Full text of Press Releases of the United States Department of the Treasury : Volume 116

View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

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

SBOEDIAXS
Tuesday, March
i^ck|Si3f#f

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

3.386$

(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

KtJLMll A. If. tWMBfkFU™*
Friday, Har^h 27, 1959.
, - ,

-iJ

' " ' ~^-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 •

3.3561 •

•

percent of the aeount bid for at the low price was accepted)
Federal laaerva
District

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

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

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

^-'

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

) a n & noncompetitive tenders for $50,000 or less for the

July 2. 1959

—

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 >

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

""^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

• iiw

"11 '

•

7 m

111

ITH

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

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

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

. -

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

-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

-7.1
-2.3
-3W.8
-30.1
-260.9
6.9
-20.0
31.7
-2.5

-215.2

:•;

-900.0

-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

-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.

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

International Monetary
Fund
Iran
Italy
Japan .•••.••••
Netherlands
Philippines . . . . . .

-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

-215.?

!
!
"<

-900.0
-3.5

-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.

>:«>;§;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.

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-

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

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

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

*•«!•*

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-\
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^

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

3,603.000

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-

-^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 *\

--^
,.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.

< ^

^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

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

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)

- 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

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

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

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

: 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

Ovnadn.

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

28,772,834

70,480,000

61,994,548

6,320,000

9,296,158

35,120,000

31,521,806

3,760,000

3>107,941

17,840,000

6,080,000

7,87^,779

6,560,000

12,880,000

7,520,000

1,219,686

15,760,000

6,090,000

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

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

6,080,000

70,480,000

17,840,000

3,600,000

61,994,548

6,320,000

31,521,806

3,760,000

17,840,000

6,090,000

3,107,941

6,080,000

- 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

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

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

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«*»

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.

&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 &

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

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

Table II - Continued

Mineral

Manufactured
product or
products
Rough construction
Ceramics, Paints,
filler, lnsectldltes, other

Stone
Talc

Depletion
rate on
mineral

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-

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

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

34,385

41,516

145,306

103,790

5,190

2,699

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/

250

2,282

7,740

5,458

819

418

13,318
229,065

4,439
163,618

346

29,636

8,879
65,447

666

_ 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

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

1957 !!

1958

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

a
m

688

•

552

•

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

15,696
44,439
.
260,170
17*277,448 14,686,074

16,880

16,034,552

1,819,692

15,122,815 11,540,485

9,^55,366

220,000

3^0,047

396,598

^13,^95

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
^

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 .

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

R. D.

LOANS
770

$ Mil.
or Equiv.

1947

'49

DisburS.M300 199 68

'51

'53

'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

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

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)

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

-h-

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

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.

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 -

-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

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-

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 -

\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.

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

\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

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^

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

'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.

- 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

- 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

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

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

that CofSfdttee adjourned, it established a working group which inoluilt^
delegations frois fourteen of the countries of the original
twenty-one. This

TTO^.V.

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

^ " ^

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^~•-;

-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

- 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**

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:

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>«

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

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*

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.

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.

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

it»

W W _rUw__Bft t» 6. 1.86
l.a
1

on the

mx___H_ _>»ui __im__<t fe-ffts,

&—_-, 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-

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

^ *~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.

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,

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.

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 ,

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

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

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

•

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

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

' 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.

- 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)

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

• • •
•

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

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)

•<?.?

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

<+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

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

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

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

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

(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.

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

3,000,000 Gallon

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

- 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

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

$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

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«

19.

Fractions may not be used. It is urged that tenders be

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

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.

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

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

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

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,

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

- 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

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.

- 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

////////
////////
;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

W//////A

itffel
Mortgages\

State and Local
Securities
>y.>.>j.>.yx

i2__

^/.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____

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

'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

- 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

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

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:

$3$

, 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 -

_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

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/

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

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.

- 2-

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

ids ability a* aa

* ^ - ^ ® ^ ^ 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

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

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

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