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TREASURY DEPARTMENT
••M____-__-_______________________^^
WASHINGTON, D.C.
FOR IMMEDIATE RELEASE
June 2, 1961
TREASURY TO ISSUE "STRIP"
OF EIGHTEEN BILL ISSUES
The Treasury will borrow $1,800,000,000 to cover its current cash
requirements, including the amount necessary to redeem that portion of
the Treasury tax anticipation bills due June 22, 1961, which will not
be used in payment of income taxes due June 15.
This amount will be borrowed through the sale of a "strip" of additional amounts of eighteen series of outstanding Treasury bills maturing
weekly from August 3, 1961, to November 30, 1961. The additional amount
of each weekly series will be $100,000,000.
Tenders will be received for the additional bills on June 8, 1961,
and tenders will be required to be submitted in units of $18,000, or even
multiples thereof. A single price must be submitted for each unit of
$18,000, or even multiple thereof. Amounts issued on accepted tenders
will be applied equally to each of the eighteen separate issues included
in the offering.
Noncompetitive tenders for $180,000, or less (in even multiples of
$18,000), without stated price from any one bidder will be accepted in
full at the average price (in three decimals) of accepted competitive bids.
The additional bills will be issued on June 14, 1961, and payment
may be made by qualified depositaries through credit to Treasury tax and
loan accounts.
D-122
TREASURY DEPARTMENT
WASHINGTON, D.C.
June 2, 1961
FOR IMMEDIATE RELEASE
TREASURY OFFERS $1,800,000,000 STRIP OF WEEKLY BILLS
The Treasury Department, by this public notice, invites tenders for additional amounts of eighteen series of Treasury bills to an aggregate amount of
$1,800,000,000, or thereabouts, for cash. The additional bills will be issued
June 14, 1961, will be in the amounts, and will be in addition to the bills
originally issued and maturing, as follows:
Amount of
Additional
Issue
$ 100,000,000
100,000,000
100,000,000
100,000,000
100,000,000
100,000,000
100,000,000
100,000,000
100,000,000
100,000,000
100,000,000
100,000,000
100,000,000
100,000,000
100,000,000
100,000,000
100,000,000
100,000,000
$1,800,000,000
Original
Issue Dates
1961
February 2
February 9
February 16
February 23
March 2
March 9
March 16
March 23
March 30
April 6
April 13
April 20
April 27
May 4
May 11
May 18
May 25
June 1
Maturity
, Dates
1961
August 3
August 10
August 17
August 24
August 31
September 7
September 14
September 21
September 28
October 5
October 13
October 19
October 26
November 2
November 9
November 16
November 24
November 30
Days from
June 14, 1961
to Maturity
50
57
64
71
78
85
92
99
106
113
121
127
134
141
148
155
163
169
Amount
Outstanding
(in millions)
June 2, 1961
$1,601
1,601
1,600
1,600
1,501
500
500
500
500
500
500
400
400
500
500
501
500
500
The additional and original bills will be freely interchangeable.
Each tender submitted must be in the amount of $18,000, or an even multipl
thereof, and the amount tendered will be applied to each of the above series of
bills on the basis of the ratio of each series to the total of all series'. (For
example, an accepted tender for $90,000 will be applied $5,000 to the issue with
original date of February 2, 1961, and $5,000 to each of the additional weekly
issues through the issue with original date of June 1, 1961.)
The bills offered hereunder 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 bear,
D-123
2
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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 Daylight Saving time, June 8,
1961. Tenders will not be received at the Treasury Department, Washington. 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. A single price must be submitted for each unit of $18,000, or even multiple
thereof. A unit represents $1,000 face amount of each issue of bills offered
hereunder, as previously described. 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 and 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. Noncompetitive tenders for $180,000 or less (in even multiples of $18,000)
without stated price from any one bidder will be accepted in full at the average
price (in three decimals) of accepted competitive bids, provided, however, that
if the total of noncompetitive tenders exceeds $900,000,000, the Secretary of
the Treasury reserves the right to allot less than the amount applied for on a.
straight percentage basis with adjustments where necessary to the next higher
multiple of $18,000. Settlement for accepted tenders in accordance with the
bids must be made or completed at the Federal Reserve Bank in cash or other immediately available funds on June 14, 1961, 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 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
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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.
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Our own future importantly depends on them. The bill befo
you is essential to meet the need.
^^-^i-^H
- 22 together with $400 million from the Morld Bank and IDA, and
$1 billion from the United States; should enable India to proceed
in an orderly manner to a successful launching of its Third Plan.
A part of thg^^KBJ coxnmitm^rrtTnLs contingent upon^aadit/ional
y
iiunds Jb„eing x_>nSnfc_?l_eirTater in the year by otEer countries.
A similar meeting under the auspices of the World Bank is being
held this week to consider aid to Pakistan.
If the United States and the other industrialized countries
of the Free World fully cooperate in providing assistance to the
developing areas - based upon the self-help efforts of the
developing countries themselves - we can look forward to a decade?
of progress and development for the hundreds of millions of
people in other lands economically less fortunate than our own.
Their economic progress is to no small degree dependent on us.
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progress in coordinating and enlarging Free World assistance
to particular countries. The IBRD has pioneered in this effor
by enlisting the cooperation of a number of industrialized
countries in expending help to India and Pakistan. You are
familiar with the Bank's role in the Indus Waters project and
the financial participation by a number of its members in thi
important undertaking. The Bank has also played an important
role in stimulating and coordinating efforts by the economica
advanced countries to assist India's economic development by
convening consortium meetings on several occasions in the pas
Only last week it led a meeting of capital-exporting countrie
prepared to help in financing India's third Five-Year Plan.
>articipating
countries other than the U.S. indicated their willingness to
provide $780 million over the next two years. This amount,
7
20 the activity to be financetfis in accord wit>-£ection 201 of
X
the proposed bi>l and that the borrpwer will have the capacity
to repays on the loan terms^rovided.__/
We will also continue to work with the other industrialized
nations of the Free World to encourage increased participation
by them in providing economic assistance to the developing
countries. This is the major objective of the WJ(^^SM£S<'
Development Assistance Group which will soon be incorporated i
the new Organization for Economic Cooperation and Development.
The functions of the MG^d the OECD in this field will be
discussed in detail by Under Secretary Ball.
In addition to the work of the DAG in urging the mobilization
of resources of the industrialized countries for the purpose
helping the developing countries, there has been very substan
8
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Coordination with the international institutions and with the
Export-Import Bank will also be effected through the National
Advisory Council, through the U.S. Executive Directors of the
international institutions and through informal day-to-day
contacts. In addition, the proposed legislation provides for
a Development Loan Committee, similar to the present DLF Boar
to establish standards and criteria for the lending operation
of the new aid agency in accordance with the foreign and
financial policies of the United States. The Treasury Department and the Export-Import Bank will be represented on this
inter-agency Committee.
Through proper coordination we can ensure that the new
lending program will complement, rather than compete with, other
establishedTending institutions, dome s t i corint ernat iona
A
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being worked out by the International Development Association
should enable the United States to offer to the developing
countries loan terms as favorable as those offered by any oth
country in the world. * The International Development Associa
reached Mfm decision after U_:orough^international discussion
under the leadership of _\ts distinguished President, Mr. Eugene
Black. V_, ?,f* c^ ^y^t^X ^^
The development lending operations of the new aid agency
will necessarily be related to the activities of other lendin
institutions, national and international.
As the United States
Governor of the major international financial institutions, I
have responsibility for assuring that the national lending
activities of the United States are properly coordinated with
h
the activities of the IBRD, the IDA, the IFC and the IDB.
10
- 17 considerably ease the annual and overall debt service burden
of the loan.
It is for these reasons that development loans under the
proposed program are intended to be on terms much less onerou
than conventional banking terms. Periods of repayment may ext
up to fifty years. Grace periods, in which no repayment of
principal is required, may be granted up to ten years. Rates
of interest could be low or non-existent, although a small
service charge might be madeyiai Xiuu of in tore .at.
In short,
loan terms CQU!J4tlLQ_ij!_axl<ad' d<__paiading <&R the prospe
of the •^m^^m\m^SSm^^U!d^^m7\
Thus, while the objective of lend
operations will be to improve the ability of the borrowing
country to service its debts through progress in development,
the burden of debt service wili^oe such as rJM. to impede tha
progress. These terms and conditions which are along the line
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2l
During the past few years the United States has come to
recognize the need of the developing countries for loans on
terms more favorable to the borrower than can be provided und
conventional banking practices. Under the proposed legislatio
this need will continue to be met, even though dollar repayme
is to be required. Dollar repayment should be possible as the
developing country increases its ability to mobilize domestic
^resources and to enlarge its exports and foreign exchange ea
But these self-help efforts of the developing countries will
time to bear fruit. Meanwhile, it is necessary to avoid exces
debt burdens on the budget or the balance of payments of the
developing country. Repayment over a long term with substanti
grace periods whould allow the major burden of repayment to
come after self-sustaining growth ±o -ftrlrinyggh. Eliminatio
drastic reduction of the interest burden on loans should also
12
*»--•• - 15 -
has been used irvfother lending programs^ nocat^r tWs^of^the-E^oX^3)Dapa^^il^ It would, in brief, put the returns from
our earlier aid programs to the industrialized countries to wo
in our new program to help the developing countries.
The primary purpose of the development lending provisions
of the Act for International Development is to assist the
{fa
'^developing countries in carrying out long-range development
programs. Loan funds are intended to support those activities
which make the most effective contribution to economic growth.
Loans may, for example, be directed to specific projects. They
may also be used to provide broad support for a national devel
ment program. They may also be used to help in establishing
general financial and economic conditions essential to steady
growth in the future. All three kinds of lending operations
are essential if the needs of the developing countries are to
be met.
13
- 14 our future relations with the countries whose currencies we
are accumulating. This danger would be particularly acute if
the U.S. Government were to acquire a large proportion of the
outstanding money supply in a foreign country. The accumula-
tion of large, and in many cases excessive or unusable amount
of local currency, provides! "no advantage to the United Stat
whereas repayment in dollars, even over a long period of time
would provide a definite return.
The President has also requested authority to make available
for development lending, the dollars to be realized from repa
ments of earlier foreign obligations. This request is confine
to outstanding obligations in which the U.S. has the option t
require dollar repayments. The amounts, WQXMa^^^at^pxfyaJ^y
&$c&rfc.&inm&%, will approximate $300 million a year ir This
a reasonable extension of the revolving fund principle that
14
_*r
mus t be met by the 1^(B6 of the Treasury. ^"^
The financing of development loans by borrowing authority
was recommended by President Eisenhower in 1957 at the inceptio
of the Development Loan Fund/ As you know, the Development Loan
Fund is authorized to make loans repayable in local currency that is, repayable in the currency of the borrower rather than
in dollars. As a result of experience, it has been found desirabl
to change this policy. It is now proposed that all development
loans under the new program be repaid exclusively in dollars.
An important reason for this change is that the United
States is rapidly acquiring large accruals of local currencies
from various programs, most importantly from the sale of agricultural surpluses under Public Law 480. There is danger that
continued large accruals of local currency by the U.S. Government could become a source of friction and misunderstanding in
•?.?
aut
Finally, the amounts to be borrowed under the proposed
legislation would be included each year in the budget as new
obligational authority in the same manner as other appropriation
Similarly, expenditures would appear in the regular expenditures
Afsas^As far as the budget is concerned there is not
budget, ^-*»<
the slightest difference between this method
of funding and the appropriation process heretofore used for this
program.
I would like to make a further point in connection with
the use of borrowing authority.
This is that borrowing frorathe
Treasury Jby the(AIl3 would not mean that the Treasury ^
would be forcedjfef borrowM-rom the public. To put it another
way, the extent to which the Treasury may have to burrow from
the public} or alternatively rely upon tax or other income, is
exactly the same whether foreign development lending is financed
by the borrowing method or WJH_.4'VU• i • -Lha funds ^©^appropriate
The requirements of this and all other programs, foreign and
domestic, determine the amount of over-all expenditure which
U>u
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be exercised in each year of the 5-year period in a number
of ways:
First, the law would determine the availability of
the funds year-by-year.
Second, quarterly reports on lending operations would
be submitted to the Congress.
Third, an annual presentation would be made to the
authorizing Committees of the Congress covering all development
lending operations.
V Fourth, an annual presentation would be made to the
Appropriations Committees of the Congress in accordance with
the provisions of the Government Corporations Control Act. Uryfe
^-this Act, y^ne Appropriations/Committee^
/
and tKe Congress would nave td approve, the use of/£he borrowing
- 10 -
17
the foreign aid program would continue to be financed by
appropriations.
It is a common practice to finance lending operations of
U.S. agencies through loans and advances from the Treasury.
The Treasury uses this method to finance the programs of more
than twenty agencies, in accordance with the statutes governing
the activities of the particular agency. A list of examples of
legislative authorizations currently in effect, for financing
governmental activities through the borrowing method has been
submitted for the information of the Committee.
This fiscal arrangement need not, and will not, mean any
loss of legislative control over expenditures. The funds will
be available only for the purposes and in the annual amounts
approved by the Congress. Under the proposed legislation,
specific Congressional control over the lending program would
industrialized countries l^join with us irj/providing aid to
developing areas. /? A
Because an effective-foreign lending program requires an
assured and adequate source of funds waifeh fefig-1erm aut ms
i^t multi-year commitments, the President has requested
that development loans be financed by borrowing from the Treasur
For this purpose, the/proposed bill provides for authority to
borrow from the Treasury $900 million in fiscal year 1962 and
$1.6 billion in each of the succeeding four years. This method
would be used only for development loans and specific ceilings
would be established limiting the amount of borrowing authorit
to be exercised annually. All loan transactions making use of
this authority would be in dollars and all repayments would be
in dollars. Grants or other forms of assistance connected with
10
- 8 increased the cost of the foreign aid program. Withoj
adequate assurance of financing for long-term progtf'ams to
r /
with the basic needs of $ developing country, tlnere is littl
incentive for y*v& country to organize ij^s plans or to adopt
6yf~y^x*' measures of self-help. We ask the developing countries to
An!
undertake basic'reforms'essential to development. But such
reforms take years to implement, ai*a our assistance to suppo
such reforms has been plagued by year-to-year uncertainty.
Reasonable assurance of out/ide assistance extending beyond the
/
next year may often mean the difference between success or
failure in the efforts of a developing country to adopt the
/
/
/
7
measures requisite to effective development. Legislative
/
authority to /make multi-year commitments will greatly enhance
/
/
the abilit^y of the United States to effectively urge and cooperat|
in £&0/reforms.
/
It will also provide an incentive to other
7^
2I
In my judgment^ the inability of the Executive to make long-term
(Jpmmitments has diminished the effectiveness and increased the cos
of the foreign aid program. Without adequate assurance of financing
for long-term programs to deal with the basic needs of a developing
country, there is less incentive for such a country to organize its
plans oVto adopt (thej appropriate measures of self-help. We^aslSJt
developing countries to/undertake basic and difficult reforms that
are essential to development. But such reforms take years to implem
and require the support of long term development programs. Reasonab
assurance of outside assistance extending over a period of years ma
often mean the difference between success or failure in the efforts
/F\
of a developing country to carry out the measures requisite to
effective development. Legislative authority to make multi-year
commitments will for the first time put the United States in a
position to effectively toge- and cooperate in basic reforms. It
will also provide an incentive to other industrialized countries
to join with the United States in providing aid to developing ^ghg
A
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21
I am convinced from my earlier experience in the Depart-
ment of State that long-term financing authority is an essentia
tool for the achievement of our foreign policy objectives. I
/
am equally convinced as Secretary of the Treasury that this is
the most efficient and least costly method of providing develop
ment assistance.
Adequate authority for long-term financing as proposed in
the bill will permit both orderly development and effective
execution of development lending programs by the administrator
of the aid program. Without such authority there will continue
to be insistent pressures for stop-gap financing to meet crises
which could have been prevented, at less cost, by adequate
long-range programs.
In my judgment"ttie inability of the Executive to make
long-term commitments has dimini&ked the effectiveness and
- 6required.
Also, emergency situations sometimes require the
transfer of aid through cash grants, a part of which
u^*^__s^fi_^s==fe€^spent for the goods of other countries. Nevertheless, through our procurement policy we will keep to a
minimum any adverse effect of aid spending on our payments
situation. I am satisfied that the present directives are
adequate to assure this result.
The new economic aid program set forth in the proposed
Act for International Development emphasizes long-term authority
for financing development lending. The President, in his letter
transmitting the draft foreign assistance bill, stated that
,5
Real progress in economic development cannot be achieved by
annual, short-term dispensations of aid and uncertainty as to
future intentions".
23
- 5 American exports financed by aid programs accounted for nearly
half of our total export surplus. The fact that foreign
assistance is in any case largely accompanied by an outflow of
J$£ American exports is not understood by those who hope to cu
our payments deficit by curtailing foreign economic assistance
Nevertheless, for such time as our payments situation requires
c»jrj2^r'
^ ^Smmmm^sf^^
our objective will be to assure that on IT mni'i
tT^*-*
<ft-
foreign economic assistance will be spent on gSA-U.S. goods and
services. * This limit n firm is nlrenrly being implomonted a$& wil
have^increasingyneffect on our payments position*
e^g>
y~£t is not in every case practicable or desirable to require
that foreign assistance funds be limited exclusively to the proXS
curement of United States goods and services.
In some cases,
particular commodities financed by aid dollars are not available
in the United States, or may not be available here in the time
The expenditures/over the years following 1962 wlllJbe taken
into account in the presentation of the budgets for those years.
As Secretary of the Treasury I am especially interested in
the relationship of foreign assistance to our balance of payments
The program proposed is consistent with our efforts to achieve
and sustain overall balance in our international payments. I
wish to emphasize that it is the form in which aid is extended,
rather than the amount to be provided, which is most relevant
to this question. We will continue under the new program to
place primary emphasis on the trse o-rr-sts^L&L&ricc funds for
purchasisag United States goods and services by aid recipients.
The preponderant part of foreign aid expenditures will be spent
in the United States^fva_MJ__lLud CLaLLi, guudll mid usggre^,. Su
expenditures, which are accompanied by American exports, du»!i_iJ
have 0i adverse impact on our balance of payments. In 1960
2S
- 3-
X'
$4,475 million forNfiscal year 1962 to be funded by appropriations or borrowing authority.
Of this .amount, $2,590 million
\
/
is economic assistance and is provided for in the proposed Act
\ /
for International Development./ In addition, that Act would
v
authorize the aid agency to use dollars received from repayments
/ \
/
\
of previous loans to foreign countries of about $300 million.
/ \
The proposed Act for International ^Development would also provide
/
$1.6 billion in development assistance^ for each of the followin
four years ydnd for continued use in these years, for development ass/stance of dollar repayments to the United States on
earlier loans.
The expenditure estimates for fiscal year 1962 under the
proposed program are approximately the same as those contained
in the budget presented to the Congress by President Eisenhower.
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/
/
$4,475 million for \fiseal year 1962 to be funded by appropria-
tions or borrowing authority.
Of this Amount, $2,590 million
\
/
is economic assistance akd is provided for in the proposed Act
\
/
for International Development./ In addition, that Act would
\ /
x
/\
authorize the aid agency to uke dollars received from repayments
/
/
\
\
of previous loans to foreign countries of about $300 million.
' . • ' ' " ' •
' i_S____&_«__i__to(.., ;f. .....
\
3-A<***
26
product, a figure that is certainly well within the capacity of our
domestic economy now and in the years ahead.
The proposed bill also requests authority to borrow from the
Treasury $1.6 billion for each of the following four years as well as
continued authority to reuse the dollars from repayments on earlier
foreign loans.
These repayments are expected to average about $300 milH°n
annually during these four years.
The expenditure estim ates....
which I, as Secretary of the Treasury and Chairman of^ the
National Advisory Council on International Financial and
Monetary Problems, have a special responsibility. At my reque
the National Advisory Council has reviewed and approved those
aspects of the proposed Act for International Development whi
relate to international financial policy.
The program which President Kennedy has submitted to the
Congress is one that the United States can afford. It is well
within the capacity of our domestic economy, now and in the
/
years ahead.
The President als6 requested, in his Special
V/
Message on Urgent Nationai\Needs, essential increases in the
\
foreign aid program/to meet unforeseen contingencies and for
\
Military Assistance.
With these increases, the total foreign
\
assistance program - economic and military - would amount to
/^l..
A
REMARKS BY SECRETARY OF THE TREASURY DOUGLAS DILLON
BEFORE THE SENATE FOREIGN RELATIONS COMMITTEE IN
SUPPORT OF THE ACT FOR INTERNATIONAL DEVELOPMENT AND
THE INTERNATIONAL PEACE AND SECURITY ACT, MONDAY,
JUNE 5, 1961.
iNrelcome the opportunity to appear before this Committee
in support ov£ the new foreign assistance program recommended by
President Kenneoy and provided for in S. 1983.
isistance are we:
'oreign assistance, adequate in amount
and effective in f^rm and administration, is essential to the
security and well being of America.
I agree with the views
expressed hy Secretary Rusk last Wednesday describing the
urgenc^ and importance of the new prograp.
I would like to confine my g^a£3_»_t remarks today to the
financial aspects of the proposed legislation - aspects for
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I My belief that foreign aid is a critically essential ingredient of
as Secretary
our national Dolicy is well known to this Committee, i
of the Treasury, I am, of course, intimately concerned with the formidable problem
of mmmW$M$^iMMmW&$^^& financeCall of our most urgent national needs, both
foreign and domestic. If we are to meet these needs without sacrificing our
fiscal integrity, we must set priorities. And I am firmly convinced that an
adequate, flexible, and soundly-conceived Drogram of foreign economic assistance
f^CM
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Pft66f?hM A l2A
merits very high priority
_1
to the security and well-being of our national. _*
I agree
with the views expressed by Seer tary of State Rusk btog^tok last Wednesday
describing the urgency and importance of
A
pleased to appear before you in support of
s. 1983.
new
program- I ai/1
_ .
, „ .
REMARKS OF THE HONORABLE DOUGLAS DILLON
SECRETARY OF THE TREASURY
BEFORE THE
SENATE FOREIGN RELATIONS COMMITTEE
IN SUPPORT OF THE ACT FOR INTERNATIONAL DEVELOPMENT
AND THE INTERNATIONAL PEACE AND SECURITY ACT,
MONDAY, JUNE 5, 1961.
My belief that foreign aid is a critically essential
ingredient of our national policy is well known to this
Committee. As Secretary of the Treasury, I am, of course,
intimately concerned with the formidable problem of financing
all of our most urgent national needs, both foreign and
domestic. If we are to meet these needs without sacrificing
our fiscal integrity, we must set priorities. And I am
firmly convinced that an adequate, flexible, and soundlyconceived program of foreign economic assistance merits very
high priority. Such a program is basic to the security and
well-being of our nation. I agree with the views expressed
by Secretary of State Rusk last Wednesday describing the
urgency and importance of President Kennedy•s^program, and
I am pleased to appear before you in support of S. 1983.
/ I would
TREASURY DEPARTMENT
Washington
32
June 5, 19^1
For Release: Upon Delivery
STATEMENT OF THE HONORABLE DOUGLAS DILLON
SECRETARY OF THE TREASURY
BEFORE THE
SENATE FOREIGN RELATIONS COMMITTEE
IN SUPPORT OF THE ACT FOR INTERNATIONAL DEVELOPMENT
AND THE INTERNATIONAL PEACE AND SECURITY ACT,
MONDAY, JUNE 5, 19^1,
10:00 A.M., EDT.
My belief that foreign aid is a critically essential ingredient
of our national policy is well known to this Committee. As Secretary
of the Treasury, I am, of course, intimately concerned with the
formidable problem of financing all of our most urgent national needs,
both foreign and domestic. If we are to meet these needs without
sacrificing our fiscal integrity, we must set priorities. And I am
firmly convinced that an adequate, flexible, and soundly-conceived
program of foreign economic assistance merits very high priority.
Such a program is basic to the security and well-being of our nation.
I agree with the views expressed by Secretary of State Rusk last
Wednesday describing the urgency and importance of President
Kennedy's new program, and I am pleased to appear before you in
support of S. 1983.
I would like to confine my remarks today to the financial aspects
of the proposed legislation — aspects for which I, as Secretary of
the Treasury and Chairman of the National Advisory Council on
International Monetary and Financial Problems, have a special
responsibility. At my request the National Advisory Council has
reviewed and approved those aspects of the proposed Act for
International Development which relate to International financial
policy.
The program the President has submitted to Congress Is one that
the United States can afford. Including the essential increases
requested by President Kennedy In his special message on urgent
national needs a total of $2,878 million is being requested in fiscal
1962 for the Act for International Development. This amount includes
authorization to reuse some $287 million which is what we currently
expect to receive from dollar repayments of previous foreign loans. It
also includes authority to borrow $900 million from the Treasury for
development loans. In addition, the military assistance request for
19^2 amounts to $1,885 million. This makes up an over-all total
D-124
program of $4,763 million which amounts to less than one percent of
our gross national product, a figure that Is certainly well within
the capacity of our domestic economy.
- 2-
33
The proposed bill also requests authority to borrow from the
Treasury $1.5 billion for each of the following four years as well
as continued authority to reuse the dollars from repayments on
earlier foreign loans. These repayments are expected to average
about $300 million annually during these four years.
The expenditure estimates for fiscal year 1962 under the proposed
program are approximately the same as those contained in the budget
presented to the Congress by President Eisenhower. The Increased
expenditures to be expected over the years following 1962 will, of
course, be taken into account in the presentation of the budgets for
those years.
As Secretary of the Treasury, I am especially Interested in
the relationship of foreign assistance to our balance of payments.
The program proposed is consistent with our efforts to achieve and
sustain over-all balance in our international payments. I wish to
emphasize that it is the form in which aid is extended, rather than
the amount to be provided, which is most relevant to this question.
We will continue under the new program to place primary emphasis on
the purchase of United States goods and services by aid recipients.
The preponderant part of foreign aid expenditures will be spent in
the United States. Such expenditures, which are accompanied by
American exports, have no adverse impact on our balance of payments.
In i960 American exports financed by aid programs accounted for
nearly half of our total export surplus. The fact that foreign
assistance is In any case largely accompanied by an outflow of
American exports is not understood by those who hope to cure our
payments deficit by curtailing foreign economic assistance.
Nevertheless, for such time as our payments situation requires, our
objective will be to assure that at least eighty percent of our
foreign economic assistance will be spent on United States goods and
services. Because of earlier commitments this goal cannot be achieved
immediately but the new policy will have an increasingly favorable
effect on our payments position.
Under the present policy, it is not in every case practicable
or desirable to require that foreign assistance funds be limited
exclusively to the procurement of United States goods and services.
In some cases, particular commodities financed by aid dollars are
not available in the United States, or may not be available here in
the time required. Also, emergency situations sometimes require the
transfer of aid through cash grants, a part of which Is ultimately
spent for the goods of other countries. Nevertheless, through our
procurement policy we will keep to a minimum any adverse effect of
aid spending on our payments situation. I am satisfied that the
present directives are adequate to assure this result.
The new economic aid program set forth in the proposed Act for
International
Development
emphasizes
long-term authority
for
financing
development
lending.
The President,
in his letter
34
- 3transmitting the draft foreign assistance bill, stated that "Real
progress in economic development cannot be achieved by annual, shortterm dispensations of aid and uncertainty as to future intentions".
I am convinced from my earlier experience in the Department
of State that long-term financing authority is an essential tool for
the achievement of our foreign policy objectives. I am equally
convinced as Secretary of the Treasury that this is the most efficient
and least costly method of providing development assistance.
Adequate authority for long-term financing as proposed in the
bill will permit both orderly development and effective execution of
development lending programs by the administrator of the aid program.
Without such authority there will continue to be insistent pressures
for stop-gap financing to meet crises which could have been prevented,
at less cost, by adequate long-range programs.
In my judgment, the inability of the Executive to make long-term
commitments has diminished the effectiveness and increased the cost
of the foreign aid program. Without adequate assurance of financing
for long-term programs to deal with the basic needs of a developing
country, there is less incentive for such a country to thoroughly
organize its plans or to adopt appropriate measures of self-help.
We urge the developing countries to undertake basic and difficult
reforms that are essential to development. But such reforms take
years to implement, and require the support of long-term development
programs. Reasonable assurance of outside assistance extending over
a period of years may often mean the difference between success or
failure in the efforts of a developing country to carry out the
measures requisite to effective development. Legislative authority
to make multi-year commitments will for the first time put the
United States in a position to effectively stimulate and cooperate in
basic reforms. It will also provide an incentive to other
industrialized countries to join with the United States in providing
aid to developing areas.
Because an effective long-term foreign lending program requires
an assured and adequate source of funds for solid multi-year
commitments, the President has requested that development loans be
financed by borrowing from the Treasury. For this purpose, the
proposed bill provides for authority to borrow from the Treasury
$900 million in fiscal year 196*2 and $1.6 billion in each of the
succeeding four years. This method would be used only for development
loans and specific ceilings would be established limiting the amount
of borrowing authority to be exercised annually. All loan transactions
making use of this authority would be in dollars and all repayments
would be in dollars. Grants or other forms of assistance connected
with the foreign aid program would continue to be financed by annual
appropriations.
It
The
United
is
Treasury
aStates
common
uses
agencies
practice
this method
through
to finance
to
loans
finance
and
lending
the
advances
programs
operations
fromof
the
more
of
Treasury.
than
- 4twenty agencies, in accordance with the statutes governing the
activities of the particular agency. A list of examples of legislative
authorizations currently in effect, for financing governmental
activities through the borrowing method has been submitted for the
information of the Committee.
This fiscal arrangement need not, and will not, mean any loss of
legislative control over expenditures. The funds will be available
only for the purposes and In the annual amounts approved by the
Congress. Under the proposed legislation, specific Congressional
control over the lending program would be exercised in each year of
the five-year period in a number of ways:
First, the law would determine the availability of the funds
year-by-year.
Second, quarterly reports on lending operations would be
submitted to the Congress.
Third, an annual presentation would be made to the authorizing
Committees of the Congress covering all development lending operations.
Fourth, an annual presentation would be made to the Appropriations
Committees of the Congress in accordance with the provisions of the
Government Corporations Control Act. Under this Act the aid agency
would be required to submit to the appropriations committees an annual
budget setting forth its proposed lending operations for the coming
year and to obtain from Congress authority to expend funds in
accordance with this budget.
Finally, the amounts to be borrowed under the proposed
legislation would be included each year in the budget as new obligationa!
authority in the same manner as other appropriations. Similarly,
expenditures would appear in the regular expenditures budget. As far
as the budget is concerned there Is not the slightest difference
between this method of funding and the appropriation process heretofore
used for this program.
I would like to make a further point in connection with the use
of borrowing authority. This is that borrowing from the Treasury
under the Act for International Development would not mean that the
Treasury would be forced into any additional borrowing from the public.
To put it another way, the extent to which the Treasury may have to
increase the public debt, or alternatively rely upon tax or other
income is exactly the same whether foreign development lending is
financed by the borrowing method or by funds otherwise appropriated.
The requirements of this and all other programs, foreign and domestic,
determine the amount of over-all expenditure which must be met by the
receipts of the Treasury.
The financing of development loans by borrowing authority was
recommended by President Eisenhower in 1957 at the inception of the
Development Loan Fund and approved at that time by this Committee and
and the Senate. As you know, the Development Loan Fund Is authorized
- 5-
36
to make loans repayable in local currency — that is, repayable in
the currency of the borrower rather than in dollars. As a result of
experience, It has been found desirable to change this policy. It is
now proposed that all development loans under the new program be
repaid exclusively in dollars.
An important reason for this change is that the United States Is
rapidly acquiring large accruals of local currencies from various
programs, most importantly from the sale of agricultural surpluses
under Public Law 480. There is danger that continued large accruals
of local currency by the United States Government could become a
source of friction and misunderstanding in our future relations with
the countries whose currencies we are accumulating. This danger would
be particularly acute if the United States Government were to acquire
a large proportion of the outstanding money supply in a foreign
country. The accumulation of large, and in many cases excessive
or unusuable amounts of local currency, provides no advantage to the
United States whereas repayment in dollars, even over a long period
of time, would provide a definite return.
The President has also requested authority to make available for
development lending, the dollars to be realized from repayments of
earlier foreign obligations. This request is confined to outstanding
obligations in which the United States has the option to require
dollar repayments. The amounts, will approximate $300 million a year
for the next five years. This is a reasonable extension of the
revolving fund principle that has been used in many other lending
programs. It would, in brief, put the returns from our earlier aid
programs to the industrialized countries to work in our new program
to help the developing countries.
The primary purpose of the development lending provisions of the
Act for International Development is to assist the developing countries
in carrying out long-range development programs. Loan funds are
intended to support those activities which make the most effective
contribution to economic growth. Loans may, for example, be directed
to specific projects. They may also be used to provide broad support
for a national development program. They may also be used to help in
establishing general financial and economic conditions essential to
steady growth in the future. All three kinds of lending operations
are essential if the needs of the developing countries are to be
met.
During the past few years the United States has come to recognize
the need of the developing countries for loans on terms more favorable
to the borrower than can be provided under conventional banking
practices. Under the proposed legislation this need will continue
to be met, even though dollar repayment is to be required. Dollar
repayment should be possible as the developing country Increases its
developing
and
ability
foreign
to mobilize
countries
exchangedomestic
will
earnings.
take
resources
time
But these
to bear
and self-help
to
fruit.
enlarge
Meanwhile,
efforts
Its exports
of the
it is
71
- 6necessary to avoid excessive debt burdens on the budget or the
balance of payments of the developing country. Repayment over a
long term with substantial grace periods would allow the major burden
of repayment to come after self-sustaining growth has commenced.
Elimination or drastic reduction of the interest burden on loans
should also considerably ease the annual and over-all debt service
burden of the loan.
It is for these reasons that development loans under the proposed
program are intended to be on terms much less onerous than conventional
banking terms. Periods of repayment may extend up to fifty years.
Grace periods, in which no repayment of principal is required, may
be granted up to ten years. Rates of interest could be low or nonexistent, although a small service charge might be made. In short,
loan terms would take into account the prospective situation of the
borrower. Flexibility would permit loans to private borrowers on
appropriate terms. Thus, while the objective of lending operations
will be to improve the ability of the borrowing country to service
its debts through progress in development, the burden of debt service
will not be such as to impede that progress. These terms and
conditions which are along the lines being worked out by the
International Development Association should enable the United States
to offer to the developing countries loan terms as favorable as
those offered by any other country in the world. It is significant
that the International Development Association reached this decision
after long and thorough international discussion under the leadership
of Its distinguished President Mr. Eugene Black.
The development lending operations of the new aid agency will
necessarily be related to the activities of other lending institutions <
national and international. As the United States Governor of the major
international financial institutions, I have responsibility for
assuring that the national lending activities of the United States are
properly coordinated with the activities of the International Bank for
Reconstruction and Development, the International Development
Association, the International Finance Corporation, and the
Inter-Amer3can Development Bank. Coordination with the international
institutions and with the Export-Import Bank will also be effected
through the National Advisory Council, through the United States
Executive Directors of the international Institutions and through
informal day-to-day contacts. In addition, the proposed legislation
provides for a Development Loan Committee, similar to the present
Development Loan Fund Board, to establish standards and criteria for
the lending operations of the new aid agency In accordance with the
foreign and financial policies of the United States. The Treasury
Department and the Export-Import Bank will be represented on this
inter-agency committee.
Through proper coordination we can ensure that the new lending
lending
of
program
private
will
institutions,
funds
complement,
available
domestic
rather
for or
international
than
international
compete with,
Investment.
as well
otheras
established
the flow
9Q
\*>
- 7 We will also continue to work with the other industrialized
nations of the Free World to encourage increased participation by them
in providing economic assistance to the developing countries. This is
the major objective of the Development Assistance Group which will soon
be incorporated in the new Organization for Economic Cooperation and
Development. The functions of the Development Assistance Group and
the Organization for Economic Cooperation and Development in this field
will be discussed in detail by Under Secretary Ball.
In addition to the work of the Development Assistance Group in
urging the mobilization of resources of the industrialized countries
for the purpose of helping the developing countries, there has been
very substantial progress in coordinating and enlarging Free World
assistance to particular countries. The International Bank for
Reconstruction and Development has pioneered in this effort by
enlisting the cooperation of a number of industrialized countries in
expanding help to India and Pakistan. You are familar with the
Bank's role in the Indus Waters project and the financial participation
by a number of its members in this important undertaking. The Bank
has also played an important role in stimulating and coordinating
efforts by the economically advanced countries to assist India's
economic development by convening consortium meetings on several
occasions in the past. Only last week it led a meeting of capitalexporting countries prepared to help in financing India's third FiveYear Plan.
Participating countries other than the United States indicated
their willingness to provide $780 million over the next two years.
This amount, together with $400 million from the World Bank and the
International Development Association, and $1 billion from the
United States, which is subject to Congressional action on the pending
legislation, should enable India to proceed in an orderly manner to
a successful launching of its Third Plan. A similar meeting under the
auspices of the World Bank is being held this week to consider aid
to Pakistan,
If the United States and the other Industrialized countries of
the Free World fully cooperate in providing assistance to the
developing areas — based upon the self-help efforts of the
developing countries themselves — we can look forward to a decade
of progress and development for the hundreds of millions of people
oOo
in other lands economically less fortunate than our own. Their economic
progress is to no small degree dependent on us. Our own future
importantly depends on them. The bill before you is essential to meet
the need.
QQ
job ahead of you.
Your four years here have been a long, hard voyage, but you
have weathered it successfully. In a few minutes, you will raise
your right hands to take the traditional oath as commissioned
officers of the United States Coast Guard. I am confident that
you will measure up to the best traditions of the hosts of brave
men who have preceded you in the service. I have equal confidence
that you will acquit yourselves with such distinction that succeed
generations of Coast Guard officers will say "Well Done". To all
of you, I extend my warmest congratulations. May you all have long
happy, and successful careers in the service of country and humani
0O0
40
-12fact that the Coast Guard has been entrusted with this heavy
international responsibility is another example of the high regar
in which the Coast Guard is held by other nations.
In viewing the Coast Guard as part of the world picture, I do
not intend in any way to minimize such important functions as
maritime law enforcement, port security, or
safeguarding individual citizens through the small boat
safety program.
Indeed, as an amateur sailor myself along
Coast, I have first hand knowledge of the invaluable service
rendered by the Coast Guard to the growing number of Americans wh
are taking to the water in pleasure craft.
Gentlemen, as you enter upon duty as officers, I think it
important for you to bear in mind that whether you serve on our
inland waterways or in the antarctic, you have a tough, but rewar
job ahead
fact that the Coast Guard's services are available to all ships and
persons in peril on the sea, without regard to nationality.
As Coast Guard officers you will have the opportunity to participate in the International Ice Patrol.
This outstandingly success^
ful venture in international collaboration was born in 1914, follow-'
ing the tragic sinking of the luxury liner "titanic".
Ever since that sad event which cost 1,513 lives, the Coast
Guard has been keeping watch over the ice-infested shipping lanes of I
the North Atlantic.
The Coast Guard is charged with the responsibility for operating
IS
the Patrol.
The cost of its upkeep is presently shared by
contributing governments^ i
Franc/e, Italy, C^re^ce,
fifty J.&&.
/
fact that
42
-10aids to navigation, Loran, merchant marine inspection, rescue
coordination, and training in the operation of the UF-2 aircraft.
This type of inter-governmental cooperation by the Coast Guard is
a valuable contribution to maritime safety and the security of the
free world. Undoubtedly, some of you will participate in this pro-
gram, which is becoming increasingly important. From my own experi
ence in international relations, I can assure you that it will be
one of the most satisfying experiences of your lifetime.
The humanitarian side of the Coast Guard's work was dramati-
cally brought to the world's attention in 1959, when the Coast Gua
cutter "Storis" was dispatched to evacuate an injured seaman from
the Soviet refrigerator ship "Pischavaya Industriya" 149 miles fro
Dutch Harbor, Alaska. After picking up an interpreter and doctor,
a Coast Guard plane flew the seaman to the nearby Elmendorf Air
Force Base hospital. This incident, one of many, underscores the
fact that
43
-9One of the most important international aspects of the Coast
Guard's work is its program of providing counsel and instruction to
help solve the problems of a growing number of other nations. It
has aided in establishing organizations similar in purpose and
scope to your own service. It has given officials of other govern-
ments an opportunity to study at Coast Guard schools, training stations, and installations since the end of World War II. The Coast
Guard has been going about this work quietly and competently.
Among the many foreign governments which^received assistance from
the Coast Guard during the past year alone are Argentina, Brazil,
Ceylon^<rt)enmark, El Salvador, Ethiopia, France, Greece, Haiti,
Honduras, Indonesia, Iraq, Iran, Japan, Lebanon, Pakistan, Peru,
% Tunisia, Turkey and Viet Nam.
The training program covers a wide variety of subjects, in-
luding helicopter rescue techniques, air traffic control, port sect
gunnery,
-8-
44
Another recent milestone in international collaboration was the
Sixth International Technical Conference on Lighthouses and Other
Aids to Navigation held last fall in Washington, D. C, under the
auspices of the Coast Guard.
Forty nations took part in th$5 confer -
I cite these conferences to indicate the wide sphere of activity
embraced by your service, and to illustrate the kind of duty that
may lie ahead of you at the international conference table as you
become senior officers. The significance of these conferences goes
far beyond purely technical considerations. They are an important
part of our continuing national effort to achieve greater understanding and collaboration with all nations.
toe of the
-7-
45
contribute much to strengthening your country's international rela
tions .
What are some of the opportunities that await you?
One example is the Coast Guard's constant effort to advance
standards of maritime safety throughout the world. Last June,
largely as a result of the tragic loss of the "Andrea Doria", an
International Conference for the Safety of Life at Sea was held in
London under the auspices of the United Nations. At that conferenc
which was attended by some five hundred officials of more than fif
nations, the Coast Guard represented American shipping interests.
During the extended negotiations, the United States delegation,
headed by your Commandant, Admiral Alfred C. Richmond, conducted
itself with a professional competence that won universal respect
and wide support for many United States proposals which pointed
the way toward greater safety at sea.
Another recent
4b
-6- .. %P
must also appeal to the minds and*nearts of men. We must convince
them that our free way of life offers a better future for themselv
and for their children than the authoritarian system. Our very
future as a nation depends in large measure upon your response to
this challenge.
You young men will participate in a world-wide effort to achieve
greater understanding between nations and their diverse peoples.
We of the Treasury are proud of the part your service is playing.
The Coast Guard is uniquely qualified to meet the complex needs of
our times because it is both a military service and a humanitarian
agency. All of its resources are at the disposal of those who need
them, without regard to nationality.
As officers of the Coast Guard you will be members of a service
which enjoys high prestige in many parts of the world. Your duties
often will bring you into contact with men of many nations in a
working partnership. It is on this personal level that you can
contribute
of our free society are nevertheless under continuing assault by an
alien ideology. This assault upon our free way of life is being
waged on all levels: political, economic, psychological -- and in
some areas~7Von the para-military level.
Since the end of World War II, there has been a great awakening
among the under privileged peoples of the world. This huge surge of
human aspiration is a force of inexorable power. Over and over it
has been proved that "men do not live by bread along". They also
yearn for the dignity and self respect of free men, and they look t
us and to other advanced free nations for assistance in realizing
their mounting expectations.
You are, therefore, entering upon your duties as officers of
the Coast Guard at a time when the world demands more of our countr
and our country demands more of you = than ever before. These
demands are spiritual as well as material. It is not enough merely
to be militarily and economically strong. To win this struggle we
must also
48
-4are endowed by their Creator with certain unalienable rights, that
among these are Life, Liberty and the pursuit of Happiness."
Note c&r^fully
/
ghts are ours
\
which have\to be
simply byVvirtu
/ V
on.
is
defended cons
A great truth
to be borne constantly in mind/that fete=gj#fcg
i-y
/
eitvoeracy cannot and must not be taken for granted.
Each generation must struggle anew to maintain Hir-m hi i i i IITT,
Th^
=ten. The young men
struggle takes $ different formjle
of my time had to meet that challenge in the arena of war.
It was
our deepest hope that out of our ordeal would be born a lasting
"7,. ••
^^-^€n^^€>^
peace among all nations, vOur hopes have not materialized.
We still
live in a world beset by tension and anxiety.
If by peace we mean}|the absence of large-scale military opera-
-2
tions, then the world is technically At peace.
But all the values
of our
4Q
-3commercial affairs.
Leadership is a big word. It will be up to you to give it
meaning. Your responsibilities and your opportunities will be
greater than those experienced by your predecessors. For your
country, which stands before the world as an example of what a f
creative people can do when given full opportunity for selfexpression, is challenged today as never before in its history.
We have indeed been fortunate. A kind Providence has blessed
us with a fair and fertile land, rich with an abundance of natur
gifts and a hard-working, intelligent citizenry. And we have far
well, I think, because there has always been in our people a rec
tion that there is a Supreme Power not subject to human limitati
But all our talents and resources will mean nothing unless we
bring them to bear as a united people to meet the problems/confront
n
us in the months and\ ^earsWiead.
Our Founding Fathers understood
the situation very well when they wrote 185 years ago:
"All men
i#@*^ndowed
so
-2-
career of service to country and humanity. The path you will follo
'will not be easy, but the fine training you have received here at
the Coast Guard Academy will stand you in good stead in life years
to come.
You have made an excellent beginning in your professional
careers. But commencements, by definition, are primarily beginning
and do not represent final achievement. When you leave this campus
today, you will set out on a new and exciting career in one of our
oldest and most versatile armed forces -- a career which offers un
parallelled opportunities for service, not only as Coast Guard of-
ficers, bufe^as official representatives of the United States. For
by accepting a commission in the Coast Guard, you will accept the
responsibilities of leadership in a profession that will bring you
into contact with a world-wide variety of naval, maritime, and
commercial affai^
51
,<L^v"/^
\k. tkf \
V ^
X
*
\
ADDRES^S OF THE HONORABLE DOUGLAS DILLON
SECRETARY OF THE TREASURY
AT THE
75TH
COMMENCEMENT EXERCISES OF THE
UNITED STATES COAST GUARD ACADEMY;5
^^£w
WEDNESDAY,
JUNE
1961,
11:00
£#r
WFnMTTGnAV
TTTMT7 7,
7
1 QA1
1 1 . 0 0 A.K,
A V
tz
^*r-
* ^
^WiL
.^^aw"
Admiral Evans, members of the Class of 1961, distinguished
guests, ladies and gentlemen:
This is my first visit to the Coast Guard Academy as Secretary
of the Treasury^ I am honored to participate in this 75th Commenc
ment and to address the Class of 1961. In a short time you will
step up to this platform to receive your Bachelor of Science dipl
and your commissions as ensigns in the Coast Guard. It is a momen
that will climax four arduous years of work and study -- one you
will never forget. You have every reason for pride and satisfacti
But while this day is primarily yours, it also belongs to the cou
you will serve^
Gentlemen, you are to be congratulated for having chosen a
career of
52
TREASURY DEPARTMENT
Washington
June 6, 1961
For Release:
P.M. Newspapers,
June 7. 1961
ADDRESS OF THE HONORABLE DOUGLAS DILLON
SECRETARY OF THE TREASURY
AT THE
75TH COMMENCEMENT EXERCISES OF THE
UNITED STATES COAST GUARD ACADEMY,
NEW LONDON, CONNECTICUT,
WEDNESDAY, JUNE 7, 196l, 11:00 A.M., EDT.
Admiral Evans, members of the Class of 1961, distinguished guests,
ladies and gentlemen:
This is my first visit to the Coast Guard Academy as Secretary
of the Treasury. I am honored to participate in this 75th Commencement
and to address the Class of 1961. In a short time you will step up to
this platform to receive your Bachelor of Science diplomas and your
commissions as ensigns in the Coast Guard. It is a moment that will
climax four arduous years of work and study — one you will never
forget. You have every reason for pride and satisfaction. But while
this day is primarily yours, it also belongs to the country you will
serve.
Gentlemen, you are to be congratulated for having chosen a career
of service to country and humanity. The path you will follow will not
be easy, but the fine training you have received here at the Coast
Guard Academy will stand you in good stead in years to come.
You have made an excellent beginning in your professional careers.
But commencements, by definition, are primarily beginnings and do not
represent final achievement. When you leave this campus today, you
will set out on a new and exciting career In one of our oldest and most
versatile armed forces — a career which offers unparallelled
opportunities for service, not only as Coast Guard officers, but also
as official representatives of the United States. For, by accepting
a commission in the Coast Guard, you will accept the responsibilities
of leadership in a profession that will bring you Into contact with
a world-wide variety of naval, maritime, and commercial affairs.
Leadership is a big word. It will be up to you to give it
meaning. Your responsibilities and your opportunities will be greater
than those experienced by your predecessors. For your country, which
stands before the world as an example of what a free, creative people
can do when given full opportunity for self-expression, Is challenged
D-125
today as never before in its history.
- 2 We have indeed been fortunate. A kind Providence has blessed
us with a fair and fertile land, rich with an abundance of natural
gifts and a hard-working, Intelligent citizenry. And we have fared
well, I think, because there has always been in our people a
recognition that there is a Supreme Power not subject to human
limitations.
But all our talents and resources will mean nothing unless we
bring them to bear as a united people to meet the problems confronting
us in the months and the years that lie ahead. Our Founding Fathers
understood the situation very well when they wrote 185 years ago:
"All men are endowed by their Creator with certain unalienable
rights, that among these are Life, Liberty and the pursuit of
Happiness."
A great truth, to be borne constantly in mind, is that these
rights cannot and must not be taken for granted. Each generation
must struggle anew to maintain them. This struggle takes different
forms. The young men of my time had to meet that challenge in the
arena of war. It was our deepest hope that out of our ordeal would
be born a lasting peace among all nations. Unfortunately, our hopes
have not materialized. We still live in a world beset by tension and
anxiety.
If by peace we mean simply the absence of large-scale military
operations, then the world Is technically still at peace. But all
the values of our free society are nevertheless under continuing
assault by an alien ideology. This assault upon our free way of life
is being waged on all levels: political, economic, psychological —
and in some areas, even on the para-military level.
Since the end of World War II, there has been a great awakening
among the underprivileged peoples of the world. This huge surge of
human aspiration is a force of inexorable power. Over and over it
has been proved that "men do not live by bread alone". They also
yearn for the dignity and self respect of free men, and they look to
us and to other advanced free nations for assistance in realizing
their mounting expectations.
You are, therefore, entering upon your duties as officers of
the Coast Guard at a time when the world demands more of our
country -- and our country demands more of you — than ever before.
These demands are spiritual as well as material. It is not enough
merely to be militarily and economically strong. To win this
struggle we must also appeal to the minds and the hearts of men. We
must convince them that our free way of life offers a better future
for themselves and for their children than the authoritarian system.
Our very future as a nation depends in large measure upon your
response to this challenge.
You
We
greater
of
young
the
understanding
Treasury
men will are
participate
between
proud of
nations
the
in apart
world-wide
andyour
their
service
diverse
effort
Ispeoples.
to
playing.
achieve
m 3 -
The Coast Guard is uniquely qualified to meet the complex needs of
our times because it is both a military service and a humanitarian
agency. All of its resources are at the disposal of those who need
them, without regard to nationality.
As officers of the Coast Guard you will be members of a service
which enjoys high prestige in many parts of the world. Your duties
often will bring you into contact with men of many nations in a
working partnership. It is on this personal level that you can
contribute much to strengthening your country's international
relations.
What are some of the opportunities that await you?
One example is the Coast Guard's constant effort to advance
standards of maritime safety throughout the world. Last June, largely
as a result of the tragic loss of the "Andrea Doria", an
International Conference for the Safety of Life at Sea was held in
London under the auspices of the United Nations. At that conference,
which was attended by some five hundred officials of more than fifty
nations, the Coast Guard represented American shipping interests.
During the extended negotiations, the United States delegation,
headed by your Commandant, Admiral Alfred C. Richmond, conducted
itself with a professional competence that won universal respect
and wide support for many United States proposals which pointed the
way toward greater safety at sea.
Another recent milestone in international collaboration was the
Sixth International Technical Conference on Lighthouses and Other
Aids to Navigation held last fall in Washington, D. C , under the
auspices of the Coast Guard. Forty nations took part in this
conference.
I cite these conferences to indicate the wide sphere of activity
embraced by your service, and to illustrate the kind of duty that
may lie ahead of you at the International conference table as you
become senior officers. The significance of these conferences goes
far beyond purely technical considerations. They are an important
part of our continuing national effort to achieve greater understanding and collaboration with all nations.
One of the most important international aspects of the Coast
Guard's work is Its program of providing counsel and Instruction to
help solve the problems of a growing number of other nations. It
has aided in establishing organizations similar in purpose and scope
to your own service. It has given officials of other governments an
opportunity to study at Coast Guard schools, training stations, and
installations since the end of World War II. The Coast Guard has
been going about this work quietly and competently. Among the many
foreign governments which have received assistance from the
Coast
The
Haiti,
Tunisia,
Republic
Guard
Honduras,
Turkey
during
of China,
and
Indonesia,
the
Viet
past
Denmark,
Nam.
year
Iraq,
El
alone
Iran,
Salvador,
are
JapanArgentina,
Ethiopa,
Lebanon,
Brazil,
Prance,
Pakistan,
Greece,
Ceylon,
Peru
- h u •,_, t training program covers a wide variety of subjects, including
nelicopter rescue techniques, air traffic control, port security,
aids to navigation, Loran, merchant marine inspection, rescue
coordination, and training in the operation of the UF-2 aircraft.
This type of inter-governmental cooperation by the Coast Guard is
a valuable contribution to maritime safety and the security of the
free world. Undoubtedly, some of you will participate in this
program, which is becoming increasingly important. From my own
experience in international relations, I can assure you that it will
be one of the most satisfying experiences of your lifetime.
The humanitarian side of the Coast Guard's work was dramatically
brought^to the world's attention in 1959, when the Coast Guard cutter
Storis" was dispatched to evacuate an injured seaman from the Soviet
refrigerator ship "Pischavaya Industriya" 149 miles from Dutch Harbor,
Alaska. After picking up an Interpreter and doctor, a Coast Guard
plane flew the seaman to the nearby Elmendorf Air Force Base
hospital. This incident, one of many, underscores the fact that the
Coast Guard's services are available to all ships and persons in
peril on the sea, without regard to nationality.
As Coast Guard officers you will have the opportunity to
participate in the International Ice Patrol. This outstandingly
successful venture in international collaboration was born in 1914,
following the tragic sinking of the luxury liner "Titanic".
Ever since that sad event which cost 1,513 lives, the Coast
Guard has been keeping watch over the ice-infested shipping lanes of
the North Atlantic.
The Coast Guard is charged with the responsibility for operating
the Patrol. The cost of its upkeep is presently shared by l6
contributing governments. The fact that the Coast Guard has been
entrusted with this heavy international responsibility is another
example of the high regard in which the Coast Guard is held by other
nations.
In viewing the Coast Guard as part of the world picture, I do
not intend in any way to minimize such important functions as
maritime law enforcement, port security, or the safeguarding of
individual citizens through the small boat safety program. Indeed,
as an amateur sailor myself along our New England Coast, I have first
hand knowledge of the invaluable service rendered by the Coast Guard
to the growing number of Americans who are taking to the water in
pleasure craft.
Gentlemen, as you enter upon duty as officers, I think it
important for you to bear in mind that whether you serve on our
inland waterways or in the Antarctic, you have a tough, but
rewarding job ahead of you.
54
- 5Your four years here have been a long, hard voyage, but you
have weathered it successfully. In a few minutes, you will raise
your right hands to take the traditional oath as commissioned
officers of the United States Coast Guard. I am confident that
you will measure up to the best traditions of the hosts of brave
men who have preceded you in the service. I have equal confidence
that you will acquit yourselves with such distinction that succeeding
generations of Coast Guard officers will say "Well Done". To all
of you, I extend my warmest congratulations. May you all have long
happy, and successful careers in the service of country and
humanity.
0O0
Mm* 5* im
j^J^iMtm A. M. mmnrtMS, Tuesday, Mm 6, 19&K
a m i s or fmijRmr's V S U L I BILL orrntno
the treasury DcpwrtaMnt *__m_Jieed last evening that the tenders for tiro seritief
, bills, one aeries to be an addition®! Issue of the hills dated "are*. 9, if£
sad the ether series to be stated «June 8, 1 M L , which were offered on m y 31, wew «p|
at the Federal Bessrve leaks on June 5. faaders were Invited for $1,100,000,000, or
thereabouts, of 91~dajr bills and for 1500,000,000, or thereabouts, of 182-dsy W i s .
the details of the two series are as fellows.
RA^S Of ACCEPTED
182-day treasury oiUt
91-day Treasury bills
8
CQKPTTITIV" BIDSt
h»*
pprox<
Price
High
Low
Average
99*361 "^
99«36*
Annual $
Hats
»
Lee
t.sm
r
l
s
p
w.
t.516* 1/
96.616
~~Il9S
W
2.738*
2.7271 £/
a/ tempting two
totaling #350,000* J/ SxeepUfl* one tender of $200,000
59 nerosnt of th
mt of 91~dsy hills bid for st the lew price was accepted
79 pereeat of the amount of lSt-dtoy bills bU for at the low prism
accepted
T0T*k T*.ximm APPtfBD FOB AJB AOCiiPWD if
rami
K;'LH:¥E DISTRICTS:
Applied For
Appllsd For
i v,m,m
IM©9,00©
t ' 23,891,000 I 1 2 , 8 9 1 , 0 0 0
796,159,000
799,686,000
1,655,702,000
383,830,081
13,099,000
10,510,000
95e,809
5,95M©0
25,083,000
31,908,000
7,863,000
20,7U,000
8,171,000
8,596,000
l,?a9,OO0
1,7*9,000
Atlanta
15,386,000
17,1*66,000
2,31*0,000
4.816,000
hieag©
11*2,731,000
233,569,000
27,101,001
St. Leui»
69,857,000
17,547,000
viniaeapolis
2l*,i&5,000
17,078,008
17,678,000
gar^as CAtf
8,983,060
19,03^,000
3,3*2,000
5,9*2,000
Dallas
19,851,000
23,261,000
7,312,088
7,*§82,000
3en Francis©©
12,667,000
12,967,000
3,276,000
it, 926, 000
$1,100^09,000 0/ $998,J0btO0O
KfttlM
58,oii#ooo
mmMMM
12,137
,1*06, x o
Includes |2O%08f,000
noncompetitive
tenders aceepted at the average prise of 9$d
District
Boston'
M* fork
Philadelphia
Cleveland
t500,35M»8J
Includes ibk,01.6,f~.C0 uncompetitive tenders accepted at the average sariee
of 9^.6^
1/ On a coupon issue of the sane length and for the sane amount Invested, toe retaflH
$
these bills would provide yields of 2.57*, for the 91-day hills, and Z.Q0M, t*r*
182-day bills. Interest rates on bills are quoted In tonus of bank discount si*
the return related to the face amount of the bills payable at maturity rather thai
the amount invested and their length in actual number of dajrs related to a 3&M*i
year. la contrast, yields on certificates, notes, and heads are computed in tort
of interest on the amount invested, and relate the masker of days remaining i»«
56
TREASURY DEPARTMENT
WASHINGTON, D.C.
June 5, 1961
PR RELEASE A. M. NEWSPAPERS, Tuesday, June 6, 1961.
RESULTS OF TREASURY* S WEEKLY BILL OFFERING
The Treasury Department announced last evening that the tenders for two series of
rsasury hills, one series to be an additional issue of the bills dated March 9, 1961,
id the other series to be dated June 8, 1961, which were offered on I&y 31, were opened
t the Federal Reserve Banks on June 5» Tenders were invited for $1,100,000,000, or
.ereabouts, of 91-day bills and for 1500,000,000, or thereabouts, of 182-day bills*
.e details of the two series are as followss
kNGE
OF ACCEPTED
>MFETITIVE BIDS.
High
Low
Average
91-day Treasury bills
maturing September 7, 1961
"^"Ti^Fcor 1 Equiv7.
Price
Annual Rate
99.369 a/""
99*361
99.36k
TJ&hJ
2.528$
2.516$ 1/
182-day Treasury bills
Mturing December 7. 1961
Approx. Equiv,
Price
Annual Rate
~2T698$
98.616""
98.621
2.738$ ^
2.727$ 1/
aJ Excepting two tenders totaling $350,000j b/ Excepting one tender of $200,000
39 percent of the amount of 91-day bills bid for at the low price was accepted
79 percent of the amount of 182-day bills bid for at the low price was accepted
IAL TENDERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS.
Applied F o r A c c e p t e d
Applied For
Accepted
* "23,8sa^ooo
12,891,000
799,686,000
383,830,000
1,655,702,000
798,159,000
95U,000
5,951*,ooo
,000
28,510,000
13,099
7,863,000
20,7lii,000
31,908,000
25,083 ,000
1,71.9,000
1,7149,000
8,598,000
8,171 ,000
2,31*0,000
^000
li,826,000
17,1.86,000
15,386
27,101,000
,000
69,857,000
233,569,000
11*2,731,000
17,078,000
17,678,000
2l*,_4ii5,000
17,51*7,000
3,31*2,000
5,91.2,000
19*038,000
7,312,000
8,983 ,000
7,1.82,000
3,276,000
23,281,000
19,851 *000
li, 926,000
1*2,859,000
12,967,000
12,667 ,000
56,601,000
$500,351**000
d/
$2,137.1*06,000
$1,100,1*09,000
e/
58,011,000
25A^
*998,30U,000
Includes $200,088,000 noncompetitive tenders accepted at the average price of 99.361*
Includes $1^,016,000 noncompetitive tenders accepted at the average price of 98.621
On a coupon issue of the same length and for the same amount invested, the return on
these bills would provide yields of 2*57$, for the 91-day bills, and 2.80$, for the
182-day bills. Interest rates on bills are quoted in terms of bank discount with
the return related to the face amount of the bills payable at maturity rather than
the amount invested and their length in actual number of days related to a 360-day
year. In contrast, yields on certificates, notes, and bonds are computed in terras
of interest on the amount invested, and relate the number of days remaining in an
interest payment period to the actual number of days in the period, with semiannual
compounding if more than one coupon period is involved•
126
District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
TOTALS
J « . ^ s M
t t e M w million M i m
by i^ich the
BUI falls start •£ tba frasiiaiii1* prapOMla,
JItarMtlwly* th* WwmmtMtmt raecnawMMM w increasa of 1/1 cent
in tlM t*a& ®n fMollw mmrnr thm axiattsig famml ®£ -Mm cm&m
Ion* iitt this is * s«e4»i mBxot&m, sine® eh* study fcy the luraatt of
Kabila &@a4s alaarly lodie«tstti feat thm gemaral bulk of ki^may users
wmxm fayiag t_telr fair mh&vm. of Faiara^igiiiiaiy as^ai*4£tr_traa, and the
fraaitoifc1* prorGre-viee is for £immmim% isatltcMa vhicli »re adequately
reflect tita ea«t faetoft attxllmtafela to haawtav trucks.
/fi* coacl.yaioti, let ma r«p$at tkat I.E. 6713, m passed fey the
Hmsaa, foas far te mmt tte ofejaetiv* of finanela* fctia Fa«!aral hid**
nay ajatam la * raaaoadbl* faaMam. I0wrar» mm fcaiiava t&at a<§4itid«l
ramauaa from mrmmtmt Treat Fund, rmmmm aoureaa ara naedad m accord ^
witii tf*a Frasi*kmtfa frogram. Frwialasi a£ ttiaaa attitieaal
aotsia* afiaklaisa to fesap o^r M a c a i ^L^mrny program wmiMg
staadily
ah*ad on a pfty~aa~yat.~f» kaais n^*h^t. aiMttng tft < Tiiiiiaaul ilnrtmlr
^p__^^U^e^
etcL< ' fTTI'gJ fr (^AyvXuoCC^t
< ^ A ^ (^A^Xukc^
^ ^ |g|jUirffti.j
JLLfivJt
^c
•IBBill ani tha fraaitau:*a raccanaaiatloaa wlttt raapatt to thm Ttmt
Wmd financing crsrar leg lifa, jtelaaiag tba #»poaa«! ttharaa Boalfta1
wmmmi®n. tta imt Bill aauata on ravanaaa of $2*3 billion from
sonreaa ablet* mm baliava ara aithar otojaetioiiabia ®t oroimt Jaataaf,"
imm
and inwi'iiwwi
it fails- to allow for abcmt iatiafotma'tfavimillionriaibftiraof
pvopar Xroat fund
:
•"'•-'" -' • •'• • • /^' • • • *Xa!w9
1. Chraratataaant of rwannea * total
a. Mvartiaa of raifannaa from afra. tax
on araeka ani basaa
b. Bataatioa of aviatiaa gas raaeipta
a. taeaas of trmais naa tarn ravaaua estinsata
2.
$2,320
tfttdaratataaaat of m-sgmmmmmm
Foraat and pifeitc land kigtoay®
1,771
161
3S8
yn
442-
3. ®rand total ««_. $ a,731 -.-.
I tirga yoor favoxabla canaldaratiaa of the President's racoa*
aaadatiaae for imeraaaaa in Hum taxaa on diaaal fual, tread rubber,
and traak use to obtain via needed aMltloaai revemaas of
59
-17He al«o have laisgiviag. about tiw provision la 8. R. 6713
far inatalaeBfc payment of tha fcrtiefc t»« tax la plaee of the exi
raajuljraaeat of a aingla mmmml pmymmt* It team bean arguai that ful
pmymmt at file tiaa of initial liability places a £iaaaeial bvz4mn
on trnefears. Mow***, thmf®*mmt trueit mm tax ia no different ia
this vaapaat than tha registration taxes in practically all tha Sta
An laatal«aat f&yaemt ayataa for tha wtmk use tax would irxreai*
tha work of cite internal Revenue Serriee sinae it wo®X4 require aai
tainiag aaeenata and sending bills to taxpayers aftar tha f irat
l*ay*aat« Tba imtarsial -Bavaaaa $enriee i» presently faced m&th a
mandcnis volnae of nafarwork, mn& mm would hope to awid additional %
whiah iees not a4d to tha effectiveness of tha tax system.
Tba Itepartiaeat has ao objaatiom to tha provision in tha Bill f®*
tha tex~free aala of gasoline for use as a material In tha manufactu
of another article.
Tha following table summarises tha differences* between tha Boat*
amounts 4m under the tax and* second* that the Regulations will be
revised to provide for a tax classification system resulting in a
higjbar ovar^ali tax than at present. Tba Ifceasury apartment is rtwiSdk$ its methods o£ enforcing this tax ana* ia confident that great*
effectiveness can be achieved. In fast, collection increases in the
last several fiaaal years indicate tfeat considerable imfrevesie&t
alraaaV baa been made, aowever, the Baaaartnaat believes it is unrealistic in making estimates for fiaaal ymmx 19B1 and after to
assume there will be immediate and complete compliance bf every taxpayer, Blsdlariy, w a see no justification for assuming that the
present truck claasif ieat&sas ia tha tabulations are erroneous or
that any readjustment of that classification ia warranted which snail
result in substantially increased revenues. These two factors, hew*
ever, have hmma counted on my the louse to add nearly $400 million —
or more than twauty percent of tfaeir estimate of the revenues froa
this tax during tha remaining life of the Trust Fund*
61
*is~
clearly supports tha raising of additional revenue from trucks, a,
increase in the truck use tax U necessary to prmUm Warn addition
increment of tax on heavy trunks which eannot be aeewatal? prmmiM^
by generalised tun. Urn Immm tha tax rata on diasal fuel at the
•*'
i
/
.
/
-
-
'
•
i
••
-
'
' '
'
'
~-v
'
i
• • , : • • . •
'
'
same level as the gasoline tax will result in diaaal vehicles paying
lass tax \wm mile of higteway use than aaaallna^aawai vehicles.
l.ft. €713 also fails to discontinue the transfer to the Highway
Trust fund of revenues from the tax on aviation gasoline. This prs*
paaad change is part of the President*s program for implementation ©f
0n tho other handy jaa
bill makes no provision for finaaeiag forest and public land hi#ntsyft
from the Highway Trust Fund revenues, which is the logical mm* appropriate arrangement for paying for these roads.
Let ma also note that the Treasury Department doaa not agrea with
mm* ' " ^ •• ' - fc)*- . . • •-, ,;;iy l'*M ®?
tha estimated revenues for the truck use tax aat f©rth in t&m Mays
and MsansCcmsiittee report on H. E» #713. Those estimates assume;
first, that tke Treasury ©apartment will collect 100 percent pf tha
62
~14~
additional revenues from heavy trucks —
rubber, tha truck use tax, md
wrnmly,
the tax on tread
the tax on dlasai fuel, toder theBlll
.,r«er>
the first two of these taxes would be wmlmmd somewhat, but there wosii
bo. no Increase in theidiesel fgalyjaafrsLmiffl * ©vertha life of tha pro
J/<3LLS'oo
gram, t_he bill would raise two biiliaa -fiwa hundred million riffniiiiipaw
•'-• '"'•>• ,'**.v_eiea
leas from these three sources than the President propose.
fi £v The following table details tfee differences in rates:
Tax Present late as of Rate proposed H.&.
....flm. **r l ^ ^ ^
nresent law
Masai fuel
.©amis per 4$
3a
•%*llea
Trucks Abuses 1,000 lbs. #1.50 #1.50
over IMiWM
' dir grass
' :'.v.
lbs.
weight
B#
KB
by President
4ZUL
7c
§5.00
4 ^.
#3.0©
^
110c
10#
Ba loc 10*
100 5$
The inereasea proposed by the President would provide a
reasonable allocation of the costs of Federal hignway a i d A ^ » a stair
made by the Bureau of IsbUs Roads at tha direction of theCongrest
63
•*B
assigned to rasanas sources other Hian taxes on motor**afeBMa<- users
The freaidaat ia his mi&mmy Massage pointed out, however, tkmt
the etudy did not- support -tartfaar aUasmiaat from the general imi,
^ \^X^x: wiu &JJIX. UUCJCU tfcu-o /mrx^xtz*- /y^-uv^-^t^-^^^ ,
?f Aside frem the interpretation of the study, we should reaea_fojrr that
considerable revenues previously used for
diverted to the Highway Trust Fund at its incept ion4
The diversion under the ilouee Bill is, In effect, an indirect
method of breaching the requirement of section 209(g) of the 1936
Act that expenditures should be limited to funds estimated to be sail!
able to she Highway Trust fund. If additional revenue tmmim of the
Fund are to be met through diversion from the general fund, then it
seems to me tiiat section 20§{g) has no real force.
The differeaees in revenue sources proposed by tha House Bill
-
• vr $>„__. •1m4p..^. ««.«>#
y
and by the President involve the components which are designed to
64
-12freaideat1® revenue pre#asals ara about #1 Utlim short of presently
estimated needs for a June 30, 11711 eut-off data, fbe eerrectia& of
this short-fall of about 2 fmmmm aarar tha Ufa of tha fund could
hava bean ©omsidared in Ikttma fears ate** the ftad has over a decade
to go. lewever,. the decision of the Maasa to maka a aoapaaaatiisi
adjustsseat in tStm program at this time is reasajnabla *m& helpful.
1. %\. 6713 deviates in one major raspact from tha principle of
paying tha federal highway mMM from tha motor vehlala taxes set aside
in IBS* tea that puxposoa fader the House Bill, the half of the recsift
from the 10 percent excise tax on manufacturers sales of trucks now
retained In the general fund would be transferred to the Highway
Trust Wvmd beginning In fiscal 1962, This diversion would total
$!.§ bUUam^TfBa argpaamt for this proposed diversion has beam asssflri
on the basis of the highway cost allocation study of the Bureau of
fublic loads (see Souse teport Mm. 32*
t
page IS). This study
suggested that § percent of the program* s costs should be
-11*
mm4 public land feitfmaya, and the iaareese ia funds far mm ABC
1. 1* *?!!, w M o h has baa® wmMwatrnM to yoar tosmittaa, would
repeal the scheduled 1%2~64 diversion from the general fund with
respect to the taxes on pasaattger automobiles m®4 parts and
aeeaasaries. It would rmmM the tax an gasoline at four cents
QSi
|£^M^U^-J-- ^\W\
^AA^U^Ax^^K *
a gallon. The taxes on tires and tubes would be increased as
S-4"
proposed by the President. 7)Lesser increases than those
by the President would be made in the taxes an A'tread rubber.&ud
A
J
the truck weight tax. finally* the Highway Trust fund and the
taxes allocated thereto would be continued for three months
beyond the now scheduled June 30, if72 completion date. Tha effect
of these increased rates and the time*extension mem shown in
Tables * and 7.
The extension MM tha life of the fund is appropriate* The
rl
___*
.
^^^U^^^^^f^
66
financing. This cbanga wouli add about #400 mllltea to
1
ovar thm rest of tha fund * U f a ,
, and urban
3. lands for tha 4BC system of prteary.
lavelef
should be gradually teoraasad from thm fixad
milliom to #1 billion by increasing authorizations #25 islllisa
|fer ymm in 1#*4, If**, and IfiB. This would add about #400
<jO ^million to Trust Fund e^euditnres.
4. The federal hl#*way law should bo mmmdmd to provide aid
J Ilia finding reasonaWe housing at reasonable costs for thasa displace!
from their homes by future Fedaral-aid higbway projects, lo cost
jfaatimate is placed on this proposal as It largely involves
.tratiw costs.
tha President'8
the Highway Trust Wwrnd
proposals is shown In Table 4. A breakdown of tha revenue sources
by type® of taxes is given in Table 5. These tables reflaat the
President's proposals with respect to aviation gasoline, forest
_
.
"
•
•
•
,
_
_
_
,
* '
*:
*
'
,-tt
T^UA*1
ft w J
-9These additional tax coats will ba rafiaata4 in tha industry's
costs mod rates.
The President madeiSS^ar suggaatteaa wfHah have an
impaot on the ll^nay Trust fund:
1. laaaipts from aviation gasoline (#22 million for fiscal
* m*
1B*2) Should be retained la too general fuad rathar than
transferred to the airway Trust fund. maAdevelapaaat of an
airway user «$mm program would heighten the inconsistency @f
using tbaae tarn rawaaataa ter-lriLgbaay fteaaateg. this change
would wmMmm Trust fund receipts war its remaining Ufa by
about #1*0 million.
2. tha financing of forest and public land highways (now
about %%9 million a year) should be transferred to tha Highway
Trust Fund. Such roads primarily benefit automotive operetta*
and logically should be paid for from automotlv* taxes devoted to
69
The attached Tftbie 3 shows how the Highway Trust fund is being
financed under present law as compared with tha taxes proposed by
The President1 a preferrad taa proposal stress** tha desirability {
mi greater tea contributions by truckers — especially those using
diesel trucks — because the highway oasts attributable to thsm
• ^
are mat maw fully reflected la Trust fund taxes paid by them. f2./w~wj
am mmtm that you will be told that the trucking industry is highly) $^
competitive, not vary profitable, and cannot "bear** the taxes
proposed.
But there 4a a* tot.ai.Hfm at halffrg d ^ t ^ i a a a additional
tha Industry a m pay them out of
profits, A more fundamental public policy question l» involved.
The trucking industry is a large industry. In fairness to the
general taxpaylag public end competing mmMmm of transportation,
we faal that the industry mmM its customers should now pay their
allocable share of the cost of federal-aid facilities used by it.
69
stated that Chit
would be clearly acceptable and would hava. his support,
this approach would raise a vary large proportion of tha additional
revenues from the drivers of passenger cars. 4 fairer allocation
TW mm> ^wa*s<?^ '%*aa4ra&( a^iia'as ^wswifiiaa aiwimmQ&**mjFm %MW amp m^m* ww^mmflm* vumw&^m ejfcasrws* •wmbmmmmmmmmmm-.jp mm m*% mm>w&wm*mmmm mftmw ^m
mS/m* mtfmm-mif^mfcmv' zmmtPm^mmifa.--a*mpmasjMsfr'^'iPa* m&mvmmmm mimmmmaBSfflmf mmm^^mm^mmf^, mm9mm^m^mm^mmmmmm 9m m § 1 a. as .a* m? m^m^a^apaisspsiea*
HA.
therefore proposed as a preferred alternative to a four and a half
cent rate on motor fuels $ the retention of the present rate of
4m& cents a gallon on gasoline tand other tax increases as shown
to the following table:
Kate as of
Sat.
freseat July 1 under pHOp0B0&
rate
present law by.^fltei
Masai fuel
Trucks mm£ buses
over 26,000 lbs.
>D«1,000 lbs.
of gross
weight
3*
7*
U.50
$1.50
#5.00
*«
Highway tires
pound
H
8«
100
Inner tubes
pound
9*
9*
100
Tread rubber
pound
3$
30
106
70
a pay-as*yau-bulld policy. I thtek that poiiay ahauld bm contiaaed,
Interest costs bmil€ no roads.
