amount and price range of accepted bids. Those submitting 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, noncompetitive tenders for $200,000 or less for the 91-day bills and noncompetitive tenders for $50,000 or less for the 182-day bills without stated price from any one bidder will be accepted in full at the average price (in three decimals) of 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 March 5, 1959 , in cash or other ------ If immediately available funds or in a like face amount of Treasury bills maturing March 5, 1959 . Cash and exchange tenders will receive equal treatment, " 7L7LW Cash adjustments will be made for differences between the par value of maturing bills accepted in exchange and the issue price of the new bills. The income derived from Treasury bills, whether interest or gain from the sale or other disposition of the bills, does not have any exemption, as such, and loss IXS39L from the sale or other disposition of Treasury bills does not have any special treatment, as such, under the Internal Revenue Code of 1954. The bills are subj to estate, inheritance, gift or other excise taxes, whether Federal or State, b are exempt from all taxation now or hereafter imposed on the principal or inter thereof by any State, or any of the possessions of the United States, or by any local taxing authority. For purposes of taxation the amount of discount at whic Treasury bills are originally sold by the United States is considered to be int Under Sections 454 (b) and 1221 (5) of the Internal Revenue Code of 1954 the am of discount at which bills issued hereunder are sold is not considered to accru until such bills are sold, redeemed or otherwise disposed of, and such bills ar cluded from consideration as capital assets. Accordingly, the owner of Treasury bills (other than life insurance companies) issued hereunder need include in hi income tax return only the difference between the price paid for such bills, wh oh original issue or on subsequent purchase, and the amount actually received e upon sale or redemption at maturity during the taxable year for which the retur made, as ordinary gain or loss. Treasury Department Circular No. 418, Revised, and this notice, prescribe the terms of the Treasury bills and govern the conditions of their issue. Copies of the circular may be obtained from any Federal Reserve Bank or Branch. - 6In Soviet Russia, the aristocracy of the communist party has been substituted for the aristocracy of the Czar. There are some 200 million people in the USSR. Out of this number there are something like 5 or 6 million communist party members. These 5 or 6 million are ruled by a bare handful of dictatorial leaders, and these leaders are subject essentially to the orders of one man. From China, we are told that the communist regime has devoted itself to furthering the advancement of man. But what has it done in fact? Families have been ruthlessly torn apart. Vast numbers of people have been herded into communes, without the slightest effort to obtain their consent. We hear the communists speak of the people's rights under their form of government. But there are no free elections, in any meaningful sense of the term. There is no free press. There is no freedom of belief. There is no freedom of choice to work. Human resources are regimented for production as if they were so many tons of steel or coal. The communists also like to refer in their propaganda to their respect for the rights of other nations. But we cannot erase from our minds the tragic fate of the Baltic republics, of Bulgaria,. of Hungary, of Poland, of Czecho-Slovakia, of E as t Germany. All of these peoples have lost the right to direct their own destinies. When they have tried to reassert that right, they have been cruelly suppressed. We cannot ignore the threats of subversion in other countries. s In contrast, our country has moved steadily forward since the close of World War II to further the brotherhood of man. Our most valued export it still, as it has been throughout our history, the concept of freedom and humanity for which our Nation stands. We can be rightly proud that the first postage stamps issued by the Republic of Indonesia turned out to bear the portraits of Washington, Lincoln, Franklin and Hamilton, side by side with the founders of the new republic. But we can also be proud of the countless ways in which our sharing of know-how, capital, and just plain friendliness during recent years has helped strengthen the basis of fellowship and understanding throughout the free world. This is brotherhood in action. oOo - 5The story of America's assistance to other countries has and should continue to emphasize the tremendously important role played by American private capital during the past 15 years and in the years ahead. This capital has aided resources for economic growth in other countries. It has brought to these countries a high degree of technical and managerial skill which they lacked. It has contributed to the development of export industries which provide the means for purchasing needed goods from our own country and from elsewhere. American business today has investments abroad valued at about $40 billion. Each year there has been a movement of capital from the United States to other countries. For the last three years, this annual outflow has been at the rate of about $4 billion a year. Under present world conditions, private investment faces real difficulties. These stem from frequent political instability, the threat of aggression and subversion in some foreign countries, and the obstacles to capital investment in areas where economic conditions are unstable and relatively less advanced. For these reasons our Government has tried to assist the expansion of private investment through such devices as tax treaties and guarantees against the inconvertibility of earnings and the risk of confiscation or possible loss from war. Private capital is a stern analyst. Even with the encouragement of our government, private investment is made principally in those countries which are willing to compete for it by the establishment of sound fiscal policies, adequate protection, and the recognition of the right of capital to earn. Both the government and private organizations are continuing to have a major role in promoting the spread of capital and thus insuring better economic conditions in the under-developed areas of the world. Our Government has also had to provide military assistance. This is in our own interest, as well as in the interest of friendly nations threatened with aggression. Without help, the Soviets would have had a clear road for the pursuit of their program of world domination, I need mention only the Near East and you will understand what I mean. One of the favorite themes of communist propaganda is the supposed concern of communist dictatorships for human beings and their welfare. The western nations who are leaders of the free world must continue to bring out the true facts with respect to these claims. To do this we have only to note what has actually happened when a country has fallen under communist control. 210 - 4Unlike the International Bank, the Fund requires outlays on the part of the member countries on a quota basis — one-fourth payable in gold, and the remainder payable in non-interest-bearing securities of the member country. The Fund's activities have grown and have become increasingly effective. To fulfill its obligations properly under conditions of expanding world trade, an increase in the quotas of member countries is imperative. \Je hope for prompt action on this request also. The Development Loan Fund, established by the United States, has further assisted economic development by making loans to both governments and private business when a given project cannot obtain financing from the other institutions or from private capital sources. In some cases, the loans granted by this Fund are repayable in the borrower's own currency. Discussion is now going on within our Government and with foreign countries exploring the desirability of establishing an International Development Association which would be an affiliate of the International Bank. This institution would supplement the functions of the Bank by providing loans for development which could not be financed on hard currency repayment terms. It would also permit members with accumulations of non-convertible currencies to use their accumulations for constructive loan purposes. In addition to the programs already mentioned, vie are engaged at the present time in negotiations with the countries of Latin America, looking toward the establishment of an Inter-American banking institution which would assist economic development in the countries of this hemisphere. There have been other important governmental programs which conic be mentioned. One which was of immense importance to the free vrorld was the Marshall Plan for aid to the devastated countries of Western Europe, shortly after the close of World VJar II. Through our timely assistance and through their own efforts, zhe Western European countries were not only able to get back on their feet. They have since come to enjoy a higher standard of living and a better level of production than ever before. Likewise, countries in Asia — many of them newly established as independent nations — have been assisted In their efforts to improve living conditions, to put their economies on a going basis, and to resist aggression. Still another program which has paid large dividends in human terms has been our plan for exporting part of our agricultural surplus. Under this program, payment for the goods we send overseas can be made in local currencies, thus permitting countries in need of food and certain other agricultural products to benefit from ou:1 abundance, even though they may lack dollar exchange. - 3- 20d While there are honest differences of opinion as to the scope and detail, I would like to mention a few efforts of our Nation in helping other nations of the world. Closely allied to the technical assistance programs have been the programs for cultural exchange. These are performing the immensely important service of making possible person-to-person contacts between people of different countries. Through scholarships and exchange of personnel, through on-the-job help when it is most needed, technical assistance and cultural exchange together are probably achieving the most practical results which up to now have been devised for promoting greater well being among the nations of the free world. For long range stability and Improvement in standards of living in the less developed countries, however, there must be substantial capital investment extending over a period of years. There must be transportation facilities, power plants, harbor installations, and industrial equipment of many varieties. Our Government has been a leader throughout the postwar period in the establishment and support of financial institutions providing long-term developmental funds of this type. > The Export-Import Bank -- set up by this country in the 1930's — has continued since the war to provide financing for the export of American equipment for industrial purposes of many different kinds. In. recent years its loans have been largely concentrated in Latin America and Asia. The International Bank for Reconstruction and Development, formed at the end of the war by the Allied countries under our leadership, provides financing for long-run investment programs of various types when private investment is not available on reasonable terms. Recently, the Bank has devoted its funds primarily to assisting economic development in Asia, Latin America, and Africa, contributing enormously to economic development in these areas. The International Bank has had no losses on its loans. We are hoping that the Congress will promptly authorize the increased subscription to the International Bank proposed in the President's message of February 12. These subscriptions require no cash outlays. The subscriptions to the capital stock of the banks constitute a contingent liability of all the member governments to meet the obligations of the bank. In this way the Bank is able to secure adequate loan fundsj at reasonable rates of interest in the open market. j s The President's message of February 12 also proposed to increase our quota in the International Monetary Fund, a companion organizationis ofan the International, Bank. institution makestrade. short-term which advances to essential its members condition in order of toThis healthy facilitate international the exchange stability - 2 We have also been givers. Not only our great proponents of freedom and democracy, but Edison, Morse, Kettering, Einstein, Salk, and many other but less well known Americans have helped change the conditions of life throughout the world. With all that we have given in the past, however, our greatest opportunity may be now, when the aspirations of millions of people to live better are finding tangible expression in many areas for the first time. During the past 15 years 700 million people in 20 countries have won political independence. But this is not enough. Brotherhood among men is laudable as an ideal. To be meaningful it must be translated into terms of understandable reality. Though much remains to be done the record of our government and our people has been a commendable one. I should like to illustrate this first by telling you a story — a true story about a little village in India which I visited last fall, in connection with my participation in the international monetary conferences being held in New Delhi. This village was the site of a foreign assistance project, sponsored and financed by an American non-profit institution. There' were no impressive structures in the village. There were two Americans giving technical assistance. A team of bullocks was slowly moving around In a circle turning a large arm. Each turn produced 1600 revolutions in the apparatus which generated electricity — sufficient for one light in each house at night, and for power during the day to run a small woodworking plant employing fifty people. The same bullock-powered equipment pumped water into pipes wh^ch ran along the streets of the village with a tap in front of each house. For thousands of years, the villagers had travelled long distances for water. Now, they could step outside the door and draw water whenever they needed it. Moreover, the excess water went into a reservoir and was sufficient to Irrigate 50 acres of land. By means of a simple mechanism thought up by an American agricultural specialist, the village had taken its first steps toward the twentieth century. Here surely is the place where emphasis should be put — at the point where people can be given the means of helping themselves through bettering actual living conditions in their own communities. The technical assistance programs now in progress are, of course, of many different kinds and are carried on under many different national and international auspices. In every case, the projects are joint operations with the countries concerned. The United States and United States technicians, however, have been not for to in the help constitute existence forefront people and the lift of into whole themselves allaof of situation the living. above efforts where the during backbreaking levelthe of postwar a bare toil struggle period does TREASURY DEPARTMENT Washington on i REMARKS BY TREASURY SECRETARY ROBERT B. ANDERSON, TO THE GRAND MASTERS OF MASONRY, HOTEL STATLER, WASHINGTON. D. C., 7:00 P.M., E.S.T., TUESDAY, FEBRUARY 24,1959. Over 300 years ago, Francis Bacon made this statement: "The true and lawful goal of the sciences is simply this, that human life be enriched by new discoveries and powers." Bacon was pleading with the scientists of his day to use their skills in improving the ordinary conditions of living. This was a radical suggestion for his time. The New World was just opening up; the compass and the printing press were just beginning to have their incalculable influence in enlarging not only man's physical surroundings but the larger creative environment in which new discoveries can take place. Yet how cramped a world this seems compared with our own! We live in a period of great international tension — yet it is a period also of unparalleled inventiveness and achievement. The scientists of today have made it possible for us to believe that sources of energy are available which can in time replace most human toil. For the first time in history, there is a possibility that conditions permitting the full exercise of man's creative abilities can be realized for the many, not just for the few. A great deal has been said about the need to accomplish greater brotherhood of mankind. Our own Order is dedicated to this principle But translated into real terms, brotherhood begins with improvement in the conditions of living. It begins with getting help to people where they need it. For help of this sort to be effective it must be adapted to differences in cultural backgrounds as well as in the material conditions of living. We must give frank and honest recognition to dissimilarities in customs, history, philosophy and religion. We must think in terms of minimizing differences — however sharp they may seem on the surface — and maximizing common interests. I believe it is a little easier to do this if we remember that our own culture is to a very large extent a borrowed one. The mathematics we use today to send a satellite into space had its beginning long ago in Egypt, in Persia, in Greece. Our art, our music, the body of science we build on, all came Initially from others. A-456 TREASURY DEPARTMENT Washington REMARKS BY TREASURY SECRETARY ROBERT B. ANDERSON, TO THE GRAND MASTERS OF MASONRY, HOTEL STATLER, WASHINGTON. D. C , 7:00 P.M., E.S.T., TUESDAY, FEBRUARY 24,1959. Over 300 years ago, Francis Bacon made this statement: "The true and lawful goal of the sciences is simply this, that human life be enriched by new discoveries and powers." Bacon was pleading with the scientists of his day to use their skills in improving the ordinary conditions of living. This was a radical suggestion for his time. The New World was just opening up; the compass and the printing press were just beginning to have their incalculable influence in enlarging not only man's physical surroundings but the larger creative environment in which new discoveries can take place. Yet how cramped a world this seems compared with our own! We live in a period of great international tension — yet it is a period also of unparalleled inventiveness and achievement. The scientists of today have made it possible for us to believe that sources of energy are available which can in time replace most human toil. For the first time in history, there is a possibility that conditions permitting the full exercise of man's creative abilities can be realized for the many, not just for the few. A great deal has been said about the need to accomplish greater brotherhood of mankind. Our own Order is dedicated to this principle. But translated into real terms, brotherhood begins with improvement in the conditions of living. It begins with getting help to people where they need it. For help of this sort to be effective it must be adapted to differences in cultural backgrounds as well as in the material conditions of living. We must give frank and honest recognition to dissimilarities in customs, history, philosophy and religion. We must think in terms of minimizing differences -- however sharp they may seem on the surface — and maximizing common interests. I believe it is a little easier to do this if we remember that our own culture is to a very large extent a borrowed one. The mathematics we use today to send a satellite into space had its beginning long ago in Egypt, in Persia, in Greece. Our art, our music, the body of science we build on, all came initially from others. A-456 - 2 We have also been givers. Not only our great proponents of freedom and democracy, but Edison, Morse, Kettering, Einstein, Salk, and many other but less well known Americans have helped change the conditions of life throughout the world. With all that we have given in the past, however, our greatest opportunity may be now, when the aspirations of millions of people to live better are finding tangible expression in many areas for the first time. During the past 15 years 700 million people in 20 countries have won political independence. But this is not enough. Brotherhood among men is laudable as an ideal. To be meaningful it must be translated into terms of understandable reality. Though much remains to be done the record of our government and our people has been a commendable one. I should like to illustrate this first by telling you a story — a true story about a little village in India which I visited last fall, in connection with my participation in the international monetary conferences being held in New Delhi. This village was the site of a foreign assistance project, sponsored and financed by an American non-profit institution. There were no impressive structures in the village. There were two Americans giving technical assistance. A team of bullocks was slowly moving around in a circle turning a large arm. Each turn produced 1600 revolutions in the apparatus which generated electricity — sufficient for one light in each house at night, and for power during the day to run a small woodworking plant employing fifty people. The same bullock-powered equipment pumped water into pipes which ran along the streets of the village with a tap in front of each house. For thousands of years, the villagers had travelled long distances for water. Now, they could step outside the door and draw water whenever they needed it. Moreover, the excess water went into a reservoir and was sufficient to irrigate 50 acres of land. By means of a simple mechanism thought up by an American agricultural specialist, the village had taken its first steps toward the twentieth century. Here surely is the place where emphasis should be put — at the point where people can be given the means of helping themselves through bettering actual living conditions in their own communities. The technical assistance programs now in progress are, of course, of many different kinds and are carried on under many different national and international auspices. In every case, the projects are joint operations with the countries concerned. The United States and United States technicians, however, have been in the forefront of all of the efforts during the postwar period to help people lift themselves above the level of a bare struggle not for constitute existence and theinto whole a of situation living.where backbreaking toil does - 3- «_ U *•* While there are honest differences of opinion as to the scope and detail, I would like to mention a few efforts of our Nation in helping other nations of the world. Closely allied to the technical assistance programs have been the programs for cultural exchange. These are performing the immensely important service of making possible person-to-person contacts between people of different countries. Through scholarships and exchange of personnel, through on-the-job help when it is most needed, technical assistance and cultural exchange together are probably achieving the most practical results which up to now have been devised for promoting greater well being among the nations of the free world. For long range stability and improvement in standards of living in the less developed countries, however, there must be substantial capital investment extending over a period of years. There must be transportation facilities, power plants, harbor installations, and industrial equipment of many varieties. Our Government has been a leader throughout the postwar period in the establishment and support of financial institutions providing long-term developmental funds of this type. The Export-Import Bank — set up by this country in the 1930's — has continued since the war to provide financing for the export of American equipment for industrial purposes of many different kinds. In recent years its loans have been largely concentrated in Latin America and Asia. The International Bank for Reconstruction and Development, formed at the end of the war by the Allied countries under our leadership, provides financing for long-run investment programs of various types when private investment is not available on reasonable terms. Recently, the Bank has devoted its funds primarily to assisting economic development in Asia, Latin America, and Africa, contributing enormously to economic development in these areas. The International Bank has had no losses on its loans. We are hoping that the Congress will promptly authorize the increased subscription to the International Bank proposed in the President's message of February 12. These subscriptions require no cash outlays. The subscriptions to the capital stock of the banks constitute a contingent liability of all the member governments to meet the obligations of the bank. In this way the Bank is able to secure adequate loan funds at reasonable rates of interest in the open market. The President's message of February 12 also proposed to increase our quota in the International Monetary Fund, a companion organization of the International Bank. This institution makes short-term which advances is an to essential its members condition in orderof tohealthy facilitate international the exchange trade. stability ^ - 4- sU -y y Unlike the International Bank, the Fund requires outlays on the part of the member countries on a quota basis — one-fourth payable in gold, and the remainder payable in non-interest-bearing securities of the member country. The Fund's activities have grown and have become increasingly effective. To fulfill its obligations properly under conditions of expanding world trade, an increase in the quotas of member countries is imperative. We hope for prompt action on this request also. The Development Loan Fund, established by the United States, has further assisted economic development by making loans to both governments and private business when a given project cannot obtain financing from the other institutions or from private capital sources. In some cases, the loans granted by this Fund are repayable in the borrower's own currency. Discussion is now going on within our Government and with foreign countries exploring the desirability of establishing an International Development Association which would be an affiliate of the International Bank. This institution would supplement the functions of the Bank by providing loans for development which could not be financed on hard currency repayment terms. It would also permit members with accumulations of non-convertible currencies to use their accumulations for constructive loan purposes. In addition to the programs already mentioned, we are engaged at the present time in negotiations with the countries of Latin America, looking toward the establishment of an Inter-American banking institution which would assist economic development in the countries of this hemisphere. There have been other important governmental programs which could be mentioned. One which was of immense importance to the free world was the Marshall Plan for aid to the devastated countries of Western Europe, shortly after the close of World War II. Through our timely assistance and through their own efforts, the Western European countries were not only able to get back on their feet. They have since come to enjoy a higher standard of living and a better level of production than ever before. Likewise, countries in Asia — many of them newly established as independent nations — have been assisted in their efforts to improve living conditions, to put their economies on a going basis, and to resist aggression. Still another program which has paid large dividends in human terms has been our plan for exporting part of our agricultural surplus. Under this program, payment for the goods we send overseas can be made in local currencies, thus permitting countries in need of food and certain other agricultural products to benefit from our abundance, even though they may lack dollar exchange. - 5The story of America's assistance to other countries has and should continue to emphasize the tremendously important role played by American private capital during the past 15 years and in the years ahead. This capital has aided resources for economic growth in other countries. It has brought to these countries a high degree of technical and managerial skill which they lacked. It has contributed to the development of export industries which provide the means fOr purchasing needed goods from our own country and from elsewhere. American business today has investments abroad valued at about $40 billion. Each year there has been a movement of capital from the United States to other countries. For the last three years, this annual outflow has been at the rate of about $4 billion a year. Under present world conditions, private investment faces real difficulties. These stem from frequent political instability, the threat of aggression and subversion in some foreign countries, and the obstacles to capital investment in areas where economic conditions are unstable and relatively less advanced. For these reasons our Government has tried to assist the expansion of private investment through such devices as tax treaties and guarantees against the inconvertibility of earnings and the risk of confiscation or possible loss from war. Private capital is a stern analyst. Even with the encouragement of our government, private investment is made principally in those countries which are willing to compete for it by the establishment of sound fiscal policies, adequate protection, and the recognition of the right of capital to earn. Both the government and private organizations are continuing to have a major role in promoting the spread of capital and thus insuring better economic conditions in the under-developed areas of the world. Our Government has also had to provide military assistance. This is in our own interest, as well as in the interest of friendly nations threatened with aggression. Without help, the Soviets would have had a clear road for the pursuit of their program of world domination. I need mention only the Near East and you will understand what I mean. One of the favorite themes of communist propaganda is the supposed concern of communist dictatorships for human beings and their welfare. The western nations who are leaders of the free world must continue to bring out the true facts with respect to these claims . To do this we have only to note what has actually happened when a country has fallen under communist control. —^ f'. f\ £ y _ In Soviet Russia, the aristocracy of the communist party has been substituted for the aristocracy of the Czar. There are some 200 million people in the USSR. Out of this number there are something like 5 or 6 million communist party members. These 5 or 6 million are ruled by a bare handful of dictatorial leaders, and these leaders are subject essentially to the orders of one man. From China, we are told that the communist regime has devoted itself to furthering the advancement of man. But what has it done in fact? Families have been ruthlessly torn apart. Vast numbers of people have been herded into communes, without the slightest effort to obtain their consent. We hear the communists speak of the people's rights under their form of government. But there are no free elections, in any meaningful sense of the term. There is no free press. There Is no freedom of belief. There is no freedom of choice to work. Human resources are regimented for production as if they were so many tons of steel or coal. The communists also like to refer in their propaganda to their respect for the rights of other nations. But we cannot erase from our minds the tragic fate of the Baltic republics, of Bulgaria, of Hungary, of Poland, of Czecho-Slovakia, of East Germany. All of these peoples have lost the right to direct their own destinies. When they have tried to reassert that right, they have been cruelly suppressed. We cannot ignore the threats of subversion in other countries. In contrast, our country has moved steadily forward since the close of World War II to further the brotherhood of man. Our most valued export it still, as it has been throughout our history, the concept of freedom and humanity for which our Nation stands. We can be rightly proud that the first postage stamps issued by the Republic of Indonesia turned out to bear the portraits of Washington, Lincoln, Franklin and Hamilton, side by side with the founders of the new republic. But we can also be proud of the countless ways in which our sharing of know-how, capital, and just plain friendliness during recent years has helped strengthen the basis of fellowship and understanding throughout the free world. This is brotherhood in action. oOo TREASURY DEPARTMENT W A S H I N G T O N , D.C RELEASE A. M. NEWSPAPERS, Saturday, February 21, 1959. A-455 The Treasury Department announced last evening that the tenders for two series of Treasury bills to be dated February 26, 1959, which were offered on February 17, were opened at the Federal Reserve Banks on February 20» Tenders were invited for $1,400,000,000, or thereabouts, of 91-day bills and for $400,000,000, or thereabouts, of 182-day bills. The details of the two series are as follows: RANGE OF ACCEPTED COMPETITIVE BIDS: 91-day Treasury bills maturing May 28, 1959 Price High Low Average 99.366 99.340 99.346 ? : Approx. Equiv. : Annual Rate : 2.508* 2.611* 2.589* ' : : 182-day Treasury bills maturing August 27, 1959 Price 98.508a/ 98.483" 98.494 Approx, Equiv. Annual Rate 2.951* 3-001* 2.978* a/ Excepting two tenders totaling $120,000 79 percent of the amount of 91-day bills bid for at the low price was accepted 33 percent of the amount of 182-day bills bid for at the low price was accepted TOTAL TENDERS APPLIED FOR AM) ACCEPTED BY FEDERAL RESERVE DISTRICTS: District Applied For Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco $ 29,876,000 $ 19,51*0,000 1,710,137,000 91*6,01*7,000 25,988,000 10,957,000 32,551*,000 37,551*,000 12,11*8,000 16,01*8,000 16,221,000 19,305,000 163,868,000 203,038,000 23,170,000 29,170,000 9,81*3,000 11,31*8,000 39,987,000 1*0,113,000 16,1*99,000 16,1*99,000 109,260,000 118,360,000 TOTALS Accepted 1,257,1*36,000 $l,i*00,09l*,000b/ : Applied For Accepted $ 2,361,000 59l*,!*ll,000 6,317,000 18,608,000 2,002,000 5,865,000 ?1*,183,000 3,576,000 6,011,000 10,1*88,000 2,323,000 33,131,000 $ 2,076,000 271,393,000 1,317,000 13,508,000 530,000 5,865,000 59,983,000 3,526,000 2,911,000 10,1*55,000 2,323,000 26.121,000 $759,276,000 $1*00,008,000 b/ includes $197,738,000 noncompetitive tenders accepted at the average price of 99\3hb of Includes $ 29,96k,000 noncompetitive tenders accepted at the average price of 98.1*91* St ft £ ^ RELEASS A. H. Saturday, February II, 1959t The Treasury Department announced last evening that the tenders tor two series of treasury bills to bm dated February 26, 1959, which were offered on February 17, were opened at the Federal Reserve Banks on February 20* Tenders were invited for 11,1*00,000,000, or thereabouts, of 91-day bills and for 11*00,000,000, or thereabouts, of 182-day bills. The details of the two series mm as followss 182-day Treasury bills 91-day Trmmoxj bills Akm% OF ACCEFWD 17, 1959 aatariag myr W9-1959 0QMFOTITXW BZSSt mmmmmtmmmmm Approx. Equiv. l^rlce High low Average 99*366 99.31*0 99.31*6 Price 2.5m 2.612$ n*mn 98.50%/ 9S_lt03 98.1*91* Annual Bats 2.951* 3.001^ 2.' a/ Excepting two tenders totaling #120,000 ,9 percent of the amount of 9X-d_y M i l s bid for mt- the low price 19 33 percent of tfes amount -.«£ ll2«day M i l s " ' *~~ ', the low price •\ fOTAI, TSUDBHS APPIJEB IXNk A ® A0CSF-® If I M B f e ' lBBSKIi B M K C f S t Acoept&d District Boston New fork Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco TOTALS t 29,876,000 # 19,51*0,000 9l»6,e4T.,000 I,ti0,l3?,oo8 10,95?,,000 25,988,00© 32,551*,,000 37,55k,O0O 12,11*8,•000 16,01*8,000 16,2,1,,000 If,315,000 163,868,,000 203,038,000 23,170,,000 29,170,000 9,8ii3;,000 39,987,,000 11,31*8,000 X69k99i,000 1*0,113,000 109,260, ,000 16,1*99,000 118,360,000 %29 257,1*36,000 |l,l400,09l*,OOC|/i •_•.••••»", Mum • i i\wm*mmm*m*Bmm*m»mm $ 2,361,000 59i*,iai,ooo 6,317,000 18,608,000 2,002,000 5,165,000 74,183,000 3,576,000 6,011,000 10,1*88,000 2,323,000 33.131,000 $ 1759,276,000 Hi00,008,000g/ 2,076,000 271,393,000 1,317,000 13,508,000 530,000 5,865,000 59,983,000 3,526,000 2,911,000 10,1*55,000 2,323,000 26_121_000 bf Includes $197 ,73^,000 noncompetitive tenders accepted at the average price of 99.31*6 c/ Includes $ 29,961*,000 noncompetitive tenders accepted at the average price of 98.U91* Wr~ TREASURY DEPARTMENT W)*Mit. -.+.*-,> -L ' . M - , I W •-.•-' .Jlll)_UiLli«IU.A.J.J_«__^>,.J,UtL-....J__^«JJJ|1Jl.ll_|l).„J^Ul«_UM | ~ - — — WASHINGTON, D.C. IMMEDIATE RELEASE, Tuesday, February 17, 1959. i A-454 Charles J. Gable, Jr., Assistant to the Secretary of the Treasury for the past year, will resign effective February 28, to return to his post as senior vice president with The First Pennsylvania Banking and Trust Company in Philadelphia. Mr. Gable will be succeeded as Assistant to the Secretary by Robert P. Mayo, a career Treasury employee since 194l, who has been Chief of the Treasury's Debt Analysis Staff for the past six years. Mr. Mayo will be succeeded in the Debt Analysis post by R. Duane Saunders, who also has been in Treasury since 194l, and has been assistant chief of the Debt Analysis Staff since 1953. The post which Mr. Mayo will take over from Mr. Gable is that of principal assistant to the Secretary and Under Secretary Julian B. Baird in the field of debt management. Mr. Mayo, a native of Seattle, Washington, received his B. A. Degree in 1937' and M.B.A. Degree in 1938 from the University of Washington. He was in charge of research for the Washington State Tax Commission prior to coming to Treasury in 1941. In the Debt Analysis assignment Mr. Mayo has served Treasury officials as a technical advisor on financing, public debt management, and general domestic economic problems. Mr. Mayo, married and the father of three children, lives at 4301 Glenridge Street, Kensington, Maryland. Mr. Saunders attended the University of Minnesota and from 1939 to 194l was a teaching assistant in the School of Business Administration at the University of Minnesota. He has been with the Treasury since 194l except for service in the Army from 1942 until 1946. Mr. Saunders is married and the father of three children and lives at 408 Daphne Lane, Alexandria, Virginia. A native of Lansford, Pennsylvania, Mr. Gable has spent most of his business career in the commercial banking field. He joined The First National Bank of Philadelphia In 1931 and served in various capacities, including vice president until the merger of that bank with the Pennsylvania Company for Banking and Trust, In 1955. Since that time and until his appointment as Assistant to the Secretary of the Treasury on March 3, 1958, he was senior Vice President of The First Pennsylvania Banking and Trust Company, oOo the successor corporation. Mr. Gable lives at 1820 Valley Road, Meadowbrook, Pennsylvania. IMMEDIATE RELEASE, Tuesday, February 17, 1959. A-454 Charles J. Gable, Jr., Assistant to the Secretary of the Treasury for the past year, will resign effective February 28, to return to his post as senior vice president with The First Pennsylvania Banking and Trust Company in Philadelphia. Mr. Gable will be succeeded as Assistant to the Secretary by Robert P. Mayo, a career Treasury employee since 194l, who has been Chief of the Treasury's Debt Analysis Staff for the past six years. Mr. Mayo will be succeeded In the Debt Analysis post by R. Duane Saunders, who also has been in Treasury since 194l, and has been assistant chief of the Debt Analysis Staff since 1953. The post which Mr. Mayo will take over from Mr. Gable is that of principal assistant to the Secretary and Under Secretary Julian B. Baird in the field of debt management. Mr. Mayo, a native of Seattle, Washington, received his B. A. Degree in 1937 and M.B.A. Degree in 1938 from the University of Washington. He was in charge of research for the Washington State Tax Commission prior to coming to Treasury in 194l. In the Debt Analysis assignment Mr. Mayo has served Treasury officials as a technical advisor on financing, public debt management, and general domestic economic problems. Mr. Mayo, married and the father of three children, lives at 4301 Glenridge Street, Kensington, Maryland. Mr. Saunders attended the University of Minnesota and from 1939 to 194l was a teaching assistant in the School of Business Administration at the University of Minnesota. He has been with the Treasury since 194l except for service in the Army from 1942 until 1946. Mr. Saunders Is married and the father of three children and lives at 408 Daphne Lane, Alexandria, Virginia. A native of Lansford, Pennsylvania, Mr. Gable has spent most of his business career in the commercial banking field. He joined The First National Bank of Philadelphia in 1931 and served in various capacities, including vice president until the merger of that bank with the Pennsylvania Company for Banking and Trust, in 1955. Since that time and until his appointment as Assistant to the Secretary of the Treasury on March 3, 1958, he was senior Vice President of The First Pennsylvania Banking and Trust Company, oOo the successor corporation. Mr. Gable lives at 1820 Valley Road, Meadowbrook, Pennsylvania. 442b 1Q,i «u w y COPY April 6, I95I* Dear Mr. Wilkinson: Reference is made to your letter of March 12, 1954, addressed to the Commissioner of Customs, in which you asked to be advised regarding the determination of the 6 percent countervailing duty which is currently applicable to imports of wool tops from Uruguay. As you know, Section 303 of the Tariff Act of 1930, as amended, provides in substance that when the Secretary of the Treasury determines that a bounty or grant exists with respect to any dutiable importation he "shall from time to time ascertain and determine, or estimate, the net amount of each such bounty or grant, and shall declare the net amount so determined or estimated." In recent years the problem of whether a bounty or grant exists has become greatly complicated for us because foreign countries have resorted to complex systems of multiple exchange rates. When two or more rates are in use we are automatically faced with the question of what rate or combination of rates is the "representative" one and we must of necessity determine that basing point before we can conclude that a foreign country is engaged in subsidizing its exports. In the specific case of Uruguay this Department employed an averaging process to arrive at the proper basing point or representative rate. In May 1953 that rate was determined to be 1.86 pesos per dollar, based on the weighted average of export and import rates over a representative period. At that time the effective wool top export rate was 2.19 pesos per dollar and the bounty was therefore estimated to be 33 centesimos per dollar, or 18$ in excess of the representative rate. In February 1954 the effective wool tops rate had been reduced to 1.97 pesos per dollar and the Treasury Department estimated the bounty to be 11 centesimos per dollar, or 6$ above the benchmark in February 1954 which, when recalculated, was found to remain the same as in May 1953• Hence, the applicable countervailing duty on imports of wool tops from Uruguay was reduced from 18$ to 6$ effective March 1954. Very truly yours, /s/ H. Chapman Rose H. Chapman Rose Assistant Secretary of the Treasury Mr. Edwin Wilkinson Executive Vice President National Association of Wool Manufacturers 386 Fourth Avenue New York l6, New York COPY October 26, 1953 My dear LIr. Wilkinson: The Secretary has asked me to roply to your letter of September 9, 1953, commenting upon certain reports of a contemplated change in the Uruguayan exchange rate applicable to exports of wool tops to the United States and stating your belief that the countervailing duty on wool tops should be maintained so long as that rate is more favorable than the rate applicable to exports of wool to the United States. The Treasury Department is, of course, in no position to comment on speculation about changes in the Uruguayan exchange rate system. Any material change in the exchange rate system of Uruguay as it affects exports of wool tops to the United States would, however, require the Treasury to reconsider the provisions of T. D. 53257 of May 6, 1953, imposing countervailing duties on imports of wool tops. In the consideration which led to the issuance of T. D. 53257 it was concluded that the Uruguayan exchange rate system contained elements of both subsidy and indirect taxation so that it could not be said that the entire difference between the lowest rate and the wool tops rate amounted to a subsidy. The countervailing duty order reflected this decision and estimated the amount of bounty present in the wool tops rate at 18 percent. If the Department found, after review of any revision in the Uruguayan exchange rate system, that a bounty continued to be paid on exports of wool tops to the United States, the countervailing duty would remain in effect, subject to such modification as might prove necessary to reflect any change in the amount of the bounty. If, however, the revision in the Uruguayan exchange rate system should result in a lowering of the rate applicable to wool tops to such a point that the subsidy element was removed, the Treasury Department would of necessity conclude that no bounty was being paid within the meaning of section 303 of the Tariff Act, Very truly yours, H. Chapman Rose Assistant Secretary of the Treasury Mr. Edwin Wilkinson Executive Vice President National Association of \fiool Manufa cturers 386 Fourth Avenue New York 16, New York 1 Q . ._ -•-" -> - 4Further changes were made in the Uruguayan rates in the latter part of 1953. A recomputation was made, still consistently using the same formula, which showed that the rate for wool top was less favorable than the weighted average export-import rate. The domestic wool industry vras advised of the basis for the Treasury decision in 1953^ the decision in 1954 and the decision now projected for 1959. As examples of the advice given to the trade, I have for insertion in the record two letters from former Assistant Secretary of the Treasury H. Chapman Rose to Mr. Wilkinson of the National Association of Wool Manufacturers. The first is dated October 26, 1953 and the second April 6, 1954. The second letter was also sent to others in the trade and to a number of interested Senators and Congressmen. At other times questions have arisen as to whether the duty should be taken off, and we have always advised the trade that any changes made would be consistent with our formula. The importers of wool top from Uruguay are currently challenging the Secretary of the Treasury's countervailing duty order in court. In this case, brought by the Energetic V;orsted Corporation, in the United States Customs Court and tried in May, 1958, the Treasury defended the validity of its formula against the importers' allegations that no countervailing duty Is justified. The Court has not yet renden an opinion in the case. In closing, let me say that we vrould be less than candid if we did not admit that the task of determining whether a bounty or grant exists under the Uruguayan multiple currency exchange rate system is a most difficult one. However, the law places the responsibility for making this determination upon the Secretary of the Treasury. In 1953* after painstaking study of the problem, the Treasury developed the formula I have been discussing. It believed that this was the proper formula and it still believes so. At that time and from time to time since over the past six years the Treasury Department has heard arguments from the domestic interests as to why*their formula should be adopted and has heard arguments from the importing and foreign interests as to why their formula should be adopted. We have not been persuaded by these arguments and after thorough review we are not persuaded by them now. We feel that the Secretary of the Treasury In carrying out his duties under this countervailing duty law must remove this duty under the existing facts. Attachments 0O0 The United States importers of wool top, the foreign exporters and the Uruguayan Government argued that the proper bench mark would be the worth of the peso demonstrated by what it would bring on the free market at that time in 1953. The free market rate was more favorable than the wool top rate so that adoption of this approach would have resulted in a determination that no bounty or grant existed and that consequently there were no grounds for imposition of a countervailing duty. The Treasury Department rejected this proposal as it had rejected the formula advanced by the domestic industry. The final conclusion reached by the Secretary of the Treasury, in carrying out his duty under the law, was that there was a subsidy, and that the appropriate bench mark for determining its amount, was the weighted average of all Uruguayan export and import exchange rates used in Uruguay's internations trade. All the rates in the trade would thus be given appropriate consideration in arriving at the bench mark value; there would be no bias arising from selecting certain of the multiple rates and rejecting others from the computation. The Treasury felt at the time, and we still feel, that this is the best, fairest and most justifiable formula to apply to this case. With this weighted average as a bench mark, under the facts of this case the bounty or grant would exist if the rate for wool top was more favorable than this average and no bounty or grant would exist if the rate for wool top were the same or less favorable than the average. Had the domestic wool trade's formula been used - the difference between the rate for top and the rate for raw wool - the countervailing duty would have been approximately ho percent. Had the importer's formula been used - the difference between the rate for top and the free rate - there would have been no countervailing duty. Application of the Treasury formula - the difference between the rate for top and the weighted average export-import rate - resulted in a countervailing duty of 18 percent. An order imposing the duty in this amount was accordingly published in May, 1953. At this point, let me give just one example of why the formula proposed by the domestic industry is not realistic. Suppose that Uruguay stopped exportation of greasy wool so that there was no export rate for this product but wool top continued to be exported. The basis for the industry formula - namely, the differential between the greasy wool rate and the wool top rate - would have disappeared. Treasury could not operate under such a formula and I doubt that the domestic industry would wish us to do so. Changes were made in the Uruguayan rates in 1954. A recomputation was made, under the same formula used in 1953, which showed that the duty should be reduced to 6 percent. An order was accordingly published reducing the rate to that figure. - 2 and determine, or estimate, the net amount of each such bounty or grant, and shall declare the net amount so determined or estimated. The Secretary of the Treasury shall make all regulations he may deem necessary for the identification of such articles and merchandise and for the assessment and collection of such additional duties." The lav/ provides for this additional duty to "countervail," or to compensate for, subsidies on exports to the United States without regard to whether or not the protection is needed. There is no injury provisior in the law. By the same token the Secretary of the Treasury can not impose a countervailing duty where no subsidy exists even though imports of the commodity in question are injuring a domestic industry. As you know, there are other laws on the books which are designed to prevent such injury. Just as the countervailing duty law does not take into account injury to domestic industry, the lav/ does not take into account international relations aspects. The classic example of a subsidy is a cash payment - so many cents per unit on an exported commodity. Such payments have not been made by Uruguay. Uruguay has, however, had for some years what is called a multiple exchange system. This means that exporters of different commodities convert their foreign exchange proceeds into pesos at different rates of exchange established by the government. Imports are also given differing exchange rates. In 1953 wool top was coming into the United States in rapidly increasing quantities. There were clear indications of a governmental policy to promote sales of wool top. United States imports had risen from $1 million in 1950 to $22 million in 1952. Other factors were present, leading to concern as to whether the rate for wool top amounted to a subsidy. The United States wool Industry urged in 1953 that a subsidy existed by virtue of the fact that the rate for wool top was more favorable than the rate for raw wool. The difference between the rates was approximate^ 40 percent, and the industry asked for a countervailing duty in that amount. The Treasury considered most carefully the domestic industry1s arguments, but came to the conclusion that the formula urged by the Industry was not justifiable. The problem the Secretary of the Treasury was faced with was that of determining whether exporters of wool top in Uruguay were receiving more for their product - in Uruguayan pesos - than appeared justified by the situation in which other elements of the Uruguayan economy were placed by the then existing multiple exchange rates; in other words, were they receiving more than the true value of the peso in the external trade of Uruguay? TREASURY DEPARTMENT Washington 19 J STATEMENT OP A. GILMORE FLUES, ASSISTANT SECRETARY OF THE TREASURY, BEFORE THE SENATE FINANCE COMMITTEE, 10:00 A.M. EST, TUESDAY, FEBRUARY 17, 1959. THE COUNTERVAILING DUTY ON URUGUAYAN WOOL TOP I am appearing before the Committee this morning at your request to discuss the countervailing duties on wool top imported into the United States from Uruguay. It will be my purpose to explain to you why the Treasury Department firmly believes that recent changes in the Uruguayan foreign exchange rates justify the removal of this countervailing duty. Section 303, Tariff Act of 1930, is known as the countervailing duty! law. It imposes upon the Secretary of the Treasury the duty of determining when merchandise coming into the United States from abroad is benefiting from a bounty or a grant. The law requires the Secretary in such instances to determine or estimate the amount of the bounty or grant and then to impose on such goods an additional duty - above and beyond the regular duty - in the amount of the bounty or grant - which in my statement I will refer to, for convenience, as a subsidy. For the record, the exact text of the law is as follows: "Whenever any country, dependency, colony, province, or other political subdivision of government, person, partnership, association, cartel, or corporation shall pay or bestow, directly or indirectly, any bounty or grant upon the manufacture or production or export of any article or merchandise manufactured or produced in such country, dependency, colony, province, or other political subdivision of government, and such article or merchandise is dutiable under the provision of this chapter, then upon the importation of any such article or merchandise into the United States, whether the same shall be imported directly from the country of production or otherwise, and whether such article or merchandise is imported in the same condition as when exported from the country of production or has been changed in condition by remanufacture or otherwise, there shall be levied and paid, in all such cases, in addition to the duties otherwise imposed by this chapter, A-453an additional duty equal to the net amount of such bounty or grant, however the same be paid or bestowed. The Secretary of the Treasury shall from time to time ascertain QJ : y^A-K.Jr>r^-^ lf\jL^ *.•*-'••y ^*v• y - ~y&. •y __ sTAtmm? OF A . muMQMM F U J E S , JuusxsTurr SIORFTAIIY C? THI TREASURY, B&JTCftE THE S1MATE FXS&1$$ COK1IXTTSE THE COUmrgRYAIlJCSa BITTY OB UHU&OAYAJf »0Ot TO** I ass appearing hefcre ih# OeaBnttte*: this morning &t your reqwest to discuss the countervailing duties on wool top imported late the United States from Uruguay, It will be my purpomm to explain to you shy the Treasury &*p*rta*nt ftrwly believes that recent changes in the Uruguayan foreign exchange rates justify the removal of this countervailing duty. Section 3*_*t ^fiff &ei of 1£3#, is known as the countervailing duty law. It imposes upon the Secretary of the Treasury the duty of determining when merchandise morning into the United States frost abroad is benefiting from a hcunty or a grant. The law requires the Secretary Is such Instances to determine or estimate the aatount of the bounty or grant and then to Impose on such goods an addltiorrduty - above ami beyond the regular duty ~ in the amount of the bounty or grant - which is sty statement I wilt refer to, for convenience, as a subsidy. For the record, the exact text of the law is as followsi "Whenever any country, dependency, colony, province, er other political subdivision of governc&wnt, person, partnerships association, cartel, or corporation shall pay er bestow, directly or Indirectly, any bounty er grant upon the manufacture or production or export of any article or merchandise manufactured or produced in such country, dependency, colony, province, or ether political subdivision of ff?vern«ent, mnd such article er merchandise is dutiable under the ftyfy is prewlsleae ef this shatter, then -pea mm lapo-tattsa of any such article or aarehmadlee into the Baited States, whether the asms sbftll be ti|mrfnd directly free the country ef predaetiso or otherwise, sad whether sash arttels or aerehsadise in imported la the S M S eenditlsoi ss when exported trmm the esoatry ef prsdaetlsa or has teen ehaaasd la eeeslitlsa by remsaafsetare er otherwise, there shall he levied end paia, in all such oases, la addition te the datiee otherwise tss>oaoa by this chapter* sa additional troty eqoal to the net aaoeat of sash bounty or groat, hossioi the same ho gal* er bestowed, the Secretary of the treasury shall trmm tias to Use aaeertata aad deteraias, or estiaste, the set saosmt ef each sash bounty or grant, aad shall oeclsre the net saoaat so dotei-dasd or estiasted. the Secretary of the Treas-ry shall aaks all regulations he asy seen necessary for tbs ideatlflestion of saeh srtieleo sad aarcbaodise aad far the aosessasat sad cellectioa of sash addltioasl duties.* the lav provldee for this additions! daty to •eosaterwail,* or to riisniBti for, subsidies on exports te the Salted states without regard te whether er act ths pretectiea is needed* There Is no lajeiy provisiso la the las. By the some token the Secrstary of the treasary can act iaposs a countervailing daty vfcere no ssbsidy exists even thoagto iaperts of the cmasedity la eaootLsa are lajariag a dsasstic iasastxy. A* yea knew, there mrm other laws on ths books which ars dceigned te prevent sack lajazy, JOst as the eotraterweiling duty law dmmm not take late account injury to dsasstic ia-astry, the law does net take into accoant international relations aspects, the classic exaapls of a sabsidy is a cash peyasnt - so aany cents per salt an sa exported esasLOdlty. Sach payments .i_vs act been nade by Uragasy, Qragsey hss, however, hoc for sons years what is called a aaltiple exchange syst this aeons that exporter* of alfferent esK&edttieo convert tbeir foreign exchange proceeds into pesos at different rates of exchange established by the government. Imports are also given differing exchange rotes, la 1953 *~»1 top was cowing late the United States la rapidly Increasing quantities. There are clsar indications of a governmental policy te promote sales of w>ol top. lilted State* imports bed risen trmm U Billion in 1950 te $22 million la 1952. Many other factors were present, loading to concern as to whether the rate for wool top smcaated te a eubsiay. Ihs United States weal ina^stry urged in 1953 that a subsidy existed by virtue ef the fact that the rate for wool top was mere favorable then ths rate for raw wool. The difference between the rates was approximately 40 percent, sad ths industry asked for a countervailing datr -» that amount. the Treasury considered most carefully the domestie industry's arguments, but came to the conclusion that ths formula urged by the industry was not justifiable. Ths problem the Secretary of ths treasury was faced sdth was that of deter* mining whether exporters of wool top in Uruguay were receiving acre for their product * in Uruguayan pesos - than appeared Justified by the situation in which other elements of the $reguayaa eeensay were placed by the then existing eultiple ex hangs rates} in ether words, war® they receiving acre than the true value of ths peso In the external trade of Urugnay? The United States importers ef wool tap, the foreign exporters and the Uruguayan Government argued that the proper bench mark would be ths worth of the peso demonstrated by what it sonic bring on the trmm market at that time la 1953. 18d ~ ** •» The free market rate was more few or able than the wool top rate so that adoption of this appreeob would have resulted in a determination that no bounty or grant existed mnm that a«iMMKpssfitly there ware ne greuada far itspoaition ef a countervailing ditty* The Treasury Be part went rejeated this proposal as It had rejectee the formula advanced by the domestic industry, the final ©one 1 us ion reached by the Secretary of the treasury, in carrying out his duty under the law, was that the appropriate bench mark, for determining; whether afeewttyer grant existed, and for determining Its amount, wa* the weighted average of all OTtigwayan expert mmd import exchange rates used la Uruguay's international trade, all the rates in the trade wewld thus ha given appropriate consideration In arriving at the bench mark valttef timrm would he no bias arising from selecting certain of the multiple rates and rejecting ethers from the computation. The Treasury felt at the time, and we still feelf that this is the best, fairest and most justifiable formula te apply te this case. With this weighted average aa a bench mark, the bounty er grant would exist If the rata far weal tap was wore favorable than this avarage and ne bounty or grant would exist if the rate for wool top were the same er lass favorable than the average. ®m& the domestic wool trade's formula been used - the difference between tba rata far tap and the rate for raw wool - the counter* railing duty would harm bean approximetely kO percent. Had the importer's formula bean used - the difference between the rata for top and the free rate - there ~ould have been no countervaillag law -*• y <J duty. Application ef the Treasury formula - the difference between the rate for top and the weighted average export-.import rate resulted in a countervailing duty of IB percent. -An order imposing the duty in this amount was accordingly published in Hay, 1953 • At this point, let mm give just one example of why the formula proposed by the domestic Industry Is not realistic. Suppose that Uruguay stepped exportation ef ^rmmmy wool so that there was no expert rate far this product but wecl top continued te be exported, the basis far the industry formula ~ namely, the differential between the greasy wool rate and the wool top rate - would have disappeared* Yreaaitry cowld not operate under such a formula and I doubt that the domestic industry would wish us te do so. Changes were made in the Uruguayan rates In 195^» A re- computatlon was made, under the same formula used la 1953• which shewed that the duty should be reduced to 6 percent. An order was accordingly published reducing the rate to that fA^urm9 Further ehmnges were made in the Uruguayan rates in the latter part ef 1958. A recemputatlon was wmdm, still consistently using the same formula, which shewed that the rate for wool top was less favorable than the weighted average expert*import rate. The demontic weel Industry was advised of the basis fer the Treasury decision in 1953» the deeislen in 1954 and the decision new projected fer 1959* As examples of the advice given te the trade, 1 have fer insertion in the record two letters frem former - 6 - 18, Assistant Secretary ef the Treasury H. Chapman Koso te 3ir« Wilkinson of the Sattemal Association ef Wee! Manufacturers. The first la dated Qetaber 26, 1953 *®d the second April 6, 1954. The second letter was else sent te ethers in the trade and te a number ef interested Senators and Congressmen, At ether times questions have arisen as to whether the duty should be taken ^mtt9 and we have always advised the trade that any changes made would be consistent with our formula. The imperters ef weel top from Uruguay are currently challenging the Secretary ef the Treasury*s countervailing duty mrdmr in court. In this case, brought by the Energetic Worsted Corporation, in the United States Sua teas. Oewrt mmd tried in Way, 1958* the Treasury defended the validity ef Its formula against the imperters* allegations that ne countervailing duty is justified. The Court has net yet rmndmrmd an opinion In the case. In closing, let mm any that we would be less than candid if we did net admit that the task ef determining whether a bounty er grant exists under the Uruguayan multiple currency exchange rate system Is a most difficult one. However, the law places the responsibility fer making this determination upon the Secretary of the Treasury, In 1953» after painstaking study ef ths problem, the Treasury develeped the formula I have been discussing. It believed that this was the proper formula and it still believes so. At that time and from time te time since ever the past six years ~ ?» the Treasury ©apartment has heard arguments from the domestic Interests ne te why their formula should be adapted and has heard arguments from the imparting and foreign interests as te why their fenaula should be adopted, &e have net boon persuaded by these arguments and after tttareugh review we are not persuaded by them new. We feel that tfee Secretary ef the Treasury in carrying out his duties under this countervailing duty law must remove this duty under the existing facts. C 0 F 1 October %o9 1953 l8o My dear $r. "ilklnson: The Si^sretsry has asked ne te reply te your letter ef September 9, 1953, cementing upon certain reports of a contemplated efeanfe in the Urugoayaa exchange rate applicable te exports of wool tops to the Halted States mm stating your belief that Urn countervailing duty ma wool tops should be amistaiaed so l&ng mm that rate is ncre favorable thai; tfe@ rate _pi>licabl_ te exports ef wosl te the United States. Ths trmmwmey £*part»*at is, ef coarse, in. ne position te earnest on speealaticn about change* In the Uruguayan exchange fata system. jtay wmtmrimX change in the exchange rate system ef Oruguay mm it offsets exports of weal tops to the United States would, fegp&ever* repairs tfe® fraaimfy te reconsider the previsions ef T. 0. 5|tf? «£ ley 6, 1953, *_patlng aoantarfftiliar duties on imports of wool taps. In the eo«»ldefati«n which led t® the issmnco of f • u. 5J^57 it was concluded thst ths Ur„.g_aya.a exchange rate system contained elements of both srabeidy a m indirect taxation so that it could mt m said that the entire d_Jttomu» between the lowest rate and the wool tops rate amoantsd te a snhsidy, Ihs e^^tervailing duty order reflected this denials and esttastad the anoimt ef bounty present in the «ool tops rate at IS peasant* If the Hop^baent fend, after review ef any revision in the Urmgfiayan nsebaag* rate system, tket & bounty eentintisd to be paid on empWts ef weal tops te the United States, the eouaWrvallinf duty weald remain in affect* subject te such mmtUSiaatian as might proms nacessaiy .to re£ta«t any chang® in the mmmmt ef the hsi&n%. If, however, the revision in the toiga*$®a exchange rate system should result in a lowering ef the rate applicable to seel tops te smch a point that the subsidy olaaant nas xenonad, ths trmmmxy asfiartmsnt would @f assess 11? eonelndn that aa bounty was being paid within the .MMuxlng of saetice 303 of the Swiff Act. fery truly yours, H. Ghapnaa &ese Assistant Secretary of the treasury Mr. Edwin Wilkinson Executive flee President Sati©i_tl Association of W e d ttanttfaetwrers 3^6 fourth Avenue JJew fork 16, Mew fork 18. cum 6> m*m Wilkinsons isasde to tft# a t * * to be advise* H&ch is e«rrezrUy lis ym knew, B&stim 3®3 in mfastnmm that msm the m b&mty or ^aet exists vith from tim to t£as ascertain ® a* of ths 6 mi mm, mm tun rates are M tlM& a fef^-gi in it» W W _rUw__Bft t» 6. 1.86 l.a 1 on the mx___H_ _>»ui __im__<t fe-ffts, At 33 s &—_-, or *» -us? in as is Mr. idwta en*. H_U-BM» __i^i________ i_____. m 9W^ 1953- *mwmmmm9 M M I I. V M wwtmwm _?Git jtdp $© US* .flfwfctv. TREASURY DEPARTMENT Washington STATEMENT OP A. GILMORE FLUES, ASSISTANT SECRETARY OF THE TREASURY, BEFORE THE SENATE FINANCE COMMITTEE, 10:00 A.M. EST, TUESDAY, FEBRUARY 17, 1959. THE COUNTERVAILING DUTY ON URUGUAYAN WOOL TOP I am appearing before the Committee this morning at your request to discuss the countervailing duties on wool top imported into the United States from Uruguay. It will be my purpose to explain to you why the Treasury Department firmly believes that recent changes in the Uruguayan foreign exchange rates justify the removal of this countervailing duty. Section 303, Tariff Act of 1930, is known as the countervailing duty law. It imposes upon the Secretary of the Treasury the duty of determining when merchandise coming into the United States from abroad is benefiting from a bounty or a grant. The law requires the Secretary in such instances to determine or estimate the amount of the bounty or grant and then to impose on such goods an additional duty - above and beyond the regular duty - in the amount of the bounty or grant - which in my statement I will refer to, for convenience, as a subsidy. For the record, the exact text of the law is as follows: "Whenever any country, dependency, colony, province, or other political subdivision of government, person, partnership, association, cartel, or corporation shall pay or bestow, directly or indirectly, any bounty or grant upon the manufacture or production or export of any article or merchandise manufactured or produced in such country, dependency, colony, province, or other political subdivision of government, and such article or merchandise is dutiable under the provision of this chapter, then upon the importation of any such article or merchandise into the United States, whether the same shall be imported directly from the country of production or otherwise, and whether such article or merchandise is imported in the same condition as when exported from the country of production or has been changed in condition by remanufacture or otherwise, there shall be levied and paid, in all such cases, in addition to the duties otherwise imposed by this chapter, an additional duty equal to the net amount of such bounty A-453or grant, however the same be paid or bestowed. The Secretary of the Treasury shall from time to time ascertain - 2 and determine, or estimate, the net amount of each such bounty or grant, and shall declare the net amount so determined or estimated. The Secretary of the Treasury shall make all regulations he may deem necessary for the identification of such articles and merchandise and for the assessment and collection of such additional duties." The law provides for this additional duty to "countervail," or to compensate for, subsidies on exports to the United States without regard to whether or not the protection is needed. There is no injury provision in the law. By the same token the Secretary of the Treasury can not impose a countervailing duty where no subsidy exists even though imports of the commodity in question are injuring a domestic industry. As you know, there are other laws on the books which are designed to prevent such injury. Just as the countervailing duty law does not take into account injury to domestic industry, the law does not take into account international relations aspects. The classic example of a subsidy is a cash payment - so many cents per unit on an exported commodity. Such payments have not been made by Uruguay. Uruguay has, however, had for some years what is called a multiple exchange system. This means that exporters of different commodities convert their foreign exchange proceeds into pesos at different rates of exchange established by the government. Imports are also given differing exchange rates. In 1953 wool top was coming into the United States in rapidly increasing quantities. There were clear indications of a governmental policy to promote sales of wool top. United States imports had risen from $1 million in 1950 to $22 million in 1952. Other factors were present, leading to concern as to whether the rate for wool top amounted to a subsidy. The United States wool industry urged in 1953 that a subsidy existed by virtue of the fact that the rate for wool top was more favorable than the rate for raw wool. The difference between the rates was approximately 40 percent, and the industry asked for a countervailing duty in that amount. The Treasury considered most carefully the domestic industryfs arguments, but came to the conclusion that the formula urged by the industry was not justifiable. The problem the Secretary of the Treasury was faced with was that of determining whether exporters of wool top in Uruguay were receiving more for their product - in Uruguayan pesos - than appeared justified by the situation in which other elements of the Uruguayan economy were placed by the then existing multiple exchange rates; in other words, were they receiving more than the true value of the peso in the external trade of Uruguay? CM O -_r - 3 The United States importers of wool top, the foreign exporters and the Uruguayan Government argued that the proper bench mark would be the worth of the peso demonstrated by what it would bring on the free market at that time in 1953. The free market rate was more favorable than the wool top rate so that adoption of this approach would have resulted in a determination that no bounty or grant existed and that consequently there were no grounds for imposition of a countervailing duty. The Treasury Department rejected this proposal as it had rejected the formula advanced by the domestic industry. The final conclusion reached by the Secretary of the Treasury, in carrying out his duty under the law, was that there was a subsidy, and that the appropriate bench mark for determining its amount, was the weighted average of all Uruguayan export and import exchange rates used in Uruguay's international trade. All the rates in the trade would thus be given appropriate consideration in arriving at the bench mark value; there would be no bias arising from selecting certain of the multiple rates and rejecting others from the computation. The Treasury felt at the time, and we still feel, that this is the best, fairest and most justifiable formula to apply to this case. With this weighted average as a bench mark, under the facts of this case the bounty or grant would exist if the rate for wool top was more favorable than this average and no bounty or grant would exist if the rate for wool top were the same or less favorable than the average. Had the domestic wool trade's formula been used - the difference between the rate for top and the rate for raw wool - the countervailing duty would have been approximately Uo percent. Had the importer's formula been used - the difference between the rate for top and the free rate - there would have been no countervailing duty. Application of the Treasury formula - the difference between the rate for top and the weighted average export-import rate - resulted in a countervailing duty of 18 percent. An order imposing the duty in this amount was accordingly published in May, 1953. At this point, let me give just one example of why the formula proposed by the domestic industry is not realistic. Suppose that Uruguay stopped exportation of greasy wool so that there was no export rate for this product but wool top continued to be exported. The basis for the industry formula - namely, the differential between the greasy wool rate and the wool top rate - would have disappeared. Treasury could not operate under such a formula and I doubt that the domestic industry would wish us to do so. Changes were made in the Uruguayan rates in 195^. A recomputation was made, under the same formula used in 1953» which showed that the duty should be reduced to 6 percent. An order was accordingly published reducing the rate to that figure. Further changes were made in the Uruguayan rates in the latter part of 1958. A recomputation was made, still consistently using the same formula, which showed that the rate for wool top was less favorable than the weighted average export-import rate. The domestic wool industry was advised of the basis for the Treasury decision in 1953^ the decision in 195^ and the decision now projected for 1959. As examples of the advice given to the trade, I have for insertion in the record two letters from former Assistant Secretary of the Treasury H. Chapman Rose to Mr. Wilkinson of the National Association of Wool Manufacturers. The first is dated October 26, 1953 and the second April 6, 195^. The second letter was also sent to others in the trade and to a number of interested Senators and Congressmen. At other times questions have arisen as to whether the duty should be taken off, and we have always advised the trade that any changes made would be consistent with our formula. The importers of wool top from Uruguay are currently challenging the Secretary of the Treasury*s countervailing duty order in court. In this case, brought by the Energetic Worsted Corporation, in the United States Customs Court and tried in May, 1958, the Treasury defended the validity of its formula against the importers1 allegations that no countervailing duty is justified. The Court has not yet rendered an opinion in the case. In closing, let me say that we would be less than candid if we did not admit that the task of determining whether a bounty or grant exists under the Uruguayan multiple currency exchange rate system is a most difficult one. However, the law places the responsibility for making this determination upon the Secretary of the Treasury. In 1953. after painstaking study of the problem, the Treasury developed the formula I have been discussing. It believed that this was the proper formula and it still believes so. At that time and from time to time since over the past six years the Treasury Department has heard arguments from the domestic interests as to why their formula should be adopted and has heard arguments from the importing and foreign interests as to why their formula should be adopted. We have not been persuaded by these arguments and after thorough review we are not persuaded by them now. We feel that the Secretary of the Treasury In carrying out his duties under this countervailing duty law must remove this duty under the existing facts. Attachments 0O0 COPY '; -> •4.. / -v \_/ October 26, 1953 My dear Mr. Wilkinson: The Secretary has asked me to reply to your letter of September 9, 1953* commenting upon certain reports of a contemplated change in the Uruguayan exchange rate applicable to exports of wool tops to the United States and stating your belief that the countervailing duty on wool tops should be maintained so long as that rate is more favorable than the rate applicable to exports of wool to the United States. The Treasury Department is, of course, in no position to comment on speculation about changes in the Uruguayan exchange rate system. Any material change in the exchange rate system of Uruguay as it affects exports of wool tops to the United States would, however, require the Treasury to reconsider the provisions of T. D. 53257 of May 6, 1953j imposing countervailing duties on imports of wool tops. In the consideration which led to the issuance of T. D. 53257 it was concluded that the Uruguayan exchange rate system contained elements of both subsidy and indirect taxation so that it could not be said that the entire difference between the lowest rate and the wool tops rate amounted to a subsidy. The countervailing duly order reflected this decision and estimated the amount of bounty present in the wool tops rate at 18 percent. If the Department found, after review of any revision in the Uruguayan exchange rate system, that a bounty continued to be paid on exports of wool tops to the United States, the countervailing duty would remain in effect, subject to such modification as might prove necessary to reflect any change in the amount of the bounty. If, however, the revision in the Uruguayan exchange rate system should result in a lowering of the rate applicable to wool tops to such a point that the subsidy element was removed, the Treasury Department would of necessity conclude that no bounty was being paid within the meaning of section 303 of the Tariff Act. Very truly yours, H. Chapman Rose Assistant Secretary of the Treasury Mr. Edwin mikinson Executive Vice President National Association of Wool Manufacturers 386 Fourth Avenue New York 16, New York o -3- COPY April 6, 195!*. Dear Mr. Wilkinson: Reference is made to your letter of March 12, 195** > addressed to the Commissioner of Customs, in which you asked to be advised regarding the determination of the 6 percent countervailing duty which is currently applicable to imports of wool tops from Uruguay. As you know, Section 303 of the Tariff Act of 1930, as amended, provides in substance that when the Secretary of the Treasury determines that a bounty or grant exists with respect to any dutiable importation he "shall from time to time ascertain and determine, or estimate, the net amount of each such bounty or grant, and shall declare the net amount so determined or estimated." In recent years the problem of whether a bounty or grant exists has become greatly complicated for us because foreign countries have resorted to complex systems of multiple exchange rates. When two or more rates are in use we are automatically faced with the question of what rate or combination of rates is the "representative" one and we must of necessity determine that basing point before we can conclude that a foreign country is engaged in subsidizing its exports. In the specific case of Uruguay this Department employed an averaging process to arrive at the proper basing point or representative rate. In May 1953 that rate was determined to be 1.86 pesos per dollar, based on the weighted average of export and import rates over a representative period. At that time the effective wool top export rate was 2.19 pesos per dollar and the bounty was therefore estimated to be 33 centesimos per dollar, or 18$ in excess of the representative rate. In February 195^ the effective wool tops rate had been reduced to 1.97 pesos per dollar and the Treasury Department estimated the bounty to be 11 centesimos per dollar, or 6$ above the benchmark in February 195^ which, when recalculated, was found to remain the same as in May 1953* Hence, the applicable countervailing duty on imports of wool tops from Uruguay was reduced from 18$ to 6$ effective March 195k. Very truly yours, /s/ H. Chapman Rose H. Chapman Rose Assistant Secretary of the Treasury Mr. Edwin Wilkinson Executive Vice President National Association of Wool Manufacturers 3&6 Fourth Avenue New York 16, New York -9- ijt institutions and to the automatic stabilizers which have been built into our private enterprise economy, through unemployment compensation and through the automatic adjustment in tax burdens as taxable income falls and then rises again. We can have confidence in the strength of our economy and vie need not resort to hasty, drastic measures each time that there may be a temporary falling off in economic activity. Let me make it clear however that I hope progress in our fiscal affairs will eventually permit us to cut taxes. Our economy carries a heavy fiscal burden. Steps to reduce the pressure against incentives, and the pressure against saving and capital formation that this burden exerts, would help the economy. I do not mean to say that the economy cannot bear these burdens. If urgent fiscal needs should arise, I am sure we could shoulder a heavier load. As we constantly evaluate our economic growth certain conditions will have to be met in considering tax reduction. First, we should be sure that by reducing taxes we do not contribute to inflationary pressures. These pressures, now mostly in abeyance, may revive. In that case, we ought to aim at a surplus in the budget. We should not dispose of that surplus through tax reduction unless our whole economic posture warrants it. Second, we must give thought to reducing the public debt. If in bad times we allow ourselves to run a deficit in order to stimulate the recovery, we must pay off debt in good times. Otherwise, we shall engage in periodic increases in the public debt without countervailing reductions. Finally, and most importantly, the prospect for a tax cut depends upon our success in holding down public expenditures. You know what efforts the Administration is making. Here, everyone of you can make a contribution. It is easy indeed to suggest that public expenditures dear to someone else's heart should be kept down. What we need today is more than that. Everyone of us must be prepared to accept and even to request limitation of those expenditures in which he has an individual special interest. When the realization gains ground that holding down expenditures means to hold down everybody's expenditures, and when everybody accepts that for a fact, then vie will have established fiscal discipline and the budget will be under control. 0O0 - 8 Tax Revisions 17b The President in his budget message made recommendations for amendments to laws covering the taxation of life insurance companies, the taxation of cooperatives, and specifying the treatment processes to be considered mining for purposes of percentage depletion in the case of mineral products. Earlier in his State of the Union Message, the President said: "I am requesting the Secretary of the Treasury to prepare appropriate proposals for revising, at the proper time, our tax structure, to remove inequities and to enhance incentives for all Americans to work, to save, and to invest. Such recommendations will be made as quickly as our fiscal condition permits. These prospects will be brightened if i960 expenditures do not exceed the levels recommended." The matter of equity and fairness, of proper distribution of the burden of taxation will always be a matter of continuing concern to a free people. In our continuing consideration of the problems of securing revenue for our government we are indeed fortunate that Chairman Wilbur Mills and Congressman Reed for the Republican minority, ably assisted during his absence because of illness by Congressman Simpson, head the Ways and Means Committee, and that Senator Byrd, as Chairman, with Senator Williams heading the Republican side, lead the Senate Finance Committee. It has been and will continue to be a matter of great satisfaction to work with them, their Committees and the Congress. Fiscal Policy Let me turn for a moment from the problems of tax administration to the broader perspective of fiscal policy. Certainly, we all recall the strong pressure for a tax cut which was present twelve months ago. It was contended that such a cut was needed-to assure early recovery. Dire predictions were made as to the effect of governmental inaction. The Administration resisted these demands, a decision which has been justified by events. The turning point of the recession came in April — earlier than most prophets expected. The recovery which some had said would be slow and halting was, in fact, vigorous and sustained. I do not believe a tax cut would have brought a quicker turnabout. And it would have multiplied our problems of insuring fiscal soundness during the current period of economic growth. Our economy has given an impressive demonstration of its resiliency and powers of recuperation. These are due to the inherent confidence and good sense of our people, to the solidity and strength of our economic organization and of our financial This approach to the depreciation problem, I am sure you will appreciate, might get us into very shaky and untenable ground. We would leave the certain and demonstrable base of original cost, and might move into the area of hypothetical and questionable appraisals of replacement cost. This approach does not seem to have the elements of a realizable program. Many have asked when a revised Bulletin F is to be issued. No issuance date has been agreed upon at this time, and the possibility exists that the present Bulletin may not be revised and reissued. Many false hopes have been raised, I believe, about what a revised Bulletin F might contain. It would be erroneous to assume that a restudy of average lives would produce many reductions apart from the obsolescence factor. The conclusion seems plausible moreover that the obsolescence factor injects a high degree of uncertainty into the determination of useful lives. I have the impression that large numbers of taxpayers have, on the basis of their own experience and of evidence submitted to the Agents, satisfactorily established for themselves shorter lives than a revised Bulletin F might suggest. There is considerable thought that a reissuance of the Bulletin in revised form might cause even more prolonged disputes than at present as.to whether the normal life set forth in the Bulletin or the prospective life measured by actual usage on the part of the taxpayer, or some other form of measurement, should control the depreciation period in any particular situation. We do not believe that we would advance the resolution of the problems which do exist in the field of depreciation by reissuing Bulletin F if such reissuance resulted in agents or taxpayers assuming that the lives given in it since the Bulletin has been under intensive restudy are now to be controlling and are to over-ride the actual experience of an individual taxpayer. In attempting to estimate the average life of a piece of equipment, it is possible for experts in the field to come up with a reasonable estimate, although this is not at all an easy thing. Thereafter some estimate might be made of how much obsolescence could be expected in this period and some range of tolerance could perhaps be allowed to account for this uncertainty created by prospective obsolescence. However, in the technological field we are moving so rapidly and developments are coming with such frequency that these estimates might be, at best, educated guesses. - 6I wish to emphasize that, subject only to fundamental requirements of consistency and reasonableness, this was intended only as a guide. It was not the intent at the time of its issuance, nor is it the intent today, that the lives set forth in Bulletin F represent the n_m___a_ia life in every case. Actual usage by the property owner is the controlling determination. It is recognized that some Re venue Agents have taken Bulletin F as the last word insofar as they are concerned. This attitude the Service has attempted and is continuing to attempt to correct. It is not the policy of the Revenue Service to substitute Bulletin F lives for the lives determined by the actual experience of the property owner. A practice of charging off an item of equipment over a relatively short period of time, and at the end of the charge-off period disposing of the Item at a relatively substantial gain has grown up in many sections of industry. Some taxpayers, ignoring salvage value and claiming to rely on section 1231 of the Code, treat this gain as a long-term capital gain. It has been suggested that the problems created by this practice would be met, insofar as personal property is concerned, and many taxpayers would benefit, if taxpayers were permitted to ignore salvage value but required upon sale at a profit of depreciable personal property to report the gain as ordinary income to the extent of the depreciation previously taken on the property. If sueh a proposal were adopted, it might well be a step In the direction of both fairness and simplification. Furthermore, It would permit more relaxation in the area of making certain that the life chosen by a taxpayer for depreciation purposes corresponds to the actual period of time during which the taxpayer Intends to use and will use the item of property. Even if a property owner is allowed to determine by his own experience the period of time, over which he will charge depreciation on a particular piece of machinery, the amount which he recovers back through depreciation charges during such determined life may not always give him sufficient funds to buy a replacing machine, that is, a new and modern machine designed to do the work theretofore performed by the fully depreciated item. Technological developments and Increased costs do mean that the replacing machine will, In many instances, cost more than the worn out item although the new machine may be more efficient and in many instances will show less cost per item. There are many taxpayers who would like to have a depreciation policy which would allow them not only to recover back the full cost of a machine, but would like, in addition, to recover back a sufficient amount to pay the full cost of a new, modern replacement. - o - 17o Depreciation and Bulletin F It had been strongly suggested to me that it might be well not to discuss tonight,, depreciation or the present status of Bulletin F. There was a fear, born of experience in other cases, that this area is so complex, has such an important legislative history and is of such intense interest that any brief statement would create more problems than it would settle. Such advice may prove to have been correct. I am taking up the subject, however, because this is a field of great interest to all of you and to all of us in the Service. Here, as elsewhere, we are attempting to enforce the tax laws in accordance with the will of Congress, and in such manner, within Congressional direction, as to collect taxes with a minimum of repressive effect on the Nation's taxpayers and their activities. There have been so many questions asked about the date of issuance of a revised Bulletin F that it has seemed advisable to make a statement concerning depreciation and the present status of a possible revision of Bulletin F. Let's begin with fundamentals. Section 167 of the 195^- Code sets forth the general rule. It provides: "There shall be allowed as a depreciation deduction a reasonable allowance for the exhaustion, wear and tear (including a reasonable allowance for obsolescence) — (l) of property used in the trade or business, or (2) of property held for the production of income." This is not a new section. It has appeared in this or similar form in the Internal Revenue Code since 1918. Questions arise, of course, as to what is "reasonable" and how best to determine the amount properly to be allowed for obsolescence. The general rule enforced by the Service, and it has been the rule for many years, is to allow depreciation based on the actual period of time that the item of machinery in question is used in trade or business by the taxpayer. In other words, the taxpayer by usage determines the period over which an item is to be depreciated. In order to provide some guidance to Revenue Agents as to the normal usable life of a particular piece of property, and in order, as well, to assist taxpayers desiring information as to what might be considered a normal life for depreciation purposes, the Treasury Department issued Bulletin F some seventeen years ago (January 19*12). - 4- I7 In this case the Court said: "* * * In essence, all manufacturing and other charges incurred prior to the actual shipment of an article and reflected separately or otherwise in the f.o.b. wholesale price are to be included in the sale price underlying the tax, while all charges incurred subsequent thereto are to be excluded.