T# permit hi#way ftesaeteg to result te» or add to» an
imbalance la the budget would be unwise. As the President stated,
•'Tills is a decision aMoSi, if it Is zmtem at all, should bm taken
on Its merits, to relation to tha state of tha economy *ad the
!
budget as a whole
9
not as an accidental by*fradt§et af tha highway
la addition to tha iwmMm mm^ismM if this scheduled diversion
is repealed, further fends must also bm provided to meat the
increased easts of construction. The President had recommended
raising all of the nmmMmd ravaanas fram iaeraaa&ag excises
previously earmarked to support tha highway program. Tha previous
Administration had reaahed the same conclusion and suggested
increasing tha present Mmm? cents a gallon motor fuel taxaa to
71
the IBS* decision by providing for tha itemmim to. the Highway
Trust fund for IMUHMk of part of tlui ravawaf £ r w ^ a * M a i * r
automobiles and parts mm£ *ee**aariea. President Kennedy — as
President Eisenhower before him — has requested that this diversion
from the general fund not be permitted to occur. They both hare
thus supported the decision made by the Congress to 1956 to limiting
to the general fund, fee tor highway purposes of funds
program at the expense of the general budget. Equivalent funds wi
would still have to be obtained bj higher tanas for the general
budget» lower expenditures elsewhere, or more debt financing. As
a practical matter, the end resold is likely to be more ttebt finanetog.
Congress examined a proposal for debt financing far the highway
program to ifSS. After eeaeiderteg tha added interest costs W^
the hand program, the Congress rejected this approach and adopted
n
of the changes to tha asttoatad cast* of tha iystam beyond the
estimates available to IBS** 4 t^mlattoa of the reasons for the
increase ia given to Table 2, taken from tha report of tha House
Committee on Public «wka on 1. 1* 6713.
la eoastoartei
the
^e€tdfi B** additional financing, 1 wish
first to disease the funds that are now available for fiscal 1962-W
only because of the scheduled diversion from tha general fund. Ths
Congress to IBS* decided to finance the m^mW&mtk highway aid program
by allocating reeeipts from the taxes on motor fuels $mM certain of
the other existing taxes on motor vehicles, by tax rate Increases,
and by the addition of two new taxes. The IBS* approach to financing
highway &td thus involved a definite decision not to use all
revenues from automotive items.
Freaeat law, howevar, contains an undesirable deviation from
73
A slow-down to the highway program would be highly undesirably
The aufpiias* machinery, and masipower for highway bmtMtmg are avsihb]
highway eoaatruatlom ia making a. positive contribution to amployasst.
The finished aaaafaruatiaa Itself is important to our safety, convenience
#
and economic growth.
The problem we face is to provide adafuate financing to
enable tha pay-as-you-go program to advance systematically,
in line with our .needs m®& physical capabilities. Completion of
the Intarstate System a* scheduled requires mora, funds —
_hfc../
4a&±2Be& if the schaduled diversion from the general fund is
rescinded. The additional money needed is largely tha result
-2Highway aid involves planning and
States tor to advance of thafetestha toads ara actually
spent. Urns, Btafia *ff«BtliMM^ will ba made this
far the fiseal year MttB. The aml^ari^tlons far bath fiseal
lf*3 and lf*4 tor thetofcerstatasystsm war* sat at
#2.2 billion.
law far the Highway tnwt Fund will dealtoa with mn abrupt
drop of mbwm #Bi§ sriLUftaa — mmm ihaa 25 percent — to
fieaai if*S laaa Tabla IK
laaause of tha estimatad future
shortages of trust toad revaauas under fraaaat law, it now
appears that apfmrtl*aMat£t* Statas lor fiseal lf*3 can
im\
only be ft* billion
Jf/j*T»*
am* M l .
, mwd for fiscal 1964 mmd 1965,
would permit
of mm billion
fiscal 1968 and I%9, compared to estimated requireme
those years of «ateee billion/hollas^, tereover, even the
reduced level of
s far fiscal years 1964 and
1965 la possible only because diversions from the general
toad to the trust fund amounting to iswa pillion
are scheduled 4mtim the fiscal years 1962-64.
Statement of tha lonorabla ^®u#l**' mihm^
""^^WJu^mmmtmwy, of tha Treasury,
Before the Co_uraittee em Finance of tha United Statas Senate,
to connection with hearings cm I. 1. 6713, relating to the
f ed*ral*Aid itig|t»my Frogram
June 4,. IB*1 arvrm
f Mr. Oiairman m4 wmbers of tha Cmmmittee
> >
I appreetet* this opportunity to appear before you to
discSss tha *lr*4*jrai-Aid Hgtaty Aet ®f It*!". Aa passed
by the House, this act goes a long way toward meeting the
needs outlined by the Fresideat to his message of February 28,
1961, cm a fedaral llpay»a*»yau-goH highway program.
I
believe, however, that the bill should be modified to meet
the financing requirements more tolly and fairlyg
T|^ «ff# fay Additional iyt#,
^ U I M | ^ K ^
The toads available to finance the Interstate Highway
iystem have, until recently, bmmm reasonably related to the
costs of the scheduled construction program which is to be
completed to 1972. This relationship has bmmn maintained,
4m»fltm increased costs, by a temporary increase of one cent
a gallon to the motor fuels tax beginning to October, IB59.
It is now apparent, however, that unless revenues are
increased above the amounts available under present law,
the program must be substantially reduced.
&•>
TREASURY DEPARTMENT
Washington
June 6, 1961
For Release? Upon Delivery
STATEMENT OF THE HONORABLE HENRY H. FOWLER
UNDER SECRETARY OF THE TREASURY
BEFORE THE
COMMITTEE ON FINANCE OF THE UNITED STATES SENATE,
IN CONNECTION WITH HEARINGS ON H-.R. 6713, RELATING
TO THE FEDERAL-AID HIGHWAY PROGRAM
TUESDAY, JUNE 6, I96I,
10:00 A.M., EDT.
I appreciate this opportunity to appear before you to discuss the
financing features of the "Federal-Aid Highway Act of 1961". As
passed by the House, this act goes a long way toward meeting the needs
outlined by the President in his message of February 28, 1961, on a
Federal "pay-as-you-go" highway program. I believe, however, that the
bili should be modifed to meet the financing requirements more fully
and fairly.
The Need For Additional Funds
i The funds available to finance the Interstate Highway System have,
until recently, been reasonably related to the costs of the scheduled
construction program which is to be completed in 1972. This relationship has been maintained, despite Increased costs, by a temporary
increase of one cent a gallon in the motor fuels tax beginning in
October, 1959. It is now apparent, however, that unless revenues are
increased above the amounts available under present law, the program
must be substantially reduced.
Highway aid involves planning and apportionments to States far In
advance of the time the funds are actually spent. Thus, State
apportionments will be made this summer for the fiscal year 1963. The
authorizations for both fiscal 19^3 and 1964 for the Interstate system
were set at $2,2 billion. However, the funds available under present
law for the Highway Trust Fund will decline with an abrupt drop of
about $800 million — almost 25 percent — In fiscal 1965 (see
Table l). Because of the estimated future shortages of trust fund
revenues under present law, it now appears that apportionments to
States for fiscal 1963 can only be $2 billion, and for fiscal 19o4 and
1965, $1,500 million each. Thereafter, revenues would permit
apportionments to rise slowly to a maximum of $1.9 billion in fiscal
1968 and 1969, compared to estimated requirements in those years of
D-127
$3 billion. Moreover, even the reduced level of apportionments for
- 2-
77
fiscal years 1964 and 1965 is possible only because diversions from
the general fund to the trust fund amounting to $2,500 million are
scheduled during the fiscal years 1962-64,
A slow-down in the highway program would be highly undesirable.
The supplies, machinery, and manpower for highway building are
available. Highway construction is making a positive contribution to
employment. The finished construction itself is important to our
safety, convenience, and economic growth.
The problem we face is to provide adequate financing to enable
the pay-as-you-go program to advance systematically, in line with our
needs and physical capabilities. Completion of the Interstate System
as scheduled requires more funds — $9,700 million more than available
under the law now on the books, and $12,200 million if the scheduled
diversion from the general fund is rescinded. The additional money
needed Is largely the result of the changes in the estimated costs of
the system beyond the estimates available in 1956. A tabulation of
the reasons for the increase is given in Table 2, taken from the
report of the House Committee on Public Works on H. R. 6713.
The Diversion Scheduled For Fiscal 1962-64
In considering the needs for additional financing, I wish first to
discuss the funds that are now available for fiscal 1962-64 only
because of the scheduled diversion from the general fund. The Congress
in 1956 decided to finance the expanded highway aid program by allocating receipts from the taxes on motor fuels and certain of the other
existing taxes on motor vehicles, by tax rate increases, and by the
addition of two new taxes. The 1956 approach to financing highway aid
thus involved a definite decision not to use all revenues from
automotive Items.
Present law, however, contains an undesirable deviation from
the 1956 decision by providing for the diversion to the Highway Trust
Fund for 1962-64 of part of the revenues from the excise taxes on
passenger automobiles and parts and accessories. President Kennedy —
as President Eisenhower before him — has requested that this
diversion from the general fund not be permitted to occur. They both
have thus supported the decision made by the Congress in 1956 in
limiting such resort to the general fund. Use for highway purposes of
funds not now dedicated to such use would merely shore up the highway
program at the expense of the general budget. Equivalent funds
would still have to be obtained by higher taxes for the general
budget, lower expenditures elsewhere, or more debt financing. As a
practical matter, the end result is likely to be more debt financing.
Congress examined a proposal for debt financing for the highway
program in 1955. After considering the added Interest costs from
the bond program, the Congress rejected this approach and adopted
Interest
a pay-as-you-build
costs buildpolicy.
no roads.
I think that policy should be continued.
(»
- 3To permit highway financing to result in, or add to, an imbalance
As the President stated,. "This is a
Ln the budget would be unwise.
lecision which, if it is taken at all, should be taken on its merits,
Ln relation to the state of the economy and the budget as a whole, not
is an accidental by-product of the highway program."
The President's Recommendation
In addition to the funds required if this scheduled diversion is
repealed, further funds must also be provided to meet the Increased
costs of construction. The President has recommended raising all of
the needed revenues from Increasing excises previously earmarked to
support the highway program. The previous Administration had reached
the same conclusion and suggested increasing the present 4 cents
a gallon motor fuel taxes to 4-1/2 cents a gallon. President Kennedy
stated that this would be clearly acceptable and would have his
support.
However, this approach would raise a very large proportion of
the additional revenues from the drivers of passenger cars, A fairer
allocation of the tax burden among those who use the highways requires
a greater contribution from large truck operators.
The President therefore proposed as a preferred alternative to a
4-1/2 cent rate on motor fuels, the retention of the present rate of
4cents a gallon on gasoline, and other tax increases as shown in the
following table;
Rate as of
Rate
Tax
Present
July 1 under
proposed
base
rate
present law
by President
gallon
Diesel fuel
34
14
Trucks and buses
over 26,000 lbs.
Highway tires
1,000 lbs. $1.50
of gross
weight
pound
84
$1.50
$5.00
84
10^
Inner tubes
pound
94
94
100*
Tread rubber
pound
34
34
104
79
The attached Table 3 shows how the Highway Trust Fund is being
financed under present law as compared with the taxes proposed by the
President,
The President's preferred tax proposal stresses the desirability
of greater tax contributions by truckers — especially those using
diesel trucks — because the highway costs attributable to them are
not now fully reflected in Trust Fund taxes paid by them. This will
be explained fully with technical detail in the statement submitted
by the Bureau of Public Roads.
I am sure that you will be told that the trucking industry is
highly competitive, not very profitable, and cannot "bear" the taxes
proposed. These additional taxes are not proposed because the industry
can pay them out of profits. A more fundamental public policy
question is involved. The trucking industry is a large industry. In
fairness to the general taxpaying public and competing modes of
transportation, we feel that the industry and its customers should
now pay their allocable share of the cost of Federal-aid facilities
used by it. These additional tax costs will be reflected in the
industry's costs and rates.
The President made four other suggestions which have an impact
on the Highway Trust Fund;
1, Receipts from aviation gasoline ($22 million for fiscal
1962) should be retained in the general fund rather
than transferred to the Highway Trust Fund. The hoped
for development of an airway user charge program would
heighten the inconsistency of using these tax revenues
for highway financing. This change would reduce Trust
Fund receipts over its remaining life by about
$160 million.
2, The financing of forest and public land highways (now
about $36 million a year) should be transferred to
the Highway Trust Fund. Such roads primarily benefit
automotive operators and logically should be paid for
from automotive taxes devoted to highway financing.
This change would add about $400 million to Trust
Fund expenditures over the rest of the Fund's life.
3. Funds for the ABC system of primary, secondary, and
urban roads should be gradually increased from the
fixed annual level of $925 million to $1 billion by
Increasing authorizations $25 million per year In
1964, 1966, and 1968. This would add about $400
million to Trust Fund expenditures.
81
- 6-
An argument for this proposed diversion has been asserted on the
basis of the highway cost allocation study of the Bureau of Public .
Roads (see House Report No. 326, page 15). This study suggested that
8 percent of the program's costs should be assigned to revenue sources
other than taxes on motor-vehicle users.
The President in his Highway Message pointed out, however, that
the study did not support further diversions from the general fund.
The statement presented on behalf of the Bureau of the Budget will
deal with this matter more thoroughly.
Aside from the interpretation of the study, we should remember
that considerable revenues previously used for general Government
purposes were diverted to the Highway Trust Fund at its inception.
The diversion under the House Bill is, In effect, an indirect
method of breaching the requirement of section 209(g) of the 1956
Act that expenditures should be limited to funds estimated to be
available to the Highway Trust Fund. If additional revenue needs of
the Fund are to be met through diversion from the general fund, then it
seems to me that section 209(g) has no real force.
The differences in revenue sources proposed by the House Bill
and by the President involve the components which are designed to
raise additional revenues from heavy trucks — namely, the tax on tread
rubber, the truck use tax, and the tax on diesel fuel. Under the Bill
the first two of these taxes would be raised somewhat, but there
would be no increase in the current rate of tax on diesel fuel. Over
the life of the program, the bill would raise $2,500 million less
from these three sources than the President proposed. The following
table details the differences in rates:
Rate as of
Tax
Present
Rate proposed H.R.
July 1 under
Base
Rate
by President
6713
present law
34
74 k4
Trucks and buses 1,000 lbs. $1.50
of gross
over 26,000
weight
lbs.
pound 84
Highway tires
$1.50
$5.00 $3.00
84
10c^ 10^
Inner tubes
pound 94
94
104 10^
Tread rubber
pound 34
34
104 54
Diesel fuel
gallon 4^
- 7-
82
The increases proposed by the President would provide a more
idequate and reasonable allocation of the costs of Federal highway aid
rtiile removing undue burdens from the general fund.
The study made by the Bureau of Public Roads at the direction of
;he Congress clearly supports the raising of additional revenue from
-,rucks. The increase in the truck use tax is necessary to provide
;he additional increment of tax on heavy trucks which cannot be
accurately provided by generalized taxes. To leave the tax rate on
iiesel fuel at the same level as the gasoline tax will result in
llesel vehicles paying less tax per mile of highway use than
gasoline-powered vehicles.
H.R. 6713 also fails to discontinue the transfer to the Highway
Prust Fund of revenues from the tax on aviation gasoline. This
proposed change is part of the President's program for implementation
_»f a user charge system for Federal airways.
The bill makes no provision for financing forest and public land
lighways from the Highway Trust Fund revenues, which is the logical
and appropriate arrangement for paying for these roads.
Let me also note that the Treasury Department does not agree with
the estimated revenues for the truck use tax set forth in the Ways
and Means Committee report on H. R. 6713. Those estimates assume;
first, that the Treasury Department will collect 100 percent of the
amounts due under the tax and, second, that the Regulations will be
revised to provide for a tax classification system resulting in a
higher over-all tax than at present. The Treasury Department is
reviewing its methods of enforcing this tax and is confident that
greater effectiveness can be achieved. In fact, collection increases
in the last several fiscal years indicate that considerable improvement
already has been made. However, the Department believes it is unrealistic in making estimates for fiscal year 1962 and after to assume
there will be immediate and complete compliance by every taxpayer.
Similarly, we see no justification for assuming that the present
truck classifications in the Regulations are erroneous or that any
readjustment of that classification is warranted which would result
in substantially increased revenues. These two factors, however, have
been counted on by the House to add nearly $400 million — or more
than 20 percent of their estimate of the revenues from this tax
during the remaining life of the Trust Fund,
We also have misgivings about the provision In H. R. 6713 for
installment payment of the truck use tax in place of the existing
requirement of a single annual payment. It has been argued that full
payment at the time of initial liability places a financial burden
on truckers. However, the Federal truck use tax is no different in
this respect than the registration taxes In practically all the States.
83
- 8-
An installment payment system for the truck use tax would increase
the work of the Internal Revenue Service since it would require
maintaining accounts and sending bills to taxpayers after the first
payment. The Internal Revenue Service is presently faced with a
tremendous volume of paperwork, and we would hope to avoid additional
work which does not add to the effectiveness of the tax system.
The Department has no objection to the provision in the Bill for
the tax-free sale of gasoline for use as a material in the manufacture
of another article.
The following table summarizes the differences between the House
Bill and the President's recommendations with respect to the Trust
Fund financing over its life, including the proposed three months'
extension. The House Bill counts on revenues of $2.3 billion from
sources which we believe are either objectionable or overestimated,
and it fails to allow for about.$400 million of proper Trust Fund
expenses, a total difference of over $2,700 million.
Amount
Item
(in millions)
1. Overstatement of revenues - total $2,320
a. Diversion of revenues from mfrs. tax
on trucks and buses
b. Retention of aviation gas receipts
c. Excess of truck use tax revenue estimate
2. Understatement of expenses
Forest and public land highways
3. Grand total $2,732
1,771
l6l
388
397
I urge your favorable consideration of the President's
recommendations for increases in the taxes on diesel fuel,
tread rubber, and truck use to obtain the needed additional
revenues by which the House Bill falls short of the President's
proposals.
Alternatively, the President recommended an increase of 1/2 cent
in the tax on gasoline over the existing level of 4 cents per gallon.
But this is a second choice, since the study by the Bureau of Public
Roads clearly indicated that the general bulk of highway users were
paying their fair share of Federal highway expenditures, and the
President's preference is for financing methods which more adequately
reflect the cost factors attributable to heavier trucks.
In conclusion, let me repeat that H. R. 6713, as passed by the
House, goes far to meet the objective of financing the Federal
highway system in a reasonable fashion. However, we believe that
additional revenues from present Trust Fund revenue sources are
- 9-
84
needed to accord with the President's program. Provision of these
additional revenues would enable us to keep our Federal highway
program moving steadily ahead on a pay-as-you-go basis without unfair
burdens on or diversion from the general fund which in the fiscal
year 1962 at least would add to an already predicted deficit.
Table 1
Estimated status of Highway Trust Fund under present law
(in millions of dollars)
Fiscal year
From before 1957
1957
1958
1959
I960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
After 1972
Total
Apportionments
.
Expenditures
: Primary
:
: Primary,
Interstate : secondary, : Interstate : secondary,
:and urban l/;
;and urban 1>
$ 140 $ 965
1,175
1,700
2,200
2,500
1,800
2,200
2,000
1,500
1,500
1,600
1,700
1,900
1,900
1,625
25,440
829
859
1,381
906
883
884
935
935
935
935
935
935
935
935
935
935
16,057
Office of the Secretary of the Treasury,
Office of Tax Analysis
$
208
675
1,501
1,861
1,901
2,078
2,278
2,l4l
1,838
1,670
1,673
1,705
1,795
1,746
1,7^6*
624
25,440
$
758
836
1,112
1,079
967
913
912
928
940
941
944
943
943
943
943
943
15,045
Balance in
the fund
on June 30
1,1*82
$ 516
2,044
1,049
2,087
524
2,536
119
2,857
108
3,216
333
3,223
366
3,308
605
2,517
344
2,573
306
2,629
318
2,683
353
2,739
354
2,797
462
2,861
634
2,930
1,997
321 2/ 2,318
42,803
June 5, 1961
l/ Includes emergency relief as well as special funds totaling $502,000,000 apportioned for 1959.
2/ Receipts on tax liabilities accrued prior to July 1, 1972.
OO
88
Table 2
Relationship of 1955, 1958, and I96I Interstate
System cost estimates
(In billions)
Estimated costs
Item
1955 estimate
5 percent increase due traffic
15 percent increase due local needs ....
3 percent increase due utilities and
miscellaneous
12 percent increase due price increase .
Subtotal, 1958 estimate
Increase due 1,452 miles added routes ..
Carryover and contingency
Total to complete a 40,000-mile
system, based on 1953 estimate
Additional 1,000 miles
Total to complete a 41,000-mile
system, based on 1958 estimate ...
Reduction in I96I construction cost
estimate
State highway planning and research
Public roads administration and research.
. _ : Federal : State
Total
,
: share : share
$27.6
$25.0
$2.6
m
1.3
3.8
1.2
3.4
.1
.4
.8
4.1
.7
3.6
.1
.5
37.6
33.9
1.6
.7
1.5
.6
3.7
.1
.1
39.9
36.0
l.l
1.0
3-9
.1
41.0
37.0
4.0
-1.0
-9
-5
.4
-.1
.1
0
.6
.4
Total, I96I estimate 4l.O 37.0 4.0
Source: H. Rep. No. 326, 87th Cong., 1st Sess., p. 7.
Table 3
Financing of the Highway Trust Fund
Tax
base
Item
Rates Rates under Rates under
Rates
prior to,
1956
Federal-aid
under
1956
Highway
Highway Presidents
Highway Revenue Act Act of, 1959 proposal
Revenue Act
Rates
under
H. R.
6713 l/
Fiscal year
Percent of receipts appropriated to Trust Fund
Present law
: 1962-72 : 1962-72
1957 :195a-61: 1952-64 :1965-72:President«s: H.R.
: proposal : 6713 _/
H2J
no change
no change
100
100
100
100
100
100
U 2/
14 y
no change
100
100
100
100
100
100
Trucks and buses Mfrs. price 8$ 10$
no change
no change
no change ;
20
50
50
50
50
100
Tires - for highway vehicles Pound 5/ 85.
other
Pound
no change
no change
10j.
;
no change j
37_
0
100
100
100
100
100
100
100
100 -
100
100
•
0
100
- 100
100
100
100
54 'j
100
100
10b
100
100
100
100
100
100
100
100
100
I 100
: 100
j 100
100
100
100
100
100
100
100
Gasoline
Gallon
2.4
3j_
Diesel fuel 3/ Gallon 2.4 3j_
5/
no change
5/
10i_
no change
Tubes Pound 9/ no change
no change
lOj.
Tread rubber Pound 0 2>4
no change
10*.
no change
$5
Use tax on trucks and buses 6/ Taxable
gross weight
Floor stocks taxes:
Gasoline
Tires for highway vehicles
Tread rubber
Tubes
\
Trucks and buses
Gallon
Pound
Pound
Pound
Mfrs. price
0
$1.50 per
M lbs.
—
—
—
lj_
3^
3^
—
2$
74
14
10^
$3
H
2/
\- 100
Passenger automobiles Mfrs. price 10$ no change
no change
Automobile parts and accessories .... Mfrs. price 8$ no change
no 'change no change no change
no change
Office of the Secretary of the Treasury,
Office of Tax Analysis
1/
2/
1/
5/
5/
%j
7/
no change
50\I/
62_\7/
June 5, 196I
Effective until September 30, 1972. Present law rates are effective
through June 30, 1972.
For period October 1, 1959 through June 30, 19_1,
Includes special motor fuels.
U cents for special motor fuels.
Laminated tires taxed at 1-cent per pound beginning June 1, i960.
Vehicles with taxable gross weight in excess of 26,000 pounds.
Actually, receipts equivalent to tax of 5 percent.
CD
Table *.
Status of Highway Trust Fund under President* s proposals
(In millions of dollars)
Apportionments
: Primary:
Fiscal year
:second-: F o r e s t
Inter-. a r y ^
and
public,
state
urban
lands
1/
T x
Expenditures
: Primary,:
: second-: Forest
Inter- : a r y a n d . and
state . urban : public
lands
: 1/ =
Total
Balance
in
trust
fund
on
June 30
Revenues
Present
sources
Additional
315
1,000
1,700
2,200
2,500
1,665
129
859
1,381
906
208
675
1,501
1,861
758
836
1,112
1,079
1,482
2,044
2,087
2,536
1,482
2,044
2,087
2,536
516
1,049
524
119
1961
Unpaid balance
1962
1963
1964
1965
1,800
883
1,901
967
2,857
2,857
108
2,200
2,400
2,600
2,700
884
930
955
955
82
36
36
36
36
2,139
2,326
2,451
2,552
913
898
927
923
37
36
36
36
3,216
3,223
3,308
2,517
-40
78
94
982
3,176
3,301
3,402
3,499
195
236
224
212
1966
2,800
2,900
3,000
3,000
3,000
980
980
1,005
1,005
1,005
36
36
36
36
36
2,645
2,739
2,838
2,866
2,901
932
949
958
972
977
36
36
36
36
36
2,573
2,629
2,683
2,739
2,797
1,011
1,038
1,066
1,092
1,117
3,584
3,667
3,749
3,831
3,914
183
126
43
0
0
2,885
1,005
1,005
36
36
2,992
3,104
1,301
979
966
36
36
2,861
2,930
321
1,1*46" 4,007
4,106
1,176
1,530
1,209
37,000
16,532
478
37,000
397
42,803
From before 1957
1957
1958
1959
I960
1967
1968
1969
1970
1971
1972
Through Sept. 30, 1972
Total
Office of the Secretary of the Treasury,
Office of Tax Analysis
15,1^
9,969
0
0
229
52,772
June 5; 1961
to
1/
Includes emergency relief program, as veil as special funds totaling $502 million apportioned for 1959-
(X)
89
Table 5
Highway Trust Fund revenues under present law and revenues added by Presidents proposals
(In millions of dollars)
ical
jar
Gasoline
and other
motor fuels
3/ per
gallon Xj
WO.—
Sales of
trucks and
buses
ft
Tread
rubber
li per
pound
Tires
8(. or
5i_ per
pound
Present law
Passenger
automobiles
9l per
pound
Tubes
1,326
1,608
1,657
2,044
34
111
107
142
11
13
14
15
82
244
247
281
17
15
19
ft "'"'
#2
*3
#4
#>5
2,362
1,894
1,869
1,917
1,965
142
143
146
149
153
15
15
16
17
19
279
286
291
296
301
16
16
16
16
16
?66
*7
?68
969
?70
2,010
2,054
2,097
2,142
2,191
156
159
162
164
166
19
20
21
22
22
307
313
318
325
331
16
16
16
16
16
m
?T2
mil
2,242
2,298
169
172
23
24
16
16
319
~
"
339
347
2
Total
31,995
2,275
286
4,589
243
m
)58
W
)6o
Parts
and
accessories
Truck
use
tax
$1.50 per
M pounds
:
:
:
:
:
Interest
Total
3
18
13
1,482
2,041)2,087
2,536
ft
ft
._
—
«
—
_.
—
—
—
26
33
34
38
—
45
50
53
56
59
- 2
2
3
4
4
2,857
3,216
3,223
3,308
2,517
61
63
65
66
67
4
4
4
4
4
2,573
2,629
2,683
2,739
2,797
68
69
4
4
2,861
2,930
- 3
Lmated--
--
—
679
692
709
—
..
—
—
—
—
__
—
-2,080
131
137
144
—
—
—
—
—
--—
-412
—
~
321
853
70
42,803
President11 s proposals
Gasoline
and other Diesel fuel
motor fuels
k4 per
U Per
gallon
gallon 3/
Sales of
trucks and
buses
ft
rubber
7/ P«r
pound
Tires
2/ per
pound
Tubes
U Per
pound
passenger
automobiles
ft
Parts
Truck
and
use
tax
accessories
ft
$3.50 per
M pounds
Net
additional
revenues
Total
present
and
additional
revenues
ial—
J57
)58
)59
?6o
1,482
2,044
2,087
2,536
—
—
—
"
Lmated--
til
—
117
124
131
138
40
78
94
2,857
3,176
3,301
3,402
3,499
2
2
2
2
2
142
147
152
154
156
1,011
1,038
1,066
1,092
1,117
3,584
3,667
3,749
3,831
3,914
78
80
110
2
2
4
159
161
44
1,146
1,176
1,209
4,007
4,106
1,530
903
26
1,625
9,969
52,772
&>
476
573
591
605
77
104
115
124
34
37
40
44
64
67
68
69
2
2
2
2
)66
*7
618
631
645
658
673
132
139
145
152
158
46
47
49
51
52
71
72
73
75
76
689
705
891
164
172
105
32
54
56
23
7,755
1,587
32
533
X>3
)6k
>65
m
>69
>70
>71
>72
mi/
Total
679
692
709
- 2,080
131
137
144
- 412
.ce of the Secretary of the Treasury,
fice of Tax Analysis
Tax receipts less refunds. Rate 4 cents per gallon from October 1, 1959 through June 30, 1961.
Includes receipts on tax liabilities accrued prior to July 1, 1972 under present law, and prior to October 1, 1972
under President's program.
Excludes receipts from aviation gasoline.
June 5, !96l
JL dUJ-C. (J
Status of Highway Trust Fund under legislation proposed in H.R. 6713
(Title II, Federal-Aid Highway Bill of 1961, as passed by the House of Representatives May 4)
(In millions of dollars)
Apportionment s
. Primary,
Inter- :secondary
state : and
: urban 1/
From before 1957
Total
Balance
in
trust
fund on
June 30
1,482
2,044
2,087
2,536
516
1,049
523
119
11
96
101
978
2,857
3,227
3,319
3,409
3,^95
108
283
378
409
429
Revenues
Present
sources
Additional
315
965
1958
1959
I960
1,000
1,700
2,200
2,500
829
859
1,381
906
208
675
1,501
1,861
758
836
1,112
1,079
1,482
2,044
2,087
2,536
1962
1963
1964
1965
1,800
2,200
2,400
2,600
2,700
883
884
930
955
955
1,901
2,139
2,326
2,451
2,552
967
913
898
927
923
2,857
3,216
3,223
3,308
2,517
1967
1968
1969
1970
2,800
2,900
3,000
3,000
3,000
980
980
1,005
1,005
1,005
2,645
2,739
2,838
2,886
2,901
932
949
958
972
977
2,573
2,629
2,683
2,739
2,797
1,003
1,025
1,048
1,068
3,576
3,654
3,731
3,807
428
394
329
298
1,090
3,887
307
2,885
1,005
1,005
2,992
3,104
1,301
979
966
317
2,861
2,930
321
1,115
1,140
1,150
3,976
4,070
1,471
312
312
165
37,000
16,532
37,000
15,463
42,803
9,825
52,628
1957
1961
1966
1971
1972
Through Sept. 30, 1972
Total
Expenditures
: Primary,:
Inter- :secondary:
state : and
:
: urban :
Office of the Secretary of the Treasury,
Office of Tax Analysis
June 5. 1961
1/ Includes emergency relief program as well as special funds totaling $502 million apportioned for 1959.
Table 7
Highway Trust Fund revenues under present law and revenues added by the Federal-Aid Highway Bill of 1961
(H.R. 6713, Title II, as passed by the House of Representatives May 4)
(In millions of dollars)
.seal
rear
Gasoline
and other
motor fuels
ll per
Sales of
trucks and
buses
Tread
rubber
•
ft
gallon 1/
Tirea
Present Lav
, Passenger
automobiles
Tubes
U Per
. 5jH per
°r
94 I«r
pound
.
pound
pound
;ual—
L957
L958
L959
L96o
1,326
1,608
1,657
2,044
34
111
107
142
11
13
14
15
82
244
247
281
.. 19
iimatedL961
L962
L963
L964
L965
2,362
1,894
1,869
1,917
1,965
142
143
146
149
153
15
15
16
17
19
279
286
291
296
301
16
16
16
16
16
L966
L967
L968
L969
L970
2,010
2,054
2,097
2,142
2,191
156
159
162
164
166
19
20
21
22
22
307
313
318
325
331
16
16
16
16
16
L971
1972
1973 _/
2,242
2,298
169
172
23
24
319
—
—
339
347
2
Total
31,995
2,275
286
4,589
Lscal
rear
;ual—
L957
L958
L959
L960
;imatedL96l
L962
Gasoline
and other Diesel fuel
motor fuels
4j^ per
1/ Per
gallon
gallon 1/
•_•
—
Sales of
trucks and
buses
Tread
rubbeT
ft
24 per
•
——
-—
—
-_
_-
—
—
~
—
—
17
15
Total
45
50
53
56
59
- 2
2
3
4
4
2,857
3,216
3,223
3,308
2,517
61
63
65
66
67
4
4
4
4
4
2,573
2,629
2,683
2,739
2,797
68
69
4
4
2,861
2,930
~
--
853
70
131
137
144
—
—
16
16
—
—
«
-__
„
—
~
—
—
—
~
._
—
~
243
2,080
ft
——
-—
—
_.
—2
1968
-969
L970
687
38
40
156
159
162
164
166
14
14
14
14
15
71
72
73
75
76
2
2
2
2
2
.971
•972
•973 2/
703
719
881
4l
43
50
169
172
64
15
16
11
78
80
110
2
2
4
Total
7,916
420
1,803
158
903
26
2
2
2
$1.50 per
M pounds
412
Revenue added by H.R. 6713
Passenger
Tires
Tubes
1 automobiles
2f£ per
1^ per
pound
pound
33
35
'ice of the Secretary of the Treasury,
'ffice of Tax Analysis
:
—
—
679
692
709
632
644
659
672
'
Interest
26
33
34
38
64
67
68
69
36
:
—
—
—
—
9
11
12
13
S6l
use
tax
—
—
—
~
143
146
149
153
-966
Truck
ft
19
25
29
31
.964
-965
:
and
ft
505
590
606
618
L963
Parts
accessories
•-
«
"
—
- 679
- 692
- 709
"
—
—
—
—
—
—
"
- 2,080
3
18
13
- 3
:
:
1,482
2,044
2,087
2,536
321
42,803
Parts
Total
Truck
use
:
present
Net
tax
: additional
accessories :
and
$1.50 per ' revenues ' additional
revenues
N pounds 3/-
and
;
ft
——
—
- 131
- 137
- 144
~
—
-«
—
—
__
—
—
- 412
:
,--—
—
~
1,482
2,044
2,087
2,536
-—
—
79
84
88
92
11
96
101
978
~
2,857
3,227
3,319
3,409
3,495
95
99
102
103
104
1,003
1,025
1,048
1,068
1,090
3,576
3,654
3,731
3,807
3,887
107
108
30
1,115
1,140
1,150
3,976
4,070
1,471
1,091
9,825
52,628
June 5, 1961
Tax receipts less refunds. Rate 4 cents per gallon from October 1, 1959 through June 30, 1961. Includes net receipts
from tax on aviation gasoline.
Includes receipts from tax liabilities accrued prior to July 1, 1972 under present law, and prior to October 1, 1972 under H.R. 6713.
Includes effect of change in law and enforcement.
- 9 I urge you, therefore, to take the logical step of
eliminating the postal deficit by assessing these costs
to the users rather than to the present and future taxpayers.
- 8fixed rates of revenue.
No private business could remain in
operation on this basis, and while I would not suggest that
it is appropriate for the postal system «e operate^on a
purely commercial basis I find the prospect of such heavy
subsidization at least equally jmtppjfopiH^fee..
In conclusion, let me say again that decisions to spend
and tax, and to borrow or repay debt, involve difficult choices
at every step along the line. It is only after the most careful
winnowing of desirable programs for additional expenditure
and revenue-costing tax reforms that the currently anticipated
total budget deficit of MM $3-"3/4 billion in fiscal 1962 has
been permitted to take shape. To add more than 20 per cent
to that deficit simply because of failure to move toward closing
the gap between postal revenues and expenditures would strike
a severe blow at fiscal integrity. On the other hand, to
close this and other gaps along the lines requested by the
Administration would be strong evidence that while we are
currently planning for a moderate-sized deficit In the next
fiscalyear, the over-all situation is manageable and
under close control.
94
- 7 aggregate deficit for a single year is expected to take the
better part of a billion dollars. This is not an amount that
we can afford to treat lightly. It imposes either an immediate
burden on the general taxpayer, which is out of place at a
time when the economy is still recovering from recession, or
an addition to the deficit which must be financed byfborrowing
but ultimately repaid with interest out of future tax revenues.
Equally or more serious than that additional deficit itself
would be the implication, for all the world to see, that we
^glBin^^V^JiP^^the high standards of fiscal discipline
which this Administration has set for itself, alongside its
aims for achieving a prosperous free society and fulfilling
its responsibilities of world leadership.
Finally, I am sure it is not necessary to remind this
tliAn TiThnn Mini i_iay«-i^^ PHI ililinliml
Finally, I am sure it is not necessary to remind this
Committee that the Congress did not intend, in setting the
current rate schedules, to underwrite postal deficits of the
magnitude now in prospect. The deficit that will now emerge,
unless revenues are increased, is one that has grown out of
the "squeeze" exerted by rising costs and
- 6To my mind the postal system is a prime example of the
kind of service that can be paid for by its users. When
we put a man into space the benefits to the national as a whole
can be apportioned among the individual citizens only by a
system of general taxation. When we expend funds to assist
small businesses in distressed areas, or to help retrain
workers who are displaced by advancing technology or shifting
patterns of demand, we can calculate where the benefit goes
but we obviously cannot exact a charge from that same quarter
without vitiating the whole effect of the program. But each
time a piece of mail is delivered by the Post Office Department
there is a service performed for which the cost is readily
_____J»y7%>>-'
calculated, beneficiaries are readily identifiable, and where
those beneficiaries clearly can and should pay a reasonable
amount for the service received.
It is rare indeed when user charges can be computed in
pennies. This can be done in the case of the postal services;
but while individual charge can be figured in pennies, the
35
- 5international cooperation, and space exploration are costly;
so also are the necessary measures to combat the recession
and to help put the economy back on a path of healthy longterm growth. Consequently, there are priorities to be met,
and principles to be applied in working out the pattern of
compromises that are inevitable in putting together whole
programs.
of
One/these principles is that the services provided by
the Federal Government should pay their own way wherever and
to whatever extent possible—consistent of course/with the
feasibility of calculating and charging the costs to those
who receive the servicet attdfwith our overriding social oL^ct^tS
jaJjgggggtBES*. Indeed,Tthe Congress itself nas declared it to
be its sense that every service provided by the Federal Government should be self-sustaining to the fullest possible extent.
This was done as far back as 1951, in the Independent Offices
Appropriation Act for 1952, which in addition expressly
charged agency ne^ds with a responsibility for carrying out
this policy. Of course, since postal rates are fixed by
statute, this is a situation in which the Congress itself
must see to it that the responsibility for fiscal integrity
is carried out.
- 4-
9?
I cannot emphasize too strongly the harmful effects
domestically and internationally of any indication that our
Government does not have its fiscal affairs under control. At
home, undisciplined deficits are a prime source of inflationary
pressures and they leave for the monetary authorities the
full burden of placing a restraining hand on potential excessive
demand. The recollection of what a large budget deficit leads
to in terms of high interest rate levels and tight availability
of credit is too fresh to be ignored.
On the international side the impact of any hint of fiscal
laxity would be, if anything, even more disturbing. Flows of
international funds are highly sensitive to changing appraisals
of the relative strengths and weaknesses of the world's leading
currencies. We simply cannot afford to risk a repetition of
last year's speculative outflow from the dollar and consequent
loss of gold for this country.
Now I do not suggest for a moment that fiscal integrity
can be held up as the ultimate aim to which other objectives
must be tailored. But our commitments for national defense.
- 3 As that quotation indicates, the postal deficit has not
been singled out for particularly rigorous application of
the Administration's fiscal standards, although that deficit
does have the distinction of being one of the largest gaps
that we feel must be plugged. The same concern for fiscal
integrity is evident in regard to the highway program, where
additional revenues have been requested to maintain a selfsustaining program. In fact, Under Secretary Fowler is
testifying to that very purpose this morning. Likewise, in
HI1"11'
• '*£, out the Administration's tax program, there was
strict adherence to the principle that potential revenue
losses as a result of the changes proposed to stimulate the
economy should be counterbalanced by revenue gains from the
elimination of certain defects and inequities in the current
tax set-up. And again, in the case of expanded benefits for
unemployment compensation, social security and health insurance, additional taxes have been recommended to finance
the increased expenditures proposed.
99
- 2on the State of the Union, continuing with his Messages on
the Balance of Payments and on Budget and Fiscal Policy, and
most recently in the Message of May 25 on Urgent National Needs,
the President has time and again underscored the need for
fiscal integrity, in particular by exerting every effort to
hold down the budget deficit now emerging in the current recessionary period and by achieving a balanced budgetary
position over the ' IjagjptfL.
In all of these statements, implicitly or explicit^, the
elimination of the large prospective postal deficit has been
^i\&___,
a vital ingredient of &B&C efforts. The issue was nowhere
drawn more clearly than in the May 25 Message on Urgent National
Needs. There, after outlining essential programs for defense,
space exploration, and relief of special problems of the
unemployed, the President said:
"If the budget deficit now increased by the
needs of our security is to be held within manageable
proportions—if we are to preserve our fiscal integrity
and world confidence in the dollar—it will be necessary
to hold tightly to prudent fiscal standards; and I
must request the cooperation of the Congress in this
regard--to refrain from adding funds or programs, desirable as they may be, to the budget—to end the postal
deficit through increased rates (a deficit, incidentally,
which exceeds the fiscal year 1962 cost of all the
space and defense measures I am submitting today)—to
provide full pay-as-you-build highway financing, and
to close those tax loopholes earlier specified."
-for F W R A K Y
STATEMENT OF ROBERT V. ROOSA, UNDER SECRETARY OF THE TREASURY^
BEFORE THE HOUSE COMMITTEE ON POST OFFICE AND CIVIL SERVICE, A
TUESDAY, JUNE 6, 1961, 10:00 A.M.
I am glad to have the opportunity to appear before this
Committee in support of postal rate increases that would
eliminate the deficit otherwise expected in Post Office operations during the fiscal year beginning next month.
Let me say at the outset that I am not here to argue
the merits of the specific provisions of H. R. 6418. I could
not possibly add to the expert knowledge available to this
Committee in regard to the detailed workings of the Post Office
Department, and particularly your knowledge of which portions
of the total operation are bringing in revenues about equal
to costs and which are providing service to the users at far
below cost. Rather, I am here to urge that ^iiwwwAntt-nfligkiiflin
fc^aass^f sound budget and fiscal iniliiiiiji nki \\mi [ii HIM I the
Government to incur an additional deficit of $843 million to
run the Post Office Department in fiscal 1962.
The President has made quite clear the strong concern
of this Administration for sound financial principles—at the
same time that it pursues policies to achieve high and rising
levels ^aife economic activity. Starting with his January Message
t>-/
TREASURY DEPARTMENT
Washington
June $, 1961
Upon Delivery
is
^
tor Monetary Affairs
mW
Statement of'Ropert V. Roosa> Under Secretary.
of the Treasury^ Before the1 House Oommittegr^H^
Post Office and Civil Servicemen Postal Rate
^
Increase^ Tuesday, June 6, 19.61V-10:00 A.M., EDT
1
TREASURY DEPARTMENT
Washington
June 6, 1961
For Release: Upon Delivery
STATEMENT OF THE HONORABLE ROBERT V. ROOSA
UNDER SECRETARY OF THE TREASURY FOR MONETARY AFFAIRS
BEFORE THE
HOUSE POST OFFICE AND CIVIL SERVICE COMMITTEE
ON POSTAL RATE INCREASES
TUESDAY, JUNE 6, 1961,
10:00 A.M., EDT.
I am glad to have the opportunity to appear before this Committee
ln support of postal rate increases that would eliminate the deficit
otherwise expected In Post Office operations during the fiscal year
beginning next month.
Let me say at the outset that I am not here to argue the merits
of the specific provisions of H, R. 6418. I could not possibly add
to the expert knowledge available to this Committee in regard to the
detailed workings of the Post Office Department, and particularly
your knowledge of which portions of the total operation are bringing in revenues about equal to costs and which are providing service
to the users at far below cost. Rather, I am here to urge that It
would be inconsistent with sound budget and fiscal policies for the
Government to incur an additional deficit of $8 31 million to run the
Post Office Department in fiscal 1962.
The President has made quite clear the strong concern of this
Administration for sound financial principles —• at the same time
that it pursues policies to achieve high and rising levels of
economic activity* Starting with his January Message on the State
of the Union* continuing with his Messages on the Balance of Payments
and on Budget and Fiscal Policy, and most recently in the Message of
May 25 on Urgent National Needs, the President has time and again
underscored the need for fiscal integrity, in particular by exerting
every effort to hold down the budget deficit now emerging in the
current recessionary period and by achieving a balanced budgetary
position over the yeax*s of the business cycle.
In all of these statements, implicitly or explicitly, the
elimination of the large prospective postal deficit has been a vital
Ingredient of these efforts. The issue was nowhere drawn more clearly
than ln the May 25 Message on Urgent National Needs. There, after
D-128
outlining essential programs for defense, space exploration, and
103
- 2 relief of special problems of the unemployed, the President saidi
"If the budget deficit now increased by the
needs of our security is to be held within manageable proportions — if we are to preserve our fiscal
Integrity and world confidence in the dollar — it
will be necessary to hold tightly to prudent fiscal
standardsj and I must request the cooperation of the
Congress in this regard — to refrain from adding
funds or programs9 desirable as they may be, to the
budget — to end the postal deficit through increased
rates (a deficit, incidentally, which exceeds the
fiscal year 1962 cost of all the space and defense
measures I am submitting today) — to provide full
pay-as-you-build highway financing, and to close
those tax loopholes earlier specified,"
As that quotation indicates, the postal deficit has not been
singled out for particularly rigorous application of the Administration's fiscal standards, although that deficit does have the distinction of being one of the largest gaps that we feel must be plugged.
The same concern for fiscal integrity is evident in regard to the
highway program, where additional revenues have been requested to
maintain a self-sustaining program. In fact, Under Secretary Fowler
is testifying to that very purpose this morning, Likewise, in working out the Administration's tax program, there was strict adherence
to the principle that potential revenue losses as a result of the
changes proposed to stimulate the economy should be counterbalanced
by revenue gains froa the elimination of certain defects and inequities in the current tax set-up. And again, in the case of expanded benefits tor unemployment compensation, social security and
health insurance, additional taxes have been recommended to finance
the increased expenditures proposed,
I cannot emphasize too strongly the harmful effects domestically
and internationally of any indication that our Government does not
have its fiscal affairs under control. At home, undisciplined
deficits are a prime source of inflationary pressures and they leave
for the monetary authorities the full burden of placing a restraining hand on potential excessive demand. The recollection of what a
large budget deficit leads to in terms of high interest rate levels
and tight availability of credit is too fresh to be ignored.
On the International side the impact of any hint of fiscal laxity
would be, if anything, even more disturbing. Flows of international
funds are highly sensitive to changing appraisals of the relative
strengths and weaknesses of the world's leading currencies, We
simply cannot
afford
to and
riskconsequent
a repetition
ofof
last
year's
speculative
outflow
from the
dollar
loss
gold
for this
country.
- 3
Now I do not suggest for a moment that fiscal integrity can
be held up as the ultimate aim to which other objectives must be
tailored. But our commitments for national defense, International
cooperation, and space exploration are costly} so also are the
necessary measures to combat the recession and to help put the
economy back on a path of healthy long-term growth. Consequently,
there are priorities to be met, and principles to be applied in
working out the pattern of compromises that are inevitable in putting
together whole programs.
One of these principles is that the services provided by the
Federal Government should pay their own way wherever and to whatever
extent possible — consistent, of course, with our overriding social
objectives and with the feasibility of calculating and charging the
costs to those who receive the service. Indeed, as the members of
this Committee know better than I, the Congress itself has declared
it to be its sense that every service provided by the Federal
Government should be self-sustaining to the fullest possible extent.
This was done as far back as 1951, in the Independent Offices
Appropriation Act for 1952, which in addition expressly charged
agency heads with a responsibility for carrying out this policy.
Of course, since postal rates are fixed by statute, this is a situation in which the Congress itself must see to it that the responsibility for fiscal integrity is carried out.
To my mind the postal system is a prime example of the kind of
service that can be paid for by its users. When we put a man into
space the benefits to the nation as a whole can be apportioned among
the individual citizens only by a system of general taxation. When
we expend funds to assist small businesses in distressed areas, or
to help retrain workers who are displaced by advancing technology
or shifting patterns of demand, we can calculate where the benefit
goes but we obviously cannot exact a charge from that same quarter
without vitiating the whole effect of the program. But each time
a piece of mail is delivered by the Post Office Department, there
is a service performed for which the cost is readily calculated,
for which the beneficiaries are readily identifiable, and where
those beneficiaries clearly can and should pay a reasonable amount
for the service received,
It is rare indeed when user charges can be computed in pennies.
This can be done in the case of the postal services; but while the
individual charge can be figured in pennies, the aggregate deficit
for a single year is expected to take the better part of a billion
dollars. This is not an amount that we can afford to treat lightly.
It imposes either an immediate burden on the general taxpayer, which
is out of place
a time when
the
economy
is still
recovering
recession,
or anat
addition
to the
deficit
which
must be
financedfrom
by
"» nc;
~ 4 borrowing but ultimately repaid with Interest out of future tax
revenues. Equally or more serious than that additional deficit
itself would be the Implication, for all the world to see, that we
are reluctant to accept the high standards of fiscal discipline
which this Administration has set for itself, alongside its alms
for achieving a prosperous free society and fulfilling its responsibilities of world leadership.
Finally, I am sure it is not necessary to remind this Committee
that the Congress did not intend, in setting the current rate
schedules, to underwrite postal deficits of the magnitude now in
prospect. The deficit that will now emerge, unless revenues are
increased, is one that has grown out of the "squeeze" exerted by
rising costs and fixed rates of revenue. Ho private business could
remain in operation on this basis, and while I would not suggest
that it is appropriate for the postal system to operate on a purely
commercial basis I find the prospect of such heavy subsidization at
least equally out of place.
In conclusion, let me say again that decisions to spend and tax,
and to borrow or repay debt, involve difficult choices at every step
along the line. It is only after the most careful winnowing of
desirable programs for additional expenditure and revenue-costing
tax reforms that the currently anticipated total budget deficit of
about $3,6 billion in fiscal 1962 has been permitted to take shape.
To add more than 20 per cent to that deficit simply because of
failure to move toward closing the gap between postal revenues and
expenditures would strike a severe blow at fiscal integrity. On
the other hand, to close this and other gaps along the lines requested
by the Administration would be strong evidence that while we are
currently planning for a moderate-sized deficit in the next fiscal
year, the over-all situation is manageable and under close control.
I urge you, therefore, to take the logical step of eliminating
the postal deficit by assessing these costs to the users rather than
to the present and future taxpayers.
oOo
1
0£
0
- 3 -
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-
iDy
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 incorp
rated banks and trust companies and from responsible and recognized dealers in
ment securities. Tenders from others must be accompanied by payment of 2 percent
the face amount of Treasury bills applied for, unless the tenders are accompanie
an express guaranty of payment by an incorporated bank or trust company.
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 submit
ting tenders will be advised of the acceptance or rejection thereof. The Secreta
of the Treasury expressly reserves the right to accept or reject any or all tend
in whole or in part, and his action in any such respect shall be final. Subject
these reservations, noncompetitive tenders for $200,000 or less for the addition
bills dated March 16. 1961 . ( 91 days remaining until maturity date on
'
ygXfy
2<^__k)
September 14, 1961 ) and noncompetitive tenders for $100,000 or less for the
182 -day bills without stated price from any one bidder will be accepted in full
£23.)
at the average price (in three decimals) of accepted competitive bids for the respec-
tive issues. Settlement for accepted tenders in accordance with the bids must be
made or completed at the Federal Reserve Bank on June 15, 1961 , in cash or
other immediately available funds or in a like face amount of Treasury bills mat
ing June 15, 1961 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 «_xer&pit_____.^ as such, a
TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE, teMx&sM% June 7, 1961
W
TREASURY'S WEEKLY BILL OFFERING
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 June 15. 1961 , in the amount
m
of
$1*601.254.000
> as follows:
-£st$x
91 -day bills (to maturity date) to be issued June 15, 1961 ,
in the amount of $ 1,100.000,000 > or thereabouts, represent-
_p_Jx
ing an additional amount of bills dated
Maroh 16. i qm
.
and to mature September 14, 1961 , originally issued in the
(including $m $100-000,000 to be issued June 14, 1961)
amount of $ 600,004,000*7 , the additional and original bills
to be freely interchangeable.
182 .day bills, for $ 500,000,000 , or thereabouts, to be dated
June 15, 1961 , and to mature December 14. 1961
The bills of both series will be issued on a discount basis under competitive
and noncompetitive bidding as hereinafter provided, and at maturity their fac
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 (m
value).
Tenders will be received at Federal Reserve Banks and Branches up to the closi
Daylight Saving
hour, one-thirty o'clock p.m., Eastern/ShaaiJaml time, Monday, June 12, 1961
Tenders will not be received at the Treasury Department, Washington. Each tend
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
TREASURY DEPART
<nww_gcCT!^^:<:«_a_,iy>»»M).».'<!s_!Li_H
ssszx^ymssss/a
srmmsfilemSn*TmttiMmm..n.mMafjm*mMi
WASHINGTON, D.C.
June 7, 1961
FOR IMMEDIATE RELEASE
TREASURY'S WEEKLY BILL OFFERING
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 June 15, 1961.
in the amount of
$1,601,254,000, as follows:
91-day bills (to maturity date) to be issued June 15. 196l. in
the amount of $1,100,000,000, or thereabouts, representing an
additional amount of bills dated March 16, 1961, and to mature
September 14, 1961, originally issued in the amount of $600,004,000
(including $100,000,000 to be issued June 14, 1961), the additional
and original bills to be freely interchangeable.
182-day bills, for $ 500,000,000, or thereabouts, to be dated
June 15, 196l,
and to mature December 14, 1961.
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 Daylight Saving
time, Monday, June 12, 1961.
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
orD-129
trust company.
- 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 Departmment 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
March 16, 1961,
(91 -days remaining until maturity date on
September 14. 196l)and noncompetitive tenders for $100,000
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 June 15, 1961,
in cash or other immediately available funds or in a like face
amount of Treasury bills maturing June 15. 1961.
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
0O0
return is made, as ordinary gain or loss.
Treasury Department Circular No. 4l8, Revised, and this notice,
prescribe the terms of the Treasury bills and govern the conditions
Federal
of theirReserve
issue. Bank
Copies
or Branch.
of the circular may be obtained from any
- 3-
Richard S. Rosenbloom, Assistant Professor of Business Administrati
Graduate School of Business Administration, Harvard University, a
specialist in the field of management; and Robert V. Breen, Vice
President, Carl Byoir and Associates, Inc., New York City, a public
relations consultant.
The task force group will have its first meeting on Friday,
June 9, 196l, at the Bureau of Customs in Washington. Commissioner
Nichols, Treasury officials and Customs personnel will brief the
group at that time. Members of the task force will serve without
compensation.
0O0
Ill
- 2 -
measure to help correct our balance of payments deficit", Commissio
Nichols said. "I have asked a group of five outstanding citizens to
make an independent study of what the Bureau of Customs can do to
encourage foreign tourists to come to America, and, in particular,
how we can *• • i in" hi 1 trnrrnntiTi tr/ftrrnr"! whlnh mny prist*
L^c^w^Jt, c«<^t,
•0t*%A~
o\3r3g_-_ce-<3puii_.ibiliUluu to oomhat smuggling am
Tieygnuftg. I look forward to receiving the comments and views of
this task force group."
Joseph J. OfConnell, Jr., of the Washington law firm of Chapman,
Walsh and O'Connell, a former Chairman of the Civil Aeronautics
Board and General Counsel of the Treasury from 1944 to 1947, will b
Chairman of the group. Serving with him will be Wilbur H. Ziehl,
Administrative Assistant to the Director of the Bureau of the Budge
who as a fbrmer Deputy Commissioner of Customs has a wide understan
of Customs procedures and operations; Dr. Ivan C. Belknap. Head of
the Department of Sociology, University of Texas, Austin, Texas, wh
will give special attention to the impact which Customs procedures
might have on travel inducements among European and Asiatics;
DRAFT PRESS RELEASE — 6~8-6l
U?
TASK FORCE TO STUDY AFFECT OF CUSTOMS INSPECTIONS ON
FOREIGN TOURIST TRAVEL
A five-man task force to study Customs baggage inspection
procedures at United States ports of entry was named today by
Commissioner of Customs Philip Nichols, Jr.
The group will seek to determine whether present Customs procedures and requirements are unnecessarily discouraging foreign
tourists from traveling to the United States, and if so, make
corrective recommendations.
For three months, during the peak of the tourist season
beginning June 15. the task force will observe arrival of passengers
at a number of major sea and air terminals and at principal entry
points on the Canadian and Mexican borders. Baggage inspection
operations at New York will be studied during the peak arrival season
at that port, which runs from^out mid-August to the middle of September
"President Kennedy directed the Department of Commerce, in
cooperation with the Departments of State and Treasury, to devise new
programs to encourage foreign travel in the United Statas as one
/
!
s
- "^ s
z
•"" -\ f
\
_L JL '•—.'
TREASURY DEPARTMENT
WASHINGTON, D.C.
June 8, 1961
FOR IMMEDIATE RELEASE
TASK FORCE TO STUDY AFFECT OF CUSTOMS INSPECTIONS
ON FOREIGN TOURIST TRAVEL
A five-man task force to study Customs baggage inspection
procedures at United States ports of entry was named today by
Commissioner of Customs Philip Nichols, Jr.
The group will seek to determine whether present Customs
procedures and requirements are unnecessarily discouraging foreign
tourists from traveling to the United States, and if so, make
corrective recommendations.
For three months, during the peak of the tourist season
beginning June 15. the task force will observe arrival of passengers
at a number of major sea and air terminals and at principal entry
points on the Canadian and Mexican borders. Baggage inspection
operations at New York will be studied during the peak arrival
season at that port, which runs from about mid-August to the middle
of September.
"President Kennedy directed the Department of Commerce, in
cooperation with the Departments of State and Treasury, to devise
new programs to encourage foreign travel in the United States as
one measure to help correct our balance of payments deficit",
Commissioner Nichols said. "I have asked a group of five outstanding
citizens to make an independent study of what the Bureau of Customs
can do to encourage foreign tourists to come to America, and, in
particular, how we can combat smuggling and collect Custom revenues
without unnecessarily deterring travel. I look forward to receiving
the comments and views of this task force group."
Joseph J. O'Connell, Jr., of the Washington law firm of Chapman,
Walsh and O'Connell, a former Chairman of the Civil Aeronautics
Board and General Counsel of the Treasury from 1944 to 1947. will be
Chairman of the group. Serving with him will be Wilbur H. Ziehl,
Administrative Assistant to the Director of the Bureau of the
Budget, who as a former Deputy Commissioner of Customs has a wide
understanding of Customs procedures and operations; Dr. Ivan C.
Belknap, Head of the Department of Sociology, University of Texas,
D-130 Texas, who will give special attention to the impact which
Austin,
114
- 2 Customs procedures might have on travel inducements among European
and Asiatics; Richard S. Rosenbloom, Assistant Professor of Business
Administration, Graduate School of Business Administration, Harvard
University, a specialist in the field of management; and Robert V.
Breen, Vice President, Carl Byoir and Associates, Inc., New York City,
a public relations consultant.
The task force group will have its first meeting on Friday,
June 9, 1961, at the Bureau of Customs in Washington. Commissioner
Nichols, Treasury officials and Customs personnel will brief the
group at that time. Members of the task force will serve without
compensation.
0O0
111;
Mm
S, 1961
TO* mUAM 1. », iBKgAftRS. Friday, Mm 9_ 1961.
RX8USES OF DFFEffliG W $1.8 BILLION STRIP W TRT.A_.UT_ If MIWB
The Treasury Department announced last evening that tenders for additional anowiti
of eighteen series of Treasury bills to ant afferent® amount of f1,800,000,000, or thertabeute, to be issued <Ju»e lk f 1961, which were offered on June 2, were opened at the
Federal leserve Banks on June 8, The amount of accepted testers will be equally d i v l M
among the eighteen re^ilar weekly lessee of outstanding Treasury bills maturing August 3,
1961, to Hovember 3®. 1961, Inclusive. The details of the offering are as follows.
Total applied for ~ ili,671,77li,O0G
total accepted
» 1,800,972,000 (includes tl8?,8&2,000 entered on a noncompetitive bn
and accepts* In full at the average price shorn, betaf
HA IDE OF ACCEPTED Approximate equivalent annual rate of discount baeed on
GQBFBTITIfE BIfS?
Pricei
109.6 days (average nuaber of days to maturity)
Hiifc
99.305
2.283$
tow
99,292
2.326$
Average
99.297
2.308$ 1/
kii percent of the SBouat bid for at the low pries was accepted
IOTA
i. Tfifiiis kffhim tm km mc^mm m
District
Boston
fls* fork
ffciladelphia
Cleveland
Eiclwond
Atlanta
Ctileftfro
St. Louis
_f_uwieap©lls
ICansas City
tmrxmm
San Francisco
TOTALS
FSBSRAL IESERTO PISTMCTS*
Accepted
Applied For
*
§3,62&,(ki0
1 176,lW,6od'
6S2,176,000
a ,293,254,oa@
65,8i*_*,G0Q
163,926,00©
153,810,000
355,050,000
33,81*0,000
117,11^,000
55,296,000
128,322,000
362,11*2,000
1*82,526,000
31,37^,000
87,930,000
72,liili,OO0
121,19fc,OGO
1|0,212,OOO
80,01*6,000
157,176,000
267,516,000
398,718,000
93.330,000
11,800,972,000
fli,671,77l,0O0
1/ On a coupon issue of the same length as the average for the bills and for the ease
amount invested, the return on these bills would provide a yield of 2*362* Interert
rates on bills are quoted in terns of bank discount with the return related to the
face apount of the bills payable at maturity rather than the amount invested and
their length in actual number of days related to a 360-day year. In contrast, yisl*
on certificates, notes, and bonds are computed in t e n s of interest on the amount invested, and relate the number of days regaining in an interest p a r e n t period to the
actual number of days in the period, with semiannual compounding if ssore than one
coupon period is involved.
TREASURY DEPARTMENT
WASHINGTON, D.C.
June 8, 1961
'OR RELEASE A . M . NEWSPAPERS, Friday, June 9. 196l.
RESULTS OF OFFERING OF $1.8 BILLION STRIP OF TREASURY BILLS
The Treasury Department announced last evening that tenders for additional amounts
if eighteen series of Treasury bills to an aggregate amount of $1,800,000,000, or thereibouts, to be issued June II4, 196l, which were offered on June 2, were opened at the
federal Reserve Banks on June 8. The amount of accepted tenders will be equally divided
song the eighteen regular weekly issues of outstanding Treasury bills maturing August 3,
.961, to November 30, 1961, inclusive. The details of the offering are as follows:
total applied for - &U,671,77U,000
total accepted
- 1,800,972,000 (includes $187,81}2,000 entered on a noncompetitive basi
and accepted in full at the average price shown below)
I.
(AN3E OF ACCEPTED
Approximate equivalent annual rate of discount based on
OMFETITIVE BIDS?
Price
109.6 days (average number of days to maturity)
High
99.305
2.283#
Low
99.292
2.326#
Average
99.297
2.308$ 1/
hh percent of the amount bid for at the low price was accepted
OTAL TENDERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS?
District
Applied For
Accepted
Boston
$ 176,11.8 ,"000"
$
83,628,000
New York
2,293,251.,000
652,176,000
Philadelphia
163,926,000
65,81^,000
Cleveland
355,050,000
153,810,000
Richmond
117,ll|li,000
33,810,000
Atlanta
128,322,000
55,296,000
Chicago
182,526,000
362,ll;2,000
St. Louis
87,930,000
31,37U,000
Minneapolis
121,19l.,000
72,lUi,000
Kansas City
80,0_i6,000
1.0,212,000
Dallas
267,516,000
157,176,000
San Francisco
398,718,000
93,330,000
TOTALS
$ii,671,77i.,000
$1,800,972,000
On a coupon issue of the same length as the average for the bills and for the same
amount invested, the return on these bills would provide a yield of 2.36$. Interest
rates on bills are quoted in terns of bank discount with the return related to the
face amount of the bills payable at maturity rather than the amount invested and
their length in actual number of days related to a 360-day year. In contrast, yields
on certificates, notes, and bonds are computed in terms of interest on the amount invested, and relate the number of days remaining in an interest payment period to the
actual number of days in the period, with semiannual compounding if more than one
coupon period is involved.
>-131
a-}
r-~
117
TREASURY DEPARTMENT
WASHINGTON, D.C.
June 9, 196l
IMMEDIATE RELEASE
TREASURY DECISION ON CORNSTARCH
UNDER ANTIDUMPING ACT
The Treasury Department has determined that cornstarch from
West Germany is .not being,, nor likely to be, sold in the United
States at less than fair value within the meaning of the Antidumping Act. Although it was found that there had been some
sales at less than home market price, it was determined that the
quantity involved was not more than insignificant. Assurance
has been given that there will be no further sales at less than
home market price. Notice of the determination will be published in the Federal Register.
Appraising officers are being instructed to proceed with
the appraisement of this merchandise from West Germany without
regard to any question of dumping.
The dollar value of imports of cornstarch from West Germany
received during i960 was approximately $216,000.
TREASURY DEPARTMENT
WASHINGTON, D.C. N ^ :
June 9, 1961
IMMEDIATE RELEASE
TREASURY DECISION ON CORNSTARCH
UNDER ANTIDUMPING ACT
The Treasury Department has determined that cornstarch from
West Germany is not being, nor likely to be, sold in the United
States at less than fair value within the meaning of the Antidumping Act. Although it was found that there had been some
sales at less than home market price, it was determined that the
quantity involved was not more than insignificant. Assurance
has been given that there will be no further sales at less than
home market price. Notice of the determination will be published in the Federal Register.
Appraising officers are being instructed to proceed with
the appraisement of this merchandise from West Germany without
regard to any question of dumping.
The dollar value of imports of cornstarch from West Germany
received during i960 was approximately $216,000.
7487
1 1 Q
UNITED STATES NET MONETARY GOLD TRANSACTIONS
WITH FOREIGN COUNTRIES AND INTERNATIONAL INSTITUTIONS
January l, 1961 - March 31, 1961
(in millions of dollars at $35 per fine ounce)
Negative figures represent net sales by the
United States; positive figures, net purchases
First Quarter
Country
1961
Argentina
BIS
Chile
-90.0
-23.0
- 6.6
Denmark -35.0
Germany (West)
Italy
-22.5
+100.0
Kuwait , - 9.8
Peru
Saudi Arabia
- 5.0
-10.0
Spain -58.2
Switzerland
United Kingdom
-5^.9
-150.0
Other - 1.0
Total
-366.0
TREASURY DEPARTMENT
12
°
WASHINGTON, D.C
June 9, 1961
FOR IMMEDIATE RELEASE
UNITED STATES FOREIGN GOLD TRANSACTIONS
FOR FIRST QUARTER OF 1961
The Treasury Department today made public
a report on monetary gold transactions with foreign governments, central banks and international
institutions for the first quarter of 1961 - The
net sale of monetary gold by the United States in
this period amounted to $366 million.
A table showing net transactions, by country,
for the first quarter of 1961 is printed on reverse
side.
D-132
121
TREASURY DEPARTMENT
WASHINGTON, D.C.
June 9, 1961
FOR I1_MEDIATE RELEASE
UNITED STATES FOREIGN GOLD TRANSACTIONS
FOR FIRST QUARTER OF 1961
The Treasury Department today made public
a report on monetary gold transactions with foreign governments, central banks and international
institutions for the first quarter of 1961. The
net sale of monetary gold by the United States in
this period amounted to $366 million.
A table showing net transactions, by country,
for the first quarter of 1961 is printed on reverse
side.
D-132
UNITED STATES NET MONETARY GOLD TRANSACTIONS
WITH FOREIGN COUNTRIES AND INTERNATIONAL INSTITUTIONS
January 1, 1961 - March 31. 1961
(in millions of dollars at $35 per fine ounce)
Negative figures represent net sales by the
United States; positive figures, net purchases
Fi rst Quarter
Country
1961
Argentina
BIS
Chile
-90.0
-23.0
- 6.6
Denmark -35.0
Germany (West)
Italy
-22.5
+100.0
Kuwa it - 9.8
Peru
Saudi Arabia. . . . . . . . . . . . . . . . .
Spain -58.2
Switzerland
United Kingdom
. . . . . . . . . . . . . . .
- 5.0
-10.0
-5^.9
-150.0
Other . . . . . . . . . . . - 1.0
Total
. . -366.0
72
Mm
12, 1961
FOR B8Lfi_.SE A. M. MM3WEBS, Tuesday*" Mm 13. 1^61. ) FACTIONS
V89T.TS Of TRSASUftY'S '**^^I'¥T!X,|}Ffm2MrUTS0NS
flie Treasury 'Bepartsieiit Maowaeed lmm% evening that mm tenders for Urn series «f
Treastury bills, one series to be m additional issue of item bills dated Harsh lit
and the other series to be feted Mm M,,..JJijjjL which were offered' GnWnsiir1
at the federal Peeerv* *anks on S W 3 1 ^ ! ! were latitat for 11,100,000,08©,
therealKmte, of 91~day bills and for 1^00,000,000, or thereabouts, of l^dpjr bUli*
?h© details of the tw© series are m tmUmmmt
*r*t Quarter
CQr?KTIfl?E BIT«t
'91-dav Tremsiaqr bills
»aturlfig;x-$e»tep^-r Ik, 1961
Appf03_» ECpiiV.
Price
Annuftl late
lift*
Low
Average
36 percent of the
71 percent &f the
W99.105
OT
"OSSF
i82-day
JPrte* 6
Approx,
Aomtal Sate
1OT
—SOTT
^JmjVmU^.
i
J8.-W0
99*Ji20
C 2.295* y^.- *
96.-71© 5
"--—-.
, "ilo
©f 91-day bills bill for at the low price was accepted
of 182-d_y bills bid for at the low- fsrie© was accepted
. . . .
j.O
. . . . . -19.0
tof4i fg^Eiis A^WLIED mm &m Aecsmr* m wmimh msmw
^SSS^
DISTRICTS.
...
. . -,8.2
Applied For
Accepted
Accepted
District
Applied For
Iceepted
.
.
:
Applied
F©_6
f ,10,397,000
l
hSM
9OOQ
B B BTork
5r9r,ll
S69nmJk6
iit.teb
I 689,363,000
_io.JW.too . . t.93li,3la,OOQ
i4fe;ttto 360,123,«»
Philadelphia
25,03,000
• -MSfKiO
IOJ.MJGOO..
3,95W»
Cleveland
33.fi5,<W
22,lSl,0G0
33,kOl,000
19,lSM»
ftiefanead
9,791,000
1,561,000
9,71*8,000
1,211,000
Atlanta
23,392,000
18,1*67,000
3*864*980
3*31©^
Chicago
210,81*8,000
175,278,000
91,5$*»0Q0
52,WLi«l
St, Una is
23,817,000
20,267,000
6,668,000
Plarwapolia
20,023,000
19,523,000
6,667,000
t
ttaseas City
35,962,000
32,962,000
12,51*0,000
ii,937fOII
Dallas
11,191,000
11,191,000
3,1*27,000
7,337,0^
San Francisco
75,27a,QO0
69,67*u0Q0
1*9,235,000 37.0BM»
TOTALS
•l,95a,o5l,00p
11,100,1*39,000 a/
11,11^,212,000 50u,60ii,QOO
a/ Includes f205,903,000 noncompetitive tenders accepted at the average price of 99*
BY Includes $50,752,000 neneeeipetltiwe tenders accepted at the average price of 98«T*
T/ O B a coupon iseiaetffthe ease length and for the sa*e astotmt invested, the rttsri
these bills would provide yields of 2.3W, for the 91-dftj hills, s.nc 2.56%, for
182-day bills. Interest rates on bills are quoted in t@ras of banlc discos with
the return related to the face amount of the bills payable at maturity r*****^!*]
the enottDt invested aisd their length ia actual mmber of days related, to a .wMJ
year. Im contrast, yields on certificates, notes, and bonds are computed ia ^ n
of interest om the amount invested, and relate the ssmber of days restainisg i» w
interest payment period to the actual number of days io the period, with smtewv
eotsf^nding -it ear© than one coupon period is involved.
L_^L
$,m m
TREASURY DEPARTMENT
1?i
WASHINGTON, D.C.
June 12, 1961
)R RELEASE A. M. NEWSPAPERS, Tuesday, June 13, 196l.
RESULTS OF TREASURY'S WEEKLY BILL OFFERING
The Treasury Department announced last evening that the tenders for two series of
«asury bills, one series to be an additional issue of the bills dated March 16, 196l,
id the other series to be dated June 15, 1961, which were offered on June 7, were opened
, the Federal Reserve Banks on June 12. Tenders were invited for $1,100,000,000, or
lereabouts, of 91-day bills and for 1500,000,000, or thereabouts, of 182-day bills.
ie details of the two series are as follows?
OF ACCEPTED
JMPETITIVE BIDS:
LNGE
High
Low
Average
91-day Treasury bills
maturing September lli, 1961
Approx. Equiv.
Price
Annual Rate
99.1125*
2.263$
99.1.15
2.311$
99.1.20
2.295$ 1/
182-day Treasury bills
maturing December ill, 196l
Approx. Equiv.
Price
Annual Rate
98.756
'
271*61$
98.736
2.500$
98.7^0
2.h92% 1/
36 percent of the amount of 91-day bills bid for at the low price was accepted
71 percent of the amount of 182-day bills bid for at the low price was accepted
)TAL TENDERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS;
Applied For
Accepted
Accepted
District
t Applied For
« $
Boston
$
30,1.62,000 $
10,397,000
3,175,000
I 2,325,660
0
New York
1,1*58,11*6,000
689,363,000
93i*,3la,000
•
360,123,000
10,168,000
Philadelphia
25,593,000
8,997,000
s
3,952,000
33,1*01,000
Cleveland
33,91*5.000
22,131,000
a
19,156,000
Richmond
9,798,000
9,7li8,000
1,561,000
»
1,211,000
Atlanta
18,1*67,000
23,392,000
3,86l*,000
e
3,310,000
210,81*8,000
175,278,000
Chicago
91,556,000
52,1*51,000
23,817,000
20,267,000
St. Louis
6,668,000
5,1.50,000
19,523,000
Minneapolis
20,023,000
6,667,000
t
1*,937,000
35,962,000
32,962,000
Kansas City
12,51*0,000
t
7,337,000
Dallas
11,191,000
11,191,000
3,1*27,000
:
3,267,000
San Francisco
69,67l.,000
1*9,235,000
75,27fc,000
3
37,085,000
$1,958,1*51,000
$1,100,1*39,000 a/ $l,ll*l*,212,000
TOTALS
Includes $205,903,000 noncompetitive tenders accepted at the average price of 99.1*20
Includes $50,752,000 noncompetitive tenders accepted at the average price of 98.71*0
On a coupon issue of the same length and for the same amount invested, the return on
these bills would provide yields of 2.3l*#, for the 91-day bills, and 2.56$, for the
182-day bills. Interest rates on bills are quoted in terms of bank discount with
the return related to the face amount of the bills payable at maturity rather than
the amount invested and their length in actual number of days related to a 360-day
year. In contrast, yields on certificates, notes, and bonds are computed in terms
of interest on the amount invested, and relate the number of days remaining in an
interest payment period to the actual number of days in the period, with semiannual
compounding if more than one coupon period is involved,
133
TREASURY DEPARTMENT
124
WASHINGTON, D.C.
June 13, 1961
IMMEDIATE RELEASE
TREASURY DECISION ON GARLIC
UNDER ANTIDUMPING ACT
The Treasury Department has determined that garlic from
Italy^is not being, nor likely to be, sold in the United
States at less than fair value within the meaning of the
Antidumping Act. Notice of the finding will be published in
the Federal Register.
The dollar value of imports of garlic received from Italy
during I96G was approximately $68^,000.
TREASURY DEPARTMENT
125
WASHINGTON, D.C.
June 13, 196l
IMMEDIATE RELEASE
TREASURY DECISION ON GARLIC
UNDER ANTIDUMPING ACT
The Treasury Department has determined that garlic from
Italy is not being, nor likely to be, sold in the United
States at less than fair value within the meaning of the
Antidumping Act.
Notice of the finding will be published in
the Federal Register.
The dollar value of imports of garlic received from Italy
during i960 was approximately $68*. ,000.
_, o .