* * * "Advertising and selling expenses incurred by a manufacturer* * * clearly fall within the class of charges which Congress intended to be included in the tax base. Regardless of whether we consider such expenses technically as manufacturing costs, it is obvious that they are incurred prior to the actual shipment of articles to wholesale purchasers and that they enter into the composition of the wholesale selling price. Even if the purchaser accepts delivery at the factory, he pays for the advertising and selling expenses. Thus they must be included in the taxable sales price." While this opinion dealt directly with manufacturers' advertising and selling expenses, the question at issue made it necessary to cover generally what constituted taxable price. In so doing the Court said, in effect, that the statute included in taxable price all charges the purchaser had to pay to obtain the article f.o.b. at the factory, whether reflected separately or otherwise in the f.o.b. wholesale price. For the purposes of T. D. 63^0, it is immaterial to whom the charge may be paid, or that it may be separately billed to the purchaser as a charge for expenses Incurred or to be Incurred in his behalf, as for example, for demonstration or display, for advertising, national or local, or for sales promotion programs. The Decision makes no distinction between local and national advertising. There is a single test for qualification for exclusion from the price on which the excise tax is computed, namely, whether payment of the contribution Is "required" in order to secure the article or whether it is voluntary. T. D. 63^0 contains an over-all and definitive definition of taxable price. Since previous positions on advertising expenses were inconsistent, some prior rulings have necessarily been modified. The Decision Is consistent with the Service's long-standing position that compulsory charges by manufacturers for warranties are part of taxable price, and that no readjustment is later permitted for the cost of carrying out warranties. The Revenue Service will not disallow deduction of the cost of reasonable advertising directed to the cultivation of good will towards the advertiser, to the improvement of the morale of its employees, to encourage contributions to such organizations as the Red Cross, to urge the purchase of United States Savings Bonds, or to raise capital or recruit personnel. If confusion or misunderstanding exists in this area, it undoubtedly arises because of the difficulty of drawing a line between allowable institutional advertising and non-deductible expenditures for purposes which have to do with the promotion or defeat of legislation. For some forty years the regulations of the Department have prohibited the deduction of expenditures to promote or defeat legislation. The validity of these regulations was sustained by the Supreme Court in 1941 in Textile Mills Securities case. That case concerned an effort to obtain legislation by the Congress for a particular group of taxpayers. Since that time, Courts of Appeal, in the Cammarano and Strauss cases have held that expenditures in advertising campaigns directed to voters in referendum or initiative elections are made for the purpose of promoting or defeating legislation. These last two cases are now before the Supreme Court. To reiterate, we are not changing our position on institutional advertising. Cooperative Advertising Perhaps there has been even greater concern in corporate circles concerning cooperative advertising. Treasury Decision 6340, published last December, provides that any charge which a purchaser is required to pay by a manufacturer as a condition of the purchase of a taxable article is to be included in the sale price upon which the manufacturers1 excise tax is based, provided the charge is not attributable to an expense falling within one of the specific exclusions provided by law for transportation, delivery, insurance, Installation, and other similar charges. A comparable position Is taken with regard to what constitutes a price readjustment for purposes of credit or refund of tax. This Decision has general application In the area of price and price re-adjustments. It has frequently, however, been referred to as the "cooperative advertising" decision, because it resulted from a review of the treatment of cooperative advertising expenses and much of its practical effect is related to such expenses. The Decision is supported by the opinion of the Supreme Court in F. W. Fitch Company case, wherein the Court construed the antecedents of section 4216(a) of the 1954 Code. - 2 We at the Treasury take pride in all of these men. With confidence I invite your attention to the record of accomplishment which these men and the able veterans continuing in places of responsibility, such as Messrs. Trainor, Gallahan and Harding, will write in the months ahead. I would be remiss to participate in this program and not to express to you once again the appreciation of the personnel of the Treasury Department and of the Internal Revenue Service for the contributions which this Tax Executives Institute and other similar groups make toward an effective and equitable administration of the country's tax laws, state and Federal, and to improvements and refinements In these laws. Your Washington meetings give an opportunity not only to renew old friendships and make new ones among leaders in the tax field, but to discuss face to face, areas of immediate interest to the tax specialist and the tax executive. Institutional Advertising In recent months there has been much discussion by corporate officials concerning the attitude of the Revenue Service toward advertising expense, institutional and otherwise. The belief appears to be held by some that the Service is changing its policy on the deductibility of the cost of institutional advertising. This is not the case. The deductibility of the cost of institutional — or so-called "good will" advertising -- is being treated exactly as it has been for many, many years. The policy and practice of the Service regarding such advertising was set forth in two published rulings that appeared during World War II. At that time, there was apprehension that business organizations might not be allowed to deduct the cost of advertising that merely kept their names and trademarks before the public. The position taken then, and the position taken now, is that the cost of such advertising is generally deductible as an ordinary and necessary business expense. If such expenditures should be extravagant and out of all proportion to the size of the taxpayer'p. business, or if they are" not related to the patronage that might reasonably be expected in the future, they will be questioned, and might be disallowed. TREASURY DEPARTMENT Washington ie_ REMARKS BY FRED C. SCRIBNER, JR., UNDER SECRETARY OF THE TREASURY, AT THE NINTH ANNUAL MIDYEAR CONFERENCE BANQUET OF THE TAX EXECUTIVES INSTITUTE, SHOREHAM HOTEL, WASHINGTON, D. C , FEBRUARY l6, 1959 Since the last Washington meeting of this Institute, the Internal Revenue Service has lost the services of some of its most able and dedicated leaders. Commissioner Harrington, Deputy Commissioner Delk and Assistant Commissioners Winkle and Stowe have moved from government to private practice. I suspect that in their new fields the rewards are greater and perhaps the harassments are less. In any event, I can assure you that each of them is much missed. The Service bears today and will always bear the stamp of leadership which these able men provided. Many of you, who did not already know him,have had an opportunity to become acquainted with Dana Latham of Los Angeles, the new Commissioner of Internal Revenue, an outstanding American and a distinguished student and practitioner in the tax field. He has already demonstrated not only his great ability, but that he possesses that innate sensitivity which brings the right decision at the right time. Mr. Latham has moved promptly and decisively to meet the many complicated problems that are constantly arising in anOne agency whose operations vitally affect every citizen and of of Commissioner Latham's urgent tasks was the filling all business activity. the several key positions in the Service vacated as a result of retirements, resignations, and promotions. This he has done, filling each position from within the Service, an outstanding demonstration of a career government service functioning at its best. We have benefited greatly from the true merit system which characterizes the Internal Revenue Service today from bottom to top. A veteran of thirty-two years in the Service, Charles I. Fox has moved from District Director In Utah to become Deputy Commissioner. Harold T. Swartz, with twenty-four years of service was, of course, a "natural" for the Assistant Commissionership (Technical). William H. Loeb, who first joined the Service in 1942, has moved from Regional Commissioner at Atlanta to become Assistant Commissioner for Operations. Other experienced and exceptionally well qualified men have moved up, filling the vacancies caused by the promotions which I have listed, as well as other spots. A-452 JL ^ *~i TREASURY DEPARTMENT Washington REMARKS B Y F R E D C . SCRIBNER, JR., UNDER SECRETARY OF T H E TREASURY, A T T H E NINTH ANNUAL MIDYEAR CONFERENCE BANQUET OF T H E T A X EXECUTIVES INSTITUTE, SHOREHAM HOTEL, WASHINGTON, D. C , FEBRUARY l6, 1959 Since the last Washington meeting of this Institute, the Internal Revenue Service has lost the services of some of its most able and dedicated leaders. Commissioner Harrington, Deputy Commissioner Delk and Assistant Commissioners Winkle and Stowe have moved from government to private practice. I suspect that in their new fields the rewards are greater and perhaps the harassments are less. In any event, I can assure you that each of them is much missed. The Service bears today and will always bear the stamp of leadership which these able men provided. Many of you, who did not already know him,have had an opportunity to become acquainted with Dana Latham of Los Angeles, the new Commissioner of Internal Revenue, an outstanding American and a distinguished student and practitioner in the tax field. He has already demonstrated not only his great ability, but that he possesses that innate sensitivity which brings the right decision at the right time. Mr. Latham has moved promptly and decisively to meet the many complicated problems that are constantly arising in an agency whose operations vitally affect every citizen and all business activity. One of Commissioner Latham's urgent tasks was the filling of the several key positions in the Service vacated as a result of retirements, resignations, and promotions. This he has done, filling each position from within the Service, an outstanding demonstration of a career government service functioning at its best. We have benefited greatly from the true merit system which characterizes the Internal Revenue Service today from bottom to top. A veteran of thirty-two years in the Service, Charles I. Fox has moved from District Director In Utah to become Deputy Commissioner. Harold T. Swartz, with twenty-four years of service was, of course, a "natural" for the Assistant Commissionership (Technical). William H. Loeb, who first joined the Service in 1942, has moved from Regional Commissioner at Atlanta to become Assistant Commissioner for Operations. Other experienced and exceptionally well qualified men have moved up, filling the A-452 vacancies caused by the promotions which I have listed, as well as other spots. 1 We at the Treasury take pride in all of these men. With confidence I invite your attention to the record of accomplishment which these men and the able veterans continuing in places of responsibility, such as Messrs. Trainor, Gallahan and Harding, will write in the months ahead. I would be remiss to participate in this program and not to express to you once again the appreciation of the personnel of the Treasury Department and of the Internal Revenue Service for the contributions which this Tax Executives Institute and other similar groups make toward an effective and equitable acimlnistration of the country's tax laws, state and Federal, and to improvements and refinements in these laws. Your Washington meetings give an opportunity not only to renew old friendships and make new ones among leaders in the tax field, but to discuss face to face, areas of immediate interest to the tax specialist and the tax executive. Institutional Advertising In recent months there has been much discussion by corporate officials concerning the attitude of the Revenue Service toward advertising expense, institutional and otherwise. The belief appears to be held by some that the Service is changing its policy on the deductibility of the cost of institutional advertising. This is not the case. The deductibility of the cost of institutional -- or so-called "good will" advertising — is being treated exactly as it has been for many, many years. The policy and practice of the Service regarding such advertising was set forth in two published rulings that appeared during World War II. At that time, there was apprehension that business organizations might not be allowed to deduct the cost of advertising that merely kept their names and trademarks before the public. The position taken then, and the position taken now, is that the cost of such advertising is generally deductible as an ordinary and necessary business expense. If such expenditures should be extravagant and out of all proportion to the size of the taxpayer's business, or if they are not related to the patronage that might reasonably be expected in the future, they will be questioned, and might be disallowed. - 3The Revenue Service will not disallow deduction of the cost of reasonable advertising directed to the cultivation of good will towards the advertiser, to the improvement of the morale of its employees, to encourage contributions to such organizations as the Red Cross, to urge the purchase of United States Savings Bonds, or to raise capital or recruit personnel. If confusion or misunderstanding exists in this area, it undoubtedly arises because of the difficulty of drawing a line between allowable institutional advertising and non-deductible expenditures for purposes which have to do with the promotion or defeat of legislation. For some forty years the regulations of the Department have prohibited the deduction of expenditures to promote or defeat legislation. The validity of these regulations was sustained by the Supreme Court in 194l in Textile Mills Securities case. That case concerned an effort to obtain legislation by the Congress for a particular group of taxpayers. Since that time, Courts of Appeal, in the Cammarano and Strauss cases have held that expenditures in advertising campaigns directed to voters in referendum or initiative elections are made for the purpose of promoting or defeating legislation. These last two cases are now before the Supreme Court. To reiterate, we are not changing our position on institutional advertising. Cooperative Advertising Perhaps there has been even greater concern in corporate circles concerning cooperative advertising. Treasury Decision 6340, published last December, provides that any charge which a purchaser is required to pay by a manufacturer as a condition of the purchase of a taxable article is to be included in the sale price upon which the manufacturers' excise tax is based, provided the charge is not attributable to an expense falling within one of the specific exclusions provided by law for transportation, delivery, insurance, installation, and other similar charges. A comparable position is taken with regard to what constitutes a price readjustment for purposes of credit or refund of tax. This Decision has general application in the area of price and price re-adjustments. It has frequently, however, been referred to as the "cooperative advertising" decision, because it resulted from a review of the treatment of cooperative advertising expenses and much of its practical effect is related to such expenses. The Decision is supported by the opinion of the Supreme Court in F. W, Fitch Company case, wherein the Court construed the antecedents of section 4216(a) of the 1954 Code. ^30 - 4In this case the Court said: "* * * In essence, all manufacturing and other charges incurred prior to the actual shipment of an article and reflected separately or otherwise in the f.o.b. wholesale price are to be included in the sale price underlying the tax, while all charges incurred subsequent thereto are to be excluded.* * * "Advertising and selling expenses incurred by a manufacturer* * * clearly fall within the class of charges which Congress intended to be included in the tax base. Regardless of whether we consider such expenses technically as manufacturing costs, it is obvious that they are incurred prior to the actual shipment of articles to wholesale purchasers and that they enter into the composition of the wholesale selling price. Even if the purchaser accepts delivery at the factory, he pays for the advertising and selling expenses. Thus they must be included in the taxable sales price." While this opinion dealt directly with manufacturers' advertising and selling expenses, the question at issue made it necessary to cover generally what constituted taxable price. In so doing the Court said, in effect, that the statute included in taxable price all charges the purchaser had to pay to obtain the article f.o.b. at the factory, whether reflected separately or otherwise in the f.o.b. wholesale price. For the purposes of T. D. 6340, it is immaterial to whom the charge may be paid, or that it may be separately billed to the purchaser as a charge for expenses incurred or to be incurred in his behalf, as for example, for demonstration or display, for advertising, national or local, or for sales promotion programs. The Decision makes no distinction between local and national advertising. There is a single test for qualification for exclusion from the price on which the excise tax is computed, namely, whether payment of the contribution Is "required" in order to secure the article or whether it is voluntary. T. D. 6340 contains an over-all and definitive definition of taxable price. Since previous positions on advertising expenses were inconsistent, some prior rulings have necessarily been modified. The Decision is consistent with the Service's long-standing position that compulsory charges by manufacturers for warranties are part of taxable price, and that no readjustment is later permitted for the cost of carrying out warranties. H13Q - 5«>-. U l f Depreciation and Bulletin F It had been strongly suggested to me that it might be well not to discuss tonight, depreciation or the present status of Bulletin F. There was a fear, born of experience in other cases, that this area Is so complex, has such an important legislative history and is of such intense interest that any brief statement would create more problems than it would settle. Such advice may prove to have been correct. I am taking up the subject, however, because this is a field of great interest to all of you and to all of us in the Service. Here, as elsewhere, we are attempting to enforce the tax laws in accordance with the will of Congress, and in such manner, within Congressional direction, as to collect taxes with a minimum of repressive effect on the Nation's taxpayers and their activities. There have been so many questions asked about the date of issuance of a revised Bulletin F that it has seemed advisable to make a statement concerning depreciation and the present status of a possible revision of Bulletin F. Let's begin with fundamentals. Section 167 of the 1954 Code sets forth the general rule. It provides: "There shall be allowed as a depreciation deduction a reasonable allowance for the exhaustion, wear and tear (including a reasonable allowance for obsolescence) — (l) of property used in the trade or business, or (2) of property held for the production of income." This is not a new section. It has appeared in this or similar form in the Internal Revenue Code since 1918. Questions arise, of course, as to what is "reasonable" and how best to determine the amount properly to be allowed for obsolescence. The general rule enforced by the Service, and it has been the rule for many years, is to allow depreciation based on the actual period of time that the item of machinery in question is used in trade or business by the taxpayer. In other words, the taxpayer by usage determines the period over which an item is to be depreciated. In order to provide some guidance to Revenue Agents as to the normal usable life of a particular piece of property, and in order, as well, to assist taxpayers desiring information as to what might be considered a normal life for depreciation purposes, the Treasury Department issued Bulletin F some seventeen years ago (January 19^2). 4*J, JL C y - 6 I wish to emphasize that, subject only to fundamental requirements of consistency and reasonableness, this was intended only as a guide. It was not the intent at the time of its issuance, nor is it the intent today, that the lives set forth in Bulletin F represent the minimum life in every case. Actual usage by the property owner is the controlling determination. It is recognized that some Revenue Agents have taken Bulletin F as the last word insofar as they are concerned. This attitude the Service has attempted and is continuing to attempt to correct. It is not the policy of the Revenue Service to substitute Bulletin F lives for the lives determined by the actual experience of the property owner. A practice of charging off an item of equipment over a relatively short period of time, and at the end of the charge-off period disposing of the item at a relatively substantial gain has grown up in many sections of industry. Some taxpayers, ignoring salvage value and claiming to rely on section 1231 of the Code, treat this gain as a long-term capital gain. It has been suggested that the problems created by this practice would be met, insofar as personal property is concerned, and many taxpayers would benefit, if taxpayers were permitted to ignore salvage value but required upon sale at a profit of depreciable personal property to report the gain as ordinary income to the extent of the depreciation previously taken on the property. If such a proposal were adopted, it might well be a step in the direction of both fairness and simplification. Furthermore, it would permit more relaxation in the area of making certain that the life chosen by a taxpayer for depreciation purposes corresponds to the actual period of time during which the taxpayer intends to use and will use the item of property. Even if a property owner is allowed to determine by his own experience the period of time over which he will charge depreciation on a particular piece of machinery, the amount which he recovers back through depreciation charges during such determined life may not always give him sufficient funds to buy a replacing machine, that is, a new and modern machine designed to do the work theretofore performed by the fully depreciated item. Technological developments and increased costs do mean that the replacing machine will, in many instances, cost more than the worn out item although the new machine may be more efficient and in many instances will show less cost per item. There are many taxpayers who would like to have a depreciation policy which would allow them not only to recover back the full cost of a machine, but would like, in addition, to recover back a sufficient amount to pay the full cost of a new, modern replacement. mv This approach to the depreciation problem, I am sure you will appreciate, might get us into very shaky and untenable ground. We would leave the certain and demonstrable base of original cost, and might move into the area of hypothetical and questionable appraisals of replacement cost. This approach does not seem to have the elements of a realizable program. Many have asked when a revised Bulletin F is to be issued. No issuance date has been agreed upon at this time, and the possibility exists that the present Bulletin may not be revised and reissued. Many false hopes have been raised, I believe, about what a revised Bulletin F might contain. It would be erroneous to assume that a restudy of average lives would produce many reductions apart from the obsolescence factor. The conclusion seems plausible moreover that the obsolescence factor injects a high degree of uncertainty into the determination of useful lives. I have the impression that large numbers of taxpayers have, on the basis of their own experience and of evidence submitted to the Agents, satisfactorily established for themselves shorter lives than a revised Bulletin F might suggest. There is considerable thought that a reissuance of the Bulletin in revised form might cause even more prolonged disputes than at present as to whether the normal life set forth in the Bulletin or the prospective life measured by actual usage on the part of the taxpayer, or some other form of measurement, should control the depreciation period in any particular situation. We do not believe that we would advance the resolution of the problems which do exist in the field of depreciation by reissuing Bulletin F if such reissuance resulted in agents or taxpayers assuming that the lives given In it since the Bulletin has been under intensive restudy are now to be controlling and are to over-ride the actual experience of an individual taxpayer. In attempting to estimate the average life of a piece of equipment, it is possible for experts in the field to come up with a reasonable estimate, although this is not at all an easy thing. Thereafter some estimate might be made of how much obsolescence could be expected in this period and some range of tolerance could perhaps be allowed to account for this uncertainty created by prospective obsolescence. However, in the technological field we are moving so rapidly and developments are coming with such frequency that these estimates might be, at best, educated guesses. M - ~+ x* - 9institutions and to the automatic stabilizers which have been built into our private enterprise economy, through unemployment compensation and through the automatic adjustment in tax burdens as taxable income falls and then rises again. We can have confidence in the strength of our economy and we need not resort to hasty, drastic measures each time that there may be a temporary falling off in economic activity. Let me make it clear however that I hope progress in our fiscal affairs will eventually permit us to cut taxes. Our economy carries a heavy fiscal burden. Steps to reduce the pressure against incentives, and the pressure against saving and capital formation that this burden exerts, would help the economy. I do not mean to say that the economy cannot bear these burdens. If urgent fiscal needs should arise, I am sure we could shoulder a heavier load. As we constantly evaluate our economic growth certain conditions will have to be met in considering tax reduction. First, we should be sure that by reducing taxes we do not contribute to inflationary pressures. These pressures, now mostly in abeyance, may revive. In that ease, we ought to aim at a surplus in the budget. We should not dispose of that surplus through tax reduction unless our whole economic posture warrants it. Second, we must give thought to reducing the public debt. If in bad times we allow ourselves to run a deficit in order to stimulate the recovery, we must pay off debt in good times. Otherwise, we shall engage in periodic increases in the public debt without countervailing reductions. Finally, and most importantly, the prospect for a tax cut depends upon our success in holding down public expenditures. You know what efforts the Administration is making. Here, everyone of you can make a contribution. It is easy indeed to suggest that public expenditures dear to someone else's heart should be kept down. What we need today is more than that. Everyone of us must be prepared to accept and even to request limitation of those expenditures in which he has an individual special interest. When the realization gains ground that holding down expenditures means to hold down everybody's expenditures, and when everybody accepts that for a fact, then we will have established fiscal discipline and the budget will be under control. 0O0 ^30 - 2 the amount and price range of accepted bids. Those submitting 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, noncompetitive tenders for $200,000 or less for the 91-day bills and noncompetitive tenders for $50,000 or less for the 182-day bills without stated price from any one bidder will be accepted in full at the average price (in three decimals) of 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 February 26, 1959, in cash or other immediately available funds or in a like face amount of Treasury bills maturing February 26, 1959. Cash and exchange tenders will receive equal treatment. Cash adjustments will be made for differences between the par value of maturing bills accepted in exchange and the issue price of the new bills. The income derived from Treasury bills, whether interest or gain from the sale or other disposition of 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 treatment, as such, under the Internal Revenue Code of 1954. The bills are subject to estate, inheritance, gift or other excise taxes, whether Federal or State, but are exempt from all taxation now or hereafter imposed on the principal or interest thereof by any State, or any of the possessions of the United States, or by any local taxing authority. For purposes of taxation the amount of 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 of 1954 the amount of 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 companies) 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 oOoor loss. return is made, as ordinary gain Treasury Department Circular No. 4l8, Revised, and this notice, prescribe the terms of the Treasury bills and govern the conditions of their issue. Copies of the circular may be obtained from any Federal Reserve Bank or Branch. TO-OAS-OC TREASURY DEPARTMENT j__«_i",i«".j»<u.au,^.a!wu_!i«i«_.iL^ WASHINGTON, D.C. RELEASE A.M. NEWSPAPERS, Tuesday, February 17, 1959. A-451 The Treasury Department, by this public notice, invites tenders for two series of Treasury bills to the aggregate amount of $1,800,000,000, or thereabouts, for cash and in exchange for Treasury bills maturing February 26, 1959, in the amount of $1,802,782,000, as follows: 91-day bills, for $1,400,000,000, or thereabouts, to be dated February 26, 1959, and to mature May 28, 1959. 182-day bills, for $400,000,000, or thereabouts, to be dated February 26, 1959, and to mature August 27, 1959. 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. They will be Issued in bearer form only, and in denominations of $1,000, $5,000, $10,000, $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 o'clock p.m., Eastern Standard time, Friday, February 20, 1959. Tenders will not be received at the Treasury Department, Washington. Each tender must be for an even multiple of $1,000, and in the case of competitive tenders the price offered must be expressed on the basis of 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. 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 of 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. Immediately after the closing hour, tenders will be opened at the Federal Reserve Banks and Branches, following which public announcement will be made by the Treasury Department of 1 £-4 A. y y TREASURY DEPARTMENT Washington RELEASE A.M. NEWSPAPERS, Tuesday, February 17, 1959 The Treasury Department, by this public notice, invites tenders for two series of Treasury bills to the aggregate amount of $ 1,800,000,000 , or thereabouts, fo cash and in exchange for Treasury bills maturing February 26, 1959 , in the amoun of $ 1.802.782.000 , as follows: 91 -day bills, for $ 1.400.000.QQO W ~ y o r thereabouts, to be WE dated February 26, 1959 , and to mature May 28, 1959 182 -day bills, for $ 400,000,000 , or thereabouts, to be dated February 26, 1959 _--_-g , and to mature August 27, 1959 xC9-3_k^c 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. They will be issued in bearer form only, and in denominations of $1,000, $5,000, $10,000, $100,000, $500,000 and $1,000,00 (maturity value). Tenders will be received at Federal Reserve Banks and Branches up to the closing hour, one-thirty o'clock p.m., Eastern Standard time, Friday, February 20, 1959 • Tenders will not be received at the Treasury Department, Washington. Each tender must be for an even multiple of $1,000, and in the case of competitive tenders th price offered must be expressed on the basis of 100, with not more than three m 2 - 1 KQ J. y y W8A 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* Others than banking institutions will not be permitted to submit tenders ex- cept for their own account. Tenders will be received without deposit from incor- porated banks and trust companies and from responsible and recognized dealers in investment securities. Tenders from others must be accompanied by payment of 2 p cent of the face amount of Treasury bills applied for, unless the tenders are ac panied by an express guaranty of payment by an incorporated bank or trust compan Immediately after the closing hour, tenders will be opened at the Federal Reserve Banks and Branches, following which public announcement will be made by the Treasury Department of the amount and price range of accepted bids. Those submitting tenders will be advised of the acceptance or rejection thereof. The Secretary of the Treasury expressly reserves the right to accept or reject any o 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 les for the 91-day bills and noncompetitive tenders for $50,000 or less for the 182bills without stated price from any one bidder will be accepted in full at the average price (in three decimals) of accepted competitive bids for the respectiv issues. Settlement for accepted tenders in accordance with the bids must be made or completed at the Federal Reserve Bank on February 26, 1959, in cash or other " """OUT " immediately available funds or in a like face amount of Treasury bills maturing February 26, 1959 . Cash and exchange tenders will receive equal treatment. OFT Cash adjustments will be made for differences between the par value of maturing bills accepted in exchange and the issue price of the new bills* The income derived from Treasury bills, whether interest or gain from the sale or other disposition of the bills, does not have any exemption, as such, and los __g_K 15 I from the sale or other disposition of Treasury bills does not have any special treatment, as such, under the Internal Revenue Code of 1954. The bills are subje to estate, inheritance, gift or other excise taxes, whether Federal or State, but are exempt from all taxation now or hereafter imposed on the principal or intere thereof by any State, or any of the possessions of the United States, or by any local taxing authority. For purposes of taxation the amount of discount at which Treasury bills are originally sold by the United States is considered to be inte Under Sections 454 (b) and 1221 (5) of the Internal Revenue Code of 1954 the amo of 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 cluded from consideration as capital "assets. Accordingly, the owner of Treasury bills (other than life insurance companies) issued hereunder need include in his income tax return only the difference between the price paid for such bills, whe on original issue or on subsequent purchase, and the amount actually received ei upon sale or redemption at maturity during the taxable year for which the return made, as ordinary gain or loss. Treasury Department Circular No. 418, Revised, and this notice, prescribe the terms of the Treasury bills and govern the conditions of their issue. Copies of the circular may be obtained from any Federal Reserve Bank or Branch. IMMEDIATE REIEASE, Monday, February 16, 1959. A-450 During January 1959^ market transactions in direct and guaranteed securities of the government for Treasury investment and other accounts resulted in net purchases by the Treasury Department of $14,138,000. oOo TREASURY DEPARTMENT WASHINGTON, D.C. IMMEDIATE RELEASE, Th^^Bda^y-^Bxmsr^ 15, 1959. During De__3__bea^-=_£5&, market transactions in direct and guaranteed securities of the government for Treasury investment and other accounts resulted in net purchases by the Treasury Department of Al, ~ — 0O0 fmbrumry 39 l?5t j~. y wmmumv jy m. nmnu L. m:m^ J*** fbUmimg tmmmeU&m mmwm nmim i® m.root and $pmrmnt,mmd mmmrttiom of nam CtoT«rni«at for Trmmmmty lattslMMfla snd otlwr acae-Ato during the .iratlof Jamary, IfSfj $33.917,58) .00 Sales lit ftircha&e* »Sfflgff CM#.ff XnwMilHMHit* ^psaefa Mvlii^a of ©splits 4 Ia*esfes#nt* /VK ! iSCAL StKVJi;OFf ICE OF FISCAL ASSt. SECRETARY 7R_ASUft/ u_rnKin_fo» TREASURY DEPARTMENT 1-^*3 J. <j<y WASHINGTON, D.C RELEASE A. M. NEWSPAPERS, Tuesday, February 17, 1959. k-kk9 The Treasury Department announced last evening that the tenders for two series of Treasury bills to be dated February 19, 1959, which were offered on February 12, were opened at the Federal Reserve Banks on February 16. Tenders were invited for $1,1*00,000,000, or thereabouts, of 91-day bills and for $1*00,000,000, or thereabouts, of 182-day bills. The details of the two series are as follows; RANGE OF ACCEPTED COMPETITIVE BIDS: 182-day Treasury bills maturing August 20, 1959 91-day Treasury bills maturing May 21, 1959 Approx. Equiv* Price Annual Rate High Low Average 99.319 2.691$ 99.309 99.311 2.73W 2.726% Price 98.380a/ 98.352" 98.355 Approx. Equiv. Annual Rate 3.201$ 3.260£ 3.253* mf Excepting one tender of $50,000 60 percent of the amount of 91-day bills bid for at the low price was accepted 20 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: District Applied For Accepted Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco $ $ TOTALS 30,908,000 1,795,1*63,000 39,69l*,000 UO,785,000 13,216,000 31,968,000 225,282,000 16,817,000 18,063,000 1*1*,080,000 20,291,000 118,79^,000 12,395,361,000 28,1458,000 973,291,000 l8,29li,000 1*0,360,000 11,866,000 26,218,000 150,582,000 16,517,000 16,523,000 29,U80,000 19,61*1,000 69,3li*,000 i Applied For :t $ 5,1*25,000 it 681*, 328,000 j1 6,181,000 r 20,1*76,000 i1 1,1*93,000 J1 3,559,000 -1 103,159,000 J! 3,897,000 !1 iU,655,ooo -t 7,023,000 j 3,656,000 j1 67,81*8,000 |l,l*00,51*l*,000b/ 1 1921,700,000 Accepted 1 5,055,000 21*3,179,000 1,156,000 7,578,000 1,1*93,000 2,329,000 79,880,000 3,562,000 8,559,000 1*,823,000 3,356,000 39,725,000 $l*OO,695,000c/ b/ Includes $262,101,000 noncompetitive tenders accepted at the average price of 99.3-1 of Includes $28,112,000 noncompetitive tenders accepted at the average price of 98.355 j*. -<*~ RELEASE A. M. HE^SPAPERS, Tuesday, February 17, 1959 the treasury Department announced last evening that the tenders for two series of treasury bill® to be dated February X99 1959, which were offered on February 12, were opened at the Federal Reserve Banks on February 16. Tenders were invited fer $1^1*00,000,000, er thereabouts, ef 91-day bills and for $1*00,000,000, or thereabouts, ef 182-day bills. The details ef the two series are as follows: 182-day treasury bills IAN0E OF ACOWfm 91~day Treasury bills maturing August 20, X959 CCWFETITIVB BIBS: maturing May 231, 1959 i_»MMWM_»M<mtMtf-««itt«lBm^ Approx. Equiv. Price Annual Rate High Low Average 99.319 99.309 99.331 Fries 98.36W 98.352 90.355 2.69M 2.73M 2.726H Approx. Equiv. Annual Bats 3t2QW 3.260* 3.253J& a/ Excepting one tender of 150,000 60 percent of the amount of 91-day bills bid for at the low price was accepted 20 percent of the attoust ef 182-day bills bid for at the low price was accepted TOTAL TEKBERS APPLOT FOt AW ACCEPTS) Ml FHSB&X iMSIfl DIBTEICTS: District Applied For Accepted Boston Hew York Philadelphia Cleveland Richmond Atlanta Chisago St. Louis Minneapolis Kansas City Dallas San Francisco I 1 TOTALS 30,901,000 1,?95,W3,000 39,694,000 1*0,785,000 13,236,000 31,968,000 225,282,000 16,817,000 18,063,000 1*1*,080,000 20,291,000 118,79*»,OO0 12,395,361,000 28,1458,000 973,291,000 18,294,000 140,360,000 11,866,000 26,218,000 350,582,000 36,517,000 16,523,000 29,1*80,000 19,61*1,000 69,3_J»,000 1 i t Applied for Accepted • 1 5,1425,000 681*,328,000 s l 6,181,000 t 20,1*76,000 ! 1,J#3,OO0 3,559,000 s t 103,159,000 : 3,897,000 1 14,655,000 7,023,000 s 8 3,656,000 67,81*8,000 :r; * 5,055,000 243,179,000 1,156,000 7,578,000 1,1*93,000 2,329,000 79,880,000 3,562,000 8,559,000 4,823,000 3,356,000 39,725,000 U*00,695,OQCte/ $l,l<00,5l4li,000_/: $921,700,000 bf Includes §262,101,000 noncompetitive tenders accepted at the average price of 99.311 67 tf Includes t?8,112,000 noncompetitive tenders accepted at the average price of 98.355 \l V TREASURY DEPARTMENT 15i WASHINGTON, D.C. IMMEDIATE RELEASE, Friday, February 15, 1959. The Treasury Department today announced the results of the current exchange offering of 3-3/4 percent one-year Treasury Certificates of Indebtedness of Series A-1960 and 4 percent three-year Treasury Notes of Series D-1962, both dated February 15, 1959, open to holders of $9,769,891,000 of 2-1/2 percent Treasury Certificates of Indebtedness of Series A-1959, maturing February 14, and $5,102,277,000 of 1-7/8 percent Treasury Notes of Series A-1959, maturing February 15. Subscriptions for the new issues amounted to $12,796,966,000, leaving $2,075,202,000 of the maturing issues for cash redemption. The amounts exchanged were divided between the two new issues and among the several Federal Reserve Districts and the Treasury as follows: 3-5/4$ TREASURY CERTIFICATES OF INDEBTEDNESS OF SERIES A-1960 Federal Reserve District Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco Treasury TOTAL Certificates Exchanged $ 107,748,000 7,014,547,000 126,686,000 124,819,000 25,168,000 93,563,000 331,198,000 98,083,000 56,969,000 71,171,000 63,214,000 176,604,000 25,546,000 $8 ,315,316,000 Notes Exchanged 86,124,000 $ 1 ,779,563,000 57,819,000 87,189,000 34,181,000 108,868,000 373,546,000 77,111,000 40,260,000 99,120,000 33,484,000 260,971,000 9,471,000 • $3 ,047,707,000 Total Exchanges $ 193,872,000 8,794,110,000 184,505,000 212,008,000 59,349,000 202,431,000 704,744,000 175,194,000 97,229,000 170,291,000 96,698,000 437,575,000 35,017,000 $11,363,023,000 4$ TREASURY NOTES OF SERIES D-1962 Federal Reserve District Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco Treasury TOTAL Certificates Notes Total Exchanged $ 40,630,000 149,887,000 24,285,000 56,800,000 7,711,000 35,624,000 116,074,000 29,471,000 40,724,000 32,247,000 11,736,000 27,938,000 4,939,000 Exchanged $ 27,150,000 245,488,000 10,062,000 44,421,000 25,625,000 47,131,000 207,840,000 43,104,000 59,100,000 58,752,000 32,969,000 50,320,000 3,915,000 Exchanges $ 67,780,000 395,375,000 34,347,000 101,221,000 33,336,000 82,755,000 323,914,000 72,575,000 99,824,000 90,999,000 44,705,000 78,258,000 8,854,000 $855,877,000 $1,433,943,000 =\ -H <-/ __WEDIAT£ RELEASE, m 4 a y , Wmbmmry 13 1559 tt* results of the current exchange one-year Treasury Certificates of Indebtedness of Series three-,year Trmmzy mtmm of Series D-1962, both dated FebElders ©f 19,769,891,000 of 8-1/2 pmroms^ froasiiry C * r t m « offering of 3*5. A-1960 Sad 4 rua*y 15, 1959, cates of 1-7/8 of ' mtim* h*mm, j_tiNrla* tmmmry 14, and #$,108,877,000 of of Series A~1BS9, amturing February 15. Subscriptions t© |lt,798,988,000, 3«a*l»g $8,075,208,000 of the The amounts exehanged w r e divided INstutoti tho two B O W issue® aad sejoag the •e^Vlif V^P*SW*fc» aPnwwMWhwWBfcft^ *3~w^P^S'S* W ^ p wlF*pHP:'(r'ft ww^p Vpm%f ^WUppsBw lp##^p ^ w w'iwlP'WSwif *S*mk? mm*%tr(wtilirtBr^wIB' e 3*3/4$ ffmA^Hf 0IOTIFISASW Of n m m n _ B Of SSRUB A-1980 Federal He serve jaatiis* Boston New Y o r k Hiiladelphia Cleveland Richmond Atlanta Chicago St* Louis IftlSBttfflfrlli*. Kansas C i t y Dallas San Franciseo Treasury TOTAL Certificates Hotes ^^fe__yi_j6i8^t l___h_J_£Mld $ # 86,124,000 X,779,998,000 57,819,000 87,189,000 54,181,000 108,868,0QCV 373,888,000 77,111,000 40,180,000 39,120,000 55,484,000 880,971,000 9,471,000 $5,047,707,000 107,748,000 7,084,887,900 186,888#000 184,819,000 88,188,000 §3*503,010 331,198,000 98,083,000 58,988,000 71,171,000 88,814,000 178,804,000 8S_54t,000 $8,515,514,000 «_ W W W JWBft m Federal Reserve District Boston new zor% Ptailadelphia. Cleveland Richmond Atla-ita Chicago St. Louis Mlnjaoapolls Kansas City Dallas San Francisco Troaaury T0TAL iStHS D»298£ Certifio«t#a lotos BtehwigH^ $ 40,630,000 Mi,887,000 84,885,000 56,800,000 7,711,000 55,884,000 118,074,000 29,471,000 40,784,000 58,847,000 11,736,000 87,958,000 4.959,000 BS£ChBQ,@@d $578,088,000 fgfcaX Bssch^aag^s | 193,872,000 8,794,110,000 184,505,000 812,008,000 S§,S49,0O0 208,431,000 704,744,000 175,394,000 97,829,000 170,891,000 98,898,000 457,575,000 35,017,000 $11,363,023,000 $ 87,180,000 045,488,000 10,088,000 44,481,000 85,825,000 47,151,000 207,840,000 45,104,000 59,100,000 58,758,000 32,989,000 50,520,000 3,915,000 $855,877,000 ffctal Kx<?h#nfflgg $ 67,780,000 595,575,000 54,347,000 101,821,000 55,356,000 32,755,000 525,914,000 72,575,000 99,824,000 90,999,000 44,705,000 73,258,000 8,854,000 $1,455,945,000 14d - 2 The new procedures are expected to strengthen materially the taxpayer assistance program of the Internal Revenue Service. Over 98$ of all cases are closed at the revenue agent or examining officer level and less than 2.% go on to administrative hearings. Thousands of persons — experienced public accountants and others — today render valuable service to the Government and to the public (even though not enrolled to practice before the Internal Revenue Service) by assisting taxpayers in the preparation of their returns. In many cases the taxpayer desires the assistance of such a person in supplying factual information or in explaining the return to an agent. In many instances -- for example, in the case of wage earners who cannot take time off from their work without losing wages, or the small businessman who cannot leave his place of business without closing up shop — the taxpayer will be relieved of inconvenience and expense since under the change the person who prepared his return may appear before the examining officer or revenue agent in the Audit Division in an office of District Director to represent the taxpayer. Cases involving relatively little tax or relatively simple facts comprise the bulk of the cases presented for disposition at the revenue agent or examining officer level. It is in the interests of the Government and the taxpayer alike that every effort be made to complete reasonable settlement of these tax controversies at the lowest possible level and in the shortest possible time. Officials of the Department and the Revenue Service are convinced that many cases can be handled at that level under the new procedure. 0O0 TREASURY DEPARTMENT WASHINGTON, D.C. FOR RELEASE A.M. NEWSPAPERS, Monday, February l6, 1959. A-447 The Treasury Department today announced final new Treasury procedures designed to assist taxpayers in their dealings with the Internal Revenue Service. The new procedures to be effective March 15, 1959, will enable persons, not enrolled to practice before the Internal Revenue Service, to represent taxpayers before revenue agents and examining officers in the District Directors' offices with respect to returns prepared by them. The change is designed to meet the increased need for competent assistance to taxpayers resulting from the tremendous increase in the number of tax returns filed since the present Treasury provisions governing these matters were put into effect. Notice of the proposed change was published in the Federal Register on October 31, 1958. The final regulations reflect the many helpful comments received from the public and interested professional groups. In discussing the new procedures, the Treasury Department said it would permit any person who prepares a return for a taxpayer to appear as the taxpayer's representative, with or without the taxpayer's presence,before revenue agents and examining officers in the Audit Division in the offices of District Directors with respect to the tax liability of the taxpayer for the taxable year or period covered by that return. Proper authorization from the taxpayer will be required. The change would not permit unenrolled persons to so represent taxpayers at the informal conference level nor with reference to estate, gift, and certain corporate tax returns. The final amendment to Treasury Department Circular No. 230 to provide for this change appears in the Federal Register of February Ik. 1959. The February 16 issue of the Internal Revenue Bulletin will contain the revised Circular No. 230 in full and other documents regarding these changes, including a Revenue Procedure document setting forth standards of conduct, ethical practices and appropriate limitations of authority applicable to preparers of returns desiring to represent taxpayers before the Service. 1% ;- FOR RELEASE A.M. NEWSPAPERS, Monday, February l6, 1959. A-447 The Treasury Department today announced final new Treasury procedures designed to assist taxpayers in their dealings with the Internal Revenue Service. The new procedures to be effective March 15, 1959, will enable persons, not enrolled to practice before the Internal Revenue Service, to represent taxpayers before revenue agents and examining officers in the District Directors1 offices with respect to returns prepared by them. The change is designed to meet the increased need for competent assistance to taxpayers resulting from the tremendous increase in the number of tax returns filed since the present Treasury provisions governing these matters were put into effect. Notice of the proposed change was published in the Federal Register on October 31, 1958. The final regulations reflect the many helpful comments received from the public and interested professional groups. In discussing the new procedures, the Treasury Department said it would permit any person who prepares a return for a taxpayer to appear as the taxpayer's representative, with or without the taxpayerfs presence,before revenue agents and examining officers in the Audit Division in the offices of District Directors with respect to the tax liability of the taxpayer for the taxable year or period covered by that return. Proper authorization from the taxpayer will be required. The change would not permit unenrolled persons to so represent taxpayers at the informal conference level nor with reference to estate, gift, and certain corporate tax returns. The final amendment to Treasury Department Circular No. 230 to provide for this change appears in the Federal Register of February 14, 1959. The February 16 issue of the Internal Revenue Bulletin will contain the revised Circular No. 230 in full and other documents regarding these changes, including a Revenue Procedure document setting forth standards of conduct, ethical practices and appropriate limitations of authority applicable to preparers of returns desiring to represent taxpayers before the Service. vD - 2 The new procedures are expected to strengthen materially the taxpayer assistance program of the Internal Revenue Service. Over 98^ of all cases are closed at the revenue agent or examining officer level and less than 2$ go on to administrative hearings. Thousands of persons — experienced public accountants and others — today render valuable service to the Government and to the public (even though not enrolled to practice before the Internal Revenue Service) by assisting taxpayers in the preparation of their returns. In many cases the taxpayer desires the assistance of such a person in supplying factual information or in explaining the return to an agent. In many instances — for example, in the case of wage earners who cannot take time off from their work without losing wages, or the small businessman who cannot leave his place of business without closing up shop — the taxpayer will be relieved of inconvenience and expense since under the change the person who prepared his return may appear before the examining officer or revenue agent in the Audit Division in an office of District Director to represent the taxpayer. Cases involving relatively little tax or relatively simple facts comprise the bulk of the cases presented for disposition at the revenue agent or examining officer level. It is in the interests of the Government and the taxpayer alike that every effort be made to complete reasonable settlement of these tax controversies at the lowest possible level and in the shortest possible time. Officials of the Department and the Revenue Service are convinced that many cases can be handled at that level under the new procedure. 