''C
STATUTORY DEBT LIMITATION
Ac; OP ^ y 31, 1961
June
lk)
196l
Section 21 of Sefcond Liberty Bond Act, as amended, provides that the face amount of obligation* issued under aut
of that Act, and tbe face amount of obligations guatanteed 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 $285,000,000,000
(Act of June 30, 1959; U.S.C., title 31, sec. 757b), outstanding at any one time. For purposes of this section the current tedempdon 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 June 30, I960 (P.L. 86-564 86th Congress) provides that during the period
beginning on July 1, I960 and ending June 30, 1961, the above limitation ($285,000,000,000) shall be temporarily increased by
$8,000,000,000.
The following table shows the face amount of obligations outstanding and the face amount which can still be issued under
this limitation :
$ 2 9 3 , 000,000,000
Total face amount that may be outstanding at any one time
OutstandingObligations issued under Second Liberty Bond Act, as amended
Interest-bearing:
Treasury bills .$38,410,558,000
Certificates of indebtedness
Treasury notes
_
BondsTreasury
* Savings (current redernp. value)
Depositary.
."
R.E.A. series
Investment series
Special FundsCertificates of indebtedness
Treasury notes
Treasury bonds
Total interest-bearing „
Matured, interest-ceased
Bearing no interest:
United States Savings Stamps
Excess profits tax refund bonds
Special notes of the United States:
Internat'l Monetary Fund series
13 » 3 3 8 » 019 ,000
56.245.737.000
80,849, 231, 650
^i i^O^-»^SJ^>t JJ7
119,^75,500
18,486,000
5.849.803.000
$107,994,314,000
134,298,098,709
O , 355 , 289 » 000
8,610,430,000
27.537.385.000
44.503,104,000
..... 2 8 6 , 7 9 5 , 5 1 6 , 7 0 9
J^J »?&( , J-H*.
53,2o/,09»?
(j^-i—i J
2,496,000,000
K S t o V l Develoo,Ass«n
57,652,200
^S::::.:;T::r^:::•::::::::::7;•:::::v,::•:•:
Guaranteed obligations (not held by Treasury):
Interest-bearing:
Debenture.: F.H.A*..5S-Stad.:. M BdS
224,663,950
Matured, interest-ceased
732,475
Grand total outstanding ......
Balance face amount of obligations issuable under above authority
2.607.691.368
289,749,195,221
225,12?^I^5
. w o _•• r, u May 31, 1961
Reconcilement with Statement of the Public Debt,
"
(Date)
(Daily Statement of the United States Treasury
.^?...^.!....„„.„„.
(Date)
°utstanding"
Total 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
•Maturity Value E, F, G, H, J and K
Unearned discount:
Series E Matured (extension)
Series E Unmatured (to maturity)
Series E Unmatured (extension)
Series F Unmatured
Series J (to maturity)
D-134
, ,
289 ,974,^1. # |
;,w)iwo»-'^
J
2 Q 0 1 4 5 640,842
225 396 S i
or/pAo
t\\ttJ\
_?"0,^V----"
289,974,591,646
STATUTORY DEBT LIMITATION
AS OF Hay 311 1961
June 1 4 , 1961
anteed obi Rations as may be held by the secretary or ine i.coauiy;, *..»« «-»*.—*-»~ - £ ° - ° . - rr- '..-,.,.
/A_-» «f lunP 10 19S9- U.S.C.. title 11. sec. 757b), outstanding at any one time. For purposes of this section t h e current re
itmptfoaTalueof any obligation ^issulk on adiscount basis which is* redeemable prior to maturity at the option of the h o d «
shTbecons£e°eI as It. face amount." The Act of June 30, I960 (P,L. 86^564 86th Congress) K ^ ^ ^ ' g ^ j g ' g
beginning on July 1, I960 and ending June 30, 1961, the above limitation ($285,000,000,000) shall be temporarily increased by
$8,000,000,000.
.....
, „nAetr
The following table shows the face amount of obligations outstanding and the face amount which can still be issuedl under
this limitation :
$ 2 9 3 » 0 0 ° » ° 0 0 »0 0 °
Total face amount that may be outstanding at any one time
Outstanding Obligations issued under Second Liberty Bond Act, as amended
Interest-bearing :
Treasury bills .$38,410,558,000
Certificates of indebtedness
13,338,019,000
^6,245,737,000
Special FundsCertificates of i n d e b t e d n e s s
Treasury notes
Treasury bonds
Total interest-bearing
$107,994,314,000
— « . JI rr,_/-l.-_-4_J..ri . .
Treasury notes
BondsTreasury
* Savings (current redemp. value)
Depositary.
R.E.A. series
Investment series
80 , 849 , 231, 650
^ 7 ,^Ol, S-0~t3jy
119,475,500
18,486,000
5 .849 , 803, 0 Q 0
»-'
4 4 , ggg OffiiOOg
286,795,5157709
345,987,14^
Matured, interest-ceased
Bearing no interest:
United States Savings Stamps
E x c e s s profits tax refund b o n d s
Special notes of the United States:
i f
134,298,098,709
8,355,289 ,000
8,610,430,000
g^^^^^jOOO
,
^
'
Internat'l Monetary Fund series
JJt-^l t®7^
' •* •>—(J
2
W^rAl!l.„DeY-loP,As:s.n
Total
»^§,992*222
o Cc^n /Cm 'l^G.
57,652,200
^|o^|2L|||
289,749,195,221
Guaranteed obligations (not held b y T r e a s u r y ) :
Interest-bearing:
' n 1
DC Stad. Bds
224,663,950
n „ A &
Debentures: F.H.A
TT. _
_._--r, •_-v__y , / j ^
Matured, interest-ceased
(Jt-i^iJ
Grand total outstanding .„
Balance face amount of obligations issuable under above authority
'•? »«?*&—•—=«2.
4 ,
- ~'<(.,-*_(—>,2,7.—I ._.,
jj.O^Uo,.^
, . _. ... _. . May 31» 1961
Reconcilement with Statement of the Public Debt
(Daily Statement of the United States T r e a s u r y ,
_
(Date)
!„5L.:.....! ?........... )
°T3tr,d^ M- ih, ^^ 290,145,640,842
Total gross public debt
~
' *
•* '
'.
29/5 396 425
Guaranteed obligations not o w n e d b y the Treasury.
Total gross public debt a n d guaranteed obligations.
Deduct - other outstanding public debt obligations not subject to debt limitation
.
,
•Maturity Value E, F, G, 11, J and K
Unearned discount:
Series E Matured (extension)
Series E Unmatured (to maturity)
Series E Unmatured (extension)
Series F Unmatured
Series J (to maturity)
______—____»__Ui--t
1—^-s.
2 9 0 , J l-t^Ji % &(
Z / P t lT2.lQ.zA.
289,974,591,646
- 3 -
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 inte
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 whi
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 a
of discount at which bills issued hereunder are sold is not considered to accr
until such bills are sold, redeemed or otherwise disposed of, and such bills a
cluded from consideration as capital assets. Accordingly, the owner of Treasury
bills (other than life insurance companies) issued hereunder need include in h
income tax return only the difference between the price paid for such bills, wh
on 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 retu
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-
xmrapBa_mx_.
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 incorp
rated banks and trust companies and from responsible and recognized dealers in
ment securities. Tenders from others must be accompanied by payment of 2 percent
the face amount of Treasury bills applied for, unless the tenders are accompanie
an express guaranty of payment by an incorporated bank or trust company.
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 submit
ting tenders will be advised of the acceptance or rejection thereof. The Secreta
of the Treasury expressly reserves the right to accept or reject any or all tend
in whole or in part, and his action in any such respect shall be final. Subject
these reservations, noncompetitive tenders for $200,000 or less for the addition
bills dated March 23 > 1961 , ( 90 days remaining until maturity date on
pxj
September 21, 196l
p8_j_
) a n a noncompetitive tenders for $100,000 or less for the
181 -day bills without stated price from any one bidder will be accepted in full
~pl_f~
at the average price (in three decimals) of accepted competitive bids for the respec-
tive issues. Settlement for accepted tenders in accordance with the bids must be
made or completed at the Federal Reserve Bank on June 23 > 196l , in cash or
other immediately available funds or in a like face amount of Treasury bills mat
ing June 23. 19&1 . 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 say exemisiioik* as such, and l
BfflfflttHBHtt
13C
FOR IMMEDIATE RELEASE
TREASURY DEPARTMENT
Washington
June lii,
1961
TMrmxsrmTmmxvyYttmiimiJ.
TREASURY'S WEEKLY BILL OFFERING
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* fo
m
cash and in exchange for Treasury bills maturing
June 23, 196l
, in the amount
w
of $ 1,595,080,000 , as follows:
55
90 -day bills (to maturity date) to be issued
June 23, 196l
in the amount of $ 1,100,000,000 , or thereabouts, represent-
,
—m
and to mature September 21, 1961 , originally issued in the
, 0 , _ W (including $100,10U,000 issued June lh, 1#1)
A ,M
ing an additional
amount /of, bills
dated March
196l bills
,
amount
of $ 600,151,000
the additional
and 23,
original
to be freely interchangeable.
l8l_-day bills, for $ £00,000.000 , or thereabouts, to be dated
June 23, 196l . and to mature December 21, 1961
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 closin
Daylight Saving
hour, one-thirty o'clock p.m., Eastern/stsafflfl*^ time, Monday, June 19, l?6l
•
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
JP-^
TREASURY DEPARTMENT
131
WASHINGTON. D.C.
June 14, 1961
FOR IMMEDIATE RELEASE
TREASURY'S WEEKLY BILL OFFERING
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 June 23. 19°1,
in the amount of
$1,595,080,000, as follows:
90-day bills (to maturity date) to be issued June 23, 1961, in
the amount of $1,100,000,000, or thereabouts, representing an
additional amount of bills dated March 23. 1961, and to mature
September 21, 1961. originally Issued in the amount of $600,181,000
(including $100,104,000 issued June 14, 1961), the additional and
original bills to be freely interchangeable.
l8l-day bills, for $500,000,000, or thereabouts, to be dated
June 23, 196l,
and to mature December 21, 1961.
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 Daylight
Saving time, Monday, June 19. 19ol,
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
D-135
or trust company.
- 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 Departmment 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
March 23, 1961, (90-days remaining until maturity date on
September 21,1961) and noncompetitive tenders for $ 100,000
or less for the 181-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 June 23. 1961,
in cash or other immediately available funds or in a like face
amount of Treasury bills maturing June 23. 1961.
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 dispobed 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
0O0
return is made, as ordinary gain or loss.
Treasury Department Circular No. 4l8, Revised, and this notice,
prescribe the terms of the Treasury bills and govern the conditions
Federal
of theirReserve
issue. Bank
Copies
or Branch.
of the circular may be obtained from any
TREASURY DEPARTMENT
Washington, D . C.
1 19
!_ _; J—
D__SOIATE RELEASE
D-136
WEDNESDAY, JUNE l4, 196l
ESTABLISHED
PMLruTNAOT DATA ON IMPORTS PGR CONSUMPTION OP UNMANUFACTURED LEAD AND H N C CHARGEABLE TO THE QUOTAS
PRELIMINARY DATA ON X ^ J J 2 * D B B p x A L paocLAMATIQN NO. 3257 OP SEPTEMBER 22, 195*
QUARTERLY QUOTA PERIOD - April I, 1961 - June 30, 1961
IMPORTS - April I, 1961 - June 12, 1961
ITEM ?92
j Lead bullion or base bullion,
t lead in pigs and bars, lead
ITEM 391
Country
of
Production
t
n„.i-
nu tost
--Ma - ": tmtm^mzx as SK : sss-sa^Las.'sr'
and _»«t»
• J"^ ^^
.Quarterly C__ota
Imports
t Dutiable. Lead
(Pounds)
Australia
ITEM 394
ITEM 393
10,080,000
8,664,275
lead>
^ ffi9tal> ,
j•toartarly
all alloysQuota
or combinations of
Iaporta
: Dutiable Lead
*
lead n.s.p.f.
'founds)
23,680,000
mr
% of
*»
1: Quarterly ©iota
*1 Dutiable Zlna
(Pounds)
Ipport.
Zino in blocks, pigs, or slabs;
old and irorn-out 2ino, fit
only to be reaanufaetursd, zino
dross, and zino skimmings
Quarterly Quota
By height
(Pounds)
Imports
23,680,000
5,440,000
5,438,84?
Belgian Congo
7,520,000 2,595,476
Belgium and
Luxemburg (total)
Bolivia
5,040,000
5,040,000
Canada
13,440,000
13,440,000
15,920,000
9,597.707
66,480,000
37,840,000
26,003,746
3,600,000
Italy
Hexioo
Peru
16,160,000
6,»13,982
Un. So. Afrioa
14,680,000
14,880,000
Yugoslovia
All other foreign
countries (total)
40,084,122
6,560,000
6,560,000
36,880,000 70,480,000
61,071,830
6,320,000
1,188,826
36,880,000
6,765,085 35,120,000
22,739,370
3,760,000
1,977,384
12,880,000
15,760,000
15,206,648
6,080,000
6,080,000 17,840,000
17,840,000
6,080,000
6,080,000
TREASTMY D2?ARnSZff
Washington, D. C.
i QQ
XklGDIATE BSLSAS3
WEDNESDAY, JUNE l4, 1961
D-136
PRELIMTNART DATA ON Ii_?0R?3 FOR CONSUMPTION OP UN5_AKUPACTUR3D LEAD AND ZINC CHARCSABLS TO THE QUOTAS ESTABLISHES
BY PRSSIDSNTIAL PROCLAMATION NO. 3257 0? SEPTEMBER 22, 1953
QUARTERLY QUOTA PERIOD • April I, I96l - June 30, I96l
IMPORTS - April I, I96l - June 12, 1961
ITEM 394
ITSl. 393
ITEM 392
t Lead bullion or base bullion,
s lead in pigs and bars, lead
t
Lead-bearing ores, flue dust,: dross, reolainad l.ad, sera?
: Zlna-baaring ores of all kinds,: Zino ia blocks, pigs, or slabs;
and scattes
: lead, antiaonial load, an*!: except pyrites containing not s old and wjm-out zino, fit
t only to be rsaanufactors d, zinc
over 3^ of sin.
: aonial serap l.ad, type icatal, 1
dross, and zino ski_3_ings
t all alloys or ooabinatioaa of J
J
load n.s.p.f.
s
ia_artariy Quota
:<_uart3rly feiota
tCSiartarly &_ata
Quarts rly 6iota
Iaports
Inaorts i Bj gelght
Ir_port3 i Dutiable Zinc
Iaports : Dutiable Load
t Dutiable- Lead
(Pounds)
(PoundsJ
fPounds)"
"(Pounds)
ITSH
Country
of
Production
Australia
10,080,000
391
8,664,273
23,680,000
23,680,000
Belgian Congo
Be 1 glum and
Luxemburg (total)
Bolivia
5,040,000
5,040,000
Canada
13,440,000
13,440,000
15,920,000
9,597,707
66,430,000
40,084,122
5,438,847
7,520,000
2,593,478
37,840,000
26,003,746
3,600,000
Italy
M^xioo
Peru
16,160,COO
6,113,982
Un. So. Afrioa
14,680,000
14,880,000
Yugosloria
All other foreigi
countries (total)
5,440,000
6,560,000
6,560,000
36,880,000
36,880,000 70,480,000
61,071,830
v 6,320,000
1,188,826
12,830,000
6,765,085 35,120,000
22,739,370
3,760,000
1,977,384
15,760,000
15,206,648
6,030,000
6,080,000 17,840,000
17,840,000
6,030,000
6,080,000
• * ?4
TREASURY DEPARTMENT
Washington, D. C.
IMvlEDIATE RELEASE
D-137
WEDNESDAY. June l4, 1961
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, I960 - June 12, 19bl
Country of Origin
Egypt 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,^83
1,370,791
8,883,259
618,723
475.124 ..
5,203
237
9,333
50,569
-
8,883,259
618,721
-
Established Quota
Country of Origin
Imports
Honduras .....*
Paraguay
Colombia
Iraq
British East Africa ...
Netherlands E. Indies .
Barbados
l/Other British W. Indies
Nigeria
2/Other British W. Africa
3/Other French Africa ...
Algeria and Tunisia ...
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, 1$60 - June 12, 1961
Established Quota (Global) - 45,656,420 Lbs.
Staple Length Allocation Imports
1-3/8" or more ~~
39,590,778
1-5/32" or more and under
1-3/8" (Tanguis)
-1-1/8" or more and under
1-3/8"
39,590,778
1,500,000
1,395,169
4,565,6^2
4-, 565,6*2
752
871
124
195
2,240
71,388
Imports
-
681
-
21,321
-
5,377
l6,oo4
689
-
TREASURY DEPARTMENT
V7ashington, D. C.
IMMEDIATE RELEASE
WEDNESDAY. June l4 t 1961
D-137
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, i960 - June 12, 1961
~
Country of Origin
Egypt and the AngloEgyptian Sudan ....
Peru
British India
China
Mexico
Brazil
Union of Soviet
Socialist Republics
Argentina
,
Haiti
,
Ecuador
,
Established Quota
783,816
247,952
2,003,483
1,370,791
8,883,259
618,723
475,124 5,203
237
9,333
Inroorts
50,569
•
-
8,883,259
618,721
_
-
Country of Origin
Honduras •.
Paraguay
Colombia
Iraq
British East Africa ...
Netherlands E. Indies .
Barbados ^
l/0ther British W. Indies
Nigeria
2/0ther British W. Africa
3/0ther 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, I960 - June 12, 1961
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)
l-l/8" or more and under
1-3/8"
Allocation
39,590,778
Imports
39,590,778
1,500,000
1,395,169
k,5<S5,6k2
4,565,642
Established Quota
.752
- 871
124
195
2,2^0
71,388
21,321
5,377
16,004
689
-
681
-
~2COTTCN WASTES
(In pounds)
COTTON CARD STRIPS made from cotton having-a staple of less than 1-3/16 inches in length, COMBER
^ASTE, LAP WASTE, SLIVER WASTE, AND ROVING WASTE, WHETHER OR NOT MANUFACTURED OR OTHERWISE
ADVANCED IN VALUE: Provided, however, that not more than 33-1/3 percent of the quotas shall
be filled by cotton wastes other than comber wastes made from cottons of 1-3/16 inches or more
in staple- length in the case- of the- following countries. United Kingdom, France, Netherlands,
Switzerland> Belgium, Germany, and Italy*
Country of Origin
Established
TOTAL QUOTA
Total Imports
; Established .
Imports
Sept. 20, I960, to . 33-1/3% of . Sept. 20, I960
June 12, 1961
s Total Quota : to June l?r 1961
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
8,135
Cuba • • • •
•
6,544
Germany . . . . . . . . .
76,329
Italy . . . .
......
21,263
1,713,391
239,690
42,782
1,441,152
1,416,533
75,807
42,782
21,442
22,747
14,796
12,853
21,442
50,646
25,443
7.038
9,937
5,482,509
2,071,019
1,599,886
1,493,762
1/ Included in total imports,-column 2.
Prepared in the Bureau of Customs.
3,068
3,'
V
1 QC
TREASURY DEPARTMENT
Washington, D. C.
IMMEDIATE RELEASE
v_/ _,-
D-138
WEDNESDAY, JUNE l4, 196l
The Bureau of Customs announced today preliminary figures showing the
quantities of wheat and wheat flour authorised to be entered, or withdrawn
from warehouse, for consumption under the import quotas established in the
President's proclamation of May 28, 194l, as modified by the President's
proclamation of April 13, 1942, for the 12 months commencing May 29, 19$0,
as follows:
Country
of
Origin
Wheat flour, semolina/
crushed or cracked
wheat, and similar
wheat products
Established :
Imports
Quota
:May 29, lfco ,
:to May 28, 1961
(Bushels)
(Bushels)
.95,000
Canada
China
Hungary
Hong Kong
Japan
United Kingdom
100
Australia
Germany
100
Syria
100
New Zealand
Chile
Netherlands
100
2,000
Argentina
Italy
100
Cuba
1,000
France
Greece
Mexico
100
,
Panama
Uruguay
Poland and Danzig
Sweden
Yugoslavia
Norway
Canary Islands
1,000
Rumania
Guatemala
100
100
Brazil
Union of Soviet
Socialist Republics
100
100
Belgium
800,000
795,000
Established :
Imports
Quota
:May 29, i960.
; to May 28, 1961
(Pounds)
(Pounds)
3,815,000
24,000
13,000
13,000
8,000
3,815,000
75,ooo
2,040
1,000
5,000
5,ooo
1,000
1,000
1,000
14,000
2,000
12,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
795,000
4,00n.nnn
3,817,040
137
TREASURY DEPARTMENT
Washington, D. C.
IMMEDIATE RELEASE
D-138
WEDNESDAY, JUNE l4, 1961
The Bureau of Customs announced today preliminary figures showing the
quantities of wheat and wheat flour authorized to be entered, or withdrawn
from warehouse, for consumption under the import quotas established in the
President's proclamation of May 28, 194l, as modified by the President's
proclamation of April 13, 1942, for the 12 months commencing May 29, I960,
as follows:
Country
of
Origin
China
Hungary
Hong Kong
Japan
United Kingdom
Australia
Germany
Syria
New Zealand
Chile
Netherlands
Argentina
Italy
Cuba
France
Greece
Mexico
Panama
Uruguay
Poland and Danzig
Sweden
Yugoslavia
Norway
Canary Islands
Rumania
Guatemala
Brazil
Union of Soviet
Socialist Republics
Belgium
Wheat flour, semolina,
crushed or cracked
wheat, and similar
wheat products
Established : Imports
Quota
:May 29, l$fc0 ,
:to May 28, 1961
(Bushels)
(Bushels)
Established :
Imports
Quota
:May 29, i960 .
:to May 28, 1961
(Pounds)
(Pounds)
795,000
\y;9vyjyj
3,815,000
24,000
13,000
13,000
8,000
-
100
75,ooo
-
3,815,000
2,040
1,000
5,000
5,000
1,000
1,000
1,000
14,000
2,000
12,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
100
100
-
100
2,000
100
-
1,000
-
100
-
1,000
100
100
100
100
800,000
795,000
4,000,000
3,817,040
T "I
X)
r-
TREASURY DEPARTMENT
Washington, D. C.
~* 3®
IMMEDIATE RELEASE
WEDNESDAY, JUNE l4_ 19<6l
B-139
The Bureau of Customs announced today preliminary figures showing the
quantities of wheat and wheat flour authorized to be entered, or withdrawn
from warehouse, for consumption under the import quotas established in the
President's proclamation of May 28, 194l, as modified by the President's
proclamation of April 13, 1942, for the 12 months commencing May 29, 19
as follows:
Wheat flour, semolina,
crushed or cracked
wheat, and similar
wheat products
Wheat
Country
of
Origin
Established :
Imports
Established :
Imports
Quota
:May 29, 196I,
Quota
:May 29, 196I,
:to June 12, 196*
_ : t o J u n e 1 2 > 1961
(Bushels)
(Pounds)
(Bushels)
(Pounds)
Canada
795,000
China
Hungary
Hong Kong
Japan
United Kingdom
100
Australia
Germany
100
Syria
100
New Zealand
Chile
Netherlands
100
Argentina
2,000
Italy
100
Cuba
France
1,000
Greece
Mexico
100
Panama
Uruguay
Poland and Danzig
Sweden
Yugoslavia
Norway
Canary Islands
Rumania
1,000
Guatemala
100
Brazil
100
Union of Soviet
Socialist Republics
100
Belgium
100
795,000
800,000
795,000
3,815,000
24,000
13,000
13,000
8,000
75,000
1,000
3,815,000
168
5,ooo
5,ooo
1,000
1,000
1,000
14,000
2,000
12,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,0Q0
5,168
TREASURY DEPARTMENT
Washington, D. C. 1 3 9
IMMEDIATE RELEASE
WEDNESDAY, JUNE 14, 196l
D-139
The Bureau of Customs announced today preliminary figures showing the
quantities of wheat and wheat flour authorized to be entered, or withdrawn
from warehouse, for consumption under the import quotas established in the
President's proclamation of May 28, 194l, as modified by the President's
proclamation of April 13, 1942, for the 12 months commencing May 29, 19 ,
as follows:
Country
of
Origin
Wheat flour, semolina,
crushed or cracked
wheat, and similar
wheat products
Established :
Imports
Established :
Imports
Quota
:May 29, 196I,
Quota
:May 29, I96I,
:to June 12, 1961
:to June 12, 1961
(Bushels)
(Bushels)
(Pounds)
(Pounds)
Canada
795,000
China
Hungary
Hong Kong
Japan
United Kingdom
100
Australia
Germany
100
Syria
100
New Zealand
Chile
Netherlands
100
Argentina
2,000
Italy
100
Cuba
France
1,000
Greece
Mexico
100
Panama
Uruguay
Poland and Danzig
Sweden
Yugoslavia
Norway
Canary Islands
1,000
Rumania
100
Guatemala
100
Brazil
Union of Soviet
Socialist Republics
100
Belgium
100
600 000
795,000
795,000
3,815,000
24,000
13,000
13,000
8,000
75,000
1,000
5,000
5,000
^
1,000
1,000
1,000
14,000 ,
2,000
12,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,0Q0
3,815,000
4,000,000
3,815,168
-
168
_
.
_
_
«.
-
~JT)
" 40
TREASURY DEPARTMENT
Washington
IMMEDIATE RELEASE
D-140
WEDNESDAY, JUNE l4, 1961
The Bureau of Customs announced today the following preliminary
figures showing the imports for consumption from January 1, 1961, to
June 3, 1961, inclusive, of commodities for which quotas were established pursuant to the Philippine Trade Agreement Revision Act of 1955:
Commodity
Buttons
Imports
as of
June 3, 1961
Established Annual
Quota Quantity
765,000
Gross
115,053
Cigars ,
180,000,000
Number
Coconut oil..,
403,200,000
Pound
51,708,289
Cordage
6,000,000
Pound
1,839,806
Tobacco
5,850,000
Pound
5,958,105
2,197,737
Ul
TREASURY DEPARTMENT
Washington
IMMEDIATE RELEASE
D-140
WEDNESDAY, JUNE l4, 1961
The Bureau of Customs announced today the following preliminary
figures showing the imports for consumption from January 1, 1961, to
June 3,1961, inclusive, of commodities for which quotas were established pursuant to the Philippine Trade Agreement Revision Act of 1955;
Commodity
Buttons ,
Imports
as of
June 3, 1961
Established Annual
Quota Quantity
765,000
Gross
115,053
Cigars ,
180,000,000
Number
2,197,737
Coconut oil..
403,200,000
Pound
51,708,289
Cordage ,
6,000,000
Pound
1,839,806
Tobacco ,
5,850,000
Pound
5,958,105
CO
o
Us
-2-
Commodity
Period and Quantity
: Unit
Imports
: of
as of
:Quantity: June 3. 1%1
Absolute Quotas
Peanuts, shelled, unshelled,
blanched, salted, prepared or
preserved (incl. roasted peanuts but not peanut butter)..,
Rye, rye flour, and rye meal..,
Butter substitutes, including
butter oil, containing 45% or
more butterfat
,
Tung Oil ,
* Imports through June 12, 1961.
12 mos. from
Aug. 1, 1960
July 1, 1960June 30, 1961
Canada
Other Countries
1,709,000 Pound
48,722*
140,733,957 Pound
2,872,122 Pound
Quota Filled
Calendar Year 1961 1,200,000 Pound
Quota Filled
Feb. 1, 1961Oct. 31, 1961
Argentina
Paraguay
Other Countries
18,770,577 Pound
2,230,313 Pound
711,188 Pound
8,177,355
Quota Filled
•3
TREASURY DEPARTMENT
Washington, D. C.
IMMEDIATE RELEASE
D-l4l
WEDNESDAY, JUNE l4, 196l
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 June 3, 1961, inclusive, as follows:
Commodity
Period and Quantity
: Unit
Imports
: of
as of
:Quantity: June 3, 1961
Tariff-Rate Quotas:
Cream, fresh or sour Calendar Year 1,500,000 Gallon 244
Whole milk, fresh or sour Calendar Year 3,000,000 Gallon 39
Cattle, 700 lbs. or more each April 1, 1961(other than dairy cows)
June 30, 1961
Cattle less than 200 lbs. each.. 12 mos. from
April 1, 1961
Fish, fresh or frozen, filleted,
etc., cod, haddock, hake, pollock, cusk, and rosefish
Calendar Year
120,000 Head
4,044
200,000 Head
22,648
32,600,645
Pound
Quota Filled!'
Tuna fish Calendar Year 57,114,714 Pound 20,035,659
White or Irish potatoes:
Certified seed
Other
12 mos. from
114,000,000 Pound
Sept. 15, 1960 36,000,000 Pound
63,969,855
8,186,295
Peanut oil July 1,1960May 4, 1961
80,000,000 Pound
Walnuts Calendar Year 5,000,000 Pound Quota Filled
Stainless steel table flatware
(table knives, table forks,
table spoons)
Nov. 1, 1960Oct. 31, 1961
1,440£/
69,000,000 Pieces Quota Filledl'
1/ Imports for consumption at the quota rate are limited to 16,300,322 pounds during
"the. first six months of the calendar year.
2/ Effective May 5, 1961, quota limitations discontinued.
3/ Based on preliminary data; subject to adjustment.
(over)
aX, IT T
TREASURY DEPARTMENT
Washington, D. C.
IMMEDIATE RELEASE
D-l4l
WEDNESDAY, JUNE l4, 1961
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 June 3, 1961, inclusive, as follows:
Commodity
Period and Quantity
Unit
of
Quantity
Imports
as of
June 3, 1961
Tariff-Rate Quotas:
Cream, fresh or sour Calendar Year 1,500,000 Gallon 244
Whole milk, fresh or sour Calendar Year 3,000,000 Gallon 39
Cattle, 700 lbs. or more each April 1, 1961(other than dairy cows)
June 30, 1961
120,000 Head
Cattle less than 200 lbs. each.. 12 mos. from
April 1, 1961
200,000 Head
Fish, fresh or frozen, filleted,
etc., cod, haddock, hake, pollock, cusk, and rosefish
Calendar Year
32,600,645 Pound
4,044
22,648
Quota Filled!'
Tuna fish Calendar Year 57,114,714 Pound 20,035,659
White or Irish potatoes:
Certified seed
Other
Peannfr Ml
12 mos. from
114,000,000 Pound
Sept. 15, 1960 36,000,000 Pound
63,969,855
8,186,295
Julv 1
» i960-
May 4, 1961
80,000,000 Pound
Walnuts Calendar Year 5,000,000 Pound Quota Filled
Stainless steel table flatware
(table knives, table forks,
Nov. 1, 1960table spoons)
Oct. 31, 1961
69,000,000
1,4402/
Pieces Quota Filled!'
1/ Imports for consumption at the quota rate are limited to 16,300,322 pounds during
the first six months of the calendar year.
2/ Effective May 5, 1961, quota limitations discontinued.
3/ Based on preliminary data; subject to adjustment.
(over)
-2-
Commodity
Period and Quantity
: Unit
h-porcs
: of
as of
: Quantity:June 3, 196
Absolute Quotas
Peanuts, shelled, unshelled,
blanched, salted, prepared or
preserved (incl. roasted peanuts but not peanut butter)..,
Rye, rye flour, and rye meal...
Butter substitutes, including
butter oil, containing 45% or
more butterfat
Tung Oil
* Imports through June 12, 1961.
12 mos. from
Aug. 1, 1960
July 1, 1960June 30, 1961
Canada
Other Countries
1,709,000 Pound
48,722*
140,733,957 Pound
2,872,122 Pound
Quota Filled
Calendar Year 1961 1,200,000 Pound
Quota Filled
Feb. 1, 1961Oct. 31, 1961
Argentina
Paraguay
Other Countries
18,770,577 Pound
2,230,313 Pound
711,188 Pound
8,177,355
Quota Filled
yy ? 7
U'J
'4?
THE SECRETARY OF THE TREASURY
WASHINGTON
JUN 13 1961
Dear Mr. President:
In the President's Message to the Congress on Budget and Fiscal Policy of
March 24, 1961, he urged the enactment of an increase in the debt limit that
would provide sufficient flexibility to permit sound management of the debt and
of our budget expenditures. He made no specific recommendation as to an appropriate new limit at that time, preferring to wait until we would have the advantage of later estimates of revenues and expenditures. Those estimates have now
been made, and accordingly I am asking the Congress to raise the temporary limit
on the public debt to $298 billion during the fiscal year 1962, as provided in
the attached draft of legislation.
Under existing legislation, the current temporary ceiling of $293 billion
expires on June 30, 1961, at which time the limit reverts to $285 billion. We
expect the public debt to exceed $285 billion on that date, however, and over
the course of the fiscal year 1962 seasonal factors will push the debt considerably above $290 billion, although a return to around the $290 billion level
is anticipated by the close of fiscal 1962. These estimates are based on the
assumption of a budget deficit of $3*7 billion during the fiscal year 1962,
which makes an allowance for the additional spending that would result from
enactment of the recommendations in the President's May 25 Message to the Congress on Urgent National Needs. The estimated budget deficit of $3«7 billion
also assumes the President's requests for maintaining various excise tax rates
and for providing increased postal rates and a self-sustaining highway program
will receive favorable action.
To provide for contingencies, and to permit vitally needed elbow-room for
the efficient management of the public debt, the debt limit must of course be
placed higher than the expected high point of the debt during the fiscal year,
as best as we can estimate it at this point. Failure to provide such a margin
for flexibility would only force the Treasury into more costly debt financing
procedures over the long rtm. I3y placing the temporary debt limit at $298
billion, some $3 billion above the high point of the debt expected within the
fiscal year (based on the budget assumptions mentioned above), the attached
draft of legislation would provide that necessary degree of operational flexibility.
I urge that the Congress give prompt and favorable attention to the enactment of this measure. A similar letter has been sent to the Speaker of the
House.
The Department has been advised by the Bureau of the Budget that there is
no objection to the submission of this legislation to the Congress and that it
is in accord with the program of the President.
Sincerely yours,
Honorable Lyndon B. Johnson hi Douglas Dillon
President of the Senate
Washington, D. C.
Douglas Dillon
14b
€l
FOR IMMEDIATE RELEASE
TREASURY REQUESTS TEMPORARY RISE
IN NATIONAL DEBT LIMIT
Treasury Secretary Douglas Dillon has asked Congress to
raise the temporary limit on the public debt to $298 billion
during fiscal year 1962. Without legislative action the
J
current $293 billion limit would revert to $285 billion on
June 30.
Treasury estimates of forthcoming revenues, expenditures
A WCf PATS 0
J
and its financing operations QapagtgWd during the year
beginning July 1 indicate the need for increasing the present
upper limit of the debt by $5 billion. This means increasing
the present temporary limit of $8 billion set by Congress last
year to $13 billion over the "permanent" limit of $285 billion,
Secretary Dillon said.
The Secretary's request was made in identical letters
addressed to the President of the Senate Lyndon B. Johnson and
to Speaker of the House Sam Rayburn. flfcppy _£B> attached/])
/
c
/
1Q '
TREASURY DEPARTMENT
WASHINGTON, D.C.
June 14, 1961
FOR IMMEDIATE RELEASE
TREASURY REQUESTS TEMPORARY RISE
IN NATIONAL DEBT LIMIT
Treasury Secretary Douglas Dillon has asked Congress to
raise the temporary limit on the public debt to $298 billion
during fiscal year 1962. Without legislative action, the current
$293 billion limit would revert to $285 billion on June 30.
Treasury estimates of forthcoming revenues, expenditures, and
its financing operations anticipated during the year beginning
July 1, indicate the need for increasing the present upper limit
of the debt by $5 billion. This means increasing the present
temporary limit of $8 billion set by Congress last year to
$13 billion over the "permanent" limit of $285 billion, Secretary
Dillon said.
The Secretaryfs request was made in identical letters
addressed to the President of the Senate Lyndon B. Johnson and
to Speaker of the House Sam Rayburn.
D-142
(Copy attached).
148
THE SECRETARY OF THE TREASURY
WASHINGTON
JUN 13 1961
Dear Mr. President:
In the President's Message to the Congress on Budget and Fiscal Policy of
March 24, 1961, he urged the enactment of an increase in the debt limit that
would provide sufficient flexibility to permit sound management of the debt and
of our budget expenditures. He made no specific recommendation as to an appropriate new limit at that time, preferring to wait until we would have the advantage of later estimates of revenues and expenditures. Those estimates have now
been made, and accordingly I am asking the Congress to raise the temporary limit
on the public debt to $298 billion during the fiscal year 1962, as provided in
the attached draft of legislation.
Under existing legislation, the current temporary ceiling of $293 billion
expires on June 30, I96I, at which time the limit reverts to $285 billion. We
expect the public debt to exceed $285 billion on that date, however, and over
the course of the fiscal year 1962 seasonal factors will push the debt considerably above $290 billion, although a return to around the $290 billion level
is anticipated by the close of fiscal 1962. These estimates are based on the
assumption of a budget deficit of $3-7 billion during the fiscal year 1962,
which makes an allowance for the additional spending that would result from
enactment of the recommendations in the President's May 25 Message to the Congress on Urgent National Needs. The estimated budget deficit of $3-7 billion
also assumes the President's requests for maintaining various excise tax rates
and for providing increased postal rates and a self-sustaining highway program
will receive favorable action.
To provide for contingencies, and to permit vitally needed elbow-room for
the efficient management of the public debt, the debt limit must of course be
placed higher than the expected high point of the debt during the fiscal year,
as best as we can estimate it at this point. Failure to provide such a margin
for flexibility would only force the Treasury into more costly debt financing
procedures over the long run. By placing the temporary debt limit at $298
billion, some $3 billion above the high point of the debt expected within the
fiscal year (based on the budget assumptions mentioned above), the attached
draft of legislation would provide that necessary degree of operational flexibility.
I urge that the Congress give prompt and favorable attention to the enactment of this measure. A similar letter has been sent to the Speaker of the
House.
The Department has been advised by the Bureau of the Budget that there is
no objection to the submission of this legislation to the Congress and that it
is in accord with the program of the President.
Sincerely yours,
Honorable Lyndon B. Johnson /s/ Douglas Dillon
President of the Senate
Washington, D. C.
Douglas Dillon
49
DEBT LIMITATION
UNDER SECTION 21 OF TEE SECOND LIBERTY BOND ACT AS AMENDED
HISTORY OF LEGISLATION
ACT
1917
Sept. 24. 1917
40 Stat. 2tfb" — - Sec. 1 authorized bonds in the amount of
1+0 Stat. 290 --- Sec. 5 authorized certificates of indebtedness outstanding (revolving authority)
1918
April 4. 1918
40 Stat. 502 --- amending Sec.
40 Stat. 504 —
amending Sec.
certificates
July 9. 1918
40 Stat. 844 —
amending Sec.
1929
June 17, 1929
46 Stat. 19
12,000,000,000 (a)
1, increased bond authority to--
20,000,000,000 (a)
8,000,000,000 (b)
10,000,000,000 (b)
7,000,000,000 (a)
amending Sec. 18, increased note authority
to outstanding (establishing revolving
authority)
-
7,500,000,000 (b)
amending Sec. 5. authorized bills in lieu
of certificates of indebtedness; no change
in limitation for the outstanding —
10,000,000,000 (b)
1931
March 3, 1931
46 Stat. 1506—- amending Sec. 1, increased bond authority to-1934
Jan. 30, 1934
48 Stat. 343 —
4,000,000,000 (b)
1, increased bond authority t o —
5. increased authority for
outstanding to
1919
March 3, 1919
40 Stat. 1_>11— amending Sec. 5, increased authority for
certificates outstanding to
40 Stat. I 3 O 9 — New Sec. 18 added, authorizing notes in
the amount of
1921
Nov. 23, 1921
42 Stat. 321 —
$7,538,945,400 (a)
amending Sec. 18, increased authority for
notes outstanding to ------
28,000,000,000 (a)
10,000,000,000 (b)
- 2-
ACT
1935
Feb. 4, 1935
49 Stat. 20
49 Stat. 21 — -
49 Stat. 21
amending Sec. 1, limited bonds outstanding
(establishing revolving authority) to
$25,000,000,000 (b)
new Sec. 21 added, consolidating authority
for certificates and bills (sec. 5) and
authority for notes (sec. 18). Same
aggregate amount outstanding — - 20,000,000,000 (b)
new Sec. 22 added, authorizing United States
Savings Bonds within authority of Sec. 1.
1938
May 26, 1938
52 Stat.
447 —
i. 44
amending Sec. 1 and 21, consolidating in
Sec. 21 authority for bonds, certificates
of indebtedness, Treasury bills, and notes
(outstanding bonds limited to $30,000,000,000).
Same aggregate total outstanding
1939
July 20, 1939
53 Stat. 1 0 7 1 — amending Sec. 21, removed limitation on
bonds without changing total authorized
outstanding of bonds, certificates of indebtedness, bills, and notes
1940
June 25, 1940
54 Stat. 526 —
1941
Feb. 19, 194L
55 Stat. 7
amending Sec. 21, adding new paragraph:
"(b) In addition to the amount authorized
by the preceding paragraph of this section,
any obligations authorized by sections 5
and 18 of this Act, as amended, not to exceed in the aggregate $4,000,000,000 outstanding at any one time, less any retirements made from the special fund made available under section 301 of the Revenue Act of
1940, may be issued under said sections to
provide the Treasury with funds to meet any
expenditures made, after June 30> 1940, for
the national defense, or to reimburse the
general fund of the Treasury therefor. Any
such obligations so issued shall be designated 'National Defense Series'."
---
*• amending Sec. 21, limiting face amount of
obligations issued under authority of Act
outstanding at any one time to
Eliminates separate authority for $4 billion
of National Defense Series obligations.
45,000,000,000 (b)
45,000,000,000 (b)
4,000,000,000 (c)
65,000,000,000 (b)
- 3-
151
ACT
1942
March 28, 1942
~56 Stat. 189 •
amending Sec. 21, increased limitation to ---
$125,000,000,000 (b)
1943
April 11, 1943
57 Stat. 63 -•
amending Sec. 21, increased limitation to — 210,000,000,000 (b)
1944
June 9. 1944
58 Stat. 272
amending Sec. 21, increased limitation to
—
260,000,000,000 (b)
1945
April 3. 1945
59 Stat. 47 -•
amending Sec. 21 to read: "The face amount
of obligations issued under authority of
this 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 $300,000,000,000 outstanding at
300,000,000,000 (b)
any one time."
•
1946
June 26, 1946
60 Stat. 316
amending Sec. 21, adding: "The current
redemption value of any obligation issued
on a discount basis which is redeemable
prior to maturity at the option of the
holder thereof shall be considered, for
the purposes of this section, to be the
face amount of such obligation-" and
decreasing limitation to --- —
—•
275,000,000,000 (b)
1954
Aug. 28, 1954
68 Stat. 895
amending Sec. 21, effective August 28, 1954,
and ending June 30, 1955. temporarily in281,000,000,000 (b)
creasing limitation by $6 billion to
1955
June 30, 1955
69 Stat. 241
amending Aug. 28, 1954, Act by extending
until June 30, 1956, increase in limitation
to
-
281,000,000,000 (b)
- 4ACT
1956
1
july 9. 1956
70 Stat. 519 --
amending Act of Aug. 28, 1954, temporarily
increasing limitation by $3 billion for
period beginning July 1, 1956, and ending
June 30, 1957, to ---
52
$278,000,000,000 (b)
1957
Effective July 1, 1957. temporary increase
terminates and limitation reverts, under
Act of June 26, 1946, to -
-
275,000,000,000 (b)
195§
Feb. 26, 1958
72 Stat. 27 — - amending Sec. 21, effective Feb. 26, 1958,
and ending June 30, 1959, temporarily increasing limitation by $5 billion to -------
280,000,000,000 (b)
Sept. 2, 1958
72 Stat. 1758 - amending Sec. 21, increasing limitation to
$283 billion, which, with temporary increase of Feb. 26, 1958, makes limitation —
288,000,000,000 (b)
1959
June 30, 1959
73 Stat. 156 —
amending Sec. 21, effective June 30, 1959;.
increasing limitation to $285 billion,
which, with temporary increase of Feb. 26,
1958, makes limitation on June 30, 1959
amending Sec. 21, temporarily increasing
limitation by $10 billion for period beginning July 1, 1959. and ending June 3°.
i960, which makes limitation beginning
July 1, 1959
—
I960
June 30, i960
74 Stat. 290 —
amending Sec. 21, for period beginning on
July 1, I960, and ending June $0, 1961,
temporarily increasing limitation by
$8 billion to
-
(a) Limitation on issue.
(b) Limitation on outstanding.
(c) Limitation on issues less retirements.
290,000,000,000 (b)
295.000,000,000 (b)
293,000,000,000 (b)
/53
mtdmm*,
154
TREASURY DEPARTMENT
WASHINGTON, D.C.
Ma^-^&i 196l
1
IMMEDIATE RELEASE
TREASURY MARKET TRANSACTIONS IN
During &pr44 19^1, 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
$49t55tT5CKTr
0O0
jo~?<b
JL O v>
TREASURY DEPARTMENT
WASHINGTON, D.C.
June 15> 19^1
IMMEDIATE RELEASE
TREASURY MARKET TRANSACTIONS IN MAY
During May 1961, 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
$24,170,800.
0O0
D-143
__ _/ V^
._S~__ II
Net Changes in Gold and Dollar Holdings
(official and private; millions of dollars)
1958
1959
i960
Total, Foreign Countries ...
/ 3.927
/ 3; H2
/ 3,120
Latin America
Canada
••
U.K. and Sterling Area ...
-268
/207
/878
-228
/208
/2
-335
/99
/939
Continental W. Europe ....
/2,876
/2,352
/1,908
Other Foreign Countries ..
Japan
Others
/234
(/379)
(-145)
International _jistitutions±/
/451
37
/778
(/47D
(/307)
/2,854
/509
(/602)
( -93)
/1,053
Beginning with 1959> includes changes in dollar holdings of
international shipping companies operating under the flags
of Liberia, Panama, Honduras and the Bahamas.
Table I
United States Balance of Payments
1958 - 60
(billions of dollars)
1958
".SIC COMPONENTS
1.
2.
3.
4.
5.
6.
7-
U. S. Payments - total
Merchandise Imports
Non-military Services
Military Expenditures Abroad
U. S. Direct & Portfolio Investment Abroad
U. S. Govt. Grants & Credits (Gross)
Pensions and Remittances
8. U. S. Receipts - total 23.9
9.
Merchandise Exports
Hon-military Services
10.
Income on investments
.11 "~^
Other
12
Military Sales
13. -^ Foreign Direct & Portfolio Investment in U.S.
14.
Repayments to U. S. Govt.
27.4
13*0
4.7
3*4
2.5
3-1
-7
16T3
2.9
3.8
.3
*
.5
15. BASIC BALANCE (Deficit - ) -3.6
OTHER COMPQEEICTS
16. U. S. Private Short-term Assets Abroad
(increase - )
17.
Unrecorded Inflow ( + ) or Outflow ( - )
-*3
+.4
18. OVERALL BALANCE (Deficit - ) -3.5
Note: Excludes military grant transactions. Details may not add
totals due to rounding.
*less than $50 million
l/ Excludes U. S. subscription of $1.4 billion to IMF
15 D
- 22 In that sense, the present role of New Yorl, and thus of
the United States, as the financial center for the world,
carries great responsibilities and great opportunities.
Tha further shaping of that role will clearly benefit from
periodic review of the kind that Congress is initiating with
the meetings beginning here today.
- 21 -
159
of imbalances, and the handling of excessive shifts of liquid
funds, rather than a shortage of over-all liquidity. Indeed,
in several countries the problem is to direct some of the
excess liquidity into longer term finance through long term
capital exports. New reserves injected into the present
payments situation would simply move to the centers which
already have excess reserves.
In the final analysis, there is no substitute for balance
of payments discipline in this, or any, economy -- a discipline
that reaches through our productivity performance, our price
and wage performance, our governmental budgetary position, and
our monetary and credit policies. Neither the force nor the
form of this discipline is materially different for a reservecurrency country than for any other. But because of its
position as the principal key-currency country, the United
States does have a special position of prominence. The way in
it acts to maintain the conditions for balance-of-payments
equilibrium sets the pace for many other countries of the
Western Alliance, all of whom use our currency in carrying
on their trade, and in supporting their own monetary reserves.
16Q
- 20 made in the operations or resources of the 'IMF^j
-HFfH_ffr*" M *^ ——*"• h n
____i^T___>_________af^
However, I think it is fair to say that our efforts at the
moment are directed toward strengthening the existing international framework, and improving the institutional arrangements for making more effective use of present world reserves.
There has been considerable public discussion, as you
know, of proposals for fundamental changes in the international
financial system.
These proposals arise out of concern that
over the longer-run, injections of international reserves
may be needed to finance a growing volume of trade and financial
transactions. ^Thether there in fact is likely to be a shortage
of aggregate world liquidity sometime in the future, and specifically whether any such shortage will need to be corrected by
creating an international currency to replace dollars (and
sterling) as official reserves, are controversial questions
on which there is as yet no agreement among economists. Therefore, although these questions need to be included in our
continuing study and consideration of long-range monetary
problems, they seem very unlikely to be matters of practical
policy at the present time. Today our problem is the correction
- 19 -
" Ify
intercentral bank credits must supplement rather than replace
the facilities provided by the IMF) In fact, there would seem
to be considerable logic in an arrangement whereby central
bank credits might in some part be repaid or refinanced through
drawings on the Fund whenever the capital flows that had initially given rise to the interbank credits did not reverse
themselves quickly enough to permit repayment by this means.
I should point out, however, that the Fund at the moment
holds only moderate amounts of continental European and Japanes
currencies, so that drawings of these currencies by the
United States -- should such action ever seem desirable -would in practice be restricted. For this reason among others,
the United States is participating in exploratory discussions
which we hope will lead to an agreement among the industrial
countries to provide standby credits to supplement the Fund's
resources of needed currencies. Many technical questions
remain to be explored in this approach, but there seems to
be increasing agreement on the need for standby facilities
of this sort to deal with short-term capital flows.
I believe it would be premature at this time to go Into
detail on the technical aspects of any change that might be
- 13 -
^?
to acquire certain other convertible currencies in relatively
small amounts during recent months. Whereas other countries
have long been in a position to even out short-term influences
on their currencies through sales or purchases of dollars,
the United States, because it held no convertible currencies,
had no similar option. Our decision to acquire small balances
of foreign currencies is designed to eliminate or reduce this
^^aisparity. Henc eforth, in order to indicate clearly the *
increased strength and flexibility of our position, we expec\
to include holdings of convertible foreign exchange as well a\
gold in the reports of our monetary assets.
While it is too soon to judge the possibilities for
lasting effectiveness of these actions in dealing with disturbances in the exchange markets, we have been highly pleased
with the results of our operations thus far. Another implication of the experiences In Europe during March is that intercentral bank credits can play an important role in offsetting
the destabilizing effects of speculative capital flows. I
believe the various participants would agree, however, that
— 1/ —
«*
conditions prevailing in the market. However, arrangements
were worked out between the United States and Germany whereby
a stabilizing influence could be exerted on the market. I \
might point out that although recent official operations in
the forward exchange market have been directed primarily at
suppressing potential speculation on currency revaluations,
essentially the same techniques can be used to exert an •
influence, upward or downward, on the covered interest incentive to move short-term investment funds from one market
to another. /iJImlTar operations in 'met other major current
.-
-
«""""
X^ttSy/vjL^u,^
A
/
S-U-t-k
,
3 t.Tieyi
,
KftpJ.0,^1
*\f>p >r® f» *-«'&,T<
.
*«^
""*"•*
US^^^l,
yAB»» -to1 caw.g inistrnmimmm*' ewmwmwie^''.
Aside from these operations in the forward market, the
Treasury, through the facilities of the Federal Reserve System,
and in cooperation with authorities abroad,^beg^m. to acquire
modest holdings of foreign exchange which could be sold in
the spot market should the dollar again come under pressure.
You will recall, for example, that we requested Germany to
make some marks available to us temporarily at the time they
agreed to prepay $&mtfm»?msmmw-*n of their official debt to the
U. S. )The Treasury has also taken advantage of opportunities
1B-1
- 16 t
agent as these new procedures were being developed. The
/
particular techniques used are not so important, however, as
the fact that ways were found to offset speculative capital
flows of very large magnitude. What stands out, against the
background of uneasiness prevailing last Autumn,\ is that the
speculative flows which began in March at the time of the
revaluations of the mark and the guilder did not precipitate
any resumption of gold purchases by foreigners^^/^Our^ioi^tary
gold stock has actually increased by more thap. $100 million elsl
since the revaluations.
We have, meanwhile, initiated a number of measures designed
to diminish the likelihood that speculation against the dollar
might recur. Our decision to undertake limited operations in
forward exchange markets represents one step in this direction.
The impact of the currency speculation during March did
not confine itself to the markets for spot exchange. In the
case of the German mark, for example, the premium on the
forward mark rose to very high levels immediately following
the revaluation. Had this premium been allowed to rise unchecked, it might well have aggravated the speculative
•165
The need to strengthen the international financial
system and improve international financial cooperation was
again dramatized recently by the speculative movements of
capital that developed following the revaluations of the
German mark and the Dutch guilder in early March. The methods
employed on that occasion to contain these movements and
prevent them from forcing either an undesirable and unnecessary change in exchange rates, or a reversion to the controls removed only after such painstaking struggle through
the postwar years, were impressive. Even though no question
concerning the standing of the dollar was directly involved
in this latest speculative flurry, the techniques developed,
and the lessons learned through the close day-by-day contact
which we have maintained with various European monetary authorities during this period, will have lasting value to the
United States. f
I believe you will have an opportunity explore jamaAT
<
^____fflgJfflJia_J_Jl'l!. tomorrow with the representatives of t
Federal Reserve Bank of New York, whose operational contacts
have been utilized on behalf of the Treasury as our fiscal
166
- 14 where a small group of responsible officials can discuss
questions of mutual interest and concern, and gain a practical
grasp of the flexibility which exists in national policies to
help discourage excessive or disequilibrating movements of
liquid funds. These officials well realize that international
financial considerations are only one of many objectives that
must be taken into account in the over-all financial policy
of a nation. Yet it is through the lessons learned last year
and through consultations of this kind that progress has been
made toward a better coordinated and more stable pattern of
international interest rate relationships than was the case
last year. These OECD meetings also afford an opportunity to
keep the basic balance of payments situation under scrutiny,
and the confrontation serves to keep both the surplus and deficit
countries aware of their responsibilities to correct their
p.
positions. At the same time, the IMF is beginning regular
consultations with convertible-currency countries, thus
broadening the scope of these useful periodic reviews which
previously had been largely confined to countries maintaining
exchange restrictions.
- 13 -
16?
Interest on such investments, and in certain cases even-imposing a penalty on foreign balances. Similarly, in Germany
^d*ij__«M-iBHiHwd IliifgiiBBM^ short-term interest rates were r
specifically with a view to the foreign effect. As a result,
the differential between short-term rates here and abroad -particularly after allowing for forward exchange cover —
has narrowed, and thus reduced considerably the interest advantage of shifting funds abroad.
Although these measures were most helpful in alleviating
the immediate problem posed by interest differentials, it was
generally agreed that there was a need for continuing contact an
discussion of international financial problems in order that st
might be taken before a potentially unstable situation got out o
hand. The Federal Reserve, both on its own behalf and as fiscal
agent of the Treasury, has been keeping in closer touch with
monetary authorities in Europe. At the same time, the
United States Government has taken the initiative in develop-
ing a framework for close consultation with European authorities
through the OEEC-OECD.
A new working party on monetary and
fiscal policies has been established as a subcommittee of the
Economic Policy Committee of OEEC. It is meeting at four-to-sixweek intervals in Paris,
- 12 One of the most widely discussed experiments undertaken
in this country involved the attempt to influence the structure
of domestic interest rates through new techniques in the
Implementation of monetary and debt management policies.
For several months now, the authorities have sought to achieve
the seemingly contradictory goals of holding up short-term
rates while enlarging the flow of funds into all forms of
domestic investment in order to spur domestic recovery. On
the whole, this venture has been gratifyingly successful thus
far, both in limiting the interest Incentive to transfer short-
term funds abroad and in maintaining credit ease and encouraging
monetary expansion at home.
In part, this has been made possible by the cooperation
of other countries in an effort to reduce the volatility of
short-term flows. This was most clearly seen in the measures
taken by various European monetary authorities to reduce the
attractiveness of their money market instruments to foreigners.
In both Germany and Switzerland, for example, the authorities'
took administrative action to discourage foreign investments
in their respective money markets by barring the payment of
26$
year, cannot -help but strain the international financial
system. Industrialized countries must work together closely
to eliminate the basic imbalances that have developed during
the past few years.
At the same time, it is also important that we continue
our efforts to strengthen the international financial framework itself so that the danger from speculative capital movements -- generated by these imbalances — may be minimized. I
should like to turn now to some of the steps that have
already been taken, both unilaterally and in cooperation with
authorities abroad, to this end.
Strengthening the International
Financial System
The problems that arose from the outflow of short-term
funds during the second half of n.960y not only for the •
United States but also for the recipients of these funds,
grew out of the conditions that have developed since the return
to convertibility by most of the world's important currencies
at the end of 1953. It .quickly became clear that these new
problems required new measures to deal with them.
- 10 -
a>
The Administration's balance-of-payments measures were
also designed to conform to this country's liberal commercial
policy. We have ruled out the imposition of either trade or
foreign exchange controls because such controls would, of
course, be self-defeating — particularly for a country of
our relative importance in international transactions. While
e have advocated the removal of special tax incentives to
direct investment in developed countries overseas* j|F would
clearly be to our own long-run disadvantage, as well as •
contrary to our principles, to impose^restraints on foreign
investment^ in^onogsrl. Similarly, in the area of trade, our
efforts have been aimed at inducing other countries and trading
groups to eliminate discriminatory quotas and reduce tariffs
on dollar exports, rather than imposing restrictions ourselves.
While the United States will continue to seek a solution
to its balance of payments problem along lines that are
consistent with its international obligations and policies,
I cannot emphasize too strongly that the task will be exceedingly difficult without the fullest cooperation of the surplus
countries. A continued accumulation of reserves, year after
I7i
- 9 At the same time, we ourselves have embarked on a broad
program aimed at achieving a sustainable balance in our
international payments within the next two years. The general
outline of the proposed measures was described in the President's
message to Congress of February £ J and I do not believe it is
necessary to re-examine the whole program in detail at this
time.
I would, however, like to offer a few general observa-
tions.
First of all, these measures have been designed to avoid
damage to our national security and to be consistent with
our international obligations.
-For this reason, we have not
proposed curtailment of our overall military or economic
assistance programs. We have, however, carefully reviewed
these programs and taken action to reduce their foreign exchange
costs as much as possible.
Both our military and our economic
assistance programs are now being administered so as to place
primary emphasis on procurement of U. S. goods and services.
In fact, we estimate that more than two billion dollars of
U. S. Government grants and credits were spent internally even
in 1960.
- 8-
172.
counterpart of, United States deficits. Table ££ emphasizes
the well-known fact that by far the largest part of excess
U. S. expenditures abroad nave ended up — directly or
indirectly — in the gold and dollar holdings of continental
Western E;::op- .._ countries. Japan, too, has accumulated
sizeable balances during this period, though the increase in
official reserves seems to have come to a halt recently. The
large increase in the gold and dollar holdings of the sterling
area during( 1960/was more than accounted for by short-term
capital inflows into the United Kingdom, and there has been
some reverse flow in the last few months.
The point I wish to emphasize is that international
imbalances are two-sided. The obligation to take effective
action to bring about equilibrium in international accounts
falls as heavily on surplus countries as it does on those
incurring a deficit. The United States recognized this obligation and acted decisively during the earlier postwar period
to alleviate the dollar shortage. Now that circumstances have
changed, others must follow this example.
173
- 7dollar, and thus eliminated a source of heavy pressure on our
reserves. This changed atmosphere was reflected in the sharp
swing In Unrecorded trans actions11 from a large negative
figure in the latter part of last year to a small plus figure
during the first quarter. On the other hand, foreign business
firms, particularly in Japan and Germany, continued to
borrow heavily from U. S. banks, with the result that recorded
outflows of short-term capital continued at roughly the same
rate as last year during the first three months of/l96l)— that
is, close to && billion a year on a seasonally adjusted basis.
Therefore, even though there has been a significant improvement
from the latter part off 1960, we must still keep an eye on shor
term rates in this country so as not to encourage a resumption
of sizeable money market investments abroad.
Before going on to discuss some of the steps that have been
taken to deal both with the basic balance of payments problem
and the unsettling effects of short-term capital movements, I
think it would be useful to summarize the geographical distribution of gold and dollar gains during the past three years.
In a very rough way, these gains reflect, and indeed are the
foreigners to'withdraw funds invested in the stock market, and
enhanced the attractiveness to U. S. firms of direct investments abroad.
As the summer months progressed, and the earlier improvement in the trade balance was increasingly offset by
these capital outflows, rumors began to appear in the exchange
markets that even the dollar itself could not withstand continued deficits of the magnitude that had been experienced
in the three preceding years. As a result, there was some
liquidation of dollar holdings to avoid any risk from devaluation, with the result that speculative withdrawals of funds
were added to the outflows already taking place in response
to business incentives.
The wide differentials in money market rates which helped
to activate the sizeable movements of short-term funds in 1960
have, for the most part, been considerably narrowed this year.
Even more important, the President's unequivocal statements of
our determination to maintain the present gold value of the
dollar, together with his program for dealing with balance
of payments deficits, have fully restored confidence in the
l?s
- 5 i m p r o v e m e n t i n o u r b a s i c b a l a n c e during 1 9 6 y w a s offset almost /
completely by outflows of short-term funds.
le.tabb
Line 16J>£ the table
shows the rise of more than a billion dollars in this outflow
last year. An additional strain was placed on our oyerall
balance by the shift in unrecorded transactions (linel/n
fc.hioln.1 mmmy
pmupljSni99mm
mmvo^ atT3i_i_ipbj_Mae
from a
s u b s t a n t i a l inflow inf 1959/ to an o u t f l o w o f m o r e than half a
billion dollars in .{960} X^^t /~+~«X*> W-*^**^*** <W J**,
'tst-yjur's lkr£+ ,. tJjttf^ M.timtmh-'J ^'J^t^'%$'**'•***
mtn^^H
W h i l e short-term capital m o v e m e n t s a r e m o r e difficult to
analyze than changes in the basic components of our international accounts, it seems likely that much of the outflow,
initially at least, was attributable to widening differentials
in interest rates and credit availabilities between this country
and other financial centers. Not only was there a substantial
incentive to transfer funds to foreign money market instruments
such as Treasury bills and bankers' acceptances, but the
differential in bank lending rates also caused business borrowers
to shift their source of financing from other countries to
U. S. banks. At the same time, the unfavorable short-run
prospects for capital appreciation in this country caused
«*
m
- 4-
in other advanced countries with a recession in the United
States. Therefore, since the progress of recovery in the
United States will undoubtedly bring some increase in our
imports, we must expect somewhat less favorable results during
the second half of the year. Furthermore, even if we should
achieve a basic balance this year, there is no assurance that
this balance can be maintained in( 1962.) Certainly we cannot
pt-M/^T
^*mmm*->^
___. £ T^ln\ CT/Wj ^
afford to depend on the A combination of circumstances fcha_*n>_»__
V-H.l_.U~iu 1 til GO 4^1jidring_1.1fhaJI_^^S. rooooaion^ yirwhich
the widest possible trade surplus. It is essential,
therefore, that we push forward with the President's balanceof-payments program in order to assure our ability to maintain
balance in our international accounts over the longer run.
We must of course be concerned not only with policies
that will strengthen our basic balance, but^with the development of measures thdt wl'l 1 -1
JL._.1L
48&e=sar_*e-»o€ international
short-term capital flows. While we must expect some transfers
of funds between countries in response to differing commercial
incentives, there is no economic justification for — and
potentially much harm from — movements that begin to feed on
themselves for speculative reasons. As you know, the considerable
Committee on Balance of Payments Information to study possible
ways of rearranging our international accounts to make them
analytically more useful. I thought that the Committee might
be interested in one form of presentation that we have adapted for
*Zf/K<it*« its* *£«49\tmM
our use in the Treasury, on the basis of the. Committee's work
thus far.
If you will look at line//15yof Table I, you will see
that our basic deficit was very large in(l958J and increased
still further iii 1959J Last year, however, there was substantial improvement in the basic balance as exports picked up
sharply and imports actually declined somewhat. In the first
quarter of this year, moreover, exports remained at high levels
while imports continued to fall slightly, with the result that
xve actually achieved a small surplus on these basic items.
While there are some indications that the recent improvement in our merchandise accounts reflects a strengthened U. S.
competitive position -- for example, in the displacement of
foreign automobile imports by domestically-produced compact
models — we cannot overlook the fact that much of the change
was due to the conjunction of high levels of economic activity
- 2 -
178
patterns of the world's major countries. Therefore, although
the committee has indicated its desire to focus on the financial side of the international payments structure during the
current hearings, I should like to begin by highlighting recent
developments in this country's balance of payments with the rest
of the world, relating these developments to the pressures that
have arisen in the exchange markets. Against this background,
I should then like to comment on the exchange market pressures
themselves and some of the specific steps that have been taken
to deal with them.
The U. g._ Balance of Payments
r i960 - 61
The problems which gave rise to the rapid gold outflow
during the second half oif I960]had their roots in the unprecedentedly large balance of payments deficits incurred by
the United States in botK 1958 and 1959 J In analyzing these
deficits, we need to distinguish between what may be called
the
tT
basic:t components of our payments accounts, and the
short-term capital flows which, as we have seen, can have such
an important impact on our overall position at any given time.
It was partly to point up this distinction that I made arrangements several months ago to set up a special interdepartmental
17S
STATEMENT OF THE HON. DOUGLAS DILLON, SECRETARY OF THE TREASURY
BEFORE THE SUBCOMMITTEE ON INTERNATIONAL EXCHANGE AND PAYMENTS
OF THE JOINT ECONOMIC COMMITTEE OF CONGRESS, MONDAY, JUNE 19,
1961, 10:00 A. M.
I appreciate this opportunity to appear before you this
morning to discuss recent developments in the international
payments structure. The Committee's review of these developments and its study of possible ways to improve present
international monetary mechanisms is both timely and welcome.
The problems stemming from persistent imbalances in the
international economy are of course not new -- they have been
with us in one form or another throughout much of the postwar
period. While the so-called "dollar shortage" of earlier
years was recognized as a source of international instability,
and policies were adopted by the United States specifically to
deal with this problem, its effects were felt more directly by
the rest of the world than they were by us. What is new is
that the constraints imposed by our own recent balance of
payments deficits -- most conspicuously evidenced in the decline
of the U. S. gold stock — have become a matter of direct
public concern in this country.
Problems in the world's financial markets cannot be
divorced from the underlying economic conditions and trade
180
TREASURY DEPARTMENT
Washington
June 19, 1961
For Release: Upon Delivery
STATEMENT OF THE HONORABLE DOUGLAS DILLON
SECRETARY OF THE TREASURY
BEFORE THE
SUBCOMMITTEE ON INTERNATIONAL EXCHANGE AND PAYMENTS
OF THE JOINT ECONOMIC COMMITTEE OF CONGRESS
MONDAY, JUNE 19, 196l,
10:00 A.M., EDT.
I appreciate this opportunity to appear before you this morning
to discuss recent developments in the international payments structure.
The Committee's review of these developments and its study of possible
ways to improve present international monetary mechanisms is both
timely and welcome.
The problems stemming from persistent imbalances in the
international economy are of course not new — they have been with
us in one form or another throughout much of the postwar period.
While the so-called "dollar shortage" of earlier years was recognized
as a source of international instability, and policies were adopted by
the United States specifically to deal with this problem, its effects
were felt more directly by the rest of the world than they were by us.
What is new is that the constraints imposed by our own recent balance
of payments deficits -- most conspicuously evidenced in the decline of
the U. S. gold stock — have become a matter of direct public concern
in this country.
Problems in the world's financial markets cannot be divorced from
the underlying economic conditions and trade patterns of the world's
major countries. Therefore, although the committee has indicated its
desire to focus on the financial side of the international payments
structure during the current hearings, I should like to begin by
highlighting recent developments in this country's balance of payments
with the rest of the world, relating these developments to the pressures
that have arisen in the exchange markets. Against this background,
I should then like to comment on the exchange market pressures themselves and some of the specific steps that have been taken to deal
with them.
The U. S. Balance of Payments
I960 - 6T
The problems which gave rise to the rapid gold outflow during the
second half of i960 had their roots in the unprecedentedly large balance
of payments deficits incurred by the United States In both 195& and 1959.
D-144
In analyzing these deficits, we need to distinguish between what may be
±81
- 2 called the "basic" components of our payments accounts, and the shortterm capital flows which, as we have seen, can have such an Important
impact on our over-all position at any given time. It was partly to
point up this distinction that I made arrangements several months ago
to set up a special interdepartmental Committee on Balance of Payments
Information to study possible ways of rearranging our international
accounts to make them analytically more useful. I thought that your
Committee might be interested in one form' of presentation that we
have adapted for our use in the Treasury, on the basis of the
interdepartmental CommitteeTs work thus far.
If you will look at line 15 of Tab]© I, you will see that our basic
deficit was very large in 1958, and increased still further in 1959.
Last year, however, there was substantial improvement in the basic
balance as exports picked up sharply and imports actually declinedsomewhat. In the first quarter of this year, moreover, exports
remained at high levels while imports continued to fall slightly, with
the result that we actually achieved a small surplus on these basic
items.
While there are some indications that the recent improvement in
our merchandise accounts reflects a strengthened U. S. competitive
position — for example, In the displacement of foreign automobile
imports by domestically-produced compact models -- we cannot overlook
the fact that much of the change was due to the conjunction of high
levels of economic activity in other advanced countries with a
recession in the United States. Therefore, since the progress of
recovery in the United States will undoubtedly bring some increase in
our imports, we must expect somewhat less favorable results during
the second half of the year. Furthermore, even if we should achieve
a basic balance this year, there is no assurance that this balance can
be maintained In 1962. Certainly we cannot afford to depend on the
recent combination of circumstances — boom conditions in Europe and
Japan side by side with recession in the United States — which
make for the widest possible trade surplus. It is essential, therefore,
that we push forward with the President's balance-of-payments program
in order to assure our ability to maintain balance in our International
accounts over the longer run.
We must of course be concerned not only with policies that will
strengthen our basic balance, but, also, with the development of measures
to cope with International short-term capital flows. While we must
expect some transfers of funds between countries In response to
differing commercial incentives, there is no economic justification
for — and potentially much harm from -- movements that begin to
feed on themselves for speculative reasons. As you know, the considerable
improvement In our basic balance during i960 was offset almost
table
last
completely
year.
showsby
the
Anoutflows
additional
rise ofof
more
short-term
strain
thanwas
a billion
placed
funds. dollars
on
Line
our16
over-all
In
ofthis
the first
balance
outflow
- 3-
182
by the shift in unrecorded transactions (line 17) from a substantial
inflow in 1959 to an outflow of more than half a billion dollars in
i960. These unrecorded transactions represent largely private
transactions and much of last year's shift is clearly associated with
the speculative atmosphere that developed last fall.
While short-term capital movements are more difficult to analyze
than changes in the basic components of our International accounts,
it seems likely that much of the outflow, initially at least, was
attributable to widening differentials in interest rates and credit
availabilities between this country and other financial centers. Not
only was there a substantial incentive to transfer funds to foreign
money market instruments such as Treasury bills and bankers' acceptances,
but the differential in bank lending rates also caused business
borrowers to shift their source of financing from other countries to
U. S. banks. At the same time, the unfavorable short-run prospects
for capital appreciation in this country caused foreigners to contract
their investments in the stock market, and enhanced the attractiveness
to U. S. firms of direct investments abroad.
As the summer months progressed, and the earlier improvement in
the trade balance was increasingly offset by these capital outflows,
rumors began to appear in the exchange markets that even the dollar
itself 'could not withstand continued deficits of the magnitude that
had been experienced in the three preceding years. As a result, there
was some liquidation of dollar holdings to avoid any risk from
devaluation, with the result that speculative withdrawals of funds were
added to the outflows already taking place in response to business
incentives.
The wide differentials in money market rates which helped to
activate the sizeable movements of short-term funds in i960 have, for
the most part, been considerably narrowed this year. Even more
important, the President's unequivocal statements of our determination
to maintain the present gold value of the dollar, together with his
program for dealing with balance of payments deficits, have fully
restored confidence in the dollar, and thus eliminated a source of
heavy pressure on our reserves. This changed atmosphere was reflected
in the sharp swing in "unrecorded transactions" from a large negative
figure in the latter part of last year to a small plus figure during
the first quarter. On the other hand, foreign business firms,
particularly in Japan and Germany, continued to borrow heavily from
U. S. banks, with the result that recorded outflows of short-term
capital continued at roughly the same rate as the second half of last
year during the first three months of 1961 -- that is, close to $2
billion a year on a seasonally adjusted basis. Therefore, even though
there
has
been
a
significant
from
the
latter
part of
i960,
we
to
must
encourage
still
akeep
resumption
an eye on
of improvement
short-term
sizeable money
rates
market
in this
investments
country
so
abroad.
as not
183
-4Before going on to discuss some of the steps that have been taken
to deal both with the basic balance of payments problem and the
unsettling effects of short-term capital movements, I think it would be
useful to summarize the geographical distribution of gold and dollar
gains during the past three years. In a very rough way, these gains
reflect, and indeed are the counterpart of, United States deficits.
Table II emphasizes the well-known fact that by far the largest part
of excess U. S. expenditures abroad has ended up — directly or
indirectly — in the gold and dollar holdings of continental Western
European countries. Japan, too, has accumulated sizeable balances
during this period, though the increase in official reserves seems to
have come to a halt recently. The large increase in the gold and
dollar holdings of the sterling area during i960 was more than
accounted for by short-term capital inflows Into the United Kingdom,
and there has been some reverse flow in the last few months.
The point I wish to emphasize is that international imbalances
are.two-sided. The obligation to take effective action to bring about
equilibrium in international accounts falls as heavily on surplus
countries as it does on those incurring a deficit. The United States
recognized this obligation and acted decisively during the earlier
postwar period to alleviate the dollar shortage. Now that
circumstances have changed, others must follow this example.
At the same time, we ourselves have embarked on a broad program
aimed at achieving a sustainable balance in our international payments
within the next two years. The general outline of the proposed measures
was described in the President's message to Congress of February 6,
and I do not believe it is necessary to re-examine the whole program
in detail at this time. I would, however, like to offer a few general
observations.
First of all, these measures have been designed to avoid damage
to our national security and to be consistent with our international
obligations. For this reason, we have not proposed curtailment of our
over-all military or economic assistance programs. We have, however,
carefully reviewed these programs and taken action to reduce their
foreign exchange costs as much as possible. Both our military and
our economic assistance programs are now being administered so as to
place primary emphasis on procurement of U. S. goods and services.
In fact, we estimate that more than two billion dollars of U. S.
Government economic grants and credits were spent internally even
in i960.
The Administration's balance-of-payments measures were also
designed to conform to this country's liberal commercial policy.
We have ruled out the imposition of either trade or foreign exchange
controls because such controls would/ of course, be self-defeating —
would
particularly
transactions.
incentives
clearly
tofor
direct
be
Viea
to
have
country
our
investment
advocated
ownoflong-run
our
in
the
relative
developed
disadvantage,
removal
importance
countries
of special
as well
in
overseas.
tax
international
as
It
184
- 5contrary to our principles, to impose general restraints on foreign
Investment. Similarly, in the area of trade, our efforts have been
aimed at inducing other countries and trading groups to eliminate
discriminatory quotas and reduce tariffs on dollar exports, rather
than imposing restrictions ourselves.
While the United States will continue to seek a solution to its
balance of payments problem along lines that are consistent with its
international obligations and policies, I cannot emphasize too strongly
that the task will be exceedingly difficult without the fullest
cooperation of the surplus countries. A continued accumulation of
reserves, year after year, cannot avoid straining the international
financial system. Industrialized countries must work together closely
to eliminate the basic imbalances that have developed during the past
few years.
At the same time, it is also important that we continue our efforts
to strengthen the international financial frame-work Itself so that the
danger from speculative capital movements — generated by these
imbalances — may be minimized. I should like to turn now to some of
the steps that have already been taken, both unilaterally and in
cooperation with authorities abroad, to this end.
Strengthening the International Financial System
The problems that arose from the outflow of short-term funds during
the second half of i960, not only for the United States but also for
the recipients of these funds, grew out of the conditions that have
developed since the return to convertibility by most of the world's
important currencies at the end of 1958. It quickly became clear that
these new problems required new measures to deal with them.
One of the most widely discussed experiments undertaken in this
country involved the attempt to influence the structure of domestic
interest rates through new techniques in the implementation of monetary
and debt management policies. For several months now, the authorities
have sought to achieve the seemingly contradictory goals of holding up
short-term rates while enlarging the flow of funds into all forms of
domestic investment in order to spur domestic recovery. On the whole,
this venture has been gratifyingly successful thus far, both in
limiting the interest incentive to transfer short-term funds abroad
and in maintaining credit ease and encouraging monetary expansion at
home.
In part, this has been made possible by the cooperation of other
countries in an effort to reduce the volatility of short-term flows.
This was most clearly seen in the measures taken by various European
monetary authorities to reduce the attractiveness of their money market
instruments to foreigners. In both Germany, and Switzerland, for
example, the authorities took administrative action to discourage foreign
investments in their respective money markets by barring the payment of
7
- 6 -
<?c
" *
interest on such investments, and in certain cases even imposing a
penalty on foreign balances. Similarly, in Germany short-term
interest rates were reduced specifically with a view to the foreign
effect. As a result, the differential between short-term rates here
and abroad — particularly after allowing for forward exchange cover —
has narrowed, and thus reduced considerably the interest advantage of
shifting funds abroad.
Although these measures were most helpful in alleviating the
immediate problem posed by interest differentials, it was generally
agreed that there was a need for countinuing contact and discussion
of international financial problems in order that steps might be taken
before a potentially unstable situation got out of hand. The Federal
Reserve, both on its own behalf and as fiscal agent of the Treasury,
has been keeping in closer touch with monetary authorities in Europe.
At the same time, the United States Government has taken the initiative
in developing a frame-work for close consultation with European
authorities through the Organization for European Economic CooperationOrganization for Economic Cooperation and Development. A new working
party on monetary and fiscal policies has been established as a
subcommittee of the Economic Policy Committee of OEEG. It is
meeting at four-to-six week intervals in Paris, where a small group of
responsible officials can discuss questions of mutual interest and
concern, and gain a practical grasp of the flexibility which exists
in national policies to help discourage excessive or disequilibrating
movements of liquid funds. These officials well realize that
international financial considerations are only one of many objectives
that must be taken into account in the over-all financial policy of
a nation. Yet it is through the lessons learned last year and through
consultations of this kind that progress has been made toward a better
coordinated and more stable pattern of international interest rate
relationships than was the case last year. These OECD meetings also
afford an opportunity to keep the basic balance of payments situation
under scrutiny, and the confrontation serves to keep both the surplus
and deficit countries aware of their responsibilities to correct their
positions. At the same time, the International Monetary Fund is
beginning regular consultations with convertible-currency countries,
thus broadening the scope of these useful periodic reviews which
previously had been largely confined to countries maintaining exchange
restrictions.
The need to strengthen the international financial system and
improve international financial cooperation was again dramatized
recently by the speculative movements of capital that developed
following the revaluations of the German mark and the Dutch guilder
in early March. The methods employed on that occasion to contain
these
movements
and
prevent
them
from
forcing
either
an
undesirable
postwar
controls
and unnecessary
years,
removed
were
change
only
impressive.
after
in exchange
such painstaking
Even
rates,
though
or no
a
struggle
reversion
question
through
to
concerning
the
the
- 7-
18S
the standing of the dollar was directly involved in this latest
speculative flurry, the techniques developed, and the lessons learned
through the close day-by-day contact which we have maintained with
various European monetary authorities during this period, will have
lasting value to the United States.
I believe you will have an opportunity to explore this subject
further tomorrow with the representatives of the Federal Reserve
Bank of New York, whose operational contacts have been utilized on
behalf of the Treasury as our fiscal agent as these new procedures
were being developed. The particular techniques used are not as
important, however, as the fact that ways were found to offset
speculative capital flows of very large magnitude. What stands out,
against the background of uneasiness prevailing last Autumn, is that
the speculative flows which began in March at the time of the
revaluations of the mark and the guilder did not precipitate any
resumption of gold purchases by foreigners. Our Treasury gold stock has
actually increased by more than $5^ million since the revaluations.
We have, meanwhile, initiated a number of measures designed to
diminish the likelihood that speculation against the dollar might recur.
Our decision to undertake limited operations in forward exchange
markets represents one step in this direction.
The impact of the currency speculation during March did not confine
itself to the markets for spot exchange. In the case of the German
mark, for example, the premium on the forward mark rose to very high
levels immediately following the revaluation. Had this premium been
allowed to rise unchecked, it might well have aggravated the speculative
conditions prevailing in the market. However, arrangements were worked
out between the United States and Germany whereby a stabilizing
influence could be exerted on the market. It Is our intention to conduct
similar operations in other major currencies whenever such action appears
appropriate and useful. I might point out that although the recent
official operations in the forward exchange market- have been directed
primarily at suppressing potential speculation on currency revaluations,
essentially the same techniques can be used to exert an influence,
upward or downward, on the covered interest incentive to move short-term
investment funds from one market to another.
Aside from these operations in the forward market, the Treasury,
through the facilities of the Federal Reserve System, and in
cooperation with authorities abroad, has begun to acquire modest holdings
of foreign exchange which could be sold in the spot market should the
dollar again come under pressure. You will recall, for example, that
we requested Germany to make some marks available to us temporarily
at the time they agreed to prepay $587 million of their official
debt to the United States. The Treasury has also taken advantage of
opportunities
to
acquire
certain
other months.
convertible
currencies
countries
relativelyhave
small
long
amounts
been during
in a position
recent
to even out
Whereas
short-term
other in
influences
187
- 8on their currencies through sales or purchases of dollars, the United
States, because it held no convertible currencies, had no similar
option. Our decision to acquire small balances of foreign currencies
is designed to eliminate or reduce this disparity. Henceforth, in
order to indicate clearly the increased strength and flexibility of
our position, we expect to include holdings of convertible foreign
exchange as well as gold in the reports of our monetary assets.
While it is too soon to judge the possibilities for lasting
effectiveness of these actions in dealing with disturbances in the
exchange markets, we have been highly pleased with the results of our
operations thus far. Another implication of the experiences in
Europe during March is that inter-central bank credits can play an
important role in offsetting the destabilizing effects of speculative
capital flows. I believe the various participants would agree,however,
that inter-central bank credits must supplement rather than replace
the facilities provided by the International Monetary Fund. In fact,
there would seem to be considerable logic in an arrangement whereby
central bank credits might in some part be repaid or refinanced
through drawings on the Fund whenever the capital flows that had
initially given rise to the interbank credits did not reverse themselves
quickly enough to permit repayment by this means.
I should point out, however, that the Fund at the moment holds
only moderate amounts of continental European and Japanese currencies,
so that drawings of these currencies by the United States — should
such action ever seem desirable -- would in practice be restricted.
For this reason among others, the United States Is participating in
exploratory discussions which we hope will lead to an agreement among
the industrial countries to provide standby credits to supplement the
Fund's resources of needed currencies. Many technical questions remain
to be explored in this approach, but there seems to be increasing
agreement on the need for standby facilities of this sort to deal with
short-term capital flows.
I believe it would be premature at this time to go into detail
on the technical aspects of any change that might be made in the
operations or resources of the International Monetary Fund. However,
I think It is fair to say that our efforts at the moment are directed
toward strengthening the existing International frame-work, and
improving the institutional arrangements for making more effective use
of present world reserves.
There has been considerable public discussion, as you know, of
proposals for fundamental changes In the International financial
system. These proposals arise out of concern that over the longer-run,
188
_9injections of international reserves may be needed to finance a growing
volume of trade and financial transactions. Whether there in fact is
likely to be a shortage of aggregate world liquidity sometime in the
future, and specifically whether any such shortage will need to be
corrected by creating an international currency to replace dollars
( and sterling) as official reserves, are controversial questions on
which there is as*yet no agreement among economists. Therefore,
although these questions need to be included in our continuing study
and consideration of long-range monetary problems, they seem very
unlikely to be matters of practical policy at the present time. Today
our problem Is the correction of imbalances, and the handling of
excessive shifts of liquid funds, rather than a shortage of over-all
liquidity. Indeed, in several countries the problem is to direct some
of the excess liquidity into longer term finance through long term
capital exports. New reserves injected into the present payments
situation would simply move to the centers which already have excess
reserves.
In the final analysis, there is no substitute for balance of
payments discipline in this, or any, economy.— a discipline that
reaches through our productivity performance, our price and wage
performance, our governmental budgetary position, and our imonetary
and credit policies. Neither the force nor the form of this discipline
is materially different for a reserve-currency country than for any
other. But because of its position as the principal key-currency
country, the United States does have a special position of prominence.
The way in which it acts to maintain the conditions for balance-ofpayments equilibrium sets the pace for many other countries of the
Western Alliance, all of whom use our currency in carrying on their
trade, and in supporting their own monetary reserves. In that sense,
the present role of New York, and thus of the United States, as the
financial center for the world, carries great responsibilities and
great opportunities. The further shaping of that role will clearly
benefit from periodic review of the kind that Congress is initiating
with the meetings beginning here today.
189
Table I
United Slates Balance of Payments
1938 - 60
(billions of dollars)
1958
1959.1/
i960
First
Quarter
1961
(Seasonally
Adjusted)
1. U. S. Payments - total
Merchandise Imports
2.
Non-military Services
r*
Military Expenditures Abroad
U.
S. Direct & Portfolio
5.
Investment Abroad
6.
U. S. Govt. Grants &
Credits (Gross)
Pensions
and Remittances
7.
27.4
13.0
4.7
3.4
29.7
15.3
5.1
3.1
30.1
14.7
5.6
3.0
7.2
T7T
1.4
.8
2.5
2.3
2.5
.5
3.1
.7
3.0
.8
3.4
.8
1.0
.2
8. U. S. Receipts - total
Merchandise Exports
9.
Non-military Services
10.
Income on investments
11.
Other
12,
Military Sales
13.
Foreign Direct & Portfolio
Investment in U.S.
14.
Repayments to U.S. Government
23.9
16.3
25.3
16.3
28.2
19.4
7.3
5.0
2.9
3.8
.3
3.0
4.1
.3
3.2
4.4
.3
.9
l.l
.1
#•
.5
.6
1.1
.3
.6
.1
.1
15. BASIC BALANCE (Deficit - )
-3.6
-4.3
-1.9
/.2
16. U. S. Private Short-term Assets Abroad
(increase - )
-.3
17. Unrecorded Inflow (/) or
Outflow ( - )
-.1
-1.3
-.5
M
/.5
- .6
/.I
-3.5
-3-9
-3.8
-.3
BASIC COMPONENTS
i
t
OTHER COMPONENTS
18. OVER-ALL BALANCE (Deficit - )
Note: Excludes military grant transactions. Details may not
add to totals due to rounding.
*less than $50 million.
1/ Excludes U. S. subscription of $1.4 billion to IMP
TABLE II
Net Changes in Gold and Dollar Holdings
(official and private; millions of dollars)
1?£8
WF
i960
Total, Foreign Countries ...
/ 3.?27
/ 3.H2
/ 3,120
Latin America
Canada
U.K. and Sterling Area ...
-268
/207
/878
-228
/208
/2
-335
/99
/939
Continental W. Europe ....
/2,876
/2,352
/l,908
Other Foreign Countries ..
' Japan
Others
International Institutions!/
/234
(/379)
(-145)
/451
/778
(/47D
(/307)
/2,854
/509
(/602)
( -93)
/1,053
TJ Beginning with 1959. includes changes in dollar holdings of
international shipping companies operating under the flags
of Liberia, Panama, Honduras and the Bahamas.
A
rs -
1^ •
__. V ^ Jk-
If, 19&
FOR f&.JBP? *. *, Ifie^MFttS, faosday
J®* im*
*&stK.i5 or wdmrnn
u ^ & a BILL cFjmjD
Tbe treasury tmrnmrmmmt mmmmmmd
lest eveniag that the tendere for t»o series of
^p««#t_t^ bills, one series to be an additional issue of the bills dated garth 23, 1941
and tfie otlser series to lis dated A u » 23, 1961, which were offered en Mm lk$ vera *
opened m% the Federal Hesorve Sashs mm Mm 19. readers were Invited tmt &,1CO,OQO,«|
or tkhereaboc**, @f 90-day bills find for |$0©,000,000, or thereabout*, ef lSl-day bilC,
fhe details of Use tee series ere es follows:
KIBE
or Mxmwm)
^0-dsy freaciiry b a l e
COMP^TItlVS B U B j
ftonroa. Iqeiv.
*riee
anase! Hate
blUs
m^Ltmlm%
Price
•*i*b
LOW
A
of the
of the
65
f—
»»,
i.*9ft_
* 2-3i*OI
99Ja5
99J*lf
3a
MISK7
Appro*
1
98.733
#f 90-day billm bid for et the lee price ess accepted
ef 161-day bills bid for st the Ice sarieo was accepted
TOtlX TffUJRflS A ? * U I D ?0i A 0 AGBtfT/i: SI F E M M ! f»*ttm JiI3ffftX613i
fiiRwis*
MOST Y©i%
milasleloisia
aieveUuad
fUe-iaend
Atlanta
at. JLcvis
*iane&polls
Kansas 01 ^r
Bellas
Sea frcocisee
rmis
l,*25,965,0e0
23,UO,0OO
39,577,000
10,80*4,000
20,817,000
276,683,000
37,668,000
16,998,000
50,567,000
16,1*93,000
98,_*yt,000
£2,055,1,97,000
A _U___Mk____l
5»,$3?,ooo
t%iao,ooo
3MT7,ooo
10,371,000
16,5^,000
228,923,000
35,066,000
11,1*76,000
U,8_,7,00©
13,713,000
89,90ii.000 f/
II, 100,871,000
oolied j-or
-
?,ii2;boc I V#9etf0Qi
382,505,000
823,715,000
9,9ii®,OO0
313,996,000
3,3*6,000
6,5'7U,000
#.,15*1,000
6^1*63,000
5,758,000
19,164,000
i*,voe,ooo
13,876,000
2,5*8,000
J»,869,000
4*6,396,000
5,619,060
:),»•«
12,329,000
4,555,000
11,027,060,000
I5oo,7i«,ooey
e/ Xaeledes #232,919,000
U U v e tenders accepted at the average $wries of 99»aif
W laoledee #61,629,000
titles tenders accepted at the average prise si *8.7JJ
0® a cocoon issue cf the seae length and for the saee amount Invested, the rttsts as
these bi-1* weeld provide yields cf 2.37% fmr the 90-day bills, and 2.591, *«* **
l£2-ae.y bills. Interest rates on bills are quoted in teres of bank discount wit*
the raters rdsted tc tiie face aacsnt cf the b U I s payable at eaterity rather to*
the mmmnt invested end their lengte ia actual aueber cf days related tc a 3&>-diJ
year, in contrast, yields on certificates, notes, and bends are competed is tefsi
of intereat on the aaonnt Invested, and relate the nuaber cf days renaialac is «
interest psysent period tc trie actual tmaber of days in the period, eith
if ©ore then one coupon period Is involved.
¥
_ _ _ _ _
TREASURY DEPARTMENT
"S2
WASHINGTON, D.C
June 19, 1961
R RELEASE A. M. NEWSPAPERS, Tuesday, June 20, 1961.
RESULTS OF TREASURY'S WEEKLY BILL OFFERING
1 The Treasury Department announced last evening that the tenders for two series
easury bills, one series to be an additional issue of the bills dated March 23, 1961,
d the other series to be dated June 23, 1961, which were offered on June ll*, wer^
bned at the Federal Reserve Banks on June 19. Tenders were invited for $1,100,000,000,
thereabouts, of 90-day bills and for #500,000,000, or thereabouts, of 181-day bills.
e details of the two series are as follows:
NGE OF ACCEPTED
MPETITIYE BIDS.
High
Low
Average
90-day Treasury bills
maturing September 21, 1961
Approx, Equiv.
Price
Annual Rate
2.300$
99.1*25
2.3i*Q$
99.U15
2.325$ 1/
99.1*19
181-day Treasury bills
maturing December 21, 1961
Approx. Equiv,
Price
Annual Rate
2.1*93$
98.724.
2.$26%
98.730
2.519$ 1/
98.733
32 percent of the amount of 90-day bills bid for at the low price was accepted
65 percent of the amount of 181-day bills bid for at the low price was accepted
IttL TENDERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS..
District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
3an Francisco
TOTALS
Applied For
*
37,b71,000
1,1*25,965,000
23,1*10,000
39,577,000
10,86l*,000
20,817,000
276,623,000
37,868,000
16,998,000
50,567,000
16,1*93,000
98,l*l4l*,000
#2,055,1*97,000
Accepted
8 Applied For
Accepted
#
17,761,060 1 1
5,112,000 # h,96T,000
591,537,000 i
823,715,000 382,915,000
8,1*10,000 5
9,91*0,000
4,908,000
3l*,577,000 s
23,996,000
13,876,000
10,371,000 1
3,398,000
2,51*8,
000
16,51.2,000 .
6,57l*,000
1*,869,
228,923,000 8
9l*,191,000
h69396,000
35,868,000 8
6,1*83,000
5,629,000
11,1*78,000
5,758,000
3,258,000
1*1,81*7,000
19,161*,000
12,329,000
13,713,000
3,980,000
l*.555,ooo
89,90l*,OOQ
15,Q1*U,
000
2l*,19i*,000
#1,100,871,000 a/ #1,027,080,000 #500,7ll*,000
000 b/
Includes #232,919,000 noncorqpetitive tenders accepted at the average price of 9
Includes #61,629,000 noncompetitive tenders accepted at the average price of 98.733
On a coupon issue of the same length and for the same amount invested, the return on
these bills would provide yields of 2.37$ for the 90-day bills, and 2.59$, for the
181-day bills. Interest rates on bills are quoted in terms of bank discount with
the return related to the face amount of the bills payable at maturity rather than
the amount invested and their length in actual number of days related to a 360-day
year. In contrast, yields on certificates, notes, and bonds are computed in terms
of intsrest on the amount invested, and relate the number of days remaining in an
interest payment period to the actual number of days in the period, with semiannual
, compounding if more frhan one coupon period is involved.
•H5
-A. J _.-
TREASURY DEPARTMENT
Washington
June 20, 1961
For Release:
P. M. Newspapers
ADDRESS OF THE HONORABLE DOUGLAS DILLON
SECRETARY OP THE TREASURY
BEFORE THE NATIONAL PRESS CLUB, WASHINGTON, D. C.
TUESDAY, JUNE 20, 196l, 12:30 P. M., EDT.
The state of our Nationfs finances is currently the subject of
considerable public debate. So is the fiscal outlook for the future.
Perhaps I can make a useful contribution to this discussion by setting
forth the Treasury's views on these and related matters.
At the outset, let me say that I believe we have four basic
national economic goals. I further believe that they must all be
pursued simultaneously.
First, we seek an economy that grows steadily and rapidly.
The attainment of this first and most important goal is essential
to the realization of our second objective, which is full employment for
our steadily expanding labor force. We cannnot tolerate the levels of
unemployment that have characterized the past few years.
Our third goal is reasonable price stability. This has always
been important In protecting pensioners and others on fixed Incomes.
It is doubly important today. For we cannot keep our international
payments in balance unless we are competitive in foreign markets. At
the very least, this calls for price stability and the reflection In
price cuts of some portion of our annual increases in productivity.
Our fourth goal Is a tax system which assesses the tax burden
fairly and reasonably in accordance with ability to pay.
The achievement of these goals should, in turn, produce a budget
surplus that would both permit us to reduce our national debt and to
provide funds for the expansion of private business and industry. For
when the economy Is growing steadily and rapidly, with unemployment
reduced to acceptable levels, the retirement of our national debt
places tax money in the hands of investors — money which they can and
will use for further investment In the private sector.
Unfortunately, as I have said on an earlier occasion, we have
not yet mastered the art of maintaining steady growth at full capacity.
Our economy is still plagued by ups and downs. Although we have made
substantial progress In terms of preventing major depressions, we
still suffer periodically from periods of recession when growth slows
to a halt and unemployment mounts rapidly. However, although we still
D-146
- 2 -
JL*j4
have a great deal to learn on the preventive side, we have learned how
to slow a decline and how to initiate recovery by using the "automatic
stabilizers" we have built into our economy. It is largely thanks to
these "stabilizers" that our recessions of the past decade have been
so much more moderate than the wrenching depressions of pre-World
War II days.
These "automatic stabilizers" so generally credited with softening our recent economic declines, are:
First, an automatic and rapid decrease in tax yields, as
corporate profits and employment decline.
Second, a prompt build up of unemployment compensation and
retirement payments as jobs grow harder to find and to hold.
Their effect is automatically to increase government outpayments
and decrease government receipts. The result is a deficit which
helps to arrest the economic decline.
The "automatic stabilizers" have been operating since last Fall.
We can largely thank the stimulating effects of their action for the
mildness of the recession. It is also due to their action that we
are facing a substantial budgetary deficit this fiscal year.
Now, let us look for a moment at tax receipts:
When the budget for fiscal year 1961 was first submitted, Federal
revenues were estimated at $84 billion. This included certain interGovernmental transactions and receipts from the Unemployment Tax,
which, because of a change In Government bookkeeping procedures last
December, are no longer carried on the receipt side of the ledger.
Therefore, In order to make the original estimate comparable with
current estimates, we should adjust the earlier revenue figure of
$84 billion down to $82.9 billion.
The recession which no one in or out of Government foresaw at the
end of 1959, has now reduced revenues to a point well short of this
adjusted estimate. If we eliminate the windfall receipt of the
$500 million advance repayment of the German post-war debt, fiscal year
1961 revenues will be about $77.7 billion, a drop of $5.2 billion.
Our obligation to help ease the effects of the recession upon our
less fortunate citizens will also add to this year's deficit. The
bulk of unemployment compensation is financed from trust funds and is
therefore not reflected in the budget. However, the provisions in our
permanent legislation for those out of work six months or longer are
clearly inadequate. This Spring — just as in 1958 — we had to
enact temporary legislation to care for their urgent needs. The budget
expenditures called for by this temporary legislation will add
approximately a half-billion dollars to the deficit this fiscal year.
JLsJi-s
- 3So you can see that our two "automatic stabilizers", while
helping to halt the recession, were also responsible for a swing of
$5.7 billion toward a budgetary deficit.
This swing, coupled with substantial Increases in the rate of
defense expenditures, minor increases in other expenditures, plus
Congressional failure to increase postal rates, has led us to a
deficit for this fiscal year that will approach $3 billion. Since
this deficit contributed substantially to halting the recession, it
was entirely appropriate in the circumstances.
The alternative — of reducing government expenditures to match
reduced revenues — would not only have meant no temporary unemployment compensation, but also a substantial addition to the unemployment
rolls as Government programs were curtailed
to say nothing of
the damage to our national security caused by the defense cutbacks
that would have been required.
Let me underscore this point: reductions in expenditures to
match raduced revenues would have increased the severity of the
recession, enlarged unemployment, and thereby further reduced our
revenues. We would have found ourselves in a deflationary spiral that
could easily have lead to a severe and prolonged economic depression.
In actual fact, this alternative was so clearly unacceptable that
there has been little responsible complaint about the deficit for
the current fiscal year. There has, however, been considerable
concern about the deficit of some $3.7 billion which we face in
the coming fiscal year. This reaction is perfectly understandable.
For recovery is well under way. It is probable that by this time
next year our economy will be rolling in high gear. We may well be
in the midst of an economic boom.
Why, then, another deficit?
The reason is simple: The corporate taxes we will collect in
the coming fiscal year will be based on calendar year 196l profits.
Personal income collections above the withholding rate will also be
largely based on 1961 results.
The first quarter of 1961 marked the very bottom of the recession.
Corporate profits ran a full 20 percent behind the previous year's
rate. While it is true that business is showing signs of a strong
recovery, corporate profits in the current quarter will probably not
exceed those of the comparable period last year. So, even with a
substantial upturn in the second half of the year, we shall be doing
well if corporate profits equal their i960 rate. Consequently, the
revenues the Government can count on for fiscal year 1962 will still
be at recession levels. In fact, they will be considerably less than
the revenues originally forecast for the current fiscal year.
- 4-
198
Meanwhile, expenditures must keep pace with our ever growing population
and our mounting national needs. This makes a deficit inevitable if
we are to meet our urgent requirements in defense, in space, in
education, in housing, in transportation, and in the international
field.
With recovery on the march, however, we plan to incur only those
expenditures that are essential to our long range national security
and to the well-being of our people. There is no need for emergency
programs to stimulate the economy. None has been proposed. On the
contrary, the President has urged the Congress not to add to his
legislative proposals. He has also urged the enactment of badly
needed revenue-raising programs, particularly ln the postal field.
The enactment of a fair and long needed increase in postal rates is
essential if we are to hold the deficit to the reasonable figure we
have foreseen. Those who fear for the fiscal soundness of our
government would do well to direct their energies to bringing about
an upward adjustment in postal rates.
I recognize the concern of those who fear that a budget deficit
next year may be inflationary. The great majority of those who
express this concern acknowledge that a reasonable budget deficit in
time of recession can help to halt the downturn — as has been the
case this year. So it is not the budget deficit per S<B that worries
them. It is, rather, a deficit incurred during a period of economic
expansion such as we now anticipate. They fear that any deficit during
a period of growth may set in motion the forces of inflation. However,
in the light of current economic prospects, such fears are not
justified.
Inflation falls roughly into two categories:
The first is the type we have lived with over the past decade,
known as "cost-push," or wage-price Inflation. It is a gradual
process that comes about whenever prices and wages are increased more
rapidly than Is warranted by growth in productivity. The threat of
this type of inflation is always with us. It is greater in good
times than in bad, because in good times both management and labor
are tempted to increase prices and wages at the expense of consumers
whose resistance has been lessened by prosperity.
This type of inflation is particularly dangerous today In the
light of our balance of payments problem and the Imperative need to
keep our products competitive with foreign products, at home and
abroad. The President has repeatedly appealed to both labor and
management to exercise restraint in their wage-price actions and to
keep in mind at all times the over-all national interest. It was to
help in this effort that he created the President's Labor-Management
Advisory Committee. While the danger of this type of Inflation Is
real and ever-present, it operates outside of budgetary influences.
197
- 5 The second — and classical — type of inflation is "supplydemand" inflation. This occurs whenever demand outruns supply.
If more money becomes available to buy the same volume
of goods,
prices simply rise. This is inflation of the type which twice in
this century totally destroyed the value of the German mark. This
is the type of inflation which is influenced by budgetary action.
We need have no fear that a budget deficit such as we envision
for next year will bring with it the threat of this classic kind of
inflation. For we are no longer In a time of shortages. There is
unusual — and under-utilized — capacity everywhere in our land
today: in steel, in autos, In housing, in textiles, in chemicals —
indeed, everywhere we look. We also — and unfortunately — are
under-utilizing our labor force, which stands ready and willing to
operate the unused capacity of our industrial plant. Next year's
budgetary deficit will of course stimulate demand. But it will be
a demand that can and will be met by the use of presently unemployed
labor and plant. Rather, therefore, than creating inflationary
pressures, the $3.7 billion deficit we anticipate in fiscal year 1962
will be helpful in putting our unused plant capacity and labor force
to work.
When we evaluate the coming deficit for fiscal 19&2, we should
look back to fiscal year 1959, when the country faced an identical
economic situation. The upturn from an earlier low started in the
spring of 1958. The entire fiscal year 1959 was one of substantial
recovery. Yet the deficit reached the staggering figure of over
$12 billion — more than three times the deficit presently in sight
for next year. It is clear that there is nothing unusual about a
deficit In the year immediately following a period of recession.
It is with all this in mind — reduced recession revenues, growing
national needs, unused plant capacity, excessive unemployment, and
absence of Inflationary pressures — that I reiterate my earlier
statement that a deficit of the size which we envisage for fiscal year
1962 — a deficit one third the size of the 1959 deficit — is both
inevitable and appropriate.
The alternative — to reduce expenditures to match recession
revenues, with resulting dangers to our national security, neglect of
our national needs, slowing of our progress toward full employment
and toward full utilization of our plant capacity — is totally
unacceptable.
This alternative course is equally unpalatable if we look ahead
to the revenue prospects for fiscal year 1963. By then, revenues
should be flowing from a prospering economy. They could well jump as
much as 10 percent over what we can expect for fiscal 1962. With
reasonable prosperity during 1962, our fiscal 1963 revenues should
approximate $90 billion, compared to the $81.4 billion that we now
foresee
for
the coming
fiscal
year.
Once
I960, again
revenues
our
of
revenues
1959.
this
would
jumped
parallel
a full
$9-8
past billion
experience.
over the
For recession
in fiscal
- 6V/ S_/
The reasons underlying this prospect are best understood if vre
examine our economy in terms of our Gross National Product:
Our GNP for i960 was about $503 billion. But this year during
the first quarter GNP dropped below $500 billion. Even with the
presently forecast total of around $530 billion in the fourth quarter,
the average for 1961 will not quite reach $515 billion — or an
increase of only about 2-1/^ percent over i960.
But 1962 gives promise of being a year of accelerating growth.
From something like $540 billion in the first quarter, we can
reasonably hope for an increase to about $570 billion by year end.
This would give 1962 an annual level of some $555 billion, an
Increase of nearly 8 percent over 1961.
If this pattern should develop next year — and the chances are
good — our revenues for fiscal 1963 would be adequate to meet all
of our national needs, with something left over. We should keep
this longer-range prospect of prosperity clearly In mind whenever we
can consider next year's budgetary outlook.
Now what can we do during the coming year to facilitate the
achievement of our basic economic goals as our economy recovers and
our output increases?
First, we must avoid price increases so that those who live on
fixed incomes will not be penalized. This will require a high order
of self restraint on the part of both labor and management with wage
increases geared to increases in productivity.
Second, we must make a great and continuing effort to reduce
unemployment to a tolerable figure — 4 percent is the current goal.
A modest and non-inflationary deficit such as we foresee for next
year will contribute to this end. In addition we should mount a
coordinated attack on structural unemployment by enacting the
President's proposals, including an expanded training program.
Finally, we should use the respite given us by the present
recovery to overhaul and strengthen the mechanism of our "automatic
stabilizers" so that future recessions may be milder and shorter than
any we have so far experienced. The fact that we have twice had to
enact temporary unemployment compensation measures clearly indicates
that our permanent legislation to help the jobless should be overhauled and strengthened. This should be done not only for the
benefit of future unemployed, but in the interest of over-all economic
stability.
If we do these things we can look forward to a period of unmatched
prosperity •— prosperity that will give us the strength we shall need
to face the world-wide challenges of the Sixties.
0O0
- 19 -
themselves — we can look forward to a decade of progress and
development for the hundreds of millions of people in other lands
economically less fortunate than our own. Their economic progress
is to no small degree dependent on us. Our own future importantly
depends on them. The bill before you is essential to meet the need.
- 18 -
of its members in this important undertaking. The Bank has also played
an important role in stimulating and coordinating efforts by the
economically advanced countries to assist India's economic development
by convening consortium meetings on several occasions in the past.
Earlier this month it led a meeting of capital-exporting countries
prepared to help in financing India's third Five-Year plan.
Participating countries other than the United States indicated
their willingness to provide $780 million over the next two years.
This amount, together with $400 million from the World Bank and the
International Development Association, and $1 billion from the United
States, which is subject to Congressional action on the pending legislation, should enable India to proceed in an orderly manner to a successful launching of its Third Plan. A similar meeting under the auspices
of the World Bank was held this month to consider aid to Pakistan.
If the United States and the other industrialized countries of
the Free ¥orld fully cooperate in provid_jag assistance to the developing
areas — based upon the self-help efforts of the developing countries
201
- 17 He will also continue to work with the other Industrialized
nations of the Free World to encourage increased participation by
them in providing economic assistance to the developing countries.
This is the major objective of the Development Assistance Group which
will soon become a part of the new Organization for Economic Cooperation
and Development. The functions of the Development Assistance Group and
the Organization for Economic Cooperation and Development in this field
will be discussed in detail by Under Secretary Ball.
In addition to the work of the Development Assistance Group in
urging the mobilization of resources of the industrialized countries
for the purpose of helping the developing countries, there has been
very substantial progress in coordinating and enlarging Free World
assistance to particular countries. The International Bank for
Reconstruction and Development has pioneered in this effort by enlisting
the cooperation of a number of industrialized countries in expanding
help to India and Pakistan. You are familiar with the Bank's role in
the Indus Waters project and the financial participation by a number
202
- 16 -
that the national lending activities of the United States are properly
coordinated with the activities of the International Bank for Reconstructio
and Development, the International Development Association, the International Finance Corporation, and the Inter-American Development Bank,
Coordination with the international institutions and with the ExportImport Bank will also be effected through the National Advisory Council,
through the United States Executive Directors of the international
institutions and through informal day-to-day contacts. In addition, the
proposed legislation provides for a Development Loan Committee, similar
to the present Development Loan Fund Board, to establish standards and
criteria for the lending operations of "the new aid agency in accordance
with the foreign and financial policies of the United States. The
Treasury Department and the Export-Import Bank will be represented on
this inter-agency committee.
Through proper coordination we can ensure that the new lending
program will complement, ratlier than compete with, other established
lending institutions, domestic or international as well as the flow
of private funds available for international investment.
203
-1. -
would take into account the prospective situation of the borrower.
Flexibility would permit loans to private borrowers on appropriate
terms. Thus, while the objective of lending operations will be to
improve the ability of the borrowing country to service its debts
through progress in development, the burden of debt service will not
be such as to impede that progress. These terms and conditions which
are along the lines being worked out by the International Development
Association should enable the United States to offer to the developing
countries loan terms as favorable as those offered by any other country
in the world. It is significant that the International Development
Association reached this decision after long and thorough international
discussion under the leadership of its distinguished President Mr. Eugene
Black.
The development lending operations of the new aid agency will
necessarily be related to the activities of other lending institutions —
national and international. As the United States Governor of the major
international financial institutions, I have responsibility for assuring
-14 Under the proposed legislation this need will continue to be met, even'
though dollar repayment is to be required. Dollar repayment should
be possible as the developing country increases its ability to mobilize
domestic resources and to enlarge its exports and foreign exchange
earnings. But these self-help efforts of the developing countries
will take time to bear fruit. Meanwhile, it is necessary to avoid
excessive debt burdens on the budget or the balance of payments of
the developing country. Repayment over a long term with s.bstantial
grace periods would allow the major burden of repayment to come after
self-sustaining growth has commenced. Elimination or drastic reduction
_
of the interest burden on loans should also considerably ease both the
annual and the over-all debt service burden of the loan.
It is for these reasons that development loans under the proposed
program are intaided to be on terms much more generous than conventional
banking terms. Periods of repayment may extend up to fifty years.
Grace periods, in which no repayment of principal is required, may be
granted up to ten years. Rates of interest could be low or non-existent,
although a small service charge might be made, m short, loan terms
revolving fund principle that has been used in many other lending
programs. It would, in brief, put the returns from our earlier aid
programs to the industrialized countries to work in our new program
to help the developing countries.
The primary purpose of the development lending provisions of the
Act for International Development is to assist the developing countries
in carrying out long-range development programs. Loan funds are intended
to support those activities which make the most effective contribution
to economic growth. Loans may, for example, be directed to specific
projects. They may also be used to provide broad support for a national
development program. They may also be used to help in establishing
general financial and economic conditions essential to steady growth
in the future. All three kinds of lending operations are essential
if the needs of the developing countries are to be met.
During the past few years the United States has come to recognize
the need of the developing countries for loans on terms more favorable
to the borrower than can be provided under conventional banking practices.
programs, most importantly from the sale of agricultural surpluses
under Public Law 480. There is danger that continued large accruals
of local currency by the United States Government could become a
source of friction and misunderstanding in our future relations with
the countries whose currencies we are accumulating. This danger would
be particularly acute if the United States Government were to acquire
a large proportion of the outstanding money supply in a foreign
country. The accumulation of large, and in many cases excessive or
unusual amounts of local currency, provides no advantage to the
United States whereas repayment in dollars, even over a long period
of time, would provide a definite return.
The President has also requested authority to make available
for development lending, the dollars to be realized from r epayments
of earlier foreign obligations. This request is confined to outstanding obligations in which the United States has the option to require
dollar repayments. The amounts will approximate $300 million a year
for the next five years. This is a reasonable extension of the
-
11 -
it another way, the extent to which the Treasury may have to increase
the public debt, or alternatively rely upon tax or other income is
exactly the same whether foreign development lending is financed by
the borrowing method or by funds otherwise appropriated. The requirements of this and all other programs, foreign and domestic, determine
the amount of over-all expenditure which must be met by the receipts
of the Treasury.
The financing of development loans by borrowing authority was
recommended by President Eisenhower in 195>7 at the inception of the
Development Loan Fund and approved at that time by this Committee.
As you know, the Development Loan Fund is authorized to make loans
repayable in local currency — that is, repayable in the currency of
the borrower rather than in dollars. As a result of experience, it
has been found desirable to change this policy. It is now proposed
that all development loans under the new program be repaid exclusively
in dollars.
An important reason for this change is that the United States is
rapidly acquiring large accruals of local currencies from various
Of)Q
x_.U \j
- 10 Fourth, an annual presentation would be made to the Appropriations
Committees of the Congress in accordance with the provisions of the
Government Corporations Control Act. Under this Act the aid agency
would be required to submit to the appropriations committees an annual
budget setting forth its proposed operations for the coming year and
to obtain from Congress authority to expend funds in accordance with
this budget.
Finally, the amounts to be borrowed under the proposed legislation
would be included each year in the budget as new obligational authority
in the same manner as other appropriations. Similarly, expenditures
would appear in the regular expenditures budget. As far as the budget
is concerned there is not the slightest difference between this method of
funding and the appropriation process heretofore used for this program.
I would like to make a further point in connection with the use
of borrowing authority. This is that borrowing from the Treasury under
the Act for International Development would not mean that the Treasury
would be forced into any additional borrowing from the public. To put
__09
- 9agencies, in accordance with the statutes governing the activities
of the particular agency. A list of examples of legislative authorizations currently in effect, for financing governmental activities
through the borrowing method has been submitted for the information
of the Committee.
This fiscal arrangement need not, and will not, mean any loss
of legislative control over expenditures. The funds will be available only for the purposes and in the amounts approved by the Congress.
Under the proposed legislation, specific Congressional control over
the lending program would be exercised in each year of the five-year
period in a number of ways:
First, the basic law would determine the availability of the
funds year-by-year.
Second, quarterly reports on lending operations would be
submitted to the Congress.
Third, an annual presentation would be made to the authorizing
Committees of the Congress covering all development lending
operations •
. 8-
^0
reforms. It will also provide an incentive to other industrialized
countries to join with the United States in providing aid to developing
areas.
Because an effective long-term foreign lending program requires
an assured and adequate source of funds for solid multi-year commitments, the President has requested that development loans be financed
by borrowing from the Treasury. For this purpose, the proposed bill
provides for authority to borrow from the Treasury $900 million in
fiscal year 1962 and $1.6 billion in each of the succeeding four years.
This method would be used only for development loans and specific
ceilings would be established limiting the amount of borrowing authority
to be exercised annually. All loan transactions making use of this
authority would be in dollars and all repayments would be in dollars.
Grants or other forms of assistance connected with the foreign aid
program would continue to be financed by annual appropriations.
It Is a common practice to finance lending operations of United
States agencies through loans and advances from the Treasury. The
Treasury uses this method to finance the programs of more than twenty
-7-
^
Without such authority there will continue to be insistent pressures
for stop-gap financing to meet crises which could have been prevented,
at less cost, by adequate long-range programs.
In my judgment, the inability of the Executive to make long-term
commitments has diminished the effectiveness and increased the cost
of the foreign aid program. Without adequate assurance of financing
for long-term programs to deal with the basic needs of a developing
country, there is less incentive for such a country to thoroughly
organize its plans or to adopt appropriate measures of self-help.
We urge the developing countries to undertake basic and difficult
reforms that are essential to development. But such reforms take
years to implement, and require the support of long-term development
programs. Reasonable assurance of outside assistance extending over
a period of years may often mean the difference between success or
failure in the efforts of a developing country to carry out the
measures requisite to effective development. Legislative authority
to make multi-year commitments will for the first time put the United
States in a position to effectively stimulate and cooperate in basic
-12
-6-
payments situation. I am satisfied that the present directives are
adequate to assure this result.
I would like now to turn to another vital aspect of the proposed
Act for International Development. The new economic aid program set
forth in the Act emphasizes long-term authority for financing development lending. The President, in his letter transmitting the draft
foreign assistance bill, stated that "Real progress in economic development cannot be achieved by annual, short-term dispensations of aid and
uncertainty as to future intentions".
I am convinced from my earlier experience in the Department of
State that long-term financing authority is an essential tool for the
achievement of our foreign policy objectives. I am equally convinced
as Secretary of the Treasury that this is the most efficient and least
costly method of providing development assistance.
Adequate authority for long-term financing as proposed in the
bill will permit both orderly development and effective execution of
development lending programs by the administrator of the aid program.
-5-
^13
American exports is not understood by -those who hope to cure our
balance of payments deficit by curtailing foreign economic assistance.
Nevertheless, for such time as our international payments situation
requires, our objective will be to assure that at least eighty percent
of our foreign economic assistance will be spent on United States goods
and services. Because of earlier commitments this goal cannot be
achieved immediately but the new policy will have an increasingly
favorable effect on our balance of payments position.
Under the present policy, it is not in every case practicable or
desirable to require that foreign assistance funds be limited exclusively
to the procurement of United States goods and services. Da some cases,
particular commodities financed by aid dollars are not available in
the United States, or may not be available here in the time required.
Also, emergency situations sometimes require the transfer of aid
through cash grants, a part of which is ultimately spent for the goods
of other countries. Nevertheless, through our procurement policy we
will keep to a minimum any adverse effect of aid spending on our
-4 -
expenditures to be expected over the years following 1962 will, of
course, be taken into account in the presentation of the budgets for
those years.
Third, as Secretary of the Treasury, I am especially interested
in the relationship of foreign assistance to our balance of payments.
The program proposed is consistent with our efforts to achieve arid
sustain over-all balance in our international payments. I wish to
emphasize that it is the form in which aid is extended, rather than
the amount to be provided, which is most relevant to this question.
We will continue under the new program to place primary emphasis on
the purchase of United States goods and services by aid recipients.
The preponderant part of foreign aid expenditures will be spent in
the United States. Such expenditures, which are accompanied by American
exports, have no adverse impact on our balance of payments. In I960
American exports financed by all of Our foreign economic programs
accounted for nearly half of our total export surplus. The fact that
foreign assistance has been largely accompanied by an outflow of
-3-
215
for the Act for International Development. This amount includes
authorization to reuse some $287 million which is what we currently
expect to receive from dollar repayments of previous foreign loans.
It also includes authority to borrow $900 million from the Treasury
for development loans, m addition, the military assistance request
for 1962 amounts to $1,885 million. This makes up an over-a^-l total
program of $4,763 million -which amounts to less than one percent of
our gross national product, a figure that is certainly well within
the capacity of our domestic economy.'
The proposed bill also requests authority to borrow from the
Treasury $1.6 billion for each of the following four years as well
as continued authority to reuse the dollars from repayments on earlier
foreign loans. These repayments are expected to average about $300
million annually during these four years.
The expenditure estimates for fiscal year 1962 under the proposed
program are approximately the same as those contained in the budget
presented to the Congress by President Eisenhower. The increased
- 2 -
21 e
There are three questions that should be answered from the
over-all financial viewpoint:
(1) How do the requirements of the program bear on our
total governmental requirements?
(2) Can we afford the program?
(3) Does the program affect our international financial
position?
First, in financing our most urgent national needs, both foreign
and domestic, we must establish priorities in order to assure overall fiscal integrity. An adequate, flexible, and soundly conceived
program of foreign economic assistance merits very high priority.
Such a program is essential to the security and well-being of our
nation.
Second, the program before you is one that the united States can
afford. A total of $2,878 million is being requested in fiscal 1962
TREASURY DEPARTMENT
Washington
/June 2<D, 1961
For Release: Upon Delivery
917
\
y
• STATEMENT
mm®sG$mmmm
OF THE HONORABLE DOUGLAS DILLON
SECRETARY OF THE TREASURY
BEFORE THE
HOUSE FORETGN AFFAIRS COMMITTEE
IN SUPPORT OF THE ACT FOR INTERNATIONAL DEVELOPMENT
AND THE INTERNATIONAL PEACE AND SECURITY ACT,
WEDNESDAY, JUNE 21, 1961
10:00 A.M., EDT
I welcome the opportunity to appear before this Committee in
support of the foreign aid legislation submitted to the Congress by
President KennecJy and introduced as H.R. 7372 by your Chairman. I
have appeared before your Committee on this subject many times in
the past and am sure that you share the view that this program is
an essential ingredient of our national policy. I hope that you will
act favorably on the proposal before you, and thus take a major step
forward in this field.
As Secretary of the Treasury I wish to comment on the major
financial aspects of the proposed Act for International Development.
The National Advisory Council on International Monetary and Financial
Problems, of which I am Chairman, has reviewed and approved those
aspects of the proposed Act relating to international financial policy.
TREASURY DEPARTMENT
Washington
21S
June 21, 1961
For Release: Upon Delivery
STATEMENT OF THE HONORABLE DOUGLAS DILLON
SECRETARY OF THE TREASURY
Rh'k'f. ___•* 'PHI?
HOUSE FOREIGN AFFAIRS COMMITTEE
IN SUPPORT OF THE ACT FOR INTERNATIONAL DEVELOPMENT
AND THE INTERNATIONAL PEACE AND SECURITY ACT,
WEDNESDAY, JUNE 21, 196l
10:00 A.M., EDT
I welcome the opportunity to appear before this Committee in
support of the foreign aid legislation submitted to the Congress by
President Kennedy and introduced as H.R. 7372 by your Chairman. I
have appeared before your Committee on this subject many times in the
past and am sure that you share the view that this program is an
essential ingredient of our national policy. I hope that you will act
favorably on the proposal before you, and thus take a major step
forward in this field.
As Secretary of the Treasury, I wish to comment on the major
financial aspects of the proposed Act for International Development.
The National Advisory Council on International Monetary and Financial
Problems, of which I am Chairman, has reviewed and approved those
aspects of the proposed Act relating to international financial policy.
There are three questions that should be answered from the over-all
financial viewpoint:
(l) How do the requirements of the program bear on our total
governmental requirements?
(2) Can we afford the program?
(3) Does the program affect our international financial
position?
First, in financing our most urgent national needs, both foreign
and domestic, we must establish priorities in order to assure overall fiscal integrity. An adequate, flexible, and soundly conceived
program of foreign economic assistance merits very high priority.
Such a program is essential to the security and well-being of our
nation.
D-147
213
- 2 Second, the program before you is one that the United States can
afford. A total of $2,878 million is being requested in fiscal 1962
for the Act for International Development. This amount Includes
authorization to reuse some $287 million which is what we currently
expect to receive from dollar repayments of previous foreign loans.
It also includes authority to borrow $900 million from the Treasury
for development loans. In addition, the military assistance request
for 1962 amounts to $1,885 million. This makes up an over-all total
program of $4,763 million which amounts to less than one percent
of our gross national product, a figure that is certainly well
within the capacity of our domestic economy.
The proposed bill also requests authority to borrow from the
Treasury $1.6 billion for each of the following four years as well as
continued authority to reuse the dollars from repayments on earlier
foreign loans. These repayments are expected to average about $300
million annually during these four years.
The expenditure estimates for fiscal year 1962 under the proposed
program are approximately the same as those contained in the budget
presented to the Congress by President Eisenhower. The increased
expenditures to be expected over the years following 1962 will, of
course, be taken Into account in the presentation of the budgets for
those years.
Third, as Secretary of the Treasury, I am especially interested
in the relationship of foreign assistance to our balance of payments.
The program proposed is consistent with our efforts to achieve and
sustain over-all balance In our international payments. I wish to
emphasize that it is the form in which aid is extended, rather than
the amount to be provided, which is most relevant to this question.
We will continue under the new program to place primary emphasis on
the purchase of United States goods and services by aid recipients.
The preponderant part of foreign aid expenditures will be spent in
the United States. Such expenditures, which are accompanied by American
exports, have no adverse impact on our balance of payments. In i960
American exports financed by all of our foreign economic programs
accounted for nearly half of our total export surplus. The fact that
foreign assistance has been largely accompanied by an outflow of
American exports is not understood by those who hope to cure our
balance of payments deficit by curtailing foreign economic assistance.
Nevertheless, for such time as our international payments situation
requires, our objective will be to assure that at least 80 percent
of our foreign economic assistance will be spent on United States
goods and services. Because of earlier commitments this goal cannot
be achieved immediately but the new policy will have an increasingly
favorable effect on our balance of payments position.
220'
- 3Under the present policy, it is not in every case practicable or
desirable to require that foreign assistance funds be limited
exclusively to the procurement of United States goods and services.
In some cases, particular commodities financed by aid dollars are not
.available in the United States, or may not be available here in the
time required. Also, emergency situations sometimes require the
transfer of aid through cash grants, a part of which is ultimately
spent for the goods of other countries. Nevertheless, through our
procurement policy we will keep to a minimum any adverse effect of aid
spending on our payments situation. I am satisfied that the present
directives are adequate to assure this result.
I would like now to turn to another vital aspect of the proposed
Act for International Development. The new economic aid program set
forth in the Act emphasizes long-term authority for financing development lending. The President, in his letter transmitting the draft
foreign assistance bill, stated that "Real progress in economic
development cannot be achieved by annual, short-term dispensations of
aid and uncertainty as to future Intentions".
I am convinced from my earlier experience in the Department of
State that long-term financing authority is an essential tool for the
achievement of our foreign policy objectives. I am equally convinced
as Secretary of the Treasury that this is the most efficient and leaot
costly method of providing development assistance.
Adequate authority for long-term financing as proposed in the bill
will permit both orderly development and effective execution of
development lending programs by the administrator of the aid program.
Without such authority there will continue to be insistent pressures
for stop-gap financing to meet crises which could have been prevented,
at less cost, by adequate long-range programs.
In my judgment, the inability of the Executive to make long-term
commitments has diminished the effectiveness and increased the cost
of the foreign aid program. Without adequate assurance of financing
for long-term programs to deal with the basic needs of a developing
country, there is less incentive for such a country to thoroughly
organize its plans or to adopt appropriate measures of self-help. We
urge the developing countries to undertake basic and difficult reforms
that are essential to development. But such reforms take years to
implement, and require the support of long-term development programs.
Reasonable assurance of outside assistance extending over a period of
years may often mean the difference between success or failure in the
efforts of a developing country to carry out the measures requisite
to effective development. Legislative authority to make multi-year
commitments will for the first time put the United States in a
position to effectively stimulate and cooperate in basic reforms. It
will
also provide
an States
incentive
to other industrialized
countries
Join with
the United
in providing
aid to developing
areas.to
221
An effective long-term foreign lending program requires an
assured and adequate source of funds for multi-year commitments.
The President has therefore requested that development loans be
financed by borrowing from the Treasury. For this purpose, the
proposed bill provides for authority to borrow from the Treasury
$900 million in fiscal year 1962 and $1.6 billion in each of the
succeeding four years. This method would be used only for development loans and specific ceilings would be established limiting the
amount of borrowing authority to be exercised annually. All loan
transactions making use of this authority would be in dollars and
all repayments would be in dollars. Grants or other forms of
assistance connected with the foreign aid program would continue to
be financed by annual appropriations.
It is a common practice to finance lending operations of United
States agencies through loans and advances from the Treasury. The
Treasury uses this method to finance the programs of more than twenty
agencies, in accordance with the statutes governing the activities of
the particular agency. A list of examples of legislative authorizations
currently in effect, for financing governmental activities through the
borrowing method has been submitted for the information of the
Committee.
This fiscal arrangement need not, and will not, mean any loss of
legislative control over expenditures. The funds will be available
only for the purposes and in the amounts approved by the Congress.
Under the proposed legislation, specific Congressional control over
the lending program would be exercised In each year of the five-year
period in a number of ways:
First, the basic law would determine the availability of the
funds year-by-year.
Second, quarterly reports on lending operations would be submitted
to the Congress.
Third, an annual presentation would be made to the authorizing
Committees of the Congress covering all development lending operations.
Fourth, an annual presentation would be made to the Appropriations
Committeesof the Congress in accordance with the provisions of the
Government Corporations Control Act. Under this Act the aid agency
would be required to submit to the appropriations committees an annual
budget setting forth its proposed operations for the coming year and
to obtain from Congress authority to expend funds in accordance with
this budget.
Finally, the amounts to be borrowed under the proposed legislation
would be included each year in the budget as new obllgational
authority in the same manner as other appropriations. Similarly,
expenditures would appear in the regular expenditures budget. As far
as the budget is concerned there is not the slightest difference between
this program.
method of funding and the appropriation process heretofore used for
- 5-
&«• £[_ ^ ^
I would like to make a further point in connection with the use
of borrowing authority. This is that borrowing from the Treasury under
the Act for International Development would not mean that the Treasury
would be forced into any additional borrowing from the public. To put
it another way, the extent to which the Treasury may have to increase
the public debt, or alternatively rely upon tax or other income is
exactly the same whether foreign development lending is financed by
the borrowing method or by funds otherwise appropriated. The requirements of this and all other programs, foreign and domestic, determine
the amount of over-all expenditure which must be met by the receipts
of the Treasury.
The financing of development loans by borrowing authority was
recommended by President Eisenhower in 1957 at the inception of the
Development Loan Fund and approved at that time by this Committee.
As you know, the Development Loan Fund is authorized to make loans
repayable in local currency — that is, repayable in the currency of
the borrower rather than in dollars. As a result of experience, it
has been found desirable to change this policy. It is now proposed
that all development loans under the new program be repaid exclusively
in dollars.
An important reason for this change is that the United States is
rapidly acquiring large accruals of local currencies from various
programs, most importantly from the sale of agricultural surpluses
under Public Law 480. There Is danger that continued large accruals
of local currency by the United States Government could become a
source of friction and misunderstanding in our future relations with
the countries whose currencies we are accumulating. This danger would
be particularly acute if the United States Government were to acquire
a large proportion of the outstanding money supply in a foreign
country. The accumulation of large, and in many cases excessive or
unusual amounts of local currency, provides no advantage to the
United States whereas repayment in dollars, even over a long period
of time, would provide a definite return.
The President has also requested authority to make available for
development lending, the dollars to be realized from repayments of
earlier foreign obligations. This request is confined to outstanding
obligations In which the United States has the option to require
dollar repayments. The amounts will approximate $300 million a year
for the next five years. This is a reasonable extension of the
revolving fund principle that has been used In many other lending
programs. It would, in brief, put the returns from our earlier aid
programs to the industrialized countries to work in our new program
to help the developing countries.
The primary purpose of the development lending provisions of the
Act
for International
Development
is which
toprograms.
assist
the
developing
countries
contribution
In carrying
Intended
to out
support
to economic
long-range
those
growth.
activities
development
Loans
may,
make
for
the
example,
Loan
most
funds
effective
be directed
are
223
- 6to specific projects. They may also be used to provide broad support
for a national development program. They may also be used to help in
establishing general financial and economic conditions essential to
steady growth in the future. All three kinds of lending operations
are essential if the needs of the developing countries are to be met.
During the past few years the United States has come to recognize
the need of the developing countries for loans on terms more favorable
to the borrower than can be provided under conventional banking
practices. Under the proposed legislation this need will continue to
be met, even though dollar repayment is to be required. Dollar
repayment should be possible as the developing country increases its
ability to mobilize domestic resources and to enlarge its exports and
foreign exchange earnings. But these self-help efforts of the
developing countries will take time to bear fruit. Meanwhile, It is
necessary to avoid excessive debt burdens on the budget or the balance
of payments of the developing country. Repayment over a long term
with substantial grace periods would allow the major burden of repayment to come after self-sustaining growth has commenced. Elimination
or drastic reduction of the interest burden on loans should also
considerably ease both the annual and the over-all debt service burden
of the loan.
It is for these reasons that development loans under the proposed
program are Intended to be on terms much more generous than conventional
banking terms. Periods of repayment may extend up to fifty years.
Grace periods, in which no repayment of principal is required, may be
granted up to ten years. Rates of interest could be low or nonexistent, although a small service charge might be made. In short,
loan terms would take into account the prospective situation of the
borrower. Flexibility would permit loans to private borrowers on
appropriate terms. Thus, while the objective of lending operations
will be to improve the ability of the borrowing country to service its
debts through progress in development, the burden of debt service will
not be such as to impede that progress. These terms and conditions
which are along the lines being worked out by the International
Development Association should enable the United States to offer to the
developing countries loan terms as favorable as those offered by any
other country in the world. It is significant that the International
Development Association reached this decision after long and thorough
International discussion under the leadership of its distinguished
President Mr. Eugene Black.
The development lending operations of the new aid agency will
necessarily be related to the activities of other lending institutions —
national and international. As the United States Governor of the major
international financial institutions, I have responsibility for assuring
thatInternational
the national
lending
activities
of International
the the
United
States
are properly
the
coordinated
Reconstruction
withandthe
Finance
Development,
activities
Corporation,
of
the the
International
and
Inter-American
Development
Bank for
Association,
- 7-
2?4
Development Bank. Coordination with the international institutions and
with the Export-Import Bank will also be effected through the National
Advisory Council, through the United States Executive Directors of
the international institutions and through informal day-to-day
contacts. In addition, the proposed legislation provides for a
Development Loan Committee, similar to the present Development Loan
Fund Board, to establish standards and criteria for the lending
operations of the new aid agency in accordance with the foreign and
financial policies of the United States. The Treasury Department and
the Export-Import Bank will be represented on this inter-agency
committee.
Through proper coordination we can ensure that the new lending
program villi complement, rather than compete with, other established
lending institutions, domestic or international as well as the flow
of private funds available for international investment.
We will also continue to work with the other industrialized nations
of the Free World to encourage increased participation by them in
providing economic assistance to the developing countries. This Is
the major objective of the Development Assistance Group which will soon
become a part of the new Organization for Economic Cooperation and
Development. The functions of the Development Assistance Group and
the Organization for Economic Cooperation and Development in this field
will be discussed .In detail by Under Secretary Ball.
In addition to the work of the Development Assistance Group in
urging the mobilisation of resources of the Industrialized countries
for the purpose of helping the developing countries, there has been
very substantial progress In coordinating and enlarging Free World
assistance to particular countries. The International Bank for
Reconstruction and Development has pioneered in this effort by enlisting
the cooperation of a number of Industrialized countries in expanding
help to India and Pakistan. You are familiar with the Bank's role in
the Indus Waters project and the financial participation by a number
of its members in this important undertaking. The Bank has also played
an important role in stimulating and coordinating efforts by the
economically advanced countries to assist Indiafs economic development
by convening consortium meetings on several occasions in the past;
Earlier this month it led a meeting of capital-exporting countries
prepared to help in financing India's third Five-Year plan.
Participating countries other than the United States indicated
their willingness to provide $780 million over the next two years.
This amount, together with $400 million from the World Bank and the
International Development Association, and $1 billion from the
United States, which is subject to Congressional action on the pending
legislation, should enable India to proceed in an orderly manner to
a successful launching of its Third Plan. A similar meeting under the
Pakistan.
auspices of the World Bank was held this month to consider aid to
- 8 If the United States and the other industrialized countries of
<-hP Free World fully cooperate in providing assistance to the developing
* « „ -- based upon the self-help efforts of the developing countries
themselves - we can look forward to a decade of progress and
development for the hundreds of millions of people in other lands
economically less fortunate than our own. Their economic progress is
to Sos__ai degree dependent on us. Our own future importantly depends
on them. The bill before you is essential to meet the need.
0O0
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
on 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.
- 2 DMXIXMMSX
decimals, e. g., 99.925. Fractions may not be used. It is urged thai 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 incorp
rated banks and trust companies and from responsible and recognized dealers in
ment securities. Tenders from others must be accompanied by payment of 2 percent
the face amount of Treasury bills applied for, unless the tenders are accompanie
an express guaranty of payment by an incorporated bank or trust company.
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 submit
ting tenders will be advised of the acceptance or rejection thereof. The Secreta
of the Treasury expressly reserves the right to accept or reject any or all tend
in whole or in part, and his action in any such respect shall be final. Subject
these reservations, noncompetitive tenders for $ 200,000 or less for the additio
""""pig?
bills dated
March 50, 1961
pfcj
, ( 91
days remaining until maturity date on
^____$x
September 28, 1961 ) and noncompetitive tenders for $ 100,000 or less for the
182 -day bills without stated price from any one bidder will be accepted in full
_£2_t$
at the average price (in three decimals) of accepted competitive bids for the respec-
tive issues. Settlement for accepted tenders in accordance with the bids must be
made or completed at the Federal Reserve Bank on June 29, 1961 . in cash or
other immediately available funds or in a like face amount of Treasury bills mat
ing June 29, 1961 • 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 asv exssHQtiork,. as such, and
EE_^CX_C(MaMIKIM
228
TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE WmMfflZf June 21, 1961
TREASURY'S WEEKLY BILL OFFERING
The Treasury Department, by this public notice, invites tenders for two serie
of Treasury bills to the aggregate amount of $1,600,000,000 , or thereabouts)
cash and in exchange for Treasury bills maturing June 29, 1961 , in the amoun
of $ 1,600.554,000 , as follows:
91 -day bills (to maturity date) to be issued June 29, 1961
in the amount of $1,100,000,000 , or thereabouts, representing an additional amount of bills dated March 50, 1961 ,
and to mature
September 28, 1961 , originally issued in the
%&$• (including $100,104,000 issued June 14, 19!
amount of $ 600,189,000 /, the additional and original bills
to be freely interchangeable.
182 -day bills, for $ 500,000,000 , or thereabouts, to be dated
P_k)c
^&_K5T
June 29, 1961
xp3c(_
, and to mature
December 28, 1961
_^a&3_
The bills of both series will be issued on a discount basis under competitive
and noncompetitive bidding as hereinafter provided, and at maturity their fa
will be payable without interest. They will be issued in bearer form only, an
denominations of $1,000, $5,000, $10,000, $100,000, $500,000 and $1,000,000 (m
value).
Tenders will be received at Federal Reserve Banks and Branches up to the clos
Daylight Saving
hour, one-thirty o'clock p.m., Eastern/_«)Qo__fl_xk time, Monday, June 26. 1961
Tenders will not be received at the Treasury Department, Washington. Each ten
must be for an even multiple of $1,000, and in the case of competitive tender
price offered must be expressed on the basis of 100, with not more than three
TREASURY DEPARTMENT
WASHINGTON, D.C.
June 21, 1961
FOR IMMEDIATE RELEASE
TREASURY'S WEEKLY BILL OFFERING
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 June 29,196l,
in the amount of
as
$1,600,554,000,
follows J
91-day bills (to maturity date) to be issued June 29, 1961, in
the amount of $1,100,000,000, or thereabouts, representing an
additional amount of bills dated March 30, 1961, and to mature
September 28, 1961, originally issued in the amount of
$600,189,000 (including $100,104,000 issued June 14, 196l), the
additional and original bills to be freely interchangeable.
182-day bills, for $500,000,000, or thereabouts, to be dated
June 29, 1961,
and to mature December 28, 196.I.
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 Daylight
Saving time, Monday, June 26, 1961.
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
D-148
or trust company.
- 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 Departmment 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
March 30, 196l,
(91-days remaining until maturity date on
September 28, 196l)and noncompetitive tenders for $100,000
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 Federal Reserve Bank on Juna 29, 196l,
in cash or other immediately available funds or in a like face
amount of Treasury bills maturing June 29, 196l.
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
0O0
return is made, as ordinary gain or loss.
Treasury Department Circular No. 4l8, Revised, and this notice,
prescribe the terms of the Treasury bills and govern the conditions
of theirReserve
issue. Bank
Copies
of the circular may be obtained from any
Federal
or Branch.
- 6 -
purchases if he pays $60 in duty.
A
'^
I do not see why, under the circumstances
?.e have before us today, he should not be asked to pay the $60 in duty if he
v. ants these purchases.
Indeed, our figures show that well over 90 percent of returning tourists
claim $200 or less in exemption. Their sacrifice, therefore, on passage of thi
legislation would Isiimab BWSPI $15 per persan^y "^ey Ae^fe^^^-g^ ^^Prm^ik^'
I do not feel this is a very large sacrifice to ask of persons who are
fortunate enough ._\^^abroad,^W~^ •^vW*^*^*'
Qu-i1 fi^-W-jffi_S^!B-aib well over 50 percent of returning tourists bring in
not more than $100 i£ jfa&p*
?hey are not called upon by this bill to make any sacrifice at all.
We have a balance of payments situation that must be brought under control.
\\-kS p m.
Here is one method that canforw,wL*\»u .•Uw'^**^.
I recommend that it be so used.
231
- 5 -
(K,
Jto OTiiBft^> I lw^i4m&ii®s*^^£&mtffiity-free allowances in the European countries
y/hich grant them range from $12 to $50.
In Latin America the usual range is
from $50 and $100. Canada grants $100 every 4 months - as compared with our
proposed $100 every 30 days. (Canada grants an additional $200 every 12 months
Of course one can not be generous, as we have been, over a period of years
5v/<_S
without getting people used to mm
generosity and coming to expect it as a matter
of right. Consequently l.tiirinnnn mmWmkr. complaint j mt._» 4»"iy_ni that the return
A
a $100 exemption after 13 years of more luxurious treatment will cause hardship.
/3 i<&£ He* m£»t,ak*st,d<€^m ~£& ~4&*le°c*%rt S^*<^m* e*®** e^is*^T^^***£«_..
A,s fftT as T nrm nr>.o thcrt., ia .no iimrniwiftlr^
nhoii'Udi Tin rriffit™*"
toiH.iotc to purchase large amounts ^duty-free, m i e ^ those who stay at home - wnetto
they travel within the United States or stay in one place - must pay duty on
everything they import. We figure that the average rate of duty charged return-
ing tourists on what is brought in over the exemption is 15 percent.
means
that with a $100 exemption the tourist can bring back $500^ vrorth of personal
- 4 result of their strong export position in world markets. «3fep duty-free allowances
act as a unilateral concession on their exports to this country. _H the same
time the United States
1MIPM_L.
large def ici% in its balance of payments. A^ **
number of American tourists return each year, mS& their purchases abroad
6 u f ^a.strt's^n* ^
represent a significant item in ~$8m deficit, in em' feala_iw.c>» &£«™gayaaafaL,
A
«_• Qu1 JLLU . b e M w e aiiyeiii; <^gw«aw_K^HB--a& fgy $400 reduction in the duty-free
exemption is going to have m* effect, @»**eisiife*iis&i_a^^ We
A
have made an estimate of how great an effect this will be. I can not guarantee
\t" Ao V»<
vfaii> 4#_iu CJ. .__nia'.e "fa exact, because we are here trying to predict human behav
.tad ,gxpgBa,«Baa
fr_iia&_ii_5^
However, there is
reason to believe that the reduction in exemption would reduce tourist purchases
A
by somewhere between $140 million and $175 million.
\ v- V <t A f (.Jin '* * 1
I do not regard this as an insignificant figure., i_or do !• belioyjt"'JM?"TBsLl /
bo so rp.jTnrtlfrd-by-^frT3-^^
In general the $100 exemption provided for in the proposed bill is far more
generous than that provided for by other countries for /their returning residents.
3-
23.?
$300 exemption \ Ho Vr ) v,
\
_.„__1_&"„C3W«^'&S'*«W^'""
In addition, persons who haw
tside of the United States for 12 days
ii /
•T
/
or more receive a separate and additional exemption of $300 which is available
once every six months.
AP- j(M." will ^pgjrgei'vey-! H&m*ithe proposed legislation seeks to
do away with the $300 exemption, and cut the $200 exemption down to $100.
The increase^ duty-free allowances took place iduriitgHafe
at a time when many foreign countries were receiving assistance
from the United States (b_s©«fliP$»*n_#«%he*-__^^
•v v* -1-7— UJ orf A - v>-\<^ *.
<_U_n^_i_rf^_g^M there was a very strong demand /l_tiiii^i_w_ii_J"'iC'OT_^»iis for
United States export goods • because of the gmmmmk
shortage of these commodities
and the general pressure of postwar demands on the war-strained .
economies of Europe.! ^*) f"»u^
01
/\\ f i ' - ^ v A ^
-
tK
^ ;-^-*^®-^ UUm-i ^
<*v\l> ©-VT U_><r%,\ & v»1\ - ^ f * 4. c ^ U v j ^ N ^ O
Wt(i
The situation has nBw^arkedly changed,''a___iT_ie leading countries of Western
.,
. J» W t U
H .
':* ik
lly" aw«w__"_rfr-fe-_g
gold and liquid dollar holding^as a
Europe
a_a*it Japan
A
* **S4-^aJ^s-^^fc<w^^^^^_d.f omia-Mexicm,
„_•J_^rt«^>•w«^»^'*v^**',!!_»_S(R, ^_ir.3SW_iSiS®^i^^^S l ^ ;# -"'^
Mexif^^^S^p^?sria^T*lT^n
trMjiM^»|ife^||gji|£TiT:^ fvmn the- Virgin Is:
^fiote tHe'timeK-ISBriHg1
234
2 -
The President feels that the seriousness of our balance of
payments situation can best be presented to the country and to the
world by legislation establishing the tourist exemption at $100 for
a fixed period. This would require a review of this policy at the
end of the period by the Congress and the President in light of our
balance of payments situation at that time."
- Oli'ii _,i nlji yn. mi-,
Subsequent to this the House Committee on Ways and Means reported out a
s
bill to reduce the duty-free allowance to $100^ for a 2-year period,
ihis bill, passed by the House of Representatives, ymmmW is now before you.
The present lav/ establishing the duty-free exemption, which the bill before yc
seeks to amend, is paragraph 1795(c) (2), Tariff Act of 1930. This law allows
returning American tourists two basic exemptions;
$200 exemption ( Ho Tf ) ^
<C Anyone who has been abroad at least 48 hours *Ls permitted to bring in goods
valued up to $200 without payment of duty. This exemption may be repeated on
9^R
^--,^v„,,... ^ w s j k . ^ ^ ^
fV-^OH i'V ivK«fi.
* siiBr; *__*^_rf*
1?T*7Aif k
*> H R 6611
A_»JK-N_n t-_,_-«^ ("W. » d) UrsjUv.
*IIWVNA»S)&
^
,|Pfc
^^^«•*<.• « M ^
'• J, wvs^.'- 2-™^ ; * ';^' ^ --"wV" ' Si A
A \ tif*
7-
l_r. Chairman, the bill~which you have tD-Ser'canside^tionyX'lT^iLS^tc '""
reduce the Customs exemption for returning .American travelers, is described as
follows in the President's February 6 message on balance of payments and gold:
"After World War II, as part of our efforts to relieve the dollar
shortage which then plagued the world, Congress provided for two
additional increases of $300 and $100 in the duty-free allowance
for returning travelers, for a total of $500. The primary purpose
for this change having vanished, I am recommending legislation to
withdraw this stimulus to .American spending abroad and return to
the historic basic duty-free allowance of $100."
As introduced in the House of Representatives, the legislation provided
that the return to the $100 duty-free allowance would be effective for a 4-year
period. Pending consideration of the bill by the House Committee on Ways and
Means 5^ wrote the Chairman of that Committee on April 25,
*o ' _rt»>
In response to mmm request for a statement of the President's \ L.
views wit3a. _-Qga_.d to-"4s_-e»a-sff^
I «<w.
/_,•"_""_ ' ... -___,_^_ge__~r«-*^a-'f"'fc'_
as follows;
~—
u
While the President recognizes that the balance of payments
pressures have eased somewhat, he does not believe that the problem
has been solved. He further believes that there is a real and
urgent need for reduction of the exemption.
-y C:
TREASURY DEPARTMENT
23G
June 22, 1961
For Release: Upon Delivery
STATEMENT OP THE HONORABLE A. GILMORE FLUES
ASSISTANT SECRETARY OP THE TREASURY
BEFORE THE
SENATE COMMITTEE ON FINANCE
ON HR 6611
TEMPORARY REDUCTION IN DUTY-FREE ALLOWANCE FOR RETURNING RESIDENTS
THURSDAY, JUNE 22, 196l, 10:00 A.M., EDT
Mr. Chairman, the bill which you have under consideration,
H. R. 66ll, to reduce the Customs exemption for returning American
travelers, is described as follows in the President's February 6 mes
on balance of payments and gold:
"After World War II, as part of our efforts to relieve
the dollar shortage which then plagued the world,
Congress provided for two additional increases of $300 and
$100 In the duty-free allowance for returning travelers,
for a total of $500. The primary purpose for this
change having vanished, I am recommending legislation
to withdraw this stimulus to American spending abroad
and return to the historic basic duty-free allowance
of $100,"
As introduced in the House of Representatives, the legislation
provided that the return to the $100 duty-free allowance would be
effective for a 4-year period. Pending consideration of the bill by
the House Committee on Ways and Means, Secretary Dillon wrote the
Chairman of that Committee on April 25, in response to his request f
a statement of the President's views, as follows:
"While the President recognizes that the balance
of payments pressures have eased somewhat, he does
not believe that the problem has been solved. He
further believes that there is a real and urgent need
for reduction of the exemption.
D-149
- 2 "The President feels that the seriousness of our ;
balance of payments situation can best be presented to
the country and to the world by legislation establishing
the tourist exemption at $100 for a fixed period. This
would require a review of this policy at the end of the
period by the Congress and the President in light of our
balance of payments situation at that time."
Subsequent to this, the House Committee on Ways and Means reported
out a bill to reduce the duty-free allowance to $100, for a 2-year
period. This bill, passed by the House of Representatives, is now
before you.
The present law establishing the duty-free exemption, which the
bill before you seeks to amend, is paragraph 1798(c)(2), Tariff Act
of 1930. This law allows returning American tourists two basic
exemptions:
$200 exemption —
Anyone who has been abroad at least 48 hours*
is permitted to bring in goods valued up to $200 without payment of
duty. This exemption may be repeated on subsequent foreign visits,
provided no part of it has been utilized within the preceding 30 days.
$300 exemption —
In addition, persons who have been outside of the
United States for 12 days or more receive a separate and additional
exemption of $300 which is available once every six months.
The proposed legislation seeks to do away temporarily with the
$300 exemption, and cut the $200 exemption down to $100.
The increases In duty-free allowances took place at a time when
many foreign countries were receiving assistance from the United States
under the Marshall Plan.
There was a very strong world-wide demand
* For lower callTornla-Mexico crossings tne minimum time out or the
United States Is 24 hours. There is no time limit for other
Mexican border crossings, and H.R. 66ll would remove the time limit
also for articles acquired by United States tourists in the
Virgin Islands.
"3 "
2^
for United States export goods because of the shortage of these
commodities and the general pressure of postwar demands on the warstrained economies of Europe, During those years, these nations were
experiencing heavy pressure on their International balance of payments,
and our liberal duty-free allowances were a distinct help to them.
The situation has now markedly changed. The leading countries of
Western Europe as well as Japan have accumulated large gold and
liquid dollar holdings as a result of their strong export position
in world markets. But our present duty-free allowances continue to
act as a unilateral concession on their exports to this country,
because at the same time the United States is experiencing large
deficits In its balance of payments.
As an increasing number of
American tourists return each year, their purchases abroad represent
a significant item in our payments deficit.
A $400 reduction in the duty-free exemption is going to have a
distinct effect. We have made an estimate of how great an effect
this will be, but I cannot guarantee it to be exact, because we are
here trying to predict human behavior.
However, there is good reason
to believe that the reduction in exemption would reduce tourist
purchases by somewhere between $140 million and $175 million.
I do not regard this as an insignificant figure.
It represents
8 to 9 percent of what we regard as the basic $1.9 billion deficit
in our i960 balance of payments accounts.
In general the $100 exemption provided for in the proposed bill
is far more generous than that provided for by other countries for
9QQ
• . V_/ _/
their returning residents.
Duty-free allowances in the European
countries which grant them range from $12 to $50.
the usual range is from $50 to
k months —
$100.
In Latin America
Canada grants $100 every
as compared with our proposed $100 every 30 days.
(Canada grants an additional $200 every 12 months but only with
respect to Canadians returning home from outside of the North American
continent.)
Of course one can not be generous, as we have been, over a period
of years without getting people used to such generosity and coming to
expect it as a matter of right.
Consequently, you are likely to hear
complaints that the return to a $100 exemption after 13 years of more
luxurious treatment will cause hardship.
But no traveler to foreign lands can claim he has an inherent
right to purchase large amounts of merchandise, which shall be duty
free, especially when those who stay at home — whether they travel
within the United States or stay in one place — must pay duty on
everything they import.
We figure that the average rate of duty
charged returning tourists on what is brought in over the exemption
is about 15 percent.
This means that with a $100 exemption the
tourist can bring back $500 worth of personal purchases if he pays
about $60 in duty.
I do not see why, under the circumstances we have
before us today, he should not be asked to pay the $60 in duty if he
wants to make these purchases.
Indeed, our figures show that well over 90 percent of returning
tourists claim $200 or less in exemption.