0O0 CD y STATUTORY DEBT LIMITATION A S Q F JANUARY 31, 1959 ~» Washington, eb. -0,1959 Section 21 of Second Liberty Bond Act, as amended, provides that the face amount of obligations issued under authority of that Act, and the face amount of obligations guaranteed as to principal and interest by the United States (except such guaranteed obligations as may be held by the Secretary of the Treasury), "shall not exceed in the aggregate $283,000,000,000 (Act of September 2, 1958; U.S.C., title 3 U sec. 757b), outstanding at any one time. For purposes of this section the current redemption value of any obligation issued on a discount basis which is redeemable prior to maturity at the option of the holder shall be considered as its face amount." T h e Act of February 26, 1958, (P.L. 85-336 85th Congress) provides that during the period beginning on February 26, 1958 and ending June 30, 1959, the above limitation ($283,000,000,000) shall be temporarily increased by 15,000,000,000. The following table shows the face amount of obligations outstanding and the face amount which can still be issued under this limitation : Total face amount that m a y be outstanding at any one time $200,000,000,000 Outstanding* Obligations issued under Second Liberty Bond Act, as amended Interest-bearing: Treasury bills $30,341,562,000 Certificates of indebtedness Treasury notes BondsTreasury * Savings (current redemp. value) Depositary. Investment series Special FundsCertificates of indebtedness Treasury notes Treasury bonds Total interest-bearing 36,364,400,000 28.918.451.000 $ 95,624,413,000 8 4 , l 4 l , 5 8 9 ,550 50 , 992 , 678,806 196,278,500 8 > 896 , 556 , 000 144,227.102,856 21,323,410,000 15,646,047,000 6,937 ,500 , 0 0 0 m Matured, interest-ceased Bearing no interest: United States Savings Stamps Excess profits tax refund bonds Special notes of the United States: Internat'l Monetary Fund series Total 43.906.957.000 283.758,472,856 819,408,416 51,214,683 860,173 748,000.000 800.074.856 285,377,956,128 Guaranteed obligations (not held by Treasury): Interest-bearing: 104,713,700 Debentures: F.H.A 999.350 Matured, interest-ceased __ Grand total outstanding .,. Balance face amount of obligations issuable under above authority, 105.713,050 285.483.669__1_8 2,516,330,822 Reconcilement with Statement of the Public Debt 7..^^J$...J.„.?....„Z.2y. (Daily Statement of the United States Treasury, J„.W^.O!..2Q.ll...iS!5S (Date) ) (Date) OutstandingTotal gross public debt Guaranteed obligations not owned by the Treasury. Total gross public debt and guaranteed obligations. Deduct - other outstanding public debt obligations not subject to debt limitation A-446 285,801,014,18^ 1O5.71L02 285,900,727,23+ 285,483,669,178 STATUTORY DEBT LIMITATION A S Q F JANUARY 31» 1959 Washington, Feb, 13,1959 Section 21 of Second Liberty Bond Act, as amended, provides that the face amount of obligations issued under authority of that Act, and the face amount of obligations guaranteed as to principal and interest by the United States (except such guaranteed obligations as may be held by the Secretary of the Treasury), "shall not exceed in the aggregate $283,000,000,000 (Act of September 2, 1958; U.S.C., title 31. sec. 757b), outstanding at any one time. For purposes of this section the current redemption value of any obligation issued on a discount basis which is redeemable prior to maturity at the option of the holder shall be considered as its face amount." The Act of February 26, 1958, (P.L. 85-336 85th Congress) provides that during the period beginning on February 26, 1958 and ending June 30, 1959, the above limitation ($283,000,000,000) shall be temporarily increased by $5,000,000,000. The following table shows the face amount of obligations outstanding and the face amount which can still be issued under this limitation : Total face amount that may be outstanding at any one time $288,000,000,000 OutstandingObligations issued under Second Liberty Bond Act, as amended Interest-bearing: Treasury bills $30,341,562,000 Certificates of indebtedness 36,364,400,000 Treasury notes 28.918.451,000 $ 95,624,413,000 BondsTreasury 84,141,589,550 * Savings (current redemp. value) 50,992,678,806 Depositary. 196,278,500 Investment series 8.896.556,000 144,227,102,856 Special FundsCertificates of indebtedness 21,323*410,000 Treasury notes 15,646,047,000 Treasury bonds 6,937,500,000 43.906.957,000 Total interest-bearing m 283 ,758 ,472,85© 819,408,416 Matured, interest-ceased Bearing no interest: United States Savings Stamps.......... Excess profits tax refund bonds Special notes of the United States: Internat'l Monetary Fund series Total 51,214,683 860,173 748.000.000 Guaranteed obligations (not held by Treasury): Interest-bearing: 104,713,700 Debentures: F.H.A ~ 999.350 Matured, interest-ceased ___ Grand total outstanding ... Balance face amount of obligations issuable under above authority, 800.074.856 285,377,956,128 105.713.050 285.483.669.178 2,516,330,822 Reconcilement with Statement of the Public Debt „.**£}?£.^...:?.....'. 7.2Z (Daily Statement of the United States Treasury, J*HS^S3r...29.„...JS5S (Date) ) (Date) OutstandingTotal gross public debt Guaranteed obligations not owned by the Treasury, Total gross public debt and guaranteed obligations. Deduct - other outstanding public debt obligations not subject to debt limitation A-446 285,801,014,184 105.713.050 285,906,727,234 423.058.056 285,483,669,178 TREASURY DEPARTl-SNT Washington, D. C. 143 IMEDIATE RELEASE Friday, February 13, 1959 A-445 The Bureau of Customs announced today the following preliminary figures showing the imports for consumption from January 1, 1959, to January 31, 1959, inclusive, of commodities for which quotas were established pursuant to the Philipoine Trade Agreement Revision Act of 1955: Commodity Established Annual Quota Quantity Buttons 765,000 Unit of : Imports as of Quantity : January 31, 1959 Gross 15,104 Cigars 180,000,000 Number Coconut oil 403,200,000 Pound 12,565,892 Cordage 6,000,000 Pound ' 593,889 (Refined Sugars (Unrefined • Tobacco 5,850,000 470,845 636,000 1,904,000,000 Pound 115,653,440 Pound 1,530,233 TREASURY DEPARTMENT Washington, D. C. IMMEDIATE RELEASE Friday, February 13, 1959 A-445 The Bureau of Customs announced today the following preliminary figures showing the imports for consumption from January 1, 1959, to January 31, 1959, inclusive, of commodities for which quotas were established pursuant to the Philippine Trade Agreement Revision Act of 1955: • • • • Commodity Buttons : : • • Established Annual : Unit of : Imports as of Quota Quantity : Quantity : January 31, 1959 765,000 Gross 15,104 Cigars 180,000,000 Number 470,845 Coconut oil 403,200,000 Pound 12,565,892 Cordage 6,000,000 Pound 593,889 (Refined 636,000 Sugars (Unrefined 1,904,000,000 Tobacco 5,850,000 Pound 1,530,233 Pound 115,653,440 COTTON WASTES (In pounds) 3 T 2 L C A R D S T R I P S made from cotton having* staple of less than 1-3/16 inches in length, COMBER ?™T^^- T ^ T ^ S L I V E R W A S T E > A N D R 0 V I N G W A S T E > 'WHETHER OR NOT MANUFACTURED OR OTHERWISE ADVANCED IN VALUEs Provided, however, that not more than 33-1/3 percent of the quotas shall be tilled by cotton wastes other than comber wastes made from cottons of 1-3/16 inches or more :m staple- length in the case- of the following countriesi United Kingdom, France, Netherlands, Switzerland* Belgium, Germany, and Utalys Country of Origin Established TOTAL QUOTA United Kingdom 4,323,457 Canada . 239,690 France 227,420 British India . . . ... 69,627 Netherlands • . . . , . . 68,240 Switzerland ....... 44,388 Belgium 38,559 Japan 341,535 China . . . . . . . . . . 17,322 E _7Pt 8,135 Cuba 6,544 Germany 76,329 Italy 21.263 5,482,509 1/ Included in total imports, column 2. Prepared in the Bureau of Customs. : Total Imports % Established % Imports y s Sept. 20, 1958, to % 33-1/32 of % Sept. 20, 1958 t Feb. 10, 1959 i Total Quota ; to Feb, 10, 1959 1,448,232 1,441,152 1,441,152 239,690 75,807 25,302 22,747 14,796 12,653 24,935 6,5fiO 25,443 7.088 24,935 6,580 1,744,739 1,599,886 1,472,667 IMMEDIATE RELEASE Friday. February XI. 1Q-.Q. A-444 Preliminary data on imports for consumption of cotton and cotton waste chargeable to the quotas established by the President's Proclamation of September 5, 1939, as amended COTTON (other than linters) (in pounds) Cotton under 1-1/8 inches other than rough or harsh under 3/4" Imports September 20, 1953 , February 10. 195? Country of Origin Tv-ypt and the AngloEgyptian Sudan .... P^ru British India China Mexico Brazil Union of Soviet Socialist Republics Argentina , Haiti , Ecuador , Established Quota 783,816 247,952 2,003,^83 1,370,791 8,883,259 618,723 475,124 5,203 237 9,333 Imports 9,672 8,883,259 618,723 5,018 Country of Origin Honduras Paraguay Colombia Iraq ;. British East Africa ... Netherlands E. Indies . Barbados l/0ther British W. Indies Nigeria # 2/Other British W. Africa 3/other French Africa ... Algeria and Tunisia ... 1/ Other than Barbados, Bermuda, Jamaica, Trinidad, and Tobago. 2/ Other than Gold Coast and Nigeria. 3/ Other than Algeria, Tunisia, and Madagascar. Cotton 1-1/8" or more Imports August 1, 1958 - February 10, 1959 Established Quota (Global) - 45,656,420 Lbs. Staple Length 1-3/8" or more 1-5/32" or more and under 1-3/8" (Tanguis) 1-1/8" or more and under 1-3/8" Allocation 39,590,778 Imports 39,590,778 1,500,000 967,802 4,565,642 4,565,642 Established Quota 752 • 871 124 195 2,240 71,388 21,321 5,377 16,004 689 Imports TREASURY DEPARTMENT Washington, D. C. IMMEDIATE RELEASE A-444 Friday, February 13, 1959. Preliminary data on imports for consumption of cotton and cotton waste chargeable to the quotas established by the President's Proclamation of September 5, 1939, as amended COTTON (other than linters) (in pounds) Cotton under 1-1/8 inches other than rough or harsh under 3/4" Imports September 20, I958 - February 10. 1959 Country of Origin Egypt and the AngloEgyptian Sudan ... J eru British India China Mexico Brazil Union of Soviet Socialist Republics Argentina Haiti Ecuador Established Quota 783,816 247,952 2,003,^83 1,370,791 8,883,259 618,723 475,124 5,203 237 9,333 Imports _ — 9,672 — 8,883,259 618,723 5,018 - Established Quota Country of Origin Honduras Paraguay . Colombia Iraq British East Africa ... Netherlands E. Indies . Barbados l/Other British W. Indies Nigeria t 2/Other British W. Africa 3/Other French Africa ... Algeria and Tunisia ... 752 • 871 124 195 2,240 71,388 21,321 5,377 l6,oo4 689 l/ Other than Barbados, Bermuda, Jamaica, Trinidad, and Tobago. 2/ Other than Gold Coast and Nigeria. 3/ Other than Algeria, Tunisia, and Madagascar. Cotton 1-1/8" or more Imports August 1, 1958 - February 10, 1959 Established Quota (Global) - 45,656,420 Lbs. Staple Length Allocation Imports I-3/8" or more 39,590,778 1-5/32" or more and under I-3/8" (Tanguis) 1,500,000 1-1/8" or more and under 1-3/8" 4,565,642 39,590,778 967,802 4,565,642 Import ^331 COTTON WASTES (In pounds) •<?.? sy S S ^f^Z^t°^a:ing •* S t a p l e ° f l 6 S S t h a n 1-3A6 inches in length, COMBER S c E ^ H S - ^ T - ^ i A K D R 0 V I M G W A S T E ' '"HETHEE 0 R H 0 T MANUFACTURED OR OTHERWISE he«?Srt 1 ?! Provided, however, that not more than 33-1/3 percent of the quotas shall in llltll i L ^ h ?" S " ' o t h f i h a n c o m b e r ™ a s t e ^ - * • ^ o m cottons of 1-3/16 inches or more ^mmm^LmmmTmmm^^ Country of Origin ^ Established TOTAL QUOTA United Kingdom 4,323,457 239,690 France 227,420 British India . . . . . . 69,627 Netherlands . 68^240 Switzerland . . . . . . . . 44*388 Belgium 38,559 I**** * *. .. 341,535 China . . . . . . . . . . 17,322 Egypt 8,135 Cuba 6,544 Germany 76,329 Italy , . 5,482,509 21,263 Canada 1/ Included in total imports, column 2, Prepared in the Bureau of Customs. Total Imports Sept. 20, 1958, to Feb, 10, 1959 1,448,232 239,690 ^ ^ Established 33-1/28 of Total Quota 1,441,152 fti*.. Rt_»____. Imports Sept, 20, 1958 to Feb. 10, 1959 1,441,152 75,807 25,302 22,747 14,796 12,853 24,935 6,5ftO 25,443 7,088 24,935 6,5ftO 1,744,739 1,599,886 1,472,667 17 <+33l l3'<± TREASURY DEPARTMENT Washington, D . C« X__2DIATE RELEASE Friday, February 13, 1959. A-443 PRELIMINARY DATA ON IMPORTS FOR CONSUMPTION 0? UNMANUFACTUBSD LEAD AND ZINC CHARGSABLS TO THS O.UOTAS ESTABLISHED B7 PRESIDENTIAL PROCLAMATION NO. 3257 C? SEPTEMBER 22, 195S GDARTERLT QUOTA PERIOD • January 1 - Maroh 31, 1559 IMPORTS • January. 2 - February 10, 1959 ITEM 392 s Lead bullion or base bullion, i lead in pigs and bars, lead Lead-bearing ores, flue dust,: dro33, reolai-ad load, scrap and sattes : lead, _nti_onlal load, antl: aoaial scrap load, type _atal, j all alloys or oorabinatlona of t:"___rteriy Quota load n.s.p.f. _oartarly Csaota t Dutiable. Lead I-?orts i Dutiable Laad I_?orta (Pounds) (pounds') ITEM 391 Country of Produotion Australia 10,080,000 10,080,000 23,680,000 ITEM 394 ITEM 393 t j * : Zinc-baaring ores ©f all klnd3,: Zino ia blocks, pigs, or slabs; : except pyrites containing not s old and *ora-out zino, fit : over 3 ^ of zino t only to be reaanufactured, zino : s droes, and zino ski.__ings j : :Quarterly _uota :_iartarly Quota Iaports : By 5el_ht laporte t Dutiable Zins (Pounds) (Pounds) 7,608,384 5,440,000 Belgian Congo Belgium and Luxeaburg (total) BoliviCan&da 5,040,000 7,520,000 7,520,000 37,840,000 11,573,082 5,040,000 5,272,269 13,440,000 8,181,392 15,920,000 66,480,000 37*356,570 3,600,000 Italy 6,320,000 5*119,859 12,880,000 5,816,106 35,l20,ooo 28,377,885 3,760,000 1*625*174 15,760,000 8,806,077 6,080,000 6,080,000 17*840,000 17,840,000 36,880,000 Peru 1*, 16*0, 000 l.,l60,0O0 Un. So* Afrioa 14,880,000 7,876,779 Yugoslovia 6,560,000 PH2?AR_D IN THZ BUREAU Of CUSTOMS 426,666 3,6oc,oeo 9,833,433 70,480,000 40,782,028 Msxioo All other foreign countries (total) 2,469,198 6,080,000 6,GSC,CC(J TREASURY DEPARTMENT Washington, D* C* IMMEDIATE RELEASE Friday, February 13, 1959. A-443 (_P PRELIMINARY DATA ON IMPORTS FOR CONSUMPTION 0? UNMANUFACTURED LEAD AND ZINC CHARGEABLE TO THSftUOTASESTABLISHED B7 PRESIDENTIAL PROCLAMATION NO. 3257 OF SEPTEMBER 22, 1958 QUARTERLY QUOTA PERIOD - January 1 - Maroh 31, 1959 IMPORTS • January, 2 - February 10, 1959 ITEM 392 t Lead bullion or base bullion, t lead In pigs and bars, lead Lead-bearing ores, flue dust,: dross, reolairaad lead, scrap aad mattes : lead, antl&onlal lead, antIaonial scrap type metal, t: all alloys orlead, oorabinatlona of ITEM 391 Country of Produotion Quarterly Quota i Dutiable. Lead Imports (Pounds) Australia 10,080,000 t lead n.s.p.f. : Quarterly Quota Imports : Dutiable Lead ^Pounds) 10,080,000 23,680,000 ITEM 394 ITEM 393 : * t • : Zino-bearing ores of all kinds,: Zino in blooks, pigs, or slabs; : except pyrites containing not : old and worn-out zino, fit over % of zino I onlydross, to be and remanufaotured, zino zino skimmings :: j :__3.rtarly diota i Dutiable Zins (Pounds) Imports 7,808,384 5,440,000 Belgian Congo Belgium and Luxemburg (total) Bolivia Canada 5,040,000 13,440,000 8,181,392 15,920,000 Mexico Peru l6,l6oPooo 16,160,000 On. So. Afrioa 14,880,000 7,876,77? Yugoslori6,560,000 PREPARED IN THE BUREAU OF CUSTOMS 2,469,198 7*520,000 7,520,000 37,840,000 11*573*082 3,600,000 3,60c,000 5,040,000 5,272,269 66,480,000 Italy All other forsi&i oountrles (total) Quarterly Quota Imports By Weight (Pounds) 4269666 37*336,570 36,880,000 9,833*433 70,480,000 40,782,028 6,320,000 12,880,000 5,816,106 35,120,000 28,877,885 3,760,000 15,760,000 8,806,077 6,080,000 6,080,000 17*840,000 17,840,000 6,0*0,000 6,080,000 5,119*859 1,625*174 _ 9 _ Commodity Period and Quantity : Unit : Imports : of : as of :Quantity ;Jan. 31. 195V Absolute Quotas: Peanuts, shelled, unshelled, blanched, salted, prepared, or preserved (incl. roasted peanuts but not peanut butter).... 12 mos. from August 1, 1958 Rye, rye flour, and rye meal ...12 mos. from July 1, 1958 Canada Other Countries Butter substitutes, including butter oil, containing 45/° or more butterf at lung oil * - Imports through February 10. Calendar Year Feb. 2, 1959 Oct. 31, 1959 Argentina Paraguay Other Countries 1,709,000 Pound 1,513,915* 182,280,000 3,720,000 Pound Pound 182,178,566* 1,200,000 Pound Quota Filled 16,633,591 2,231,680 702,000 Pound Pound Pound 2,002,448* Quota Filled Quota Filled lj.V_i--JUj.Ll JJJ-JJ. i_.LJ.j'i-.dJ 1 I3t> •J ashing ton, 0. C. MEDIATE RELEASE Friday, February 13,1959. A-442 The Bureau of Customs announced today preliminary figures showing the imports for consumption of the commodities listed below within quota limitations from the beginning of the quota periods to January 31, 1959, inclusive, as follows: Commodity Period .no. Quantity : Unit : Imports : of : as of : Quantity :Jan. 31f 19' Tariff-Rate Quotas: 1,500,000 Gallon Cream, fresh or sour Calendar Year Whole milk, fresh or sour Calendar Year- 3,000,000 Gallon 14 Jan. 1, 1959 March 31, 1959 120,000 Head 10,845 12 mos. from April 1, 1958 200,000 Head 16,282 Fish, fresh or frozen, filleted, etc., cod, haddock, hake, pollock, cusk, and rosefish ... Calendar Year 36,919,874 Pound Quota Fille Tuna fish Calendar Year To be announced Pound 4,068,694 White or Irish potatoes: Certified seed Other 12 mos. from Sept. 15, 1958 114,000,000 36,000,000 Pound Pound 40,504,403 2,677,700 Walnuts Calendar Year 5,000,000 Pound 713,295 Alsike clover seed 12 mos. from July 1, 1958 3,000,000 Pound 2,593,732 12 mos. from. July 1, 1958 80,000,000 Pound 3,380,178 Pound 2,337,726 Cattle, 700 lbs. or more each (other than dairy cows) ..... Cattle, less than 200 lbs. each. Peanut oil Woolen fabrics Calendar Year To be announced 13 (1) Imports for consumption at the quota rate arc Limited to 9,229,968 pounds during the first three months of the ccalendar year. (continued) 1 7 TREASURY D E P A R T K E M T Washington, D. C. IMMEDIATE RELEASE A-442 Friday, February 13*1959. The Bureau of Customs announced today preliminary figures showing the imports for consumption of the commodities listed below within quota limitations from the beginning of the quota periods to January 31* 1959, inclusive, as follows: Commodity Period and Quantity : Unit : Imports : of : as of :Quantity, :Jan. 31, 1959 Tariff-Rate Quotas; Cream, fresh or sour • Calendar Year Whole milk, fresh or sour Calendar Year 1,500,000 Gallon 13 3,000,000 Gallon 14 Jan. 1, 1959 March 31, 1959 120,000 Head 10,845 Cattle, less than 200 lbs. each. 12 mos. from April 1, 1958 200,000 Head 16,282 Fish, fresh or frozen, filleted, etc., cod, haddock, hake, pollock, cusk, and rosefish ... Calendar Year 36,919,874 Pound Quota Filled ' To be Pound announced 4,068,694 Cattle, 700 lbs. or more each (other than dairy cows) ••••••• Tuna fish •••• Calendar Year White or Irish potatoes: Certified seed Other •• 12 mos. from Sept. 15, 1958 walnuts • • Calendar Year 114,000,000 36,000,000 Pound Pound 5,000,000 Pound Alsike clover seed ••••••••••••• 12 mos• from July 1, 1958 3,000,000 Pound 40,504,403 2,677,700 713,295 2,593,732 Peanut oil • 12 mos • from July 1, 1958 Woolen fabrics • Calendar Year 80,000,000 Pound 3,380,178 To be Pound announced 2,337,726 (l) Imports for consumption at the quota rate are limited to 9,229,968 pounds during the first three months of the calendar year. (continued) "*'32 y • - 2- Commodity Period and Quantity : Unit : Imports : of : as of .Quantity :Jan. 31* 1959 Absolute Quotas: Peanuts, shelled, unshelled, blanched, salted, prepared, or preserved (incl. roasted peanuts but not peanut butter)•••• 12 mos. from August 1, 1958 Rye, rye flour, and rye meal ...12 mos. from July 1, 1958 Canada Other Countries Butter substitutes, including butter oil, containing 45$ or more butterfat ••••< Tuns oil # - Imports through February 10. Calendar Year Feb. 2, 1959 Oct. 31, 1959 Argentina Paraguay Other Countries 1,709,000 Pound 1,513,915* 182,280,000 3,720,000 Pound Pound 182,178,566* 1,200,000 Pound Quota Filled 16,633,591 2,231,680 702,000 Pound Pound Pound 2,002,448* Quota Filled Quota Filled TREASURY DEPARTMENT ±*J»J WASHINGTON, D.C. ^V_l RELEASE A.M. NEWSPAPERS, Thursday, February 12, 1959., A-UU1 The Treasury Department announced last evening that the tenders for $1,500,000, or thereabouts, of Tax Anticipation Series 217-day Treasury bills to be dated Febr 1959. and to mature September 21, 1959, which were offered on February 9, were ope the Federal Reserve Banks on February 11. The details of this issue are as follows: Total applied for - $2,982,710,000 n _ Total accepted - 1,500,03k,000 (includes $202,389,000 entered on a noncompetitive basis and accepted in full at the average price shown below) Range of accepted competitive bids: Hi«h - 98.106 Equivalent rate of discount approx. 3.lji2# per annum H Low - 97^983 " " " " 3.3l»6* « Average -98.015 - " " " " 3.293* - " (13 percent of the amount bid for at the low price was accepted) Federal Reserve District Total Applied for Total Accepted p«,t«n I 91,839,000 $ 37,139,000 Konf 50015000 30,015,000 _fi^f nlt£Q 98 093 000 37ii958000 60,1*93,000 227,508,000 SS 2-ls 25078000 17,978,000 St. Louis (£> ike ooo fZT^r %f£,Z Kansas City 132 109 000 BallaS , 206 607 000 San Francisco _uo,ouf,uuu TOTAL ^2,982,710,000 $1,500,03*1,000 28,7li5,000 k7,2S9\000 115,809,000 61,507,000 ____;—i RlLEASf A* K. NEWSPAPERS, ftureday, fmbrwey 12, 1959 * The Treasury Department announced l&st evening that the tenders for #1,500,GGu,Ov_0, or ther*m]^mte, of fax Anticipation Series 217~daF treasury bills to be dated February 16 1959, *«<$ to mature September 21, 1959, wfeiets were offered on February 9, were opened a the Federal Reserve Banks on February 11. The details of this issue are as follows: total applied for ~ #2,982,710,000 total accepted - 1,500,0314,000 (imitate© #202,389*000 entered on a noncompetitive basis and accepted in fall at the average pries shewn below) Range of accepted competitive bids: ,Uigh„ - 98.1063quivaleni rate of discount approx. 3.11*2$ per annum M Uw -97.983 • • ' • « 3*M% Average v - 98.015 » 8 * • » » » 3.293$, » « (13 percent of the amount bid for at the low price was accepted) Federal Reserve District total Applied for total Accepted Boston Mew fork Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Klrmeapolis Kansas City Dallas San Francises 1 91,839,000 1,597,860,000 9Mtt,,000 170,336,,000 5o,oi53,000 98,093,,000 37it,958,,000 25,078,,000 62,335.,000 75,169,,000 132,109,,000 206,607.000 1 $2,982,710,,000 f 1,500,0314,000 TOtAL 37,139,000 690,ii6o,0O0 56,751,000 126,370,000 30,015,000 60,1493,000 227,508,000 17,978,000 28,7i£,O00 hi,259,000 115,809,000 61,507,000 - 2 the amount and price range of accepted bids. Those submitting 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, noncompetitive tenders for $200,000 or less for the 91-day bills and noncompetitive tenders for $50,000 or less for the 182-day "bills without stated price from any one bidder will be accepted in full at the average price (in three decimals) of 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 February 19, 1959, in cash or other immediately available funds or in a like face amount of Treasury bills maturing February 19, 1959. Cash and exchange tenders will receive equal treatment. Cash adjustments will be made for differences between the par value of maturing bills accepted in exchange and the issue price of the new bills. The income derived from Treasury bills, whether interest or gain from the sale or other disposition of 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 treatment, as such, under the Internal Revenue Code of 195^. The bills are subject to estate, inheritance, gift or other excise taxes, whether Federal or State, but are exempt from all taxation now or hereafter imposed on the principal or interest thereof by any State, or any of the possessions of the United States, or by any local taxing authority. For purposes of taxation the amount of discount at which Treasury bills are originally sold by the United States is considered to be interest. Under Sections k5k (b) and 1221 (5) of the Internal Revenue Code of 195^ the amount of 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 companies) 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 oOoor loss. return is made, as ordinary gain Treasury Department Circular No. kid. Revised, and this notice, prescribe the terms of the Treasury bills and govern the conditions of their issue. Copies of the circular may be obtained from any Federal Reserve Bank or Branch. ID OAS DC RELEASE A.M. NEWSPAPERS, Thursday, February 12, 1959. A-440 The Treasury Department, by this public notice, invites tenders for two series of Treasury bills to the aggregate amount of $1,800,000,000, or thereabouts, for cash and in exchange for Treasury bills maturing February 19, 1959, in the amount of $ 1,802,955,000, as follows: 91-day bills, for $1,400,000,000, or thereabouts, to be dated February 19, 1959, and to mature May 21, 1959. 182-day bills, for $ 400,000,000, or thereabouts, to be dated February 19, 1959, and to mature August 20, 1959. 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. They will be issued in bearer form only, and in denominations of $1,000, $5,000, $10,000, $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 o'clock p.m., Eastern Standard time, Monday, February 16, 1959. Tenders will not be received at the Treasury Department, Washington. Each tender must be for an even multiple of $1,000, and in the case of competitive tenders the price offered must be expressed on the basis of 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. 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 of 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. Immediately after the closing hour, tenders will be opened at the Federal Reserve Banks and Branches, following which public announcement will be made by the Treasury Department of 1 Q. i -L V \y TREASURY DEPARmSTO Washington RELEASE A.M. NEWSPAPERS, tharsday, February 12, 1959 A f\ <__ j / / ____ ^ mmm m f The Treasury Department, by this public notice, invites tenders for two series of Treasury bills to the aggregate amount of $1,800,000,000 , or thereabouts, for —W2— cash and in exchange for Treasury bills maturing February 19, 1959 , in the amount of $ 1,802,955,000 , as follows: 91 -day bills, for $1,400,000,000 _______ , or thereabouts, to be ,_^_ dated February 19, 1959 , and to mature May 21, 1959 182 -day bills, for $400,000,000 , or thereabouts, to be {&* &_§e dated February 19, 1959 , and to mature August 20, 1959 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. They will be issued in bearer form only, and in denominations of $1,000, $5,000, $10,000, $100,000, $500,000 and $1,000,00 (maturity value). Tenders will be received at Federal Reserve Banks and Branches up to the closing hour, one-thirty o'clock p.m., Eastern Standard time, Monday, February 16, 1959 Tenders will not be received at the Treasury Department, Washington. Each tender must be for an even multiple of $1,000, and in the case of competitive tenders th price offered must be expressed on the basis of 100, with not more than three decimals, e. g., 99.925« 2 - 19. 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. 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 of 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. Immediately after the closing hour, tenders will be opened at the Federal Reserve Banks and Branches, following which public announcement will be made by the Treasury Department of the amount and price range of accepted bids. Those submitting 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, noncompetitive tenders for $200,000 or less for the 91-day bills and noncompetitive tenders for $50,000 or less for the 182-day bills without stated price from any one bidder will be accepted in full at the average price (in three decimals) of 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 February 19, 1959, in cash or other 7-iI. .V QDDO immediately available funds or in a like face amount of Treasury bills maturing February 19. 1959 Cash and exchange tenders will receive equal treatment. Cash adjustments will be made for differences between the par value of maturing bills accepted in exchange and the issue price of the new bills. The income derived from Treasury bills, whether interest or gain from the sale or other disposition of the bills, does not have any exemption, as such, and loss SB___ from the sale or other disposition of Treasury bills does not have any special treatment, as such, under the Internal Revenue Code of 1954. The bills are subje to estate, inheritance, gift or other excise taxes, whether Federal or State, but are exempt from all taxation now or hereafter imposed on the principal or intere thereof by any State, or any of the possessions of the United States, or by any local taxing authority. For purposes of taxation the amount of discount at which Treasury bills are originally sold by the United States is considered to be inte Under Sections 454 (b) and 1221 (5) of the Internal Revenue Code of 1954 the amo of 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 cluded from consideration as capital assets. Accordingly, the owner of Treasury bills (other than life insurance companies) issued hereunder need include in his income tax return only the difference between the price paid for such bills, whe oh original issue or on subsequent purchase, and the amount actually received ei upon sale or redemption at maturity during the taxable year for which the return made, as ordinary gain or loss. Treasury Department Circular No. 418, Revised, and this notice, prescribe the terms of the Treasury bills and govern the conditions of their issue. Copies of the circular may be obtained from any Federal Reserve Bank or Branch. DEPAR W A S H I N G T O N , D.C RELEASE A. M. NEWSPAPERS, Tuesday, February 10, 1959. A-l*39 The Treasury Department announced last evening that the tenders for two series Treasury bills to be dated February 13, 1959, which were offered on February 5, were opened at the Federal Reserve Banks on February 9. Tenders were invited for fl, 1*00,000,000, or thereabouts, of 90-day bills and for $1*00,000,000, or thereabouts of 181-day bills. The details of the two series are as follows; RANGE OF ACCEPTED COMPETITIVE BIDS: High Low Average 90-day Treasury bills maturing May lit, 1959 181-day Treasury bills maturing August 13, 1959 Approx. Equiv, Price Annual Rate Price Approx. Equiv. Annual Rate 99. 3h0 2.61*0$ 99*295 2,820$ 99.298 2.810$ 9Q.hk5 98.301* 98.328 3.093$ 3.373$ 3.326$ li8 percent of the amount of 90-day bills bid for at the low price was accepted 10 percent of the amount of l8l-day bills bid for at the low price was accepted TOTAL TENDERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS: District Applied For Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St, Louis Minneapolis Kansas City Dallas San Francisco $ 31,1*85,000 1,670,1*1*9,000 28,890,000 37,967,000 16,589,000 1*8,973,000 21*0,861*,000 22,855,000 20,80l*,000 1*7,813,000 23,358,000 113,61*6,000 TOTALS $2,303,693,000 Accepted 18,985,000 916,767,000 11,780,000 31*,517,000 ll*,l*8i*,000 33,320,000 201,676,000 22,1*55,000 18,719,000 3k,020,000 22,1*90,000 72,120,000 $1,1*01,333,000a/ Applied For Accepted $ 7,9l*u,000 576,659,000 9,619,000 16,893,000 828,000 1*,150,000 66,392,000 2,61*3,000 8,162,000 7,11*6,000 3,059,000 21,817,000 ^ 7,9l*U,000 278,959,000 5,619,000 16,893,000 828,000 $725,312,000 $i*00,0l*8,000b/ l*,o5o,ooo 1*3,378,000 2,61*3,000 7,762,000 7,lU6,000 3,009,000 21,817,000 a/ Includes $272.7lli,000 noncompetitive tenders accepted at the average price of 99.29^ b/ Includes $26,1*90,000 noncompetitive tenders accepted at the average price of 98.3-8 1 Ov, m)mC^ ISUEASS A. x* mmmwm9 faeaday, February 10. 1959. A L y q The Treasury r#part*ent announced last evening that the tenders tor two aeries of Treasury bill* t© be dated February 13, 1959, whicfe were offered ©» February J, were opened at the Federal mmmrm Bank* en February 9. fenders were invited fer ^1,1*00,000,000, or thereabouts, of 90-ds.y bill* and for 11*00,000,000, or thereabouts, of 181-day bills, the details ef the two series are mm followe: RANGE OF ACCBfTIB 9§~day treasury bills Ill-day Treasury bills »at%ri*sg; kvmmt 13. 1959 eoMjEmzti BOTH High Low Average ...*»&»» , A,i»al late *_*_«• $9*$k& 2.6fe€$ 99.295 9S.I&5 2,SfOJg 9$.m Approx. Equiv, Animal late 1.093* 3.371$ 3.326$ lid percent ef the amount of 90-day bills* bid for at the low price was accepted 10 percent ef the amount of l8l-d_y bills bid for at ttie low priee was accepts TOTAL fEMDISS AffLXI® FOR *XD ACCEPT© BT IIDIttL RKSSKVE gISTtlCTSi District Applied for Boston Hew York Philadelphia Cleveland Rich-onr' Atlanta Chicago St, Louie Minneapolis Kansas City Dallas SanTOTALS Francisco f Amomptmd 31,1*85,000 x9mtM&9®m 18,985,000 916,767,000 11,780,000 3l*,5l7,000 Hi,ii81i,000 33,320,000 201,676,000 22,1*55,000 11,719,000 23,890,000 37*967,000 16,589,000 1*8,973,000 21,0,861;,000 22,855,000 20,801,000 3Ma§fooo 1*7,813,000 22,1*90,000 23,358,000 72,120,000 •2,303*693*000 fl,Ii01,333,00^ x^mfm Includes $272,7114,000 nonrcetfetlUre tenders Includes $26,1*90,000 noncompetitive tenders lA AppHed For Accepted I 7,9l0i,OOO 576,659,000 9,619,000 16,893,000 828,000 1$,150,000 66,392,000 2,61*3,000 8,162,000 7,iM f ooo 3,059,000 21 y 8l? t QQQ #7*5,312,000 I 7,9i*J*,000 278,959,000 5,619,000 16,893,000 828,000 1*,050,000 1*3,378,000 2,61*3*000 7,762,000 7*11*6,000 3*009,000 21,817,000 |l*00,0l*8,0G0l_/ at the average price of 99*296 at the average price of 98*32$ -6- 12a Federal Reserve Bank of its District. The income derived from Treasury bills, whether interest or gain from the sale or other disposition of 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 treatment, as such, under the Internal Revenue Code of 1954. The bills are subject to estate, inheritance, gift or other excise taxes, whether Federal or State, but are exempt from all taxation now or hereafter imposed on the principal or interest. thereof by any State, or any of the possessions of the United States, or by any local taxing authority. For purposes of taxation the amount of 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 of 1954 the amount of 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 companies) 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 of the Treasury bills and govern the conditions of their issue. Copies of the circular may be obtained from any Federal Reserve Bank or Branch. will be supplied by Federal Reserve Banks or Branches on application therefor. Others than banking institutions will not, be permitted to submit tenders except for their own account. Tenders ..ill 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 of 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. All bidders are required to agree not to purchase or to sell, or to make any agreements with respect to the purchase or sale or other disposition of any bills of this issue, until after one-thirty o'clock p.m., Eastern Standard time, Wednesday, February 11, 1959. Inmediately after the closing hour, tenders will be opened at the Federal Re- serve Banks and Branches, following which public announcement will be made by the Treasury Department of the amount and price range of accepted bids. Those submitting 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, noncompetitive tenders for $300,000 or less without stated price from any one bidder will be accepted in full at the average price (in three decimals) of accepted competitive bids. Payment of accepted tenders at the prices offered must be made or completed at the Federal Reserve Bank in cash or other immediately available funds on February 16, 1959, provided, how- ever, any qualified depositary will be permitted to make payment by credit in its Treasury tax and loan account for not more than 75 percent of the amount of Treas ury bills allotted to it for itself and its customers up to any amount for which it shall be qualified in excess of existing deposits when so notified by the 12 TREASURY DEPARTMENT WASHINGTON, D.C RELEASE A.M. NEWSPAPERS, Monday, February 9, 1959. A-!*38 The Treasury Department, by this public notice, invites tenders for $1,500,000,000, or thereabouts, of 217-day Treasury bills, to be issued on a di count basis under competitive and noncompetitive bidding as hereinafter provide The bills of this series will be designated Tax Anticipation Series, they will dated February 16, 1959, and they will mature September 21, 1959. They will be accepted at face value in payment of income and profits taxes due on September 1959, and to the extent they are not presented for this purpose the face amount of these bills will be payable without interest at maturity. Taxpayers desiring to apply these bills in payment of September 15, 1959, income and profits taxes have the privilege of surrendering them to any Federal Reserve Bank or Branch o to the Office of the Treasurer of the United States, Washington, not more than fifteen days before September 15, 1959, and receiving receipts therefor showing the face amount of the bills so surrendered. These receipts may be submitted in lieu of the bills on or before September 15, 1959, to the District Director of Internal Revenue for the District in which such taxes are payable. The bills wi be issued in bearer form only, and in denominations of $1,000, $5,000, $10,000, $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 o'clock p.m., Eastern Standard time, Wednesday, Febru- ary 11, 1959. Tenders will not be received at the Treasury Department, Washingt Each tender must be for an even multiple of ^1,000, and in the case of competit tenders the price offered must be expressed on the basis of 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 whi RtXEASl A.M. NEWSPAPglBI# The Treasury Department, by this public notice, invites t@nd.ers for §1,SCO,000,000, or thereabouts," of 8i7«-day Treasury' bills," to be issued o count basis under competitive and noncompetitive bidd&g as hereinafter provi The bills o£ this series will be"designated Tsot Anticipation'Series, they^w dated February 16,* 1989, and thsy will mature Septeiaber' £1," 1959.** They wi accepted at face value In pt^ntut of ineoma and jrefitft tastes due on Septe 1969/ and to the extent they are not presented for this purpose the face" amo of these bills will be payable without interest at maturity. " Taxpayers' des to apply these bills in-paQr-tfnt <>t September IS, 1959, income .and profit have the privilege' of surrendering thea to any Federal Hmtmtvm Bank or Branc to "the Office of the Treasurer of the felted States, Washlstgtim, not more t ^fifteen days before September IS, 1969, and receiving receipts therefor sho the face amount of the bills so msrmndmrmd. These reeeipt® my be submitted i lieu of the bills on or before September 15, 1959, to the District Director internal Revenue for the District In which such taxes are payable. The bills be Issued in bearer form only, &n& in denominations of $1,000, $5,000, $10,000, $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 o»clock p.ra., Eastern Standard time, Wednesday, Febr ary H# 1959, f Tenders will not be received at the Treasury Department, Washin Each tender must be for an even multiple of $1,000, and in the case of compet tenders the price offered must be expressed on the basis of 10C;, with not m tfhfli\ three decimals, e.g., ?9.9f:5. Fractions may not be used. It is urged t tender* be made on the printed forms and forwarded in the special envelopes w t '/ - 2 - will.,,fee supplied by Federal RAsearte^panks or Branches on application theref Others thm banking institutions will net be permitted to submit tenders exeept for their own account. Tenders will be received without deposit from in&ofpormtmd bank© and trust companies and from responsible and recognised defers in investment securities. Tenders from others must be accompanied by payment of £.percent of the face amount of Treasury bills applied for, unless the tenders §re accompanied by an express guaranty of payment by an incorporate bank or trust company. All bidders are required to agree not t© purchase or to sell, or to make any agreements with respect to the purchase or sale or other disposition of any bills of this issue, until after one-thirty o'clock p.m., Eastern Standard time, Wednesday, February ^Jt, 1959. Immediately after,the closing hour, tenders will be opened at the Federal Re- serve Banks and Branches, following which public announcement will be made by th Treasury Department of the amount and price range of accepted bids. Those sub- mitting tenders will b© 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, noncompetitive tenders for $300,000 or les without stated price from any one bidder will be accepted in full at the averag price (in three decimals) of accepted competitive bids. Payment of accepted ten- ders at the prices offered must be made or completed at the Federal Reserve Ban in cash or other immediately available funds on February 16, 1959, provided, how ever, any qualified depositary will be permitted to make payment by credit in it Treasury tax and loan account for not more than 75 percent of the amount of Trea ury bills allotted to it for itself and its customers up to any amount for whic it shall be qualified in excess of existing deposits when so notified by the Federal Reserve Bank of its District. The inoom derived from Treasury bills, whether interest or gain from the tale or other disposition of the bills, dm** not have my exemption, as such, and less from the sale or other disposition of Treasury bills does not have any special treatawmt, as such, under the Internal tev^nue fkd® ©f 1954, The bill® are subjeet to estate, iiiherltanee, gift or other exs&se taxes, whether Federal or State, but are exempt from all taxation now or hereaft#r Imposed on the principal or interest thereof by any State, or any ef the' possessions of the Ifeited States, ©r by my ImmmX taxing authority. For purpose© of taaeation the amount of discount at wnlen Treasury bills are originally eoid fey the United States is considered to be interest, teier Sections 464 (b) md M l (I) of' the Internal Mmmm Code of 1964 the amount of diseouat at which bills issued hereunder are sold is not considered to aeerue until such bills are sold, redeemed or otherwise disposed of, and such M i l s are mmoXvdmd from mmmMmmtion m* capital asset®, Accordingly, the owner of Treasury bills (other than life insurance eoaisaniee) issued hereunder need include in his ineos» tax return only the difference- between the price pmid 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 fain or loss, Treasury Department Circular m. 418, Eevlsed, and this notice, prescribe the terms of the Treasury bills and govern the conditions of their issue. of the circular may be obtained from any Federal teaerve Bank or Branch. Copies TREASURY DEPARTMENT U9 WASHINGTON, D.C. IMMEDIATE RELEASE, Friday, February 6, 1959. A-l*37 The Treasury Department announced today that preliminary figures show that about $12,791 million of the $9,770 million certificates maturing February 14 and the $5,102 million of the notes maturing February 15 have been exchanged for $11,362 million of the new 3-3/4 percent certificates maturing February 15, 1960, and for $1,429 million of the 4 percent Treasury notes maturing February 15, 1962. About $2,081 million of the outstanding issues remain for cash redemption. Final figures regarding the exchange will be announced after final reports are received from the Federal Reserve Banks. The Treasury Department also announced it will invite tenders for $1.5 billion, or thereabouts, of 217-day Treasury Tax Anticipation bills to raise cash for current requirements. The full terms of the offering will be contained in a statement to be released Monday morning, February 9. Tenders will be opened at 1:30 p.m., Eastern Standard time, on Wednesday, February 11. The new bills will be dated February 16, 1959, and will mature September 21, 1959. They will be Tax Anticipation bills, acceptable at face value in payment of income and profits taxes due September 15, 1959. They may be paid for up to 75$ by credit in Treasury Tax and Loan Accounts. All bidders are required to agree to refrain from any dealings in these bills until after the time set for the opening of tenders 1:30 p.m., Eastern Standard time, Wednesday, February 11, 1959. 11U _*g®IATE U A S S , M%7 The Treasury Department announced today that preliminary figures show that about $1£,?91 million of the |9,?70 rdllion certificates BHituring February 14 and the #6*102 million of the notes maturing February 16 have been w h a n g e d for $ll,80g million of the new B*$/4 percent esrtifle&te* maturing .feferuaiy IS, 1960, and for $1*4&9 sdl~ lion of the 4 pereent Treasury notes maturing February 16, 1962. About $2,081 million of the oubataaAiRg £mWm remain for cash redemption. Final figures regarding the exchange will be announced after final reports are received from the Federal Beserve Banks. The Treasury department also announced it will lavtt* tender® for $1,5 billion, or thereabouts, of ti'7-day Treasury Tax Anticipation bill® to raise cash for currant raqp&raMsia* Th# Ml terms of the offering will be contained in a statement to be released Monday mrn~ ing, fmbtmry 9. Tender* w f H mm opmmd at 1§60 p.m., Bastern Standard time, on Wednesday, February 11. The new bills will be dated February 16, 1959, md will mature September El, 1969. They will be Tax Anticipation bills, acceptable at face value in pmymmt of lAaoma and profits taxes due September 15, 1059. They mmy be paid for up to 7B% by credit In Treasury Tax and Loan Accounts. All bidders are required to agree to refrain from any dealings in these bills until after the time m% for th* opening of tenders Is SO p.m., Eastern Standard tias, Wednesday, February 11, 1959. one year area in i960, in 1961 and in 1962 so that financing exclusively in the one year area during the next h years (and with no increase in outstanding debt) would bring the amount of under-one-year debt to $129-1/2 billion — about 75$ of the total marketable debt outstanding « by the end of 1962. The importance of sound fiscal policy in setting the environment in which debt management operations are undertaken cannot be overemphasized. The fact that a budget deficit means a larger amount of money to be raised is only a relatively minor part of this problem. Far more important is the psychological reaction of investors to the prospect of the effect of future inflation upon the purchasing power of the dollars which they invest if they lack confidence in the ability of the Federal Government to manage its fiscal affairs soundly and to take whatever additional steps are necessary to minimize inflation. This is true not only in relation to Government securities, but to all other fixed dollar obligations as well. A budget deficit in a period of prosperity, and a growing public debt, mean just that much less opportunity for an expansion of mortgage debt, corporate debt and State and local government debt without running the risks of serious monetary inflation. 