Their sacrifice, therefore,
- 5 -
'\'/
on passage of this legislation would average $15 per person if they
purchased abroad up to this top $200 figure.
I do not feel this is a very large sacrifice to ask of persons who
are fortunate enough to afford a trip abroad, especially when viewed
against the background of the other expenses of such a trip.
Furthermore, well over 50 percent of our returning tourists bring
In not more than $100 of foreign purchases.
They are not called upon
by this bill to make any sacrifice at all.
We have a balance of payments situation that must be brought under
control. Here is one method that can help.
used.
oOo
I recommend that it be so
^1
26, 1961
FOB H&UtlSS A* 2U
urnus w -wEAsiai*s Wfcsscu BISA ormiin
that the tsadara for t»o aeriat sf
ia#t
ffea froasmry B©pta?l»«afe
mi the bUl« detod mrmk 30, iffof
an additional
bQltt, mm aerias to
offerad O R & a o flf
and the ottto? ooria* to bm
tf , mi,
invito for flfioo,oeoj|
®p9mmm m% the Federal foaarva
mm Mm 26.
or ifewsolmita, of n-day M i l * and for ?5O0,000,0O0, or
fh* details of tha W o series are so follow*!
or &ceimi
ooHNBrarm »ji*t
IMB*
n-mwy
jfi_H__a_;
bills
b%Xl9
^mmmlmmmhjml^L
•saxr.
kpprex.
Smpir,
iato
Rifh
cm
CBS—
99.W1
tJNW ,
"ST
t.ti8» ,
: »
t.ymy
n*ky*of
91-cay M i l s bid for at the l<w
of 182-day blUs M d for *t the Xmt price
TOTM. WWW A!TO» FOt MR. ACCEPTED ST FIDttU. IttCftfS PJORtieiSt
_______Hstod
Hfflwo
miade&pfela
Claralaud
Atlanta
St. Icmie
rtty
Dallas
Saa Froneisoe
i,y9$9im9mm
25,727,000
2^,6^0,000
*»7»5«<K»
li.,l?3f0ttG
11t9117f«*
2©,8?3,ooo
lMJMK*
77M)*vm
lia, 727,060
2S^50,000
13,333,000
lffc,U7»«tt
17,t73,000
U,535,000
3^,^2,000
11,393,600
812,396,000
7,636,000
18,7^,000
1,113,000
6^3,000
07,101,000
k9fTI*0Q0
I*,930,Q00
*9m9*m
l§*73Mef
i9m9m
6,itt,«*
h9m9m
9,10S,W
3«HM»
3,228,000
3k,5&P,ooo
*
«,%tQ0o
IS00,U0,Wi
Hf«07,t6*,O©0
n,10O,O39,OOO m/
13,193,000
m*9$te9QM
39»on.©oo
Inelmdos fl77f6l9,Q00
noaaoapotltlvo tersdere accepted at tha averagem+mmttlia
at tha average price of 9S.W
Iocl^aa 1^0,316,000 noBeoajpatltira tenriera acce
On a eoapoft issue of tha sans length and for tha
the*e billa woxild prcrida yields of 2.76%, for the
lit«mmj bills. Interest rata* on billa ar* quoted In tenia of banlc <liaaoa__t with
Ilia return rolatod to tha faca mmmm% of tha billa paymbla at maturity
of days rolatad to a
the mmmt
invested and thair length Is aetwal
da are e«*patad 111
year. Ia contrast, yields on certificates, sets*,
of daja taMilalng ^ *ft
of interest on th* aammt larostod, and relate tiie
IK
tha
parlad, aith
lutarost pmynmnt period to tha actual stater of
ec^petsndiW If mmrm than ©iso coupoc period ia
TREASURY DEPARTMENT
mw, yj'l.l..M
_r_-.M»',IU__-__W«__IJJ__._I_LU__-W_-_M._I«•
WASHINGTON. D.C.
June 26, 196l
FOR RELEASE ______ NEWSPAPERS,
Tuesday, June 27, 1961.
RESULTS OF TREASURY'S WEEKLY BILL OFFERING
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 March 30, 1961,
u_d the other series to be dated June 29, 196l, which were offered on June 21, were
)pened at the Federal Reserve Banks on June 26. Tenders were invited for $1,100,000,000,
)r thereabouts, of 91-<_ay bills and for 1500,000,000, or thereabouts, of 182-day bills.
[he details of the two series are as follows.
RAN3E OF ACCEPTED
COMPETITIVE BIDS:
High
Low
Average
91-day Treasury bills
maturing September 28, 196l
Approx. Equiv.
Price
Annual Rate
2.188$
99.10.7
2.267$
99.1*27
2.219$ 1/
99.1.39
182-day Treasury bills
maturing December 28, 196l
Approx. Equiv,
Annual Rate
Price
98*796
98.771;
98.787
2.382$
2.125$
2.399% 1/
9 percent of the amount of 91-day bills bid for at the low price was accepted
17 percent of the amount of 182-day bills bid for at the low price was accepted
DOTAL 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
Applied For
$
33,1.56,000
1,398,180,000
25,727,000
25,650,000
'9,71*5,000
ll.,193,000
178,117,000
20,873,000
lli,535,000
31^,522,000
13,193,000
39,071,000
t_.,807,261i,000
Accepted
f
18,938,000
776,1*30-, 000
Hi, 727,000
25,1.50,000
9,71*5,000
13,338,000
121,117,000
17,873,000
il*,535,ooo
3k91*22,000
11,393,000
39,071,000
Applied For
$2,058,000
812,896,000
7,636,000
18,732,000
1,113,000
6,31*3,000
87,101,000
1*,973,000
1*,930,000
9,105,000
3,228,000
11*, kk$, 000
$1,100,039,000 a/ $972,560,000
Accepted
$ 2,058,000
387,11*6,000
2,636,000
18,732,000
1,113,000
6,11*3,000
1*8,1*01,000
li,li73,000
l*,5i5,ooo
9,105,000
3,088,000
12,720,000
1500,130,000 b /
V Includes $177,619,000 noncompetitive tenders accepted at the average price of 9
2/ Includes $1*0,318,000 noncompetitive tenders accepted at the average price of 98.787
If On a coupon issue of the same length and for the same amount invested, the return on
these bills would provide yields of 2.26$, for the 91-day bills, and 2.1*6$, for the
182-day bills. Interest rates on bills are quoted in terms of bank discount with
the return related to the face amount of the bills payable at maturity rather than
the amount invested and their length in actual number of days related to a 360-day
year. In contrast, yields on certificates, notes, and bonds are computed in terms
of interest on the amount invested, and relate the number of days remaining in an
interest payment period to the actual number of days in the period, with semiannual
-Compounding if more than one coupon period is involved.
from the sale or other disposition of Treasury bills does not have any special
treatment, as such, under the Internal Revenue Code of 1954. The bills are subje
to estate, inheritance, gift or other excise taxes, whether Federal or State, bu
are exempt from all taxation now or hereafter imposed on the principal or 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 int
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 e
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.
- 2-
®£^^ 244
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 incorp
rated banks and trust companies and from responsible and recognized dealers in
ment securities. Tenders from others must be accompanied by payment of 2 percent
the face amount of Treasury bills applied for, unless the tenders are accompanie
an express guaranty of payment by an incorporated bank or trust company.
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 submit
ting tenders will be advised of the acceptance or rejection thereof. The Secreta
of the Treasury expressly reserves the right to accept or reject any or all tend
in whole or in part, and his action in any such respect shall be final. Subject
these reservations, noncompetitive tenders for $ 200,000 or less for the additi
bills dated April 6, 1961 . ( 91 days remaining until maturity date on
_p_&5x
October 5, 1961
*pt_I_$x
) and noncompetitive tenders for $ 100,000 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 r
tive issues. Settlement for accepted tenders in accordance with the bids must b
made or completed at the Federal Reserve Bank on July 6, 1961 . *n
cash or
other immediately available funds or in a like face amount of Treasury bills ma
ing July 6, 1961 . 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 haare anv e_cejSfcpti_sk,. as such,
_3_{_KBff3-_
24.
TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE ¥$8&Wffi£f Jun« 26, 1961
TREASURY'S WEEKLY BILL OFFERING
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;
cash and in exchange for Treasury bills maturing July 6,, 1961 , in the amount
of $ 1.600,552,000 , as follows:
91 -day bills (to maturity date) to be issued July 6, 1961 ,
in the amount of $ 1,100.000,000 , or thereabouts, representing an additional amount of bills dated April 6, 1961 .
m
and to mature
October 5, 1961
. originally issued in the
fc9_jc( including $100,104,000 issued June 14, 1
amount of $600,259,000
/, the additional and original bills
to be freely interchangeable.
182 -day bills, for $ 500,000,000 , or thereabouts, to be dated
P&$
x$___a£x
July 6, 1961
, and to mature
January 4, 1962
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 (ma
value).
Tenders will be received at Federal Reserve Banks and Branches up to the closi
Daylight Saving
hour, one-thirty o'clock p.m., Eastern/j3&*_&ii£_rji time, Friday, June 50, 1961
Tenders will not be received at the Treasury Department, Washington. Each tend
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
TREASURY DEPARTMENT
____B_I
WASHINGTON. D.
June 26, 19
POR IMMEDIATE RELEASE
TREASURY'S WEEKLY BILL OFFERING
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 July 6, 196l,
in the amount of
$1,600,332,000, as follows:
91-day bills (to maturity date) to be issued July 6, 1961, in the
amount of $1,100,000,000, or thereabouts, representing an additional
amount of bills dated April 6, 196l,and to mature October 5, 19^1,
originally issued in the amount of $600,239,000 (including $100,104,000
Issued June 14, 1961), the additional and original bills to be freely
interchangeable.
182-day bills, for $ 500,000,000, or thereabouts, to be dated
July 6, 196l,
and to mature January 4, 1962.
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 Daylight
Saving time, Friday, June 30, 196l.
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
D-151
or trust company.
- 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 Departmment 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
April 6, 196l,
(91-days remaining until maturity date on
October 5, 1961) and noncompetitive tenders for $100,000
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 July 6, 1961,
in cash or other immediately available funds or in a like face
amount of Treasury bills maturing July 6, 1961.
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.
0O0
Treasury Department Circular No. 4l8, Revised, and this notice,
prescribe the terms of the Treasury bills and govern the conditions
of theirReserve
issue. Bank
Copies
of the circular may be obtained from any
Federal
or Branch.
947
- 44 - _
in timing and the utilization of expenditures on a
countercyclical basis,
4. The strengthening of our 'automatic stabilizers'1 •
for example, the revision of unemployment compensation to
increase botb benefit levels and duration on a permanent
basis similar to tbat enacted temporarily to deal with
the last two recessions.
5. Some examination of the destabilizing character
of consumer credit and inventory investment.
2d*
-,H»
X. Improvements in budgetaxy policy to reduce
unnecessary volatility of orders for durable goods
by the Federal government.
2, The grant of discretionary,authority to
the President to offoot short-run economic stabilization
on both the up and down side, The most recent, suggestion
of this nature was the recommendation of the Commission
on Money and Credit that Congress grant to the President
limited conditional power to make temporary countercyclical adjustments in the first bracket rate of
personal income tax, to be list!ted to 3 percentage
points upward or downward,
3. Hie provision of more adequate planning for
worthwhile but postponable public works projects under
conditions that would permit greater executive flexibility
- 42 reduced prices with the user or consumer of the product or service*
Fast experience also suggests that even within
the ambit of existing monetary, fiscal and credit tools
there are gaps.
. shall not prejudge in any way whether additional
tools should be provided to those chiefly responsible
for assuring a better performance in the achievement of
our national economic goals. Some who have studied
the situation most closely suggest the possibility of
additional procedures designed to reconcile roaseaable
price stability with economic growth at levels close
to our potential.
Some of the approaches most often suggested are:
25u
them at excessive levels,.the result may bo the loss
Of reasonable price stability and demand at home and
abroad.
0p to now, increased competition as a result of
a vigorous antitrust program and keeping the door open
to import competition seem to provide the most useful
methods for reducing the impact of abuses of market "\:
power. It is to bo hoped that the President's Labor*
Management Advisory Committee will chart some beginning
stops, short of price and wage controls, toward making
private organisations which possess "market power0 more
responsive to the public interest to the end that this
power will not be abused. It is to be hoped that some
means may bo developed whereby the benefits of increased
volume and productivity may more ofton bo shared through
«. 40 appraising current business conditions, ••* ^t iwsst
And, scanning the guidelines and policy instruments that objective students of our economic system
believe desirable to stimulate recovery, to guide
recovery in full flight, ami to deal with incipient
or real recession, it would appear that there are
serious gaps in the ready .availability of some of
the policy instruments considered important. - ,
Some experts hold thatrunder certain conditions
monetary, credit and fiscal measures alone may not
be sufficient to achieve our national economic goals.
For example, if resources in plant capital and labor
move too slowly as elements of demand shift, oar if
some private groups in the economy abuse their market
power to push prices or wages too high or to maintain
9 £9
iV. ^
t
-
Does tho experience of the last two recoveries
and recessions, plus a recognition of those economic
facts of lift, suggest the optimistic possibility
lls
that Federal policios on exf^ndltiiroo^ taxation,
debt management and credit may be mixed In the current
recovery so as to achieve our national economic goals?
The choice and mis of existing policy instruments and
their effective coordination between the Executive
Departments, the Federal Reserve Board and the Congress
will be of great importance. Each policy instrument
has its role, but each has'its limitation, so that
e&cessivo reliance must^not bo placed on "any one of
them. Moreover, they must be used in response to
economic diagnoses which can bo quite difficult ink#e
terms of tho time lag and the imperfect art of
2*?
- 38 in a free society voluntarily claim less than the law
allows and voluntarily do more than the law requires,
then the protection of all society will continuously demand
more law, more government, and less freedom. The alternate
to voluntary self-restraint is the imposition of restraint
from mobilized public opinion leading to the intervention
of government.
The third fact ot economic lire in sustaining tne
duration of this recovery and resisting any tendency
to serious decline is the need to recognize that no
one of these economic goals can be wholly unqualified»
because each may have to be sought subject to constraints
imposed by other goals or at costs representing sacrifices,
to some degree, of other goals.
25^
mm 37 **
A fair analysis of our economic system and its functioning
since World War IX would show that both government and the
private sector.of the economy share the blame for our failtui
to achieve our national economic goals through sustaining
our recoveries•
In a system such as ours, we cannot escape theaniju*
necessity and desirability of coordinating both government
activities and actions In the private sector of the economy
if the nation is to lengthen periods of economic climb and
reduce the periods of decline or stagnation.
, Since the American people desire to achieve our material
goals within an atmosphere of personal opportunity and *a
individual freedom, It must be emphasized that the pries
of this freedom is a good measure of self-discipline and
wise economic conduct in the private sector. As has been
recently said, "Unless individuals and groups of Individuals
255
- 36 The first is the factor of timing. The way in
which the nation employs and enjoys the early phase
of the recovery has a great deal to do with how long
it will last and how quickly tendencies to recession
can be overcome when they recur.
It is in the early stages of an economic recovery
that there is sufficient lead time to forge the instruments
and policies for both government and private conduct so
that they can be brought to bear effectively upon the
tendency to recession./
/
It is too late to gear public and private action to
avoid or cure quickly the economic illness of recession
if the nation waits for the illness to take hold before
looking to and providing methods of prevention and cure.
The second fact of economic life in sustaining the
duration of this recovery has to do with the Importance
of coordinating both governmental and private action.
25b
- 35 an annual rate of $24 billion in Federal finances from
deficit to surplus.
(2) The exercise of fiscal restraint on general
economic expansion, accompanied by a tightening of credit
conditions. (He particularly notes that long-term interest
rates advanced faster than during a comparable stage of
any business cycle during the past one hundred years.)
(3) The protracted steel strike in the second half
of 1959 which led to a sharp build-up of inventory and a
boom psychologically In the spring and summer of 1959,
hesitation in placing of orders for investment goods, and
finally a new economy in managing inventories.
It would be a tragic mistake if the nation failed
to realize at least three Important facts of economic life
in sustaining the- duration of this recovery and arresting
any tendency to serious decline.
257
- 34 To wait until strong inflationary pressures build
up is to risk cutting short the recovery. As was said in the
Staff Report of the Joint Economic Committee of the Congress:
"The die for the inflation in 1950 and 1957 was cast in 1955;
To be forced to employ the meat axe of excessive
monetary and fiscal brakes at the sacrifice of maintaining
a growth of total demand is not an adequate answer in
the light of experience.
Let us turn to the eminent economist. Dr. Arthur F.
Burns, who earlier was Chairman of President Eisenhowerfs
Council of Economic Advisors, for an analysis of the
reasons for the failure of the recovery of 1958-1930.
While acknowledging that many factors contributed, he
feels that three developments were decisive;:
(1) A violent shift In Federal finances which saw
in a period of little more than a year a turnaround at
256
- 33 prevalent and exercised in Important industries. It added
substantially to the inflation, with steel prices the
glaring example. This, in turn, drove up costs in many stee]
using industries. Many of these industries also were
able to pass on their high unit costs in the face of falling
demand. In fact, in many sectors of the economy, there was
no marked fall-off in prices in the recession or a sharing
with the consumer of increasing profits or productivity
in the subsequent recovery.
/.
Also, the prices of services rose substantially in
(_A -•• '•
r
this period.
In an effort to meet these various sources of inflation,
some of which were beyond the reach of monetary and fiscal
policy, the brakes were stepped on hard. One result was
that the predictions of high levels of output turned (Hit
to be overly optimistic, and the important factor of a sustai
growth of total demand faded away.
25s
— %kmm *""
sustained for longer periods because inflationary tendencies
and efforts to counter them led to a dampening of demand.
The attempt to achieve full employment and adequate growth
without Inflation failed. The 1955 recovery foundered
in 1954* on the shoals of inflationary pressures which were
checked by a too-restrictive monetary and fiscal policy,
faulty price and wage policies, and marked instability of
demand.
The tremendous upswing of 1955, marked by a rapid increa
in consumer credit, led to very high profits in some
industries which, in turn, led to some substantial wage
settlements. Also, a capital goods boom produced excess
demand in the machinery industries and thereby an increase
•_
in machinery prices, also causing rising prices in
construction.
Moreover, market power — that is, the power to raise
prices in the absence of excess demand — was widely
in it, to take much thought as to how another recession
can be avoided or minimised.
Indeed, many may become so iaie». on accei.era.xing the
rate and thrust of the recovery that they may ignore or
treat lightly the challenge to sustain IT, xorgetting
President Kennedy's wise admonition that "we cannot expect
to make good in a day or even a year tho accumulated
deficiencies of several years."
While no two economic recoveries are likely to present
identical problems, it Is timely now to attempt to identify
some of the xactors tnat xne experts Believe causea our
recent recoveries to be foreshortened and to turn into
recessions. Perhaps they will provide some guidelines on
how to sustain the current recovery.
It is the judgment of many analysts of economic events
that the recoveries beginning in 1955 and 1958 were not
Since World War IX, approximately fourteen quarterly
periods or twenty-three percent of the total have been
periods of recession.
Every American _ts an iapertant stake ia avoiding
the early recurrence of another recession and,in
minimising those periods la which the economy either
stagnates or falls back.
Yet all of us are quite familiar with the natural
tendency of tho human being, ordinary and extraordinary,
to forget the danger once it has passed. * Now,that the
recent recession Is over and the nation's economy has
turned the corner, many are too much inclined to bo
concerned only with the effect of the ceasing prosperity on
their own economic prospects. ..,, _
Business and labor may become too absorbed with the
pace and thrust of tho current recoveryn and their shars
- 28 Fries and wage decisions could affect tho level
of detaand for affected products In doaestic and -f
export markets, thereby resulting in'curtailed or
increased output.
Tho full realisation of rising"productivity
poteatial could bo blocked by Arbitrary i«pcd__e_ts
that restrict output or hinder more of fieleut **'r'' s"f
techniques.
Decisions of what and how much to produce, how
the proceeds are to be shared, how much is to be
invested or reinvested, what and how much is purchased
by consumers or users of goods and services ~ those
are made by individualsprimarily ia response "
to aarket forces.
In the achievement of full recovery and adequate
growth, as with our other national econowic goals, the
quality and behavior of tho private eitisen say bo the
most influential factor.
- 27 For example, consumer purchasing may depend upon
consumer choice or a decision not compelled by
necessity. Private investment may depend upon
many factors apart from a shortage of capital. ...v,
Indeed, it is difficult to escape from the
importance of psychological factors., A healthy
economic recovery and growth will depend heavily
upon the confidence, initiative, Incentive, optimism,
and industry of the private citizen.
In addition to governmental policy and related
psychological factors, a healthy recovery!and
economic growth in our free society will depend
upon many private decisions beyond the direct Influence
or control of government.
These decisions are of many types.
°dN
- 26 tines of a groat booa?
How should any
excess of revenues over current expenditures
during the recovery be divided as between
Increased expenditures, tax reduction and
debt retirement?
.»»
4.
- ^
•
•-
.
_
_
The coordination of monetary and
fiscal policy so air to permit tho maintenance
of a healthy growing economy.
^
J
These specific decisions and the countless others
that flow from the mix of governmental monetary, fiscal
credit policies will affect in varying degrees the
great private sector of the economy.! In the final
/
analysis it is here that the die is cast ~~ where the
largest elements in the level of demand are finally
Aetermlaed,
26b
emphasize the direct provision by government
of goods and services, or to stimulate
private investment and advances In technology.
2. The nature of our basic tax
structure — to what degree will It be
revised for purposes of equity or to
influence levels of private Investment
or coi-tsumotlon*?
3. The revenue-raising character of
the tax system. It is estimated that, at
current expenditure levels, the budget
would balance with unemployment between
5.5 and 6 percent. Should the tax system
be modified so as to avoid becoming a drag
on full employment but thereby become a
less powerful anti-inflationary brake in
2G(
- 24 in recent years as an increasingly strong deterrent
to the achievement of our national economic goals*
Lying beyond the provision of these specific
tools for healthy recovery and growth Is the complex of
decisions that must be repeatedly made by the Federal
Government, by State and local governments, by private
business concerns, by consumers, by investors, by
borrowers, by lenders, by you and me. It is the sum
total of these decisions that are determinative.
What are some of the key decisions that will
determine the future outlook for recovery and growth?
Several basic decisions by the Federal Government
lie ahead, concerning:
1. The level and makeup of government
expenditure programs and direct lending
programs for the fiscal year 1963 — whether to
- 23 the likelihood of eventual use. Horeower, #the
stimulus to business investment should promote
recovery and increase employment. >..b#s*_ mpm^&f-'
Also pending for enactment is a measure importantly
related to employment and growth; namely, the mi
Manpower Development and Training Program. This
measure would initiate the training and retraining
of workers suffering from chronic or long term unemployment as a result of technological factors.
Their skills, made obsolete by automation and Industrial
change, would be replaced by new skills which new .,
procesees demand.
If enacted, this measure, coupled with the
depressed areas program already launched, would mark
the first major attempt to tackle the problem of socalled structural unemployment, which has loomed up
26s
- 22 This statement couples the need for prompt
enactment of both the President's program for aid to
education and his investment incentive tax credit
proposal, now pending in the Bouse of Representatives.
The latter would offer a special tax credit as an
incentive for Investment by business in new plant
and equipment. It is designed to encourage modernization and expansion of the nation*s productive plant
to accelerate economic growth and improve the
international competitive position of American Industry.
It will encourage the Incorporation of modern research
and technology in new facilities which should, in
turn, advance productivity, reduce costs, and lead
to marketing of new products. This should indirectly
encourage private industrial research by increasing
** 2 1 mt
As put recently by the Council of Economic
Advisors;
H
The improvement of technology and
the increase of skills go hand-in-hand
with ordinary capital formation to increase
productive capacity. Their interaction is
far more powerful than the sum of their
independent effects. Technical advance
without modernization of facilities loses
much of Its potential effect on output,
and it has been observed that mere increase
of capital without technological progress
also has weak effects on productivity. But
together they are responsible for the longterm growth of American productive potential.
271
m 20 the housing and urban rehabilitation legislation
and the revised Federal highway bill.
But of great importance to healthy economic
recovery and growth is the enactment into legislation
of other Presidential recommendationswhicb are still
being considered by the Congress.
•*«
Let us consider only a few examples.
The President's program for aid to education weuld
give an immediate and substantial boost to the economy
by stimulating needed school construction and increasing
incomes of teachers. But beyond that, such a program
is vital to the nation*s future economic growth, apart
from its other values. A basic component of any program
for accelerated growth must he, investment in the
extension of.knowledge, the general education of the
population, and the training of the labor force.
- is ~
272
History has already recorded the actions undertaken by the past and present Federal Administrations
to achieve this result. Familiar to most areithe
new enactments by this Congress to add new tools to
the Presidential kit — for example,- the depressed 1
areas law and the provision of temporary special
unemployment benefits for* those suffering from unemployment of long duration. ^% sJM tw #d^^tl^i tmil& •
v.
Of more concern today than these necessary first steps
are those actions which remain to be taken to promote a
healthy recovery and sustained growth. -e>?. a :r,-:-:
Much of the answer is to lie found in elements
in the President's legislative program which remain ^
to he enacted.
Other bills which will.add to public and private
demand are well on their way to enactment w for example,
273
«* 18 «*
Given the desirability of a healthy and vigorous
recovery, how can it be fostered and achieved in the
period ahead?
Putting in more common parlance the technical
answer given by economists, it adds up to thlsr
Handle taxesf^ government spending, government credit,
money supply levels, Interest^rate?str^_oture so that
m*
the total of the money yen and 1 spend as consumers,
the money invested in business, the money spent by
government (Federal/State and local), will Increase
steadily the output of goods and services and the
persons employed— and the division of the output
between personal consumption, private'plant and
equipment and inventories, and government programs will
result in a steady growth-of the private wealth pre~
ducing sector.
This modernization and expansion Is not likely
to occur except in response to a healthy and vigorous
economic recovery marked by an increasing demand for
products and services.
These are some of the reasons why the pace and
thrust of the current economic recovery are Important
and why in the years ahead the nation cannot be content
":•_£-• _V*T " 'I|V
merely to hold fast to existing levels of economic
activity and capacity.
275
- 16 on which our national security and leadership in the
struggle of competitive coexistence may well depend.
The nation needs to modernize its industrial and
business plant so that we can compete successfully with
our friends and allies in the developed markets at
heme and In Western Europe and in the developing markets
In Asia, Africa and Latin America. If the United States
does not compete successfully, it cannot sell the products
necessary to the favorable balance of trade that c
enables ue to achieve a balance of payments,
Ve need to expand this plant capacity if we are to
provide the bone and muscle that will keep the nation
ahead of potential enemies who seek to "bury* us either by
outright aggression or the attainment of superior economic
power.
27 b
- 15 —
modernization and expansion of America's industrial
capacity. Our gross fixed capital expenditures (ether
than housing), including producers* durable equipment
and/non-residential construction, have declined from
a 12.5 percent of gross national product In 1948 to
a 9.5 percent in 1960. By comparison the Investment
ratio in Western Europe rose from an average of 13.3
percent of gross national product in 1951-55 to
15.1 percent of gross national product in the period
1956-60.
If our friends have grown and modernised more
rapidly than we, what about those who are not so
friendly? The rate of industrial growth in the
Sino-Sovlet Bloc challenges us to maintain our
economic and industrial superiority,
277
?__
Also, unhappily, the nation is underutilining our
labor force, whicb stands ready and willing to operate
the unused capacity of our industrial plant. And yet,
the current high unemployment rate of 6.8 percent could
i%- • • • **e mm **cV- • . J
remain in its present range — or even expand with the
anticipated influx of over a million young men and women
a year to the labor force — unless the current economic
M i ¥ -i* . ,, . . ?%m ..,;••..• ... ./1_3
recovery is a healthy and vigorous one.
A flourishing
can make this influx of young blood into our
*_^jfe*._
.Jm'KJ
economic lifestream a glorious opportunity.
A stagnant
economy could make it an occasion for despair, eonverting the American dream into a nightmare for many
A healthy and vigorous economic recovery can also
•f\ -*$ mr-
lead to needed increases In the rate of both the
""# ..*•£« "
~ is «*
?72
five hundred thousand net new additions
to the work force during the'next ten
years; to improve the standard of livings
and to assure U. S, eeaqpetltlve strength.
There is unusual and unutilized capacity and
opportunity for increased economic activity throughout
much of America: in steel, in autos/ in housing; in
textiles, in mining, in chemicals, in the depressed"
and distressed areas such as the Appalachian region in
which we are meeting today-- indeed,' everywhere we look,
These unused resources are wasting assets which a
healthy recovery would activate for increased national
plenty and strength — including, and of importance to the
Treasury Department, the revenues which ate needed to meet
our national security requirements and other essential
needs on a balanced budget.
279
Now, to consider our national opportunity to act
in such a manner that this recovery fill be a healthy and
vigorous one. Why is this important? Why cannot we be
content with a mere creeping advance or a holding
operation?
The Report of President Eisenhower's Commission on
National Goals last fall answered these questions as
follows;
"The economy should grow at a rate son**
slstent with primary dependence upon free
enterprise and the avoidance of marked
inflation.
"Such growth is essential to move toward
.•»
our goal of full employment, to provide
jobs for the approximately thirteen million
280
_ _ _ * . _ _ •
Report of the
"•'
now,
Commission on Money and Credit by twenty private
chosen from diverse scoters of the
CCOJ
and the
ions.
One astonishing aspect of these various studies is
the
one
measure
in the policy proposals ier*1as-
perform
Indeed, there seems to be a considerable consensus among
*Xm\
i*^ It
one to wonder
whether education of the many by* ^he to# is met the root
Perhaps that Is why last week President Kennedy urged
that many in the Congress
of the Cosmxisslon on
the1public
and Credit;
In any event, the situation is ripe for progress
Today the nation has seemingly turned the economic
corner; a business recovery is well underway; the
hemorrhage of our gold supply seems arrested, at least
for the time being; there has been a sharp reduction
in the imbalance of payments.
Hence, a splendid opportunity with a favorable
momentum and that priceless element — time — is presented
to the American people to do a better job In achieving our
national economic goals.
There is no shortage of blueprints and prescriptions
for improvement *-*x Chapter 3 of President Eisenhower's
last Economic Report in January, the Staff Report on
Employment, Growth and Price Levels prepared for the
Joint Economic Committee of the Congress, Majority and
Minority Reports last July and in May of this year of that
- s~
282
This was all brought home in President Kennedy's
second economic message to the Congress when he observed
that:
"Our balance of payments — the accounting
which shows the result of all of our trade and
financial relations with the outside world ~
has become one of the key factors In our national
economic life,"
In moving rapidly to arrest the imbalance of payments
of approximately $11 billion in the preceding three years,
which resulted in a disturbing outflow of gold that threaten*,
to weaken the dollar as the world's leading rmserre
currency, the President inaugurated a new national
discipline in financial policy which will be a landmark
in our national economic life in years to come.
private, with little concern about their impact on the
so-called balance of payments. But the years have witnessed
the emergence of powerful and efficient industrial
competition from Western Europe and Japan for the very
same export market areas in which the United States had
reigned supreme since World War II. This, plvm rising
import competition, brought home the importance of
o
stability of prioe levels in avoiding an imbalance of
payments. And with the achievement of external currency eoa*
vertibility by the major industrial countries in the Western
World at the end of 1958, the dollar encountered a new
environment in the international money market. Short
term capital flows away from the dollar became a fresh
element to be taken into account.
284
~ T ~
the context of such other Important national objectives
as the preservation of adequate national security,
the maintenance of harmonious international relations,
and reliance on competitive enterprise with economic
freedom and market mechanisms for a primary role in
allocation of products and resources.
Equally significant Is the newly-felt necessity for
the pursuit of our national economic goals with full
awareness of the international as well as the domestic
impact of our economic policies and practices. This adds up
to a relatively new national economic goal -** the avoidance
of any substantial imbalance in our international payments.
During the postwar period, the U. S. was able to
employ a mix of domestic economic measures, public and
285
- 6 achieving these goals by more effective coordination
of governmental effort and private action.
- , _
This viewpoint is one substantially shared and
expressed in President Eisenhowerfs last Economic
and
Report,/the Report of the President's Commission on
National Goals released in late I960. And Just last
week the President commended to the attention of the
Congress and the citizenry a detailed and extensive
report in the same vein of the Commission on Money and
Credit, composed of private eitisens from various
sectors of our society who had conducted a three-year
study of the influence of money and credit on jobs,
price® and growth.
Of course, this national consensus recognises that
these three national economic goals must be pursued in
unemployment, and at the same time to
maintain reasonable stability of the price
level. For 1992 and 1963 our programs
must aim at expanding American productive
capacity at a rate that shews the world
the vigor and vitality of a free economy.
These are mot merely fond hopes, they are
realistic goals. We pledge and ask maximum
effort for their attainment."
In so setting the nation's near-term sights on a
healthy and vigorous recovery, President Kennedy confirmed
a striking national consensus: that our national economic
goals include a healthy rate of economic growth, a low
level of unemployment, and reasonably stable price levels,
and that we must improve our national performance in
- 4-
287
about the performance of that economy.
It was against this backdrop that the new
President submitted his first economic message to
the Congress entitled "A Program to Restore Momentum
to the American Economy.M Its keynote went as follows:
!,
The Nation cannot — and will not —
be satisfied with economic decline and slack.
The United States cannot afford, in this
time of national need and world crisis, to
dissipate its opportunities for economic
growth. We cannot expect to make good in
a day or even a year the accumulated
deficiencies of several years. But realistic
aims for 1961 are to reverse the downtrend
in our economy, to narrow the gap of unused
potential, to abate the waste and misery of
288
~ 3 and overcome rapidly the inevitable tendency of the
economy at some unpredictable point in the future to
turn down into a recession.
Before considering these opportunities, our
national economic goals should be identified.
When President Kennedy was inaugurated in that never
to be forgotten January week of the blizzard, he was
confronted by a recession that began seven months earlier.
That recession had followed a period of recovery or advance
of approximately twenty-five months which had been
preceded by the recession of 1957 and 1958. Ever higher
residues of unemployment of increasing duration had marked
the peak of each preceding recovery. The slow growth of
the American economy of the past six years, which coincided
with some rise in the price level, added to the concern
28?
be an annual rate between $525 and $535 billion, as
compared with the first quarter rate of $499 billion.
We in Treasury believe that the figure will be nearer
$530 billion. We also hope that the appreciable gains
of around six percent in 1961, despite a bad first quarter,
can be bettered in 1962.
Today, I should like to discuss some of the
opportunities this fledgling business recovery, now
in its third month, presents to the nation to do a
better job in achieving our national economic goals.
What are these opportunities?
First, to act in such a manner that this recovery
will be a healthy and vigorous one.
Second, to act in such a manner as to sustain the
recovery for a long period and be able to meet effectively
2Su
ft ' ' >
_90M_BS OF HENilY H. FOWLER, UNDER SECRETARY
OF THE TREASURY, BEFORE THE VIRGINIA
ASSOCIATION OF INSURANCE AGENTS, THE HOMESTEAD,
HOT SPRINGS, VIRGINIA, TUESDAY, JUNE 37, 1961
*f * J v A . M . ^ J~\i t.^f-""^
!
The biggest news at home this spring is the
business recovery — the turn from a recession that
began in the spring of I960 — a recession which
held back the economy from the new high ground of
growth that had been anticipated for 1960, causing
it to sag disturbingly until the recent turnabout.
i - - ' ' ' ." PL.
Mow that the economy is moving forward again, the
question most often asked is how fast will it thrust upward
and what peaks will it reach in the last half of 1961 and
in 1962. The economic forecasters are having a heyday making
book on the rate at which the economy, as measured
by the gross national product, will be operating
by the turn of the year. The range of estimate seems to
TREASURY* DEPARTMENT
Washington
2$j
June 27, 196l
For Release: Upon Delivery
REMARKS OP HENRY H# FOWLER, UNDER SECRETARY
OP THE TREASURY, BEFORE THE VIRGINIA
ASSOCIATION OF INSURANCE AGENTS, THE HOMESTEAD,
HOT SPRINGS, VIRGINIA, TUESDAY, JUNE 27, 196l
9:30 A.M., EST.
The biggest news at home this spring is the business recovery —
the turn from a recession that began in the spring of i960 — a
recession which held back the economy from the new high ground of growth
that had been anticipated for i960, causing it to sag disturbingly until
the recent turnabout.
Now that the economy Is moving forward again, the question most
often asked is how fast will it thrust upward and what peaks will it
reach in the last half of 1961 and in 1962. The economic forecasters
are having a heyday making book on the rate at which the economy, as
measured by the gross national product, will be operating by the turn
of the year. The range of estimate seems to be an annual rate between
$525 and $535 billion, as compared with the first quarter rate of
i>499 billion. We in Treasury believe that the figure will be nearer
$530 billion. We also hope that the appreciable gains of around six
percent in 196l, despite a bad first quarter, can be bettered in 1962.
Today, I should like to discuss some of the opportunities this
fledgling business recovery, now in its third month, presents to the
nation to do a better job in achieving our national economic goals.
What are these opportunities?
First, to act in such a manner that this recovery will be a
healthy and vigorous one.
Second, to act in such a manner as to sustain the recovery for
a long period and be able to meet effectively and overcome rapidly the
inevitable tendency of the economy at some unpredictable point in the
future to turn down into a recession.
Before considering these opportunities, our national economic goals
should be identified.
When President Kennedy was inaugurated in that never to be
forgotten January week of the blizzard, he was confronted by a recession
that began seven months earlier. That recession had followed a period
of recovery or advance of approximately 25 months which had been
preceded by the recession of 1957 and 1958. Ever higher residues of
unemployment of increasing duration had marked the peak of each
preceding recovery. The slow growth of the American economy of the
D-152
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past six years, which coincided with some rise in the price level,
added to the concern about the performance of that economy.
It was against this backdrop that the new President submitted his
first economic message to the Congress entitled,"A Program to Restore
Momentum to the American Economy." Its keynote went as follows:
"The Nation cannot — and will not — be
satisfied with economic decline and slack. The
United States cannot afford, in this time of
national need and world crisis, to dissipate its
opportunities for economic growth. We cannot
expect to make good in a day or even a year the
accumulated deficiencies of several years. But
realistic aims for 1961 are to reverse the downtrend
in our economy, to narrow the gap of unused potential,
to abate the waste and misery of unemployment, and
at the same time to maintain reasonable stability
of the price level. For 1962 and 1963 our programs
must aim at expanding American productive capacity
at a rate that shows the world the vigor and vitality
of a free economy. These are not merely fond hopes,
thAt^are realistic goals. We pledge and ask maximum
effort for their attainment."
In so setting the Nation's near-term sights on a healthy and
vigorous recovery, President Kennedy confirmed a striking national
consensus: that our national economic goals include a healthy rate of
economic growth, a low level of unemployment, and reasonably stable
price levels, and that we must improve our national performance in
achieving these goals by more effective coordination of governmental
effort and private action.
This viewpoint is one substantially shared and expressed in
President Eisenhower's last Economic Report, and the Report of the
President's Commission on National Goals released in late i960. And
Just last week the President commended to the attention of the Congress
and the citizenry a detailed and extensive report in the same vein of
the Commission on Money and Credit, composed of private citizens from
various sectors of our society who had conducted a three-year study of
the influence of money and credit on jobs, prices and growth.
Of course, this national consensus recognizes that these three
national economic goals must be pursued in the context of such other
Important national objectives as the preservation of adequate national
security, the maintenance of harmonious international relations, and
reliance on competitive enterprise with economic freedom and market
mechanisms for a primary role in allocation of products and resources.
Equally significant is the newly-felt necessity for the pursuit of
our national economic goals with full awareness of the international
This
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as well
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asup
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a relatively
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inof
our
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our
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payments.
goal and
— the
practices.
avoidance
293
- 3 During the postwar period, the U. S. was able to employ a mix of
domestic economic measures, public and private, with little concern
about their impact on the so-called balance of payments. But the years
have witnessed the emergence of powerful and efficient industrial
competition from Western Europe and Japan for the very same export
market areas in which the United States had reigned supreme since
World War II. This, plus rising import competition, brought home the
Importance of stability of price levels in avoiding an imbalance of
payments. And with the achievement of external currency convertibility
by the major industrial countries in the Western World at the end of
1958, the dollar encountered a new environment in the international
money market. Short term capital flows away from the dollar became a
fresh element to be taken into account.
This was all brought home in President Kennedy's second economic
message to the Congress when he observed that:
"Our balance of payments — the accounting which
shows the result of all of our trade and financial
relations with the outside world — has become one
of the key factors in our national economic life."
In moving rapidly to arrest the imbalance of payments of
approximately $11 billion in the preceding three years, which resulted
in a disturbing outflow of gold that threatened to weaken the dollar as
the world's leading reserve currency, the President inaugurated a new
national discipline in financial policy which will be a landmark in our
national economic life in years to come.
Today the Nation has seemingly turned the economic corner; a
business recovery is well underway; the hemorrhage of our gold supply
seems arrested, at least for the time being; there has been a sharp
reduction in the imbalance of payments.
Hence, a splendid opportunity with a favorable momentum and that
priceless element — time — is presented to the American people to do
a better job in achieving our national economic goals.
There is no shortage of blueprints and prescriptions for
improvement:
Chapter 3 of President Eisenhower's last Economic Report
in January, the Staff Report on Employment, Growth and Price Levels
prepared for the Joint Economic Committee of the Congress, Majority and
Minority Reports last July and in May of this year of that Committee
and now, most recently, the Report of the Commission on Money and Credit
by twenty private citizens chosen from diverse sectors of the economy —
banking, industry, labor, the universities and the professions.
One astonishing aspect of these various studies is the substantial
measure of agreement one finds, on close analysis, in the policy
proposals for an improved performance. Indeed, there seems to be a
considerable consensus among informed observers and experts. It leads
one to wonder whether education of the many by the few is not the root
of the problem.
m, k -
-^94
Perhaps that is why last week President Kennedy urged that many in
the Congress and the public read the Report of the Commission on Money
and Credit.
In any event, the situation is ripe for progress.
Now, to consider our national opportunity to act in such a manner
that this recovery will be a healthy and vigorous one: Why is this
important? Why cannot we be content with a mere creeping advance or
a holding operation?
The Report of President Eisenhower's Commission on National Goals
last fall answered these questions as follows:
"The economy should grow at a rate consistent
with primary dependence upon free enterprise and
the avoidance of marked inflation.
"Such growth is essential to move toward our
goal of full employment, to provide jobs for the
approximately 13*500,000 net new additions to the
work force during the next ten years; to improve
the standard of living; and to assure U. S.
competitive strength."
There is unusual and unutilized capacity and opportunity for
increased economic activity throughout much of America: in steel, in
autos, in housing, in textiles, in mining, in chemicals, in the
depressed and distressed areas such as the Appalachian region in which
we are meeting today — indeed, everywhere we look.
These unused resources are wasting assets which a healthy recovery
would activate for increased national plenty and strength — including,
and of importance to the Treasury Department, the revenues which are
needed to meet our national security requirements and other essential
needs on a balanced budget.
Also, unhappily, the nation is underutilizing our labor force,
which stands ready and willing to operate the unused capacity of our
industrial plant. And yet, the current high unemployment rate of
6.8 percent could remain in its present range ~ or even expand with
the anticipated influx of over a million young men and women a year
to the labor force — unless the current economic recovery is a
healthy and vigorous one. A flourishing economy can make this influx
of young blood into our economic lifestream a glorious opportunity.
A stagnant economy could make it an occasion for despair, converting
the American dream Into a nightmare for many of our younger citizens.
A healthy and vigorous economic recovery can also lead to needed
increases in the rate of both the modernization and expansion of
America's industrial capacity. Our gross fixed capital expenditures
(other than housing), including producers1 durable equipment and
295
- 5 non-residential construction, have declined from a 12.5 percent of
gross national product in 19^8 to a 9-5 percent in i960. By comparison
the investment ratio in Western Europe rose from an average of 13,3
.percent of gross national product in 1951-55 to 15.1 percent of gross
national product in the period 1956-60.
If our friends have grown and modernized more rapidly than we,
what about those who are not so friendly? The rate of industrial
growth in the Sino-Soviet Bloc challenges us to maintain our economic
and industrial superiority, on which our national security and
leadership in the struggle of competitive coexistence may well depend.
The nation needs to modernize its industrial and business plant
so that we can compete successfully with our friends and allies in the
developed markets at home and in Western Europe and in the developing
markets in Asia, Africa and Latin America. If the United States does
not compete successfully, it cannot sell the products necessary to
the favorable balance of trade that enables us to achieve a balance of
payments.
We need to expand this plant capacity if we are to provide the
bone and muscle that will keep the nation ahead of potential enemies
who seek to "bury" us either by outright aggression or the attainment
of superior economic power.
This modernization and expansion is not likely to occur except in
response to a healthy and vigorous economic recovery marked by an
increasing demand for products and services.
These are some of the reasons why the pace and thrust of the current
economic recovery are important and why in the years ahead the Nation
cannot be content merely to hold fast to existing levels of economic
activity and capacity.
Given the desirability of a healthy and vigorous recovery, how
can it be fostered and achieved in the period ahead?
Putting in more common parlance the technical answer given by
economists, it adds up to this: Handle taxes, government spending,
government credit, money supply levels, interest rate structure, so
that the total of the money you and I spend as consumers, the money
invested in business, the money spent by government (Federal, State
and local), will increase steadily the output of goods and services
and the persons employed — and the division of the output between
personal consumption, private plant and equipment and inventories, and
government programs will result in a steady growth of the private
wealth producing sector.
History has already recorded the actions undertaken by the past
and present Federal Administrations to achieve this result. Familiar
to most are the new enactments by this Congress to add new tools to
the Presidential kit — for example, the depressed areas law and the
provision of temporary special unemployment benefits for those
suffering from unemployment of long duration.
- 6Of more concern today than these necessary first steps are those
actions which remain to be taken to promote a healthy recovery and
sustained growth.
Much of the answer is to be found in elements in the President's
legislative program which remain to be enacted.
Other bills which will add to public and private demand are well
on their way to enactment — for example, the housing and urban
rehabilitation legislation and the revised Federal highway bill.
But of great importance to healthy economic recovery and growth
is the enactment into legislation of other Presidential recommendations
which are still being considered by the Congress.
Let us consider only a few examples.
The President's program for aid to education would give an
immediate and substantial boost to the economy by stimulating needed
school construction and increasing incomes of teachers. But beyond
that, such a program is vital to the nation's future economic growth,
apart from its other values. A basic component of any program for
accelerated growth must be investment in the extension of knowledge,
the general education of the population, and the training of the labor
force.
As put recently by the Council of Economic Advisors:
"The improvement of technology and the increase
of skills go hand-in-hand with ordinary capital
formation to increase productive capacity. Their
interaction is far more powerful than the sum of their
independent effects. Technical advance without
modernization of facilities loses much of its potential
effect on output, and it has been observed that mere
increase of capital without technological progress
also has weak effects on productivity. But together
they are responsible for the long-term growth of
American productive potential."
This statement couples the need for prompt enactment of both the
President's program for aid to education and his investment incentive
tax credit proposal, now pending in the House of Representatives. The
latter would offer a special tax credit as an incentive for investment
by business in new plant and equipment. It is designed to encourage
modernization and expansion of the nation's productive plant to
accelerate economic growth and improve the international competitive
position of American industry. It will encourage the incorporation
of modern research and technology in new facilities which should, in
turn, advance productivity, reduce costs, and lead to marketing of
new products. This should indirectly encourage private industrial
research by increasing the likelihood of eventual use. Moreover, the
stimulus to business investment should promote recovery and increase
employment.
-7-
237
Also pending for enactment is a measure importantly related to
niployment and growth; namely, the new Manpower Development and
raining Program. This measure would initiate the training and retraining
,f workers suffering from chronic or long term unemployment as a result
,f technological factors. Their skills, made obsolete by automation
ind industrial change, would be replaced by new skills which new
irocesses demand.
If enacted, this measure, coupled with the depressed areas program
ilready launched, would mark the first major attempt to tackle the
)roblem of so-called structural unemployment, which has loomed up in
recent years as an increasingly strong deterrent to the achievement of
>ur national economic goals.
Lying beyond the provision of these specific tools for healthy
recovery and growth is the complex of decisions that must be repeatedly
oade by the Federal Government, by State and local governments, by
private business concerns, by consumers, by investors, by borrowers,
i>y lenders, by you and me. It is the sum total of these decisions
that are determinative.
What are some of the key decisions that will determine the future
outlook for recovery and growth?
Several basic decisions by the Federal Government lie ahead,
concerning:
1. The level and makeup of government expenditure
programs and direct lending programs for the fiscal year
1963 — whether to emphasize the direct provision by
government of goods and services, or to stimulate private
investment and advances in technology.
2. The nature of our basic tax structure — to what
degree will it be revised for purposes of equity or to
influence levels of private investment or consumption?
3. The revenue-raising character of the tax system.
It is estimated that, at current expenditure levels, the
budget would balance with unemployment between 5.5 and
6 percent. Should the tax system be modified so as to
avoid becoming a drag on full employment but thereby
become a less powerful anti-inflationary brake in times
of a great boom? How should any excess of revenues over
current expenditures during the recovery be divided as
between increased expenditures, tax reduction and debt
retirement?
4. The coordination of monetary and fiscal policy so
as to permit the maintenance of a healthy, growing economy.
These specific decisions and the countless others that flow from
the mix of governmental monetary, fiscal and credit policies will
affect in varying degrees the great private sector of the economy.
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In the final analysis it is here that the die is cast — where the
largest elements in the level of demand are finally determined.
For example, consumer purchasing may depend upon consumer choice
or a decision not compelled by necessity. Private investment may
depend upon many factors apart from a shortage of capital.
Indeed, it is difficult to escape from the importance of
psychological factors. A healthy economic recovery and growth will
depend heavily upon the confidence, initiative, incentive, optimism
and industry of the private citizen.
In addition to governmental policy and related psychological
factors, a healthy recovery and economic growth in our free society
will depend upon many private decisions beyond the direct influence
or control of government.
These decisions are of many types.
Price and wage decisions could affect the level of demand for
affected products in domestic and export markets, thereby resulting
in curtailed or increased output.
The full realization of rising productivity potential could be
blocked by arbitrary impediments that restrict output or hinder more
efficient techniques.
Decisions of what and how much to produce, how the proceeds are
to be shared, how much is to be invested or reinvested, what and how
much is purchased by consumers or users of goods and services — these
are made by individuals primarily in response to market forces.
In the achievement of full recovery and adequate growth, as
with our other national economic goals, the quality and behavior of
the private citizen may be the most influential factor.
There has been little recent discussion of our final topic — the
national opportunity to act so as to sustain the recovery for a long
period and be able to meet effectively and overcome rapidly at some
future unpredictable point the inevitable tendency to a recession.
The unfortunate impact of recession on standard of living,
unemployment, and an adequate rate of growth, is too well known to
require statistical demonstration.
In periods of recession the extent and duration of unemployment are
at their height.
The loss of growth in these periods sharply reduces the average
rate of growth over a period of years.
The last recession was accompanied by a sharp increase in shortterm capital flow from the United States, thereby creating a serious
balance of payments problem.
299
- 9 Since World War II, approximately fourteen quarterly periods or
23 percent of the total have been periods of recession.
Every American has an important stake in avoiding the early
recurrence of another recession and in minimizing those periods in
which the economy either stagnates or falls back.
Yet all of us are quite familiar with the natural tendency of the
human being, ordinary and extraordinary, to forget the danger once it
has passed. Now that the recent recession is over and the nation's
economy has turned the corner, many are too much inclined to be
concerned only with the effect of the coming prosperity on their own
economic prospects.
Business and labor may become too absorbed with the pace and
thrust of the current recovery, and their share in it, to take much
thought as to how another recession can be avoided or minimized.
Indeed, many may become so intent on accelerating the rate and
thrust of the recovery that they may ignore or treat lightly the
challenge to sustain it, forgetting President Kennedy's wise
admonition that "we cannot expect to make good in a day or even a year
the accumulated deficiencies of several years."
While no two economic recoveries are likely to present identical
problems, it is timely now to attempt to identify some of the factors
that the experts believe caused our recent recoveries to be foreshortened and to turn into recessions. Perhaps they will provide
some guidelines on how to sustain the current recovery.
It is the judgment of many analysts of economic events that the
recoveries beginning in 1955 and 1958 were not sustained for longer
periods because inflationary tendencies and efforts to counter them
led to a dampening of demand. The attempt to achieve full employment
and adequate growth without inflation failed. The 1955 recovery
foundered in 1957 on the shoals of inflationary pressures which were
checked by a too-restrictive monetary and fiscal policy, faulty price
and wage policies, and marked instability of demand.
The tremendous upswing of 1955> marked by a rapid increase in
consumer credit, led to very high profits in some industries which,
in turn, led to some substantial wage settlements. Also, a capital
goods boom produced excess demand in the machinery industries and
thereby an increase in machinery prices, also causing rising prices in
construction.
Moreover, market power — that Is, the power to raise prices in
the absence of excess demand — was widely prevalent and exercised
in important industries. It added substantially to the inflation,
with steel prices the glaring example. This, in turn, drove up
costs in many steel-using industries. Many of these industries also
were able to pass on their high unit costs in the face of falling
demand. In fact, in many sectors of the economy, there was no marked
fall-off
increasing
inprofits
prices or
in productivity
the recessionin
orthe
a sharing
subsequent
withrecovery.
the consumer of
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Also, the prices of services rose substantially in this period.
In an effort to meet these various sources of inflation, some of
which were beyond the reach of monetary and fiscal policy, the brakes
were stepped on hard. One result was that the predictions of high
levels of output turned out to be overly optimistic, and the important
factor of a sustained growth of total demand faded away.
To wait until strong inflationary pressures build up is to risk
cutting short the recovery. As was said in the Staff Report of the
Joint Economic Committee of the Congress: "The die for the inflation
in 1956 and 1957 was cast in 1955."
To be forced to employ the meat axe of excessive monetary and
fiscal brakes at the sacrifice of maintaining a growth of total
demand is not an adequate answer in the light of experience.
Let us turn to the eminent economist, Dr. Arthur F. Burns, who
earlier was Chairman of President Eisenhower's Council of Economic
Advisors, for an analysis of the reasons for the failure of the
recovery of 1958-1960. While acknowledging that many factors
contributed, he feels that three developments were decisive:
(l) A violent shift in Federal finances which saw in a period
of little more than a year a turnaround at an annual rate of
$24 billion in Federal finances from deficit to surplus.
(2) The exercise of fiscal restraint on general economic
expansion, accompanied by a tightening of credit conditions. (He
particularly notes that long-term interest rates advanced faster than
during a comparable stage of any business cycle during the past
100 years.)
(3) The protracted steel strike in the second half of 1959 which
led to a sharp build-up of inventory and a boom psychologically in the
spring and summer of 1959, hesitation in placing of orders for investment
goods, and finally a new economy in managing inventories.
It would be a tragic mistake if the nation failed to realize at
least three important facts of economic life in sustaining the duration
of this recovery and arresting any tendency to serious decline.
The first is the factor of timing. The way in which the nation
employs and enjoys the early phase of the recovery has a great deal to
do with how long it will last and how quickly tendencies to recession
can be overcome when they recur.
It is in the early stages of an economic recovery that there is
sufficient lead time to forge the instruments and policies for both
government and private conduct so that they can be brought to bear
effectively upon the tendency to recession.
30i
It is too late to gear public and private action to avoid or cure
quickly the economic illness of recession if the nation waits for the
illness to take hold before looking to and providing methods of
prevention and cure.
The second fact of economic life in sustaining the duration of
this recovery has to do with the importance of coordinating both
governmental and private action. A fair analysis of our economic
system and its functioning since World War II would show that both
government and the private sector of the economy share the blame for
our failures to achieve our national economic goals through sustaining
our recoveries.
In a system such as ours, we cannot escape the necessity
and desirability of coordinating both government activities and
actions in the private sector of the economy if the nation is to
lengthen periods of economic climb and reduce the periods of decline
or stagnation.
Since the American people desire to achieve our material goals
within an atmosphere of personal opportunity and individual freedom,
it must be emphasized that the price of this freedom is a good
measure of self-discipline and wise economic conduct in the private
sector. As has been recently said, "Unless individuals and groups of
individuals in a free society voluntarily claim less than the law
allows and voluntarily do more than the law requires, then the protection
of all society will continuously demand more law, more government, and
less freedom. The alternative to voluntary self-restraint is the
imposition of restraint from mobilized public opinion leading to the
intervention of government."
The third fact of economic life in sustaining the duration of
this recovery and resisting any tendency to serious decline is the need
to recognize that no one of these economic goals can be wholly
unqualified, because each may have to be sought subject to constraints
imposed by other goals or at costs representing sacrifices, to some
degree, of other goals.
Does the experience of the last two recoveries and recessions,
plus a recognition of these economic facts of life, suggest the
optimistic possibility that Federal policies on expenditures, taxation,
debt management and credit may be mixed in the current recovery so as
to achieve our national economic goals? The choice and mix of
existing policy instruments and their effective coordination between
the Executive Departments, the Federal Reserve Board and the Congress
will be of great importance. Each policy instrument has its role,
but each has its limitation, so that excessive reliance must not be
placed on any one of them. Moreover, they must be used in response to
economic diagnoses which can be quite difficult in terms of the time
lag and the imperfect art of appraising current business conditions.
- 12 TOO
And, scanning the guidelines and policy instruments that Objective
students of our economic system believe desirable to stimulate
recovery, to guide recovery in full flight, and to deal with incipient
,or real recession, it would appear that there are serious gaps in the
ready availability of some of the policy instruments considered
Important.
Some experts hold that under certain conditions monetary, credit
and fiscal measures alone may not be sufficient to achieve our national
economic goals. For example, if resources in plant capital and labor
move too slowly as elements of demand shift, or if some private groups
in the economy abuse their market power to push prices or wages too
high or to maintain them at excessive levels, the result may be the
loss of reasonable price stability and demand at home and abroad.
Up to now, increased competition as a result of a vigorous
antitrust program and keeping the door open to import competition seem
to provide the most useful methods for reducing the impact of abuses
of market power. It is to be hoped that the President's LaborManagement Advisory Committee will chart some beginning steps, short
of price and wage controls, toward making private organizations which
possess "market power" more responsive to the public interest to the
end that this power will not be abused. It is to hoped that some
means may be developed whereby the benefits of increased volume and
productivity may more often be shared through reduced prices with the
user or consumer of the product or service.
Past experience also suggests that even within the ambit
of existing monetary, fiscal and credit tools there are gaps.
I shall not prejudge in any way whether additional tools should
be provided to those chiefly responsible for assuring a better
performance in the achievement of our national economic goals. Some
who have studied the situation most closely suggest the possibility of
additional procedures designed to reconcile reasonable price stability
with economic growth at levels close to our potential.
Some of the approaches most often suggested are:
1. Improvements in budgetary policy to reduce unnecessary
volatility of orders for durable goods by the Federal government.
2. The grant of discretionary authority to the President to
effect short-run economic stabilization on both the up and down side.
The most recent suggestion of this nature was the recommendation of
the Commission on Money and Credit that Congress grant to the President
limited conditional power to make temporary counter-cyclical adjustments
in the first bracket rate of personal income tax, to be limited to
5 percentage points upward or downward.
- 13 3. The provision of more adequate planning for worthwhile but
postponable public works projects under conditions that would permit
greater executive flexibility in timing and the utilization of
'expenditures on a countercyclical basis.
4. The strengthening of our "automatic stabilizers" — for
example, the revision of unemployment compensation to increase both
benefit levels and duration on a permanent basis similar to that
enacted temporarily to deal with the last two recessions.
5. Some examination of the destabilizing character of consumer
credit and inventory investment.
oOo
:>
4
9
As you can see from tho first table, our debt projections, plus the $3 billion allowance for flexibility,
will reach a high point of $298 billion during the winter
months.
A temporary limit of that amount should give us
sufficient elbow-room for maximum efficiency of operations
and yet not impair any useful function which may bo served
by the public debt limitation.
The intended function of the debt limit is but poorly
served, I think, when a specific limit fits so closely that
tho Treasury is forced to obtain additional funds--at higher
cost--through the market borrowings of Federal agencies not
subject to the statutory debt Itoit.
Indeed the Government
was forced to take such steps a few years ego when the debt
ceiling Imposed too tight a limit on Government fiscal opera*
tionc.
In addition the Treasury in Its own borrowings has at
times had to defer borrowings when it would have been advantageous
or to engage in piecemeal borrowings because of the limitations
of too little margin under the debt ceiling.
In conclusion, I believe that a temporary Increase In
the debt limit to $293 billion Is essential to the orderly
end economical management of the Government's finances, and
I earnestly recommend its prompt approval by this Committee.
first: table attached to wy statement. One important assumption i» fMf«__ag ti_w« pf^jeettose is tttst the
Itaaeeiitfy'a operating balance attibeffcderal Reserve Banks
ami frigate eeHnaiteial bank* would hold *zm&$ throughout
the period at |3,5.bllliin* That is mtmllf
^c^teg balance for en eg>eratlon m
a rathe* low
large m*& m subject
to 'stancy fluet^tAone in receipts and m§®t*4lm£m m is
the manages&ent of the Treasury* a eash fM*siti*m*
of $3*5 billion would cover only e little mm
A balance
half of em
iivorage mm^h^n budget i^endltorest *tiiafe is e isoeh ieger
ratio of cash holdings to e x ^ d t m r e a than is maintained
by the avaraga huelaMte* corporation*
In fact, as ebon** in the second attached table, the
operating b*Uo_$* has been more often above then belear
$3.3 billion daring the fiscal year now ending. It hes
avwagei closer to $5 billion then to $3*5 billion, end
this has provided a highly desirable end i^ortant degree
of flexibility In tit* efficient convict of d&y~fie«M§ay
Treasury operations*
It is because of this need f&t
flexibility in the mmmgmrnit of cash belaneee, end beeeuse
of the inescapable ^certainties of revenue and m$m$lt®x*
estimates> that the $3 billion, margin has been added to
our calculation of tho appropriate debt celling*
7 306
anticipate in the coming fiscal year will be helpful in
putting our unused plant capacity and labor force to work.
Looking further ahead we can and do foresee a sharp
increase In revenues in fiscal year 1963. This follows die
same pattern as in previous recovery periods. Revenues
increased very substantially in the fiscal years 1956 and
1960. In fact, during fiscal year 1960 the increase over
the preceding year amounted to $9.8 billion. While naturally
we cannot make any firm prediction at this point, I believe
it is a reasonable expectation that we will be able to
present a budget for fiscal year 1963 in which receipts
exceed expenditures. For as the President stated In his
message on budget and fiscal policy of March 24, 1961:
Federal revenues and expenditures . . .
should, apart from any threat to national
security, be in balance over the years of
the business cycle--running a deficit in
years of recession when revenues decline
and the economy needs the stimulus of additional expenditures, and running a surplus in years of prosperity, thus curbing
inflation, reducing the public debt, and
freeing funds for private investment.
This statement by President Kennedy clearly outlines our budgetary
policy, a policy from which we have never waifvered.
Our projections of the public debt at semi-monthly
intervals during the fiscal year 1962 are shown in the
3QT
6
extended unemployment compensation, aid to education, agricultural programs, and space exploration.
The spending for
unemployment compensation la under a program very similar to
what was done in 1958. The csfclmatfai silrHlimn fur spiEnHa^oi^^
agricultural programs 4_a___pM-t represents the use of more realist!*
assumptions In preparing our spending estimates.
In the areas
of defense spending and space exploration, the force of external
events has called for additional programs that would and should
have been undertaken, in some form, whatever Administration was
in office.
In short, In qy view the budget changes since January
simply do not add up to the picture of unrestrained spending
that some have sought to draw.
Moreover, the «***&*&* deficit now anticipated for fiscal
year 1962 will not have an inflationary impact on our economy.
For while we do expect the economy throughout this period to
be recovering sturdily, the period as a whole will not be one
of full prosperity.
For today there is substantial unused
capacity in every part of our industrial structure, and most
seriously in our labor force.
Rather than creating the
inflationary pressures that are inevitably associated with
deficits in times of full employment, the deficit we
5
308
important in our over-all revenue structure.
But the corporats
tax revenues which will be available to us in fiscal 1962 will
be based on corporate profits during the present calendar year
which includes the lowest point of the recession*
In effect,
while the economy is recovering, our corporate Income tax
revenues will still be at recession levels.
The same applies,
to a somewhat lesser extent, to individual Income tax collections
above the standard withholding deductions, because these
collections are largely dependent on incomes realized during
calendar year 1961. Therefore, the coming fiscal year will be
one of continued recession revenues as far as the Federal
Government is concerned*
On the spending side, the latest estimates indicate that
the January budget underestimated expenditures for going programs
by about $ ^°Q ^'',D/>'
In addition, Preeident Kennedy h a s » p f
certain programs which he considers vital in terms of fulfilling
needs for national defense, promoting a healthy and vigorously
growing economy at home, and meeting the challenge of space
exploration.
Total budgetary expenditures under these new pro-
posals in fiscal year 1962 are expected to amount to $ ^
U>10^
The main Increases in spending that we expect for 1962, compared
with those in the January budget message, are for defense,
3,
4
highway-building program on a fully self-sustaining basis,
to eliminate the postal deficit by raising postal rates, and
to maintain various tax rates otherwise scheduled for reduction
or termination.
Since the preparation of these estimates the
Congress has acted favorably on the President's request for
continuation of existing tax rates.
In addition, the Congress
has completed action on the highway financing fill *hst avoids
any diversion of general revenues during fiscal 1962. However,
there has as yet been no
action on postal rate increases which
were recommended in the amount of $741 million.
If the Congress
fails to act on this legislation the expected fiscal 1962 deficit
would be increased to $4.4 billion, and the Treasury's margin
of flexibility would be reduced to $2 1/4 billion.
I might add that the currently projected budget deficit
of $3.7 billion for the fiscal year 1962 compares with
deficits of $4,2 billion and $12.4 billion in the fiscal years
following the two previous business recessions (the fiscal
years 1955 and 1959).
It may seem incongruous that with a
vigorous recovery already under way, we nonetheless expect
a deficit next year.
The reason for this deficit is simple.
Corporate income tax revenues, as you know, are highly
310
3
is any year. There is no way by which the debt ceiling can
be effective in lisslting Congressional autborisatioes to spaed,
**
because there is no direct end im_aediate connection batsmen
_-.
Congressional authorisations and their effects on the public
debt vahich will be felt montlis or even years later, when the
spending takes place.
In arriving at the projected need for a temporary debt
ceiling of $298 billion, tike latest budget estimates have been
4
-
:
"
'v
taken into account, including full allowance for ell of the
new or expanded programs reconsaended by the President In his
message of May 25 on Urgent Rational Heeds/* Budget outlays
for fiscal 1962 are now estimated at $85.1 billion. The
increase of $000 oil lion from the $84-3 billion figure reported SM lata March largely represents additional fuads for
X
space exploration, defense and oilitary assistance, expanded
lending to small business, and prograoc to allaviata .true.oral
'•s«f.
uneaployaant.
Budget revenues ax* still estimated at $81.4
billion, the sane as reported in March, indicating a dafi.it
of $3.7 billion. Those spending and revenue projections have
been eased on the assumption that the Congress* would act
favorably oti the President's recooraendations to pat tfea
31 -•
$© provide this mr&n, I believe that an allowance of $1 billioaa«the
w e aUowaaee that has been laade la previous years —should he
MMM€
to the projected higji point of %%95 billioa In the public debt during
fiscal year 1 9 & . Ihis clearly indicates the need for a temporary debt
c^Hing of $898 M M f c n in the ferfehcoelng fiscal year*
As you knov, setting the t e s ^ m r y debt liaait at $9198 billion Is
by no means a "license" to spend freely out of borrowings n$ to that
amount. Federal GaqwfoSitwea are determined en the basis of Coagraiisioaal
authorisations and app-^priafcioaa, and S an vhcaahaartadly in support of
observing strict discipline la weiring the cierits of the aaay caapetlng
dfflaanda for additional expenditures. If the Congress vished to set liinits
on its e m «*tm>
i^a»
is • « _ « * * * • » « « * « « , It e « _ d d b _o iiteetiy
jHw^i^w"f^PKj^fc«*B5ft mfm ^mw^tmmm^^mmmmmi^^^
~(P^P*
mm/mm^m
m9*?m^^9?mmEmmmmmm9s^^m ewiniiPaawiF4s ••• ^ww - f^ff^e*^* - ^NWBP
312
Statement of the Honorable I)cmg2aj» Milan*
Secretary of the Treasury, before the
.v
Senate finance CcsaaitteeV fuesday, 2vm t?, 1 9 & , 10.00 a.a_
Mr* ffi*«4r«a«*i and igesabers of the Ccesaittsc, I a® hem today in support
of a new temporary limit of #898 billion oa the pubUc debt for the fiscal
year 1962.
U&der the existing leglalatlen. the cmrae&t taafwary ceiling of #293
billion reverts at the end ef this month to #885 billions
0a that date,
June 30, 1961,tfxichis a w just a fev days anay* ne estiaaate that the pufelie
debt subtest to lindtatlon nill be aboufc $889 M l l l m .
®Jla Is esajected to
include a cart* balsnee ef app?qedJ^tely #5*1/2 M l l t o i i&lch is about the
usual balance to? the end of the fiscal yesa%
Durir^s the next twelve s*mths~~the fiscal year 1962-~w expect rsvasuas
to fall short ef expenditures. On the sasuapfcloa that ve are able to doss
out fiscal year 19^2 »Ath a sdnlisuja writing cash balance as lev as #3*5
biUion, we est&iaate a total public debt subject to limitation of about
#@90 M l H o u cm June 30* 1962. Because of normal seasonal factors, hewsver,
the end^f~*Tune debt position is fgmersOly w l l b e l w the h l # point reach**
taring the fiscal year. Our current projections (as shorn in Stable I)
indicate a net increase of about $6 billion in the public debt for the rest
Of the calendar year to a hi#* of about #895 Mllion In Beceabsre
In addition, it is pnstoit to set the debt liadt at a level that
taates a reasonable provision for errors in the estliaates as w l l as othsr
unforeseen contingencies, and permits sufficient flexibility in debt
isa&eganeat so that the efficiency of day-to-day operations is not lispairsdt
TREASURY DEPARTMENT
Y/ashington
June 27, 1961
Upon Delivery
STATEMENT OF THE HONORABLE DOUGLAS DILLON
SECRETARY OF THE TREASURY
BEFORE THE
SENATE FINANCE COMMITTEE
ON THE PUBLIC DEBT LIMIT
TUESDAY, JUNE 27, 1961, 10:00 A.M., EDT
')
313
°
w 14
TREASURY DEPARTMENT
Washington
June 27, 196l
For Release: Upon Delivery
STATEMENT OP THE HONORABLE DOUGLAS DILLON
SECRETARY OP THE TREASURY
BEFORE THE
SENATE FINANCE COMMITTEE
ON THE PUBLIC DEBT LIMIT
TUESDAY, JUNE 27, 196l, 10:00 A.M., EDT
Mr. Chairman and members of the Committee, I am here today in
support of a new temporary limit of #298 billion on the public debt
for the fiscal year 1962.
Under the existing legislation, the current temporary ceiling of
$293 billion reverts at the end of this month to #285 billion. On
that date, June 30, 196l, which is now just a few days away, we estimate
that the public debt subject to limitation will be about $289 billion.
This is expected to include a cash balance of approximately $5-1/2
billion, which is about the usual balance for the end of the fiscal
year.
During the next twelve months — the fiscal year 1962 — we
expect revenues to fall short of expenditures. On the assumption that
we are able to close out fiscal year 1962 with a minimum working cash
balance as low as $3.5 billion, we estimate a total public debt
subject to limitation of about $290 billion on June 30, 1962. Because
of normal seasonal factors, however, the end-of-June debt position is
generally well below the high point reached during the fiscal year.
Our current projections (as shown in Table I) indicate a net increase
of about $6 billion in the public debt for the rest of the calendar
year to a high of about $295 billion in December.
In addition, it is prudent to set the debt limit at a level that
makes a reasonable provision for errors in the estimates as well as
other unforeseen contingencies, and permits sufficient flexibility in
debt management so that the efficiency of day-to-day operations is
not impaired. To provide this margin, I believe that an allowance of
$3 billion — the same allowance that has been made in previous
years — should be added to the projected high point of $295 billion
in the public debt during fiscal year 1962. This clearly indicates
the need for a temporary debt ceiling of $298 billion in the
forthcoming fiscal year.
As you know, setting the temporary debt limit at $298 billion is
by no means a "license" to spend freely out of borrowings up to that
D-153
amount. Federal expenditures are determined on the basis of
315
- 2 -
Congressional authorizations and appropriations, and I am wholehearted
in support of observing strict discipline in weighing the merits of
the many competing demands for additional expenditures. If the
'Congress wished to set limits on its own actions in authorizing
expenditures, it could do so directly by placing a ceiling on new spending authorizations in any year. There is no way by which the debt
ceiling can be effective in limiting Congressional authorizations to
spend, because there is no direct and immediate connection between
Congressional authorizations and their effects on the public debt
which will be felt months or even years later, when the spending takes
place.
In arriving at the projected need for a temporary debt ceiling of
$298 billion, the latest budget estimates have been taken into account,
including full allowance for all of the new or expanded programs
recommended by the President in his message of May 25 on "Urgent
National Needs." Budget outlays for fiscal 1962 are now estimated at
$85.1 billion. The increase of $800 million from the $84.3 billion
figure reported in late March largely represents additional funds for
space exploration, defense and military assistance, expanded lending
to small business, and programs to alleviate structural unemployment.
Budget revenues are still estimated at $8l_4 billion, the same as
reported in March, indicating a deficit of $3.7 billion. These
spending and revenue projections have been based on the assumption that
the Congress would act favorably on the President's recommendations
to put the highway-building program on a fully self-sustaining basis,
to eliminate the postal deficit by raising postal rates, and to
maintain various tax rates otherwise scheduled for reduction or
termination. Since the preparation of these estimates the Congress
has acted favorably on the President's request for continuation of
existing tax rates. In addition, the Congress has completed action on
the highway financing bill which avoids any diversion of general
revenues during fiscal 1962. However, there has as yet been no action
on postal rate increases which were recommended in the amount of
$74l million. If the Congress fails to act on this legislation the
expected fiscal 1962 deficit would be increased to $4.4 billion, and
the Treasury's margin of flexibility would be reduced to $2-1/4
billion.
I might add that the currently projected budget deficit of
»>3.7 billion for the fiscal year 1962 compares with deficits of
$4.2 billion and $12.4 billion in the fiscal years following the two
previous business recessions (the fiscal years 1955 and 1959). It
may seem incongruous that with a vigorous recovery already under way,
we nonetheless expect a deficit next year. The reason for this
deficit is simple. Corporate income tax revenues, as you know, are
highly important in our over-all revenue structure. But the
corporate tax revenues which will be available to us in fiscal 19&2
withholding
extent,
which
will
the
still
economy
be
be
includes
to
based
atindividual
deductions,
recession
ison
the
recovering,
corporate
lowest
income
levels.
because
point
profits
our
tax
The
corporate
of
these
collections
during
the
same
collections
recession.
applies,
income
the above
present
tax
to
are
In
the
revenues
a calendar
effect,
somewhat
largely
standard
will
while
dependent
year
lesser
316
- 3 on incomes realized during calendar year 1961. Therefore, the coming
fiscal year will be one of continued recession revenues as far as the
Federal Government is concerned.
On the spending side, the latest estimates indicate that the
January budget underestimated expenditures for going programs by about
$400 million. In addition, President Kennedy has proposed certain
programs which he considers vital in terms of fulfilling needs for
national defense, promoting a healthy and vigorously growing economy
at home, and meeting the challenge of space exploration. Total
budgetary expenditures for these new proposals in fiscal year 1962
are expected to amount to $3.8 billion. The main increases in spending
that we expect for 1962, compared with those in the January budget
message, are for defense, extended unemployment compensation, aid to
education, agricultural programs, and space exploration. The spending
for unemployment compensation is under a program very similar to what
was done in 1958. A substantial portion of the additional spending
on agricultural programs represents the use of more realistic
assumptions in preparing our spending estimates. In the areas of
defense spending and space exploration, the force of external events
has called for additional programs that would and should have been
undertaken, in some form, whatever Administration was in office. In
short, in my view the budget changes since January simply do not add
up to the picture of unrestrained spending that some have sought to
draw.
Moreover, the deficit now anticipated for fiscal year 1962 will
not have an inflationary impact on our economy. For while we do
expect the economy throughout this period to be recovering sturdily,
the period as a whole will not be one of full prosperity. For today
there is substantial unused capacity in every part of our industrial
structure, and most seriously in our labor force. Rather than'
creating the inflationary pressures that are inevitably associated
with deficits in times of full employment, the deficit we anticipate
in the coming fiscal year will be helpful in putting our unused plant
capacity and labor force to work.
Looking further ahead we can and do foresee a sharp increase in
revenues in fiscal year 1963. This follows the same pattern as in
previous recovery periods. Revenues increased very substantially in
the fiscal years 1956 and i960. In fact, during fiscal year i960
the increase over the preceding year amounted to $9.8 billion. While
naturally we cannot make any firm prediction at this point, I believe
it is a reasonable expectation that we will be able to present a
budget for fiscal year IQ63 in which receipts exceed expenditures.
For as the President stated in his message on budget and fiscal policy
of March 24, 1961:
"Federal revenues and expenditures . . .
should, apart from any threat to national
security, be in balance over the years of
public
prosperity,
years
expenditures,
the business
economy
of
debt,
recession
thus
needs
cycle—running
and
and curbing
freeing
running
the
whenstimulus
revenues
funds
inflation,
a a
surplus
deficit
for
ofdecline
additional
private
in
reducing
in
years
and
investment.
of
the
-4-
317
This statement by President Kennedy clearly outlines our budgetary
policy, a policy from which we have never wavered.
Our projections of the public debt at semi-monthly intervals
during the fiscal year 1962 are shown in the first table attached to
my statement. One important assumption in preparing these projections
is that the Treasury's operating balance at the Federal Reserve Banks
and private commercial banks would hold steady throughout the period
at $3.5 billion. That is actually a rather low working balance for
an operation as large and as subject to sharp fluctuations in receipts
and expenditures as is the management of the Treasury's cash position.
A balance of $3.5 billion would cover only a little over half of an
average month's budget expenditures, which is a much lower ratio of
cash holdings to expenditures than is maintained by the average
business corporation.
In fact, as shown in the second attached table, the operating
balance has been more often above than below $3.5 billion during the
fiscal year now ending. It has averaged closer to $5 billion than
to $3.5 billion, and this has provided a highly desirable and
important degree of flexibility in the efficient conduct of day-to-day
Treasury operations. It is because of this need for flexibility in
the management of cash balances, and because of the inescapable
uncertainties of revenue and expenditure estimates, that the $3 billion
margin has been added to our calculation of the appropriate debt
ceiling.
As you can see from the first table, our debt projections, plus
the $3 billion allowance for flexibility, will reach a high point of
$298 billion during the winter months. A temporary limit of that
amount should give us sufficient elbow-room for maximum efficiency
of operations and yet not impair any useful function which may be
served by the public debt limitation.
The intended function of the debt limit is but poorly served,
I think, when a specific limit fits so closely that the Treasury is
forced to obtain additional funds — at higher cost — through the
market borrowings of Federal agencies not subject to the statutory
debt limit. Indeed the Government was forced to take such steps a
few years ago when the debt ceiling imposed too tight a limit on
Government fiscal operations. In addition the Treasury in its own
borrowings has at times had to defer borrowings when it would have
been advantageous, or to engage in piecemeal borrowings because of
the limitations of too little margin under the debt ceiling.
In conclusion, I believe that a temporary increase in the debt
limit to $298 billion is essential to the orderly and economical
management of the Government's finances, and I earnestly recommend
its prompt approval by this Committee.
Table I
TOffiCAST OF P J 3 H C D55T OUTSE\LIDIIM_, FISCAL YEAR
"1962, __AS__D ON CO-ISIAN? 0?_?A_IffG C^SH IVJLANCS
OF 33o5 BIU-ION (excluding free cold)
^ U
^" ^
(Based on assumed Budget deficit of $3 ©7 billion)*
(in billions)
Operating Balance
:
: Allo\rance to pro~
:Federal Reserve Banks: Public Debt: vide flexibility :: Total public
limitation
:
: and Depositaries : subject to : in financing and ;debt
:(excluding free gold): limitation : for contingencies:: required *-*
$3-0
$289©^
3©0
3-0
3©o
3-0
291©6
292.6
292©9
290 ©1
29lo9
288o 2
290 ©7
292«2
3*0
3*0
3o0
.3.0
29^.9
291©2
293-7
295-2
3-5
3.5
3-5
3o5
293 oO
292©8
29^.9
292©if
3o0
3o0
3o0
3-0
296.0
3o5
3o5
3-5
3-5
29^-9.
29^©0
29^©1 .
293*2
3©0
3-0
3©0
3-0
297-9
297-0
.297-1
296.2
3-5
3.5
3-5
3o5
29*i-©7
291©2
293©^
292*7
3©0
3©0
3-0
3o0
297-7
29^*2
296«^
295-7
3-5
3-5
3.5
3i5
291©9
292©3
29306
290 ©1
3*0
3-0
3o0
3o0
291J-©9
295-3
296.6
293-1
une 30; 19^1 >•*•-
$3-5
uly 15; 1961 — -
3o5
3o5
3.5
3.5
28806
289a6
289.9
290 ©1
• 3o5
3o5
3o5
3.5
ojgust 3 1
Jeptember 15 - —
Jeptember $0
)ctober 31 - — ~
»
Tanuary 15, 1962
Tanuary 31
February 15
Lpril 15
Lpril 30
__v
'*V
U
kv
J
1 5 --- ----i? ---------31
J—
~ — ---------
$286^***
295o8
297-9
295_^
* Incorporates estimated Budget revenues of $&L.k billion and estimated
expenditures of $85©1 billion.
** From July 1, i960, to June 30, 196l, the statutory debt limit is $293
billion© Thereafter it will revert to $285 billion©
*** Because the actual operating balance on June 30, I96I is expected to be considerably larger than $3-5 billion, the public debt subject to limitation will
be about $289 billion on that date.
11 Q
Tabic II
ACTUAL CASH BALANCE AZTD PUBLIC D7BT OUTSTANDING
JULY I960 - MAY 19bl
(In billions)
•
•
m
_
',
Operating Balance
Federal Reserve Banks
!
and Depositaries
! (excluding free gold)
«
*
Public Debt .
subject to .
limitation .
July 15, I960
July 31
$7A
6.2
$288.6
288.1
August 15
August 31
k.Q
5.1
287.5
288.1;
September 15
September 30
3.0
7-5
288.3
288.2
October 15 October 31 •
3.6
5-9
287.2
290.2
November 15
November 30
k.l
5.0
289.9
290.2
December 15
December 31
2.7
5-7
290.0
290.0
January 15, 196l
January 31 - — —
3A
3.8
289.9
289.8
February 15
February 28
3-7
5.3
290.5
290.3
March 15
March 31
2.8
k.O
290.0
287.3
April 15
April 30
1-7
2.9
288. k
287.8
May 15
May 31
U.o
288.8
290.0
4.4
NOTE: From July 1, i960 to June 30, 196l, the statutory debt limit is
$293 billion. Thereafter it vill revert to $285 billion.
STATEMENT OP CONGRESSMAN CHARLES E. BENNETT, OP FLORIDA
We in America have the most wonderful country on earth. The
programs of our country include things of benefit to our generation
and those to come, not only here, but throughout the world. They
are expensive. Our large national debt imperils our national
strength and ability to remain secure and to make progress. I
can think of no more appropriate way for Americans to show the
love they have for their country and the desire they have for its
security than to contribute something toward paying off the
national debt.
I am glad to have this opportunity.
COPY
3
THE SECRETARY OF THE TREASURY
WASHINGTON
June 29, 1961
Dear Mr. Bennett:
I am delighted to receive your personal check for
$1,000 as the first contribution under H. R. 311, a
bill introduced by you to authorize the United States
Government to accept gifts to be used to reduce the
public debt.
As provided by this legislation — for which you
are so largely responsible — your generous gift to the
Treasury of the United States will be utilized ftfor the
payment on maturity or the redemption or purchase
before maturity of any obligation of the United States
included in the public debt of the United States."
As the President's chief financial advisor, the
burden of preserving this Nation's proud tradition of
fiscal responsibility falls with special weight upon
me. I am, therefore, deeply grateful for the efforts
made by you — both as an elected representative of
our people and as an individual American — that will
help to preserve the fiscal integrity of our country.
As the first contributor under this law, as well as
its sponsor, you have certainly pointed the way.
Sincerely yours,
/s/
Honorable Charles E. Bennett
House x>f Representatives
Washington 25, D # C #
Douglas Dillon
Douglas Dillon
2?2
30, 19*1
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wmm
it
fe/ laelwlM life? ^ ? ? f201,000
900 M M M | N t t t t M tratex* accepted at tr.e iititgt
KMMft fi&tir
,
a
ldo__8*_3k
m $ &mm§^mrmm
3^05,008
$,064,000
t,*37,0O©
priM ©f 9f*W
*.
c/ I M I W I M fltjiftfOOO w M M M t i t i i * tntera *mmpU& attt»«iiitg# friM *f ^•TWJ
":: aTOttp^aimm mt Hit M M l«t«h and f«artotM M a^ouat Ijrrmt**© t M r«t»r« ij
#
ttaM M i l * H M M ^iwiJ« yirtia #f t»Jft» f w th« ?i*dayfeili«faai 2©SJi<# '«P M
IDft-day bills. X M w w t m t M on Milt ar® quoUd in torn of baaak diiaeoiait wltt
« M fw^sira r*l*t«l to tn« fact lionit of th# bills pa|mbl« at Mtturity rathtr thafl
t M M M M U H lOTMted and th#ir lmt«b in setMl mmhmr of dmys n U M to a 360-day
JMT©
la MirtvMt© JML4* m e « r U f i M t M # note«? ami bond* m co^ut^l ia Uf«i
#f iatorMt OM tJ» wttat lawttad, aad mlat# tn« itMber of dayg rwiiai^l i» **
ittt^r^st p^yMut p#ri«d to tte a«t««l m t k f #f d«ys ^a th« _>«riod. wite M«l*a«»
/ if
^ mrm
Z-, Omm w «raip«M pwted 1» iflMlfidi
TREASURY DEPARTMENT
WASHINGTON, D.C.
June 3 0 , 1961
gREL-ASBAaMa NEWSPAPERS, Saturday, July 1, 196l>
RESULTS OF TREASURY'S WEEKLY BILL OFFERING
The Treasury Department announced last evening that the tenders for two series of
reasury bills, one series to b e a n additional issue of the bills dated April 6, 1961,
nd the other series to b e dated July 6, 1961, which were offered o n June 2 6 , were opened
t the Federal Reserve Banks on June 30© Tenders were invited for $1,100,000,000, or
fereabouts, of 91-day bills and for $500,000,000, or thereabouts, of 182-day bills© The
.tails of the two series are as follows:
\NGE OF ACCEPTED
3MFSTITIVE BIDS:
High
Lew
Average
91-day Treasury bills
maturing October 5. 1961
ApproXa Equiv.
Price
Annual Rate
99©1*29 a /
2.259%
99.1*07 ~
2.31*6$
99.1*17
2.305$ 1 /
n
182-day Treasury bills
maturing January h> 1962
Approx. Equiv©
Price
Annual Rate
98 • 761,.
2.1*1*52
98.733
2.506#
98.71*3
2al*86£ 1 /
•
•
•
i
1111 1--1
11
1 MI
' 1
1
a/ Excepting one -bander of $7 ©000
19 percent of the amount of 91-day bills bid for a t the low price was accepted
6i|. percent of the amount of 182-day bills bid for a t the low price was accepted
)TAL 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
26,i*2l*,000
1,371,872,000
20,lM*,000
17,365,000
5,351,000
Accepted
$
12,80l*,000
782,572,000
lil,li^,000
17,365,000
5,351,000
i5,l*ol*,ooo
i5,Uol*,ooo
Applied For
* 3,319,000
8Ui,175,000
10,567,000
9,551,000
l,70l*,000
1,1*1*1,000
57,378,000
3,31*6,000
• © y W - ^ a w
__ai©Min—_——_fa—X9mm__>_—a
Accepted
• 3,319,000
1*28,175,000
5,567,000
9,551,000
l,7Ql*,000
1,1*1*1,000
27,378,000
2,81*6,000
3,1*05,000
5,081*,000
2,1*37,000
9,11*2,000
$500,01*9,000 c/
19^,152,000
155,102,000
20,02^,000
16,021*, 000
13,826,000
13,826,000
l*,l*o5,ooo
18,262,000
17,212,000
5,285,000
7,365,000
7,365,000
2,1*37,000
52a0l8 5 0QQ
1*3*018.000 b / $922,750,000
9,11*2,000
#1,100,187,000
$1,762,207,000
Includes $11*9,1*77,000 noncompetitive tenders accepted at the average price of 99*1*17
Includes $30,592,000 noncompetitive tenders accepted at the average price of 98.71*3
On a coupon issue of the same length and for the same amount invested, the return on
these bills would provide yields of 2©35/S, for the 91-day bills, and 2.55$, for the
182-day bills. Interest rates on bills are quoted in terms of bank discount with
the return related to the face amount of the bills payable at maturity rather than
the amount invested and their length in actual number of days related to a 360-day
year, in contrast, yields on certificates, notes, and bonds are computed in terms
of interest on the amount invested, and relate the number of days remaining in an
interest payment period to the actual number of days in the period, with semiannual
compounding if more than one coupon period is involved.
•151*
- 3-
3?4
xg_&e%&
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 ovner
of Treasury bills (other than life insurance companies) issued hereunder need in-
clude 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.
325
face amount of Treasury bills applied for, unless the tenders are accompanied by
on 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 $1*00,000 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. Settlement for accepted tenders in
accordance with the bids must be made or completed at the Federal Reserve Bank on
July 17, 1961 , in cash or other JLmmediately available funds or in a like
p&5_
face amount of Treasury bills maturing
July 15, 1961
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
I_£MM_tXl
M__H3_X
TREASURY DEPARTlfflNT
Washington
IMMEDIATE RELEASE,
Wednesday, July 5, 1961
"INCREASES
TREASURY ^s^mB^i^mm&mz^
ONE -YEAR BILLS
The Treasury Department, by this public notice, invites tenders for
$ 2,000,000,000 , or thereabouts, of 565 -day Treasury bills, for cash and in
exchange for Treasury bills maturing
July 15, 1961
, in the amount of
^
$ 1,500,509,000 , to be issued on a discount basis under competitive and noncompetitive bidding as hereinafter provided.
July 15, 1961
9
The bills of this series will be dated
and will mature July 15, 1962 , when the face
p_f
amount will be payable without interest.
—
3^J
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 closDaylight Saving
ing hour, one-thirty o'clock p.m., Easter_V:HSt*Kxta3(fctime, Tuesday, July 11, 1961
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 dec(Notwithstanding the fact that these bills will rui
imals, 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 excepi
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-i-f
(for 365 days, the discount rate will be computed on a bank discount basis
(of 360 days, as is currently the practice on all issues of Treasury billsO,
/^y
TREASURY DEPARTMENT
327 r/S^\\
WASHINGTON, D.C. ^^j^
July 5, 1961
FOR IMMEDIATE RELEASE
TREASURY INCREASES ONE-YEAR BILLS
The Treasury Department, by this public notice, invites tenders for
$2,000,000,000, or thereabouts, of 365-day Treasury bills, for cash and
in exchange for Treasury bills maturing July 15, 196l, in the amount of
$1,500,509,000, to be issued on a discount basis under competitive and
noncompetitive bidding as hereinafter provided. The bills of this
series will be dated July 15, 196l, and will mature July 15, 1962,
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 Daylight Saving
time, Tuesday, July 11, 1961. 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. (Notwithstanding
the fact that these bills will run for 3^5 days, the discount rate will
be computed on a bank discount basis of 3§0 days, as is currently the
practice on all issues of Treasury bills.) It is urged that tenders be
made *pn 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 $400,00Dor less
D-155stated price from any one bidder will be accepted in full at the
without
average price (in three decimals) of accepted competitive bids.
- 2 Settlement for accepted tenders in accordance with the bids must be ma<
or completed at the Federal Reserve Bank on July 17, 196l, in cash or
other immediately available funds or in a like face amount of Treasury
bills maturing July 15, 1961. Cash and exchange tenders will receive
equal treatment. Cash adjustments will be made for differences betweei
the par value of maturing bills accepted in exchange and the issue pri<
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. 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 Feders
Reserve Bank or Branch.
0O0
-3-
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 interes
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 ex
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, whethe
on original issue or on subsequent purchase, and the amount actually received eithe
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~
329
Mm^^mmimx
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 incorpo-
rated banks and trust companies and from responsible and recognized dealers in inves
ment 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 rigjit 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 April 13, 1961 , ( 92 days remaining until maturity date on
October 13, 1961 ) and noncompetitive tenders for $100»000 or less for the
—
^
$&)
1 8 2 - d a y 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 respec
tive issues. Settlement for accepted tenders in accordance with the bids must be
made or completed at the Federal Reserve Bank on July 13, 196l , in cash or
other immediately available funds or in a like face amount of Treasury bills maturing July 13, 196l . 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 anv *v<wMr__inn. Q^ such, and loss
33U
xmEKxxxx
TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE
HlM>5IXT)t:XKCTl^^^aXW^^mLMI_t
TREASURY'S WEEKLY BILL OFFERING
July fj, 196l
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 July 13, 1961 , in the amount
of $ 1,600,927,000 , as follows:
92 -day bills (to maturity date) to be issued July 13, 1961 ,
in the amount of $ 1,100,000,000 , or thereabouts, represent-
—m
ing an additional amount of bills dated April 13, 196l
,
and to mature October 13, 196l , originally issued in the
, ~
^ ( i n c l u d i n g $100,104,000 issued June 14, 1961)
amount of $ 600,479,000 / , the additional and original bills
to be freely interchangeable.
182 -day bills, for $ $00,000,000 , or thereabouts, to be dated
_£____»
July 13, 1961
, and to mature January 11, 1962
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 Fed.eral Reserve Banks and Branches up to the closing
Daylight Saving
,
hour, one-thirty o clock p.m., _^stern/__t___a__ex_d time, Monday, July 1 0 , 1961
yi__y
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
•
331
TREASURY DEPARTMENT
BfWH'n^1 VUIMJ.«aU^-^*J^Mi<*^^^
WASHINGTON, D.C.
July 5, 1961
FOR IMMEDIATE RELEASE
TREASURY'S WEEKLY BILL OFFERING
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 July 13, 19^1,
in the amount of
$1,600,927,000, as follows:
92-day bills (to maturity date) to be Issued July 13, 1961, in the
amount of $1,100,000,000, or thereabouts, representing an additional
amount of bills dated April 13, 196l, and to mature October 13, 19^1,
originally issued in the amount of $600,479,000 (including $100,104,000
issued June 14, 1961), the additional and original bills to be freely
interchangeable.
182-day bills, for $500,000,000, or thereabouts, to be dated
July 13, 1961
and to mature January 11, 19&2.
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 Daylight
Saving time, Monday, July 10, 1961.
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
D-156company.
or trust
- 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 Departmment 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
April 13, 1961.
(92- days remaining until maturity date on
October 13, 1951) and noncompetitive tenders for $100,000
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 July 13, 196l,
in cash or other immediately available funds or in a like face
amount of Treasury bills maturing July 13, 1961.
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.
0O0
Treasury Department Circular No. 4l8, Revised, and this notice,
prescribe the terms of the Treasury bills and govern the conditions
of theirReserve
Issue. Bank
Copies
of the circular may be obtained from any
Federal
or Branch.
- Ik -
QT5
"^t-
In a recent statement before the Joint Economic Committee, the
Council of Economic Advisers stated: "The twin keys to an accelerated
growth of productivity and output are two forms of investment: investment in education and investment in the expansion and
modernization of the Nation1 s stock of business plant and equipment."
We have offered the Congress both keys. j#*he other key is embodied in
A
the program of Aid to Education. I am confident that the Congress will
use both keys to unlock the growth potential of our country and enable
our private enterprise system to meet the challenge of the Sixties.
0O0O0O0O0O0O0
- 13 Since 1955-57, the Nation^ increase in its stock of plant and
equipment has slowed down and the age of this same plant and equipment
has increased. Surely these developments must be reversed if we are to
grow at a satisfactory rate and if we are to remain competitive with the
newly rebuilt plants of Western Europe and Japan. We are attempting to
reverse this trend with our tax credit proposal encouraging u American
industry to modernize.
Improving our plant and equipment is just one side of the coin. The
best and the most modern plant is of little use unless we have the human
resources to run it. Several studies have shown that since 1929, about
25 percent of our real growth rate in this country can be traced directly
to the increased educational level of our labor force. To manage and to
operate the industry of the Sixties, we unquestionably need a highly
trained force of management, labor, and professional skills, ^iir
- 12 -
attempting to do in our proposal to give back to business $1.7 billion
of our national revenue to encourage the modernization of this Nationfs
plant and equipment.
We believe that one of the principal reasons for the slowdown in
the rate of growth is a reduction in the rate at which the stock of
capital has been renewed and modernized. A few figures will illustrate
what has been happening.
In 194& 12.5 !____
percent of ^^flfrtjnnftl -ffirnwr was devoted to
investment in fixed capital (plant and equipment). This ratio has
declined more or less steadily to 9*6 percent of our gross national
product (in i960. By isolating the equipment figures, the decline is
even more obvious $$ falling from 8*3 percent In 1948 to 5 .£ percent in
i960.
When we look at the average age of equipment in this country, we
find that it stood at 10.6 years in 1945, dropped to 8.5 years in the
1952-1955 period, but has crept back up to 9.0 years today.
- 11 -
w
°v"/
liberalized old-age benefit legislation and a more comprehensive and
effective system of ijnemployment Compensation. We have attacked the
problem of structural unemployment in the Depressed Areas legislation
and the Congress is now considering legislation which we have proposed
to help re-train and re-locate the "disemployed" worker.
Aside from the last two programs , there is nothing new or
dramatic about any of these proposals. They are simply attempts to
bring existing legislation up to date • In my opinion, our real chores
lie ahead in the remaining 60 days of ±_a_ this session of the Congress.
Two programs which are fundamental to an attack on our problem of growth
are still being considered. The first is the tax bill aimed at stimulating
investment in new plant and equipment and the second is the Aid—to-Education measure.
Noone is foolish enough to believe that the Federal Government can
cure our economic ills. We cannot. But we can provide a marginal stimulus
that will often make the crucial difference. This is exactly what we are
33?
- 10 -
budgeted for expenditures. An $11 billion Federal surplus in fiscal
year 1962 is the potential of our economy. Actual results, according to
our latest figures show a probable deficit of $3.7 to $4.4 billion.
We will not achieve our full potential this year or next, but in
this first six months of a new Administration we are laying the groundwork.
We are trying to take advantage of the priceless time element of the
first phases of recovery to initiate actions that can help the economy
shift to a faster rate of growth which will reduce the tendency toward
recession and pull down a totally unacceptable rate of unemployment.
To date we have made certain headway. We have passed a Highway
Financing Act that will enable the States to move ahead with their
building programs at a rate above $3 billion a year for this decade.
We have completed action on a Housing Bill that is aimed at a segment of
the American people that have not had the resources to enter the housing
market — specifically low income families and the elderly. We have passed
337
- 9 5.1 percent at its peak in May i960.
The trend is ominous and must be reversed if our free enterprise
society is to meet the economic challenge of the Sixties. It is
apparent, as the President has often noted, that our basic challenge
is to provide 13,500,000 new jobs over the span of this decade. The
ultimate test of any society is to provide the opportunity to earn a
living. I cannot believe that our society is an exception. Obviously,
we will not measure up to this challenge by sitting back watching recessions come at more frequent intervals and leaving behind them an ever
larger group of unemployed.
The response to this challenge just as obviously lies in our national
growth rate. If we in this Nation closed the gap between what we can do
and what we are doing, our unemployment levels would drop to 4 percent
or below, corporate profits could jump from $44 billion in i960 to
about $58 billion in I96I, and Federal Government revenues would rise to
about $92 billion in fiscal 1962 — or $11 billion more than currently
- e-
338
With sufficient liquidity, no bank failures, adequate plant and
labor supply, a diminishing inflationary threat, and a national debt
that has shrunk from 117 percent of our national income in 1946 to
58 percent in i960, I believe that the most crucial problem remaining
to face us this year and next is the problem of sustaining this present
recovery and checking our postwar tendency toward recession.
The history of the last three recessions makes for sober reading
and reflection. This history draws a picture of a shortening period of
business expansion leaving an ever larger residue of unemployed at the
peak of the cycle. The 1953-54 downturn was preceded by a period of
expansion that ran for 45 months and at its peak left only 2.7 percent of
the working force unemployed. The 1957-58 downturn was preceded by an
expansion that ran for 35 months but that left 4.2 percent of our labor
force unemployed at its peak in July 1957. The i960 downturn followed
an expansion that ran only 25 months and left an unemployment figure of
- 7can pull back our troops in Germany, Taiwan, and
Korea,, and leave these areas open to communist pressures. We can give
up our attempts to help the under-developed nations of the world struggle
up to a level of economic decency. We can forbid all investment abroad;
and we could even give up our passion for foreign travel. If we did all
these things we could then raise our tariffs high enough to stop imports,
not worry about exports, and then let the forces behind "cost-push"
inflation raise prices higher and higher behind a protective tariff wall.
I know of no serious national leader who suggests such a course. For
this reason, I believe that the forces of ±i_fckx international competition
will have an increasingly restraining influence on price levels of most
raw materials and manufactured goods in this country. Unfortunately,
this international competition has little or no effect on services and
for that reason I would expect these prices to rise fastest in the next
decade•
- 6American industrial capacity and labor supply seems more than adequate to
meet any foreseeable demand. Nor do I expect that the Federal Reserve
4^4tMmULy
System will go t/SMWB^ and pump vast new amounts of credit into our
financial channels.
Secondly, I see a greatly diminished chance for the "cost-push" type
of inflation. Our attempts to rebuild Western Europe and Japan to assist
us in our fight »g-tf;i_gfc against, communism have proved amazingly successful. We no longer have a clear position of dominance in world trade. We
no longer set the world price for most basic raw materials. Instead, we
are competing fiercely with the industrial nations that have been rebuilt
with our aid. This competition is a most effective lid on industries
using their power in the market to raise prices or for labor unions
trying to raise wages past the point of their increase in productivity.
I have never heard it mentioned in Congressional debates, but foreign aid,
especially to Europe and Japan, has developed as a powerful deterrent to
inflation and a warm ally of the American consumer.
341
- 5There are some indications that the problems of inflation may be
diminishing. From 1946 to 1950 the country was threatened with the
old classical type of inflation in which too much money was chasing too
few goods and services. We came out of the war with enormous liquid
resources and a strong pent-up demand for cars, houses, and capital
goods. In this situation we could have kept the lid on prices by retaining controls and keeping up taxes until the economy had an opportunity to
shift over to peacetime production. We chose to drop controls and cut
taxes, and it was the amazing response of American labor and industry in
meeting demand that kept this first round of inflation within reason*
In the mid-Fifties we faced another type of inflation — a newer
variety — now referred to as "cost-push" in which industry used its
market power to raise prices and profits and labor moved right in behind
with sizable wage increases.
I see little or no chance for a repetition of the classical
(too much money — too few goods) type of inflation barring a war.
IAD
- k -
__• Hf __
The postwar years presented a new set of economic challenges and
the Nation faced up to them with imagination and vigor.
In many areas
we were notably successful. Our conversion from a wartime to a peacetime economy was accomplished with relative smoothness and rapidity.
The Federal Reserve System demonstrated that it could keep the economy
supplied with "enough but not too much credit". (There is great
controversy in this area but agreement that the System1s performance
had vastly improved.) Bank failures were unheard of. The countercyclical
effects of relatively large Federal budgets, unemployment ___-_&
compensa-
tion, and old age benefits choked off any downturns that could be classed
as depressions.
The two areas of failure were inflation (the price level has risen
iHiWlWJJUL—^^^^_,
about
rcent since 1946), and a tendency toward recession
which slowed our growth &
rate to unacceptable levels.
we have been in recession for a total of
(Since 1946
or about 23 percent
of the time.)
^r.V»"^*W'1''~> "
v_/
- 3The high hopes for the new Federal Reserve System lasted through
the Twenties but began to crack in 1929 and smashed in the early
Thirties when the System either could not or would not prevent wholsesale
bank failures.
In the Thirties the problems of money and credit were met quickly
•I
\^
and adequately with the Glass-Steagall Act, setting up the Federal
Deposit Insurance Corporation jmd ending jqnce and for all toenr^abiyty
C
^ - CK M<^U^J< : CJLH>+*S-
4^^
of losses to depositors. But in those years the Nation decided).that this
was not enough. We decided that some forms of economic stabilizers should
be built into the economy to counterbalance the terrible downswings of
depressions. Unemployment compensation and old-age benefits entered the
CM
national scene in response to this conclusion.* ^ * > -
^ ^
(>^^c^^^^
You men arc too young to remember those dreadful da^s, but lean
well remember thoughtful men of business wondering aloud whether our free
enterprise system could sustain another gmcJU shock.
the push to "New Frontiers." About 1850 the country became enmeshed
inextricably in the problems (both moral and economic) of slavery — a
problem that yielded only to a war and the brutal economic suppression
of the South. From 1870 to, jjjtfr the Nation filled out its borders,
settled the frontier, developed its industrial might, and pulled level
with the great powers of Western Europe.
Although we had reached a level of economic maturity in industry
and agriculture, the Nation had never succeeded in establishing a reliable
V
r
system of credit and currency. Time after time the Nation*s forward
thrust in its economic development had been blunted or reversed by
"money panics" — by breakdowns or paralysis in our financial institutions.
To cure these defects the Congress established the Aldrich Commission which
brought in its report in 1911 and resulted in the Federal Reserve Act
of Jftg-" whose preamble states:
An Act To provide for the establishment of Federal reserve banks,
to furnish an elastic currency to afford means of rediscounting commercial paper, to establish a more effective supervision of banking
in the United States, and for other purposes.
r >^4L<
W
* w
GREAT DECISION —
I96I
On June 27th, Mr. Henry J. Fowler, Under Secretary of the Treasury
in a public statement said "There has been little recent discussion of
one topic — the national opportunity to act so as to sustain the
recovery for a long period " In this statement "joe" Fowler was
bringing to public attention the crucial but often ignored economic
question facing the Nation in 1961 and 1962. "How can we sustain this
business recovery? How can we check the postwar tendency toward recession? "
This is the latest in a long series of economic challenges which
have faced the American people. George Washington faced the basic problem
of establishing our credit and our national revenues. Jefferson and
Madison wc^e wrcotliag with the problems of opening up the Northwest
Territory and parts of the Louisiana Purchase.
From 1825 to I85O the Nation was preoccupied with its attempts to
establish a reliable system of currency and credit (which were none
too successful), developing the beginnings of an industrial and transportation system, and coping with the continuing problems involved in
TREASURY DEPARTMENT
Washington
34 0
•
<
_
REMARKS BY JOSEPH W. BARR, ASSISTANT TO THE SECRETARY OF THE TREASURY,
BEFORE THE INDIANAPOLIS BRANCH OF THE AMERICAN INSTITUTE OF BANKING,
CjQlLIGHIffiSDAYfi¥fiNS»ft,JULY 6p$-M" 6:30, CAT THE SEVERIN H
INDIAMAP6LIS7 INDIANA^
/f.A
"
~*»»»i««..m»- i»^Mii,_WM"»"«w*»l'<._im»i_»i____>_,
JIJ
I
O
>__,
JO
TREASURY DEPARTMENT
Washington
^ *
REMARKS BY JOSEPH W. BARR, ASSISTANT TO THE SECRETARY OF
THE TREASURY, BEFORE THE INDIANAPOLIS BRANCH OF THE
AMERICAN INSTITUTE OF BANKING, AT THE SEVERIN HOTEL,
INDIANAPOLIS, INDIANA, ON THURSDAY, JULY 6, 196l, AT
6:30 P. M., CDT.
GREAT DECISION -- 196l
On June 27th, Mr. Henry H_ Fowler, Under Secretary of the Treasury
in a public statement said "There has been little recent discussion of
one topic —
the national opportunity to act so as to sustain the
recovery for a long period
"
In this statement "Joe" Fowler was
bringing to public attention the crucial but often Ignored economic
question facing the Nation in 1961 and 1962.
business recovery?
"How can we sustain this
How can we check the postwar tendency toward
recession?"
This is the latest In a long series of economic challenges which
have faced the American people.
George Washington faced the basic
problem of establishing our credit and our national revenues. Jefferson
and Madison wrestled with the problems of opening up the Northwest
Territory and parts of the Louisiana Purchase.
From 1825 to 1850 the Nation was preoccupied with Its attempts to
establish a reliable system of currency and credit (which were none
too successful), developing the beginnings of an Industrial and
transportation system, and coping with the continuing problems involved
In the push to "New Frontiers."
About 1850 the country became enmeshed
inextricably In the problems (both moral and economic) of slavery
—
a problem that yielded only to a war and the brutal economic suppression
- 2 -
348
of the South.
From 1870 to the first World War the Nation filled out
its borders, settled the frontier, developed its industrial might, and
pulled level with the great powers of Western Europe.
Although we had reached a level of economic maturity in industry
and agriculture, the Nation had never succeeded in establishing a
reliable system of credit and currency.
After the National Bank Act
of the Civil War years, we developed a sound currency, but our credit
system was still inflexible and unresponsive.
Time after time the
Nation's forward thrust in its economic development had been blunted
or reversed by "money panics" —
financial institutions.
by breakdowns or paralysis in our
To cure these defects the Congress established
the Aldrich Commission which brought in its report in 1911 and resulted
in the Federal Reserve Act of 1913 — whose preamble states:
An Act to provide for the establishment of Federal
reserve banks, to furnish an elastic currency to afford
means of rediscounting commercial paper, to establish a
more effective supervision of banking in the United States,
and for other purposes.
The high hopes for the new Federal Reserve System lasted through
the Twenties but began to crack in 1929 and smashed in the early
Thirties when the System either could not or would not prevent wholesale
bank failures.
In the Thirties the problems of money and credit were met quickly
and adequately with the Glass-Steagall Act, setting up the Federal
Deposit Insurance Corporation and ending once and for all the
probability of losses to depositors.
But In those years the Nation
decided (in a round-about way) that this was not enough. We decided
349
- 3 that some forms of economic stabilizers should be built into the
economy to counterbalance the terrible downswings of depressions.
Unemployment compensation and old-age benefits entered the national
scene in response to this conclusion and to the apparent social need.
The postwar years presented a new set of economic challenges and
the Nation faced up to them with imagination and vigor.
we were notably successful.
In many areas
Our conversion from a wartime to a peace-
time economy was accomplished with relative smoothness and rapidity. .
The Federal Reserve System demonstrated that it could keep the economy
supplied with "enough but not too much credit".
(There is great
controversy in this area but agreement that the System's performance
had vastly improved.)
Bank failures were unheard of.
The counter-
cyclical effects of relatively large Federal budgets, unemployment
compensation, and old age benefits choked off any downturns that
could be classed as depressions.
The two areas of failure were inflation (the price level has risen
about 53 percent since 19^6), and a tendency toward recession which
slowed our growth rate to unacceptable levels.
(Since 19^6.we have
been in recession for a total of 14 quarterly periods or about 23
percent of the time.)
There are some Indications that the problems of inflation may be
diminishing. From 1946 to 1950 the country was threatened with the
old classical type of inflation In which too much money was chasing
too few goods and services. We came out of the war with enormous
liquid resources and a strong pent-up demand for cars, houses, and
J5u
capital goods.
In this situation we could have kept the lid on prices
by retaining controls and keeping up taxes until the economy had an
opportunity to shift over to peacetime production.
We chose to drop
controls and cut taxes, and it was the amazing response of American
labor and industry in meeting demand that kept this first round of
inflation within reason.
In the mid-Fifties we faced another type of inflation —
a newer
variety — now referred to as "cost-push", in which industry used its
market power to raise prices and profits and labor moved right in
behind with sizeable wage increases.
I see little or no chance for a repetition of the classical
(too much money —
too few goods) type of inflation, barring a war.
American industrial capacity and labor supply seems more than adequate
to meet any foreseeable demand.
Nor do I expect that the Federal
Reserve System will go insane and pump vast new amounts of credit into
our financial channels.
Secondly, I see a greatly diminished chance for the "cost-push"
type of inflation.
Our attempts to rebuild Western Europe and Japan
to assist us in our fight against communism have proved amazingly
successful. We no longer have a clear position of dominance in world
trade. We no longer set the world price for most basic raw materials.
Instead, we are competing fiercely with the Industrial nations that
have been rebuilt with our aid.
This competition is a most
effective lid on Industries using their power In the market to raise
prices or for labor unions trying to raise wages past the point of
their increase in productivity.
I have never heard It mentioned In
?S1
w
^__.
- 5Congressional debates, but foreign aid, especially to Europe and
Japan, has developed as a powerful deterrent to inflation and a warm
ally of the American consumer.
Of course we can blunt the effectiveness of this international
competition.
We can pull back our troops in Germany, Taiwan, and
Korea and leave these areas open to communist pressures.
We can give
up our attempts to help the under-developed nations of the world
struggle up to a level of economic decency.
We can forbid all
investment abroad; and we could even give up our passion for foreign
travel. If we did all these things we could then raise our tariffs
high enough to stop imports, not worry about exports, and then let
the forces behind "cost-push" inflation raise prices higher and higher
behind a protective tariff wall.
who suggests such a course.
I know of no serious national leader
For this reason, I believe that the
forces of international competition will have an increasingly
restraining Influence on price levels of most raw materials and
manufactured goods in this country.
Unfortunately, this international
competition has little or no effect on services and for that reason
I would expect these prices to rise fastest in the next decade.
With sufficient liquidity, no bank failures, adequate plant and
labor supply, a diminishing inflationary threat, and a national debt
that has shrunk from 117 percent of our national income in 19^6 to
58 percent in i960, I believe that the most crucial problem remaining
to face us this year and next is the problem of sustaining this present
recovery and checking our postwar tendency toward recession.
- 6 The history of the last three recessions makes for sober reading
,nd reflection.
This history draws a picture of a shortening period
,f business expansion leaving an ever larger residue of unemployed at
;he peak of the cycle. The 1953-54 downturn was preceded by a period
>f expansion that ran for 45 months and at its peak left only 2.7
)ercent of the working force unemployed.
The 1957-58 downturn was
receded by an expansion that ran for 35 months but that left
1.2 percent of our labor force unemployed at its peak in July 1957.
.he i960 downturn followed an expansion that ran only 25 months and
Left an unemployment figure of 5.1 percent at its peak in May i960.
The trend is ominous and must be reversed if our free enterprise
society is to meet the economic challenge of the Sixties. It is
apparent, as the President has often noted, that our basic challenge
La to provide 13,500,000 new jobs over the span of this decade. The
ultimate test of any society is to provide the opportunity to earn a
living. I cannot believe that our society is an exception.
Obviously,
m will not measure up to this challenge by sitting back watching
recessions come at more frequent Intervals and leaving behind them an
ever larger group of unemployed.
The response to this challenge just as obviously lies in our
aatlonal growth rate.
If we in this Nation closed the gap between
what we can do and what we are doing, our unemployment levels would
drop to 4 percent or below, corporate profits could jump from
.W billion in I960 to about $58 billion in 1961, and Federal Government
revenues would rise to about $92 billion in fiscal 1962 ~
or
-7-
353
$11 billion more than currently budgeted for expenditures. An $11
'billion Federal surplus in fiscal year 1962 is the potential of our
economy.
Actual results, according to our latest figures, show a
probable deficit of $3-7 to $4.4 billion.
We will not achieve our full potential this year or next, but in
this first six months of a new Administration we are laying the
groundwork. We are trying to take advantage of the priceless time
element of the first phases of recovery to initiate actions that can
help the economy shift to a faster rate of growth which will reduce
the tendency toward recession and pull down a totally unacceptable
rate of unemployment.
To date we have made certain headway.
We have passed a Highway
Financing Act that will enable the States to move ahead with their
building programs at a rate above $3 billion a year for this decade.
We have completed action on a Housing Bill that is aimed at a segment
of the American people that have not had the resources to enter the
housing market —
specifically, low income families and the elderly.
We have passed liberalized old-age benefit legislation and a more
comprehensive and effective system of unemployment compensation.
We
have attacked the problem of structural unemployment In the Depressed
Areas legislation and the Congress is now considering legislation which
we have proposed to help re-train and re-locate the Misemployed"
worker.
Aside from the last two programs, there is nothing new or
dramatic about any of these proposals.
They are simply attempts to
bring existing legislation up-to-date.
In my opinion, our real chores
354
lie ahead in the remaining 60 days of this session of the Congress.
Two programs which are fundamental to an attack on our problem of
growth are still being considered.
The first is the tax bill aimed
at stimulating Investment in new plant and equipment and the second
is the Aid-to-Education measure.
No one is foolish enough to believe that the Federal Government
can cure our economic ills.
We cannot. But we can provide a marginal
stimulus that will often make the crucial difference. This is exactly
what we are attempting to do in our proposal to give back to business
$1.7 billion of our national revenue to encourage the modernization
of this Nation's plant and equipment.
We believe that one of the principal reasons for the slowdoxm in
the rate of growth is a reduction in the rate at which the stock of
capital has been renewed and modernized.
A few figures will
illustrate what has been happening.
In 1948, 12.5 percent of our gross national product was devoted to
investment in fixed capital (plant and equipment).
This ratio has
declined more or less steadily to 9.6 percent of our gross national
product in i960.
By isolating the equipment figures, the decline is
even more obvious, falling from 8.3 percent in 1948 to 5.6 percent in
I960.
When we look at the average age of equipment in this country, we
find that it stood at 10.6 years in 1945, dropped to 8.5 years in the
1952-1955 period, but has crept back up to 9.0 yfcars today.
W <J *J
m, 9
-
Since 1955-57, the Nation's increase in its stock of plant and
equipment has slowed down and the age of this same plant and equipment
has Increased.
Surely these developments must be reversed if we are
to grow at a satisfactory rate and if we are to remain competitive
with the newly rebuilt plants of Western Europe and Japan.
We are
attempting to reverse this trend with our tax credit proposal
encouraging American industry to modernize.
Improving our plant and equipment is just one side of the coin.
The best and the most modern plant is of little use unless we have the
human resources to run it.
Several studies have shown that since
1929, about 25 percent of our real growth rate in this country can be
traced directly to the increased educational level of our labor force.
To manage and to operate the industry of the Sixties, we unquestionably
need a highly trained force of management, labor, and professional
skills.
In a recent statement before the Joint Economic Committee, the
Council of Economic Advisers stated:
"The twin keys to an accelerated
growth of productivity and output are two forms of investment:
investment in education
and investment in the expansion and
modernization of the Nation's stock of business plant and equipment."
We have offered the Congress both keys.
One key is our tax credit
proposal; the other key is embodied in the program of Aid to Education.
I am confident that the Congress will use both keys to unlock the growth
potential of our country and enable our private enterprise system to
meet the challenge of the Sixties.
0O0
FOR IMMEDIATE RELEASE
In response to questions based upon recent newspaper
articles concerning the investigation of complaints of
alleged employment discrimination in the Bureau of Engraving
and Printing, Robert A. Wallace, Treasury Department
Employment Policy Officer, today stated:
"We have taken no final action on any case. We expect
that it will take us several weeks to complete the investigation
of the thirty-five discrimination complaints.
After completion
of our investigations, attempts will be made to work out satisfactory agreements between complainants and the Bureau."
0O0
MODIFICATIONS IN U.S.-JAPAN TAX CONVENTION TO BE DISCUSSED
/DRAFT PRESS RELEASE)
Representatives of the Treasury Department and the State Departr w,x & ed > T
7:>
(Jz.fr j . -TtftmS z^y^>
mentr will hold discussions/^with representatives of the Government of
Japan to consider modifications in the existing income tax convention
between the United States and Japan. It is anticipated that among
the subjects to be discussed will be the tax treatment of dividends,
interest, and permanent establishments in one country of an
enterprise of the other country.
Interested persons in the United States who desire to submit
comments on the existing convention and suggestions for modification
of the income tax treaty are invited to submit their views. Communications should be addressed to the Assistant Secretary of the Treasury,
Mr. Stanley S. Surrey, Treasury Department, Washington 25, D. C To
receive adequate consideration, comments and suggestions should be
submitted as promptly as possible but not later than October 1, 196l.
kJ- (
Vx v> w
TREASURY DEPARTMENT
WASHINGTON. D.C
July 10, 196l
FOR IMMEDIATE RELEASE
MODIFICATIONS IN U.S.-JAPAN TAX CONVENTION
TO BE DISCUSSED
Representatives of the Treasury Department and the State
Department expect to hold discussions late this Fall with
representatives of the Government of Japan to consider
modifications in the existing income tax convention between
the United States and Japan.
It is anticipated that among the
subjects to be discussed will be the tax treatment of dividends,
interest, and permanent establishments in one country of an
enterprise of the other country.
Interested persons in the United States who desire to
submit comments on the existing convention and suggestions for
modification of the income tax treaty are invited to submit
their views. Communications should be addressed to the
Assistant Secretary of the Treasury, Mr. Stanley S. Surrey,
Treasury Department, Washington 25, D. C.
To receive adequate
consideration, comments and suggestions should be submitted as
promptly as possible but not later than October 1, 1961.
D-157
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Oo « e@_^OB !••__ _f th« M M l_a_t_ .ad for tte M U M u_nuit l a w t o . , tua M t a M l |
teaaatelllaweal, previa, /t.lda ©f 2.37$, far t_« 9_-4»y killa, aat 2.566, frjt
182-aay bllla. lataraat rata* aa billa ara qaatad la torn* «t l w * _jwwaa* w _ ;
tfta ratara ralatad ta tha faaa amoafl af tba .Ula p«/abla at _t_rlt7 rattar i&
_ a aaaaat lnrosted _«_ thatr laagth la aataal aaabar a. a_j_ ralates to a 3t0_¥!
J W M T . la aaatraai, yields on cerUfic.taa, aotoa, aaa baada ara aaapatotf la mm]
«t iataraat anteaaaaaat iavaatad, aad ralata tJM aaatoar af 6ajn roalaUf la •* J
iatoraat aawwat pari©, to _&© aataal maAwe af <»J? la tb. partod, - t o ataiatfl;
eoapaaadlai if aara toaa ©a. eaapoa paried la laaalaaa.
T
TREASURY DEPARTMENT
?C
WASHINGTON, D.C.
July 10, 1961
IR RELEASE A. M. NEWSPAPERS, Tuesday July 11, 1961,
RESULTS OF TREASURY'S WEEKLY BILL OFFERING
| The Treasury Department announced last evening that the tenders for two series of
reasury bills, one series to be an additional issue of the bills dated April 13, 1961,
pd the other series to be dated Jtdy 13, 1961, which were offered on July 5, were
[>ened at the Federal Reserve Banks on July 10. Tenders were invited for $1,100,000,000,
p thereabouts, of 92-day bills and for $500,000,000, or thereabouts, of 182-day bills.
tie details of the two series are as follows:
92-day Treasury bills
182-day Treasury bills
TOE OF ACCEPTED
maturing October 139 1961
maturing January 11, 1962
.MPETITIVE BIDS:
Approx. Equiv,
Approx. Equiv.
Annual Rate
Price
Price __ Annual Rate
High
98.736
2.297$
99.U13 a/
2.500$
Low
98.726
2.336$
99-1403 2.520$
Average
98.730
2.322$ 1/
99^07
2.512$ 1/
a/ Excepting one tender of $100,000
73 percent of the amount of 92-day bills bid for at the low price was accepted
72 percent of the amount of 182-day bills bid for at the low price was accepted
OTAL TENDERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:
Accepted
Applied For
Applied For
Accepted
District
5,775,000 $ 5,775,000
I
31,912,000
15,612,000
Boston
885,088,000 426,828,000
1,531,298,000
737,601,000
New York
1,838,000
10,921,000
32,869,000
14,729,000
Philadelphia
5,029,000
14,239,000
36,733,000
26,633,000
Cleveland
2,042,000
2,977,000
10,523,000
10,323,000
Richmond
3,238,000
5,790,000
28,813,000
22,473,000 »
Atlanta
25,933,000
75,927,000
218,1.82,000
125,732,000 :
Chicago
3,695,000
4,195,000
26,886,000
21,886,000 :
St© Louis
1,965,000
21,325,000
15,770,000 :
Minneapolis
5,5i5,ooo
4,621,000
38,23U,000
28,334,000 x
Kansas City
4,977,000
64.851,000
.
3,034,000
20,28U,000
16,284,000 i
Dallas
6,062,000
$1,100,228,000 b / 81,047,421,000
16,180,000 c/
89a011aOOO
San Francisco
25,955,ooo €500,178,000
b/ Includes
noncompetitive tenders accepted at the average price of 99.407
TOTALS$231,215,000
$2,086,370,000
c/ Includes 43,229,000 noncompetitive tenders accepted at the average price of 98.730
_/ On a coupon issue of the same length and for the same amount invested, the return on
these bills would provide yields of 2.37#, for the 92-day bills, and 2.58$, for the
182-day bills. Interest rates on bills are quoted in terms of bank discount with
the return related to the face amount of the bills payable at maturity rather than
the amount invested and their length in actual number of days related to a 360-day
year. In contrast, yields on certificates, notes, and bonds are computed in terms
of interest on the amount invested, and relate the number of days remaining in an
interest payment period to the actual number of days in the period, with semiannual
compounding if more than one coupon period is involved.
D-158
mmmmmmwmmfSfmfl n i • tnmwmmUmmt•___
cn
TREASURY DEPARTMENT
WASHINGTON, D.C.
July 11, 1961
FOR IMMEDIATE RELEASE
TREASURY DECISION ON EDIBLE OLIVE OIL
UNDER THE ANTIDUMPING ACT
The Treasury Department has determined that edible olive
oil, in containers weighing with immediate contents under 1*0
pounds, from Italy is not being, nor likely to be, sold in the
United States at less than fair value within the meaning of
the Antidumping Act. Notice of the finding will be published
in the Federal Register.
The dollar value of imports of this merchandise received
from Italy during i960 was approximately $3,980,000.
^C9
TREASURY DEPARTMENT
^B_BC--«««~~Bgitiuirii»liiiilii-a----g
•'••"•••"•
'
•_•_•••_••_•_•_•••-_••_.
WASHINGTON, D.C.
July 11, 1961
FOR IMMEDIATE RELEASE
TREASURY DECISION ON EDIBLE OLIVE OIL
UNDER THE ANTIDUMPING ACT
The Treasury Department has determined that edible olive
oil, in containers weighing with immediate contents under kO
pounds, from Italy is not being, nor likely to be, sold in the
United States at less than fair value within the meaning of
the Antidumping Act.
Notice of the finding will be published
in the Federal Register.
The dollar value of imports of this merchandise received
from Italy during i960 was approximately $3,980,000.
CD
O
CNJ
TREASURY DEPARTMENT
WASHINGTON, D.C.
July 11, 1961
FOR IMMEDIATE RELEASE
TREASURY DECISION ON EDIBUE OLIVE OIL
UNDER ANTIDUMPING ACT
The Treasury Department has determined that edible olive
oil, in containers weighing with their contents under kO pounds
each, from Spain is not being, nor likely to be, sold in the
United States at less than fair value within the meaning of
the Antidumping Act. Notice of the finding will be published
in the Federal Register.
The dollar value of imports received from Spain during
i960 was approximately $892,000.
TREASURY DEPARTMENT
—a——MMMW—••aa____iiM.iiiMiMiaiiiai.ai
ILUBW—law
WASHINGTON, D.C. \ ^
July 11, 1961
FOR IMMEDIATE RELEASE
TREASURY DECISION ON EDIBIE OLIVE OIL
UNDER ANTIDUMPING ACT
The Treasury Department has determined that edible olive
oil, in containers weighing with their contents under ko pounds
each, from Spain is not being, nor likely to be, sold in the
United States at less than fair value within the meaning of
the Antidumping Act. Notice of the finding will be published
in the Federal Register.
The dollar value of Imports received from Spain during
i960 was approximately $892,000.
CO
CO
TREASURY DEPARTMENT
WASHINGTON, D.C. N^VJuA 11, 1961
FOR IMMEDIATE RELEASE
TREASURY DECISION ON RAYON STAPLE FIBER
UNDER THE ANTB)UMPING ACT
The Treasury Department has determined that rayon staple
fiber from Austria is not being, nor likely to be, sold in
the United States at less than fair value within the meaning
of the Antidumping Act. Notice of the finding will be published in the Federal Register.
The dollar value of imports of rayon staple fiber received from Austria during i960 was approximately $2,120,000.
_> L / v_/
TREASURY DEPARTMENT
•iwwii_iiBBaB_---a-__3B__________-_____a_^
WASHINGTON, D.C.
Ju&y 11, 1961
FOR IMMEDIATE RELEASE
TREASURY DECISION ON RAYON STAPLE FIBER
UNDER THE ANTIDUMPING ACT
The Treasury Department has determined that rayon staple
fiber from Austria is not being, nor likely to be, sold in
the United States at less than fair value within the meaning
of the Antidumping Act. Notice of the finding will be published in the Federal Register.
The dollar value of Imports of rayon staple fiber received from Austria during i960 was approximately $2,120,000.
CD
CD
—H
TREASURY DEPARTMENT
WASHINGTON, D.C.
July 11, 1961
FOR IMMEDIATE RELEASE
TREASURY DECISION ON RADIO TUBES
UNDER THE ANTIDUMPING ACT
The Treasury Department has determined that radio tubes
from Japan are not being, nor likely to be, sold in the
United States at less than fair value within the meaning of
the Antidumping Act. Notice of the finding will be published
in the Federal Register.
The dollar value of the involved merchandise received
from Japan during a representative 6-month period was approximately $919,000.
368
TREASURY DEPARTMENT
WASHINGTON, D.C.
FOR IMMEDIATE RELEASE
\^>
July 11, 1961
TREASURY DECISION ON RADIO TUBES
UNDER THE ANTIDUMPING ACT
The Treasury Department has determined that radio tubes
from Japan are not being, nor likely to be, sold in the
United States at less than fair value within the meaning of
the Antidumping Act. Notice of the finding will be published
in the Federal Register.
The dollar value of the involved merchandise received
from Japan during a representative 6-month period was approximately $919*000.
ICQ
tot iiyi.Mii 4. K. HttFmts,
Aly 11, llil
i»iiUi_wii*tiwKmM«BO«^^
R-31LT6 0? ftMSCif*& OHMtSAl Slil Offll__B
Tha frasawry Dapartaaal axaxnuiead laat ©vaaia^ that toa tenders far ^,000,QO.,ooo
or toaraafeaato, af 3^-4ay Twaaary M l l a to tea iatad * 0 ? IS, lf£l, aaitoatai.ro
July IS, 1$68, waicte. war© offared an «N_ly 5, w w a spots*, at toa fataral 'esama 3a«*«
en J_ly H ,
f
Tba .atailB af tolas toe.® ara as fallaa*
total appUaa far
Total aeaayta.
14,170,6^,000
2,000,061,000 (toelest*. fS0?,5ll»G»
s®i^i^fj#&il<lv# litis &$i&
S*«g» of MMgAttf $ » j ^ i i i t w bftetet
i
tan
kmm$m
{••61 {MMNMWit of tain Mwafc Md for «k tto lor y«te# «M» *M4pt*d)
fatal
F l i a d Far
ii
,
,
fetal
Aoooptatf
district
toatoa
I" 15,5_5,6W
"i6 3w; a«
Sew ¥03*
l,3$l,Slfe,Q0.
f,8?3,M»,aoo
.hUadalptala
If ,?_.,«*»
litf,5t9,©00
Clavalaad
lt,Nh«000
3S,tofe,oo.
Ulctowoad
17,731,000
itlaafca
.3»,&33»00©
15,3t?.O0Q
Cfeieago
55o,33fcv<*»
U,b6t,Q0O
St. Lauie
6S,»l,ooa
A,997,0OO
finnaspalia
JiO,fc60,-QO
Haasa. City
lk,6SL,an
<9,127,000
Dallas
32,091,000
TOWX
Saa -raaeioee
_lt.l70,6bS#.0Q
|2,OCKi,C©l,0O©
1/ On & aaapan iaaua of toa aswa leagto *ad for taa aaaa aaaaat tavastod,
toa rfttoia »»
toasa bllla aould pr©*ti§a * ytoli af 3.02*. lHtaraat w&tas a» bills as* feotad i|
t»rw.e of taak dtoaaasfc alto to® r a t a m ralatod to toa faea mmmfc of 'toe bill* NT*
able at aatarity mtfear than toa aswaat ianraatad awl toato leagto to aotaal naafeof
©f days ralatad to a 360-day ytar. la eoatraat, yialds o® eartlfieataa, «>ta», "l
banoa « n eoapatad is taraa af lataxast oa tba. <»s»aat iaraatad, and ralato tie n**
bar of dajra resaisiar ia ®a iataraat pajwart paria. to toa a»to«l anatear af ^*3*|
tha pariari, vito aaatarasaal ©asRf*MSisst if rare toan O M coapaai period la InWlwl
*#*M
^€)^ ^~^
-37t
TREASURY DEPARTMENT
v>
l t_/
liir .~!J-.-aB„.-._-__A,_„W-J^^
WASHINGTON, D.C
FOR RELEASE A . M . NEWSPAPERS,
Wednesday, July 12 , 196l.
July 11, 1961
RESULTS OF TREASURY'S ONE-YEAR BILL OFFERING
The Treasury Department announced last evening that the tenders for $2,000,000,000,
or thereabouts, of 365-day Treasury bills to be dated July 15, 196l, and to mature
July 1$, 1962, which were offered on July 5, were opened at the Federal Reserve Banks
on July U a
The details of this issue are as follows.
Total applied for Total accepted
,170,61J5>000
2,000,061,000
(includes $207,518,000 entered on a
noncompetitive basis and accepted in
full at the average price shown below)
Range of accepted competitive bids*
High
Low
Average
97al01 Equivalent rate of discount approx. 2.8$9% per annum
97.039
"
n
w
«
w
2*920# «
«
B!
9
97.051
«
»
«
«
2.908$ "
"
y
(6I4. percent of the amount bid for at the low price was accepted)
Federal Reserve
District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Total
Applied For
•M____MMMHMa___0_M»aMain-_a__e
Total
Accepted
$
15,960,000
l,35l,5lU,000
19,91*6,000
52,572,000
12,20_4,000
17,733,000
ii02,078,000
15,322,000
11,1488,000
2.4,997,000
ll;,65l,000
61,596,000
$2,000,061,000
2,873,02^,000
7li,Olj.2,000
1.49,588,000
35,20li,000
65,633,000
550,33li,000
65,382,000
iiO, 1*68,000
69,127,000
32,891,000
15^,576,000
TOTAL
,170,6145,000
On a coupon issue of the same length and for the same amount invested, the return on
these bills would provide a yield of 3.02#a Interest rates on bills are quoted in
terms of bank discount with the return related to the face amount of the bills payable at maturity rather than the amount invested and their length in actual number
of days related to a 360-day year. In contrast, yields on certificates, notes, and
bonds are computed in terms of interest on the amount invested, and relate the number of days remaining in an interest payment period to the actual number of days in
the period, with semiannual compounding if more than one coupon period is involved.
D-159
kmmmMmmmmmummmmtimmmmmmmmmmB&mmm*iMMm*m*um
en
STATUTORY DEBT LIMITATION
ASQF _Jurje_30. 1961
Q
7[
Washington, 0 U i f f 1 2 , 1 ^ j L _
Section 21 of Sefcond 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),Mshall not exceed in the aggregate $285,000,000,000
(Act of June 30, 1959; 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 June 30, I960 (P.L. 86-564 86th Congress) provides that during the period
beginning on July 1, I960 and ending June 30, 1961, the above limitation ($285,000,000,000) shall be temporarily increased by
$8,000,000,000.
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
$293»000,000,000
OutstandingObligations issued under Second Liberty Bond Act, as amended
Interest-bearing:
Treasury bills , $36,723,190,000
Certificates of indebtedness
Treasury notes
,
BondsTreasury
* Savings (current redemp. vaiue)
Depositary.
RoEoAo series
Investment series
Special FundsCertificates of indebtedness
Treasury notes
Treasury bonds
Total interest-bearing
Matured, interest-ceased
1 3 9 3 3 7 . 9 9 3 »000
66.257,1^6.000
$106,318,329,000
80,829,778,750
Qf95-*-^'»2£\5> jOy
Il6,8l9i500
19,221,000
5 > 830,308 , 000
13^,310,392,619
5,691)970,000
9,133,080,000
30.217,837.000
4,,0^2,887.000
285,671,608,619
J^J , O O D , ^ O O
'}
Bearing no interest:
United States Savings Stamps
Excess profits tax refund bonds
Special notes of the United States:
Internat'l Monetary Fund series
x&m In.t.De.y$.lQp«As.slix.....„
Total
51,9^9,308
r50,5^5
2,^96,000,000
57...652,200..,
2,606,352.093
288,621,6^71000
Guaranteed obligations (not held by Treasury):
Interest-bearing:
2
Debentures: F.H.A. O P . . S ^ r . ^ 39,69^,000
Matured, interest-ceased
Grand total outstanding
5 2 1 * **50
2*K).215|^5Q
2 8 8 »861 1 862 * 530
Balance face amount of obligations issuable under above authority
Reconcilement with Statement of the Public Debt .,!?}^$...,£„J....„7.!?.7r.
(Date)
(Daily Statement of the United States Treasury,
*[j^?...2.9»....•!:?".
Outstanding'a
Total 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
^',138»l_/7f^'i 0
)
288,970,938,610
dJ™\£±Q\ J
289,211,Ijr*t^ ou
J**7 \ ^1 T ^ -
288,861,862,530
D-160
Q
72
STATUTORY DEBT LIMITATION
e
AS O F J ^ 30, 1961
jl v
Washington,
0 U J
196l
" ±dj -LJ^±
l u K ' c o n s " ^ ^ as h T f a ^ a m ^ u n u " T h e A c T c T j u n T Y o , I960 (P.L. 86-564 86th Congress) provides that during the period
beginning on July 1, I960 and ending June 30, 1961, the abov* limitation ($285,000,000,000) shall be temporarily increased by
$8,000,000,000.
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
$293,000,000,000
OutstandingObligations issued under Second Liberty Bond Act, as amended
Interest-bearing:
Treasury bills $36,723,190,000
Certificates of indebtedness
Treasury notes
BondsTreasury
* Savings (current redemp. value)
Depositary
R0EoA. series
Investment series
Special FundsCertificates of indebtedness
Treasury notes
Treasury bonds
13,337*993,000
56.257.1^6.000
80 , 829 , 778,750
^7,51^,265,369
U 6 , 8 1 9 ,500
19,221,000
5 . 8 3 0 ,308 ,000
13^,310,392,619
J • W X , J (\) , U U U
9 ,3 3 3 ,080 , 0 0 0
30,217,837,000
Total interest-bearing
Matured, interest-ceased
^,0^2,887,000
285,671,608,619
3^3,686,368
Bearing no interest:
United States Savings Stamps
Excess profits tax refund bonds
Special notes of the United States:
Intcrnat'l Monetary Fund series
$106,318,329,000
51,9^9,308
(j^tJ^J
2,^96,000,000
wzm Ija.UDe.vs.lQX.,As.aVru
Total
~.
Guaranteed obligations (not held by Treasury):
Interest-bearing:
Debentures: F.H.A. tM.$^.:^S
•
57.A.652t200...
2,606,352,0??
288,621,6^7,080
. ,
239/^,000
Ma.urcd. interest-ceascd
521,^50
Grand total outstanding
Balance face amount of obligations issuable under above authority
240t21g,»g0
_2o8 > 861,862 , 530
^»1J&» 137 » w 0
Reconcilement with Statement of the Public Debt ..J^}^?...2.9..^..i2.9l
(Dnte)
(Daily Statement of the United States Treasny,
£_^?...2.9._...i?£i
/v.
i-
)
(Data)
OutstandingTeal gross public deb,
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
288,970,938,610
*y^y • ~X_? i f-* v
Z O 7 , c X X , Xj/r, U o U
j^y , *._'X-5_7V
288,861,862,530
D-160
2
TREASURY DEPARTMENT
WASHINGTON, D.C.
July 12, 1961
WITHHOLDING OF APPRAISEMENT ON
TETRACYCLINE TABL1» AMD CAPSULES
The Treasury Department has instructed customs field
officers to withhold appraisement of tetracycline tablets
and capsules from Italy, pending a determination as to whether
this merchandise is being sold in the United States at less
than fair value. Notice to this effect has been published in
the Federal Register.
Under the Antidumping Act, determination of sales in the
United States at less than fair value would require reference
of the case to the Tariff Commission, which would consider
whether American industry v/as being injured. Both dumping price
and injury must be shown to justify a finding of dumping under
the law.
The complaint in this case v/as received on February 16, 1961.
Available information indicates that the dollar value of imports
of this merchandise from Italy received during I960 was approximately $1,031,000.
TREASURY DEPARTMENT
r
W
»*>'-'-M-i-*»M..^.ilMUUI«BmmHMWW>ii !••••• _ ^ r | _
,J_i_.«._„,
,, ||
i ••.IIULUPL ...I.I11W Mll-li U . m l W ^ M - . ^ ^ - - - ^ ^ . ^ ,
WASHINGTON, D.C.
July 12, 1961
BMEDIATE RELEASE
WITHHOLDING OF APPRAISEMENT ON
TETRACYCLINE TABLETS AND CAPSULES
The Treasury Department has instructed customs field
officers to withhold appraisement of tetracycline tablets
and capsules from Italy, pending a determination as to vfhether
this merchandise is being sold in the United States at less
than fair value. Notice to this effect has been published in
the Federal Register.
Under the Antidumping Act, determination of sales in the
United States at less than fair value would Require reference
of the case to the Tariff Commission, which would consider
whether American industry was being injured. Both dumping price
and injury must be shown to justify a finding of dumping under
the lay/.
The complaint in this case was received on February 16, 1961
Available information indicates that the dollar value of imports
of this merchandise from Italy received during I960 was approximately $1,031,000.
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 interes
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 ex
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, whethe
on original issue or on subsequent purchase, and the amount actually received eithe
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 -
376
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 incorpo-
rated banks and trust companies and from responsible and recognized dealers in inve
ment 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 b
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 April 20, 1961 , ( 91 days remaining until maturity date on
p ^
October 19, 1961
SET
_£±8_)
) a ^ noncompetitive tenders for $ 100,000 or less for the
i&mx
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 respe
tive issues. Settlement for accepted tenders in accordance with the bids must be
made or completed at the Federal Reserve Bank on July 20, 1961 . ia
cash or
_pE_55
other immediately available funds or in a like face amount of Treasury bills maturing July 20, 1961 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
_E_$i__Ka&02S&
yMB&MMyiMKMX
37?
TREASURY DEPARTMENT
Washington
July 12, 1961
FOR IMMEDIATE RELEASE, !8SQQC_©__E£_$.•*.".T."r.*
"VEUUS
TREASURY'S WEEKLY BILL OFFERING
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) fo
cash and in exchange for Treasury bills maturing July 20, 1961 , in the amount'
of $1,500,515,000 , as follows:
91 -day bills (to maturity date) to be issued July 20, 1961 ,
"_^i5_~
_£$$_
in the amount of $1,100,000,000 , or thereabouts, represent_$__&
ing an additional amount of bills dated
April 20, 1961
,
and to mature October 19, 1961 , originally issued in the
2<^(including $100,104,000 issued June 14, 196
amount of $500,394,000 / , the additional and original bills
— p a y —
to be freely interchangeable.
182 -day bills, for $ 500,000,000 , or thereabouts, to be dated
"xpcSJT
$&&)_
July 20, 1961
, and to mature
January 18, 1962
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 am
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 (matu
value).
Tenders will be received at Federal Reserve Banks and Branches up to the closii
Daylight Saving
hour, one-thirty o'clock p.m., Eastern/_jft©__d©ffi_k time, Monday, July 17, 1961 ____
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
378
TREASURY DEPARTMENT
WASHINGTON, D.C.
July 12, 1961
FOR IMMEDIATE RELEASE
TREASURY'S WEEKLY BILL OFFERING
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 July 20, 1961,
in the amount of
$1,500,513*000, as follows:
91-day bills (to maturity date) to be issued July 20, 1961, in the
amount of ^1,100,000,000, or thereabouts, representing an additional
amount of bills dated April 20, 1961, and to mature October 19, 196l,
originally issued in the amount of $500,39^000 (including
$100,104,000 issued June 14, 1961), the additional and original bills
to be freely interchangeable,
182-day bills, for $500,000,000, or thereabouts, to be dated
July 20, 1961,
and to mature January 18, 1962.
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 Daylight
Saving time, Monday, July 17, 196l.
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
D-161 company.
- 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 Departmment 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
April 20, 196l. ($1- days remaining until maturity date on
October 19, 19*1) and noncompetitive tenders for $ 100,000
or less for the l8£-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 July 20, 1961,
in cash or other immediately available funds or in a like face
amount of Treasury bills maturing July 20, 1961.
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 h^k (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.
0O0
Treasury Department Circular No. 4l8, Revised, and this notice,
prescribe the terms of the Treasury bills and govern the conditions
Federal
of theirReserve
Issue. Bank
Copies
or Branch.
of the circular may be obtained from any
TREASURY DEPARTMENT
Washington, D. C.
^7Q
IMMEDIATE RELEASE
,_
D-162
THURSDAY, JULY 13, 196l
The Bureau of Customs announced today preliminary figures showing the
quantities of wheat and wheat flour authorized to be entered, or withdrawn
from warehouse, for consumption under the import quotas established in the
President's proclamation of May 28, 19^1, as modified by the President's
proclamation of April 13, 19^2, for the 12 months commencing May 29, 196I,
as follows:
Wheat flour, semolina,
crushed or cracked
wheat, and similar
wheat products
Wheat
Country
of
Origin
Established : Imports
Quota
:May 29, 1961 ,
:to June 30 1961
(Bushels)
(Bushels)
Canada
795,000
China
Hungary
Hong Kong
Japan
United Kingdom
100
Australia
Germany
100
Syria
100
New Zealand
Chile
Netherlands
100
Argentina
2,000
Italy
100
Cuba
France
1,000
Greece
Mexico
100
Panama
Uruguay
Poland and Danzig
_
Sweden
Yugoslavia
Norway
Canary Islands
Rumania
1,000
Guatemala
100
Brazil
100
Union of Soviet
Socialist Republics
100
Belgium
100
795,000
800,000
795,000
Established :
Imports
Quota
:May 29, 1951,
:to June 30. 19.
(Pounds)
(Pounds)
3,815,000
2^,000
13,000
13,000
8,000
75,ooo
3,815,000
1,000
5,000
5,000
1,000
1,000
1,000
14,000
2,000
12,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
150
4^oa_ooL
3,815,150
8U
TREASURY DEPARTMENT
Washington, D. C.
IMMEDIATE RELEASE
D-162
THURSDAY, JULY 13, 196l
The Bureau of Customs announced today preliminary figures showing the
quantities of wheat and wheat flour authorized to be entered, or withdrawn
from warehouse, for consumption under the import quotas established in the
President's proclamation of May 28, 19^1, as modified by the President's
proclamation of April 13, 19^2, for the 12 months commencing May 29, 1961,
as follows:
Country
of
Origin
Wheat flour, semolina,
crushed or cracked
wheat, and similar
wheat products
Established : Imports
Quota
:May 29, 196I ,
:to June 30 1961
(Bushels)
(Bushels)
3,815,000
2^,000
13,000
13,000
8,000
795,000
Canada
795.000
China
Hungary
Hong Kong
Japan
United Kingdom
100
Australia
100
Germany
Syria
100
New Zealand
Chile
Netherlands
100
Argentina
2,000
Italy ,
100
Cuba
1,000
France
Greece
Mexico
100
Panama
_.
Uruguay
Poland and Danzig
Sweden
Yugoslavia
Norway
Canary Islands
Rumania
1,000
100
Guatemala
100
Brazil
Union of Soviet
100
Socialist Republics
100
Belgium
800,000
Established :
Imports
Quota
:May 29, 1951,
:to June 30. 1961
(Pounds)
(Pounds)
75,ooo
795,000
3,815,000
1,000
5,000
5,000
1,000
1,000
1,000
1^,000
2,000
12,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
150
U,000,000
3,S15,15C
2z8
^
Q1
-2-
Commodity
Period and Quantity
Unit
of
Quantity
Imports
as of
June 30. 1
Absolute Quotas
Peanuts, shelled, unshelled,
blanched, salted, prepared or
preserved (incl. roasted pea;*
nuts but not peanut butter)..,
Rye, rye flour, and rye meal..
Butter substitutes, including
butter oil, containing 45% or
more butterfat
Tung Oil
*
Imports through July 10, 1961.
12 mos. from
Aug. 1, 1960
July 1, 1960June 30, 1961
Canada
Other Countries
Calendar Year
Feb. 1, 1961Oct. 31, 1961
Argentina
Paraguay
Other Countries
1,709,000
Pound
56,96
140,733,957
2,872,122
Pound
Pound
Quota Fille
1,200,000
Pound
Quota Fille
18,770,577
2,230,313
711,188
Pound
Pound
Pound
8,616,47
Quota Fillei
228
TREASURY DEPARTMENT
Washington, D. C.
>_> KJ __.
IMMEDIATE RELEASE
THURSDAY, JULY 13, 196l
D-I63
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 June 30, 1961, inclusive, as follows:
Commodity
Period and Quantity
Unit
of
Quantity
Imports
as of
June 30, 1961
Tariff-Rate Quotas:
Cream, fresh or sour
Calendar Year
1,500,000
Gallon
245
Whole milk, fresh or sour
Calendar Year
3,000,000 Gallon
43
Cattle, 700 lbs. or more each
(other than dairy cows)
,
April 1, 1961
June 30, 1961
120,000
Head
6,565
Cattle less than 200 lbs. each...
12 mos. from
April 1, 1961
200,000
Head
27,326
Fish, fresh or frozen, filleted,
etc., cod, haddock, hake, pollock, cusk, and rosefish..
Calendar Year
32,600,645
Pound
Quota Filled!7
Tuna fish Calendar Year
57,114,714
Pound
23,575,216
114,000,000
36,000,000
Pound
Pound
64,382,705
8,608,220
White or Irish potatoes:
Certified seed
Other
12 mos. from
Sept. 15, I960
Walnuts
Calendar Year
5,000,000
Pound
Quota Filled
Stainless steel table flatware
(table knives, table forks,
table spoons).....
Nov. 1, 1960Oct. 31, 1961
69,000,000
Pieces
Quota Filled2/
1/ Imports for consumption at the quota rate are limited to 16,300,322 pounds during
the first six months of the calendar year.
2/ Based on preliminary data; subject to adjustment.
(over)
TREASURY DEPARTMENT
Washington, D. C.
383
MEDIATE RELEASE
KURSDAY, JULY 13, 196l
D-I63
The Bureau of Customs announced today preliminary figures showing the imports for
jnsuraption of the commodities listed below within quota limitations from the beginning
t the quota periods to June 30, 1961, inclusive, as follows:
Commodity
:
Imports
: Unit
:
as of
: of
:Quantity: June 30, 1961
Period and Quantity
ariff-Rate Quotas:
245
ream, fresh or sour Calendar Year 1,500,000 Gallon
hole milk, fresh or sour Calendar Year 3,000,000 Gallon
43
attle, 700 lbs. or more each April 1, 1961(other than dairy cows)
June 30, 1961
120,000
Head
6,565
lattle less than 200 lbs. each... 12 mos. from
April 1, 1961
200,000
Head
27,326
Pound
Quota Filled.!/
'ish, fresh or frozen, filleted,
itc., cod, haddock, hake, polock, cusk, and rosefish..
Calendar Year
32,600,645
23,575,216
una fish «, Calendar Year 57,114,714 Pound
foite or Irish potatoes:
Certified seed
Other
12 mos. from
Sept. 15, I960
114,000,000
36,000,000
64,382,705
8,608,220
Pound
Pound
Quota Filled
alnuts Calendar Year 5,000,000 Pound
tainless steel table flatware
(table knives, table forks,
tabie spoons)
Nov. 1, 1960Oct. 31, 1961
69,000,000
Pieces
Quota Filled2/
1
Imports for consumption at the quota rate are limited to 16,300,322 pounds during
te first six months of the calendar y^ar.
Based on preliminary data; subject to adjustment.
(over)
-2-
Commodity
Period and Quantity
Unit
of
Quantity
Imports
as of
June 30, 19(
Absolute Quotas
Peanuts, shelled, unshelled,
blanched, salted, prepared or
preserved (incl. roasted peanuts but not peanut butter)..,
Rye, rye flour, and rye meal..,
Butter substitutes, including
butter oil, containing 45% or
more butterfat
Tung Oil
*
Imports through July 10, 1961.