11 - 15 - money markets and on the flotation of new corporate and municipal issues and in order to provide the Federal Reserve with the greatest freedom possible to conduct effective monetary policy. If we do not seek every opportunity to accomplish debt extension we will find the short-term debt increasing to a new high in the years immediately ahead. The under-one-year debt, as is shown in Chart 6, stood at $72-1/2 billion on December 31, 1958. If no more securities longer than one year to maturity are issued during the remainder of 1959 the under-one-year debt will increase by $ll-l/2 billion during the year. Furthermore, the passage of time will bring more of the debt within the Chart 6 POTENTIAL GROWTH OF SHORT-TERM DEBT* DEC. l958-'62_ (Assuming N o Debt Extension) Outstanding Dec.31,1958 Potential Growth during Each Calendar Year Potential Dec.31,1962 life: 120 h3fe Debt extension needed to keep under I-year debt at present level. '62 '61 80 ssssssss SSSSSSSS //////// '//////// • / / / / / / / • / / / / / / / / •//////ss 40 //////// //////// ;72"^ //////// ssssssss S SSSSSS //////// /////// //////// /////// /////// ssssssss sssssss SSSSSSS SSSSSSSS ssssssss ssssssss ssssssss ssssssss Office of the Secretary of the Treasury ssssssss /ssssssss ///////// ssssssss ssssssss ssssssss /ssssssss ssssssss ssssssss //////ss ssssssss ssssssss //////// /////// //////// //////// s/ssssss //////// *Marketable maturities within one year (partially tax-exempt bonds to earliest call date). //////// ^Includes January short-term financing. //////// //////// SS///SSS ssssssss ssssssss ssssssss ssssssss growth and the way in which the Federal Government's fiscal programs are handled. The rate of economic growth and the extent to which demands for funds exceed available savings will, of course, set the basic environment in terms of interest rates and credit availability in which the Treasury will have to operate. Our borrowing, just like that of any other debtor, will continue to be done in a market environment in which neither maturing issues nor new issues are supported by the Federal Reserve. Government borrowing is borrowing which must be done and cannot be postponed. Because of its size Treasury borrowing terms obviously have a greater impact on interest rates than the terras of any other borrower. At times monetary policy may seem to make debt management more costly and more difficult, but that should not be allowed to detract from the appropriateness of an independently conceived and operated monetary policy as a fundamental tool in the control of inflation. We will continue in 1959 to pursue the major objectives which have guided our operations during the past year. The Treasury will continue to secure its necessary funds at as reasonable a cost to the taxpayer as possible consistent with the major objective of contributing to sound economic growth. We will continue to secure our funds as largely as possible from true savers rather than from commercial banks in order to reduce the inflationary potential of our financing operations during a period of rising economic activity. We will also continue to take advantage of every opportunity which arises to extend the maturities of our issues in order to reduce to a minimum the disturbing effect of Treasury financing operations on the The refunding job this year consists not only of a weekly amount of $2 billion or so of Treasury bills which have to be rolled over, but also $15 billion of maturities in February, $l*-l/2 billion in May, $13-l/2 billion in August and $9 billion in November. The February refunding, the largest of the year, was announced last Thursday and we have offered holders of the maturing securities a choice between a new 3-3/*$ certificate maturing February 15, 19,60 or a hfi note maturing 3 years from now, both priced at par. The books on this exchange offering closed last night and we expect to announce preliminary results tomorrow afternoon. Sometime before the end of the present fiscal year, the Treasury will ask for new legislation on the debt limit. We are now operating under a temporary debt ceiling of $288 billion. That temporary ceiling will expire on JUne 30, 1959, at which time the ceiling will revert to the permanent debt limit of $283 billion. With a $285 billion public debt now estimated for June 30 an increase in the permanent debt limit to that amount seems indicated, depending, of course, on the final outcome of the fiscal 1959 budget picture. In addition temporary financing needs will require a substantial increase in the public debt — and in the temporary debt limit — during July-December 1959, even though with a balanced budget this would represent financing which could be repaid during January-June i960. The environment in which the Treasury's 1959 financing program will take place will, of course, depend on a great many factors. Perhaps the two most important relate to the progress of the Nation's economic - 12 Two more factors during the summer added further to an unsettled Government bond market. The first of these was the temporary shock of the coup d'etat in Iraq. The second was more fundamental — the growing realization on the part of investors throughout the country that the Federal Government was faced with its largest post-war deficit, a factor which was obviously very important in the development of an inflationary psychology during the fall despite the continued stability of commodity prices. As a result largely of this psychology, a buoyant stock market hit new highs and bond prices — for corporates and municipals as well as for Governments -- hit new lows, thus adding to the cost of borrowing for business and for all levels of Government. The Treasury's market financing job in 1959 should be smaller in dollar volume than in 1958 — both in terms of refunding and new cash issuance. Nevertheless the 1959 financing schedule is very heavy. We have already raised over $k billion in new cash in January through the issuance of $.9 billion of 21-year bonds, $2.7 billion of l6-month notes and $.6 billion of additional Treasury bills, bringing the debt up to $286 billion by the end of January. Although the entire deficit for fiscal 1959 has been financed and the debt is expected to fall by June 30, the Treasury will nevertheless need additional cash borrowing amounting to an even larger amount than that raised in January between now and the end of the fiscal year to cover retirements of securities coming due. We also will need an amount which we are not yet prepared to estimate to cover the heavy seasonal deficit in July-December 1959 which will occur even with a balanced budget for the fiscal year i960 as a whole. - 11 - 1 1 'J A. _. __ The June intermediate-term bond was put out as one part of an optional offering in exchange for maturing securities and was subscribed for in an amount of more than $7 billion — considerably in excess of what had been expected by either the financial community or by the Treasury. This large amount presumably could have been properly digested by the market, however, if the trends of recent months had continued. But improvement in business news, plus rumors in the financial community as to a possible reversal in monetary policy, resulted in a sharp turnaround in the bond market. As a result many speculative buyers who nad financed their purchases on little or no margin were forced to liquidate them. The resulting disturbance was very unsettling to the entire _i_rket. It is clear in retrospect that the reversal in bond prices reflected a legitimate change in investor expectations as economic recovery set in. Furthermore, there is no reason to believe that speculation had more than a temporary effect in depressing bond prices. But it is true, nevertheless, that the abruptness of the change in the market was accentuated by excessive speculation. A recurrence of such activity should be prevented. The general public should be better protected against such excesses. Furthermore, dealers in Government securities under such conditions are unable to perform their vital functions of maintaining an orderly and active market for Government securities. The Treasury is at present studying this problem and consultations are underway with the Federal Reserve System and with various other groups in the financial markets to see what steps can be taken to restrain undue speculation without at the same time hampering legitimate dealer operations. either. An increase of $7 billion in E and H bond holdings was completely offset by a decline in holdings of other Government securities. In effect, then, all of the funds available for direct investment during these 6 years went into corporate securities, into mortgages or into State and local government issues. In the latter case, of course, the Treasury is up against a particularly difficult debt management problem in trying to make its securities attractive to individuals who have the opportunity of buying tax-exempt State and municipal offerings. A satisfactory solution to the problem of making Government securities attractive to savings-type investors is not easy to find. The Treasury is, however, exploring all possible ways of encouraging greater participation in Government security ownership by these purchasers. A discussion of the environment in which Treasury financing took place in 1958 would not be complete without reference to the rather dramatic changes in the market environment in which the Treasury had to do its financing. With interest rates declining and bond prices rising early in the year the Treasury had little difficulty selling securities which were priced very close to the market at the time they were issued. Subsequent market rises resulting from investor anticipation of continuing recession and monetary ease made each new security look quite attractive soon after issuance. As a result, particularly with regard to the 2-5/8$ seven year bond which was offered in June, there was an increased amount of speculative activity in new Government issues on the assumption of a continuation of these trends. n •y - 9A n analysis of individuals' savings during the last 6 years shows rather clearly that no individual savings found their way into Government securities on net balance during these years, despite substantial increases in E and H bonds. During the past 6 years individuals had new savings of $137 billion available for investment either through savings institutions or directly in securities and mortgages. Of this total $106 billion was placed directly in savings institutions, and as has been already indicated in Chart k no part of this flow of savings on net balance reached the Government securities market. Moreover, as Chart 5 shows, none of the remaining individuals' savings was invested directly in United States Government obligations Chart 5 INDIVIDUALS SAVINGS SINCE 1952 $Bil. 100- ^Savings through Institutions 106 Totab 50- Corporate Securities t W//////A itffel Mortgages\ State and Local Securities >y.>.>j.>.yx i2__ i ^/.i/V^jEand H Bonds.+7 \k\\ Other. -7 Goyfs 0 . Office of the Secretary of the teasuy -8 December 1952 to $26 billion in December 1958. This was done at a time when the assets of these institutions were growing by approximately $100 billion. As is shown in Chart k, therefore, the proportion of assets of each of these types of institutions invested in Government securities has shown in most cases a substantial decline during the last 6 years. Even in the case of rapidly expanding savings and loan associations, which have been building up reserves in the form of Government securities, their percentage of assets invested in Governments has declined slightly. Chart 4 __SAVINGS INSTITUTION INVESTMENT IN GOVERNMENTSDecember 1952 and 1958 Gov'ts Held As Percent of Assets Life Insurance CompaniesMutual Savings Banks Savings and Loan Associations—. State and Local Pension Funds. Corporate Pension Funds. 14% «^I952 7.2___. ii%n^/£5<? $10.3 BiL. 9.5____ Sllll||||liillllllll.37%lllllllllllllll;ill^ 7.3____ ^l!9%JMl l.8____ 8% 3.8____ l7%! 3.7___. 54% 5.3____ 2.3_ 30% 2.3____ 10% Office of the Secretary of the Treasury 20% 30% 40% 50% ' r) -7 Federal deficit financing at a time when other demands for funds were rising and monetary policy sought properly to temper the rise in money supply. Furthermore, all of "the increase in bank holdings was outside of the larger financial centers. The Treasury would have preferred, however, that a larger part of its financing outside of "the banks during the second half of the calendar year had been through longer term savers — such as individuals and savings institutions — rather than through nonfinancial corporations. In the latter case investment in Govermaent securities is typically in the shortest term obligations available and is only one step away from an increase in money supply. On the other hand, longer term securities are purchased by savers with more permanent investment goals in mind. The fact that savings institutions did add somewhat to their holdings of Government securities in the second half of 1958, reversing earlier trends, is an encouraging sign, however. Individuals added further to their E and H savings bond holdings in July-December 1958, but again reduced their holdings of the larger investor type F and G sav- ings bonds and -their holdings of marketable securities during the second half of 1958. The persistence of the post-war trend of savings institutions away from Government securities is hi^ilighted by the fact that the four major groups of savings institutions — insurance companies, mutual savings banks, savings and loan associations and pension funds — have reduced their holdings of Government securities from $27-l/2 billion in in? _. V, 1 - 6Chart 3 CHANGES IN PUBLIC DEBT OWNERSHIP IN 1958 Office of the Secretary of the Treasury profits were shrinking and their tax liabilities were at a low point. Even the sale by the Treasury of $2.9 billion of new long-term bonds during the first half of the year did not result in a net increase in the holdings of Government securities by individuals and savings institutions since the bonds were paid for, in effect, by selling shorter maturities to banks. In the second half of the year, with the economy entering into a period of vigorous economic recovery, two-thirds of the $6.6 billion increase in the public debt was absorbed by investors outside of commercial banks thereby lessening somewhat the inflationary impact of 1 nc J L v_> _» - 5year debt stood at $80 billion. One year ago it was $75-l/2 billion. It is now $72-1/2 billion, of which $51 billion is held by the public and $21-1/2 billion held by Federal Reserve banks and Government investment accounts. The Job of Treasury financing in 1958 was made somewhat more difficult by the fact that Government investment accounts, which had provided a market for approximately $2 billion a year for Government securities on average during the post-war period as a whole, showed a decline of $.8 billion in their investments. This was true because of the excess of expenditures over receipts in the Unemployment Trust Fund, the Federal Old-age and Survivors Insurance Trust Fund and the Highway Trust Fund. Treasury financing in the first half of 1958 was conducted in the atmosphere of recession, with rising bond prices, falling interest rates, and monetary ease. In this atmosphere it was appropriate that Treasury offerings were designed primarily to appeal to commercial banks, as debt management sought to complement monetary policy in its endeavor to increase the money supply and to better assure the availability of adequate credit for economic recovery. As a result commercial bank holdings of the debt rose by $5.8 billion in the first half of the year, even though the total debt was rising by only $l.k billion. With the exception of Series E and H savings bonds held mostly by small savers, all types of nonbank investors liquidated Government securities in the first half of the year, with most of the liquidation being accounted for by nonfinancial corporations at a time when their .Ob -h 2-l/2 years to maturity in the unsettled market environment which characterized the last half of 1958. The slight lengthening of the debt last year was in contrast to declines of approximately 6 months each in the average length of the debt during the two preceding years and, as shown in Chart 2, brought the average back almost to the level of five years ago when the long post-war decline in the average length of the debt came to an end. Chart 2 AVERAGE LENGTH OF THE MARKETABLE DEBT. (Callable Bonds to Maturity Date)' Years 7 ^Partially tax-exempt bonds to earliest call date. Office of the Secretary of the Treasury Despite the fact that there was an $5 billion increase in the total debt in 1958, there was a reduction of $3 billion in the amount of marketable debt becoming due within one year. Five years ago the under-one- "* HA m. "5 " J " i J -f .ft. W . years of budget surpluses, the debt was reduced to $275 billion. That $6 billion reduction has been completely erased, however, by deficit financing in the calendar year 1958, which increased the debt by $8 billion to a new high of $283 billion. This was the largest increase in the public debt for any year in the post-war period. The job of adding a net amount of $8 billion to the debt in as sound a manner as possible last year required the Treasury to go to the market 6 times during the year to raise new cash of $17 billion, plus $2 billion more cash raised through additions to weekly bill offerings. This large amount of new cash borrowing was needed not only to cover the deficit but also to cover the retirement of other securities growing mainly out of marketable maturities paid off in cash and the redemption of the wartime F and G savings bonds which are now maturing. At the same time the Treasury issued $50 billion of new securities in exchange for maturing issues ($28-l/2 billion publicly held and $21-l/2 billion held by Federal Reserve banks and Government investment accounts) so that the total of $69 billion new marketable securities issued during the year reached a new post-war high. As part of this $69 billion job the Treasury issued $2.9 billion of long-term bonds and $16.7 billion of intermediate-term notes and bonds running from k years to 8-l/2 years to maturity. As a result, the average length of the marketable debt was increased by two months during the year — from h years and 7 months to k years and 9 months. This was done despite the inability of the Treasury to extend any debt beyond -*» y v„^ - 2 only is the United States Government the largest single debtor in the country, it accounts for one-third of the total debt owed by all individuals, all corporations and all levels of Government in the Nation. Chart I , THE PUBLIC DEBT , Office of the Secretary of the Treasury B-I274-EH After some reduction in debt early in the post-war period the public debt grew steadily again under the burden of heavy defense requirements and the Korean War, reaching a peak of $28l billion on December 31, 1955. During the calendar years 1956 and 1957, under the impact of two TREASURY DEPARTMENT Washington Statement by Mr. Charles J. Gable, Jr., Assistant to the Secretary of the Treasury on Management of the Public Debt, before the Joint Economic Committee, February 5, 1959. I would like to review with you this morning some of the current problems which the Treasury faces in its debt management program. These are not problems which can be solved by applying a rigid set of rules. There are certain basic principles which we always try to follow, but the very fact that the economic environment and the market atmosphere in which the Treasury operates is constantly changing means that our approach to debt management must always be flexible. The impact of changing circumstances on debt management policies was clearly illustrated by our experience in the calendar year 1958. The past year was a year in which the debt was growing again and as you will note from Chart 1, the debt at the end of December 1958 amounted to $283 billion. This is a large debt any way you look at it and one which is woven into the asset structure of every major class of investor in the country. In the savings bond program alone an estimated kO million individuals own bonds and about 8 million are buying bonds currently through payroll savings plans. The $283 billion public debt at the end of December represents an amount equal to 63$ of the total gross national product. It is an amount equal to more than $1,600 for each man, woman and child in America. Not A-^36 10; JL y «_ - 6The Committee questions deal also with the relation of taxes to the stability of the economy. I take it that this refers principally to the cushioning effect that declining tax collections can have during a recession. Illustrative of this effect, of course, is the sharp decline in collection of corporate taxes growing out of the recent recession. It also focuses our attention on the fact that deficits may well continue after the economy has moved up and is advancing toward full prosperity. This sort of complex problem deserves, and will have, our continuing study. The high degree of resilience which our economy has just demonstrated seems to suggest that we should be cautious and analytical in our evaluations and flexible enough, if some future downturn should require it, to be willing to use whatever instrument seems most appropriate to the occasion. In this connection, some advance planning is proper so that the right decisions can be appropriately taken when we are confronted with cyclical movements in our economy. Question 3* Under what circumstances can we reduce Federal taxes? What are the prospects for realizing these circumstances? Answer: The circumstances and prospects of tax reduction would first depend very much on future expenditures and the maintenance of our economic growth. Economic growth can be expected to raise our revenues but it will produce no surplus if we do not control expenditures. Unless we spend wisely we will have trouble taking care of such new requirements as may prove really essential. Next, tax reduction must be weighed against debt reduction out of surplus. I believe that in years of prosperity we should endeavor to achieve some debt reduction. This policy commends itself as an act of fiscal soundness. It would ease the task of monetary policy and the management of the public debt. Circumstances for a tax reduction would depend further upon the degree to which we can succeed in avoiding inflation. At times of inflationary pressure we should aim at some budget surpli I would not now want to prescribe a precise formula or to try to predict a precise time when tax reduction might properly be considered. I have tried to point out the varying factors which would influence our judgment at the time when such a judgment seems to be appropriate. I will now ask Mr. Gable to answer your fourth and final question. oOo M. 'y y - 5of fiscal policy will still be to stimulate the economy. As prosperity advances, so will our revenues until the deficit is eliminated at a high level of economic activity if spending is under control. At the income levels projected in the budget, the tax system is expected to produce revenues approximately equal to proposed expenditures in fiscal I960. If we achieve our objectives there will be no need, consequently, for an increase in taxes. By eliminating the deficit, tax policy will greatly ease the task of monetary policy. If we fail to keep I960 expenditures within income, we contribute to inflationary pressures and complicate the problems of monetary management. Tax policy will render additional assistance to monetary policy by avoiding further permanent borrowing by the Treasury in the market. This will also facilitate the Treasury1s own job of handling the public debt. Question 2: Is the present structure of the Federal tax system adequate in light of the nation^ economic growth and stability requirements? If not, what changes would you recommend? Answer: I believe that any tax structure can always be improved. By that I do not mean to say that we cannot live with our present taxes. We certainly can. If new imperative revenue needs should arise, we could live with higher taxes than the present. Ours is the most productive economy in the world and I do not believe that it would be crushed by its tax burdens, if we are reasonable. We must constantly evaluate in terms of continuing economic growth both elements of tax reform and, when proper, tax reduction. While these are closely related, they are not necessarily identical The Treasury has been studying and continues to study various improvements in the tax system and in tax administration. In this we are cooperating, and shall continue to cooperate, with the appropriate committees of Congress. Many of the adjustments under review are of a technical character. Their application depends in many cases on the resolution of administrative difficulties. It depends further on future business conditions and other factors that cannot now be foreseen. As this is a continuing study both in the Treasury and the committees of the Congress, it would be premature to attempt any detailed discussion. . 4Finally, orderly finances in our country are a key to maintaining the strength of the free world, and our role in it. Our prestige in the world is not enhanced if we fail to practice what we preach. The world watches us very closely. On my trip to and from New Delhi, for the annual meetings of the International Bank and Monetary Fund, I was impressed to discover how well informed foreign officials are about even the details of our budget. But more than prestige is at stake here. If we run continuing large deficits in prosperity and so almost inevitably drive up prices, we may price ourselves out of world markets. Aside from the losses that this will mean to us, how are we to discharge our world-wide responsibilities if our international economic position weakens? Because we are for sustainable and healthy growth, because we are for increasing job opportunities, because we look to the long run and a possibly long period of world tension, we must be for the maintenance of orderly finances and a stable dollar. I believe that the time to face this issue is now. Americans have faith in their money. That faith is justified. Confidence, if shaken, is hard to re-establish. That is why we must keep our expenditures under control, and the budget in hand. Your Committee has asked me to deal with certain questions. I would now like to turn to the first three of these. With your permission, I shall then ask Mr. Charles Gable, who assists Under Secretary Baird and myself in debt management matters to discuss with you the fourth question, relating to the management of the public debt. Question Is What would you regard as the proper division of labor between tax policy and monetary policy as instruments of economic stabilization during the coming year? Answer: The first consideration of tax policy is, of course, to keep intact the system by which the United States Government raises its revenues to finance the government service that the nation requires. Tax policy and monetary policy should continue to work closely to foster economic health with stability of prices as our economy grows. After a deficit of $12.9 billion expected for fiscal year 1959, the President's budget proposes a budget balance for the fiscal year I960. For quite a few months ahead, the net effect QQ - 3- v-f y is necessary, and much that is desirable, and pay for it. But we should not reach for everything at the same time. Even a rich country can get into trouble if it keeps spending beyond what it pays for currently. Some people seem to feel that to be for meeting current expenses from current revenues means to be "against or "negative." Let us not be misled. The fact of the matter is there is almost nothing which is more positive and more important to be for than fiscal soundness. This is an essential condition of our economic health, without which we can have neither adequate military security nor the adequate provision of other needed governmental services. Meeting our expenses currently and all that that means in the way of fiscal soundness and a healthy economy is a highly positive objective which deserves the support of everyone. Growth requires capital formation, through saving and investment. As a consequence, we should meet our expenditures out of current revenues in prosperous times. A Federal deficit financed outside the banks tends to absorb resources that could otherwise go into private capital formation. A deficit, during prosperity, which is financed through the banks, in itself of course brings inflationary consequences. .A current deficit and the fear of future deficits can keep people from saving because of possible loss of these savings to Inflation. If we ever reach the point where people believe that to speculate is safe but to save is to gamble then we are indeed in trouble. If rising prices which will follow from continued deficits cut into saving habits, the result will be further to diminish the supply of capital for economic growth. We cannot indefinitely expect people to continue their saving if they expect prices to go on rising indefinitely. Our habits of saving, our financial institutions, our monetary system, must not be jeopardized. Our needs for capital will increase as our labor force begins to expand more rapidly in the early sixties. This expanding labor force, the result of the high birth rate of the forties, will give a powerful impetus to the economy. But if job opportunities are to be found, with a rising degree of productivity, investment in plant and equipment will have to advance correspondingly. Of this deficit, about half will result from a shortfall In revenues. The remaining is the result of increases in expenditures over original budgetary estimates. The drop in revenues in fiscal 1959 is the direct result of the recession. The increase in expenditures reflects for the most part increases that came about automatically or through actions not primarily related to the recession. Among these are the higher cost of the agricultural program because of larger crops, the Federal Government pay increases, higher defense expenditures, and the proposed subscription to the International Monetary Fund. Some $2 billion of spending, chiefly FNMA mortgage purchases, the extension of unemployment benefits, and direct housing loans by the Veterans Administration, represent actions designed to combat the recession. What conclusions seem to follow from this experience? First; it seems to me that the economy has once more demonstrated remarkable resilience and resistance to recession. This is indicated by the fact that personal income declined very little, and that the recovery set in very quickly. I attribute this good performance to the inherent qualities of our economy, to the confidence and good sense maintained by our people, and to the automatic stabilizers that have become a part of the economy. Second, I am concerned with the size of the deficit that the recession in large part produced and with its continuation in a period of growing prosperity. A deficit of this magnitude, unless quickly corrected, can produce serious inflationary pressures in the longer run, even though in the short run these pressures are held in check by excess plant capacity and other factors. The extended unemployment benefits proved timely, but the economy turned around before several of the others could have their full budget effect. Meanwhile these expenditures will continue as we move closer to increased prosperity. Third, the decision by the Administration and the Congress to avoid a major tax cut last spring has been justified by events. Had we resorted to a tax cut we would not have had this demonstration of the economy's inherent recuperative powers. We would have helped develop a philosophy that tax relief was necessary to pull us out of a downturn. Also, a tax cut would have increased our present deficit and our public debt, and with them the danger of inflationary pressures in the future, I fear, however, that price pressures may eventually revive, if we do not finally close the budget gap. I sincerely believe that a nation as rich and productive as ours must, In times of prosperity, at least pay its way. We can afford to do all that TREASURY DEPARTMENT Washington Qg STATEMENT BY SECRETARY OF THE TREASURY ROBERT B. ANDERSON BEFORE THE JOINT ECONOMIC COMMITTEE, 10:00 A.M. EST., THURSDAY, FEBRUARY 5, 1959 I welcome the opportunity to appear before your Committee and to discuss the government's fiscal outlook and some of its implications for the nation's economy. First, I should like to discuss the budget for the fiscal year I960, We estimate total receipts of $77.1 billion. Of this total, $40.7 billion is expected to come from individual income taxes, and $21.4 billion from corporation income taxes. The assumptions for the calendar year 1959 underlying these figures are $37^ billion for personal income, and $47 billion for corporate profits. These income assumptions were arrived at after careful studies and consultations utilizing all data and judgment available both inside and outside the government. The increases they represent imply a continued vigorous recovery, but at a slightly lesser rate than we experienced after the 195^ recession. Somewhat larger revenue gains, too, were attained in moving out of the recession of 195^, if we adjust the timing of corporate tax payments for comparability. The personal income figure of $37^+ billion compares with a rate for December 1958 of $359 billion; the corporate profits assumption of $47 billion for 1959 compares with a rate for the fourth quarter 1958 of $44 billion. I present these estimates with the full realization that the revenue results for fiscal 1959 will turn out to be substantially less than we originally estimated. I believe, however, that our assumptions for fiscal I960 are sound and will turn out much closer to the mark. They are within the range of calculations made by private estimators, and I understand that similar figures have also been mentioned by some of the experts that have testified before your Committee. Let us now look at our present situation in a broader perspective. We are well along in the recovery from a recession which is now substantially contributing to the largest peace-time deficit in our history — $12.9 billion at present estimates. A-435 TREASURY DEPARTMENT Washington <y <-J STATEMENT BY SECRETARY OF THE TREASURY ROBERT B. ANDERSON BEFORE THE JOINT ECONOMIC COMMITTEE, 10:00 A.M. EST., THURSDAY, FEBRUARY 5, 1959 I welcome the opportunity to appear before your Committee and to discuss the government's fiscal outlook and some of its implications for the nation's economy. First, I should like to discuss the budget for the fiscal year I960. We estimate total receipts of $77.1 billion. Of this total, $40.7 billion is expected to come from individual income taxes, and $21.4 billion from corporation income taxes. The assumptions for the calendar year 1959 underlying these figures are $374 billion for personal income, and $47 billion for corporate profits. These income assumptions were arrived at after careful studies and consultations utilizing all data and judgment available both inside and outside the government. The increases they represent imply a continued vigorous recovery, but at a slightly lesser rate than we experienced after the 1954 recession. Somewhat larger revenue gains, too, were attained in moving out of the recession of 1954, if we adjust the timing of corporate tax payments for comparability. The personal income figure of $374 billion compares with a rate for December 1958 of $359 billion; the corporate profits assumption of $47 billion for 1959 compares with a rate for the fourth quarter 1958 of $44 billion. I present these estimates with the full realization that the revenue results for fiscal 1959 will turn out to be substantially less than we originally estimated. I believe, however, that our assumptions for fiscal I960 are sound and will turn out much closer to the mark. They are within the range of calculations made by private estimators, and I understand that similar figures have also been mentioned by some of the experts that have testified before your Committee. Let us now look at our present situation in a broader perspective. We are well along in the recovery from a recession which is now substantially contributing to the largest peace-time deficit in our history — $12.9 billion at present estimates. A-435 - 2C •' Of this deficit, about half will result from a shortfall in revenues. The remaining is the result of increases in expenditures over original budgetary estimates. The drop in revenues in fiscal 1959 is the direct result of the recession. The increase in expenditures reflects for the most part increases that came about automatically or through actions not primarily related to the recession. Among these are the higher cost of the agricultural program because of larger crops, the Federal Government pay increases, higher defense expenditures, and the proposed subscription to the International Monetary Fund. Some $2 billion of spending, chiefly FNMA mortgage purchases, the extension of unemployment benefits, and direct housing loans by the Veterans Administration, represent actions designed to combat the recession. What conclusions seem to follow from this experience? First, it seems to me that the economy has once more demonstrated remarkable resilience and resistance to recession. This is indicated by the fact that personal income declined very little, and that the recovery set in very quickly. I attribute this good performance to the inherent qualities of our economy, to the confidence and good sense maintained by our people, and to the automatic stabilizers that have become a part of the economy. Second, I am concerned with the size of the deficit that the recession in large part produced and with its continuation in a period of growing prosperity. A deficit of this magnitude, unless quickly corrected, can produce serious inflationary pressures in the longer run, even though in the short run these pressures are held in check by excess plant capacity and other factors. The extended unemployment benefits proved timely, but the economy turned around before several of the others could have their full budget effect. Meanwhile these expenditures will continue as we move closer to increased prosperity. Third, the decision by the Administration and the Congress to avoid a major tax cut last spring has been justified by events. Had we resorted to a tax cut we would not have had this demonstration of the economy's inherent recuperative powers. We would have helped develop a philosophy that tax relief was necessary to pull us out of a downturn. Also, a tax cut would have increased our present deficit and our public debt, and with them the danger of inflationary pressures in the future. I fear, however, that price pressures may eventually revive, if we do not finally close the budget gap. I sincerely believe that a nation as rich and productive as ours must, in times of prosperity, at least pay its way. We can afford to do all that ~ "" J" •*-•-*-*•"-»-• -Me,li __ui_i ___jte'ij'r, iiirmwiii'^ .»_™*SHfc--,-- .*o_***~~----- - 3o J is necessary, and much that is desirable, and pay for it. But we should not reach for everything at the same time. Even a rich country can get into trouble if it keeps spending beyond what it pays for currently. Some people seem to feel that to be for meeting current expenses from current revenues means to be "against or "negative." Let us not be misled. The fact of the matter is there is almost nothing which is more positive and more important to be for than fiscal soundness. This is an essential condition of our economic health, without which we can have neither adequate military security nor the adequate provision of other needed governmental services. Meeting our expenses currently and all that that means in the way of fiscal soundness and a healthy economy is a highly positive objective which deserves the support of everyone. Growth requires capital formation, through saving and investment. As a consequence, we should meet our expenditures out of current revenues in prosperous times. A Federal deficit financed outside the banks tends to absorb resources that could otherwise go into private capital formation. A deficit, during prosperity, which is financed through the banks, in itself of course brings inflationary consequences. A current deficit and the fear of future deficits can keep people from saving because of possible loss of these savings to inflation. If we ever reach the point where people believe that to speculate is safe but to save is to gamble then we are indeed in trouble. If rising prices which will follow from continued deficits cut into saving habits, the result will be further to diminish the supply of capital for economic growth. We cannot indefinitely expect people to continue their saving if they expect prices to go on rising indefinitely. Our habits of saving, our financial institutions, our monetary system, must not be jeopardized. Our needs for capital will increase as our labor force begins to expand more rapidly in the early sixties. This expanding labor force, the result of the high birth rate of the forties, will give a powerful impetus to the economy. But if job opportunities are to be found, with a rising degree of productivity, investment in plant and equipment will have to advance correspondingly. - 4Finally, orderly finances in our country are a key to maintaining the strength of the free world, and our role in it. Our prestige in the world is not enhanced if we fail to practice what we preach. The world watches us very closely. On my trip to and from New Delhi, for the annual meetings of the International Bank and Monetary Fund, I was impressed to discover how well informed foreign officials are about even the details of our budget. But more than prestige is at stake here. If we run continuing large deficits in prosperity and so almost inevitably drive up prices, we may price ourselves out of world markets. Aside from the losses that this will mean to us, how are we to discharge our world-wide responsibilities if our international economic position weakens? Because we are for sustainable and healthy growth, because we are for increasing job opportunities, because we look to the long run and a possibly long period of world tension, we must be for the maintenance of orderly finances and a stable dollar. I believe that the time to face this issue is now. Americans have faith in their money. That faith is justified. Confidence, if shaken, is hard to re-establish. That is why we must keep our expenditures under control, and the budget in hand. Your Committee has asked me to deal with certain questions. I would now like to turn to the first three of these. With your permission, I shall then ask Mr. Charles Gable, who assists Under Secretary Baird and myself in debt management matters to discuss with you the fourth question, relating to the management of the public debt. Question 1: What would you regard as the proper division of labor between tax policy and monetary policy as instruments of economic stabilization during the coming year? Answer: The first consideration of tax policy is, of course, to keep intact the system by which the United States Government raises its revenues to finance the government service that the nation requires. Tax policy and monetary policy should continue to work closely to foster economic health with stability of prices as our economy grows. After a deficit of $12.9 billion expected for fiscal year 1959* the President's budget proposes a budget balance for the fiscal year I960. For quite a few months ahead, the net effect of fiscal policy will still be to stimulate the economy. As prosperity advances, so will our revenues until the deficit is eliminated at a high level of economic activity if spending is under control. At the income levels projected in the budget, the tax system is expected to produce revenues approximately equal to proposed expenditures in fiscal I960. If we achieve our objectives there will be no need, consequently, for an increase in taxes. By eliminating the deficit, tax policy will greatly ease the task of monetary policy. If we fail to keep i960 expenditures within income, we contribute to inflationary pressures and complicate the problems of monetary management. Tax policy will render additional assistance to monetary policy by avoiding further permanent borrowing by the Treasury in the market. This will also facilitate the Treasury's own job of handling the public debt. Question 2: Is the present structure of the Federal tax system adequate in light of the nation's economic growth and stability requirements? If not, what changes would you recommend? Answer: I believe that any tax structure can always be improved. By that I do not mean to say that we cannot live with our present taxes. We certainly can. If new imperative revenue needs should arise, we could live with higher taxes than the present. Ours is the most productive economy in the world and I do not believe that it would be crushed by its tax burdens, if we are reasonable. We must constantly evaluate in terms of continuing economic growth both elements of tax reform and, when proper, tax reduction. While these are closely related, they are not necessarily identical. The Treasury has been studying and continues to study various improvements in the tax system and in tax administration. In this we are cooperating, and shall continue to cooperate, with the appropriate committees of Congress. Many of the adjustments under review are of a technical character. Their application depends in many cases on the resolution of administrative difficulties. It depends further on future business conditions and other factors that cannot now be foreseen. As this is a continuing study both in the Treasury and the committees of the Congress, it would be premature to attempt any detailed discussion. - 6The Committee questions deal also with the relation of taxes to the stability of the economy. I take it that this refers principally to the cushioning effect that declining tax collections can have during a recession. Illustrative of this effect, of course, is the sharp decline in collection of corporate taxes growing out of the recent recession. It also focuses our attention on the fact that deficits may well continue after the economy has moved up and is advancing toward full prosperity. This sort of complex problem deserves, and will have, our continuing study. The high degree of resilience which our economy has just jiemonstrated seems to suggest that we should be cautious and analytical in our evaluations and flexible enough, if some future downturn should require it, to be willing to use whatever instrument seems most appropriate to the occasion. In this connection, some advance planning is proper so that the right decisions can be appropriately taken when we are confronted with cyclical movements in our economy. Question 3: Under what circumstances can we reduce Federal taxes? What are the prospects for realizing these circumstances? Answer: The circumstances and prospects of tax reduction would first depend very much on future expenditures and the maintenance of our economic growth. Economic growth can be expected to raise our revenues but it will produce no surplus if we do not control expenditures. Unless we spend wisely we will have trouble taking care of such new requirements as may prove really essential. Next, tax reduction must be weighed against debt reduction out of surplus. I believe that in years of prosperity we should endeavor to achieve some debt reduction. This policy commends itself as an act of fiscal soundness. It would ease the task of monetary policy and the management of the public debt. Circumstances for a tax reduction would depend further upon the degree to which we can succeed in avoiding inflation. At times of inflationary pressure we should aim at some budget surplus. I would not now want to prescribe a precise formula or to try to predict a precise time when tax reduction might properly be considered. I have tried to point out the varying factors which would influence our judgment at the time when such a judgment seems to be appropriate. I will now ask Mr. Gable to answer your fourth and final question. oOo I would not now want to prescribe a precise formula or to try to preduct a precise time when tax reduction might properly be considered. I have tried to point out the varying factors which would influence our judgment at the time when such a judgment seems to be appropriate. I will now ask Mr. Gable to answer your fourth and final question. 0O0 - 2 the amount and price range of accepted bids. Those submitting 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, noncompetitive tenders for $200,000 or less for the 90-day bills and noncompetitive tenders for $50,000 or less for the l8l~day bills without stated price from any one bidder will be accepted in full at the average price (in three decimals) of 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 February 13, 1959* in cash or other Immediately available funds or in a like face amount of Treasury bills maturing February 13, 1959* Cash and exchange tenders will receive equal treatment. Cash adjustments will be made for differences between the par value of maturing bills accepted in exchange and the issue price of the new bills. The income derived from Treasury bills, whether interest or gain from the sale or other disposition of 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 treatment, as such, under the Internal Revenue Code of 1954. The bills are subject to estate, Inheritance, gift or other excise taxes, whether Federal or State, but are exempt from all taxation now or hereafter imposed on the principal or Interest thereof by any State, or any of the possessions of the United States, or by any local taxing authority. For purposes of taxation the amount of 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 of 1954 the amount of 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 companies) 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 oOoor loss. return is made, as ordinary gain Treasury Department Circular No. 4l8, Revised, and this notice, prescribe the terms of the Treasury bills and govern the conditions of their issue. Copies of the circular may be obtained from any Federal Reserve Bank or Branch. >P OAS Ov RELEASE A.M. NEWSPAPERS, Thursday, February 5, 1959* A-434 The Treasury Department, by this public notice, invites tenders for two series of Treasury bills to the aggregate amount of $1,800,000,000, or thereabouts, for cash and in exchange for Treasury bills maturing February 13, 1959* in the amount of $1,800,617,000, as follows: 90-day bills, for $1,400,000,000, or thereabouts, to be dated February 13, 1959, and t o mature May 14, 1959. l8l-day bills, for $400,000,000, or thereabouts, to be dated February 13, 1959, and to mature August 13, 1959. 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. They will be issued in bearer form only, and in denominations of $1,000, $5,000, $10,000, $100,000, $500,000 and $1,000,000 (maturity value). Tenders will be received at Federal Reserve Banks and Branched up to the closing hour, one-thirty o'clock p.m., Eastern Standard time, Monday, February 9, 1959. Tenders will not be received at the Treasury Department, Washington. Each tender must be for an even multiple of $1,000, and in the case of competitive tenders the price offered must be expressed on the basis of 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. 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 of 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. Immediately after the closing hour, tenders will be opened at the Federal Reserve Banks and Branches, following which public announcement will be made by the Treasury Department of O» ECU TREASURY DEPARTI-IENT Washington RELEASE A.M. NEWSPAPERS, q_ttraday. Feb_n__ry j>, Woe The Treasury Department, by this public notice, invites tenders for two series of Treasury bills to the aggregate amount of $ l.@©Q.QQQ.QQQ , or thereabouts, fo cash and in exchange for Treasury bills maturing February 15, 1959 , in the amount (__y of $1,800,617,000 90 , as follows: -day bills, for $1,400,000,00© $3$ , or thereabouts, to be _jgf dated February 13, 1959 , and to mature May 14. (t) (8) 181 -day bills, for $ 400,000,000 , or thereabouts, to be ________ ___*_. dated gatonaary 15, 1959 , and to mature August 15. Ti_£k$ (___k) 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. They will be issued in bearer form only, and in denominations of $1,000, $5,000, $10,000, $100,000, $500,000 and $1,000,00 (maturity value). Tenders will be received at Federal Reserve Banks and Branches up to the closing hour, one-thirty o'clock p.m., Eastern Standard time, Monday. IfabTVKFV 9, 1959 • Tenders will not be received at the Treasury Department, Washington. Each tender must be for an even multiple of $1,000, and in the case of competitive tenders th price offered must be expressed on the basis of 100, with not more than three - 2 - 8b _gg 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. 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 of 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. Immediately after the closing hour, tenders will be opened at the Federal Reserve Banks and Branches, following which public announcement will be made by the Treasury Department of the amount and price range of accepted bids. Those submitting 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, noncompetitive tenders for $200,000 or less 90 XBX for the_Sl-day bills and noncompetitive tenders for $50,000 or less for the _&_~day bills without stated price from any one bidder will be accepted in full at the average price (in three decimals) of 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 February 15, 1959, in cash or other immediately available funds or in a like face amount of Treasury bills maturing Febr-M^T 13T 1959 ^ash anc^ exchange tenders will receive equal treatment, fed-fit Cash adjustments will be made for differences between the par value of maturing bills accepted in exchange and the issue price of the new bills. The income derived from Treasury bills, whether interest or gain from the sale or other disposition of the bills, does not have any exemption, as such, and loss - 3 - P^> _»y SI__ from the sale or other disposition of Treasury bills does not have any special treatment, as such, under the Internal Revenue Code of 1954. The bills are subject to estate, inheritance, gift or other excise taxes, whether Federal or State, but are exempt from all taxation now or hereafter imposed on the principal or interest thereof by any State, or any of the possessions of the United States, or by any local taxing authority. For purposes of taxation the amount of 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 of 1954 the amount of 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 companies) 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 of the Treasury bills and govern the conditions of their issue. Copies of the circular may be obtained from any Federal Reserve Bank or Branch. TREASURY DEPAR RELEASE A. M. NEWSPAPERS, Tuesday, February 3, 1959, A-l*33 The Treasury Department announced last evening that the tenders for two series of Treasury bills to be dated February 5, 1959, which were offered on January 29, were opened at the Federal Reserve Banks on February 2. Tenders were invited for $1,1*00,000,000, or thereabouts, of 91-day bills and for $1*00,000,000, or thereabouts, of 182-day bills* The details of the two series are as follows* RANGE OF ACCEPTED COMPETITIVE BIDS? 91-day Treasury bills maturing May 7, 1959 High Low Average 182-day Treasury bills maturing August 6, 1959 Price Approx. Equiv« Annual Rate Price 99.333 99»309 99.312 2.639% 2.73M 2.' 98.1*68 98408 98,1*29 Approx. Equiv, Annual Rate 3.030$ 3.107* 88 percent of the amount of 91^-day bills bid for at the low price was accepted 56 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: District Applied For Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco $ TOTALS 1*0,886,000 1,657,036,000 31,63l*,000 1*2,01*5,000 11,591,000 29,79l*,000 238,856,000 26,017,000 17,812,000 1*3,962,000 25,1*91,000 135,152,000 $2,300,276,000 Accepted Applied For Accepted 30,886,000 878,036,000 13,781*,000 31,107,000 11,591,000 29,79l*,000 181*,836,000 25,861*, 000 13,206,000 30,81*7,000 25,091,000 125,092,000 $ 6,1*88,000 5l8,77l*,000 10,623,000 ll*,61*8,000 878,000 8,525,000 85,576,000 8,81*1*,000 3,970,000 7,651,000 3,52i*,000 1*6,761*,000 & 6,lt88,000 2i*l*,17l*,000 5,623,000 l!*,6i*8,000 878,000 8,525,000 59,576,000 8,61*1*,000 3,970,000 7,651,000 3,12l*,000 36,7614,000 $l,i*00,13l*,000a/s $716*265,000 $1*00,065,000b/ a/ Includes $265,967,000 noncompetitive tenders accepted at the average price of 99.312 V Includes $28,380,000 noncompetitive tenders accepted at the average price of 98,1*29 8 — C-/ RELEASE A . M . H&tfSPAPKRS, Tuesday, February 3, 1959. The Treasury Department announced last evening that the tenders for two series of Treasury bills to be dated February 5* 1959, which were offered ©n January 29, were opened at the Federal Reserve Banks on February 2, Tenders were invited for 11,1100,000,000, or thereabouts, mt 91~dmy bills and for $1*00,000,000, or thereabouts, of 182-day bills. The details of the two series are as follows? Um% OF ACCEPTED COMPETITIVE BIDSs 91~day Treasury bills maturing Kay 7, X9$9 High Low Average 182-day Treasury bills maturing August 6, 1959 Fries Approx. Bcguiv, Annual Rate Price Approx. Equiv. Animal Rate 99.333 99.302 99*3X2 2.639$ 2.731$ 2.721* 98.1*68 98.1*08 98.1*29 3.030* 3.U*9* 3.107* 88 percent of the ajaount of fX**$my bill® bid for at the low price was accepted 56 percent of the aatount of l$2~day bills bid for at the low price was accepted TOTAi TENDERS APPLIED FOR AW ACCIPfED Bx F 1 D I M L 8BSEHVS DISTRICTS? District Applied For Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Loui.« Minneapolis Kansas City Dallas San Francisco I TOTALS Accepted 30,886,000 878,036,000 13,78l*,000 31,107,0)0 11,591,000 29,79l*,O0O 18I*,836,000 25,86i*,000 13,206,000 30,81*7,000 25,091,000 125,092,000 1*0,186,000 1,657,036,000 31,63l*,000 1*2,01*5,000 11,591,000 29979k9Q00 238,856,000 86,017,000 17,812,000 1*3,962,000 25,1*91,000 135,152,000 12,300,276,000 fl, 1*00,131*, 000a/ t Applied For Accepted f 6,1*88,000 5l8,77l*,000 10,623,000 U*,61*8,000 878,000 8,525,000 85,576,000 I 6,1*88,000 2l*l*,17l*,000 5,623,000 U*,6l*8,000 878,000 8,525,000 59,576,000 8,6U*,000 3,970,000 7,651,000 3,12l*,GO0 36,761*,QO0 8,su*,ooo 3,970,000 7,651,000 3,52l*,000 1*6,764,000 1716,265,000 £1*00,065,0006/ •/ Includes #265,967,000 noncompetitive tenders accepted at the average price of 99.312 \l Includes 128,380,000 noncompetitive tenders accepted at the average price of 98,1*29 M^ TREASURY DEPARTMENT WASHINGTON, D.C. IMMEDIATE RELEASE Thursday, January 29, 1959. A-l*32 The Treasury Department announced today an optional exchange offering of 3-3/4 percent one-year Treasury certificates of indebtedness, to be dated February 15, 1959, and to mature February 15, 1960, and 4 percent 3-year Treasury notes, to be dated February 15, 1959, and to mature February 15, 1962, open to holders of $9,770 million 2-1/2 percent certificates of indebtedness maturing February 14 and $5,102 million 1-7/8 percent notes maturing February 15. Cash subscriptions will not be received. The new certificates and the new notes will be offered at an issue price of 99.993 percent of par to holders of the maturing certificates, and at par to holders of the maturing notes. In order to obtain uniform dates of issue and to have the maturity dates for the new certificates and notes coincide with the quarterly maturity dates for marketable issues, namely, February 15, May 15, August 15 and November 15, a discount of $0.07 per $1,000 on the issue price of the new certificates and notes is being allowed to the holders tendering the 2-1/2 percent certificates maturing February 14, 1959, for exchange. This discount is equivalent to one day's interest covering the day which elapses between the maturity date of the certificates maturing February 14 and the date of issue of the new certificates and notes. Interest will be payable on the new certificates semiannually on August 15, 1959, and February 15, 1960. Interest on the new notes will be payable semiannually on August 15, 1959, and thereafter on February 15 and August 15 in each year. The subscription books will be open February 2 through February 4 for this exchange offering. Any subscription for either issue addressed to a Federal Reserve Bank or Branch, or to the Treasurer of the United States, and placed in the mail before midnight Wednesday, February 4, will be considered as timely. IMMEDIATE RELEASE Thursday, January 29, 1959. A-i*32 Ttte freasury Department announced today en options*! exchange offering of 3-3/4 percent one-year Treasury certificates of indebtedness, to be dated Feb* ruary 15, 1959, and to mature February 15, 1060, aad 4 percent 3-year Treasury notes, to be dated February 15, 1959, sad to mature February 15, 1962, open to holders of $§,770 miHioa 2-1/2 percent certificates of indebtedness maturing February 14 aad $S,102 million 1-7/8 percent notes maturing February 15. $aah subscriptions will not be received, !Ehe new certificates and the new notes wiH be offered at an issue price of 99.993 percent of par to holders of the maturing certificates, end at par to holders of the maturing notes. In order to obtain uaifoi® dates of issue and to have the maturity dates for the new certificates and notes coincide with the quarterly maturity dates for marketable issues, namely, February 15, May 15, August 15 aad lovember 15, a discount of $0.07 per $1,000 on the issue price of the new certificates end notes is being allowed to the holders tendering the 2-1fM percent certificates maturing February 14, 1959, for e»hange. this discount is equivalent to one day' s interest covering the day which elapses between the maturity date of the certificates maturing f^bruary 14 mad the date of issue of the new certificates and notes. Interest will be payable on the new certificates semiannually on August 15, 1959, and February 15, I960. Interest on the new notes will be payable semiannually on August 15, 1959, and thereafter on ?eb_i*ary 15 and August 15 in The subscription books will be open February 2 through February 4 for this exchange offering. Any subscript ion for either issue addressed, to a federal Reserve Bank or Branch, or to the treasurer of the Itoited States, m& placed in the mail before midni#t Wednesday, l^bruary 4, will be considered as timely. TREASURY DEPARTMENT —WPWW—^MM»_HMimM«lll_IIW'»"'fM WASHINGTON. D-C. IMMEDIATE RELEASE Wednesday, January 28, 1959 A-431 Treasury Secretary Anderson today presented the Treasury Department's Exceptional Civilian Service Award to 0 e Gordon Delk, Jr., Deputy Commissioner of Internal Revenue, whose resignation is effective January 31* 1959. The award is symbolized by a gold medal and a lapel emblem. The presentation was made at a ceremony in the Treasury and was attended by Treasury and Revenue officials, and friends and associates of Mr. Delk. The Secretary, in making the award, commended the Deputy Commissioner for his outstanding service over the past six years, and his significant contribution to the reorganization of the Revenue Service, as well as to the establishment of the Revenue Service's outstanding executive training development program, Mr. Delk entered the Government service in 1928 as a messenger in the General Accounting Office. He served as a member of the staff of that agency's Investigations Division from 1933 till 1942. In 1942, he was on loan to the Senate Committee on the Reduction of Non-essentia Expenditures, and in July of that year transferred to the Office of the Comptroller General as budget analyst, later advancing to senior administrative analyst* From February, 1943, till February, 1944, Mr* Delk was on loan to the State Department as principal mission officer with the North African Economic Board, a staff operation under the Commander of Allied Forces. Mr. Delk returned to the General Accounting Office in February, 1944, as senior administrative analyst, and in January, 1945, was made assistant director of the newly-formed Corporation Audits Division. He remained in that capacity until December, 1951 when he left the Government. Mr. Delk was engaged in banking and farming enterprises at Smithfield, Virginia, until February, 1953, when he was named a special consultant to Internal Revenue Commissioner Andrews, Mr. Delk was appointed Deputy Commissioner of Internal Revenue on March 30, 1953 Mr. Delk was born December 28, 1911, in Smithfield, Virginia, the son of 0. Gordon and Frances Tulloss Delk. He studied accountancy at George Washington University, and later earned an LL.B. Degree from Southeastern University. He is a member of the bars of the District of Columbia, the State of Virginia, and the Supreme Court of the United States. Mr. Delk lives In Arlington, Virginia. 0O0 7v4 IMMEDIATE RELEASE Wednesday, January 28, 1959 A- f3/ Treasury Secretary Anderson today presented the Treasury Department's Exceptional Civilian Service Award to 0. Gordon Delk, Jr., Deputy Commissioner of Internal Revenue, s___x_____^H_8_h__ax whose resignation is effective U-***The award is symbolized by a gold medal and a lapel emblem. The presentation was made at a ceremony in^cieSfy Mdei_uii! J ____i__9-' and was attended by Treasury and Revenue officials, and many friends and associates of Mr. Delk. The ward was authorized in recognition of Mr. Delk entered the Government service in 1928 as a messenger in the General Accounting Office. He served as a member of the staff of that agency's Investigations division from 1933 till 1942. In 1942, he was on loan to the Senate Committee on the Reduction of Non-essential Expenditures, and In July of that year transferred to the Office of the Comptroller General as budget analyst, later advancing to senior administrative analyst. From February, 1943, till February, 1944, Mr. Delk was on loan to the State Department as principal mission officer with the North African Economic Board, a staff operation under the Commander of Allied Forces. Mr. Delk returned to General Accounting Office in February, 1944, as senior administrative analyst, and in January, 1945, was made assistant director of the newly-formed Corporation Audits Division, :sk____xx_sx__^_n_____^ fstxy^so^w&yxrfy^ He remained in that capacity until December, 195*1 when he left the Government. Mr. Delk was engaged in banking and farming until %j/KJt *4 -iyA when enterprises at Smithfield, Virginia,/B_BEH he was named a special consultant to Internal Revenue Commissioner Andrews. Mr. Delk was appointed Deputy Commissione of Internal Revenue on March 30, 1953. 7Q - 2- f y Mr. Delk was born December 28, 1911, in Smithfield, Virginia, the son of 0. Gordon and Frances Tulloss Delk. He studied accountancy at George Washington University, and later earned an LL.B. degree from Southeastern University. He is a member of the bars of the District of Columbia, the State of Virginia, and the Supreme Court of the United States. Mr. De-lr' lise_-*wTbh bis wif©<^^ f ^«^t5n°ildrenJ****-*--} at (heme address) ^%f^^»\my oOo ^ty%*^€Ai^m^ mmimnm ®* •». i •••«• tru. A . Consist) is t»r apessslble %* to Us* o#ver*M«t s**ti#t U itta «*tt tfc* 3 « m « # ia 1M1« ie mm aspatafed i*\m%y in mr*k9 mm, m*d Am m~ mt *U mmtum is a to tte« stata lerii* Ifrtaea 1 offlea in in Jaffsafy )_*», fi r^natry l_44y me. MX* was as niaaiaa efflear #A%b t^ 9%mft for***. X*U as la ti** be lift ii» m. 2ai* 1 at fetttaflal*, •ay ef I a ids ability a* aa (o * ^ - ^ ® ^ ^ f i = s ^ his outstanding service as Deputy Commissioner for the past six years, a^fs^ 2 * ^^s_siSnificant contribution to the effectuation of the reorganization of the Revenue Service, a<^s MJLUL *. His significant contributeon<to the establishment of the Revenue Service's outstanding if training development program. - 2 the amount and price range of accepted bids. Those submitting 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, noncompetitive tenders for $200,000 or less for the 91-day bills and noncompetitive tenders for $50,000 or less for the 182-day bills without stated price from any one bidder will be accepted in full at the average price (in three decimals) of 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 February 5, 1959, in cash or other immediately available funds or in a like face amount of Treasury bills maturing February 5, 1959Cash and exchange tenders will receive equal treatment. Cash adjustments will be made for differences between the par value of maturing bills accepted in exchange and the issue price of the new bills. The income derived from Treasury bills, whether interest or gain from the sale or other disposition of 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 treatment, as such, under the Internal Revenue Code of 1954. The bills are subject to estate, Inheritance, gift or other excise taxes, whether Federal or State, but are exempt from all taxation now or hereafter imposed on the principal or interest thereof by any State, or any of the possessions of the United States, or by any local taxing authority. For purposes of taxation the amount of 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 of 1954 the amount of 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 companies) 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 oOoor loss. return is made, as ordinary gain Treasury Department Circular No. 4l8, Revised, and this notice, prescribe the terms of the Treasury bills and govern TO-MS-OC the conditions of their issue. Copies of the circular may be obtained from any Federal Reserve Bank or Branch. 7^ TREASURY DEPARTMENT WASHINGTON, D.C RELEASE A.M. NEWSPAPERS, Thursday, January 29, 1959. A-430 The Treasury Department, by this public notice, invites tenders for two series of Treasury bills to the aggregate amount of $1,800,000,000, or thereabouts, for cash and in exchange for Treasury bills maturing February 5, 1959^ in the amount of $1,802,029,000, as follows: 91-day bills, for $1,400,000,000, or thereabouts, to be dated February 5, 1959^ and to mature May 7, 1959. 182-day bills, for $400,000,000, or thereabouts, to be dated February 5, 1959, and to mature August 6, 1959The 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. They will be Issued in bearer form only, and In denominations of $1,000, $5,000, $10,000, $100,000, $500,000 and $1,000,000 (maturity value). Tenders will be received at Federal Reserve Banks and Branchesup to the closing hour, one-thirty o'clock p.m., Eastern Standard time, Monday, February 2. 1959. Tenders will not be received at the Treasury Department, Washington. Each tender must be for an even multiple of $1,000, and in the case of competitive tenders the price offered must be expressed on the basis of 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. 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 of 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. Immediately after the closing hour, tenders will be opened at the Federal Reserve Banks and Branches, following which public announcement will be made by the Treasury Department of 74 TREASURY DEPART! 13NT Washington RELEASE A.M. NEWSPAPERS, Thursday, January 29, 1959 y \J A The Treasury Department, by this public notice, invites tenders for two series of Treasury bills to the aggregate amount of $ 1,800,000,000 , or thereabouts, f ss— cash and in exchange for Treasury bills maturing February 5, 1959 of $1.802.029.000 y as follows: 91 -day bills, for $1,400,000,000 , in the amount , or thereabouts, to be dated February 5, 1959 , and to mature May 7, 1959 182 -day bills, for $400,000,000 , or thereabouts, to be dated February 5, 1959 , and to mature August 6, 1959 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. They will be issued in bearer form only and in denominations of $1,000, $5,000, $10,000, $100,000, $500,000 and $1,000,0 (maturity value). Tenders will be received at Federal Reserve Banks and Branches up to the closing hour, one-thirty o'clock p.m., Eastern Standard time, Monday. February 2 1959 XJ^S—* Tenders will not be received at the Treasury Department, Washington. Each tender must be for an even multiple of $1,000, and in the case of competitive tenders t price offered must be expressed on the basis of 100, with not more than three 2 . 73 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. Others than banking institutions will not be permitted to submit tenders ex- cept for their own account. Tenders will be received without deposit from incor- porated banks and trust companies and from responsible and recognized dealers in investment securities. Tenders from others must be accompanied by payment of 2 p cent of the face amount of Treasury bills applied for, unless the tenders are ac panied by an express guaranty of payment by an incorporated bank or trust compan Immediately after the closing hour, tenders will be opened at the Federal Reserve Banks and Branches, following which public announcement will be made by the Treasury Department of the amount and price range of accepted bids. Those submitting tenders will be advised of the acceptance or rejection thereof. The Secretary of the Treasury expressly reserves the right to accept or reject any o 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 les for the 91-day bills and noncompetitive tenders for $£0,000 or less for the 182bills without stated price from any one bidder will be accepted in full at the average price (in three decimals) of accepted competitive bids for the respectiv issues. Settlement for accepted tenders in accordance with the bids must be made or completed at the Federal Reserve Bank on February §T 19^9 n, in cash or other immediately available funds or in a like face amount of Treasury bills maturing February s. 1959 Cash and exchange tenders will receive equal treatment. Cash adjustments will be made for differences between the par value of maturing bills accepted in exchange and the issue price of the new bills. The income derived from Treasury bills, whether interest or gain from the sale or other disposition of the bills, does not have any exemption, as such, and los XXXDQC 72 from the sale or other disposition of Treasury bills does not have any special treatment, as such, under the Internal Revenue Code of 1954. The bills are subj to estate, inheritance, gift or other excise taxes, whether Federal or State, b are exempt from all taxation now or hereafter imposed on the principal or inter thereof by any State, or any of the possessions of the United States, or by any local taxing authority. For purposes of taxation the amount of discount at whic Treasury bills are originally sold by the United States is considered to be int Under Sections 454 (b) and 1221 (5) of the Internal Revenue Code of 1954 the am of discount at which bills issued hereunder are sold is not considered to accru until such bills are sold, redeemed or otherwise disposed of, and such bills ar cluded from consideration as capital "assets. Accordingly, the owner of Treasur bills (other than life insurance companies) issued hereunder need include in hi income tax return only the difference between the price paid for such bills, wh oh original issue or on subsequent purchase, and the amount actually received e upon sale or redemption at maturity during the taxable year for which the retur made, as ordinary gain or loss. Treasury Department Circular No. 418, Revised, and this notice, prescribe the terms of the Treasury bills and govern the conditions of their issue. Copies of the circular may be obtained from any Federal Reserve Bank or Branch. 7 t — - 2 - The proposed legislation would not only prevent a substantial loss in revenue but would also help resolve difficult and complex problems in datermining for many mineral industries the stage at which taxpayers first obtain a commercially marketable mineral product. The Staff of the Treasury is now preparing a draft of the proposed legislation, and in this connection would be pleased to work in cooperation with the tax staffs of the Congress in its development. Sincerely yours, /s/ Robert B. Anderson Secretary of the Treasury TREASURY DEPARTMENT ;U WASHINGTON, D.C. IMMEDIATE RELEASE Monday, January 26, 1959. A-i*29 Treasury Secretary Anderson today sent the following identical letters to the Vice President and the Speaker of the House of Representatives: January 26, 1959 My dear Mr. Vice President; In the Budget Message of the President, submitted to Congress on January 19, 1959, the President stated that the Treasury Department would recommend an amendment to the Internal Revenue Code specifying the treatment processes which shaH be considered mining for the purpose of computing percentage depletion in the case of mineral products. Early last year I testified before the Ways and Means Committee on the need to revise the law in order to preclude excessive depletion deductions for the brick and cement industries. My recommendation was made as a result of a series of court cases which permitted manufacturers of brick and cement to compute percentage depletion on the basis of the selling price of the finished manufactured product rather than on the value of the clay or cement rock before it is manufactured., It is now apparent under the court decisions that manufacturers of many other products may obtain depletion allowances based on gross income derived from the sale of finished products.. This can only result in increasing the depletion deduction for all minerals severalfold — in extreme cases as ' much as one hundred times. I do not believe that depletion on such an inflated scale is either reasonable or was intended. If permitted, the revenue losses will indeed be serious. The problem arises because the term "mining" is defined in the statute to include the ordinary treatment processes normally applied to obtain the "commercially marketable mineral product or products" which, in many instances, may be an expensive. finished product. Accordingly, in order to prevent excessive depletion allowances, I recommend the immediate elimination of the phrase "commercially marketable mineral product or products" from the statute and the substitution of a new definition of "mining" which will specify the allowable treatment processes for the various minerals. IMMEDIATE RELEASE Monday, January 26, 1959. A-i*29 Treasury Secretary Anderson today sent the following identical letterto the Vice President and the Speaker of the House of Representatives: January 26, 1959 My dear Mr. Vice President: In the Budget Message of the President, submitted to Congress on January 19, 1959> the President stated that the Treasury Department would recommend an amendment to the Internal Revenue Code specifying the treatment processes which shall be considered mining for the purpose of computing percentage depletion in the case of mineral products. Early last year I testified before the Ways and Means Committee on the need to revise the law in order to preclude excessive depletion deductions for the brick and cement industries. My recommendation was made as a result of a series of court cases which permitted manufacturers of brick and cement to compute percentage depletion on the basis of the selling price of the finished manufactured product rather than on the value of the clay or cement rock before it is manufactured. It is now apparent under the court decisions that manufacturers of many other products may obtain depletion allowances based on gross income derived from the sale of finished products. This can only result in increasing the depletion deduction for all minerals severalfold — in extreme cases as much as one hundred times. I do not believe that depletion on such an inflated scale is either reasonable or was intended. If permitted, the revenue losses will indeed be serious. The problem arises because the term "mining" is defined in the statute to Include the ordinary treatment processes nonaally applied to obtain the "commercially marketable mineral product or products" which, in many instances, may be an expensive finished product. Accordingly, in order to prevent excessive depletion allowances, I recommend the immediate elimination of the phrase "commercially marketable mineral product or products" from the statute and the substitution of a new definition of "mining" which will specify the allowable treatment processes for the various minerals. - 2- ee The proposed legislation would not only prevent a substantial loss in revenue but would also help resolve difficult and complex problems in determining for many mineral industries the stage at which taxpayers first obtain a commercially marketable mineral product. The Staff of the Treasury Is now preparing a draft of the proposed legislation, and in this connection would be pleased to work in cooperation with the tax staffs of the Congress in its development. Sincerely yours, fsf Robert B. Anderson Secretary of the Treasury 67 TREASURY DEPARTMENT WASHINGTON, D.C. RELEASE A. M. NEWSPAPERS, Tuesday, January 27, 1959. A-ii28 The Treasury Department announced last evening that the tenders for two series o" Treasury bills to be dated January 29, 1959, which were offered on January 22, were opened at the Federal Reserve Banks on January 26. Tenders were invited for $1,1*00,000,000, or thereabouts, of 91-day bills and for $1*00,000,000, or thereabouts, of 182-day bills. The details of the two series are as follows: Pries 99.267a/ 99.2k5~ 99.21*8 High Low Average a/ _Y 70 9k 182-day Treasury bills maturing July 30, 1959 91-day Treasury bills maturing April 30, 1959 RANGE OF ACCEPTED COMPETITIVE BIDS: Approx. Equiv. Annual Rate Price 98.332b/ 98.306" 98.313 2.9002 2.9872 2.9752 Approx. Equiv. Annual Rate 3.2992 3.3512 3.3372 Excepting one tender of $1,175,000 Excepting four tenders totaling $750,000 percent of the amount of 91-day bills bid for at the low price was accepted 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: District Applied For Accepted Jt Applied For Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco $ $ •i $ 5,1*35,000 ji 578,1*1*9,000 i li|,035,000 Jr 15,758,000 i 2,073,000 i\ 8,188,000 ; 90,01*5,000 : 7,852,000 : 5,6l*5,ooo !\ 7,902,000 : 2,61*7,000 i l*2,9l*l*,000 TOTALS 36,753,000 1,896,61*7,000 1*2,018,000 59,810,000 19,901,000 29,681*,000 293,217,000 28,81*7,000 21,383,000 k9,708,000 28,261*,000 120,593,000 $2,626,825,000 20,533,000 928,933,000 20,71*0,000 1*7,910,000 18,781*,000 17,951i,000 180,077,000 28,61*8,000 18,1*33,000 26,913,000 28,261*,000 61,039,000 $1,1*00,228,000c/: $780,973,000 Accepted t 5,285,000 269,21*9,000 1*,035,000 I5,o58,ooo 2,073,000 7,1*85,000 1*2,1*28,000 7,852,000 5,339,000 7,602,000 2,6)47,000 31.063.000 $l*OO,ll6,000d c/ Includes $283,222,000 noncompetitive tenders accepted at the average price of 99-21 of Includes $26,1*66,000 noncompetitive tenders accepted at the average price of 9&\31; bo A RELEASE A. K. NEWSPAPERS, Tuesday, January 27. X959- The Treasury Department announced last evening that the tenders for tiro series of Treasury bills to be dated January 29, 1959, which were offered on January 22, were opened st the Federal Reserve Banks on January 26. Tenders were invited fer 6,1*00,000,000, or thereabouts, of 91-dsy bills aad for ^00,000,000, or thereabouts, of 182-day bills. The details of the two series are as followst 182-day Treasury bills RAKOE OF ACCEPTED 91-day treasury M i l s Maturing July 30, 1959 Maturing April 30* 1959 ccKmrrm BIDS? Price n.t&imf High Low Average 99*tl%T 99.21*8 Approx. B Q U I T . Annual Rate Price 98.332©/ 98.30iT 98.313 2.9002 2.9872 2.975% Approx. Equiv. Annual Rate 3.2992 3.351* 3.3372 mf Excepting one tender of 11,175,000 tf Excepting four tenders totaling §750,000 70 percent of the amount of 9X-my bills bid for at the low price was accepted 9k percent of the amount of iSt-day bills bid for st the low price was accepted TOTAL TEHDE8S APFLUB FOR AW ACCEPT© BT FEBtmL BESItVI DIBTSICTSs District Applied For Accepted Boston Bew York Philadelphia Cleveland Richmond Atlanta Chicego St. Louis Sinneapolis Kansas City Bellas Sen Francisco $ I 36,753,000 1,896,^7,000 1*2,018,000 59,810,000 19,901,000 29,681*, 000 293,217,000 28,81*7,000 21,383,000 19,708,000 28,261i,000 150.593,000 ; Applied For 20,533,000 1 5,1*35,000 928,933,000 578,1*1*9,000 20,71*0,000 s lM35,000 15,758,000 1(7,910,000 s 18,784,000 * 2,073,000 8,188,000 17,95lifOOO * * 180,077,000 s 9O,0li5,OOO 28,64*8,000 • 7,852,000 18,1*33,000 •* 5,61*5,000 28,913,000 «7,902,000 28,264,000 *• 2,64i7,0O0 1*2,9U*.000 61,039,000 ? Accepted $ 5,285,000 269,21(9,000 ii,035,000 15,058,000 2,073,000 7,1*85,000 142,1*28,000 7,852,000 5,339,000 7,602,000 2,61*7,000 31,063.000 t TOTALS 12,626,825,000 fl,J*OO,228,0OOe/t 1780,973,000 ;*l40G,ll6,000d/ of Includes "?33,222,000 noncompetitive tenders accepted st the average price of 99.22(8 If Includes 126,1(66,000 noncompetitive tenders accepted at the average price of 98.313 TREASURY DEPARTMENT WASHINGTON. ELC A-427 IMMEDIATE RELEASE, Thursday, January 22, 1959. The Treasury Department today announced the subscription and allotment figures vith respect to the cash offering of $750 million, or thereabouts, of 4 percent Treasury Bond of 1980, to be dated January 23, 1959, and to mature February 15, 1980. Subscriptions from savings-type investors were allotted 70 percent, subscriptions from commercial bUs for their own account were allotted 35 percent, and all other subscriptions were allotti 15 percent, m accordance with the offering announcement, all subscriptions up to a maximum of $25,000 were allotted in full where accompanied by 100$ payment at the time-xi entering the subscriptions. All other subscriptions for $5,000 were allotted in full. Subscriptions for more than $5,000 were allotted not less than $5,000. In addition, Ji§q million were allotted to Government Investment Accounts. Subscriptions and allotments were divided among the several Federal Reserve Distg and the Treasury as follows: Federal Reserve District Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco Treasury Tots1 Subscriptions from savingstype investors Subscriptions from ceml. banks for own account Subscriptions accompanied by 100$ deposit Subscriptiorif; from all others $ 55,247,500 245,789,000 22,770,000 46,839,000 34,816,500 37,836,000 61,897,500 6,543,000 9,875,000 32,835,000 39,435,000 112,162,000 675,000 $ 9,506,000 162,513,500 21,462,500 37,606,500 18,595,500 16,891,000 99,079,500 16,064,500 5,302,000 7,387,000 27,251,000 32,010,000 - $ 5,967,000 19,203,000 4,453,000 5,612,000 4,814,500 7,488,000 10,977,000 7,446,000 4,706,000 8,226,500 4,170,500 5,338,500 254,500 $ 14,612,500 389,980,000 21,835,50$13,596,001$ 12,837,00$^ 14,595,50$ 37,090,500" 7,835,500322,500: 7,031,500* 18,538,500 12,402,500 39,000 $706,720,500 $453,669,000 $88,656,500 $550,714,500 i, Federal Reserve District Total Subscriptions Received Total Allotments Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco Treasury Govt. Inv. Accts. $ 85,333,000 817,485,500 70,521,000 103,653,500 71,063,500 76,810,500 209,044,500 37,887,000 20,205,500 55,480,000 89,395,000 161,913,000 968,500 - $ 50,412,,000 310,544,,000 31,543.,500 54,608.,500 38,187.,500 42,819.,500 95,585.,000 19,316,,500 13,595.,000 35,238;,000 44,283.,500 97,144; 500 761, 000 50,000; 000 $1,799,760,500 $884,038,500 Total < * . - A-'-f*- IMMEDIATE RELEASE, gmrsday, January 22, 1959. The Treasury Department today announced the subscription and allotment figures with respect to the cash offering of $750 million, or thereabouts, of 4 percent Treasury Bonds ef 1980, to be dated January 23, 1959, and to mature February 15, 1980. Subscriptions from sS3ri»gS*tys>e investors were allotted 70 percent, subscriptions from commercial banks for their ova account were allotted 35 percent, aad all other subscriptions were allotted 'l5 percent. In accordance with the offering announcement, all subscriptions up to a Cximum of $23,000 were allotted in full where accompanied by 100$ payment at the time of taring the subscriptions. All other subscriptions for $5,000 were allotted in full. Subscriptions for more than $5,000 were allotted not less than $5,000. la addition, $50 pillion were allotted to Government Investment Accounts. Subscriptions end allotments were divided among the several Federal Reserve Districts end the Treasury as follows; federal Reserve District Boston New York Philadelphia Cleveland Richmond Atlanta Chicago 8t. Louis Minneapolis Kansas City Dallas San Francisco Treasury Tote1 Subscript Ions from savingstype investors Subscriptions from octal, banks for own account Subscriptions accompanied by 100$ deposit Subscriptions from all others $ 55,247,500 245, 789, W0 22,770,000 46,839,000 34,816,300 37,336,000 61,897,500 6,545,000 9,875,000 32,855,000 39,435,000 112,162,000 675,000 $ 9,506,000 10E,515,500 81,462,500 37,603,500 10,595,500 18,891,000 99,079,500 16,064,500 5,302,000 7,387,000 27,251,000 38,010,000 $ 5,967,000 19,203,000 4,453,000 5,612,000 4,814,500 7,488,000 10,977,000 7,446,000 4,706,000 8,226,500 4,170,500 5,338,500 254,500 $ 14,612,500 389,980,000 21,835,500 13,596,000 12,837,000 14,595,500 37,090,500 7,833,500 322,500 7,031,500 18,538,500 12,402,500 59,000 $706,720,500 $453,669,000 $88,656,500 $550,714,500 - Federal Beserve District Total Subscriptions Heceived Total Allotments Boston New Yorls Philadelphia Cleveland, Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco Treasury Govt. Inv. Accts. $ $ 50,412;,000 310,544.,000 o-i-, <D_0;,500 54,608;,500 58,187.,500 42,819.,500 95,585j,000 19,316 ,500 < 13,595,,000 35,238;,000 44,283;,500 97,144;,500 761.,000 50,000.,000 Total 85,333,000 817,485,500 70,521,000 103,653,500 71,063,500 76,810,500 209,044,500 37,887,000 20,205,500 55,480,000 89,395,000 161,913,000 968,500 - $1,799,760,500 $884,030,500 -z the amount and price range of accepted bids. Those submitting 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, noncompetitive tenders for $200,000 or less for the 91-day bills and noncompetitive tenders for $50,000 or less for the 182-day bills without stated price from any one bidder will be accepted in full at the average price (in three decimals) of 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 29, 1959> in cash or other Immediately available funds or In a like face amount of Treasury bills maturing January 29, 1959. Cash and exchange tenders will receive equal treatment. Cash adjustments will be made for differences between the par value of maturing bills accepted in exchange and the issue price of the new bills. The income derived from Treasury bills, whether interest or gain from the sale or other disposition of 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 treatment, as such, under the Internal Revenue Code of 195^. The bills are subject to estate, inheritance, gift or other excise taxes, whether Federal or State, but are exempt from all taxation now or hereafter imposed on the principal or interest thereof by any State, or any of the possessions of the United States, or by any local taxing authority. For purposes of taxation the amount of discount at which Treasury bills are originally sold by the United States is considered to be interest. Under Sections k5k (b) and 1221 (5) of the Internal Revenue Code of 195^ the amount of 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 companies) 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 oOoor loss. return is made, as ordinary gain Treasury Department Circular No. 4l8, Revised, and this notice, prescribe the terms of the Treasury bills and govern TO oas oc the conditions of their issue. Copies of the circular may be obtained from any Federal Reserve Bank or Branch. TREASURY DEPARTMENT •••.._.».i JUMJI .mi. ii. . ^ , J _ » J _ J _ M I J _ [ ^ U U M — U ^ I I _ * - J « _ — u » ^ _ ^ - j a m a — WASHINGTON, D.C RELEASE A.M. NEWSPAPERS, Thursday, January 22, 1959. A-426 The Treasury Department, by this public notice, invites tenders for two series of Treasury bills to the aggregate amount of $1,800,000,000, or thereabouts, for cash and in exchange for Treasury bills maturing January 29, 1959, in the amount of $1,802,702,000, as follows: 91-day bills, for $1,400,000,000, or thereabouts, to be dated January 29, 1959* and to mature April 30, 1959. 182-day bills, for $400,000,000, or thereabouts, to be dated January 29, 1959, and to mature July 30, 1959. 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. They will be Issued in bearer form only, and In denominations of $1,000, $5,000, $10,000, $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 o'clock p.m., Eastern Standard time, Monday, January 26, 1959. Tenders will not be received at the Treasury Department, Washington. Each tender must be for an even multiple of $1,000, and in the case of competitive tenders the price offered must be expressed on the basis of 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. 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 of 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. Immediately after the closing hour, tenders will be opened at the Federal Reserve Banks and Branches, following which public announcement will be made by the Treasury Department of y — TREASURY DEPARTMENT Washington -/ <_- RELEASE A.M. NEWSPAPERS, Thursday. Jaauary 22. 1959 The Treasury Department, by this public notice, invites tenders for two series of Treasury bills to the aggregate amount of $1,800.000.000 , or thereabou _a_J8K cash and in exchange for Treasury bills maturing of $ l,8Q2,7pg,,QQQ > as January 29. 1959 , i n the amount follows: LAX. SEEK 91 ^ -day bills, for $ It40Q,000,0Q0 , or thereabouts, to be ___&_. dated January 29, 1959 182 -day bills, for $400,000,00© "_$_5~~ , and to mature April 30, 1959 , or thereabouts, to be _*___$_ dated January 29, 1959 , and to mature July 50, 1959 The bills of both series will be issued on a discount basis under competitive and noncompetitive bidding as hereinafter provided, and at maturity their amount will be payable without interest. They will be issued in bearer fo and in denominations of $1,000, $5,000, $10,000, $100,000, $500,000 and $1 (maturity value). Tenders will be received at Federal Reserve Banks and Branches up to the hour, one-thirty o'clock p.m., Eastern Standard time, Monday, January 26, Tenders will not be received at the Treasury Department, Washington. Each must be for an even multiple of $1,000, and in the case of competitive te price offered must be expressed on the basis of 100, with not more than th - 2 CI v-/™_ 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. Others than banking institutions will not be permitted to submit tenders ex- cept for their own account. Tenders will be received without deposit from incor- porated banks and trust companies and from responsible and recognized dealers in investment securities. Tenders from others must be accompanied by payment of 2 p cent of the face amount of Treasury bills applied for, unless the tenders are ac panied by an express guaranty of payment by an incorporated bank or trust compan Immediately after the closing hour, tenders will be opened at the Federal Reserve Banks and Branches, following which public announcement will be made by the Treasury Department of the amount and price range of accepted bids. Those submitting tenders will be advised of the acceptance or rejection thereof* The Secretary of the Treasury expressly reserves the right to accept or reject any o 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 les for the 91-day bills and noncompetitive tenders for $50,000 or less for the 182bills without stated price from any one bidder will be accepted in full at the average price (in three decimals) of accepted competitive bids for the respectiv issues. Settlement for accepted tenders in accordance with the bids must be made or completed at the Federal Reserve Bank on January 29, 1959 , in cash or other SSF immediately available funds or in a like face amount of Treasury bills maturing January 29t 1959 Cash and exchange tenders will receive equal treatment. Cash adjustments will be made for differences between the par value of maturing bills accepted in exchange and the issue price of the new bills. The income derived from Treasury bills, whether interest or gain from the sale or other disposition of the bills, does not have any exemption, as such, and los _____ from the sale or other disposition of Treasury bills does not have any special treatment, as such, under the Internal Revenue Code of 1954. The bills are subje to estate, inheritance, gift or other excise taxes, whether Federal or State, but are exempt from all taxation now or hereafter imposed on the principal or intere thereof by any State, or any of the possessions of the United States, or by any local taxing authority. For purposes of taxation the amount of discount at which Treasury bills are originally sold by the United States is considered to be inte Under Sections 454 (b) and 1221 (5) of the Internal Revenue Code of 1954 the amo of 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 cluded from consideration as capital assets. Accordingly, the owner of Treasury bills (other than life insurance companies) issued hereunder need include in his income tax return only the difference between the price paid for 3uch bills, whe oh original issue or on subsequent purchase, and the amount actually received ei upon sale or redemption at maturity during the taxable year for which the return made, as ordinary gain or loss. Treasury Department Circular No. 418, Revised, and this notice, prescribe the terms of the Treasury bills and govern the conditions of their issue. Copies of the circular may be obtained from any Federal Reserve Bank or Branch. TREASURY DEPARTMENT WASHINGTON. D.C. IMMEDIATE RELEASE Tuesday, January 20, 1959 A-42f> Technical discussions are scheduled to commence in the near future between representatives of the governments of Ceylon and the United States, looking toward the conclusion of an income tax convention between the two countries for the avoidance of double taxation and the elimination of other tax obstacles to the international flow of trade and investment. If bases for agreement are found, drafts of a proposed agreement will be prepared and submitted to the respective governments for consideration. Interested persons in the United States who desire to submit information and comments bearing on such a tax convention, or suggestions for possible inclusion in a convention, should forward them to Mr. David A. Lindsay, Assistant to the Secretary of the Treasury, Treasury Department, Washington 25, D. C. TREASURY DEPARTMENT s« y y WASHINGTON, D.G. IMMEDIATE RELEASE, Tuesday, January 20, 1959. A-424 The Treasury Department today announced the subscription and allotment figures with respect to the current cash offering of $2-1/2 billion, or thereabouts, of 3-1/4 percent Treasury Notes of Series B-1960. These notes will be dated January 21, 1959, and will mature May 15, 1960. Subscriptions and allotments were divided among the several Federal Reserve Districts and the Treasury as follows: Federal Reserve District Total Subscriptions Received Total Subscriptions Allotted Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco Treasury $ 190,081,000 2,014,995,000 243,893,000 425,850,000 210,673,000 308,337,000 873,338,000 184,714,000 176,935,000 229,153,000 237,617,000 427,613,000 1,001,000 $ $5,524,200,000 $2,738,163,000 TOTAL 95,115,000 956,216,000 119,900,000 207,802,000 108,301,000 158,028,000 440,822,000 101,521,000 99,175,000 126,117,000 119,529,000 205,166,000 471,600 £7 B__EDIA23S RILIASE, Tuesday, January 20, 1959. t | The Treasury Department today announced the subscription and allotment figures with respect to the current cash offering of $1*1/2 billion, or thereabouts, of 3-1/4 percent Treasury Notes of Series B-1980. These notes will be dated January 21, 1959, and will mature Wsy 15, 1960. Subscriptions mmd allotments were divided smong the several Federal Reserve District* aad the Treasury a® follows: Federal Reserve District Total Subscriptions Received Total Subscriptions Allotted Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Daixas San Francisco Treasury $ 190,081,000 2,014,995,000 243,893,000 425,850,000 210,673,000 308,337,000 873,338,000 184,714,000 176,935,000 220,153,000 237,617,000 427,613,000 1,001,000 $ $5,524,200,000 $2,738,185,000 TOTAL 95,115,000 956,216,000 119,900,000 207,802,000 108,301,000 158,028,000 440,822,000 101,521,000 99,175,000 126,117,000 119,529,000 205,186,000 471,000 Is k' w _< - 2 - Thus, all distributions of cash, including redemptions of nonqualified documents,* would be deductible by the cooperative and taxable to the patron. In order to insure that the single tax is collected at ordinary income tax rates, it would, be necessary to treat amounts received upon redemption and upon the sale or exchange of redeemable certificates as ordinary income rather than capital gain. You may wish to consider other methods of achieving a single tax liability for cooperative income, A number of alternative methods have been suggested and we shall be glad to weigh and consider the merits of these various proposals during the course of the deliberations of your committee. In connection with the selection and development of legislation that is reasonable and fair, the staff of the Treasury will continue to work cooperatively with the staff of your committee. Sincerely yours, fsf Robert B. Anderson Secretary of the Treasury 0O0 TREASURY DEPARTMENT 55 WASHINGTON, D.C. IMMEDIATE RELEASE, Monday, January 19, 1959« A-423 Treasury Secretary Anderson today sent the following identical letters to Senator Harry F. Byrd, Chairman of the Senate Finance Committee, and Representative Wilbur D. Mills, Chairman of the House Ways and Means Committee: January 19, 1959 My dear Mr. Chairman: In testimony before your Committee on January 16, 1958; I pointed out that the proper taxation of cooperatives continues to be a troublesome problem. As you know, a series of court decisions have made largely Ineffective the 1951 legislation which was intended to assure that all cooperative income was to be taxed either to the cooperative or to its members as it was earned. Treasury rulings under which all patronage refunds in the form of certificates were held to be taxable at the face value have been held invalid where the certificates do not have a determinable market value. Thus, it is possible for the cooperative to receive a deduction in computing its taxable income while its members are not-taxable on the certificates they receive. As I stated in my testimony, while we are fully aware of the important place which cooperatives occupy in the life of our agricultural and farming communities, we believe that, as was contemplated in the 1951 legislation, some single tax liability should be assumed by all who participate in the business activities of the country and that legislation should be developed which imposes such a tax and at the same time is fair and reasonable from the standpoint of the members and the relative availability of retained earnings for expansion. We suggest that your Committee consider a method of taxation under which the tax-free retention of income would be limited to three yeara. Under this method cooperatives would be permitted to deduct amounts paid to the patron during the taxable year if paid (l) in cash or (2) in the form of "qualified" patronage certificates, A qualified certificate must bear interest at the rate of at least four percent, must by its terms be redeemable in cash within three yaare after the close of the year in which Issued, and must in fact be redeemed in cash within the three-year period. The cooperative would not be permitted a deduction in respect of non-qualified certificates, euoh aa certificates redeemable within a period In excess of three years or bearing Interest at a rate of less than four percent, until the document is redeemed in cash. The patron would be required to include in his Income only th& cash amounta received, either as current cash distributlona or on redemption of qualified or non-qualified certificates. IMMEDIATE RELEASE, . Monday, January 19, 1959 R.4 A- CJ- J L j "" "" ' -* • identical * Treasury Secretary Anderson today sent the following/letters to Senator Harry F. Byrd, Chairman of the Senate Finance Committee, and Representative Wilbur D. Mills, Chairman of the House Ways and Means Committee: January 19, 1959. Mf dmmr *x. Cbalmasa: la testimony before your GmmAttm m. January 16, 195">, I point*! out that the proper taxation of cooperatives continues to be a troublesome problem. As y m \mm*9 ft series @t court deeitioat have tmdm largely ineffective the 1951 legislation which _&a intended to assure that nil cooperative incoase van to be i&xed sitter t© tbt cooperative or to its mmbmrm as it \m* earned* Treasury rulings u m o r vhich all patronage vttftod* in ths form of certificates were held to b* taxable at ths fnce v^lue have been held i m O J A *here tte certificat_» do not have As * determinable ssarket value, nfcdl* thus,weitare is possible foroftbtthe 1 stated la my testimony, fully aware tive to receive deduction In computing taxable Important pl&$e *w&t®h acMtyMmttvti occupy Its 1 B tit life income of ourwhile agri-its twnfel* «* tt$st eertlflMtet cultural•art andnet tmmim zmmmlt±m we MLlt*t tfetgr that,receive. mm was in the i951 lecial&tion, none •Jj_f_* tax U t i l i t y mtrnkld mm by mix %mm pwrticlpite la tlMi bmitmmm aettvitiet of tlm that, ]*£&•!