12 mos. from
Aug. 1, i960
July 1, 1960June 30, 1961
Canada
Other Countries
Calendar Year
Feb. I, 1961Oct. 31, 1961
Argentina
Paraguay
Other Countries
1,709,000
Pound
140,733,957
2,872,122
Pound
Pound
Quota Filled
1,200,000
Pound
Quota Filled
18,770,577
2,230,313
711,188
Pound
Pound
Pound
8,616,472*
Quota Filled
56,960^
Q4
COTTON WASTES
(In pounds)
COTTON CARD STRIPS made-from cotton having-a staple of less than 1-3/16 inches in length, C0I4BER
ID ROVING 7^ASTE, 'WHETHER OR NOT MANUFACTURED OR OTHERWISE
WASTE, LAP WASTE, SLIVER WASTE, AND
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 countries. United Kingdom, France, Netherlands,
Switzerland, Belgium, Germany, and Italy.
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
44,383
Belgium
38,559
Japan
341,535
China .
17,322
Egypt
. .
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
Sept. 20, 1960, to
July 10. 1961
Established _
Imports
TJ
33-1/3% of . Sept. 20, I960
Total Quota : to July 10. 1961
1,755,754
,239,690
42,782
1,441,152
1,416,533
75,807
42,782
21,442
22,747
14,796
12,853
21,442
3,068
3,068
50,646
25,443
7.088
9,937
2,113,382
1,599,886
1,493,762
TREASURY DEPARTMENT
Washington, D. C*
38^
IMv___DIATE RELEASE
THURSDAY. JULY 13. lQ6l
D-164
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, i960 - July 10, 1961 ~
""
Country of Origin
Established Quota
Imports
Egypt and the AngloEgyptian Sudan . . « . « < « .
Pert;
British India
China
Mexico
Brazil
Union of Soviet
Socialist Republics
Argentina
Haiti
Ecuador
Country of Origin
Established Quota
Honduras ..
783,816
Paraguay ..
50,569
247,952
Colombia
2,003,483
Iraq
British East Africa ...
1,370,791
8,883,259
Netherlands E. Indies .
8,883,259
618,721
Barbados
618,723
1/Other British W. Indies
475,124
Nigeria
5,203
2/0ther British W. Africa
237
3/0ther French Africa ...
9,333
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.
e
e
e c
•
e
o
«
•
s
•
• •
752
- 871
124
195
2,240
71,388
o
•
21,321
5,377
16,00k
689
Cotton 1-1/8" or more
Imports August 1, I960 - July 10, 1961
Established Quota (Global) - 45,6^6,420 Lbs.
Staple Length
Allocation
Imports
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"
39,590,778
Imnorts
39,590,778
1,500,000 1,494,161
._,^: .-5 65, 642, 4,5 65.642
681
TREASURY DEPARTMENT
Washington, D. C.
^MEDIATE RELEASE
THURSDAY. JULY l^r lQ6l
D-164
Preliminary data on imports for consumption of cotton and cotton waste chargeable to the quotas
established by the Presidents 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, i960 - July 10, 1961
"
"
Country of Origin
Established Quota
Imports
Country of Origin
Established Quot.L
^Sypt and the AngloHonduras
752
Egyptian Sudan
783,816
Paraguay
871
Peru
247,952
50,569
Colombia
124
British India
2,003,483
Iraq
195
China
1,370,791
British East Africa ...
2,240
Mexico
8,883,259
Netherlands E. Indies .
8,883,259
71,388
Brazil
618,721
Barbados
618,723
Union of Soviet
21,321
l/0ther British W. Indies
475,124
Socialist Republics
Nigeria
5,377
5.203
Argentina
2/0ther British W. Africa
16,004
237
Haiti
,
3/0ther French Africa ...
689
Ecuador
9,333
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 moire
Imports August 1. i960 - July 10, 1961
Established Quota (Global) - 45,656,420 Lbs.
Staple Length
Allocation
Imports
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"
39,590,778
39,590,778
1,500,000 1,494,161
4,565,642 4,565,642
Inroorts
ms
681
m*
-
COTTON WASTES
(In pounds)
COTTON CARD STRIPS made-from cotton having-a staple of less than 1-3/16 inches in length, COHBER
WASTE, LAP WASTE, SLIVER WASTE, AND ROVING ?;ASTE, WHEJHER 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 countries: United Kingdom, France, Netherlands,
Switzerland, Belgium, Germany, and Italy.
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
8,135
Cuba
•
6,544
Germany
76,329
Italy . . . .
. .
•
21,263
5,482,509 2,113,382 1,599,886 1,493,762
1/ Included in total imports, column 2.
Prepared in the Bureau of Customs.
Total Imports
_ Established .
Imports
Sept. 20, I960, to . 33-1/3% of : Sept. 20, I960
July 10. 1961
s Total Quota : to July 10. 1961
1,755,754
239,690
42,782
21,442
_.
3,068
-
50,646
^
.1,441,152
1,416,533
75,807
42,782
22,747
14,796
12,853
21,442
25,443
7.088
3,068
9,937
,
B-
l7
o
CO
•307
TREASURY DEPARTMENT
Washington
IMMEDIATE RELEASE
THURSDAY, JULY 13, 196l
D-I65
The Bureau of Customs announced today the following preliminary
figures showing the imports for consumption from January 1, 1961, to
June 30, 1961, inclusive, of commodities for which quotas were established pursuant to the Philippine Trade Agreement Revision Act of 1955:
Commodity
Buttons....
Established Annual
Quota Quantity
765,000
Unit
of
Quantity
Gross
Imports
as of
June 30, 1961
191,639
Cigars
180,000,000
Number
Coconut oil
403,200,000
Pound
56,273,409
Cordage....
6,000,000
Pound
2,406,409
Tobacco....
5,850,000
Pound
5,958,105
3,370,595
38z
TREASURY DEPARTMENT
Washington
IMMEDIATE RELEASE
THURSDAY, JULY 13, 196l
D-165
The Bureau of Customs announced today the following preliminary
figures showing the imports for consumption from January 1, 1961, to
June 30, 1961, inclusive, of commodities for which quotas were established pursuant to the Philippine Trade Agreement Revision Act of 1955:
Commodity
Established Annual
Quota Quantity
Buttons.., « . . . . . e * . e
765,000
Unit
of
Quantity
Gross
Imports
as of
June 30, 1961
191,639
180,000,000
Number
403,200,000
Pound
56,273,409
Cordage
6,000,000
Pound
2,406,409
Tobacco . . • • e » - « « . e . e
5,850,000
Pound
5,958,105
v*_,g_i_r_» • « • • . . . o «
» . o e o
Coconut oil
3,370,595
CO
CM
TREASURY DEPARTMENT
Washington, D. C.
^flQ
'
BA&OIATE RELEASE
\m*
D-166
THURSDAY, JULY 13, 196l
PRELIMINARy DATA ON IldPORTS ?0R CONSUMPTION OP UNMANUFACTURED LEAD AND ZINC CHARGEABLE TO THE aUOTAS ESTABLISHED
BY PRESIDENTIAL PROCLAMATION NO. 3257 0? SEPTEMBER 22, 195$
QUARTERLY QUOTA PERIOD • April I, 1961 • dune JO, 1961
IMPORTS - April I, I96l - June 50, 1961
ITEM 394
ITEM 393
ITEM 392
* Lead bullion or base bullion,
t lead In pigs and bars, lead
Zinc-bearing ore3 of all kinds,s Zlno la blocks, pigs, or slabs;
Lead-bearing ores* flue dust, . dross, reolaissad lead, BO rap
except
pyrites containing not : old and worn-out zlno, fit
and coattes
: lead, antiaaonlal lead, antlortr 3^ of zino
: only to be r.manufactured, zinc
s aonial scrap lead, type sietal,
:
dross, and sine skimmings
.all alloys or combinations of
j
lead n.s.p.f.
Quarterly Cuota
sQuarterly Quota
t&iartarly Quota
Quarterly C_iota
Iffiport3
t
Dutiable
2ins
Imports
. By Weight
Imports
Iaports : Dutiabl. Lead
. Dutiable Lead
*—
(Pounds)
(Pounds)
(PoundsJ
(Pounds^
ITEM 391
___M_Ma«__M&____r««>«
Country
of
Production
Australia
10,080,000
10,080,000
23,630,000
25,680,000
Belgian Congo
Belgium and
Luxemburg (total)
Bolivia.
Canada
5,040,000
13,440,000
5,440,000
5t^36,8H7
7#520,000
^,026,665
37,840,000
35»6«»9.867
5,01*0,000
I5,M*0,00Q 15,920,000
15,920,000
66,480,000
51,2*12,650
3,600,000
Italy
Mexico
36,880,000
56,880,000 70,480,000
70,^80,000
6,320,000
2,188,826
12,878,756 35*120,000
55,120,000
3,760,000
5,760,000
6,080,000
6,080,000
Peru
16,160*000
16,160,000
12,880,000
On. So. Afrloa
14,880,000
in,880,000
as
Yugoslovia
_»
All other foreign
countries (total)
6,560,000
6,560,000
15,760,000
15.760,000
6,080,000
6,080,000 17,840,000
17,8*40,000
TREASURY DEPARTMEHT
3&s_lngto_# D. C«
3Ql r
E-COIATE BSLEASS
<*> KJ *_/
D-166
THURSDAY, JULY 13, 196l
PaELIMINAKy DATA ON I_3K>R?S *GR CONSUMPTION OP DSMANOTACTUfiSD LEAD AND ZINC CHARGEABLE TO THE QUOTAS ESTABLISHED
BY PRESIDENTIAL PROCLAMATION NO. 3257 0? SEPTEMBER 22, 195&
QUARTERLY QUOTA PERIOD - April I, 1961 - June 50, 1961
IMPORTS • April I, 1961 - June 50, 1961
ITEM 392
. Lead bullion or base bullion,
t lead in pigs and bars, lead
Lead-bearing ores, flue dust,: drosa, rooUlzaad lead, sera?
and aattei
t lead, eatlaool&l load, airtl8 aonial scrap load, type aatal,
. all alloys or combination, of
%
lead n.s.p.f.
:&t__rUriy
Quota
Oiarterly C__3ta
In?art3
Iaports : Patlabia Lead ^
x Dutiable Lead
(Pounds)"
(Pounds \
ITEM
Country
of
Production
Australia
10,080,000
10,080,000
23,680,000
ITEM
ITEM 393
391
:
s
*
,.
%
: Zinc-b.aring or*, of all kinds,: Zino in Hoots,; pigs, or slabs;
: except pyrites containing not : old ana worn-out zinc, fit
:
crsr 3$ of zino
* onlydross,
to be and
reaanufaetured,
zinc
zino skimainga
:
*
Quarterly C__ota
:C_aart3rly __io±a
By fei.^it
Isporte
x Dutiable Zinc
Inports
(Pounds)
"(pounds')
25,680,000
Belgian Congo
Belgium and
Luxemburg (total)
Bolivia
Canada
5,040,000
394
t
5,440,000
5,458,847
7,520,000
4,026,665
37,340,000
35,649,867
5,040,000
13,440,000 15,440,000 15,920,000
15,920,000
66,430,000
51,242,650
3,600,000
Italy
Mexico
Peru
16,160,000
16,160,000
On. So. Afrioa
14,880,000
14,880,000
Yugoslovia
_»
All other foreigi
countries (total)
6,560,000
FRSPABSD IN TH2 BUSISAU OT CUSTOMS
6,560,000
36,880,000
36,880,000
70,480,000
12,830,000
12,878,756 35,120,000
15,760,000
15,760,000
6,030,000
6,080,000 17,840,000
70,480,000
35,120,000
17,840,000
6,320,000
2,188,826
3,760,000
3,760,000
6,080,000
6,080,000
CO
3Q-?
TREASURY DEPARTMENT
Washington, D* C.
IMMEDIATE RELEASE
THURSDAY, JULY. 13, 196l
D-I67
PRELIMINA__f DATA ON IMPORTS FOR CONSUMPTION OF UNMANUFACTURED LEAD AND ZINC CHARGEABLE TO THE QUOTAS ESTABLISHED
BY PRESIDENTIAL PROCLAMATION NO. 3257 OF SEPTEMBER 22, 1958
QUARTERLY QUOTA PERIOD • JUly I, 1961 - September 30, 1961
IMPORTS -July I, 196! - July IC, 1961
ITEM 394
ITEM 392
ITEM 393
: Lead bullion or base bullion,
t
t
i lead in pigs and bars, lead
Zlno~b_aring ores of all kinds,: Zino In blocks, pigs, or slabs;
Lead-bearing ores, flue dust,t dross, reclaimed lead, scrap
except pyrites containing not . old and worn-out zino, fit
and mattes
: lead, antlfflonlal lead, antlover 3°t> of zino
. only to be reaaanufactured, zino
: aonlal scrap lead, type metal,
:
' dross, and zino skiranings
i all alloys or combinations of
:
s
lead n.s.p.f.
Quarterly Quota
:Quarterly Quota
:Quarterly Quota
:Quarterly Quota
Importa
IniDorts : By Height
Dutiable Zinc
{ Dutiable Lead
Imports i Putlabia Lead
Imports
(Pounds)
(Pounds)
(Pounds)
(Pounds)
ITEM 391
Country
of
Production
i
Australia
10,080,000
1,685,146
i
23,680,000
•
!•
r II
i — p . — _ _ — — _ _ _ •
10,278
Belgian Congo
5,440,000
Belgium and
Luxemburg (total)
7# 520,000
Bolivia
Canada
5,040,000
2,705,870
66,480,000
13,440,000 9,460,929 15,920,000 1,246,403
1,487,087
37,840,000
3,122,667
3,600,000
440,920
70,480,000 4,660,911
6,320,000
415,307
35,120,000
3,760,000
Italy
36,880,000
Mexico
Peru
16,160P000
On. So. Afrloa
14,880,000
12,880,000
9,748,668
15,760,000 3,252,769
Yugoslavia
All other foreign
countries (total)
2,688,526
6,560,000
6,560,000
6,080,000 6,080,000
17,840,000
17,840,000
6,080,000
6,080,000
TREASURY DEPARTMENT
Washington, 9» C_
Q9
H&30IATE RELEASE
w __»
D-167
THURSDAY, JULY: 13, 196l
PRELIMDJAKT DATA ON IMF0RT3 FOR CONSUMPTION OF UNMMIUPACTUiSD LEAD AND ZINC CHARGEABLE TO THE QUOTAS ESTABLISHED
BY PRESIDENTIAL PROCLAMATION NO. 3257 OF SEPTEMBER 22, 1958
QUARTERLY QUOTA PERIOD • Jtfly I, 1961 - September 30, 1961
IMPORTS • July *, 1961 - July 10, 1961
ITEM 3?2
i Lead bullion or base" bullion,
t lead in pigs and bars, lead
Lead-bearing ores, flue dust,: dross, ra.laiaad lead, scrap
and aattes
: lead, antisonial load, anti: aonial scrap load, type aatal,
: all alloys or combinations of
t
load n.s.p.f.
Oiarterly~C__ota
__i_ar._riy Quota
t Dutiable Lead
Iaports : Put labia L3a.d _
Import3
(Pounds)
~
"~
(pounds
ITEM
Country
of
Production
10,080,000
Australia
391
1,685,146
23,680,000
i
* _ _ _ . . *
•
i v
: Zino-b_aring ores of all kinds,: Zinc in blooxs, pigs, or slabs;
: except pyrites containing not : old and worn-out zino, fit
:
OY.r 30 of zino
1 only to be reaanufactured, zino
:
*
dross, and zinc skianings
:
:Quarterly Quota
:(_uartarly €_icia
Iaporta
: By Sel.ght
Isports
i Dutiable 2inc
________________
(pounds)
10,278
5,440,000
Belgium and
Luxemburg (total)
7,520,000
5,040,000
2,705,870
37,840,000
3,122,667
3,600,000
440,920
70,480,000 4,660,911
6,320,000
415,307
35,120,000
3,760,000
66,480,000
13,440,000 9,460,929 15,920,000 1,246,403
Canada
1,487,087
Italj
36,880,000
Mexico
Peru
16,160,000
Un. So. Africa
14,880,000
F____?AB___>
2,688,526
12,880,000
9,748,668
15,760,000 3,252,769
Yugoslovia
All other foreign
oountries (total)
394
t
Belgian Congo
Bolivia
ITEM
ITEM 393
6,560,000
XH THS BU-ISA.U OT CUSTOMS
6,560,000
6,080,000 6,080,000
17,840,000
17,840,000
6,080,000
6,080,000
37 i
- 2 -
from Monday through Wednesday of next week, July 17-19•
The auction of $3-1/2 billion tax anticipation bills will take
place on Thursday, July 20, with payment to be made on Wednesday, July
QyerUttt^P
26.
^rrmfilTy depositaries may make payment for the
bills by credit in the Treasury's tax and loan accounts•
Further details of these offerings are summarized in the accoiapany__*
iag BJgjgfir statement^anU»f>rrMi'inM^ i 1 vv ul *-,
Draft #3—7/12/61
V> «_/ "f"
Treasury Announces $16 Billion Borrowing Operations
The Treasury announced today that it will refund in one operation
four maturing Treasury obligations due August 1 through October 1. Biis
refunding, totaling $12-1/2 billion, will be followed immediately by the
borrowing of $3-1/2 billion in cash through issuance of a tax anticipation
bill due next March.
/ The maturing issues include approximately $10 billion of certificates
and notes due August 1, $2-l/l|. billion of bonds maturing September Iff, and
$1/3 billion of notes maturing October 1* / Holders of all maturing issues
will be given a choice of -three securities: a 3-l/l$ note of 15-1/2 month
maturity^ a 3-3/1$ note of 3 year maturity*; and a 3-7/8$ Treasury bond
maturing in 6-3A years, which is already outstanding in the amount of
$1«U billion. The exchanges will be made on a par for par basis, except
that the issue price of the 3-7/8$ bonds will be 99-Jfe^B, to provide an
investment yield of 3•9$% to maturity.
billion exchange offer will be received
Subscriptions for the $12-1/2
•
W
w
TREASURY DEPARTMENT
^^^^^^•^B__________________________________B__________________________M
WASHINGTON, D.C.
July 13, 1961
FOR IMMEDIATE RELEASE
TREASURY ANNOUNCES $16 BILLION BORROWING OPERATIONS
The Treasury announced today that it will refund in one
operation four maturing Treasury obligations due August 1
through October 1. This refunding, totaling $12-1/2 billion,
will be followed immediately by the borrowing of $3-1/2 billion
in cash through issuance of a tax anticipation bill due next
March.
The maturing issues include approximately $10 billion of
certificates and notes due August 1, $2-1/4- billion of bonds
maturing September 15, and $1/3 billion of notes maturing
October 1.
Holders of all maturing issues will be given a choice of
three securities: a 3-1/4$ note of 15-1/2 month maturity;
a 3-3A# note of 3 year maturity; and a 3-7/8$ Treasury bond
maturing in 6-3/4 years, which is already outstanding in the
amount of $1.4 billion. The exchanges will be made on a
par for par basis, except that the Issue price of the 3-7/8$
bonds will be 99-3/8, to provide an investment yield of 3.98$
to maturity. Subscriptions for the $12-1/2 billion exchange
offer will be received from Monday through Wednesday of next
week, July 17-19.
The auction of $3-1/2 billion tax anticipation bills will
take place on Thursday, July 20, with payment to be made on
Wednesday, July 26. Qualified depositaries may make payment
for the bills by credit in the Treasury's tax and loan accounts.
Further details of these offerings are summarized in the
accompanying statements.
D-168
- 3 -
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 interes
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 un
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 -
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.
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
Daylight Saving
o f this issue, u n t i l after one-thirty o'clock p . m . , Eastern/^tsococtaxsd t i m e , Thursday,
_^_3___^c
July 20, 1961
.
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 $ 500,000 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 imme
diately available funds on July 26, 1961 , 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.
ftMMxxxSM
393
TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE
^ P ^ m t ! « ^ I;H Wa;^^Kt«
July 13, 1961
xx_g_x_u_o>o_a^^
TREASURY TO RAISE $3-1/2 BILLION CASH IN TAX BILLS
The Treasury Department, by this public notice, invites tenders for
$ 5,500,000,000 , or thereabouts, of 240 -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 designated Tax Anticipation Series, they will be
dated July 26, 1961 , and they will mature March 25, 1962 They will
be accepted at face value in payment of income and profits taxes due on March 15,
1962 , 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 March 15, 1962 , income and profits
taxes have the privilege of surrendering them to any Federal Reserve Bank or Branch
or to the Office of the Treasurer of the United States, Washington, not more than
fifteen days before March 15, 1962 , 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 March 15, 1962 , to the District Director of
Internal Revenue for the District in which such taxes are payable. The bills 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 closini
Daylight Saving
hour, one-thirty o'clock p.m., East ena ^dx_c__aK_xk time, Thursday, July 20 T 1961
xfciS_)_
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 cori|>etitive tenders th
price offered must be expressed on the basis of 100, with not more than three decimals, e. 5., 99.925. Fractions may not be used. It is urged that tenders be made
fc/t-f
July 13, 1961
FOR IMMEDIATE RELEASE
TREASURY TO RAISE $3-1/2 BILLION CASH IN TAX BILLS
The Treasury Department, by this public notice, Invites tenders
for $3*500,000,000, or thereabouts, of 240-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
designated Tax Anticipation Series, they will be dated
July 26, 196l,
and they will mature March 23, 1962.
They will be accepted at face value in payment of income and
profits taxes due on March 15. 1962,
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 March 15* 1962,
income
and profits taxes have the privilege of surrendering them to any
Federal Reserve Bank or Branch or to the Office of the Treasurer
of the United States, Washington, not more than fifteen days before
March 15, 1962, and receiving receipts therefor showing the
face amount of the bills so surrendered. These receipts may be
submitted in lieu 6f the bills on or before March 15, 1962,
to the District Director of Internal Revenue for the District in
which such taxes are payable. The bills 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 Daylight
Saving time, Thursday, July 20, 196l.
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
D-169
responsible
and recognized dealers in Investment securities. Tenders
from others must be accompanied by payment of 2 percent of the
4
/
O
Estimated Ownership of August, September and October 1961 Maturities
as of June 30, 1961
(in millions of dollars)
August
:Certificate:
Tfr
Note
$1,120
$ 815
$ 965
Mutual savings banks
33
33
50
Insurance companies:
Life
Fire casualty and marine
18
35
5
48
53
53
13
92
105
20
20
30
*
1,125
230
lf75
175
20
30
35
*
580
894
464
Ul
1,979
Total privately held,
2,951
2,075
2,124
327
7,477
Federal Reserve banks and
Government Investment Accounts.
4,878
61
115
5
5,059
Total outstanding
7,829
2,136
2,239
332
12,536
Commercial banks
Total, insurance companies.....
Corporate pension funds
Corporations
Savings and loan associations....
All other private investors
Office of the Secretary of the Treasury
* Less than $500,000.
$ 95
$ 2,995
*
116
3
13
16
39
188
227
70
2,005
85
July 13, 196:
273
40i
- 4-
1-1/2$ Treasury
note exchanged
for
5-1/4$ note 11/15/62
Credits per $1,000
Accrued
interest Discount
on 1-1/2$
on
note to
3-7/8$
9/1/61
Bond
$6.27049
Charges per $1,000
Accrued interest
to
9/1/61
Difference to
be paid to
subscriber
$2.73777
$3-53272
3-3/4$ note 8/15/64 6.27049
3.18261
3.08788
3-7/8$ Bond of 1968 6.27049 $6.25
11.47758
1.
An announcement concerning the issuance of $3*5 billion of 240-day Treasurytax anticipation bills is also being released at this time.
- 0 -
273
i09
_. 3 _.
Exchanges of 2-5/4$ Treasury Bonds
The maturing 2-3/4$ Treasury Bonds due September 15, 196l, may be exchanged
for a like face amount of the new 3-l/4$ Treasury notes due November 1$, 1962, or
the 5-3/4$ Treasury notes due August 15, 1964, with interest adjustments as of
August 1, 196I. Exchanges of the maturing 2-3/4$ Treasury Bonds due September 15,
1961, also may be made for a like face amount of the additional 3-7/8$ Treasury
Bonds due May 15, 1968, which will be issued at 99*575> with interest adjustments
as of August 1, 1961.
Coupons dated September 15> 196l, must be attached to the 2-5/4$ Treasury
Bonds of 1961 in coupon form when surrendered.
Adjustments with the holders
who exchange their 2-5/4$ Bonds will be made as follows:
2-5/4$ Bonds
exchanged
for
5-1/4$ note 11/15/62
Credits per $1.000
Accrued
Discount
interest
on
on 2-5/4$
3-7/8$
Bond to
Bond
8/1/61
Charges per $1,000
Accrued interest
to 8/1/61
on 3-7/8$ Bond
$10.58723
$10.58725
5-5/4$ note 8/15/64 10.58725
5-7/8$ Bonds of 1968 10.58725
Amount to
be paid
to
subscriber
IO.58725
$6.25
.21352
8.42391
Exchanges of l-l/2$ Treasury Notes
Holders of the l-l/2$ Treasury notes, Series E0-1961, maturing October 1,
1961, may exchange them for a like face amount of the new 5-1/4$ Treasury notes
maturing November 15, 1962, the 5-5/4$ Treasury notes maturing August 15, 1964,
or additional 5-7/8$ Treasury Bonds due May 15, 1968, which will be offered at
99 • 575* Exchanges of the l-l/2$ Treasury note§ Series EO-1961, will be made
with interest adjustments as of September 1, 1961.
Coupons dated October 1, 1961, must be attached to the l-l/2$ Treasury notes
when surrendered. Adjustments with the holders who exchange their l-l/2$ Treasury
notes will be made as follows:
273
40d
- 2 and placed in the mail before midnight JUly 19, will be considered as timely.
The securities will be delivered August 1, 196l, and will be made available
in registered form, as well as bearer form.
Tax Anticipation Bills
In addition to the exchange privileges open to the holders of the maturing
Treasury securities, the Treasury will also receive tenders on Thursday, July 20,
1961, for approximately $5.5 billion of 240-day tax anticipation Treasury bills
to be dated July 26, 1961, and to mature Jfarch 25, 1962. Qualified depositaries
may make payment for the bills by credit in their Treasury tax and loan accounts.
Interest Payment Dates
Interest on the new 5-l/4$ 15-l/2-month Treasury note will be paid on
November 15, 1961, and semiannually on May 15 and November 15, 1962. Interest
on the 5-5/4$ 5-year Treasury note w i U be payable semiannually on February 15
and August 15. Interest on the 5-7/8$ Bonds of 1968 is payable semiannually
May 15 and November 15Exchanges of 5-l/8$ Certificates and 4$ Treasury Notes
Exchanges of the 5-l/8$ certificates of indebtedness and 4$ Treasury notes
maturing August 1, 1961, may be made for a like face amount of either the 5-l/4$
Treasury notes maturing November 15, 1962, or the 5-5/4$ Treasury notes maturing
August 15, 1964. Coupons dated August 1, 1961, on the maturing 5-l/8$ certificates
and 4$ Treasury notes exchanged for the new Treasury notes should be detached by
holders and cashed when due.
Exchanges of the securities maturing August 1, 1961, for additional amounts
of the 5-7/8$ Treasury Bonds maturing May 15, 1968, will be made with interest
adjustments as of August 1, 1961. Coupons dated August 1, 1961, on the maturing
certificates and notes exchanged, must be attached to the certificates and notes
when surrendered. Adjustments will be made with the subscribers to the 5-7/8$
Treasury Bonds of 1968, as follows:
Credits per $1.000
Maturing issue
Amount
exchanged for
due on
5-7/8$ Bond
maturing
issue
5-1/8$ Certificate
4$ Note
Discount
on
5-7/8$
Bond
Charges per $1,000
Accrued interest
to 8/1/61
on 5-7/o$ Bond
Difference to be
paid to
subscriber
$15,625
$6.25
21552
$15,66168
20.00
6.25
8.21552
I8.O5668
273
TREASURY DEPARTMENT
WASHINGTON, D.C.
FOR IMMEDIATE RELEASE
July
^'
19gl
TREASURY TO REFUND $12-5 BILLION OF SECURITIES MATURING
AUGUST 1 TO OCTOBER 1, AND TO RAISE $5.5 BILLION
IN CASH
The Treasury is offering holders of Treasury securities maturing from
August 1, 1961, through October 1, 1961, aggregating $12,556 million, the
right to exchange them for any of the following securities:
5-1/4$ 15-l/2-month Treasury notes to be dated August 1,
15361, and to mature November 15, 1962, at par; or
3-3/4$ 3-year Treasury notes to be dated August 1, 1961,
and to mature August 15, 1964, at par; or
3-7/8$ Treasury Bonds of 1968, dated June 23, i960, maturing
May 15, 1968, of which $1,390 million are outstanding,
at 99-375—«o#
The additional amounts of 3-7/8$ Treasury Bonds maturing May 15, 1968,
included in this exchange offering, will be issued at a price of 99.375, to
yield 3.98$ to maturity.
Cash subscriptions for the securities listed above will not be received.
The maturing issues eligible for exchange are as follows:
$7,829 million of 3-1/8$ Treasury certificates of indebtedness
of Series C-1961, dated August 15, i960, maturing August 1.
196l; and
$2,136 million of 4$ Treasury notes of Series A- 1961, dated
August 1, 1957, maturing August 1, 196I; and
$2,239 million of 2-3/4$ Treasury Bonds of 1961, dated
November 9, 1953> and maturing September 15, 196I; and
$352 million of l-l/2$ Treasury notes of Series EO-1961,
dated October 1, 1956, due October 1, 1961.
The subscription books will be open only on JUly 17 through July 19 for the
receipt of subscriptions. Subscriptions for any issue addressed to a Inderal
Reserve Bank or Branch, or to the Office of the Treasurer of the United States,
D-170
TREASURY DEPARTMENT
WASHINGTON, D.C.
FOR IMMEDIATE RELEASE
JUly 13
'
19 1
TREASURY TO REFUND $12.5 BILLION OF SECURITIES MATURING
AUGUST 1 TO OCTOBER 1, AND TO RAISE $3.5 BILLION
IN CASH
The Treasury is offering holders of Treasury securities maturing from
August 1, 1961, through October 1, 196l, aggregating $12,536 million, the
right to exchange them for any of the following securities:
3-1/4$ 15-l/2-month Treasury notes to be dated August 1,
15961, and to mature November 15, 1_?62, at par; or
3-5/4$ 5-year Treasury notes to be dated August 1, l<96l,
and to mature August 15, 196k, at par; or
5-7/8$ Treasury Bonds of 1J968, dated JUne 25, i960, maturing
May 15, 1968, of which $1,590 million are outstanding,
at 99-575.
The additional amounts of 5-7/8$ Treasury Bonds maturing May 15, 1968,
included in this exchange offering, will be issued at a price of 99.575* to
yield 5.98$ to maturity.
Cash subscriptions for the securities listed above will not be received.
The maturing issues eligible for exchange are as follows:
$7,829 million of 5-1/8$ Treasury certificates of indebtedness
of Series C-1961, dated August 15, i960, maturing August 1,
1S&L; and
$2,156 million of 4$ Treasury notes of Series A- 196l, dated
August 1, 1957* maturing August 1, 196I; and
$2,239 million of 2-3/4$ Treasury Bonds of 1961, dated
November 9$ 1953> and maturing September 15, 196l; and
$352 million of l-l/2$ Treasury notes of Series E0-1J961,
dated October 1, 1956, due October 1, l<?6l.
The subscription books will be open only on July 17 through JUly 19 for the
receipt of subscriptions. Subscriptions for any issue addressed to a Federal
Reserve Bank or Branch, or to the Office of the Treasurer of the United States,
D-170
4P£
and placed in the mail before midnight JUly 19, will be considered as timely.
The securities will be delivered August 1, 1961, and will be made available
in registered form, as well as bearer form.
Tax Anticipation Bills
In addition to the exchange privileges open to the holders of the maturing
Treasury securities, the Treasury will also receive tenders on Thursday, JUly 20,
196I, for approximately $5.5 billion of 240-day tax anticipation Treasury bills
to be dated July 26, 1JJ61, and to mature March 25, 1J?62_ Qualified depositaries
may make payment for the bills by credit in their Treasury tax and loan accounts.
Interest Payment Dates
Interest on the new 5-l/4$ 15-l/2-month Treasury note will be paid on
November 15* 1961, and semiannually on May 15 and November 15, 1962, Interest
on the 5-5/*$ 5-year Treasury note will be payable semiannually on February 15
end August 15. Interest on the 5-7/8$ Bonds of 1JJ68 is payable semiannually
May 15 and November 15*
Exchanges of 3-l/8$ Certificates and 4$ Treasury Notes
Exchanges of the 3-1/8$ certificates of indebtedness and 4$ Treasury notes
maturing August 1, 196l, may be made for a like face amount of either the 3-l/4$
Treasury notes maturing November 15, 15?62, or the 5-3/4$ Treasury notes maturing
August 15, 1J364. Coupons dated August 1, 1961, on the maturing 3-1/8$ certificates
and kfd Treasury notes exchanged for the new Treasury notes should be detached by
holders and cashed when due.
Exchanges of the securities maturing August 1, 15961, for additional amounts
of the 3-7/8$ Treasury Bonds maturing May 15, 1<?68, will be made with interest
adjustments as of August 1, 1JJ61. Coupons dated August 1, 15?6l, on the maturing
certificates and notes exchanged, must be attached to the certificates and notes
vhen surrendered. Adjustments will be made with the subscribers to the 5-7/8$
Treasury Bonds of 1968, as follows:
Credits per $1,000
Maturing issue
Amount
exchanged for
due on
3-7/8$Bond
maturing
issue
3-1/8$ Certificate
$15,625
4$ Note 20.00 6.25
Discount
on
5-7/8$
Bond
$6.25
Charges per $1,000
Accrued interest
to 8/1/61
on 5-7/8$ Bond
$8.21552
8.21552 18.05668
Difference to be
paid to
subscriber
$15,66168
_5-
4n
Exchanges of 2-3/H Treasury Bonds
-•
i
The maturing 2-3/4$ Treasury Bonds due September 15, 15?6l, may be exchanged
for a like face amount of the new 3-l/4$ Treasury notes due November 15> JL962, or
the 3-5/4$ Treasury notes due August 15 > 1964, with Interest adjustments as of
August 1, 196l. Exchanges of the maturing 2-5/4$ Treasury Bonds due September 15,
1961, also may be made for a like face amount of the additional 5-7/8$ Treasury
Bonds due May 15, 1968, which will be issued at 539*575/ vith interest adjustments
as of August 1, 1961.
Coupons dated September 15 > 15361, must be attached to the 2-5/4$ Treasury
Bonds of 15361 in coupon form when surrendered.
Adjustments with the holders
who exchange their 2-5/4$ Bonds will be made as follows:
2-5/4$ Bonds
exchanged
for
3-1/4$ note 11/15/62
Credits ner $1,000
Accrued
interest Discount
on
on 2-5/4$
Bond to
5-7/8$
Bond
8/1/61
Charges per $1,000
Accrued interest
to 8/1/61
on 2llZ8 Bond
$10.58725
$10.58725
IO.58725
3-3/4$ note 8/15/64 10.58725
3-7/8$ Bonds of 1968 10.58725
Amount to
be paid
to
subscriber
$6.25
$8.21552
8.42591
Exchanges of l-l/2$ Treasury Notes
Holders of the l-l/2$ Treasury notes, Series EO-1961, maturing October 1,
1961, may exchange them for a like face amount of the new 5-l/4$ Treasury notes
maturing November 15, 1962, the 5-5/4$ Treasury notes maturing August 15> 15364,
or additional 5-7/8$ Treasury Bonds due May 15, 15?68, which will be offered at
99*375. Exchanges of the l-l/2$ Treasury note§ Series EO-1J361, will be made
vith interest adjustments as of September 1, 1961.
Coupons dated October 1, 1J361, must be attached to the l-l/2$ Treasury notes
when surrendered. Adjustments with the holders who exchange their l-l/2$ Treasury
notes will be made as follows:
n
- 4-
l-l/2$ Treasury
note exchanged
for
Credits per $1,000
Accrued
interest Discount
on 1-1/2$
on
note to
3-7/8$
9/1/61
Bond
Charges per $31,000
Accrued interest
to
9/1/61
Difference to
be paid to
subscriber
3-1/4$ note 11/15/62 $6.27049
$2.73777
$3-55272
3-3/4$ note 8/15/64 6.27049
3.18261
5.08788
3-7/8$ Bond of 1968 6.27049 $6.25
11.47758
1.04291
An announcement concerning the issuance of $5*5 billion of 240-day Treasury
tax anticipation bills is also being released at this time*
- 0 -
4^Q
*%?.
MkWM&mWNmM
;i_j__dtL-_8-fc
^ ____,
y"'rtto_l_----B<- ___rt_b> ____.________»___• -_______R___1 ,______^ ____,^M^^-
_«.»•••••..«_•
*«•#••«•••*#*••»••
.»•••••
410*
TREASURY DEPARTMENT
WASHINGTON. D.C.
June 15, 1961
IMMEDIATE RELEASE
TREASURY MARKET TRANSACTIONS IN
J,
W)C
June
During May 1961, 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
4t-rjJJ^tfooos
0O0
b -n 1
TREASURY DEPARTMENT
WASHINGTON, D.C.
July lb, 1961
IMMEDIATE RELEASE
TREASURY MARKET TRANSACTIONS IN JUNE
During June 1961, 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
$15,351,000.
0O0
D-171
____S8SS8_Sigi
u
ii w^SBBSnT
!i____K_5__SSSi£35»S£^^
Secretary of the Troaawry Dotelae Dillon and Kafael
Glower Valdivieao, the Minister of Uoamm
of El Salvador,
today signed an exchange agreeaent in the aaouat of $6 nd-fifa^
Under the. ajjreesaent, which will M M for oat year, II
Salvador nay request tho United StateeffwrhanfceffuHll—tloi
Fund to nurehaee Snlve>d©__H_ eoloaee should tho occasion for
s____ _o______aee eriae. Anv eolonee ao
SIHIHIITSHI
_nr t__e U. _>.
dollars.
'Shis excii&ag® ag^Mwsit Is iliiwlgiwt t© Aaalst fit Salvador
to ffsalnt&li! lt& | M M I ^mlflfKf ^Kflwifigf rate Miditenrostera
Afttiillliyitae-i in %1
S&lv_ftl@$f f & %&_Ltf__tt_M_l $ £ W ^ W f i l t t e e
The Board of Biro, tore of t__. Eapme _»Iayoc. lank today
authorized a credit of $10, 000,000 to the Banco Central do
Reserve de 11 Salvador to maintain easeatlal iMporta fron the
United States.
the aRre—ant with tho 8, 8. Treaaury suoalenents tho
U 1,250,000 standby arraxtgeaent with tho International Monetary
food which heeawa effeetiva July 13, 1961.
413
TREASURY DEPARTMENT
|_MWII»IU__UW1_-_^TO^
•II.IIHSIIII.I.IIIIII
WASHINGTON, D.C.
July 14, 1961
FOR IMMEDIATE RELEASE
U.S.-
EL SALVADOR SIGN $6 MILLION EXCHANGE AGREEMENT
Secretary of the Treasury Douglas Dillon and Rafael
Glower Valdivieso, the Minister of Economy of El Salvador,
today signed an exchange agreement in the amount of $6 million.
Under the agreement, which will run for one year,
El Salvador may request the United States Exchange Stabilization
Fund to purchase Salvadoran colones should the occasion for
such purchases arise.
Any colones so acquired by the U.S.
Treasury would subsequently be repurchased by El Salvador for
dollars.
This exchange agreement is designed to assist El Salvador
to maintain its present unified exchange rate and to restore
equilibrium in El Salvador's balance of payments.
The Board of Directors of the Export-Import Bank today
authorized a credit of $10,000,000 to the Banco Central de
Reserva de El Salvador to maintain essential imports from the
United States.
The agreement with the U. S. Treasury supplements the
$11,250,000 standby arrangement with the International Monetary
Fund which became effective July 13, 1961.
0O0
D-172
mmiM at rmmKx*s WBBKLT •:
feat t&a taiadara fortedmtim mt
wa oftotM i l * datwl April 20, lf6l,
wmm affarad mm ML? 22* m n
«Wft iaviUd for 11,100,000,81
* ar tMiHttbaata. af l82«4ftjr billt*
'_>..
apam» at tte I M a m l .taaarira lanim on
•Bf
tail
•r-oi
IfiKday Treasury bills
1
**ww_a*iaaisiaa»
SlOSt
mmmmam
lot.;
Wz.m$y
$& pmtmM& of tlMi asuaatit af 9l-da;r bill* hid far at t&a Im prto* mm* *ce*ptad
far at the Im prim w&® &cceptad
FOR
* #*,**
HEM* J
it4* *s**=4#<
f ,190*00.
821,166,000
ii.o__£ooo
ali,*n,009
"V
19,158,000
1,315,000
1,652,000
72,317,000
5,669,000
6,119,000
2,5*6,000
1,115,000
3,152,00.
.21,991,000
35,317,090
tT,210,000
e.171.00.
«tl_9,080
ai'sofr
5,719,000
2,5*6,00.
*•»
12.56fe.0O.
ieel__es tSltO, I O & J O O O asnee-oetiilve taadaro tUMMptnMl at ttia awraia priea of W#MA
e$d*srs acc^iad at ttoi «fini« priaa af £8#TSkj
*
'%»• • Jf'*l V
i audi £«r Urn mm® mmmaMt iitaaatad* ifea rttura if
till*
af S.atot» ffcr tto 91-day fetUt# a*i 2#W* t ftr J
*a a*a qpata* is tarw af bank dlaaaaat » *
#f ttia M l l a pajalda at natality r*iM*r **J
^'*3_ Li>w
tual aua&er m£ dajra ralatad ta a J60-4I
* nataa* awi bairfa *r® eanpatad la *•**
« t mm**
.^plata t&a raafear af day* raaaiatag ia •*
ecruocm
*J
toil aufcar af daya la tbajparia*. *!*& aaalw*
1
SS9B9
TREASURY DEPARTMENT
gQQ__________G
aSB_____S__B
WASHINGTON, D.C.
July 17, 1961
FOR RELEASE A. M_ NEWSPAPERSa Tuesday, July 18, 196l»
RESULTS OF TREASURY* S WEEKLY BILL OFFERING
*• 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 April 20, 1961,
land the other series to be dated July 20, 1961, which were offered on July 12, were
opened at the Federal Reserve Banks on July 17 • Tenders were invited for $1,100,000,000,
or thereabouts, of 91-day bills and for $500,000,000, or thereabouts, of 182-day bills.
The details of the two series are as follows:
RANGE OF ACCEPTED
COMPETITIVE BIDS.
High
Low
Average
91-day Treasury bills
maturing October 19, 1961
Approxo Equiv,
Price
Annual Rate
2.172%
99.1*51
2.221%
99.1*37
2.200$ 1/
99.hkk
182-day Treasury bills
maturing January 18, 1962
Approx. Equiv,
Price
Annual Rate
98o801
2.372$
2.1*05$
98.781*
2*385$ 1/
98.791*
90 percent of the amount of 91-day bills bid for at the low price was accepted
73 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:
Accepted
Applied For
Accepted
District
Applied For
Boston
¥2,896,000
2,896,000
22*, 096,000
$
1*2,096,000
Mew York
1*18,991,000
821,866,000
659,1*81,000
1,339,981,000
Philadelphia
2,058,000
7,058,000
15,103,000
31,103,000
Cleveland
7,158,000
19,158,000
29,361,000
3l*,66l,000
Richmond
1,315,000
1,315,000
11,616,000
11,616,000
Atlanta
3,152,000
3,652,000
17,915,000
18,615,000
Chicago
35,317,000
72,317,000
11*7,391,000
221,991,000
Ste Louis
1*,179,000
1*,679,000
69,51*0,000
87,210,000
Minneapolis
1*,169,000
5,669,000
12,33l*,000
lli,_*3l*,000
Kansas City
5,719,000
6,119,000
1*1,1*07,000
1*1,507,000
Dallas
2,516,000
2,51*6,000
li*, 700, 000
ll*, 700,000
57.351,000
San Francisco
12,561*, 000
13,1893000
57^951,000
,100,295,000
a/
$960,1*61*,000
TOTALS
$500,061*,000 b /
,915,865,000
a/ Includes $2l*0,10l*,000 noncompetitive tenders accepted at the average price of 99ei*l
!jy Includes $1*5,561*,000 noncompetitive tenders accepted at the average price of 98e79U
J/ On a coupon issue of the same length and for the same amount invested, the return on
these bills would provide yields of 2.2i*$, for the 91-day bills, and 2.1*5$, for the
182-day bills• Interest rates on bills are quoted in terms of bank discount with
the return related to the face amount of the bills payable at maturity rather than
the amount invested and their length in actual number of days related to a 360-day
year. In contrast, yields on certificates, notes, and bonds are computed in terms
of interest on the amount invested, and relate the number of days remaining in an
interest payment period to the actual number of days in the period, with semiannual
compounding if more than one coupon period is involved.
D-173
s— X
___sa__M«eweM^«w«ej_a-)|S-nu__MSSKB_______H»
- 3 -
-•• i c
\_/
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 intere
Under Sections 454 (b) and 1221 (5) of the Internal Revenue Code of 1954 the amoun
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 e
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, whethe
on original issue or on subsequent purchase, and the amount actually received eith
upon sale or redemption at maturity during the taxable year for which the return i
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 -
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 invest
raent 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 April 27. 1961 > ( 91 days remaining until maturity date on
_{_b_f
October 26, 1961
_p3S§
p®$
) and noncompetitive tenders for
$10QJQQQ
or less for the
^mf
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 respec
tive issues. Settlement for accepted tenders in accordance with the bids must be
made or completed at the Federal Reserve Bank on July 27, 1961 , in cash or
(£&)
other immediately available funds or in a like face amount of Treasury bills maturing July 27, 1961 Cash and exchange tenders will receive equal treatment.
x£23$
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 exem&tioikf, as such, and loss
I _4_ \_/
TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RISL_lASE,x_<_k^-^ J^'
19
>
1961
xxxyxyyyyyyxyyyyyyy,yy»_ffl_X-0^^
^*
TREASURY'S WEEKLY BILL OFFERING
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 July 27, 1961 y in the amount
of $1,600,818,000 , as follows:
P?
91 -day bills (to maturity date) to be issued July 27, 1961 >
~p_f
p|
in the amount of $1,100-,000,000 , or thereabouts, representing an additional amount of bills dated April 27, 1961 >
~J
m
and to mature
October 26, 1961 , originally issued in the
W(including $100,104,000 issued June 14, 1961)
amount of $ 500,219,000 7 , the additional and original bills
to be freely interchangeable.
182 -flay bills, for $ 500,000,000 , or thereabouts, to be dated
July 27, 1961 , and to mature January 25. 1962 •
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
Daylight Saving
hour, one-thirty o'clock p.m., Eastern/_545S8€ti^Sctime, Monday, July 24, 1961
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
/
.
)
/
,. 1 Q
TREASURY DEPARTMENT
IW_-_^„AUWU_^ffMOJ_yw^
II | (|| mi IIIIIIHIII W . I • H S M B I B I I I M 1
WASHINGTON, D.C.
N ^ ^ X
July 19, 1961
FOR IMMEDIATE RELEASE
TREASURY'S WEEKLY BILL OFFERING
The Treasury Department, by this public notice, invites tend£i*S
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 July 27,1961
in the amount of
$ 1,600,818,000 as follows:
91 -d^y bills .(to maturity date) to be issued July 27, 1961 > ifi
amount of $1,100,000,000, or thereabouts, representing an additional
amount of bills dated April 27, 1961, and to mature October 26, 19^1
originally issued in the amount of ^500,219,000 (including $100,104*000
issued June 14, 1961
), the additional and original bills
to be freely interchangeable .182 -day bills, for $ 500,000,000 ©£ thereabouts, to be dated
July 27, 196l and to iriatUref January 25, 1962
The bills of both series will be issued on a discount basis und3_?
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
Daylight Saving time, Monday, July 24,l96l.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 ftfdfii
responsible and recognized dealers in investment securities. Tenders
from
D-174others must be accompanied by payment of 2 percent of the facd
amount df Treasury bills applied for, unless the tenders are
accompanied
by an express guaranty of payment by an incorporated bank
or
trust company.
- 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 Departmment 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 respec'
shall be final. Subject to these reservations, noncompetitive
tenders for $ 200,000or less for the additional bills dated
April 27, 1961
(91 days remaining until maturity date on
October 26, 1961
and noncompetitive tenders for $100,000
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 July 27, 1961
in cash or other immediately available funds or in a like face
amount of Treasury bills maturing July 27, 1961
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 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 hereunde
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 u P o n
sale or redemption at maturity during the taxable year for which the
return is made, as ordinary gain or loss.
0O0
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.
•1 •"'•
- 4 Supreme Court in 1956 in Commissioner v. LoBue, 351 U. S. 243, that
options granted in connection with the rendition of services are
compensatory in nature and subject to tax. The problem at present
is one of determining the time at which options should be taxed—for
example, whether on grant, or on exercise, or on sale of the stock
acquired pursuant to exercise—and, as a corollary to the timing of
the income derived from the option, the amount and type of gain—whether
ordinary or capital. The Treasury Department at one time by regulations
sought to provide that options not qualifying under section 421 were
not taxable upon grant but were taxable when transferred or exercised,
the recipient of the option realizing ordinary income at such time.
In several decisions, the courts have refused to uphold such a rule.
In January of this year, the regulations were amended to provide as
to employees that an option in certain cases may be taxable upon
grant.
There is a substantial administrative problem involved if options
are to be taxed upon grant. The value of an option is often very
uncertain and difficult to determine. It may be necessary if section 421
were repealed in order to handle satisfactorily the more technical aspects
of taxing stock options to enact legislation specifying rules as to the
timing and amount of income realized from such options.
To conclude, in addition to the problems of basic policy involved
in according employee stock options special treatment, there are problems
in this area of a more technical nature which the Treasury is also studying in connection with its review of this area as part of its program of
general tax revision.
*2i
- 3 the stock so acquired shortly after the minimum holding period. In
such situations, section 421 merely provides a way in which compensation can be paid to selected employees without the payment of ordinary
income tax thereon and with no possible incentive effect through continued holding of stock. In this connection, it has been pointed out
that in providing other incentive tax benefits in the compensation
area, such as pension, profit-sharing, and stock-bonus plans, Congress
has required that the extension of the benefits must be non-discriminitory—
that is, they must be proportionately available to a substantial number
of the employees of an enterprise. The benefits of stock options can
be bestowed at will on selected employees, discretion in this regard
being unrestricted by section 421.
The basic question raised by S. 1625 is whether this particular
form of executive compensation should be accorded special tax treatment.
Entirely apart from the above criticisms of the manner in which section 421
has operated, since the preference accorded by section 421 to selected
persons is so substantial, both the basic policy objectives of such
section and the extent to which they have been realized in actual
practice should be reviewed.
If S. 1625 were to be enacted and section 421 repealed, consideration
might well have to be given to the bunching of income which might occur
if all the compensation involved in an employee option were to be taxed
in the year of exercise. This would involve examination of various
methods of spreading or averaging such taxable income over an appropriate
period of time. This problem may be somewhat similar to that involved
in sections 1301 through 1306 of the Internal Revenue Code.
We plan to consider all the alternatives in the stock option area
and had intended to complete our study before next year so that, if
changes seem desirable, they could be proposed as part of the program
of general tax revision. However, if your Committee wishes to develop
new legislation this year, we will be pleased to work with you to this
end.
In this connection, it should be recognized that, apart from the
basic policy questions raised by section 421, there are serious problems of a more technical nature in the stock option area. There is at
present considerable controversy as to what rules should govern the
taxation of employee options which do not qualify under section 421.
Non-qualifying options are on occasion received by employees, although
such occurrence normally is not intentional but rather is attributable
to inability to meet the requirements of section 421. If section 421
were to be repealed, there might be an even larger group of employee
options to be governed by non-statutory rules. While at one time there
was controversy as to whether such options were to be taxed at all, it
is now clear, and has at least been clear since the decision of the
- 2 fair market value of the stock upon exercise. Thus, a substantial
economic benefit may be obtained, and retained indefinitely, without
the payment of any tax. If the stock is sold, then there may be tax,
but income realized on the sale of the stock, including that attributable to appreciation prior to the exercise of the option, is taxed as
a capital gain. If the stock is held until death, there is no income
tax at any time.
Where the option price is between 85 and 95 percent of the fair
market value of the stock at the time the option is granted, a more
involved rule becomes applicable. No income is realized on the exercise of the option, but the spread between the option price and the
fair market value of the stock at the time of grant is taxable as
ordinary income on any disposition of the stock, including transfer
upon death. In the case of a person who owns more than 10 percent
of the stock of his employer, the option price must be at least
110 percent of the fair market value of the stock on the date when
the option is granted. Also, in such a case, the option can be
exercised only within a period of five years. In cases of employees
with lesser stock interests, the option can be exercised over a
period of ten years. In all cases, the benefits cannot be obtained
unless the stock is held until at least two years after the date the
option was granted, and for at least six months after the option was
exercised.
Section 421 has been the subject of varied criticism, primarily
along the following lines.
It has been contended that, in practice, the law discriminates
against the closely-held company whose stock is not listed on an
established exchange and in favor of the company whose stock is so
listed. The reason is that, in order to qualify under section 421,
the option price must be at least 85 or 95 percent of the fair market
value of the stock at the time the option is granted. When the stock
of a company is not listed on an established exchange, the company
ordinarily has great difficulty in establishing with reasonable certainty the fair market value of its stock, and, consequently, unlisted
companies are reluctant to use section 421. On the other hand, companies
which are publicly held have no such difficulty. Moreover, it has been
asserted that in some instances smaller companies have had difficulty
in retaining promising executives because larger companies have induced
these executives to join them by offering restricted employee stock
options.
A more fundamental criticism of section 421 that has been voiced
is that often it has not in fact operated to encourage employees to
acquire a proprietary interest in the business - a primary purpose
for which the section was enacted. It has been suggested that in many
instances the employee, who has exercised the restricted option, sells
TREASURY DEPARTMENT
Wa shington
42 ^
July 20, 1961
For Release: Upon Delivery
STATEMENT OF MICHAEL WARIS, JR.
ASSOCIATE TAX LEGISLATIVE COUNSEL OF THE TREASURY DEPARTMENT
BEFORE THE
SENATE FINANCE COMMITTEE
ON S. 1625, RELATING TO THE TAX TREATMENT OF
CERTAIN EMPLOYEE STOCK OPTIONS
THURSDAY, JULY 20, I96I
10:00 A.M., EDT
I am happy to be here today to present the views of the Treasury
Department regarding S, 1625. This bill would terminate the tax treatment now accorded to certain employee options by making section 421
inapplicable to options granted after April 13th of this year.
The statutory tax treatment of "restricted employee options" was
introduced into the Internal Revenue Code in 1950. The Congressional
purpose appears to have been primarily to assist corporations in
securing better management. This was to be accomplished by facilitating
the acquisition by key employees of a proprietary interest in the business. Senate Report No. 2375 stated that:
"Such options are frequently used as incentive devices
by corporations who wish to attract new management,
to convert their officers into 'partners1 by giving
them a stake in the business, to retain the services
of executives who might otherwise leave, or to give
their employees generally a more direct interest in
the success of the corporation."
It is clear that extensive use has been made of section 421 to
compensate key corporate employees. In June, 1959, Business Week
reported that a recent National Industrial Conference Board survey of
673 companies listed on stock exchanges indicated that 69$ of such
companies had such plans at that time.
Section 421 provides a particularly complex scheme for according
special treatment. If the option price is at least 95 percent of the
fair market value of the stock at the time the option is granted, then
no income is realized on the exercise of the option regardless of the
D-175
424
TREASURY DEPARTMENT
Washington
July 20, 1961
For Release: Upon Delivery
STATEMENT OF MICHAEL WARIS, JR.
ASSOCIATE TAX LEGISLATIVE COUNSEL OF THE TREASURY DEPARTMENT
BEFORE THE
SENATE FINANCE COMMITTEE
ON S. 1625, RELATING TO THE TAX TREATMENT OF
CERTAIN EMPLOYEE STOCK OPTIONS
THURSDAY, JULY 20, I96I
10:00 A.M., EDT
I am happy to be here today to present the views of the Treasury
Department regarding S. 1625. This bill would terminate the tax treatment now accorded to certain employee options by making section 421
inapplicable to options granted after April 13th of this year.
The statutory tax treatment of "restricted employee options" was
introduced into the Internal Revenue Code in 1950. The Congressional
purpose appears to have been primarily to assist corporations in
securing better management. This was to be accomplished by facilitating
the acquisition by key employees of a proprietary interest in the business. Senate Report No, 2375 stated that:
"Such options are frequently used as incentive devices
by corporations who wish to attract new management,
to convert their officers into 'partners1 by giving
them a stake in the business, to retain the services
of executives who might otherwise leave, or to give
their employees generally a more direct interest in
the success of the corporation."
It is clear that extensive use has been made of section 421 to
compensate key corporate employees. In June, 1959> Business Week
reported that a recent National Industrial Conference Board survey of
673 companies listed on stock exchanges indicated that 69$ of such
companies had such plans at that time.
Section 421 provides a particularly complex scheme for according
special treatment. If the option price is at least 95 percent of the
fair market value of the stock at the time the option is granted, then
no income is realized on the exercise of the option regardless of the
D-175
425
- 2 fair market value of the stock upon exercise. Thus, a substantial
economic benefit may be obtained, and retained indefinitely, without
the payment of any tax. If the stock is sold, then there may be tax,
but income realized on the sale of the stock, including that attributable to appreciation prior to the exercise of the option, is taxed as
a capital gain. If the stock is held until death, there is no income
tax at any time.
Where the option price is between 85 and 95 percent of the fair
market value of the stock at the time the option is granted, a more
involved rule becomes applicable. No income is realized on the exercise of the option, but the spread between the option price and the
fair market value of the stock at the time of grant is taxable as
ordinary income on any disposition of the stock, including transfer
upon death. In the case of a person who owns more than 10 percent
of the stock of his employer, the option price must be at least
110 percent of the fair market value of the stock on the date when
the option is granted. Also, in such a case, the option can be
exercised only within a period of five years. In cases of employees
with lesser stock interests, the option can be exercised over a
period of ten years. In all cases, the benefits cannot be obtained
unless the stock is held until at least two years after the date the
option was granted, and for at least six months after the option was
exercised.
Section 421 has been the subject of varied criticism, primarily
along the following lines.
It has been contended that, in practice, the law discriminates
against the closely-held company whose stock is not listed on an
established exchange and in favor of the company whose stock is so
listed. The reason is that, in order to qualify under section 421,
the option price must be at least 85 or 95 percent of the fair market
value of the stock at the time the option is granted. When the stock
of a company is not listed on an established exchange, the company
ordinarily has great difficulty in establishing with reasonable certainty the fair market value of its stock, and, consequently, unlisted
companies are reluctant to use section 421. On the other hand, companies
which are publicly held have no such difficulty. Moreover, it has been
asserted that in some instances smaller companies have had difficulty
in retaining promising executives because larger companies have induced
these executives to join them by offering restricted employee stock
options.
A more fundamental criticism of section 421 that has been voiced
is that often it has not in fact operated to encourage employees to
acquire a proprietary interest in the business - a primary purpose
for which the section was enacted. It has been suggested that in many
instances the employee, who has exercised the restricted option, sells
42o
- 3the stock so acquired shortly after the minimum holding period. In
such situations, section 421 merely provides a way in which compensation can be paid to selected employees without the payment of ordinary
income tax thereon and with no possible incentive effect through continued holding of stock. In this connection, it has been pointed out
that in providing other incentive tax benefits in the compensation
area, such as pension, profit-sharing, and stock-bonus plans, Congress
has required that the extension of the benefits must be non-discriminitory—
that is, they must be proportionately available to a substantial number
of the employees of an enterprise. The benefits of stock options can
be bestowed at will on selected employees, discretion in this regard
being unrestricted by section 421.
The basic question raised by S. 1625 is whether this particular
form of executive compensation should be accorded special tax treatment.
Entirely apart from the above criticisms of the manner in which section 421
has operated, since the preference accorded by section 421 to selected
persons is so substantial, both the basic policy objectives of such
section and the extent to which they have been realized in actual
practice should be reviewed.
If S. 1625 were to be enacted and section 421 repealed, consideration
might well have to be given to the bunching of income which might occur
if all the compensation involved in an employee option were to be taxed
in the year of exercise. This would involve examination of various
methods of spreading or averaging such taxable income over an appropriate
period of time. This problem may be somewhat similar to that Involved
in sections 1301 through 1306 of the Internal Revenue Code.
We plan to consider all the alternatives in the stock option area
and had intended to complete our study before next year so that, if
changes seem desirable, they could be proposed as part of the program
of general tax revision. However, if your Committee wishes to develop
new legislation this year, we will be pleased to work with you to this
end.
In this connection, it should be recognized that, apart from the
basic policy questions raised by section 421, there are serious problems of a more technical nature in the stock option area. There is at
present considerable controversy as to what rules should govern the
taxation of employee options which do not qualify under section 421.
Non-qualifying options are on occasion received by employees, although
such occurrence normally is not intentional but rather is attributable
to inability to meet the requirements of section 421. If section 421
were to be repealed, there might be an even larger group of employee
options to be governed by non-statutory rules. While at one time there
was controversy as to whether such options were to be taxed at all, it
is now clear, and has at least been clear since the decision of the
4?<
- 4 Supreme Court in 1956 in Commissioner v. LoBue, 351 U. S. 243, that
options granted in connection with the rendition of services are
compensatory in nature and subject to tax. The problem at present
is one of determining the time at which options should be taxed—for
example, whether on grant, or on exercise, or on sale of the stock
acquired pursuant to exercise--and, as a corollary to the timing of
the income derived from the option, the amount and type of gain—whether
ordinary or capital. The Treasury Department at one time by regulations
sought to provide that options not qualifying under section 421 were
not taxable upon grant but were taxable when transferred or exercised,
the recipient of the option realizing ordinary income at such time.
In several decisions, the courts have refused to uphold such a rule.
In January of this year, the regulations were amended to provide as
to employees that an option in certain cases may be taxable upon
grant.
There is a substantial administrative problem involved if options
are to be taxed upon grant. The value of an option is often very
uncertain and difficult to determine. It may be necessary if section 421
were repealed in order to handle satisfactorily the more technical aspects
of taxing stock options to enact legislation specifying rules as to the
timing and amount of income realized from such options.
To conclude, in addition to the problems of basic policy involved
in according employee stock options special treatment, there are problems
in this area of a more technical nature which the Treasury is also studying in connection with its review of this area as part of its program of
general tax revision.
13^^
"1 H I *7
IMMEDIATE RELEASE
JULY 2 0 , 1961
JOINT STATEMENT OF DOUGLAS DILLON, SECRETARY OF THE TREASURY,
AND DAVID E . BELL, DIRECTOR OF THE BUREAU OF THE BUDGET
The monthly budget statement for June, released today, showed
that Federal expenditures for the fiscal year ending June 30, 1961
were $81.5 billion. Revenues were $77.6 billion, leaving a budget
deficit of $3.9 billion. The deficit was higher than expected,
because the revenue and expenditure effects of the recent recession
were greater than anticipated.
Lower total receipts resulted primarily from individual income
tax collections substantially below previous estimates, plus an
unexpected increase of $329 million in tax refunds. Expenditures
were higher than had been anticipated, mainly for the military
activities of the Department of Defense. On February 2 , the President
directed that expenditures for procurement and construction be temporarily accelerated as an anti-recession measure. The year-end
figures show that this acceleration was more rapid than was anticipated.
The following table compares the actual results for fiscal
year 1961 with the estimates made in March by the present administration, the January estimates of the previous administration, and
the results for 1960.
BUDGET TOTALS
(Fiscal years. In billions)
1961
1960
actual
Surplus (/) or deficit
(-)...
January
estimate
March 28
estimate
Actual*
$77.8
$79.0
$78.5
$77.6
76.5
78.9
80.7
81.5
/1.2
/.I
-2.2
—3.9
. . _ _ • . - • •
•Preliminary
D-176
•
-
"Y__-^
«. 2 Budget receipts were $946 million lower than estimated in March
resulting primarily from a decline of $856 million in individual
income tax collections and an increase of $329 million in refunds
of receipts. Final payments (in April) on calendar year 1960
personal incomes and recent tax withholdings were both lower than
had been expected. Although a substantial increase in refunds
over their 1960 level had been taken into account in the earlier
estimates, the actual increase exceeded expectations, as taxpayers with recession-reduced incomes filed 2,000,000 more refund
claims than were expected. The decline in individual income tax
receipts and the increase in the number of refunds were partially
offset by higher than estimated corporation income taxes (up $65
million) and all other receipts (up $206 million). The latter,
however, reflects over $500 million collected from the advance
loan repayment by the Republic of Germany.
Budget expenditures were $810 million greater than the March estimates. The largest increase was for the Department of DefenseMilitary (including military assistance), which was $651 million
more than estimated. The next largest increase over the March
estimates was for the Department of Agriculture, up $147 million,
mainly because of higher participation by more farmers than had
been expected in the new feed grains program.
Comparison with January estimates.—The 1961 deficit of $3.9 billion
contrasts with the surplus of $79 million estimated in January of
this year by the preceding administration.
Tax collections, based chiefly on earnings received in the
calendar year 1960, fell short of the January estimate by $2 billion
not including the advance repayment of over $500 million on the
German loan, which was not counted in the January estimate.
Total expenditures exceeded the amounts estimated in January
by $2.6 billion. Military expenditures of the Department of Defense
(including military assistance) showed an increase of $1,451 million
above the January estimate, of which $561 million reflects higher
expenditures for the programs in the January budget estimates rather
than program changes. Expenditures of the Post Office were higher
than anticipated, chiefly because the January budget was based on
the assumption that the Congress would enact postal rate increases
effective April 1, 1961, in time to reduce the 1961 postal deficit
by $160 million. The program of temporary extended unemployment
benefits, recommended by President Kennedy, accounted for $498 million
Attachments
of the increase over the January estimate.
43u
Attachment
BUDGET RECEIPTS AND EXPENDITURES
(Fiscal years. In millions)
19§1
Description
i960
actual
January 16
estimate
March 28
estimate
Actual
Change from
March 28
est^ate
Receipts by source
Individual income taxes $44,946 $47,800 $47,000 $46,144 -$856
Corporation income taxes
22,179
21,100
21,700
Excise taxes
9,222
9,^4
9,204
All other receipts
7,155
6,719
6,719
Less: refunds
5.045
5.323
5,^23
Subtotal
78,457
79,700
79,200
Deduct interfund transactions ..
694
676
676
Net budget receipts
77,763
79,024
78,524
21,765
9,1^
6,925
5.752
78,227
64§
77,578
+65
-58
+206
+329
-973
-27
-946
200
185
-15
1,675
43
1,725
58
1,792
3
2,660
-100
64o
2,660
-50
630
2,716
37
639
770
5,314
770
1^2
544
5,739
511
720
5,1)00
759
420
525
5,807
511
744
5,401
741
387
498
5,954
498
4l,500
1,700
986
42,500
1,500
1,015
43,211
1,440
971
3,716
785
285
3,744
785
285
3,685
801
284
Expenditures by major agency
Legislative branch and the
judiciary
Executive Office of the
President
Funds appropriated to the
President:
Mutual security—economic and
contingencies
Other
Independent offices:
Atomic Energy Commission
Export-Import Bank
Federal Aviation Agency
National Aeronautics and
Space Administration
Veterans Administration
Other
General Services Administration.
Housing and Home Finance Agency.
Department of Agriculture
Department of Commerce
Department of Defense—Military:
Military functions
Military assistance
Department of Defense--Civil ...
Department of Health, Education,
and Welfare
Department of the Interior
Department of Justice
175
56
1,613
143
2,623
-323
508
401
5,250
555
408
309
5,^19
539
4l,215
1,609
902
3,403
690
258
208
6l 72 70 -2
2
1961
4
Description
i960
actual
January 16
estimate
Change frod
March 28
estimate
March 28
estimate
Actual
926
260
929
253
+3
-7
8,993
965
42
25
9,055
976
50
-
+62
+11
+8
-25
676
649
-27
Expenditures by major agency-Cont.
Department of Labor $549 $295 $892 $831 -$6l
Post Office Department
525
786
Department of State
247
260
Treasury Department:
Interest
9,266
8,993
Other
865
965
District of Columbia
28
48
Allowance for contingencies
25
Subtotal 77,233 79,621 81,369 82,152 +783
Deduct interfund transactions ...
694
676
Total budget expenditures . 76,539 78,9^5 80,693 81,503 +810
Budget surplus (+) or deficit (-) +1,224 +79 -2,169 -3,925 +1,756
NOTE: - Figures are rounded to nearest million and will not necessarily add to totals
July 20, 1961
A Q ^Attachment
EXPLANATION OF MAJOR DIFFERENCES
BETWEEN ACTOAL 196l EXPENDITURES
AND MARCH ESTIMATES
Funds appropriated to the President:
••^•«»•________________._______________________________B_^B_^_—_________
Mutual security—economic and contingencies—$67 million more than
estimate, as loans, grants, and deliveries were made at a somewhat higher rate than indicated by previous trends.
Other—$55 million less than estimated, because estimated 196l payments for Chilean reconstruction were deferred ($25 million) and
unexpected repayments were received on loans for defense production activities (net loans down $30 million).
Atomic Energy Commission—$56 million more than anticipated as a result
of faster progress in the construction program.
Export-Inrport Bank—$87 million more than the estimate principally
because portfolio sales were less than anticipated.
General Services Administration—$33 million less than estimated mainly
because there was slower progress than expected on (l) construction
and (2) general supply activities.
Housing and Home Finance Agency—$27 million less than expected chiefly
for special assistance purchases of the Federal National Mortgage
Association.
Department of Agriculture—$147 million more than estimate:
Commodity Credit Corporation—$220 million more than estimated
mainly as a result of higher than expected participation in
the feed grain program.
Other—$73 million less than estimate principally for the Rural
Electrification Administration, the Farmers Home Administration,
and domestic distribution of surplus agricultural commodities.
Department of Defense--Military (including military assistance) —
$651 million more than estimate, mainly because of greater acceleration of procurement and construction programs than had been anticipated
and earlier payments of some defense bills.
Department of Defense—Civil—$44 million less than expected as result
of construction delays caused by bad weather, floods, and land
acquisition difficulties in certain parts of the country.
Department of Health, Education, and Welfare--$59 million lower than expect
primarily for the new program for aid to dependent children of unemployed
parents ($20 million), for the National Institutes of Health ($20 million),
and for defense educational activities ($17 million).
Department of Labor--$6l million less than estimated, principally because
congressional deferral of a portion of the advance to the unemployment
trust fund for the temporary extended unemployment benefit program.
Treasury Department--Interest--$62 million higher than estimated, because
the higher deficit and increased borrowings.
United States Treasury Department
Fiscal Service
Bureau of Accounts
This statement is preliminary and is based on reports from collecting and disbursing agencies received through
July 13, 1961. Final reports of Government collecting and disbursing agencies including certain overseas transactions for the year ended June 30, 1961, which it has not been possible to include in this statement will be incorporated in the final statement to be published at a later date.
Monthly Statement of
Receipts and Expenditures of the United States Government
for the period from July I, I960 through June 30, 1961
(Cents omitted, therefore details will not add to totals)
TABLE I--SUMMARY
Budget receipts and expenditures
Year
Gross receipts
Net
expenditures
Net receipts
1
1
Public debt
(end of period) a
Balance in
account of
Treasurer, U . S .
(end of period)
-$2,826,000,000
(2)
(2)
(2)
Budget surplus(+)
or deficit (-)
Estimated 1962*
$103,860,000,000
Estimated 1961*
100,003,000,000
1
78,524,000,000
1
80,693,000,000
-2,169,000,000
(2)
99,404,955,255
1
77,577,691,870
1
81,502,661,054
-3,924,969,183
$288,970,938,610
$6,694,119,953
Actual fiscal year 1960
96,962,198,070
1
77,763,460,220
1
76,539,412,798
+1,224,047,421
286,330,760,848
8,004,740,998
Actual fiscal year 1959
83,904,266,060
3
67,915,348,624
3
80,342,335,375
-12,426,986,751
284,705,907,078
5,350,391,763
Actual fiscal year 1958
83,973,500,309
3
68,549,720,044
3
71,369,174,086
-2,819,454,041
276,343,217,745
9,749,102,977
Actual fiscal year 1961
(twelve months)
$81,433,000,000
$84,259,000,000
TABLE II--BUDGET SUMMARY-FISCAL YEAR 1961
Fiscal year 1961 to date
Classification
Applicable
deductions4
Net
receipts5
$94,396,478,167
1,007,755,214
4,000,721,872
$21,150,184,182
25,439,531
2,304,634
$73,246,293,985
982,315,682
3,998,417,238
$74,507,000,000
998,000,000
3,695,000,000
99,404,955,255
21,177,928,348
78,227,026,906
79,200,000,000
Deduct: Certain inter fund transactions1
649,335,035
676,000,000
Grand total
77,577,691,870
78,524,000,000
BUDGET RECEIPTS
Internal Revenue
Customs
Miscellaneous receipts
Total
Gross
receipts
Net budget
estimates
fiscal year 1961*
Gross
expenditures
BUDGET EXPENDITURES
Legislative Branch
The Judiciary
Executive Office of the President
Funds appropriated to the President:
Mutual security-economic assistance ....
Other
Independent Offices:
Atomic Energy Commission
National Aeronautics and Space A d m
Veterans Administration
Other
General Services Administration
Housing and H o m e Finance Agency
Agriculture Department
Commerce Department
Defense Department:
Military functions
Military assistance
Civil functions
Health, Education, and Welfare Department.
Interior Department.*
Justice Department
Labor Department
Post Office Department 6
State Department
Treasury Department:
Interest on the public debt
Other
,
District of Columbia
Unclassified expenditure transfers
Allowance for contingencies
Total
Deduct: Certain interfundtransactions1
Grand total
Budget surplus (+) "r rig>fi^t (---See footnotes on p/ge 9
$133,504,727
51,968,149
69,796,923
1,810,477,208
96,556,036
2,715,582,366
744, 306,288
5,625,427,267
2,464,712,460
389, 838,958
2,415,964,207
8,909,722,203
507, 545,172
43,276,187,164
1,439,579,061
1,082,381,816
3,688,503,117
839, 516,564
284, 176,167
1,086,932,330
4,401,619,785
252, 522,070
8,962,206,472
1,074,542,129
50,433,000
-197,342
92,373,804,311
Applicable receipts
(deduct)4
$184,396
18,440,000
93,631,336
224,021,490
1,047,975,452
2,823,970
1,917,698,526
2,955,652,528
9,455,895
64,774,282
111,328,409
3,816,737
38,208,515
256,347,950
3,472,157,972
5,290,755
10,221,808,221
Net
expenditures5
$133,504,727
51,968,149
69,612,527
$149,000,000
51,000,000
72,000,000
1,792,037,208
2,924,699
1,725,000,000
58,000,000
2,715,582,366
744, 306,288
5,401,405,776
1,416,737,008
387, 014,988
498, 265,681
5,954,069,674
498, 089,277
43,211,412,881
1,439,579,061
971,053,406
3,684,686,380
801,308,049
284,176,167
830,584,380
929,461,813
252,522,070
8,962,206,472
1,069,251,373
50,433,000
-197,342
2,660,000,000
720, 000,000
5,400,000,000
1,339,000,000
420, 000,000
525, 000,000
5,807,000,000
511, 000,000
42,500,000,000
1,500,000,000
1,015,000,000
3,744,000,000
785, 000,000
285, 000,000
892, 000,000
926, 000,000
260, 000,000
8,900,000,000
1,058,000,000
42,000,000
82,151,996,090
81,369,000,000
649,335,035
676,000,000
81,502,661,054
80,693,000,000
-3,924,969,183
-2,169,000,000
25,000,000
Wtf sum TreMuryDep.rt_»t
Fiscal Service
a.ouolAccaiBS
This statement is preliminary and is based on reports from collecting and disbursing agencies received through
July 13, 1961. Final reports of Government collecting and disbursing agencies including certain overseas transactions for the year ended June 30 1961, which it has not been possible to include in this statement will be incorporated in the final statement to be published at a later date.
Monthly Statement of
Receipts and Expenditures of the United States Government
for the period from July I, I960 through June 30, 1961
(Cents omitted, therefore details will not add to totals)
TABLE I--SUMMARY
-—
Budget receipts and expenditures
Year
Gross receipts
1
Estimated 1962*
$103,860,000,000
Estimated 1961*
100,003,000,000
1
78,524,000,000
99,404,955,255
1
Actual fiscal year 1960
Actual fiscal year 1959
Actual fiscal year 1961
(twelve months)
Actual fiscal year 1958
Net
expenditures
Net receipts
1
Budget surplus(+)
or deficit (-)
Public debt
(end of period) a
Balance in
account of
Treasurer, U.S.