*&&•* tlmtt %m dtroAqpti A i e h imposes su<& a tux and at imase tine It fair and reaea-sable from the standpoint of tlm se»ft that your $p?»itt*eofconsider taxation asd tuggett the relative availability retaineda attfcodl earningseffor expansion. under Which the tax-free rater.t ian of tncvm would fee limited to three yetrt, y,-ler this -sethoc, cooperative, wa&M mm pemitt*- to deduct paid to the patron during tbm taxable year If paid (i) in (2) la the torn, of "qualified" patronage certificate*. A certificate smst bear ist#*t*t at tte rate if at leaet met % lts ***•• *• t^«*t"M* in cash within three after tiw mXmm «f **• 3*®**" latftdtliI M N M * , and m * t in fact bm tmdmmmmd. in sash within tfet three-^ear ptrtoft. »&® cooperative wouH not -e p m i l t M a deduction in mtpeet of ai«m~tmli£i«d. certificates, such m* certificate* redeemable within a period in excess of three The patron would be reeuirel to include in his inccae only the ymmrm m bearing isttmrt at a rate of lest ttaa f@nr pereeat, until cash amount® received, either mm current cash distributions or oa tilt dacuBM&nt it redeemd in cash. redemption of «p»lifi*i or non-fiitUfied certificate*. fhut, ail distribution* of m*mm9 imhmm re<le^tioa© of nonqualified locu_**at«, w o u H fee 4*€tietltel* by the c©#|?erative and taxable to the patron. In mdmr to insure that ths- single tax It collected at ordisary ineoae tax rat#«, 1% would lie a©e«e««ry to treat ftaountf received upo» rede^tion aad upon the eale er exchange #f redeemable certifieatee at or&iaary iasna rather than capital gain* Tou may nitk %# coneiler other setho&s of achieving a mixmlw tax liability for mmpmrnMrn income. A number of a iterative methods aerits of these varlm* proposals during the e^urta of the deXilseratioas of your m « i « t * « * In eaniaeetlon wtftfc th$ mlzvtiou mmd development of legislation that ft mmmmblB mm fair, the utaff of tilt Treasury will continue to m l cooperatively %mk tlm staff «r Sineerely youre, /s/ Robert B. Anderson DALindsayrftt 12/29/58 5P TREASURY DEPARTMENT Washington, D. C. IMMEDIATE RELEASE A-422 Tuesday, January 20, 1959. The Bureau of Customs announced today the following preliminary figures showing the imports for consumption from January 1, 1958, to December 31, 1958, inclusive, of commodities for which quotas were established pursuant to the Philippine Trade Agreement Revision Act of 1955: Commodity Established Annual Quota Quantity Buttons 807,500 Unit of : Imports as of Quantity : December 31, 1958 Gross 426,727 Cigars 190,000,000 Number Coconut oil 425,600,000 Pound 205,669,105 Cordage 6,000,000 Pound 5,526,944 (Refined Sugars (Unrefined Tobacco 6,175,000 4,053,827 42,392,000 1,904,000,000 Pound 1,861,608,000 Pound 6,190,517 y — TREASURY DEPARTMENT Washington, D. C. IMMEDIATE RELEASE Tuesday, January 20, 1959. A-422 The Bureau of Customs announced today the following preliminary figures showing the imports for consumption from January 1, 1958, to December 31, 1958, inclusive, of commodities for which quotas were established pursuant to the Philippine Trade Agreement Revision Act of 1955: Commodity : : Established Annual : Unit of : Imports as of Quota Quantity : Quantity : December 31, 1958 • • » Buttons 807,500 Gross 426,727 Cigars 190,000,000 Number 4,053,827 Coconut oil 425,600,000 Pound 205,669,105 Cordage 6,000,000 Pound 5,526,944 (Refined 42,392,000 Sugars (Unrefined 1,904,000,000 Tobacco 6,175,000 Pound 6,190,517 Pound 1,861,608,000 - 2 - Unit : Imports of : as of Quantity :Dec. 31, 1958 Commodity ibsolute Quotas: 'eanuts, shelled, unshelled, blanched, salted, prepared, or preserved (incl. roasted peanuts but not peanut butter) 12 mos. from August 1, 1958 1,709,000 Pound 1,443,915* tye, rye flour, and rye meal ••••• 12 mos. from July 1, 1958 182,280,000 Canada 3,720,000 Other Countries Pound Pound 182,178,566* utter substitutes, including butter oil, containing 45$ or more butterfat Calendar Year 1,200,000 Pound 1,199,991 Jan. 31, 1959 Argentina Paraguay Other Countries 5,525,000 741,000 234,000 Pound Pound Pound 5,489,039* Quota Filled Quota Filled •ung oil Nov. 1, 1958 - *- Imports through January 15* 50 TREASURY DEPARTMENT Washington, D. C. IMMEDIATE RELEASE TUESDAY, JANUARY 20. 1QSQ. A-421 The Bureau of Customs announced today preliminary figures showing the imports for consumption of the commodities listed below within quota limitations from the beginning of the quota periods to December 31, 1958, inclusive, as follows: Commodity Period and Quantity J Unit : Imports l of : as of * Quantity :Dec. 31. 19 Tariff-Rate Quotas: Whole milk, fresh or sour CalpndflY* YpnT' 1,500,000 Gallon 211 Calendar Year 3,000,000 Gallon 279 Cattle, 700 lbs. or more each Cattle, less than 200 lbs. each. Fish, fresh or frozen, filleted, etc., cod, haddock, hake, pollock, cusk, and rosefish ... Oct. 1, 1958 Dec. 31, 1958 120,000 Head 63,656 12 mos. from April 1, 1958 200,000 Head 16,028 Calendar Year 35,892,221 Pound Quota Fill« C,al pridPIT* Ypflr 44,693,874 Pound Quota Fillet' 12 mos. from Sept. 15, 1958 114,000,000 36,000,000 Pound Pound 35,302,078 2,012,943 Calendar Year 5,000,000 Pound 2,939,512 12 mos. from July 1, 1958 3,000,000 Pound 2,593,732 12 mos. from July 1, 1958 80,000,000 Pound 3,380,178 Calendar Year 14,200,000 Pound Quota Filled White or Irish potatoes: Other (continued) TREASURY DEPARTMENT Washington, D. C. 4 b HMEDIATE RELEASE 1UESDAY, JANUARY 20, 1959. A-421 The Bureau of Customs announced today prellmi nary figures showing the imports for jonsumption of the commodities listed below within quota limitations from the beginning )f the quota periods to December 31, 1958, inclusive, as follows: Commodity Period and Quantity . Unit : Imports t of : as of : Quantity :Dec. 31. 1958 Tariff-Rate Quotas: Cream, fresh or sour •••••• Calendar Year Jattle, less than 200 lbs. each. Fish, fresh or frozen, filleted, etc., cod, haddock, hake, pollock, cusk, and rosefish ... 279 Oct. 1, 1958 Dec. 31, 1958 120,000 Head 63,656 12 mos. from April 1, 1958 200,000 Head 16,028 Calendar Year 35,892,221 Pound Quota Filled 44,693,874 Pound Quota Filled Tuna fish •••••••••••••••••••... Calendar Year White or Irish potatoes: Certified seed Other 211 Gallon 3,000,000 Gallon ihole milk, fresh or sour Calendar Year Cattle, 700 lbs. or more each (other than dairy cows) ....... 1,500,000 12 mos. from Sept. 15, 1958 114,000,000 36,000,000 Pound Pound 5,000,000 Pound Walnuts Calendar Year 35,302,078 2,012,943 2,939,512 Alsike clover seed 12 mos. from July 1, 1958 3,000,000 Pound 2,593,732 80,000,000 Pound 3,380,178 14,200,000 Pound Quota Filled Peanut oil 12 mos. from July 1, 1958 Woolen fabrics Calendar Year (continued) - 2 - Commodity Period and tfy Quantity : Unit : Imports : of : as of : Quantity :Dec. 31. 1958 Absolute Quotas: Peanuts, shelled, unshelled, blanched, salted, prepared, or preserved (incl. roasted peanuts 12 mos. from but not peanut butter) •••••••••• August 1, 1958 1,709,000 Pound 1,443,915* l„ye, rye flour, and rye meal ••••• 12 mos. from July 1, 1958 182,280,000 Canada 3,720,000 Other Countries Pound Pound 182,178,566* Butter substitutes, including butter oil, containing 45$ or more butterfat • •••••••• Calendar Year 1,200,000 Pound 1,199,991 5,525,000 741,000 234,000 Pound Pound Pound 5,489,039* Quota Filled Quota Filled Tung oil Nov. 1, 1958 Jan. 31, 1959 Argentina Paraguay Other Countries * - Imports through January 15. TREASURY DSPART&EK? Washington, _• C. I_H_DIAfE RSLSASS Tuesday, January 20> 195Q. A-420 PaSLIMINABJ DATA OK I2dFOR_3 FOR CONSUMPTION 0? UH_ANU_ACTUP_8 LEAD AND ZINC CHARG2ABLS TO THS OUOTAS ESTABLISHED BY PRESIDENTIAL PROCLAMATION NO. 3257 0? SEPTEMBER 22, 1953 QUARTERLY ffiJOTA PERIOD - January 1$ ^ _ ^rch 31, l%3 IMPORTS - January 1, 1959 - Hanuary 14, 195? ITEM ffiL Country of Production Australia ITEM 392 __________ V Lead bullion or base bullion, : j t lead in pigs and bar3, lead : j Lead-bsaring ores, fluo dust,: dross, realaiswd load, sera? : Zinc-bearing eras of all kinds,s Zino ia blocks, pigs, or slabs; aad sjattea : lead, aatiaonial load, antij except pyrites containing not : old and ^ora-out zino, fit aonial scrap typ* aatal, ovar 3 ^ of zino i only to bs raaanufaetarsd, zino j: all alloys orload, ocabinationa of :: dross, and zino ski__ings * laad n.s.p»f. : Oiartarly C_ota tGuart.rly Quota zOiartarly feiota Quarts riy C_io-£_ t Dutiabls. Lead Iaports i Dutiabla Load Icporta : Dutiable Zins Inoorts By Saight trports (Pounds) (Pounds) [pounds (Pounds) 10,080,000 3,278,364 23,680,000 3,037,766 ™ ??? Belgian Congo 5,440,000 Bslgiura and Luxsaburg (total) Bolivia Canada 5,040,000 3,151*592 13,440,000 2,633,212 15,920,000 1,921,840 66,430,000 14,350,322 Italy Msxioo Peru 16,160,000 9,118,339 On. So. Afrioa 14,830,000 7,376,779 Yugoslovia All other foreign oountrios (total) 6,560,000 PR2PAR2D IN THS BUREAU OF CUSTOMS 231,7^1 7,520,000 7,520,000 37,840,000 5,220,424 3,600,000 3,600,000 905,206 36,880,000 3,095*225 70,480,000 11,450,605 6,320,000 12,830,000 1,593,289 35,120,000 16,657,080 3,760,000 15,760,000 2,405,400 6,080,000 6,080,000 17>M0,000 17,840,000 6,030,000 6,080,000 0& TREASURY DEPARTMENT Washington, D . C. IMMEDIATE RELEASE A-420 Tuesday, January 20, 1959. PRELIMINARY DATA ON IMPORTS FOR CONSUMPTION 0? UNMANUFACTURED LEAD AND ZINC CHARGEABLE TO THE QUOTAS ESTABLISHED BY PRESIDENTIAL PROCLAMATION NO. 3257 OP SEPTEMBER 22, 195* ODARTERLY QUOTA PERIOD • January 1, 1959 - March 31, 1959 IMPORTS - January 1, 1959 - Hanuary 14, 1959 ITEM 392 . Lead bullion or base bullion, t lead in pigs and bars, load Lead-bearing ores, flue dust,: dross, reolai-ad lead, sorap and mattes : lead, antiasonial lead, anti: aonial scrap lead, type _etal, : all alloys or combinations of j lead n.s.p.f. Oiarterly^ota Faiartarly Quota : Dutiable Lead Imports : Dutlablt Lead Imports (Pounds) (PoundsJ" Country of Produotion Australia 10,080,000 3,278,364 23,680,000 ITEM 394 ITEM 393 ITEM 391 i j * : Zino-bearing ores of all kinds,: Zino ia blooks, pigs, or slabs; : except pyrites containing not : old end worn-out zino, fit : over 3# of zino : only to be reaanufactured, zino : * ' dross, and zino skimmings : :Quarterly Quota :Osartarly ©iota Imports Imports : By Weight : Dutiable Zins (Pounds) (Pounds) "" 3*037,766 5,440,000 Belgian Congo Belgium and Luxemburg (total) Bolivia 5,040,000 Canada 13,440,000 2,633,212 15,920,000 Mexico Peru 16,160,000 9,118,339 Un. So. Africa 14,880,000 7,876,779 Yugosloria 6,560,000 PB2PlR?n TN THE BUREAU OP CUSTOMS 7,520,000 37,840,000 5,220,424 3,600,000 3,600,000 905,206 3,151,592 1,921,840 66,480,000 14,350,322 Italy All other foreign countries (total) 7,520,000 231,761 36,880,000 3,095,225 70,480,000 11,450,605 6,320,000 12,880,000 1,593,289 35,120,000 16,657,080 3,760,000 15,760,000 2,405,400 6,080,000 6,080,000 17*840,000 17,840,000 *#oao,ooo 6,080,000 TREASURY DSPARTMEKT flaahtngton, D . C. V- ir.tfDIATE RELEASE A-419 Tuesday, January 20, 1959 PRELIMINARY DATA ON IMPORTS FOR CONSUMPTION 07 UNS-UJUFACTUKSD LEM) AND ZINC CHARGEABLE TO THE QUOTAS' ESTABLISHED BY PRESIDENTIAL PROCLAMATION NO, 3257 07 SEPTEMBER 22, 195« QUARTERLY QUOTA PERIOD - October 1, 1958 - December 31, 1953 IMPORTS - October 1, 1958 - December 31, 1958 ITEM 392 1 Lead"bullion or base bullion, : lead in pigs and bars, load Lead-boaring ores, flue duat,: droja, reolalnad load, oorap and mattes » lead, antluonlal load, anti: nonial scraporload, typa natal, : all alloys combinations of ITEM ^91 Country of Produotion Quarterly Quota Dutiable. Lead Imports "(p^undVJ Australia 10,080,000 10,080,000 ITEM 394 ITEM 393 : * : ' . J Zino-boaring ores of all kinds,: Zino ia blooks, pigs, or sia_s; : except pyrites containing not : old and worn-out zino, fit ovar 3 # of tlno 1 onlydross, to be and reaanufaotursd, zino zino skimmings :: 1 load n.a.p.f. 1 s&iartarly Quota :Quarterly Quota In?ort a 1 Put LibIa Zinc : Dufrl\bl» Laad (Pounds) 'jpFoundsX 23,680,000 Import* 5,440,000 Be led. Mia njid Luxemburg (total) Canada 5,040,000 13,440,000 13,440,000 Peru 16,160,000 16,160,000 On. So. Africa 14,880,000 14,860,000 Yugoslovia 6,560,000 PRSIPAR3D IN THE BUREAU OP CUSTOMS 5,440,000 7,520,000 7,520,000 37,840,000 37,340,000 3,600,000 3,600,000 3,428,980 15,920,000 15,920,000 66,430,000 66,480,000 Italy All other foreign oountries (total) Exports 23,680,000 Belgian Congo Bolivia tQuartsrly Quota 1 By ffel^ht (Pounds) 2,5^4,454 36,880,000 36,880,000 70,480,000 70,480,000 6,320,000 6,320,00c 12,880,000 12,880,000 35,120,000 35,120,000 3,760,000 3,760,00.0 15,760,000 12,000,151 6,080,000 6,080,000 17,840,000 ^,034,804 6*080,000 6,080,000 TREASORT DEPART-BUT Washington, D. C. 4'1 IMUSDIATE RELEASE Tuesday, January 20, 1959. A-419 PRELIMINARY DATA ON IMPORTS 90R CONSUMPTION OF UNMANUFACTURED LEAD AND ZINC CHARGEABLE TO THS QUOTAS ESTABLISHED BY PRESIDENTIAL PROCLAMATION NO. 3257 OF SEPTEMBER 22, 1958 QUARTERLY QUOTA PERIOD • October 1, 1958 - December 31, 1958 IMPORTS - Ooteber 1, 1958 - Deoember 31, I958 ITEM 391 Country of Produotion Australia ITEM 392 1 Lead bullion or base bullion, : lead in pigs and bars, lead Lead-bearing ores, flue dust,: dross, reclaimed lead, scrap and mattes : lead, antiaonial lead, antl: -onial scrap lead, type metal, * all alloys or combinations of -aartarly Quota »: Quarterly Quota lead n.s.p.f. Dutiable Lead Imports 2 Dutiable Lead Importa Pounds) (Pounds) 10,080,000 10,080,000 23,680,000 ITEM 394 ITEM ffl , : 1 : t : Zinc-bearing ores of all kinds,: Zino in blooks, pigs, or slabs; : except pyrites containing not : old and worn-out zino, fit : over 3^ of zino : only to be reaanufactured, zino : : dross, and zino skimmings :Oiartarly (_iota ::Quarterly Quota : : Dutiable Zins Imports : By Weight Imports (Pounds) (Pounds) 23,680,000 Belgian Congo 5,440,000 Belgium and Luxemburg (total) Bolivia Canada 5,040,000 7*520,000 7,520,000 37,840,000 37,840,000 3,600,000 3,600,000 70,480,000 70,480,000 6,320,000 6,320,000 35,120,000 35,120,000 3,760,000 3,760,000 3,428,980 13,440,000 13,440,000 15,920,000 15,920,000 66,480,000 66,480,000 Italy Mexico 36,880,000 Peru 16,160,000 16,160,000 Un. So. Africa 14,880,000 14,880,000 Yugoslovla All other foreign oountries (total) 6,560,000 PREPARED IN THE BUREAU OF CUSTOMS 5,440,000 2,5*4*454 36,880,000 12,880,000 12,880,OOQ 15,760,000 12,000,151 6,080,000 6,080,000 17,840,000 16,034,804 6,080,000 6,080,000 COTTON WASTES (In pounds) COTTON CARD STRIPS made-from cotton having--* staple of less than 1-3/16 inches in length, COMBER WASTE, LAP WASTE, SLIVER WASTE, AND ROVING WASTE, 'WHETHER OR NOT MANUFACTURED OR OTHERWISE ADVANCED IN VALUE_ Provided, however, that not more than 33-1/3 percent of the ouotas shall be filled by cotton wastes other than comber wastes made from cottons of 1-3/16 inches or more in staple- length in the case- of the- following countries*. United Kingdom, France, Netherlands, Switzerland, Belgium, Germany, and Italys : Country of Origin — : •* United Kingdom . " . . . . Cana <* a France • • British India . . . . . . Netherlands Switzerland . . . . . . . . Belgium ^apan China Egypt Cuba Germany Italy Established TOTAL QUOTA : Total Imports s Established s Imports l7 i Sept. 20, 1958, to : 33-1/3* of : Sept0 20, 1958 .-'* Jan. Ik* 1959 s Total Quota ; to Jan, 14, 1959 4,323,457 239,690 227,420 69,627 68,240 44,388 38,559 341,535 17,322 8,135 6,544 76,329 2_a____ 1,448,232 239,690 _ 9 557 '_, _, _ „ _. _ _ _. 6.580 1,441,152 75 go7 5,482,509 1,704,059 1,599,886 1/ Included .in total imports, column 2. Prepared in the Bureau of Customs, 1,441,152 - 22 747 14^796 _2!s53 _ _, 25,443 7!o88 6,580 ' 1,447,732 ____A.SURY DEPARTMENT Washington, D. C. ^MEDIATE RELEASE TUESDAY, JANUARY 2 0 . 1959. A-418 Preliminary data on imports for consumption of cotton and cotton waste chargeable to the quotas established by the President's Proclamation of September 5, 1939, as amended COTTON (other than linters) (in pounds) Cotton under 1-1/8 inches other than rough or harsh under 3/k" Imports September 20, 19^8 - January 14» 1959 Egypt and the AngloEgyptian Sudan 1 Per.;. British India China ;'.CXiCO , • Brazil • Union of Soviet Socialist Republics .. Argentina Haiti Ecuador 783,816 247,952 2,003,^83 1,370,791 8,883,259 618,723 9,672 8,883,259 618,723 475,12^ 5,203 237 9,333 5,018 — Established Quota Country of Origin Imnorts Established Quota Country of Origin Honduras Paraguay • Colombia Iraq British East Africa ... Netherlands E. Indies . Barbados l/Other British W. Indies Nigeria '.. 2/0ther British W. Africa 3/Other French Africa ... ~~ Algeria and Tunisia ... 752 871 124 195 2,240 71,388 21,321 5,377 16,004 689 1/ Other than Barbados, Bermuda, Jamaica, Trinidad, and Tobago. ' -^ther than Gold Coast and Nigeria. L-l 3/ Other than Algeria, Tunisia, and Madagascar. Cotton 1-1/8" or more Imports August 1, 1958 - January 14, 1959 Established Quota (Global) - 45,656,420 Lbs. Staple Length 1-3/8" or more I-5/32" or more and under I-3/8" (Tanguis) 1-1/8" or more and under 1-3/8" Allocation 39,590,778 Imports 39,590,778 1,500,000 967,802 4,565,642 4,565,642 Imuorts TKISAniJjRY DEPARTMENT Washington, D. C. _TZ IMMEDIATE RELEASE TUESDAY, JANUARY 20, 19^9. A-4lQ Preliminary data on import_ for consumption of cotton and cotton waste chargeable to the quotas established by the President's Proclamation of September 5, 1939, as amended COTTON (other than linters) (in pounds) Cotton under 1-1/8 inches other than rough or harsh under 3/4" Imports September 20, 19sft - January 14. 1959 ( (jljr 1 'tr,y oC Orlr. Ln stablished Quota Imports Country of Origin Established Quota K;:,ypt ruid the Anrjlo,, , ' l ,,;L 1 1 ••'™ ' ' ""< ™ T> rn.tl.. ., r .. 1L Lr h Lnd a ' ' ,,,.,.,,._ r;;"\? ;l,.ULl ;.•;.••:•: "!!m.°\.Tu ,, • Haiti. ..oc. ., ULr.t Republics ... Kcuador Ar-enUna Honduras . nonuuras 783,816 Paraguay '-M,^>Colombia • 2,003,'183 9,672 Iraq n'rj 'fJ " British East Africa ... G,^33,;^9 8,883,259 Netherlands E. Indies . 6 -»/ra 618,723 Barbados .5 2 0 l / ° t h e r B r i t 1 ^ W. Indies > 3 2/0ther British W. Africa kJ5922k Nigeria 2 5,018 37 __/Other French Africa ... q.PM _ ' oM_L_„ -,,._,_.. _,. ., 1* ! ' ' 9^333 Algeria and Tunisia ... \J Other than Barbados, Bermuda, Jamaica, Trinidad, and Tobago. ',_/ Other than Gold Coast and Nigeria. 3/ other than Algeria, Tunisia, and Madagascar. Cotton 1-1/8" or more Imports August l t 1958 - January 14_ 1959 Established Quota (Global) - 45,656,420 Lbs. Staple Length Allocation Imports ^'¥/L»or m re ° 1-5/32 or more and under 1-3/8" (Tanguis) 1-1/8" or more and under 1 3 8 " / " 39,590,778 39,596,778 1,500,000 967,802 4,565,642 4,565,642 nr> ,7 1P4 t£ 2.P40 71 388 _ 21 321 16,004 c'077 689 2,_(/ COTTON WASTES (In pounds) COTTON CARD STRIPS made from cotton having-a staple of less than 1-3/16 inches in length, COMBER WASTE, LAP WASTE, SLIVER WASTE, AND ROVING 7/ASTE, 'WHETHER OR NOT MANUFACTURED OR OTHERWISE ADVANCED IN VALUEt Provided, however, that not more than 33-1/3 percent of the quotas shall be filled by cotton wastes other than comber wastes made from cottons of 1-3/16 inches or more in staple length in the- case- of the following countries? United Kingdom, France, Netherlands, Switzerland, Belgium, Germany, and Italys Country of Origin United Kingdom • Canada France . . . . . . British India Netherlands Switzerland Belgium . • Japan . . . China . . . Egypt • • • Cuba . . . . Germany . • Italy . . . Established s Imports 33-1/3$ of s Sept. 20, 1958 Total Quota s to Jan. 14. 1959 Established TOTAL QUOTA Total Imports Sept. 20, 1958, to 3an. 14. 1959 4,323,457 239,690 227,420 69,627 68,240 44,388 38,559 341,535 17,322 8,135. 6,544 76,329 21,263 1,448,232 239,690 6,580 25,443 7,088 6,580 5,482,509 1,704,059 1,599,886 1,447,732 if Included in total imports, column 2. Prepared in the Bureau of Customs. 1,441,152 1,441,152 75,807 9,557 22,747 14,796 12,853 u TREASURY DEPARTMENT WASHINGTON, D.C. RELEASE A. M. NEWSPAPERS, Tuesday, January 20, 1959* A-KL7 The Treasury Department announced last evening that the tenders for two series of Treasury bills to be dated January 22, 1959, which were offered on January 15, were opened at the Federal Reserve Banks on January 19- Tenders were invited for $1,1*00,000,000, or thereabouts, of 91-day bills and for $1*00,000,000, or thereabouts, of 182-day bills. The details of the two series are as follows: 182-day Treasury bills maturing July 23, 1959 91-day Treasury bills maturing April 23, 1959 RANGE OF ACCEPTED COMPETITIVE BIDS: High Low Average Price Approx. Equiv. Annual Rate 99.300 99.230 99.233 2.769* 3.046* 3*035*- Price 9S.k5Qmf 98.330 98.366 Approx. Equiy. Annual Rate 3.050* 3.303* 3.233* a/ Excepting one tender of $200,000 91* percent of the amount of 91-day bills bid for at the low price was accepted 6 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: District Applied For Accepted : Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco $ $ ii j J\ Ji J• ii '> i i 3t J* ii $ 3,716,000 1*50,856,000 10,71*8,000 13,181,000 3,777,000 7,130,000 58,839,000 3,60l*,000 2,955,000 6,213,000 1,820,000 30,2ll*,O0O $ 3,716,000 285,756,000 5,868,000 13,181,000 3,777,000 7,130,000 35,839,000 3,604,000 2,955,000 6,213,000 1,820,000 30,214,000 $l,l*00,l*0l*,000b/jt $593,053,000 $l*OO,O73,000c/ TOTALS l*l*,7l*5,000 1,71*7,1*29,000 32,638,000 56,267,000 17,572,000 21^,655,000 219,673,000 31,885,000 19,31*9,000 51*, 636,000 21,91*8,000 103,872,000 $2,37li,669,000 3k,7ii5,000 924,637,000 17,638,000 51,267,000 17,572,000 2l*,355,000 1V7,67U,000 29,885,000 16,319,000 1*1,516,000 21,71*8,000 73,01*8,000 Applied For Accepted b / Includes $298,11*5,000 noncompetitive tenders accepted at the average price of 99.-33 c/ Includes $26,848,000 noncompetitive tenders accepted at the average price of 98.366 ,V BlSiSS A. H. KEWSPAFE8B, h w d a y . Janu.ry 80. 1 9 » . vy Th© Treasury Department announced last evening that the tenders for two series of Treasury bills to be dated January 22, 1959, which worm offered on January 15, were opened at the Federal Reserve Banks ©a January 19. Tenders were invited for 11,1*00,000,000, or thereabouts, of 91-day bills and for "400,000,000, or thereabouts, ef 182-day bills. The details of the two series are m followst f X-4ay Treasury bills maturing April 23, X9%9 um% 0? ACCEPTED COKFIKXITO B U B * High Low Average 182-day Treasury bills mm***** m? 23f Ifp frUm Approx. Equiv. Annual late Price $9,300 99.230 99*233 3.016* 3.03$* 98.1*58*/ 98.330 98*366 Squiv. Annual Bate 3*®m 3.303* 3.233* a/ Excepting one tender of #200,000 % percent of the amount of 91-day bills bid for at the low price was 6 percent of the amount of l82«day bills bid for at the low price was f©f*L TEHDEftS APF_»HD FOB AW ACCEPTS) Wt FRBIML R&8ER9B BISTBXOTSs District Applied For Boston Bsv fork Philadelphia Cleveland Richmond Atlanta Chisago fit. Louis Kansas City Bellas San Francisco # TOTALS yi,7i45„ooo X97k7M990OO 32,631,000 56,267,000 17,572,000 2lt,4||,000 219,673,000 31,815,000 19,31*9,000 51*,636,000 21,91*8,000 103,872,000 $2,37*1,669,000 Accepted 34,7^5,000 92k9637*0QO 17,638,000 51,267,000 17,572,000 2l*,355,O00 11*7,67^,000 29,885,000 16,319,000 1*1,516,000 21,71*8,00© n.m*m fi,i*OO,i*0k,000y Applied For I 3,7X6,000 1*50,856,000 10,71*8,000 13,181,000 3,777,000 7,130,000 58,839,000 3,60^,000 2995§9mo 6,213,000 1,820,000 30,2X1,000 1593,053,000 Accepted | 3,716,000 285,756,000 5,868,000 13,181,000 3,777,000 7,130,000 35,839,000 3,6Olif0GO 2,955,000 6,213,000 1,820,000 30,2ll*,00Q £1*00,073,0000/ hf Includes $298,11*5,000 noneompetitive tenders accepted at the average price of 99.233 if Includes $26,81*8,000 noncompetitive tenders accepted at the average price of 9P.366 _. 4 In more recent months — partly as a result of concern over deficit Government spending — public attention again shifted to the possibilities of hedging against a future inflation. On the basis of these rapidly changing attitudes toward governmental responsibilities, one would think that our entire economy reversed direction completely every six months or so. We know that this does not occur. An exaggerated view of the ups and downs was reflected in these exaggerated demands for Government action last spring. The Government followed a course of what we believe was prudent action and did not resort to the degree of Government intervention which was urged by some. Such Intervention not only would have added to an already huge deficit but would have given the public a false philosophy as to what caused the recession to end. Events have demonstrated the basic resilience of our free economy into which have been built powerful automatic stabilizers. We have a clear responsibility as a Nation to adhere to prudent programs which contribute to sustained growth in our economy over the long term. One of the most important of these is the maintenance of fiscal soundness. Imprudent spending and a complacent attitude toward deficit financing could in time destroy the very basis of our economic growth — the confidence of Americans in the future of America. 0O0 - 3 security nor any of the other programs which the Federal Government now provides. Fiscal soundness is important in all periods, but particularly during this unknowable length of time when the demands of the world situation require preparedness — military, economic and scientific — of highly costly proportions. The President's program, embodying a balance between revenues and expenditures,provides for our security, for necessary services, and for many services which are both desirable and are a proper function of the Federal Government. But it cannot attempt to provide to the maximum extent every service which some groups might deem desirable, without leading to trouble. Not even the most prosperous country can afford to provide at one time everything which may seem desirable — any more than a family can accomodate in a current spending program everything each member may consider desirable. Inflation not only brings serious hardships to those of our citizens who are least able to protect themselves against a rising cost of living but weakens the economy as a whole. We must come to a wider and clearer understanding of the dangers to our economy of the way in which continuing large Government deficits contribute to inflation. When the Government spends more than it takes in, it must borrow the difference in order to pay its bills. To the extent that these funds can be obtained only by resorting to borrowing from the commercial banking system, there is real inflationary pressure. Heavy competition from private borrowers for available savings usually means that a large part of a deficit must be financed through issuing securities to the banking system. This results in an equivalent Increase in bank deposits — thus increasing the money supply. To add to the supply of money without adding to the amount of goods and services tends to decrease the value of our money. In that way deficit financing generates inflationary pressures sooner or later. This is why the Administration has prepared an expenditure program for thecoming fiscal year which can be financed on the basis of expected revenues without resorting to borrowing operations which would ultimately force up the prices people must pay for things. Let me add one final observation. You will remember that back in the spring and summer of 1957 there was widespread evidence of a strong groundswell for economy in this country. The demands were loud that the Government should spend less. A few months later there was just as strong a demand that the Government should spend more in order to promote recovery. ^7 - 2 business community. They are realistic, barring some major shifts in the economy in the next 18 months, which we do not now foresee. In contrast to last year the economy is now moving forward with strength. Recovery from the recession has reached encouraging proportions. The assumptions used in our estimates are consistent with a gross national product for calendar 1959 of more than $470 billion. This would compare with actual gross national product of $440 billion in calendar 1957 and what now looks like about $437 billion for calendar 1958. We believe, incidentally, that the annual rate in the last quarter of 1958 has climbed to over $450 billion. Industrial production has been moving forward steadily since the low of last April. Personal income, which fell off relatively little during the recession, has risen substantially in recent months. As the budget indicates, we are now estimating receipts for fiscal 1959 at $68 billion instead of the $67 billion estimated in the midyear review last September. The expected pickup in revenue in fiscal i960 is strongly supported by the experience of the fiscal year 1955 and 1956, which reflect the recovery from the recession of calendar year 195^-. After adjustment is made for comparability In corporate tax payment dates, the increase in revenues from 1955 to 1956 was $9.3 billion — more than the increase between a recession and recovery year we are estimating in the current budget. Considering all the evidence of recovery which exists in the economy today, we are confident that our revenue estimates are well founded. It is also Interesting to note that the annual new year forecasts in the business and financial press in recent weeks have almost unanimously predicted a substantial recovery in corporate profits in calendar 1959. The revenue estimate is based on continuance of the present tax rates on corporation profits and certain excise taxes for another year beyond their present expiration date of June 30. 1959. Failure to do this would result in revenue losses of $2 billion for the fiscal year — a decline of $1 billion in each category. On the matter of the budget in general I would like to reaffirm what the message says about the great value of being able to do the things that Government must do within our current income. There is nothing academic about the need for fiscal soundness in the Federal Government. It Is of basic significance to the lasting health of our economy — and without that health we can have neither military TREASURY DEPARTMENT Washington FOR USE WITH THE RELEASE OF THE BUDGET AT NOON MONDAY, JANUARY 19, 1959 A-4l6 STATEMENT BY SECRETARY ANDERSON AT BUDGET PRESS CONFERENCE, ROOM 4121, MAIN TREASURY, 11:30 A.M., SATURDAY, JANUARY 17, 1959 The budget of the United States Government is of vital importance to every citizen. In this budget for fiscal I960 the President has set forth a program under which the Government can do what is essential and proper for it to do and still live within its income. I know that the Director of the Budget has discussed with you the details of the expenditures side of this budget. My main purpose today is to discuss the revenue estimates. The following assumptions for calendar years 1958 and 1959 were used in making our revenue estimate of $77.1 billion for fiscal I960, an increase of $9.1 billion over our present estimate for fiscal 1959: Calendar Year 1958 1959 (In Billions") Personal income $353.5 $37^ Corporate profits .^ 36.5 ^7 As a basis for comparison between the two years it is interesting to note what has happened to corporate profits. It now appears that calendar 1958 may total about $36.5 billion, reflecting a substantial recovery from the low annual rates of $31.7 billion and $32.0 billion In the first and second quarters. It is even more interesting to note that the third quarter rate rose to $37.9 billion and that the fourth quarter rate is now indicated at $44 billion, or only $3 billion less than we are estimating for calendar 1959. These assumptions and estimates reflect firm confidence in our economy. They represent our best judgment based upon checking as closely as possible throughout the Government and the private TREASURY DEPARTMENT Washington FOR USE WITH THE RELEASE OF THE BUDGET AT NOON MONDAY. JANUARY 19. 1959 A-4l6 STATEMENT BY SECRETARY ANDERSON AT BUDGET PRESS CONFERENCE, ROOM 4121, MAIN TREASURY, 11:30 A.M., SATURDAY, JANUARY 17, 1959 The budget of the United States Government is of vital importance to every citizen. In this budget for fiscal I960 the President has set forth a program under which the Government can do what is essential and proper for it to do and still live within its income. I know that the Director of the Budget has discussed with you the details of the expenditures side of this budget. My main purpose today is to discuss the revenue estimates. The following assumptions for calendar years 1958 and 1959 were used in making our revenue estimate of $77.1 billion for fiscal I960, an increase of $9.1 billion over our present estimate for fiscal 1959: Calendar Year 1958 1959 Tin Billions) Personal income $353.5 $374 Corporate profits 36.5 47 As a basis for comparison between the two years it is interesting to note what has happened to corporate profits. It now appears that calendar 1958 may total about $36.5 billion, reflecting a substantial recovery from the low annual rates of $31.7 billion and $32.0 billion in the first and second quarters. It is even more interesting to note that the third quarter rate rose to $37.9 billion and that the fourth quarter rate is now indicated at $44 billion, or only $3 billion less than we are estimating for calendar 1959. These assumptions and estimates reflect firm confidence in our economy. They represent our best judgment based upon checking as closely as possible throughout the Government and the private 2 business community. They are realistic, barring some major shifts in the economy in the next 18 months, which we do not now foresee. In contrast to last year the economy is now moving forward with strength. Recovery from the recession has reached encouraging proportions. The assumptions used in our estimates are consistent with a gross national product for calendar 1959 of more than $470 billion. This would compare with actual gross national product of $440 billion in calendar 1957 and what now looks like about $437 billion for calendar 1958. We believe, incidentally, that the annual rate in the last quarter of 1958 has climbed to over $450 billion. Industrial production has been moving forward steadily since the low of last April. Personal income, which fell off relatively little during the recession, has risen substantially in recent months. As the budget indicates, we are now estimating receipts for fiscal 1959 at $68 billion instead of the $67 billion estimated in the midyear review last September. The expected pickup in revenue in fiscal i960 is strongly supported by the experience of the fiscal year 1955 and 1956, which reflect the recovery from the recession of calendar year 195k. After adjustment is made for comparability in corporate tax payment dates, the increase in revenues from 1955 to 1956 was $9*3 billion — more than the increase between a recession and recovery year we are estimating in the current budget. Considering all the evidence of recovery which exists in the economy today, we are confident that our revenue estimates are well founded. It is also interesting to note that the annual new year forecasts in the business and financial press in recent weeks have almost unanimously predicted a substantial recovery in corporate profits in calendar 1959. The revenue estimate is based on continuance of the present tax rates on corporation profits and certain excise taxes for another year beyond their present expiration date of June 30, 1959. Failure to do this would result in revenue losses of $2 billion for the fiscal year — a decline of $1 billion in each category. On the matter of the budget in general I would like to reaffirm what the message says about the great value of being able to do the things that Government must do within our current income. There is nothing academic about the need for fiscal soundness in the Federal Government. It is of basic significance to the lasting health of our economy — and without that health we can have neither military - 33w^wi__S l-°f ?*• 0 t ^ e r Pr?Srfns w h l c h t h e Federal Government S t S J S S ? ! - Fiscal soundness Is important in all periods, but of the world ^ f l n S . t h i s unknowable length of time when the demands and seienti_ift U a ^ ° ^ ^ ? U i r e P f e P a r e d n e f s ~ military, economicana sciemjiiic — of highly costly proportions. The President's program, embodying a balance between revenues and expenditures,provides for our security, for necessary serviced and for many services which are both desirable and are a p r o p S ' function of the Federal Government. But it cannot attempt to provide to the maximum extent every service which some groups might deem desirable, without leading to trouble. Not eVen the # ost prosperous country can afford to provide at one time everything which may seem desirable -- any more than a family can accomodate in a<-current spending program everything each member may consider ci@siraD_.e. Inflation not only "brings serious hardships to those of our citizens who are least able to protect themselves against a rising cost of living but weakens the economy as a whole. We must come to a wider and clearer understanding of the dangers to our economy of the way in which continuing large Government deficits contribute to inflation. When the Government spends more than it takes in, it must borrow the difference in order to pay its bills. To the extent that these funds can be obtained only by resorting to borrowing from the commercial banking system, there is real inflationary pressure. Heavy competition from private borrowers for available savings usually means that a large part of a deficit must be financed through issuing securities to the banking system. This results in an equivalent increase in bank deposits — thus increasing the money supply. To add to the supply of money without adding to the amount of goods and services tends to decrease the value of our money. In that way deficit financing generates inflationary pressures sooner or later. This is why the Administration has prepared an expenditure program for the coming fiscal year which can be financed on the basis of expected revenues without resorting to borrowing operations which would ultimately force up the prices people must pay for things. Let me add one final observation. You will remember that back in the spring and summer of 1957 there was widespread evidence of a strong groundswell for economy in this country. The demands were loud that the Government should spend less. A few months later there was just as strong a demand that the Government should spend more in order to promote recovery. In more recent months — partly as a result of concern over deficit Government spending — public attention again shifted to the possibilities of hedging against a future inflation. On the basis of these rapidly changing attitudes toward governmental responsibilities, one would think that our entire economy reversed direction completely every six months or so. We know that this does not occur. An exaggerated view of the ups. and downs was reflected in these exaggerated demands for government action last spring. The Government followed a course of what we believe was prudent action and did not resort to the degree of Government intervention which was urged by some. Such ^ intervention not only would have added to an already huge deficit^ jut would have given the public a false philosophy as to what caused the recession to end. Events have demonstrated the basic resilience of our free economy into which have been built powerful automatic stabilizers. We have a clear responsibility as a Nation to adhere to prudent programs which contribute to sustained growth in our economy over the long term. One of the most important of these is the maintenance of fiscal soundness. Imprudent spending and a complacent attitude toward deficit financing could in time destroy the very basis of our economic growth — the confidence of Americans In the future of America. 0O0 3 f2fj 31 TREASURY DEPARTMENT WASHINGTON, D.C. IMMEDIATE RELEASE, Friday, January 16, 1959. A-415 The Treasury today announced a 70 percent allotment to savings type investors, a 35 percent allotment to commercial banks for their own account, and a 15 percent allotment to all other subscribers for the current cash offering of $3/4 billion, or thereabouts, of 4 percent Treasury Bonds of 1980. As previously announced,all subscriptions up to a maximum of $25,000 were allotted in full where accompanied by 100 percent payment at the time of entering the subscriptions. All other subscriptions for $5,000 were allotted in full. Subscriptions for more than $5,000 were allotted not less than $5,000. In addition to the amount allotted to the public $50 million of these bonds were allotted to Government Investment Accounts. Reports received thus far from the Federal Reserve Banks show that subscriptions total almost $1.8 billion, of which about $720 million were received from subscribers in the savings type investor groups, $470 million from commercial banks for their own account and $610 million from all others. Details by Federal Reserve Districts as to subscriptions and allotments will be announced when final reports are received from the Federal Reserve Banks. frlQMW. Jtoigry 16. X959. A-4^ The Treasury today announced a 70 percent allotment to savings type investors, t% 35 percent allotment to CGBiaerci&l banks for their own account, and a 1% percent allotment to all oth^r subscribers for the current cash ofteriagof $3/4 billion, or thereabouts, of 4 percent Treasury Bonds of 1980. As previously announced^all eubscriptionis up to e maximum of $25,000 were allotted in full where accompanied by 100 percent payment at tne tim of entering the subscriptions. All other subscriptions for $5,000 were allotted la full. Subscriptions ffcr more than $$,000 were allot*** ®@t lees tbm $S,GQ0- Xn addition t© mm mmmmt a l l e t M t® «*e gtfbU* #S© sdlio© of ttmm bono* were mll®ttm& to mmmemt Mmmtmmt Jk*mmm*m* Reports rmomimd tbm ffcr from tb» tfmmrml Keaertre Banks show that ^bmoripti&nm total mlmmt fa.. 8 bilMm, of wi&efc about #780 a O U o n wer® vM*l«-d fe®ft iMlMerlbar* 1® th® aaatoga type laudator groups, |4?0 tCllioa from twmmroiml bmafc* far tfeair own mooamxt and $610 sdllion from mil others. Betalls by Inderal Reserve districts as to subscriptions mod allotments will be announced when final reports are rmmivmd fro® the federal Iteeerve Banks. ELK-lby :afh IMMEDIATE RELEASE, Thursday, January 15, 1959. A-4l4 During December 1958, market transactions in direct and guaranteed securities of the government for Treasury investment and other accounts resulted in net purchases by the Treasury Department of $43,663,500. 0O0 TREASURY DEPARTMENT iA WASHINGTON, D.C IMMEDIATE RELEASE, •y -3e&em&em?~^&, 1958. uw^^.~^mw*-**/*m ****?»* *<* t y*fi During Wo¥ombor 1958, market transactions in direct and guaranteed securities of the government for Treasury investment and other accounts resulted in net purchases by the Treasury Department of tBDii'iJisoo./Vj; 6 4 5,S"oo 0O0 January 6, 1959 _. ' JTSCTH •!•• [M I*. . MQOEEs In direct and guaranteed securities and other accounts daring the month tha Inlawing traasaetioaa were of the OovearnEieBt for Trmmimry *t Deeaatfcer, lf$S* $4?t696i5OO.00 4,033.000>00 $43,663,500.00 Sales mm i M m 11 n > i' ••» II n»iif n « » ( S g d ) 0m*cx.m.4a X. mm-VtHffimti Chief, Investments Branch of ©epoalts & Jjweetmenis MMMAOU TREASURY DEPARTMENT - * • WASHINGTON, D.C. IMMEDIATE RELEASE, Wednesday, January 14, 1959. A-413 The Treasury today announced a 47 percent allotment on subscriptions in excess of $100,000 for the current cash offering of $2-1/2 "billion, or thereabouts, of 3-1/4 percent Treasury Notes of Series B-1960. Subscriptions for $100,000 or less will he allotted in full. Subscriptions for more than $100,000 will be allotted not less than $100,000. Reports received thus far from the Federal Reserve Banks show that subscriptions total about $5,508 million. Details by Federal Reserve Districts as to subscriptions and allotments will be announced when final reports are received from the Federal Reserve Banks. Allotments of the 4 percent Treasury Bonds of 1980 will be announced at a later date. IMMEDIATE RELEASE, Wednesday, January 14, 19§9. _tie freasury today announced a 47 percent allotment on subscription© in excess of $100,000 for tbm current ©ash offering of $t*l/g billion, or thereabouts, of 3-1/& percent freasury Hotes of Series B-3J60. Subscriptions for $100,©OO or leas wiH be allotted in full* Subscription® for more than $100,000 will be -allotted not leas than $100,000. Report© received thus t*x from the Federal Reserve Banks show that subscriptions total abdut- $S,S08 million. Details by Federal .Heaerve Districts as to subseripfeions and allotiaents will be mmovLnoed vhon final reports are received from the Federal Reserve Bank©. - 2 the amount and price range of accepted bids. Those submitting 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, noncompetitive tenders for $200,000 or less for the 91-day bills and noncompetitive tenders for $50,000 or less for the 182-day bills without stated price from any one bidder will be accepted in full at the average price (in three decimals) of 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 22, 1959, in cash or other immediately available funds or in a like face amount of Treasury bills maturing January 22, 1959. Cash and exchange tenders will receive equal treatment. Cash adjustments will be made for differences between the par value of maturing bills accepted in exchange and the issue price of the new bills. The income derived from Treasury bills, whether Interest or gain from the sale or other disposition of 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 treatment, as such, under the Internal Revenue Code of 195^. The bills are subject to estate, inheritance, gift or other excise taxes, whether Federal or State, but are exempt from all taxation now or hereafter imposed on the principal or Interest thereof by any State, or any of the possessions of the United States, or by any local taxing authority. For purposes of taxation the amount of discount at which Treasury bills are originally sold by the United States is considered to be interest. Under Sections 45^ (b) and 1221 (5) of the Internal Revenue Code of 195*1- the amount of 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 companies) 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 oOo return is made, as ordinary gain or loss. Treasury Department Circular No. 4l8, Revised, and this notice, prescribe the terms of the Treasury bills and govern the conditions of their issue. Copies of the circular may be obtained from any Federal Reserve Bank or Branch. TO 0*3 OC RELEASE A.M. NEWSPAPERS, Thursday, January 15, 1959* A-412 The Treasury Department, by this public notice, invites tenders for two series of Treasury bills to the aggregate amount of $1,800,000,000, or thereabouts, for cash and in exchange for Treasury bills maturing January 22, 1959, in the amount of $ 1*799,712,000, as follows: 91-day bills, for $1,400,000,000, or thereabouts, to be dated January 22, 1959, and to mature April 23, 1959. 182-day bills, for 1400,000,000, or thereabouts, to be dated January 22, 1959, and to mature July 23. 1959. 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. They will be issued in bearer form only, and in denominations of $1,000, $5,000, $10,000, $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 o'clock p.m., Eastern Standard time, Monday, January 19, 1959. Tenders will not be received at the Treasury Department, Washington. Each tender must be for an even multiple of $1,000, and in the case of competitive tenders the price offered must be expressed on the basis of 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. 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 of 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. Immediately after the closing hour, tenders will be opened at the Federal Reserve Banks and Branches, following which public announcement will be made by the Treasury Department of 2J TREASURY DEPARTI-I3KT Washington A-* RELEASE A.M. NEWSPAPERS, Thursday, January 15, 1959 & The Treasury Department, by this public notice, invites tenders for two series of Treasury bills to the aggregate amount of $1,800,000,000 , or thereabouts, for —i cash and in exchange for Treasury bills maturing r^\ 7 T January 22, 1959 , in the amount of $ 1,799.712,000 , as follows: 3*: 91 -day bills, for $ 1,400,000,000 dated January 22, 1959 , or thereabouts, to be , and to mature April 25, 1959 182 -day bills, for $ 400,000,000 , or thereabouts, to be dated January 22, 1959 , and to mature July 25, 1959 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. They will be issued in bearer form only, and in denominations of $1,000, $5,000, $10,000, $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 o'clock p.m., Eastern Standard time, Monday, January 19, 1959 , . —__—____———_____________________________ Tenders will not be received at the Treasury Department, Washington. Each tender must be for an even multiple of $1,000, and in the case of competitive tenders the price offered must be expressed on the basis of 100, with not more than three - 2 - ^ t _._. Sggfc decimals, e. g., 99.92!?. 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. Others than banking institutions will not be permitted to submit tenders except for their own account. Tenders will be received without deposit from incor- porated banks and trust companies and from responsible and recognized dealers in investment securities. Tenders from others must be accompanied by payment of 2 percent of 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. Immediately after the closing hour, tenders will be opened at the Federal Reserve Banks and Branches, following which public announcement will be made by the Treasury Department of the amount and price range of accepted bids. Those submitting 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, noncompetitive tenders for $200,000 or less for the 91-day bills and noncompetitive tenders for $£0,000 or less for the 182-day bills without stated price from any one bidder will be accepted in full at the average price (in three decimals) of 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 22, 1959 . ^ casn or other ___________ immediately available funds or in a like face amount of Treasury bills maturing January gg 1959 Cash and exchange tenders will receive equal treatment. Cash adjustments will be made for differences between the par value of maturing bills accepted in exchange and the issue price of the new bills. The income derived from Treasury bills, whether interest or gain from the sale or other disposition of the bills, does not have any exemption, as such, and loss XXX3C ,. from the sale or other disposition of Treasury bills does not have any special treatment, as such, under the Internal Revenue Code of 1954. The bills are subje to estate, inheritance, gift or other excise taxes, whether Federal or State, bu are exempt from all taxation now or hereafter imposed on the principal or inter thereof by any State, or any of the possessions of the United States, or by any local taxing authority. For purposes of taxation the amount of discount at which Treasury bills are originally sold by the United States is considered to be int Under Sections 454 (b) and 1221 (5) of the Internal Revenue Code of 1954 the am of discount at which bills issued hereunder are sold is not considered to accru until such bills are sold, redeemed or otherwise disposed of, and such bills are cluded from consideration as capital "assets. Accordingly, the owner of Treasury bills (other than life insurance companies) issued hereunder need include in hi income tax return only the difference between the price paid for such bills, whe oh original issue or on subsequent purchase, and the amount actually received ei upon sale or redemption at maturity during the taxable year for which the retur made, as ordinary gain or loss. Treasury Department Circular Wo. 418, Revised, and this notice, prescribe the terms of the Treasury bills and govern the conditions of their issue. Copies of the circular may be obtained from any Federal Reserve Bank or Branch. 2U TREASURY DEPARTMENT WASHINGTON. D.C. RELEASE A. M. NEWSPAPERS, Tuesday, January 13, 1959* A4*ll The Treasury Department announced last evening that the tenders for two series o Treasury bills to be dated January 15, 1959, which were offered on January 8, were opened at the Federal Reserve Banks on January 12. Tenders were invited for ^.,600,000,000, or thereabouts, of 91-day bills and for $1*00,000,000, or thereabouts, of 182-day bills. The details of the two series are as follows; RANGE OF ACCEPTED 91-day Treasury bills : 182-day Treasury bills COMPETITIVE BIDS j maturing April 16, 1959 t maturing July 16, 1959 Price Approx. Equiv. Annual Rate s j 99.325 99.280 99,290 2.670% 2.81*8* 2.808* 1 1 t Price Approx. Equiv. Annual Rate t High Low Average 9S.kQ0af 98.158 98.1*66 3.007* 3.05$ 3.03i$ a/ Excepting three tenders totaling $2,1*50,000 22 percent of the amount of 91"*d_y bills bid for at the low price was accepted 31* 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? District Applied For Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco $ TOTALS Accepted ? Applied For 26,702,000 J I 7,318,000 36,702,000 $ 1,518,191,000 1,006,521,000 % 51*2,725,000 1*2,679,000 27,679,000 t 7,11*0,000 51i,567,000 5k,567,000 : 28,251i,000 li*,211,000 li*,211,000 % 2, li 80,000 3l*,030,000 • 33,1*06,000 ; 27,1*81*,000 21*3,1*81,000 201*, 1*81,000 % 70,867,000 29,106,000 29,106,000 \ li,l60,000 15,1*29,000 15,1*29,000 : i*,3li5,000 1*7,1*01,000 1*1*, 905,000 1 6,771,000 26,901,000 26,901,000 : 1,981,000 116,099,000 116,099,000 % 30,257,000 $2,178,797,000 %19 600,007, OOOb/s $733,782,000 Accepted $ 7,318,000 265,359,000 2,11*0,000 2i*,95l*,000 2,180,000 19,961*,000 1*0,227,000 I*,l60,000 l*,3ii5,00C) 5,821,000 1,981,000 21,777,000 |1*00,526,000c/ b / Includes $300,325,000 noncompetitive tenders accepted at the average price of 99.290 "of Includes $30,851,000 noncompetitive tenders accepted at the average price of 98.1*66 1 Q '4 I HXIASE A. *?. mmpArtm. Tuesday, January 13, 19S9. The Treasury Department announced last evening that the tenders for two series ef Treasury bills to be dated January 15, 1959, which were ottmrmd on January 8, were mymmd at the Federal ieeerve Banks on January 12. Tenders were invited for 6,600,000,000, or thereabouts, of 91-day bill* awl tor §1*00,000,000, or thereabouts, of 182-day bills. The details of the two series are as follows 1 um% OP ACCEPTS;:*PETITIVI BIDS 1 91~day Treasury bills Maturing April 16, 1959 Price Approx. Bquiv. Annual Bate — — — — High Low Average 99.325 99.280 99»290 linn 11 m i — M > 182-day Treasury bills Maturing July 16, 1959 Price Approx. Equiv. Annual Rate 9B.k&0&f 98.1*56 98.1*56 3.007* 3.050% 3.031** IIIIIIII mm 2.670* 2.31*8% 2.1 a/ Excepting three; tenders totaling $2,1*50,000 72 percent of the amount of 91-day bills bid for at the low price was accepted 3k percent of the amount of 182-day bills bid for at the low price was accepted TOTAL TSMBBPS APPLIEL FOR Ail) ACCEPTED BT FBI-fiRAL RESERVE DISTRICTSt Applied For District Accepted Applied For Accepted mmm%mmmmmmmm^mmmm*9mmmm9mmmmmmmi I 36,702,000 1,518,191,000 1*2,679,000 514,567,000 lii,211,000 3lt,03O,0O0 21*3,1*81,000 29,106,000 15,1*29,000 1*7,1*01,000 26,901,000 116,099,000 Boston New fork Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco 12,178,797,000 TOTALS I 26,702,000 1,006,521,000 27,679,000 51*,567,0O0 U*,211,000 33,1*06,000 20^,li8l,OOO 29,106,000 l5,li29,OO0 ^4,905,000 26,901,000 116,099,000 fl,600,007,OQOb/t \ 7,318 000 5*i2,725 000 7,3itO 000 28,251* 2,1*80 000 27,1*81* 000 70,867 1*,260 000 l*,3l»5 6,771 000 1,981 30s257_QQ0 1733,782,000 m^mmmm*m*9mmmm*9mm I 7,318,000 265,359,000 2,11*0,000 2U,951*,ooo 2,1*80,000 19,96l*,000 1*0,227,000 I*,l60,000 l*,3l45,000 5,821,000 1,981,000 21,777,000 t!*00,526,000c/ bf Includes $300,325,000 noncompetitive tenders accepted at the average ^rice of 99.290 c/ Includes 130,851,000 noncompetitive tenders accepted at the average price of 98.1*66 - f a , ^ T M - STATUTORY DEBT LIMITATION AS O F DECEMBER 31, 1958 1* «*. y Washington, J a n . 1 2 , 1 9 5 9 Section 21 of Second Liberty Bond Act, as amended, provides that the face amount of obligations issued under authority of that Act, and the face amount of obligations guaranteed as to principal and interest by the United States (except such guar* anteed obligations as may be held by the Secretary of the Treasury), "shall not exceed in the aggregate $283,000,000,000 (Act of September * • « " - " " - -'-• - -* --- —-•-* -J! »—.—-*!— _•— c JCi :__ .u redemption value c shall be consider* __ _ period beginning on February 26, 1958 and ending June 30, 1959, the above limitation ($283,000,000,000) shall be temporarily increased by $5,000,000,000. TotalThe facefollowing amount that be outstanding at anyofone time tablemay shows the face amount obligations outstanding and the face amount which$288,000,000,000 can still be issued under this limitation : Outstanding* Obligations issued under Second Liberty Bond Act, as amended Interest-bearing: Treasury bills $29,748,224,000 Certificates of indebtedness Treasury notes ._ BondsTreasury * Savings (current redemp. value) Depositary. Investment series Special FundsCertificates of indebtedness Treasury notes Treasury bonds Total interest-bearing Matured, interest-ceased Bearing no interest: United States Savings Stamps Excess profits tax refund bonds Special notes of the United States: Internat'l Monetary Fund series Total 36,364,400,000 2 6 , 0 7 1 . 527 . 0 0 0 $ 92,184,151,000 83,352,402,150 5 1 | 1 9 1 * 9 ^ 5 »763 203 . 301,500 9,0-7,-43.000 143,764,792,413 22,262,057,000 15,640,581,000 6,937,500,000 44,840,138,000 2 8 0 ,789 ,081,413 900,335»958< 50,908,421 870,073 757,000,000 Guaranteed obligations (not held by Treasury): Interest-bearing: 108,152,050 Debentures: F.H.A Matured, interest-ceased ___ 625.500 Grand total outstanding ,A , Balance face amount of obligations issuable under above authority, 808,778,494 282,498,195,865 108,777,550 •1 •L c t _ r> Li- -. v.. D e c e m b e r 3 1 , 1 9 5 8 Reconcilement with Statement of the Public Debt .....,;. (Date) (Daily Statement of the United States Treasury J?.e.SSSS?e.3r...rfQif....i25§ ) (Date) OutstandingTotal gross public debt , Guaranteed obligations not owned by the Treasury. Total gross public debt and guaranteed obligations. Deduct - other outstanding public debt obligations not subject to debt limitation A-410 282.606.973,415 5,393,026,585 282,922,423,584 108,777,550, 283,031,201,13^ 424,227,719. 282,606,973,^15 17 STATUTORY DEBT LIMITATION A S OF DECEMBER 31, 1958 Jan. 1 2 , 1959 Washington, Section 21 of Second Liberty Bond Act, as amended, provides that the face amount of obligations issued under authority of that Act, and the face amount of obligations guaranteed as to principal and interest by the United States States (except (except such such guargu ,000 anteed obligations as may be held by the Secretary of the Treasury), "shall not exceed in the aggregate $283,000,000,( current (Act of September 2, 1958; U.S.C., title 31, sec. 757b), outstanding at any one time. For purposes of this section the corn any obligation obligation issued issued on on a a discount discount basis basis which which is is redeemable redeemable prior prior to to maturity maturity at at the the option option of ot the tne holt holder redemption value of any shall be considered as its face amount." The Act of February 26, 1958, (P.L. 85-336 85th Congress) provides that during the period beginning on February 26, 1958 and ending June 30, 1959, the above limitation ($283,000,000,000) shall be temporarily increased by $5,000,000,000. The following table shows the face amount of obligations outstanding and the face amount which can still be issued under Total face amount $288,000,000,000 this limitation : that may be outstanding at any one time OutstandingObligations issued under Second Liberty Bond Act, as amended Interest-bearing: Treasury bills $29,748,224,000 Certificates of indebtedness Treasury notes BondsTreasury * Savings (current redemp. value) Depositary. Investment series Special FundsCertificates of indebtedness Treasury notes Treasury bonds Total interest-bearing Matured, interest-ceased Bearing no interest: United States Savings Stamps Excess profits tax refund bonds Special notes of the United States: Internat'l Monetary Fund series Total 36,364,400,000 26.071.527,000 83 , 352 ,402 ,150 51,191,945»763 203,301,500 9.017,143.000 22,262,057,000 15,640,581,000 6,937,500,000 $ 92,184,151,000 143,7-4,792,413 44.840,138,000 280 ,789,081,413 900,335,958 50,908,421 870,073 757,000,000 Guaranteed obligations (not held by Treasury): Interest-bearing: Debentures: F.H.A 108,152,050 Matured, interest-ceased OCQ,_-00 Grand total outstanding .A Balance face amount of obligations issuable under above authority, Reconcilement with Statement of the Public Debt, 808,778,494 282,498,195,865 1Q8,777>550 282,606,973.415 5,393,026,585 December 31, 1958 "(Date") (Daily Statement of the United States Treasury v J DeceniberJlf OutstandingTotal gross public debt Guaranteed obligations not owned by the Treasury. Total gross public debt and guaranteed obligations. Deduct - other outstanding public debt obligations not subject to debt limitation A-410 1^8 ) (Date) ~ 282,922,423,584 108,777,550 283,031,201,134 424,227.719 282,606,973,415 - 2 1 f-: Where subscribers in this group (except States, political subdivisions or instrumentalities thereof, and public pension and retirement and other public funds) elect to pay for such bonds in installments, delivery of 5$ of the total par amount allotted will be withheld until payment for the total amount allotted has been completed. Tne offering of $2-l/2 billion of 3-l/4# Treasury notes will be open only on January 12. A cash down-payment of 2$ will be required from nonbank subscribers to this offering. Subscriptions from commercial banks to the notes will be limited in each case to an amount not exceeding 50$ of the combined capital, surplus and undivided profits of the subscribing bank. Commercial banks and other lenders are requested to refrain from making unsecured loans, or loans collateralized in whole or in part by the bonds or notes subscribed for, to cover the deposits required to be paid when subscriptions are entered, and banks will be required to make the usual certification to that effect. All subscribers to the bonds or the notes are required to agree not to purchase or to sell, or to make any agreements with respect to the purchase or sale or other disposition of these issues, until after January 12 in the case of the notes and after January 13 in the case of the bonds. Any subscriptions for either issue addressed to a Federal Reserve Bank or Branch, or to the Treasurer of the United States, and placed in the mail before midnight of the respective closing dates will be considered as timely. The new bonds and notes may be paid for by credit in Treasury tax and loan accounts. oOo - 21 ,• mm-, y Where subscribers in this group (except States, political subdivisions or instrumentalities thereof, and public pension and retirement and other public funds) elect to pay for such bonds in installments, delivery of 5$ of the total par amount allotted will be withheld until payment for the total amount allotted has been completed. The offering of $2-l/2 billion of 3-l/4$ Treasury notes will be open only on January 12. A cash down-payment of 2$ will be required from nonbank subscribers to this offering. Subscriptions from commercial banks to the notes will be limited in each case to an amount not exceeding 50$ of the combined capital, surplus and undivided profits of the subscribing bank. Commercial banks and other lenders are requested to refrain from making unsecured loans, or loans collateralized in whole or in part by the bonds or notes subscribed for, to cover the deposits required to be paid when subscriptions are entered, and banks will be required to make the usual certification to that effect. All subscribers to the bonds or the notes are required to agree not to purchase or to sell, or to make any agreements with respect to the purchase or sale or other disposition of these issues, until after January 12 In the case of the notes and after January 13 in the case of the bonds. Any subscriptions for either issue addressed to a Federal Reserve Bank or Branch, or to the Treasurer of the United States, and placed in the mail before midnight of the respective closing dates will be considered as timely. The new bonds and notes may be paid for by credit in Treasury tax and loan accounts. oOo BflffiDIATE RELEASE, Thursday, January 8, 1959. A-U09 The Treasury Department announced today that on Monday, January 12, it will offer for cash subscription $750 million, or thereabouts, of 4$ Treasury Bonds of 1980, to be dated January 23, 1959, and to mature February 15, 1980. The bonds will be issued at a price of 99$ of face value, to yield about 4.07$. In addition, there will be offered $2-1/2 billion, or thereabouts, of 16-month Treasury notes bearing interest at the rate of 3-l/4$, and to be issued at a price of 99-3/4$ of face value, to yield about 3.45$. The notes will be dated January 21, 1959, and will mature May 15, 1960. The offering of the 4$ bond is designed primarily to meet the investment needs of savings-type investors, such as pension and retirement funds, insurance companies, savings banks, and other savings institutions. To encourage subscriptions from such sources, they will be permitted to pay for bonds allotted to them in installments up to April 23 (not less than 25$ by January 23, the issue date; 50$ by February 24j 75$ by March 23; and full payment by April 23). Amounts allotted to other classes of subscribers must be paid for in full on January 23. A H subscriptions from others than commercial banks for their own account and from States, political subdivisions or instrumentalities thereof and public funds must be accompanied by a cash down-payment of 15$ at the time of the subscription. Commercial bank subscriptions will be limited to an amount not exceeding 4$ of the combined amount of time certificates of deposit (but only those issued in the names of individuals, and of corporations, associations, and other organizations not operated for profit) and of savings deposits, or 10$ of the combined capital, surplus and undivided profits, whichever is greater. In addition to the amount offered for public subscription, the Secretary of the Treasury may allocate up to $75,000,000 of these bonds to Government Investment Accounts. Subscription books for this issue will be open on January 12 and January 13. In order to encourage wide distribution of the 4$ bonds of 1980, subscriptions up to a maximum of $25,000 if they are accompanied by 100$ payment at the time the subscriptions are entered will be allotted in full to all subscribers. The Secretary of the Treasury reserves the right to reject or reduce any subscription, to allot less than the amount of bonds applied for, and to make different percentage allotments to various classes of subscribers. Savings-type investors who may subscribe to the 4$ bonds on a deferred payment basis ares Pension and Retirement Funds - public and private Endowment Funds Insurance Companies Mutual Savings Banks Fraternal Benefit Associations and Labor Unions' Insurance funds Savings and Loan Associations Credit Unions Other Savings Organizations (not including commercial banks) States, Political Subdivisions or instrumentalities thereof, and Public Funds - 2 the amount and price range of accepted bids. Those submitting 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, noncompetitive tenders for $200,000 or less for the 91-day bills and noncompetitive tenders for $50,000 or less for the 182-day bills without stated price from any one bidder will be accepted in full at the average price (in three decimals) of 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 15, 1959. in cash or other immediately available funds or in a like face amount of Treasury bills maturing January 15, 1959. Cash and exchange tenders will receive equal treatment. Cash adjustments will be made for differences between the par value of maturing bills accepted in exchange and the issue price of the new bills. The income derived from Treasury bills, whether interest or gain from the sale or other disposition of 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 treatment, as such, under the Internal Revenue Code of 1954. The bills are subject to estate, Inheritance, gift or other excise taxes, whether Federal or State, but are exempt from all taxation now or hereafter imposed on the principal or Interest thereof by any State, or any of the possessions of the United States, or by any local taxing authority. For purposes of taxation the amount of 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 of 1954 the amount of 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 companies) 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 oOo return is made, as ordinary gain or loss. Treasury Department Circular No. 4l8, Revised, and this notice, prescribe the terms of the Treasury bills and govern the conditions of their issue. Copies of the circular may be obtained from any Federal Reserve Bank or Branch. TO 0*S OC RELEASE A.M. NEWSPAPERS, Thursday, January 8, 1959. A-408 The Treasury Department, by this public notice, invites tenders for two series of Treasury bills to the aggregate amount of $ 2,000,000,000, or thereabouts, for cash and in exchange for Treasury bills maturing January 15, 1959. in the amount of $1,803,037,000, as follows: 91-day bills, for $1,600,000,000, or thereabouts, to be dated January 15, 1959. and to mature April 16. 1959. 182-day bills, for $400,000,000, or thereabouts, to be dated January 15, 1959. and to mature July l6, 1959. 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. They will be issued in bearer form only, and in denominations of $1,000, $5,000, $10,000, $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 o'clock p.m., Eastern Standard time, Monday, January 12, 1959. Tenders will not be received at the Treasury Department, Washington. Each tender must be for an even multiple of $1,000, and in the case of competitive tenders the price offered must be expressed on the basis of 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. Others than banking institutions will not be permitted to submit Renders 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 of 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. Immediately after the closing hour, tenders will be opened at the Federal Reserve Banks and Branches, following which public announcement will be made by the Treasury Department of 1 3 mm, — » TREASURY DEPARTl-lENT Washington A- RELEASE A.M. NEWSPAPERS, Thursday, January 8, 1959 The Treasury Department, by this public notice, invites tenders for two series of Treasury bills to the aggregate amount of $ 2,000,000,000 , or thereabouts, fo ______ cash and in exchange for Treasury bills maturing January 15, 1959 , in the amount of $ 1,803,057,000 . as follows: 91 -day bills, for $ 1,600,000,000 , or thereabouts, to be ________ '_S©$dated January 15, 1959 , and to mature April 16, 1959 182 -day bills, for $400,000,000 , or thereabouts, to be -430. ipse? dated January 15, 1959 , and to mature July 16, 1959 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. They will be issued in bearer form only, and in denominations of $1,000, $5,000, $10,000, $100,000, $500,000 and $1,000,00 (maturity value). Tenders will be received at Federal Reserve Banks and Branches up to the closing hour one-thirty o'clock p.m., Eastern Standard time, Monday, January 12, 1959 *»* Tenders will not be received at the Treasury Department, Washington. Each tender must be for an even multiple of $1,000, and in the case of competitive tenders th price offered must be expressed on the basis of 100, with not more than three - 2 - 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. Others than banking institutions will not be permitted to submit tenders ex- cept for their own account. Tenders will be received without deposit from incor- porated banks and trust companies and from responsible and recognized dealers in investment securities. Tenders from others must be accompanied by payment of 2 p cent of the face amount of Treasury bills applied for, unless the tenders are ac panied by an express guaranty of payment by an incorporated bank or trust compan Immediately after the closing hour, tenders wiU be opened at the Federal Reserve Banks and Branches, following which public announcement will be made by the Treasury Department of the amount and price range of accepted bids. Those submitting tenders will be advised of the acceptance or rejection thereof. The Secretary of the Treasury expressly reserves the right to accept or reject any o 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 les for the °l-day bills and noncompetitive tenders for $5>0,000 or less for the 182 bills without stated price from any one bidder will be accepted in full at the average price (in three decimals) of accepted competitive bids for the respectiv issues* Settlement for accepted tenders in accordance with the bids must be made or completed at the Federal Reserve Bank on January 15, 1959 , in cash or other immediately available funds or in a like face amount of Treasury bills maturing January 15. 1959 Cash and exchange tenders will receive equal treatment, B5 Cash adjustments will be made for differences between the par value of maturing bills accepted in exchange and the issue price of the new bills. The income derived from Treasury bills, whether interest or gain from the sale or other disposition of the bills, does not have any exemption, as such, and los 1JDSXK from the sale or other disposition of Treasury bills does not have any special treatment, as such, under the Internal Revenue Code of 1954. The bills are subje to estate, inheritance, gift or other excise taxes, whether Federal or State, but are exempt from all taxation now or hereafter imposed on the principal or intere thereof by any State, or any of the possessions of the United States, or by any local taxing authority. For purposes of taxation the amount of discount at which Treasury bills are originally sold by the United States is considered to be inte Under Sections 454 (b) and 1221 (5) of the Internal Revenue Code of 1954 the amo of 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 cluded from consideration as capital "assets. Accordingly, the owner of Treasury bills (other than life insurance companies) issued hereunder need include in his income tax return only the difference between the price paid for such bills, whe oh original issue or on subsequent purchase, and the amount actually received ei upon sale or redemption at maturity during the taxable year for which the return made, as ordinary gain or loss. Treasury Department Circular No. 418, Revised, and this notice, prescribe the terms of the Treasury bills and govern the conditions of their issue. Copies of the circular may be obtained from any Federal Reserve Bank or Branch. TREASURY DEPARTMENT i " - * ™ — * * * *». — _ _____S_____ K_______________________3__ WASHINGTON, D.C. RELEASE A. M. NEWSPAPERS, Tuesday, January 6, 1959* A-UO? The treasury Department announced last evening that the tenders for two series of Treasury M i l s to be dated January 8, 1959, which were offered on December 31, 1958, were opened at the Federal Reserve Banks on January 5, 1959. Tenders were invited for $1,600,000,000, or thereabouts, of 91~day bills and for $400,000,000, or thereabouts, of JJ2^iay bills. The details of the two series are as follows: RafflSE OF ACCEPTED COMlREflTIVE BIDS; Average 91-day Treasury bills maturing April 9, 1959 182-day Treasury bills maturing July 9, 1959 Price Approx. Equiv. Annual Rate Price Approx. Equiv. Annual Rate 99.331 99*319 99.323 2.647$ 2.694$ 2.678$ 98.537 98.494 98.504 2.891$ 2.979$ 2.959$ 58 percent of the amount of 91-day bills bid for at the low price was accepted 27 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: District Applied For Accepted Applied For Accepted Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco \ 33,971,000 1,835,317,000 33,832,000 49,872,000 22,390,000 35,428,000 259,894,000 26,537,000 17,315,000 56,710,000 17,878,000 120,084,000 \ 23,721,000 1,061,677,000 18,032,000 kk,522,000 22,386,000 32,108,000 197,654,000 26,537,000 14,747,000 40,891,000 17,478,000 100,584,000 $ 5,392,000 474,986,000 6,ii86,000 27,488,000 2,304,000 9,013,000 121,111,000 2,559,000 2,476,000 6,380,000 2,863,000 18,994,000 $ 2,892,000 219,001,000 1,486,000 22,488,000 2,304,000 9,013,000 112,001,000 2,559,000 2,476,000 6,011,000 2,863,000 16,994,000 TOTALS 12,509,228,000 $1,600,337,000a/s $680,052,000 $400,088,000b/ a/ Includes $264,846,000 noncompetitive tenders accepted at the average price of / Includes $22,294,000 noncompetitive tenders accepted at the average price of 98.504 o RELEASE A . M . NEWSPAPERS, Tuesday, January 6_ 1959. A-*"7 the treasury Department announced last evening that the tenders for two series of treasury bills to be dated <?a*»iary 8, 1959, which were offered on December 31, 1958, wtre opened at the Federal Reserve Banks on January 5$ 1959. tenders were invited for 11,600,000,000, or thereabouts, ef 91-day bills and tor $400,000,000, or thereabouts, of 182-day bills. The detail® of the two series are as followss JUNGE OF ACCfP?ID 9X-dmy Treasury bills *&my treasury bills eOWPEtltlfE BIDSt maturing April 9, If5$ maturing July 9, 1959 mmmmmmmmwmmmmmmmimmmnl!km.^mn« i\~ ~. ,imgi umiiiui.mn.iim Approx. Sc__tv. Annual lite MMMMIMMM. High Low Average $8 percent ef the 27 percent of the 2.647$ 2.694* 99,331 99.319 99.323 t.$7H Price Approx. Equiv, Annual late 98*537 98.494 98.504 2.8?4*. 2*979$ 2.959$ of 91~day bills bid fer at the low price was accepted of l82~day bills bid fer st the lew price was accepted TOTAL TEASES APf&IlB F M AMD ACCKKIB SI F I M A ! HESIUfS M S f fUCTS* Accepted District Boston Mew Tork Philadelphia Cleveland Richmond Atlanta Chicago St• Louis Minneapolis Kansas City Dallas San tOtALS Francisco I 33,971,000 1,835,317,000 33,832,000 49,872,000 22,390,000 35,428,000 259,894,000 26,537,000 17,315,000 56,710,000 17,878,000 120,084.000 12,509,228,000 : I I fJ,7_l,G00 1 1,061,677,000 t 18,032,000 * t 44,522,000 1 22,386,000 '. 32,108,000 t 197,654,000 f 26,537,000 t 14,747,000 1 40,891,000 j * 17,478,000 100.584,000 't $1,600,337,000a/ Appxie© ror Accepx-ea 1 5,392,000 474,986,000 6,486,000 27,488,000 2,304,000 9,013,000 121,111,000 2,559,000 2,476,000 6,380,000 2,863,000 18,994,000 # 2,892,000 219,001,000 1,486,000 22,488,000 2,304,000 9,013,000 112,001,000 2,559,000 2,476,000 6,011,000 2,863,000 16,994.000 1680,052,000 $400,088,000b/ Includes $264,846,000 noncompetitive tenders accepted at the average price of 99.323 \\f Includes #22,294,000 noncompetitive tenders accepted at the average price of 98.504 t W JAY W. GLASMANN Assistant General Counsel PLACE AND DATE OF BIRTH: Ogden, Utah, December 1, 1924. FATHER: Blaine V. Glasmann --- MOTHER: Phyllis 0. Glasmann. EDUCATION: Public Schools of Ogclen, Utah. Attended the University of Utah at Salt Lake City, Utah, and Idaho State at Pocatello, Idaho. Harvard Business School, MBA degree, 1947. Harvard Law School, LLB degree, 1950. MARRIED: Sharlene Brewer, Ogden, Utah, 1951. CHILDREN: John, Reed, Jaymie and Jill. BRIEF CAREER SUMMARY: Served during World II as an officer in the U.S. Naval Reserve. 1950 - Admitted to the Utah Bar. 1951 - Admitted to the District of Columbia Bar. 1951 - Associated with the law firm of Ivins, Phillips and Barker of Washington, D. C. 1957 - Member of law firm of Ivins, Phillips and Barker. MEMBERSHIPS: Beta Theta Pi Fraternity, Utah State Bar, and American Bar Association. HOME: 5905 Lenox Road, Bethesda, Maryland. January, 1959. TREASURY DEPARTMENT WASHINGTON, D.C. RELEASE A.M. NEWSPAPERS, Wednesday, January 7, 1959. A-406 Secretary of the Treasury Robert B. Anderson today announced a new staff appointment and revision of duties in the Department's tax policy activities following the resignation of Dan Throop Smith as Deputy to the Secretary in charge of Tax Policy matters. Mr. Smith's resignation becomes effective January 15, 1959. Under Secretary Fred C. Scribner, Jr. will have responsibility for the over-all supervision of Treasury tax matters. Mr. David A. Lindsay will continue to serve as Assistant to the Secretary and Head of the Legal Advisory Staff. He Will, In addition, take over some of the responsibilities of Mr. Smith with respect to tax policy matters. The Tax Analysis and the International Tax Staffs, formerly directed by Mr. Smith, will be directed by Henry C. Wallich, Assistant to the Secretary, who joined the Treasury on October 1, 1958. Mr. Wallich1s other duties include that of advisor on matters relating to debt management and long-term tax policy. At the same time the Secretary announced the appointment of Jay W. Glasmann as Assistant General Counsel of the Treasury Department. He will serve also as special assistant to Mr. Lindsay. Mr. Glasmann was born in Ogden, Utah and attended the Universities of Utah and Idaho State. He received his M.B.A. degree in 1947 from Harvard Business School and his law degree in 1950 from Harvard Law School. Mr. Glasmann has been a partner with the Washington firm of Ivins, Phillips and Barker. (Biographical sketch attached.) REI_SASB A.ft. N_MWAFBI1SWednesday, January 7, 1959. A-406 Secretary of the Treasury Robert B, Anderson today announced a new staff appolntsient and revision of duties in tlm ©apartmentr® tax policy activities following the reilgnatiGn of Den Throop Smith as Deputy to the Secretary in charge of Tax Policy matter®. Mr. Smith's resignation becomes effective 3mmm&$ 15 # 1959. gnder See rotary Fred 0. Sorltaer* Jr. will haw responsibility for the over-all supervision of ^gg|f Treasury tax matters. Mr. Bavld k. Lindsay will continue to serve as Assistant to the Secretary and Head of the I*egal Advia02*r Staff. He will, In addition, take over some of the responsibilities of Mr. Smith with respect to tsjg policy natters. The Tax Analysis and the International fax Staffs, foweriy directed by Mr. Smith, will be directed by Henry 0. Wallich, Assistant t# the Secretary, who joined the Treasury on October 1, 1958. Mr. Wallichfs other duties Include that of advisor on matters relating to debt management and long-term tax policy. At the same tine the Secretary announced the appointment of Jay W. 01asmann as Assistant §©neral Counsel of the Traasu_*y Department. lie will serve alee as special assistant to Mr. Lindsay. Mr. dlasmann was born in Ogien, Utah and attended the Universities of Utah and Idaho State. He received his M.B,A. degree in 19^7 from Harvard Business School and his law degree in 1950 from Harvard Law School» Mr. Glasmann has been a partner with the Washington firm of Ivins, Phillips and Barker. ^Biographical sketch attached.) oOo .^jNl*. %llA^fU*^*L/W FOR RELEASE A. M. NEWSPAPERS es_iay_ January 6f. 1959 A-406 Secretary of the Treasury Robert B. Anderson today announced a new staff appointment and revision of duties in the Department's tax policy activities following the resignation of Dan Throop Smith as Deputy to the Secretary in charge of Tax Policy matters. Mr. Smith's resignation becomes effective January 15, 1959. _, y] c y^^y2^<->-^ ^' ' f Mr. David A. Lindsay will continue to serve as Assistant to the Secretary and Head of the Legal Advisory Staff. He will, in addition, takin e»tu^h^_responglb11It%3. s *of Mr i _fim_.t_i with respect to tax policy'^tters'^^^^z^^^^S^^Sl^ The Tax Analysis and the International Tax Staffs, formerly directed by Mr. Smith, will be directed by Henry C. Wallich, Assistant to the Secretary, who joined the Treasury on October 1, 1958. Mr. Wallich1s other duties include that of advisor on matters relating to debt management and long-term tax policy. At the same time the Secretary announced the appointment of Jay W. Glasmann:; as Assistant General Counsel of the Treasury Department. He will serve also as special assistant to Mr. Lindsay, Mr. Glasmann was born in Ogden, Utah and attended the Universities of Utah and Idaho State. He received his M.B.A. degree in 19^7 from Harvard Business School and his law degree in 1950 from Harvard Law School. Mr. Glasmann has been a partner with the h^*%&y Washington firm of Ivins, Phillips and t Barker. ru. I' r U-L--t^-^':^'V"» $y<Li-^,^£.-y 0O0 * JAYW. GLASMAM Assistant General Counsel u PLACE AND DATE OF BIRTH: Ogden, Utah, December 1, 192k. FATHER: Blaine V. Glasmann MOTHER: Phyllis 0. Glasmann. EDUCATION: Public Schools of Ogden, Utah. Attended the University of Utah at Salt Lake City, Utah and Idaho State at Poeatello, Idaho. Harvard Business ____ School, VBA degree, 19h7. Harvard Lair School, LLB degree, 1950. MARRIED: Sharlene Brewer, Ogden, Utah, ' <y •_,' / CHILDREN: John, Reed, Jaymie and Jill. BRIEF CAREER SUMMARY: _a__i±iB_3_Served during World II as an officer in the U.S. Naval Reserve 1950 - Admitted to the Utah Bar 19f?l - Admitted to the District of Columbia Bar 1951 - Associated with the law firm of Ivins, Phillips and Barker of Tfashington, D« C« 1957 - Member of law firm of Ivinf, Phillips and Barker MEMBERSHIPS: Beta Theta Pi fraternity, Utah State Bar, and American Bar Association. HOME : gCj 0 jT L JtA^iyiL (fc-(C January, 1959 f Bethesda, Maryland 7 January 2, 195? My dear Mr. Secretary*. In accordance with our conversation of eteveraL months ago, X c.n submitting wy 'resignation m Z*mpnty to the Secretary of thetfreasvoy*effective January 15# X do this with real regret* '£ho privilege of close association with you and your predecessor, Secretary itaphrey, end with ugr friends in the Treasury and those concerned with tax legislation in the Congress, has bsan of tawamarable interest and has given J?,O g^est oatiofactlon. Your consideration for your associates has made tho work here most pleasant and rewarding. But 1 have already stayed far beyond the time I originally intended, «md aftor six years, 1 wu3t for personal reasons ask to be rollC'T^d.* It is especially gratifying to rco to have continued until it 1 P one© more possible to plan the Government1 a financial operation under a balanced budget. Tour firm determination to avoid _33tJi_Q tax reductions last spring end to restore a balanced budget for the next fiscal year have b©en an inspiration to your colleagueo* If, at some future time, I can- be of any assistance in carrying forward the wise economic policies and tax programs of tills Administration, to which X ©m mo dedicated, I shall consider it a privilege to be called on. Very elncerely yours, fsf Dan Throop Smith Dan Throop Smith Honorable Robert Bm Anderson Secretary of the Treasury o January 59 1959 Dear Dans It is with reluctance and a genuine fooling of regret that I am acceding to your request and accepting your resignation as Deputy to the Secretary to bo effective January lf>, 1959* Because of your ability, your integrity, and your devotion to duty, you have boon of invaluable assistance to mo &xid the Treasury* I am vory sorry that it is ncceesaiy for our close association to terminate. Hoover, I understand your reasons for resigning and must accept your decision. I 011 estreBicly grateful to you for your great personal sacrifice in extending your stay ~lth tho Treasury far longer than you originally planned. It ijould bo very difficult indeed to equal your record of acco'o pllshmonts during the past six years. Before I cane to ths Treasury, George Humphrey told mo about tho invaluable a_3istance you had given him and tho outstanding job you did in connection with tho revision of the Internal Revenue Code, for which you wore honored by an av;ard of tho Exceptional Civilian Service gold nodal. Since then, I havo been greatly inrpreased with your capacity to undertake and handle EO effectively tho various Important and very difficult assignments which have boon yours. You havo anple reason to bo proud of your excellent contributions in connection with our tax legislative and international tax treaty programs. While I am fully aware of tho many long hours of hard work you devoted to these programs, I am sure the results achieved will always bo a source of satisfaction to you. This Administration has been stronger bocauso of your service in it. I appreciate more than I can say your off or to be of further assistance to tho Treasury. Your offer Is accepted. Because of your experience in the tax troaty field, I would appreciate your serving as a Treasury Consultant in connection with tho tax treaties wo will bo negotiating with foreign countries in the near future. You are going to be missed by your many friends in the Treasury and I know they Join mo in wishing you every success in your future undertakings and many long years of tho best of health and happiness. Kindest regards to you and Mrs. Smith, and many, many thanks for tho excellent assistance you have given mo. Sincerely, (signed) Robert B, Anderson Mr. Dan Throop Smith Deputy to the Secretary Treasury Department TREASURY DEPARTMENT BE?,".-1 ;•••';:• \ a. w i « w : u — t r e t — ^ g w a ^ ^ ^ ^ m i mi n i - • — — • — — MI WASHINGTON, D C . RELEASE A.M. NEWSPAPERS, Tuesday, January 6, 1959. A-405 Secretary of the Treasury Robert B. Anderson today announced his acceptance of the resignation of Dan Throop Smith as Deputy to the Secretary, to be effective January 15. In his letter to Mr. Smith, Secretary Anderson asked him to continue to serve as a Treasury Consultant in connection with tax treaties the Department will be negotiating with foreign countries in the near future. In an exchange of correspondence the Secretary told Mr. Smith he accepted the resignation "with reluctance and a genuine feeling of regret." The Secretary cited Mr. Smith's record since January 1953 when Mr. Smith was appointed an Assistant to the Secretary. "It would be very difficult indeed to equal your record of accomplishments," he said. Mr. Smith will continue as Professor of Finance at Harvard University. In January, 1957. Mr. Smith was named Deputy to the Secretary. In this position he assisted the Secretary on matters of tax policy. He was praised by Secretary Anderson and George Humphrey, the previous Secretary of the Treasury, for his outstanding work in the revisions of the Internal Revenue Code, for which Mr. Smith was presented the Treasury's Exceptional Civilian Service Gold Medal Award. He contributed greatly to the Treasury's tax legislative and international tax treaty programs. Mr. Smith is a native of Chicago and was graduated from Stanford University. He joined the Harvard faculty in 1930 and received his Ph.D. degree from that University. He has been Professor of Finance at the Harvard Graduate School of Business Administration since 19^5. He is the author of several books and articles dealing with taxation and business. Secretary Anderson said that details on the continuation of the responsibilities discharged by Mr. Smith would be announced shortly. oOo i ;i_SASE A.M. NEWSPAPERS, lesday, January t?, 1#5S». A-405 Secretary of the Treasury Robert B. Anderson today announced his acceptance of the resignation of Dan Throop Smith as Deputy to the Secretary, to be effective January 15. In his letter to Mr. Smith, Secretary Anderson asked him to continue to serve as a Treasury Consultant in connection with tax treaties the Department will be negotiating with foreign countries in the near future. In an exchange of correspondence the Secretary told Mr. Smith he accepted the resignation "with reluctance and a genuine feeling of regret." The Secretary cited Mb?. Smith's record since January 1953 when Mr. Smith was appointed an Assistant to the Secretary. "It would be very difficult indeed to equal your record of accomplishments," he said. Mr. Smith will continue as Professor of Finance at Harvard University. In January, 1957* Mr. Smith was named Deputy to the Secretary. In this position he assisted the Secretary on matters of tax policy. He was praised by Secretary Anderson and George Humphrey, the previous Secretary of the Treasury, for his outstanding work in the revisions of the Internal Revenue Code, for which MT. Smith was presented the Treasury's Exceptional Civilian Service Gold Medal Award. He contributed greatly to the Treasury's tax legislative and international tax treaty programs. Mr. Smith is a native of Chicago and was graduated from Stanford University. He joined the Harvard faculty in 1930 and received his Ph.D. degree from that University. He has been Professor of Finance at the Harvard Graduate School of Business Administration since 1945. He is the author of several books and articles dealing with taxation and business. Secretary Anderson said that details on the continuation of the responsibilities discharged by Mr. Smith would be announced shortly. oOo 00 '•«*~JL. S-v^-. y1 (6 V Secretary of the Treasury Robert B. Anderson today announced his acceptance of the resignation of Dan Throop Smith as Deputy to the Secretary, to be effective January 15. In his letter to Mr. Smith, Secretary Anderson asked him to continue to serve as a Treasury Consultant in connection with tax treaties the Department will be negotiating with foreign countries in the near future. In an exchange of correspondence the Secretary told Mr. Smith he accepted the resignation "with reluctance and a genuine feeling of regret." The Secretary cited Mr. Smith's record since January 1953 when Mr. Smith was appointed an Assistant to the Secretary. "It would be very difficult indeed to equal your record of accomplishments," he said. (L^-s^yy^triy^.^. Mr. Smith —~.y Will T^saa^n „_„_Jyfc«--ptv4H84fm as Professor Of ^^^^~g_-_? — at Harvard University* fB^i^~w____________?Jaa_k_ istant to the January .1957*/ In both y f positions he assisted the Secretary on matters of tax policy. He was praised by Secretary Anderson and George Humphrey, the previous Secretary of the Treasury, for his outstanding work in the ^ v i s i o n s of_the Internal Revenue C©&_, for which Mr. Smith was ^S__aT^the Exceptional Civilian Service Gold Medal Award. He contributed greatly togrmfr the Treasury's - 2 tax legislative and international tax treaty programs. Mr. Smith is a native of Chicago and was graduated ^£~__^ from HarvetrcUuniversity. He joined the Harvard faculty in 1930 and received his Ph.D Degree from that University. He has been Professor of Finance at the Harvard Graduate School of Business Administration ~inrr ITr! Vinii 1i nlrm alnember of"~^Q-a_»aduate &eh_fe_r uf Pub_r_o Adminlflfr^finn. He is the author of several.articles dealing with taxation A and business. Secretary Anderson said that details on the continuation of the responsibilities discharged by Mr. Smith would be announced shortly. January 2, 1959 My dmat mr. smormtmmyt Xm momrdmmm with our ^otw^raatlon of several wKmths **p9 I mm sttfemlttlag tgr real-nation as Deputy to the Secretary of the Treaswy, mffmtAm January 15* X do this with real nrngrmt. fh« p3&iriX®pi of ©lose association with you and your predecessor, _^w^«%ary i^slirey, and with agr friends in the Treasury and tltowt e^e^rned with ttir legislation in the Omgrmm, has b®«n of ljm_«mE_aft interest and has g i v ^ me gr«*fe *at$sl&eti©n. To«r consideration for your associates has made the work here wmt plmtmmtt and rewarding. Set 1 have already ataynd tmr beyond th# tJUs© 1 originally intended, and after six yta*»# 1 w e t for personal reasons ask to be relieved. It $M ««fa^glalSy graUfSrlag to nt te* have coiitinasd until it is once more p&mAbl* t© f&to the tbvaniMurt,« financial operation i®d«r a beXaaeed budget, lour H r a determination to avoid lastfis® tax tvAMfeiomi last spring and to restore a balanced budget for th« mast fiseal ymr have be*n an Inspiration to your If, at sossat tvt&m tins, I can be of any assistance in 'mmefimg forward the wise eooaoiaic policies and tax ]«*pttfcf^ of this Ads_inl«'femti^ai t# which I am so dedicated, I shallF consider it a privll«fe t* bm called on. f«ty sincerely yours, /s/ Dan Throop Smith Dan Throop Smith Honorable Robert B. Anderson Secretary of the Trsas_xy January 5, 1959 Dear Bans It is with relmotanoe and a genuine feeling of regr#fc thsfc I am acceding to y o w reo^sst and accenting yo%w resignation as Deputy to the Mowmtmzy to mm eff#@tiv# January 1% 1959. Because of your ability* y&& integrity, mod yonr d w t l o n to duty, ym have been of Invalmafele assistance to me mad the trmmmary. I am ^mry sorry that it Is neceasaiy for our olmm association to te^^inate. However, I understand your reasons for resigning and must aooa_*t your decision. 1 am txtrewly grateftil to you tm y w great fersonal sacrifice in sact^ding ymr stay with the freaswy far longer than you originally It would be very difficult indeed to e^al your rmoord of aooomplishments during the past mix years. Before X came to the Treasury, George Hntftesf told m about the invaluable assistance you had given him msui the outstanding J$b you did In connection with the revision of the Internal Bevemie Code, for ^hieh you were honored by an award *t the %@aptlonal O M l t m Service fold .medal, since than, I have been greatly impressed with your capacity to undertake and handle so effectively the various important and mry difficult assignments which have bmm yours, fou have s$ple reason to be prwsd of yoar excellent ©o_ftrii»ftlons In oonneetlon with our tax legislative and international taae treaty programs. WxHm I am folly aware of the many long hours of hard xmrfe you devoted to these programs, I am sure the results achieved will always be a source of satisfaction to you. This Administration has been stronger because of ysur service in it. I appreciate more than 1 can say your offer to be of further assistance to the Treasury, ^our offer is accepted. Because of your experience in the tax trmty field, I wonld appreciate your serving as a treasury Consultant in connection with the tax treaties we will be negotiating with forei^i countries in the near futura. ton are going to be missed by your many friends in the Treasury md I know they join mo in wishing ym every success in your future undertakings and many long years of the best of health and happiness. Kindest regards to you and Mrs. Smith, and many, many thanks for the excellent assistance you have given me. Sincerely, (signed) Robert B. Anderson Mr. Dan Throop Smith D«|mty to the Secretary Treasury Department Treas. HJ 10 .A13P4 v.116 U.S. Treasury Dept. Press Releases U.S. TREASURY LIBRARY 1 0031488