(end of period)
$84,259,000,000
-$2,826,000,000
(2)
(2)
1
80,693,000,000
-2,169,000,000
(2)
(2)
77,577,691,870
1
81,502,661,054
-3,924,969,183
$288,970,938,610
$6,694,119,953
96,962,198,070
1
77,763,460,220
1
76,539,412,798
+1,224,047,421
286,330,760,848
8,004,740,998
83,904,266,060
3
67,915,348,624
3
80,342,335,375
-12,426,986,751
284,705,907,078
5,350,391,763
83,973,500,309
3
68,549,720,044
3
71,369,174,086
-2,819,454,041
276,343,217,745
9,749,102,977
$81,433,000,000
TABLE II--BUDGET SUMMARY-FISCAL YEAR 1961
Fiscal year 1961 to date
Classification
BUDGET RECEIPTS
Internal Revenue
Total
Gross
receipts
$94,396,478,167
1,007,755,214
4,000,721,872
99,404,955,255
Net
receipts5
$21,150,184,182
25,439,531
2,304,634
21,177,928,348
$73,246,293,985
982,315,682
3,998,417,238
78,227,026,906
$74,507,000,000
998,000,000
3,695,000,000
649,335,035
676,000,000
77,577,691,870
78,524,000,000
Grand total
Gross
expenditures
BUDGET EXPENDITURES
Legislative Branch ....
Executive Office of the President
Funds appropriated to the President:
Mutual security-economic assistance ....
Independent Offices:
Atomic Energy Commission
National Aeronautics and Space A d m
Veterans Administration
Other
General Services Administration
Mousing and H o m e Finance Agency
Agriculture Department
Commerce Department
Defense Department:
Military
assistance
Military functions
Civil functions
,
Health, Education, and Welfare Department.
wterior Department.,
Justice
Department
Labor Department
£ost Office Department 6
State Department
Treasury Department:
interest on the public debt
District of Columbia .
x\&lassified expenditure transfers 7
Allowance for contingencies
Total
Deduct: Certain interfundtransactions1
Grand total
£__get_surplus (+) or deficit (-)
See footnotes on page 9
$133,504,727
51,968,149
69,796,923
1,810,477,208
96,556,036
2,715,582,366
744,306,288
5,625,427,267
2,464,712,460
389,838,958
2,415,964,207
8,909,722,203
507,545,172
43,276,187,164
1,439,579,061
1,082,381,816
3,688,503,117
839,516,564
284,176,167
1,086,932,330
4,401,619,785
252,522,070
8,962,206,472
1,074,542,129
50,433,000
-197,342
92,373,804,311
Net budget
estimates
fiscal year 1961*
Applicable
deductions4
Applicable receipts
(deduct)4
79,200,000,000
Net
expenditures5
$184,396
$133,504,727
51,968,149
69,612,527
$149,000,000
51,000,000
72,000,000
18,440,000
93,631,336
1,792,037,208
2,924,699
1,725,000,000
58,000,000
2,715,582,366
744,306,288
5,401,405,776
1,416,737,008
387,014,988
498,265,681
5,954,069,674
498,089,277
43,211,412,881
1,439,579,061
971,053,406
3,684,686,380
801,308,049
284,176,167
830,584,380
929,461,813
252,522,070
8,962,206,472
1,069,251,373
50,433,000
-197,342
82,151,996,090
2,660,000,000
720,000,000
5,400,000,000
1,339,000,000
420,000,000
525,000,000
5,807,000,000
511,000,000
42,500,000,000
1,500,000,000
1,015,000,000
3,744,000,000
785,000,000
285,000,000
892,000,000
926,000,000
260,000,000
649,335,035
676,000,000
81,502,661,054
80,693,000,000
-3,924,969,183
-2,169,000,000
224,021,490
1,047,975,452
2,823,970
1,917,698,526
2,955,652,528
9,455,895
64,774,282
111,328,409
3,816,737
38,208,515
256,347,950
3,472,157,972
5,290,755
10,221,808,221
8,900,000,000
1,058,000,000
42,000,000
25,000,000
81,369,000,000
TABLE HI-BUDGET RECEIPTS AND EXPENDITURES-JUNE 30,1961
This month
Classification
Corresponding
month
last year
Fiscal Year
1961
to date
Corresponds
period
fiscal year
RECEIPTS
Internal Revenue:
Individual income taxes:
Withheld8 „
Other 8
9
9
,
Total individual income taxes ... „ ,
Corporation income taxes
Excise taxes
Employment taxes:
Federal Insurance Contributions Act and
Self-Employment Contributions Act 8
Railroad Retirement Tax Act
Federal Unemployment Tax Act
Total employment taxes
;2,272,505,971
1,852,122,420
4,387,448,653
4,124,628,392
46,143,800,076
5,245,870,751
1,066,902,984
5,530,388,808
1,118,169,227
21,765,041,450
12,068,883,963
9
1,126,989,732
44,444,738
1.099.127
Deduct:
Transfers to:
Federal old-age and survivors insurance trust fund 8.
Federal disability insurance trust fund 8
Highway trust fund
Railroad retirement account
Unemployment trust fund 12
Total transfers to trust accounts :
9
9
11,586,283,169
570,729,763
345,356,402
$31,674,587,6
J3^7M23J7
44,945,711,4
~2M7Ml47_i
11,864,740,8!
10,210,550,1!
606,930,8'
341,107,51
1,155,195,448
12,502,369,336
145,450,947
135,313,573
-7,066,717
1,916,383,341
12,018,206,934
12,056,628,732
94,396,478,167
91,774,802,8.
83,668,525
90,135,620
1,007,755,214
1,123,037,5;
311,293,528
60,906,322
-9,763,409
43,221,585
10,082,791
98,956,061
4,233,401
20,952,329
539,882,612
330,965,357
81,981,044
-2,286,854
15,656,368
52,204,569
148,514,282
3,101,553
26,703,316
656,839,638
936,243,473
804,785,859
1,006,874,747
176,254,034
68,816,063
664,766,848
55,378,802
287,602,044
4,000,721,872
967,151,11
1,110,991,4!
436,214,6r£
114,842,1.
96,194,81
765,916,4*
52,694,0*520,852,84
4,064,357,66'
12,641,758,073
12,803,603,991
99,404,955,255
Customs „
Miscellaneous receipts:
Interest10
Dividends and other earnings
Realization upon loans and investments
Recoveries and refunds
Royalties lx
Sales of Government property and products
Seigniorage
Other...
Total miscellaneous receipts
Gross budget receipts
1,103,638,665
50,436,286
1,120,496
$32 968,736,218
13,175,063,858
9
1,172,533,598
Estate and gift taxes
Internal revenue not otherwise classified
Total internal revenue.
9
$2,450,164,637
1,937,284,015
1,025,183,984
101,805,747
238,400,000
44,444,738
1,099,127
1,410,933,598
1,014,348,746
89,289,919
238,100,000
50,429,243
9
11,158,588,6;
1,626,347,65
96,962,198,07
1,392,167,909
10,623,470,761
9
962,812,407
2,923,240,921
570,630,950
345,356,402
15,425,511,445
13,459,913,93.
238,908,865
2,415,557
216,025
249,730,072
2,398,591
110,188
5,724,672,737
25,439,531
2,304,634
5,024,470,80
18,483,39,
1,897,06
241,540,448
252,238,852
5,752,416,903
5,044,851,26:
Total deductions
1,652,474,046
1.644,406.761
21,177,928,348
18,504,765,1^
Subtotal receipts
10,989,284,026
11,159,197,229
78,227,026,906
78,457,432,87
Deduct: Interest and other income received by
Treasury from Government agencies included
above and also included in budget expenditures1.
240,293,665
268,672,105
649,335,035
Net budget receipts
10,748,990,361
10,890,525,124
77,577,691,870
2,348,861
4,498,441
4,811,425
77,336
1,780,413
1,951,129
-1,091,546
2,048,023
4,078,631
3,400,971
26,647
1,613,023
1,455,320
1,331,449
26,876,543
47,323,507
31,434,476
833,958
15,390,881
15,850,464
-4,205,104
14,376,060
13,954,067
133,504,727
.• 197,204
-122,767
94,151
83,426
4,503,698
138,630
25,749
84,627
76,031
3,920,235
1,940,449
330,093
851,106
896,592
47,949,907
4,755,712
4,245,275
51,968,149
Refunds of receipts:
Internal revenue
Customs
Other
Total refunds of receipts
EXPENDITURES
i
9
9,271,868,31;
938,681,78:
2,642,499,11
606,864,65;
693,972,65;
77,763,460,22;
13
Legislative Branch:
Senate
House of Representatives
Architect of the Capitol
Botanic Garden
Library of C o n g r e s s 1 A
Government Printing Office:
General fund appropriations
Revolving fund (net)
Total—Legislative Branch
The Judiciary:
S u p r e m e Court of the United States
Court of C u s t o m s and Patent Appeals
C u s t o m s Court
Court of Claims
Courts of appeals, district courts, and other judicial
services
Total--The Judiciary
See footnotes on pages 9 and 14
15
25,674,641
44,207,08'
26,218,15;
332,50,"
13,814,661
15,980,36!
'WW
755,1ft
822,38*^
45,70yg
T A B L E I I I — B U D G E T R E C E I P T S A N D E X P E N D I T U R E S - J U N E 30, 1961-Continued
Classification
This month
Corresponding
month
last year
Fiscal Year
1961
to date
Corresponding
period
fiscal year 1960
EXPENDITURES--Continued
executive Office of the President:
Compensation of the President
The White House Office
>
e
S
Stive"ra ans ion 'and grounds'
^reau of the Budget
Council of Economic Advisers
National Security Council ••••••••••
Office of Civil and Defense Mobilization:
Civil defense procurement fund (net)
President's Advisory Committee on Government
Organization
President's Advisory Committee on Labor-Management
policy • • • •
Miscellaneous16
Total—Executive Office of the President
Funds appropriated to the President:
Disaster relief
Emergency fund for the President, National Defense
Expansion of defense production (net)
Expenses of m a n a g e m e n t i m p r o v e m e n t
Transitional grants to Alaska
Other
Mutual security-economic assistance:
Defense Department
International Cooperation Administration
Public enterprise funds (net):
Development loan fund
Foreign investment guarantee fund ...
All other agencies
Total--Economic assistance.
Total—Funds appropriated to the President
[dependent Offices:
Advisory Commission on Intergovernmental Relations..
Alaska International Rail and Highway Commission ....
American Battle Monuments Commission
Atomic Energy Commission:
Defense production guarantees (net)
Other
Central Intelligence Agency-construction
Civil Aeronautics Board
Civil Service Commission:
Payment to civil service retirement and disability
fund
Government payment for annuitants, employees health
, benefits fund
Government contribution, retired employees health
benefits fund....
„ „....
„
Total—Civil
Service
Commission.
Other.
Commission on Civil Rights
Commission on International Rules of Judicial Procedure
Export-Import Bank of Washington (net)
Farm Credit Administration:
Public enterprise funds (net):
Federal F a r m Mortgage Corporation fund
Federal intermediate credit banks investment fund..
Production credit associations investment fund ....
Banks
for cooperatives
investment
Total--Public
enterprise
funds fund
Administrative expenses
Total—Farm Credit Administration
Federal Aviation Agency
federal Coal Mine Safety Board of Review
federal Communications Commission
federal Home Loan Bank Board (net):
federal Savings and Loan Insurance Corporation fund
Other
llJera} Mediation and Conciliation Service
federal Power Commission
Federal Trade Commission
lgn
n_nf
, Claims
Settlement
Commission
and
_*?*-?*
memorial
commissions
Accountin
e Office
J8 .S™ ^Claims Commission
e
Shistorical
™ S
Cand
o m mn__
e r mc»_<
e Commission
ni „
werstate Commission on Potomac River Basin
$12,500
163,092
127,802
59,981
437,149
38,181
57,996
-13,351
4,626,687
$12,500
126,496
133,415
36,049
346,120
29,042
54,703
2,781
4,043,637
3,433
6,352
2,387
$150,000
2,331,628
1,382,633
640,168
5,260,490
420,520
793,665
-64,291
58,692,607
31,235
$150,000
2,221,739
1,212,514
464,896
4,631,941
381,851
745,775
-70,063
45,824,966
37,424
6,490
-32,621
2,788
5,518.779
4,788,179
69,612,527
55,603,835
274,782
108,570
-30,302,893
2,609
123,080
121,063
-5,462
5,826
634,195
11,325
63,900
143,640
7,455,828
489,444
-12,385,184
232,207
6,033,269
1,099,133
1,638,660
277,590
130,267,593
87,239
10,385,962
508,826
1,893,832
109,209,005
3,608,569
108,209,959
33,755,380
1,307,341,893
33,168,432
1,228,235,517
42,074,050
-184,790
6,401,187
159,393,286
22,069,486
-157,607
8,559,232
142,289.640
259,022,768
-1,672,830
193,589,995
1,792,037,208
202,351,774
-1,356,226
151.041.662
1,613,441,160
129.720.497
143,143,066
1,794,961,908
1,756,607,032
15,627
22,466
196.124
13,673
12,372
259,215
137,706
108,082
2.441,591
243,683,683
708,879
7,221,472
244,262,497
1,912,728
5,739,637
2,715,582,366
19,307,075
85.540,727
34,722
119,444
2,873,132
-12,067
2,622,959,391
11,806,726
67,227,078
18
46,329,000
19
2,500,000
20
1,733,072
1,437,380
1,733,072
1,437,380
1,625,000
23^993^780
74,447,780
75,133
61.237
813,737
8,322,876
'37^2i3*746
778,297
24,997
-323,179,691
1.411
-5,322
-50,000
-300,000
-115
-48.588
-305,437
-1,736,474
5,500,000
-1,590,000
-8,052,400
-5,878,874
-1,670,829
6,250,000
-1,445,000
-8,460.117
-5,325,946
114,398
188,591
2,387,250
2,212,232
65,810
-116,845
-3,491,623
-3,113,713
55,228,964
4,704
924,122
46,587,722
4,082
805,885
-5,796,742
244,570
340,714
645,932
622,104
48,829
3,150,902
9,229
16,427
2,441,677
-5,200,047
39,905
310,182
594,234
532,421
34,614
2,985,669
91,933
14,205
1,578,042
638,510,466
54,644
11,948,117
-35,192,004
98,670
4,146,975
8,003,429
7,853,651
485,192
40,855,952
278,665
200,298
22,139,067
5,000
507,949,859
52,749
10,367,228
-20,426,341
259,038
3,845,926
7,207,034
6,750,521
429,340
38,178,088
428,286
175,770
19,405,197
5,000
1,247*130
21,393,372
21,393,372
T A B L E M I - B U D G E T R E C E I P T S A N D E X P E N D I T U R E S - J U N E 30, 1961-Continued
Classification
This month
Corresponding
month
last year
Fiscal Year
1961
to date
Corresponding
period
fiscal year I960
E X P E N D I T U R E S - -Continued
Independent Offices--Continued
National Aeronautics and Space Administration
National Capital Housing Authority
National Capital Planning Commission
National Capital Transportation Agency
National Labor Relations Board
National Mediation Board
National Science Foundation:
Research and development of rubber program (net) .
Other.i
Outdoor Recreation Resources Review Commission. . .
Railroad Retirement B o a r d — p a y m e n t to railroad
unemployment insurance account
Renegotiation Board
Saint Lawrence Seaway Development Corporation (net).
Securities and Exchange Commission
Selective Service System
Small Business Administration:
Public enterprise funds (net)
Salaries and expenses
Grants for research and management counseling ...
Total--Small Business Administration
Smithsonian Institution
Subversive Activities Control Board
Tariff Commission
T a x Court of the United States
Tennessee Valley Authority (net) „
United States Information Agency:
Informational media guarantee fund (net)
Special international program 1 7
Other
United States Study Commissions 21
Veterans Administration:
Compensation, pensions, and benefit programs
Public enterprise funds (net) „
Other
Total--Veterans Administration
Total--Independent Offices14 17
General Services Administration:
Real property activities:
Construction, public buildings projects
Repair and improvement of public buildings
Intragovernmental funds (net)
Other
Personal property activities:
Intragovernmental funds (net)
Other
Records activities
Transportation and utilities activities
Defense materials activities:
Public enterprise funds (net) „
Intragovernmental funds (net)
Strategic and critical materials
General activities:
Public enterprise funds (net)
Intragovernmental funds (net)
Other
Total--General Services Administration.
Housing and Home Finance Agency:
Office of the Administrator:
Public enterprise funds (net):
College housing loans
Liquidating programs
Urban renewal fund
Other
Other
Total--Office of the Administrator ,
Federal National Mortgage Association (net):
Subscription to capital stock, secondary market
operations
Loans for secondary market operations
Management and liquidating functions fund
Special assistance functions fund
Total--Federal National Mortgage Association
Federal Housing Administration (net).
Public Housing Administration (net)
Total--Housing
Home
See footnotes onand
page
14 Finance Agency
$87,860,952
2,996
45,657
26,457
1,380,723
149,786
$52,076,386
2,208
37,434
13,675,704
93,194
14,409,023
45,862
143,307,152
1,127,639
5,000,000
221,657
470,832
777,031
3,142,271
213,464
473,485
692,743
2,442,568
13,000,000
2,894,756
2,477,496
9,331,158
32,841,117
1,275,362
152,666
$744,306,288
39,678
761,828
135,313
17,964,266
1,497,749
$401,033,01243,14.
1,337,150
;
14,649,858*
1,376,60ft;
t
-1,598:
120,320,717;
494,906;
2,769,376
6,122,169;
8,126,375
28,577,309;
11,300,279
1,887,002
134,190
13,321,472
7,735,916
1,456,294
795,656
82,610,849
6,038,721
879,994
9,987,866
89,529,565
54,593,020!
3,767,947
2,027,761
60,388,728
2,496,845
25,703
221,325
133,486
6,260,334
334,441
650,732
9,177,575
190,528
1,312,345
20,435
175,713
127,605
4,784,278
181,458
1,043,717
10,060,562
149,528
21,243,064
299,411
2,541,255
1,627,115
38,677,415
4,486,758
7,116,851
107,295,597
2,634,870
12,598,759i
284,258!
2,088,074;
1,472,092
11,847,650
2,187,475
7,436,092
103,679,096
1,144,534
353,751,423
665,587
95,340,987
337,307,324
40,606,401
89,047,175
4,074,239,377
131,390,181
1,195,776,218
449,757,997
466,960,901
5,401,405,776
3,934,260,703
187,448,251
1,127,864,928
5,249,573,882
908,268,548
876,909,245
10,278,031,440
9,013,089,068
6,874,436
3,685,728
18,158,086
5,547,212
6,778,769
1,936,793
972,070
162,561
220
-2,497
2,545,419
-502
1,526,568
46,203
8,198,360
10,332,009
14,257,172
14,064,051
14,849,080
1,458,563
636,340
150,152
-4,102
49,165
2,745,026
37,326
1,155,929
29,569
68,983,529
49,284,183
3,267,657
189,126,976
-4,398,811
31,134,361
13,806,652
2,493,231
-653,189
.75,026
35,217,203
-1,864,417
-305,369
847,952
54,000,306
71,644,763
-11,819,330
190,882,566
19,078,659
26,679,864
9,274,409
1,959,222
-1,781,136
-150,402
49,756,375
-1,677,300
-283,821
429,280
48,231,068
67,958,645
387,014,988
407,993,455
26 ,206,066
-268,252
13,998,639
1,214,320
1,218,332
42,369,106
19,102,101
-7,803,756
17,720,063
1,784,637
980,591
31,783,637
198,175,318
-87,622,468
144,500,893
9,991,722
13,860,478
278,905,945
201,314,302
-77,629,098
105,074,161
11,945,720
11,505,621
252,210,707
-9,610,000
-15,029,805
-1,335,999
-25,975,805
-96,569,589
-57,427,047
-370,106
-154,366,744
-79,991,914
135,488,677
4,191,170
10,424,477
-9,479,589
14,875,088
-7,124,476
154,987,448
-53,311,653
139,925^249
31,008,948
-117,187,607
498,265,681
309106j^696_
16,000,000
-41,531,035
-437,219,728
448,99245JL
71,496,763
TABLE lll-BUDGET RECEIPTS AND EXPENDITURES-JUNE 30, 1961-Continued
Classification
•
-•
•
This month
Corresponding
month
last year
Fiscal Year
1961
to date
Corresponding
period
fiscal year 1960
•
EXPENDITURES--Continued
Agriculture Department:
^Agricultural Research Service:
-$5,449
13,061,645
767,706
76,292
6,241,247
4,169,472
946,206
48,758
-$38,272
11,719,472
699,691
76,419
6,195,829
4,462,434
920,374
$81,111
185,432,000
67,340,666
636,823
86,887,158
50,133,999
8,635,425
-6,607
-$55,300
172,443,778
63,720,768
575,912
8,305,548
40,417
14,547,369
20,663
250,060,770
549,200
236,068,908
896,656
1,990,035
12,798
613,498
32,819,538
11,744
54,778
35,502,394
20,361
10,647
268,501
7,265,525
69,072
58,981
7,693,090
45,806,443
1,195,000
154,325,237
203,258,998
55,699
791,951
405,433,329
38,352,980
1,195,000
152,832,151
89,663,354
19,061
.-709,685
1,697,371
77,321
478,055
65,757
13,165,946
964,436
6,298,671
879,246
65,189
2,842,623
747,365
10,520,827
10,420
8,765,452
1,836,198
-721,400
43,597,419
365,864,559
72,220,216
-7,063,790
40,485,766
323,657,828
73,961,603
-516,755
471,076,815
-71,818,138
1,672,301,735
1,561,390,628
171,234,815
458,917,793
1,760,130,670
1,685,868,247
642,311,631
387,099,655
3,432,432,405
3,247,258,876
516,953
-1,865,208
-82,846
-985,462
7,276,163
-7,443,904
6,364,422
-2,363,144
22,076,143
788,675
27,029,171
751,700
291,477,644
9,901,243
321,004,910
9,416,737
11,707,861
9,922,997
324,850,275
272,388,172
37,209
2,857,706
1,722,971
16,325,748
-625,628
1,758,721
1,477,115
12,533,206
1,473,867
-6,143,952
32,641,786
352,821,977
-17,785,166
6,814,645
30,560,514
291,978,166
Office of the General Counsel
Office of the Secretary:
281,558
251,138
3,409,299
3,125,687
Other
Office of Information
-62,473
241,570
91,545
85,844
21,887
216,818
105,398
63,779
76,905
3,028,821
1,574,353
946,116
-99,251
2,802,482
1,374,854
884,159
-379,772
14,916,955
340,881
12,884,531
68,716,691
-17,475
245,936,764
-498,121
205,391,000
780,434,110
496,961,416
5,954,069,674
5,418,894,982
184,985
14,165,285
715,617
645,655
295,814
117,963
-33,137
19,228,507
-873,383
1,638,932
-7,447
6,342,636
33,778,015
18,059,345
4,600,280
5,928,871
1,482,949
-2,191,344
283,997,361
-393
23,136,821
-843
2,743,443
99,958,807
15,878,717
5,973,379
5,144,285
1,344,791
4,485,965
5,358,877
45,426,320
47,004,737
599,430
1,792,651
4,465,896
593,028
1,400,275
3,753,034
-182,553
22,298,828
55,419,585
-677,531
17,468,735
54,033,328
30,135,023
47,191,456
498,089,277
539,170,911
Soil Conservation Service:
Flood prevention, watershed protection, and other ..
Agricultural Conservation P r o g r a m Service:
Agricultural Marketing Service:
22
Total-Agricultural Marketing Service
Commodity Exchange Authority
Commodity Stabilization Service:
Commodity Credit Corporation:
Public enterprise funds (net):
Price support, supply, and related programs
Special activities financed by Commodity
Total--Commodity Credit Corporation
22
79,307,606
43,886,340
7,870,937
282,772,233
Federal Crop Insurance Corporation:
Federal Crop Insurance Corporation fund (net) ....
Rural Electrification Administration:
Salaries and expenses
Farmers H o m e Administration:
Loans
Public enterprise funds (net):
Forest Service:
Acquisition of lands, Klamath Indians
intragovernmental funds (net) i
Commerce Department:
General administration:
Public enterorisp funri«s fnpt^
....
Bureau of the Census
Maritime activities:
Patent Office ..........
Bureau of Public Roads:
Other 2 5...
National Bureau of Standards:
...
-700
563,588
2,011,977
1,346,960
212,911
435,958
118,915
-260,384
12,739,369
1,622,480
-1,565,165
271,756,331
-874,892
20,982,785
TABLE MI-BUDGET RECEIPTS AND EXPENDITURES-JUNE 30, 1961-Continued
This month
Classification
Corresponding
month
last year
Fiscal Year
1961
to date
Corresponding
period
fiscal year I960
EXPENDITURES--Continued
Defense Department:
Military functions:
Military personnel:
Office of Secretary of Defense 0
Department of the A r m y
Department of the Navy
Department of the Air Force
Total--Military personnel
$66,115,788
393,261,658
289,315,279
349,176,031
$60,310,408
286,057,138
295,887,828
365,147,469
$782,936,511
4,021,448,887
3,249,365,370
4,006,331,436
$694,241,029
3,866,452,542
3,225,867,807
3,951,213,566'
1,097,868,757
1,007,402,844
12,060,082,206
11,737,774,9461
Operation and maintenance:
Office of Secretary of Defense
Department of the A r m y
Department of the Navy
Department of the Air Force „
Subtotal
5,079,123
312,088,768
282,883,563
412,949,727
1,013,001,183
3,176,484
297,985,922
270,384,358
298,205,853
869,752,617
45,388,012
3,416,988,194
2,868,746,108
4,442,869,977
10,773,992,292
38,347,767
3,249,602,224,
2,761,522,713'
4,296,618,328
10,346,091,033;
Classification adjustment
-13,151,000
-6,941,000
-154,521,000
-122,702,000'
Total--Operation and maintenance
999,850,183
862,811,617
10,619,471,292
10,223,389,033"
Procurement:
Office of Secretary of Defense „
Department of the A r m y
Department of the Navy
Department of the Air Force
Subtotal.
117,902,863
443,243,175
845,679,381
38,407,744
-394,886,505
645,057,241
1,525,738,550
4,724,786,873
8,691,231,916
1,604,885,716
3,819,888,23^
8,762,717,054
1,406,825,420
288,578,479
14,941,757,341
14,187,491,007;
-13,118,000
818,158,000
-213,818,000
124,743,000.
1,393,707,420
1,106,736,479
14,727,939,341
14,312,234,0075
22,796,739
134,614,696
123,245,909
156,449,709
437,107,056
26,734,661
121,395,764
-37,524,131
105,474,182
216,080,477
195,498,269
1,081,376,596
1,191,723,708
1,659,446,137
313,673,971!
705,078,956;
766,531,654"1,089,294,95^
4,128.044,712
2,874,579,532
__ 6
Classification adjustment
Total--Procurement
Research, development, test and evaluation:
Office of Secretary of Defense
Department of the A r m y
Department of the Navy
Department of the Air Force
Subtotal
26
"
27
Classification adjustment
26.269.000
199.110.000
368,339,000
857,034,000^
Total--Research, development, test and evaluation
463,376,056
415,190,477
4,496,383,712
3,731,613,532,
Military construction:
Office of Secretary of Defense
Department of the A r m y
Department of the Navy
Department of the Air Force
Total—Military construction
4,454,819
30,839,526
28,415,825
78,741,909
142,452.081
1,149,952
29,545,121
35,249,080
93,809,253
159,753,408
38,817,283
275,404,954
275,818,424
1,013,866,259
1,603,906,920
46,274,731280,494,245:
287,207,099=
1,011,657,232
1,625,633,30^
4,715,023
-9,854
71,263
2,633,737
5,545
39,208
38,677,921
-24,586
-134,158
22,796,186-137,249,,
-279,775
-36,012,357
-28,046,725
9.756.417
„ -87,274,272
28
1,042,686,325
-1,803,650
-49,526,232
956,286,893
Revolving and management funds (net):
Public enterprise funds:
Office of Secretary of Defense
Department of the A r m y
Department of the Navy „
Intragovernmental funds:
Department of the A r m y
Department of the Navy
Department of the Air Force
Subtotal
Classification adjustment2
Total--Military functions
See footnotes on page 19
-314,672,425'
780,812,45£
-45,307,309;
-296,370,592
443,211,878:,
-859,075,000^
-1,010,327,000
Total--Revolving and management funds
Military assistance:
Office of Secretary of Defense:
Repayment of credit sales 29 „. „
Other
0
Department of the A r m y
Department of the Navy
Department of the Air Force
International Cooperation Administration
All other agencies
Total--Military assistance
Total--Military
-191,429,414
-105,869,192
-37,591,162
;
-49,526,232
-54,040,106
-296,370,592
4,047,728,266
3,497,854,721
43,211,412,881
-1,583,848
12,321,942
132,721,947
33,082,273
117,370,777
211,617
305,081
294,429,790
-2,375,585
11,788,585
125,768,114
18,658,565
84,054,478
675,941
795,104
239,365,205
-17,133,287
139,796,809
637,954,461
168,053,369
501,019,139
3,427,748
6,460,820
1,439,579,061
4,342,158,057
3,737,219,926
44,650,991,943
-.15,863,121^
41,214,781,
-25,969,352;
117,369,276^
753,422,320*
219;243,841;
532,893,842
5 726,512
6705 948
1,609,392,389
42,824,1747^
TABLE lll-BUDGET RECEIPTS AND EXPENDITURES-JUNE 30, 1961-Continued
Classification
This month
Corresponding
month
last year
Fiscal Year
1961
to date
Corresponding
period
fiscal year 1960
EXPENDITURES--Continued
Defense Department-Continued
Civil functions:
Army*
Corps of Engineers:
Rivers and harbors and flood control.
Intragovernmental funds (net)
The Panama Canal:
Canal Zone Government
Panama Canal C o m p a n y :
Public enterprise funds (net)
Panama
Canal PBridge
Total--The
a n a m a Canal
Defense production guarantees (net)
Payment of Texas City claims
Navy-defense production guarantees (net),
Air Force:
Defense production guarantees (net)...
Other
Total—Civil functions
Total—Defense Department
Health, Education, and Welfare Department:
Food and Drug Administration
Freedmen's Hospital
Office of Education:
Assistance for school construction
Defense educational activities
Payments to school districts
Other.
Office of Vocational Rehabilitation
Public Health Service:
Hospital construction activities
National Institutes of Health
Operation of commissaries, narcotic hospitals (net).
Total—Public Health Service.
Other
Saint Elizabeths Hospital
Social Security Administration:
Grants to States for public assistance
Grants for maternal and child welfare
Operating fund, Bureau of Federal Credit Unions (net)
Other
Special institutions:
American Printing House for the Blind
Gallaudet College
Howard University
Office of the Secretary:
Intragovernmental funds (net)
Total—Health, Education, and Welfare Dept.
Other
Interior Department:
Departmental offices
Commission of Fine Arts
Bonneville Power Administration
Southeastern Power Administration
Southwestern Power Administration
Bureau of Land M a n a g e m e n t
Bureau of Indian Affairs:
Public enterprise funds (net):
Revolving fund for loans
Other
Other
*<
Bureau of Reclamation:
Public enterprise funds (net):
Continuing fund for emergency expenses,
Fort Peck project, Montana
Upper Colorado River Basin fund
Total—Bureau of Reclamation.
Other
$111,366,310
-781,749
$125,521,162
-789,783
$931,574,066
-5,468,094
$866,572,438
583,598
1,938,496
2,067,971
22,627,447
21,796,500
3,201,034
318,496
1,287,625
487,683
6,300,282
1,871,224
-2,174,689
2,673,882
5,458,028
3,843,280
30,798,955
22,295,693
-3,767
41,461
1,252,315
-27,962
-118,602
1,930
-10,494
172,546
1,246,384
-71,854
-125,750
2,762
-215,372
201,263
15,157,177
-479,785
-544,384
29,580
58,049
607,036
12,172,573
936,513
-973,289
23,765
117,187,964
129,788,254
971,053,406
902,276,379
4,459,346,021
3,867,008,181
45,622,045,349
43,726,450,476
1,615,449
152,467
1,357,017
223,809
18,737,408
3,415,984
13,686,689
3,108,452
7,463,319
11,003,024
31,622,966
1,391,937
2,333,888
12,582,467
51,533,674
-9,206
25,904,633
90,011,569
9,086,646
10,039,567
24,044,962
1,070,588
1,382,654
13,438,308
27,963,538
-4,104
22,343,594
63,741,337
71,041,730
143,132,613
207,748,415
68,841,947
70,479,343
158,174,891
420,430,654
-8,585
277,670,824
856,267,784
83,347,944
128,770,827
174,850,424
63,173,582
61,303,165
144,607,088
348,960,103
-8 343
250,152^465
743,711,314
831,530
380,043
5,234,630
4,197,042
189,168,280
317,018
28,787
668,818
165,098,600
438,908
8,749
438,853
130,001
573,754
57,443
496,294
2,166,986,232
51,521,846
-139,072
5,810,451
400,000
1,678,385
6,294,253
2,058,896,283
47,432,645
-170,629
4,974,983
400,000
2,074,371
6,421,356
-16,023
730,786
-19,365
671,751
34,045
7,200,379
-70,348
7,064,655
338,027,578
278,517,862
3,684,686,380
3,403,172,759
616,807
5,514
2,985,269
22,197
497,149
3,714,636
449,554
4,074
2,558,692
19,925
485,936
3,112,790
7,637,684
60,687
36,632,048
423,294
5,715,426
91,707,086
5,351,396
41,555
27,193,979
338,224
6,201,076
84,837,922
148,915
-260
10,418,349
-1,109,098
-815
9,834,971
262,730
689
131,009,665
856,193
6,944
121,100,678
79,162
7,386,767
19,646,222
46,856
2,374,694
17,793,480
-1,547,065
57,090,561
210,335,544
-1,780,775
32,032,395
178,406,644
27,112,152
20,215,031
265,879,040
208,658,264
8
TABLE HI-BUDGET RECEIPTS AND EXPENDITURES-JUNE 30, 1961-Continued
Classification
This month
Corresponding
month
last year
Fiscal Year
1961
to date
Corresponding
period
fiscal year I960
E X P E N D I T U R E S - -Continued
Interior Department--Continued
Geological Survey
Bureau of Mines:
Development and operation of helium properties (net).
Other
.
National Park Service
Fish and Wildlife Service:
Office of Commissioner of Fish and Wildlife
Bureau of Sport Fisheries and Wildlife
Bureau of Commercial Fisheries:
Public enterprise funds (net)
Other
Office of Territories:
Public enterprise funds (net)
Other
Virgin Island Corporation (net)
Alaska Railroad (net)
Office of the Secretary
Total—Interior Department
Justice Department:
Legal activities and general administration
Federal Bureau of Investigation
Immigration and Naturalization Service
Federal Prison System:
Federal Prison Industries, Inc. (net) „
Other 8
Total--Justice Department
Labor Department:
Office of the Secretary
B u r e a u of Labor- M a n a g e m e n t Reports . „
Office of the Solicitor
B u r e a u of L a b o r Standards
B u r e a u of Veterans' R e e m p l o y m e n t Rights
B u r e a u of Apprenticeship and Training
B u r e a u of E m p l o y m e n t Security:
Grants to States for u n e m p l o y m e n t compensation
and e m p l o y m e n t service administration 3 0
Advances to employment security administration
account, unemployment trust fund (net)
Payment to Federal extended compensation
account
Unemployment compensation for Federal employees
and ex-servicemen
F a r m labor supply fund (net)
Temporary unemployment compensation
Other
Total—Bureau of Employment Security
Bureau of Employees' Compensation
Bureau of Labor Statistics
W o m e n ' s Bureau
W a g e and Hour Division
Total—Labor Department
Post Office Department:
Payment for public services
Public enterprise fund (net)--Postal fund
Total--Post Office Department
State Department:
Administration of foreign affairs:
Salaries and expenses
Acquisition, operation and maintenance of buildings
abroad
Payment to Foreign Service retirement and disability
fund
Intragovernmental funds (net).
Other
Total--Administration of foreign affairs
International organizations and conferences:
Contributions to international organizations
Other
International commissions
Educational exchange
Other
Total—State Department
See footnotes on pages 9 and 19
£3,806,111
13,231,921
$45,137,630
$41,709,84!!
419,486
2,733,843
7,258,458
39,026
2,359,045
6,908,898
941,022
31,879,559
89,412,616
90,63'/
34,012,62'*
73,282,39«
33,824
5,063,408
27,289
3,638,704
342,248
53,685,763
343,91*1
49,729,53',,
225,758
1,249,280
302,874
1,199,563
1,106,886
15,984,202
625,691
15,980,921;
-5,698
114,217
677,840
42,941
311,319
67,451,523
-12,552
418,494
-125,585
-9,505
253,372
53,802,609
-29,399
17,362,842
3,483,750
-84,668
2,757,240
801,308,049
-76,61c1
17,250,54(.
167,64c;
-217,3Ui
2,647,56?
690,133,64^:
4,502,076
9,797,142
4,970,753
3,746,056
8,986,695
4,885,778
48,053,585
125,051,332
61,983,128
44,641,44(112,607,290:
54,802,652^
-546,696
4,102,883
-100,917
3,708,073
-2,817,761
51,905,883
-1,335,584':
47,248,342
22,826,160
21,225,685
284,176,167
257,964,14£i
43,383
351,487
234,519
190,561
43,275
329,818
30,928
463,351
216,859
190,192
58,353
323,784
1,937,671
5,656,110
2,824,872
2,638,364
638,710
4,309,574
1,563,483*
2,536,20%
2,666,724
2,307,013;
577,393=
3,949,270.;
22,698,440
2,163,945
324,739,667'
31
40,589,611
48,589,611
498,138,622
268,138,622
15,519,114
101,855
-78,682
200,017
324,470,538
15,001,132
8,951
-413
704,159
38,412,269
171,042,688
-751,655
„ -399,238
32
3,123,964
721,907,939
131,704,456
-2,067,280
-13,197,892,
9,331,939"
450,510,890^
5,691,485
881,330
43,825
883,786
333,164,012
5,218,338
858,265
49,689
921,870
46,743,903
65,585,374
12,314,692
541,079
12,229,991
62,956,231l
10,306,876';
497,178
11,355,694
830,584,380
549,226,965v
4,698,000
130,050,751
2,900,000
-4,566,827
49,000,000
880,461,813
37,400,000
487,616,369'
134,748,751
-1,666,827
929,461,813
525,016,369:
15,466,141
12,328,061
33
122,011,403
114,595,831;
1,183,965
2,536,570
14,829,441
20,868,415
2,360,000
-79,041
16,767,029
6
254,224
509,136
253,802
928,248
2,540,000
91,769
7,512,863
17,413,468
16,046,683
146,985,478
1,075
619,710
573,600
1,761,036
202,198
20,571,087
532,343
382,387
495,014
2,556,015
224,487
20,236,932
48,273,093
4,334,863
6,914,444
36,927,866
9,086,323
252,522,070
54,644,001
3,786,674
6563,886
23,474,905
3,643,923
TABLE HI-BUDGET RECEIPTS AND EXPENDITURES-JUNE 30,1961-Continued
Classification
EXPENDITURES—Continued
Treasury Department:
Office of the Secretary:
Subscription to International Development Association
Investment in Inter-American Development Bank ...
public enterprise funds (net):
Reconstruction Finance Corporation liquidation
fund
Civil defense program fund
Intragovernmental funds (net)
Other
Bureau of Accounts:
Interest on uninvested funds
Payment to Unemployment trust fund
Claims, judgments and relief acts
Government losses in shipment fund (net)
Salaries and expenses
.
Other
Bureau of the Public Debt
Office of the Treasurer:
Check forgery insurance fund (net)
Other
Bureau of Customs:
Intragovernmental funds (net)
Other
Internal Revenue Service:
Interest on refunds of taxes
Payments to Puerto Rico for taxes collected
Salaries and expenses
Bureau of Narcotics
United States Secret Service
Bureau of the Mint
Bureau of Engraving and Printing:
Intragovernmental funds (net)
Other
0
Coast Guard:
Intragovernmental funds (net)
Other
Interest on the public debt:
Public issues35
Special issues 35
Total—Interest on the public debt
Total—Treasury Department
District of Columbia:
Federal payment to District of Columbia
Advances for general expenses (repayable)
Loans to District of Columbia for capital outlay
Unclassified expenditure transfers7
Subtotal expenditures
Deduct: Interest and other payments by Government
agencies to Treasury included above and also
included in budget receipts1
Budget expenditures
Budget surplus (+) or deficit (-)
Corresponding
month
last year
This month
Fiscal Year
1961
to date
Corresponding
period
fiscal year 1960
$73,666,700
$79,550,000
-$331,930
-11,087
-46,155
-9,072
287,317
229,856
118,802
101,188
2,553,205
314,521
644
4,176,560
5,942,622
$80,000,000
1,024,924
43,749
1,358,536
385
2,825,356
4,791
2,120,827
1,954
2,136,704
-3,951,550
-137,474
1,273
3,555,412
10,068,147
34
1,216,262
28,998,047
86,093
24,115,069
665
47,259,838
10,849
16,744,416
407,221
4,363,847
333,527
4,150,214
58,882,227
53,849,830
6,711,015
2,891,152
33,165,401
324,336
488,642
482,417
-473,246
72,300
5,592,010
2,315,689
28,816,290
318,715
487,607
467,123
-1,550,789
82,746,794
24,998,475
408,083,748
4,275,893
6,262,501
5,798,537
568,752
123,731
76,437,867
22,934,141
360,147,442
4,017,961
5,641,413
5,415,340
-662,589
555,574
29,260,952
642,869,385
120,460,877
-140,452
28,116,272
689,331,876
111,912,890
-2,025,086
277,902,046
7,712,098,476
1,250,107,996
-2,086,863
240,218,022
7,986,493,352
1,193,095,505
763,330,262
801,244,766
8,962,206,472
9,179,588,857
849,021,551
965,103,003
10,031,457,846
10,131,134,530
27,218,000
331,920
328,370
30,233,000
8,000,000
12,200,000
-197,342
8,188,387,357
6,789,263,467
82,151,996,090
77,233,385,451
240,293,665
268,672,105
649,335,035
693,972,652
7,948,093,692
6,520,591,362
81,502,661,054
76,539,412,798
+2,800,896,668
+4,369,933,761
-3,924,969,183
+1,224,047,421
8,000,000
2,450,000
-14,267,391
-145,340
7,988
3,314,256
9,791,610
2,553,205
11,306,365
35,955
28,022,040
*47,*7__,'i_i
-2,670
17,218,934
"* '.66,' 566
FOOTNOTES
n
Based ° budget messages of the President dated March 24 and
1961 a n d the statem
th n A
e n t of the Director of the Bureau of
ne Budget before the Joint Economic Committee on March 27, 1961.
?!iglnning w i t h t h e M o n t h l y Statement for July i960, and incorceb tn t h e f i n a l s t a t e m e n t f o r t h e fiscal year I960 (released De19 0
vedt*
^ ^' t o t a l s shown for net budget receipts and budget ex6S
intt! rf ® x c l u d e cert ain interfund transactions which are included
d etail o f
tra
.
both budget receipts and budget expenditures. The
i
T
i
— deducted
—
_._v__, consist
.unai.1 i_i_._xi_y
I U the
tuc
actions
mainly u_
of interest
interest p_.yiii.iit_
payments to
m
n. T U r y y Government corporations and agencies that borrow from
cha e,asury (see Table IX page 15, for details). This reporting
*_ ange
- does not
-*w» affect
&____!, the
M__ budget
.uagei surplus or deficit.
a_ii.it. The
_n_ interfund
nit_n__i<_
to th aC T° nS d e d u c t e d under this procedure do not include payments
tire -*reasury by wholly-owned Government corporations for recapiMfr °ft h e i r c a P i t a l st ock and for disposition of earnings. These
n.L-. t r a n s f e rs have been excluded from ^budget receipts and exPendrtures s i n c e J u l y lf 1 9 4 g
1961 d'd Pres.ident's budget messages of March 24 and March 28,
id not include estimates for balance in account of Treasurer,
a
- and public debt outstanding.
3
Figures have been revised to exclude certain interfund transactions. See footnote 1.
4
For details of deductions from receipts see Table III, page 2
and for details of deductions from expenditures see Table X, page 16.
5
For details see Table III.
6
Transactions cover the period July 1, I960, through June 30,
1961, and are partially estimated.
7
Represents expenditure adjustments reported by Regional Disbursing Officers which have not yet been picked up in reports of other
officers.
a
Includes debt not subject to statutory limitation, which on June
30, 1961 amounted to $349,291,529. Statutory debt limit was established at $285 billion by the act approved June 30, 1959. The limit,
including temporary increases, was $290 billion on June 30, 1959
and $295 billion from July 1, 1959 to June 30, I960, and $293 billion
from July 1, I960, to June 30, 1961. F r o m July 1, 1961, to June 30,
1962, the limit, including a temporary increase of $13 billion, will
be $298 billion. Thereafter, it will revert to $285 billion.
Footnotes continued on page 14
10
TABLE IV--TRUST AND OTHER RECEIPTS AND EXPENDITURES-JUNE 30, 1961
Classification
This month
Corresponding
month
last year
Fiscal Year
1961
to date
Corresponding
period
fiscal year 1960
RECEIPTS
Legislative Branch:
Other
The Judiciary:
Judicial survivors annuity fund:
Independent Offices:
Civil Service Commission:
Civil service retirement and disability fund:
Deductions from employees' salaries, etc
Payments from other funds:
Employing agency contributions
Voluntary contributions, donations, etc
Interest and profits on investments
$89,262
143,397
$89,262
81,650
$179,324
1,452,277
$179,156
1.014,700
81,762
4,652
16,709,877
42,005
2,255
49,299,981
502,559
48,604
216,992,103
503,363
38,307
197,879,569
86,340,784
64,116,263
843,763,699
749,513,523
86,348,925
64,127,077
749,498,995
1,082,812
242,314,882
989,565
218,824,234
843,859,004
46,329,000
11,881,679
280,175,819
10,682,199
250,679,287
416,087,405
348,057,140
2,026,009,203
1,760,374,005
53,597,771
-9,153,033
53,973,642
-3,544,398
85,346,597
86,843,770
570,165,005
465,944
250
110,920,670
609,619,201
-2,754,544
100
109,954,714
551,126
416,079
1,020,481
899,891
12,165,000
22,481,000
31,205,000
85,231,000
336,882,000
318,389,000
336,882,000
600,437,000
479,389,462
478,559,093
1,050,659,353
1,403,387,362
1,814,157
36,764,688
1,252,375
15,784,771
20,599,986
37,829,919
21,845,515
38,897,753
43,910,436
728,611
172,058,061
172,611
250,971
157,500
36,927,980
838,439
71,054,831
186,117
-1,900
120,055
485,527,359
8,190,375
175,394,965
1,714,863
454,615
833,065
459,882,846
10,298,078
172,406,829
1,697,136
605,844
178,020
384,207
427,390
3,588,527
4,416,419
384,207
427,390
40,445,317
41,848,814
238,400,000
238,100,000
518,976
2,923,240,921
60,000,000
-60,000,000
2,017,718
2,642,499,118
359,000,000
-359,000,000
1,854,801
240,265,258
238,618,976
2,925,258,640
2,644,353,919
666,706
3,703,145
28,482,239
76,872,109
1,021,055
1,519,200
3,840,367
7,056,728
3,619,133
7,878
2,664,174
16,672
2,740,336
19,923,042
544,361
2,762,798
19,237,827
130,327
3,034,172
19,199
647,667
4,552,991
34,053
1,149,119
113,993,899
22,636,661
11,882,660
61,472,284
11,075,213
9,830,115
+506
496
-1,419
1,077
+506
85,085
-1,419
68,914
389,660
216,361
1,158,394
7,485
1,070,163
75,276
3,478,698
2,540,000
1,247,307
291,043
2,520,574
2,360,000
1,134,061
385,590
101,805,747
4,548,009
89,289,919
392,837
4,851,000
22,306,311
962,812,407
68,680,977
61,486,814
938,681,781
58,146,727
26,831,000
47,634,535
Railroad Retirement Board:
Railroad retirement account:
Transfers (Railroad Act taxes):
Interest and profit on investments
Interest on advances to railroad unemployment
Repayment of advances to railroad unemployment
Payment from Federal old-age and survivors
and Federal disability insurance trust funds ....
Veterans Administration:
Government life insurance fund:
National service life insurance fund:
Payments from general and special funds
Other Independent Offices
Agriculture Department:
Food stamps issued:
Payments from general fund
C o m m e r c e Department:
Highway trust fund:
Transfers (Highway Revenue Act of 1956)
i, 8.5,_._8
Other
Defense Department:
Civil functions:
Other
Health, Education and Welfare Department
Interior Department:
Other
Labor Department:
State Department:
Foreign Service retirement and disability fund:
Deductions from salaries and other receipts
Treasury Department:
Federal disability insurance trust fund:
Transfers from general fund receipts
Payments from railroad retirement account
29,341,066
Total—Federal disability insurance trust fund
Federal old-age and survivors insurance trust fund:
Transfers from general fund receipts
Interest and profits on investments
Other
•••..•••ooo.**.*
135,694,823
116,840,067
1,092,980,199
1,071,294,044
1,025,183,984
42,554,791
205,713,881
5,586
1,014,348,746
1,189,514
204,384,513
17,576
10,623,470,761
755,447,319
530,226,255
998,976
9,271,868,378
650,256,737
516,406,240
871,867
1,273,458,244
1,219,940,352
11,910,143,313
10,439,403,223
Total—Federal old-age and survivors insurance
TABLE IV--TRUST AND OTHER RECEIPTS AND EXPENDITURES-JUNE 30,1961-Continued
Classification
Corresponding
month
last year
This month
Fiscal Year
1961
to date
11
Corresponding
period
fiscal year 1960
RECEIPTS—Continued
Treasury Department-Continued
Unemployment trust fund:
Fm_lovment security administration account:
Transfers (Federal unemployment taxes):
Appropriated
«• • • • <>•
Unappropriated
..
Advances from general (revolving) fund
Less return of advances to the general fund ...
State accounts - deposits by States.
Federal unemployment account-payments from
general fund
»
Less transfer of receipts to L a b o r
Railroad unemployment insurance account:
Deposits by Railroad Retirement B o a r d
Advances from railroad retirement account.
Transfer of receipts from railroad u n e m p l o y m e n t
insurance administration fund
Advances from general fund
Federal extended compensation account:
Advances from general fund
Interest and profits on investments
Total—Unemployment trust fund
Other
District of Columbia:
Revenues from taxes, etc
Payments from general fund:
Federal contribution
Advances for general expenses
Loans for capital outlay
Other loans and grants
Total trust fund receipts
Increment from reduction in weight of gold dollar
Subtotal receipts
Deduct: Certain trust receipts which are also trust
expenditures36
....
.
Net receipts
EXPENDITURES
Legislative Branch
The Judiciary--Judicial survivors annuity fund
Funds appropriated to the President
Independent Offices:
Civil Service Commission:
Civil service retirement and disability fund
Employees health benefits fund (net)
Employees life insurance fund (net)
Retired employees health benefits fund (net)
Total—Civil Service Commission„
National Capital Housing Authority (net) ............
Railroad Retirement Board:
Railroad retirement account:
Administrative expenses
Benefit payments, etc.
•
Payment to Federal old-age and survivors and
disability insurance trust funds
Advances to railroad unemployment insurance
account
„
Total--Railroad Retirement Board
Veterans Administration:
Government life insurance fund-Benefits, refunds
and dividends
National service life insurance fund-Benefits,
refunds and dividends
Other
Other Independent'offices:
•••••••
Trust enterprise funds (net)
Other.
....
General Services Administration:"
Trust enterprise funds (net)
Other ................................
Ho
Jjsing and H o m e Finan_e°Agency:° ° " * ° ° °
Federal National Mortgage Association:
ijpans for secondary market operations (net) 7
Other (net)............
...
.....
...
Agriculture Department:"
Food stamps redeemed
Trust enterprise funds (net)
Other
Commerce Department:0
Total--Highway
Other.....
Highway
Refunds
Interest
Federal-Aid
trust
payment
of taxes
fund:
trust
Highway
onfund
advances
Act of 1956
from
. general fund ...
$345,979,586
593,078
301,500,000
-250,000,000
2,396,685,409
$975,000
124,127
43,500,000
47,775,703
$3,774,493
-506
2,553,205
+1,419
-506
2,553,205
+1,419
30,604,791
31,106,961
152,703,508
132,345,000
152,997,833
183,730,000
1,723,252
5,000,000
268,138,622
73,036,994
470,877,983
1,752,489
$2,166,956,483
8,914,368
145,275,890
8,598,960
13,000,000
498,138,622
204,490,889
3,804,034,547
2,703,294,649
1,686,889
1,308,371
15,737,763
22,466,267
10,680,064
11,868,103
205,010,733
201,588,267
76,087,321
188,141,338
27,218,000
2,763,872,363
30,233,000
8,000,000
12,200,000
23,981,429
24,306,911,329
900,000
25,924,176
21,442,384,981
6
336
914
4,054
3,327,205,736
2,763,872,700
24,306,912,244
21,442,389,035
351,859,743
346,995,647
514,738,367
908,101,588
2,975,345,992
2,416,877,052
23,792,173,876
20,534,287,446
126,152
30,834
28,138,745
81,988
27,704
108,266,244
1,332,668
347,110
191,631,087
1,224,100
352,873
248,826,429
82,755,836
-7,957,022
-5,551,430
2,083
69,249,466
79,042,590
892,728,405
81,981,376
951,038,343
-23,263,233
-50,904,686
-1,622,916
875,247,507
-263,906
294,818
321,968
2,580,122
1,115,004
83,604,991
861,879
80,512,108
9,766,698
981,839,329
9,017,767
916,387,088
8,000,000
2,450,000
757,123
3,327,205,729
8,309,304
"_]___, 785
^_i_4M9i
848,683,214
26,831,000
4,851,000
132,345,000
183,730,000
84,719,996
86,224,987
1,123,951,027
1,135,965,855
14,498,776
6,831,066
94,495,277
83,247,544
71,804,935
168,020
49,430,415
214,704
709,310,388
1,817,188
581,575,034
2,087,409
-12
7,011
1,837
25,784
7,916
480,900
-9,588
950,797
-9,394
187,550
-11,155
45,418
-48,769
773,226
-38,626
113,434
9,610,000
215,378
642,648
-264,500
3,653,854
96,569,589
40,588,213
-16,000,000
-68,772,422
41,531,035
946,471,695
1,169,963
3,376,472
642,648
-1,289,556
40,670,826
2,261,326
36,710,031
239,102,406
249,855,501
2,619,783,301
543,457
125,703,141
2,940,251,130
5,066,704
103,472,542
3,048,790,377
4,996,284
1,778,717
39,808,466
28,613,756
12
TABLE IV--TRUST AND OTHER RECEIPTS AND EXPENDITURES-JUNE 30, 1961-ContLnued
Classification
EXPENDITURES—Continued
Defense Department:
Military functions
,
Civil functions:
Trust enterprise funds (net)
Other
Health, Education and Welfare Department
Interior Department:
Indian tribal funds
Other
Justice Department (net):
Alien property activities
Federal Prison System commissary funds
Labor Department:
Bureau of Employment Security
Other
State Department:
Foreign Service retirement and disability fund
Other
Treasury Department:
Federal disability insurance trust fund:
Administrative expenses—reimbursement to Federal
old-age and survivors insurance trust fund
Payments to general fund:
Administrative expenses
-.
Refunds of taxes
Benefit payments
~.
Payment to Railroad Retirement Board
Total—Federal disability insurance trust fund ^...
Federal old-age and survivors insurance trust fund:
Administrative expenses-Bureau of Old-Age and
Survivors Insurance
Reimbursement of administrative expenses from
Federal disability insurance trust fund
Payments to general fund:
Administrative expenses
Refunds of overpayment of payroll tax receipts ...
Payment to Railroad Retirement Board
Benefit payments
Construction
Total—Federal old-age and survivors insurance
trust fund
Unemployment trust fund:
Employment Security administration account:
Salaries and expenses, Bureau of Employment
Security
Grants to States for unemployment compensation
and employment service administration
Payments to general fund:
Reimbursements for administrative expenses, a.
Refunds of taxes
Payment of interest on advances from general
(revolving) fund
_.Railroad unemployment insurance account:
Administrative expenses
Benefit payments
Temporary extended railroad unemployment
benefits
Repayment of advances to railroad retirement
account
Payment of interest on advances from railroad
retirement account
State accounts:
Withdrawals by States
Reimbursement from Federal extended compensation account.
Federal extended compensation account:
Temporary extended unemployment compensation
payments
Reimbursement to State accounts
Total—Unemployment trust fund
Other
District of Columbia
Deposit fund accounts (net):
District of Columbia
Government sponsored enterprises:
Investments in public debt securities, net investment (+) or sales (-)
Sales and redemptions of obligations in market, net
sales (-) or redemptions (+)
Other
Indian tribal funds
Other
Total trust and deposit fund expenditures
Payment of melting losses on gold
Subtotal expenditures
Deduct: Certain trust expenditures which are also
trust receipts3*
Net expenditures
Excess of trust and other receipts (+) or expenditures (-)
See footnotes on page 19
This month
Corresponding
month
last year
Fiscal Year
1961
to date
Corresponding
period
fiscal year I960
$287,180
$507,172
$4,685,495
$8,132,756
-504
2,360,286
27,430
2,192
2,917,263
18,794
7,773
17,856,036
308,427
-7,658
18,450,110
166,974
7,023,787
1,227,742
9,022,716
948,737
137,430,242
12,069,836
74,189,348
10,155,690
956,625
3,804
1,440,369
-14,242
2,826,638
7,635
4,620,352
25,824
506
-8
29,042
21,616
166,848
412,860
27,144
291,524
17,343
4,253,250
440,003
111,322
3,331,374
398,525
34,052,915
29,505,953
248,409
3,122,289
9,500,000
703,995,495
5,148,000
3,140,241
9,750,000
528,303,887
79.098.706
45,819,296
755,818,700
570,700,082
22,176,283
15,838,896
223,653,749
179,348,203
270,684
73,680,021
5,148,000
-33,176,322
-28,781,908
39,425,017
79,440,000
600,437,000
10,269,708,576
12,525,583
11,152,102,473
3,449,327
3,223,876
331,734,000
985,828,891
316,064
318,389,000
899,623,698
102.794
43,760,039
86,240,000
331,734,000
11,184,531,292
1,779,643
1,343,504,566
1,237,178,265
11,838,522,401
739,075
7,738,718
38,544,427
374,975,294
129,867
329,758
5,100,863
2,245,089
2,910,388
2,910,388
871,880
16,555,566
325,326
10,905,566
4,571,254
9,061,099
274,962,614
9,920,098
251,710,635
10,017,469
12,165,000
22,481,000
85,231,000
31,205,000
551,126
416,079
1,020,481
899,891
242.521.524
193,608,930
3,558,148,949
2,366,285,954
264,969,774
481.151.560
584,859,642
227,736,902
4,736,144,547
2,736,440,560
1,395,674
24,787,005
1,146,501
28,747,649
16,724,782
302,003,327
47,815,132
266,893,773
138,745
86,429
-576,334
538,228
+238,803,500
-99,000,000
-19,925,500
+434,689,800
-218,654,200
305,949,677
-2,678,779
113,882,904
2,672,253,594
-171,247,600
179,272,529
2,857,591
16,828,206
2,290,427,412
-195,758,200
-232,512,286
1,435,623
119,791,715
23,697,094,136
-722,992,300
478,913,408
1825,587
-99 218,907
21,801,332,976
35
17
35
2,290,427,447
23,697,094,154
21,801,333,011
346,995,647
514,738,367
2,320,393,850
1,943,431,799
23,182,355,786
20,893,23M22
+654,952,142
+473,445,253
+609,818,090
-358,943,975
2,672,253,594
351,859,743
908,101,588
JUNE 30,1961
TABLE V--INVESTMENTS OF GOVERNMENT AGENCIES IN PUBLIC DEBT SECURITIES (NET) 13
(Including certain guaranteed securities)
Classification
This month
Trust accounts, etc:
__,._,
Federal disability insurance trust fund
Employees health benefits fund
Employees life insurance fund
Federal employees' retirement funds:
Civil service retirement and disability fund
Foreign service retirement and disability fund
Federal National Mortgage Association:
Secondary market operations:
Public debt securities
Guaranteed securities
Federal old-age and survivors insurance trust fund..
Highway trust fund
Judicial survivors annuity fund
Railroad retirement account
Unemployment trust fund
Veterans life insurance funds:
Government life insurance fund
National service life insurance fund
Other
Total trust accounts, etc
Public enterprise funds:
Federal Housing Administration:
Public debt securities
Guaranteed securities
Federal Savings and Loan Insurance Corporation
Federal National Mortgage Association:
Public debt securities (management and liquidating
functions)
Guaranteed securities
Tennessee Valley Authority 39
Other
Total public enterprise funds
Net investments, or sales (-)
MEMORANDUM
$48,155,719
921,000
Corresponding
month
last year
$111,370,374
-36470
Fiscal Year
1961
to date
$284,712,842
12,324,000
47,002,000
Corresponding
period
fiscal year 1960
$493,988,457
'*'47i7i6,'.29
338,983,000
1,140,000
272,344,000
970,000
1,059,787,000
3,002,000
868,247,000
2,762,000
-233,880,410
79,139,000
44,000
404,761,000
-124,003,179
23,393,000
137,782,000
-6,349,060
466,400
383,099,069
-56,304,000
67,000
397,874,000
-82,520,139
9,705,000
60,941,000
-12,496,355
761,050
-225,331,046
232,699,000
210,000
-78,258,000
-951,988,061
-35,107,000
-43,718,000
-18,146,160
466,400
-725,582,159
-427,879,000
242,500
264,163,000
-40,907,178
-20,695,000
61,541,000
23,865,700
670,086,069
1,085,480,179
287,949,624
547,929,048
7,560,000
3,795,000
97,489,000
62,169,000
4,"o66io66
'4,666^666
34.666J666
18^566,666
731,400
-32,000,000
4,367,000
7,019,350
-12,089,000
21,667,000
15,363,400
51,289,000
18,449,000
-15,341,600
-44,745,000
-2,003,400
-7,000,000
3,249,000
-42,704,400
148,086,350
165,770,400
654,744,469
1,042,775,779
436,035,974
713,699,448
-2,000,000
5,000,000
-101,000,000
-1,000,000
-500
7,500,000
-28,480,000
55,000
1,000,000
3,027,500
147,521,000
286,990,000
1,486,300
-4,335,000
-500
133,996,000
102,030,000
1,778,000
1,000,000
38
40
(Included in Table IV)
Government sponsored enterprises:
Banks for cooperatives
Federal Deposit Insurance Corporation
Federal home loan banks
Federal intermediate credit banks
Federal land banks
i
TABLE VI--SALES AND REDEMPTIONS OF OBLIGATIONS OF
GOVERNMENT AGENCIES IN MARKET (NET)
Public enterprise funds:
Guaranteed by the United States:
Federal Farm Mortgage Corporation
federal Housing Administration
Home Owners' Loan Corporation
wot guaranteed by the United States:
federal National Mortgage Association
(management and liquidating functions)
Home Owners' Loan Corporation
Tennessee Valley Authority
irust enterprise funds:
n w n t e _ d b y t h e Uni ted States:
district of Columbia stadium fund
Wo
iSuara:nteed b y the United States:
federal National Mortgage Association
(secondary market operations)
Net redemptions, or sales (-)
MEMORANDUM *°
(Included in Table IV)
Nntrlment sponsored enterprises:
ter*nteed b v t h e U n " e d States:
Banks for cooperatives
h o m e loan
_._!*
banks
era
J!? J intermediate credit banks
fjjjgral land banks
$1,000
-14,821,250
1,225
$3,400
-6,397,200
1,400
$19,300
-81,077,500
8,525
$21,300
-28,412,100
44,175
20,025
797,333,000
75
-50,000,000
6,000
20,475
-19,324,000
-380,000
3,000
-14,277,000
-143,232,000
85,552,000
-29,093,025
-149,604,375
732,511,400
-1,023,117,150
19,920,000
-99,520,000
-62,300,000
-76,754,200
10,280,000
-70,565,000
-63,140,000
-47,822,600
-51,925,000
200,315,000
-123,695,000
-220,453,200
-45,640,000
-283,595,000
-143,930,000
-249,827,300
-994,417,000
G
^ee footnotes on page 19.
JUNE 30, 1961
TABLE VII--CHANGES IN THE PUBLIC DEBT
14
(Includes exchanges)
Classification
Increase (+) or decrease (-) in the gross public debt:
Public issues:
Marketable obligations:
Treasury bills
Certificates of indebtedness
Treasury notes
Treasury bonds
Other
Total marketable obligations
Non-marketable obligations:
United States savings bonds
Treasury bonds, investment series
Other
Total non-marketable obligations
Total public issues
This month
Corresponding
month
last year
Fiscal Year
1961
to date
Corresponding
period
fiscal year 1960
-$1,663,415,000
-27,506,000
+23,946,500
-20,141,450
-46,795,515
-1,733,911,465
-$3,844,605,000
-3,587,000
+3,906,846,000
-3,898,888,050
-22,150
-3,840,256,200
+$3,261,886,000
-4,310,425,000
+4,767,136,400
-422,224,450
-46,987,902
+3,249,385,048
+42,658,385
-19,495,000
-3,370,475
+19,792,909
-65,075,516
-126,881,000
-1,904,747
-193,861,263
-69,243,017
-952,616,000
+278,466,849
-743,392,168
-3,009,945,246
-1,582,341,000
+245,901,804
-4,346,384,441
-1,714,118,555
-4,034,117,463
+2,505,992,879
+1,493,879,420
+143,615,000
-12,640,650
+1,624,853,770
Special issues
Other obligations
+539,783,000
-366,676
+999,230,000
^877,280
+143,641,000
-9,456,118
Change in gross public debt
-1,174,702,231
-3,035,764,743
+2,640,177,761
+$1,447,328,000
-16,194,467,000
+24,179,407,850
-3,591,710,450
-294,537
+5,840,263,862
TABLE VIM-EFFECT OF OPERATIONS ON PUBLIC DEBT
Budget surplus (-) or deficit (+)
Excess of trust and other receipts (-) or expenditures (+)
Excess of investments (+) or sales (-) of Government
Excess of redemptions (+) or sales (-) of obligations
Increase (-) or decrease (+) in checks outstanding and
-$2,800,896,668
-654,952,142
-$4,369,933,761
-473,445,253
+$3,924,969,183
-609,818,090
-$1,224,047,421
+358,943,975
+654,744,469
+1,042,775,779
+436,035,974
+713,699,448
-29,093,025
-149,604,375
+732,511,400
-1,023,117,150
+329,292,813
+58,900,423
-112,529,429
41
-7,487,237
+379,775,745
+243,887,168
-441,949,134
-231,036,134
-93,723,083
+117,728,784
-83,463,290
-3,713,929
+1,532,454,833
+493,926,490
-1,310,621,044
+2,654,349,235
-1,174,702,231
290,145,640,841
-3,035,764,743
289,366,525,591
+2,640,177,761
286,330,760,848
+1,624,853,770
284,705,907,078
Gross public debt at end of period
Guaranteed obligations of Government agencies,
288,970,938,610
286,330,760,848
288,970,938,610
286,330,760,848
240,215,450
139,841,775
240,215,450
139,841,775
Total public debt and guaranteed obligations
289,211,154,060
349,291,529
286,470,602,623
405,638,299
289,211,154,060
349,291,529
286,470,602,623
405,638,299
288,861,862,530
286,064,964,323
288,861,862,530
286,064,964,323
Increase (-) or decrease (+) in public debt interest due
Increase (+) or decrease (-) in cash held outside
Increase (+) or decrease (-) in balance of Treasurer's
Continued from page 9.
FOOTNOTES
Distribution between income taxes and employment taxes made
in accordance with provisions of Sec. 201 of the Social Security Act
as amended for transfer to the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund.
9
"Individual income taxes withheld" have been decreased $170,489,551 to correct estimates for the quarter ended September I960
and prior, and "Individual income taxes other" have been decreased
$6,016,533 to correct estimates for the calendar year 1959 and prior.
The total of the above adjustments ($176,506,084) is shown as an increase of employment taxes under "Federal Insurance Contributions
Act and Self-Employment Contributions Act" representing increases
in appropriations of $161,767,541 for the Federal Old-Age and Survivors Insurance Trust Fund and $14,738,543 for the Federal Disability Insurance Trust Fund.
10
Formerly included with Dividends and other earnings.
11
Formerly included under Miscellaneous receipts, other.
12
Represents appropriations of receipts under the Federal Unemployment Tax Act to the Unemployment Trust Fund as provided under
Sec. 901(b) of the Social Security Act, as amended September 13,
1960.
13
Certain classifications in this statement have been revised to
agree with classifications in the 1962 Budget Document. Where no
figures appear on certain lines there was either no activity reported
or comparative figures are not available on account of changes in
classification.
14,
Permanent
Committee
for Oliver
Devise
formerlv
shown under
Independent
OfficesWendell
includedHolmes
in Library
of Con-
15
Adjustment due to reclassification.
Includes Refugee relief.
17
President's Special International program formerly shown under
Funds appropriated to the President included under Independent Offices, United States Information Agency, as Special international program. See footnote 13.
18
Represents amount appropriated by Public Law86-626, approved
July 12, I960, transferred to Civil Service retirement and disability
fund.
19
Represents amount appropriated by Public Law 86-626, approved
July 12, I960, transferred to Employees health benefits fund.
20
Represents amount appropriated by Public Law 87-14, approved
March 31, 1961, transferred to Retired employees health benefits
fund.
21
Formerly stated as River Basin Study Commissions.
22
Includes $384,207 transferred to Agriculture Department, Food
Stamp Program (Sec. 32 of the Act of August 24, 1935, as amended,
7 USC 612). See page 10.
23
Represents residual of gross receipts and expenditures alte
reduction for certain costs which are included in amounts shown
for special activities.
24
Includes certain costs transferred from price support operations
for which expenditures m a y have been made in prior years, in ad ition to adjustments for prior months' transactions.
25
The greater part of Bureau of Public Roads expenditures ar
made from on
Highway
Trust Fund, page 11.
Continued
pagej__
16
TABLE IX-INTERFUND TRANSACTIONS EXCLUDED FROM BOTH NET BUDGET
RECEIPTS AND EXPENDITURES-JUNE 30, 1961
Classification
This month
Corresponding
month
last year
Fiscal Year
1961
to date
15
Corresponding
period
fiscal year 1960
Merest payments to the Treasury:
Funds appropriated to the President:
nefense production act:
Expansion of defense production
TnHeoendent offices:
amort-Import Bank of Washington
Saint Lawrence Seaway Development Corporation.
Small Business Administration
United States Information Agency:
Informational media guarantee fund
Veterans Administration:
Direct loans to veterans and reserves
,
Total—Independent offices
Housing and H o m e Finance Agency:
Office of the Administrator:
College housing loans
Public facility loans
Urban renewal fund
Federal National Mortgage Association:
Management and liquidating functions fund
Special assistance functions fund
Public Housing Administration
Total—Housing and H o m e Finance Agency
Agriculture Department:
Commodity Credit Corporation
Farmers H o m e Administration:
Farm tenant-mortgage insurance fund
Total—Agriculture Department.
Commerce Department:
Maritime activities:
Federal ship mortgage insurance fund.
$710,175
$1,356,881
3,140,587
$34,777,587
21,214,594
500,000
20,569,173
400,000
363,256
42,876,620
2,000,000
15,238,423
45,722,342
2,504,920
6,657,359
1,064,720
413,784
31,990,233
23,028,174
93,169,996
78,326,580
20,017,279
1,594,232
2,914,362
14,404,921
967,401
2,514,407
21,714,594
352,674
98,073
1,259,876
44,663
27,768,315
64,147,224
1,102,450
29,510,768
41,238,875
1,331,801
450,747
1,304,539
117,543,864
89,968,176
216,927,865
240,538,145
409,574,897
464,785,614
476,380
666,721
1,195,868
1,307,791
217,404,246
241,204,866
410,770,765
466,093,405
27,125
27,125
54,250
73,881
1,917,222
6,939,528
9,422,781
Defense Department:
Civil functions:
The Panama Canal:
Panama Canal C o m p a n y
Health, Education and Welfare Department:
Bureau of Federal Credit Unions
Interior Department:
Bureau of Reclamation:
Colorado River D a m fund, Boulder Canyon project
Virgin Islands Corporation
Total—Interior Department
33
-86,133
-128,127
3,113,866
397,760
3,071,872
108
-86,133
-128,127
3,511,626
3,071,981
540
25,241
24,153
267,015,478
638,155,861
681,758,582
91,666
338,433
450,000
1,503,066
10,048,695
10,967,975
1,594,733
10,387,128
11,417,975
72,909
61,893
792,045
796,093
240,293,665
268,672,105
649,335,-035
693,972,652
Treasury Department:
Office of the Secretary:
Civil defense program fund .
Total—Interest payments to the Treasury .
21,332,429
240,220,755
s:
Defense Department*
Civil functions:
The Panama Canal:
Panama Canal Company:
Reimbursement by P a n a m a Canal C o m p a n y tot
annuity payment to Republic of P a n a m a
under treaty
Reimbursement for net cost of operations of
Canal Zone Government less tolls on
Government vessels
Total—Reimbursements
,
>
iM-vSfes41161
Grtnd
charges fop
accounting and auditing
total-interfundtransactions
16
TABLE X--SUPPLEMENTARY TABLE OF RECEIPTS AND EXPENDITURES OF PUBLIC
ENTERPRISE (REVOLVING) FUNDS-JUNE 30, 1961
(Included in expenditures in Table H I on a net basis)
Fiscal year 1961 to date
Classification
Receipts
Executive Office of the President:
Office of Civil and Defense Mobilization-Civil defense procurement fund
Funds appropriated to the President:
Expansion of defense production
Mutual security-economic assistance:
Development loan fund
Foreign investment guarantee fund
Total--Funds appropriated to the President
Independent Offices:
Atomic Energy Commission—Defense production
guarantees
Export-Import Bank of Washington
F a r m Credit Administration:
Federal F a r m Mortgage Corporation fund
Federal intermediate credit banks investment fund.
Production credit associations investment fund ....
Banks for cooperatives investment fund
Total-Farm Credit Administration
Federal Home Loan Bank Board:
Federal Savings and Loan Insurance Corporation fund
Other
National Science Foundation
Saint Lawrence Seaway Development Corporation....
Small Business Administration
,
Tennessee Valley Authority
United States Information Agency
Veterans Administration
Total--Independent Offices ,
General Services Administration:
Defense materials activities
,
General activities
Total--General Services Administration
Expenditures
Net receipts (-)
or expenditures
Corresponding/
fiscal year I960
Net receipts (-)*
or expenditures"
$184,396
$120,104
-$64,291
-$70,01'
93,631,336
81,246,152
-12,385,184
130,267,51.
16,767,094
1,672,905
275,789,863
75
259,022,768
-1,672,830
202,351,7;
-1,356,2k
112,071,337
357,036,091
244,964,754
331,263,10
544,423,311
581,637,051
37,213,740
-12,0t
-323,179,6£
1,741,959
5,485
5,500,000
50,000
-1,670,8.:
6,250,0Cl
-1,445, (Kii
-8,460,11
-5,325,94-
11,434,359
5,555,485
-1,736,474
5,500,000
-1,590,000
-8,052,400
-5,878,874
60,820,125
10,714,963
25,628,120
10,813,633
-35,192,004
98,670
3,673,815
142,094,319
271,992,470
2,822,088
224,021,490
1,271,996,943
6,151,312
224,705,168
310,669,885
7,308,846
355,411,672
1,527,881,177
2,477,496
82,610,849
38,677,415
4,486,758
131,390,181
255,884,233
-20,426,34'
259,0?'
-1,5.6,122,1654,593,0.
11,847,6."
2,187,41.
187,448,251:
-86,488, Of
724,934
2,099,036
71,745
234,618
-653,189
-1,864,417
-1,781,13
-1,677,30'
2,823,970
306,363
-2,517,607
1,640,000
8,052,400
-3,458,43*
______=_=-ii
Housing and Home Finance Agency:
Office of the Administrator:
College housing loans
Liquidating programs
Urban renewal fund
Other
Federal National Mortgage Association:
Subscription to capital stock, secondary market
operations
Loans for secondary market operations
Management and liquidating functions fund
Special assistance functions fund
Federal Housing Administration
Public Housing Administration
Total--Housing and Home Finance Agency
Agriculture Department:
Commodity Credit Corporation:
Price support, supply, and related programs, and
special milk 2 3
Special activities financed by Commodity Credit
Corporation 2 *
Federal Crop Insurance Corporation
F a r m e r s H o m e Administration:
Disaster loans, etc., revolving fund
F a r m tenant-mortgage insurance fund
Total--Agriculture Department
Commerce Department:
General administration
Maritime activities
Inland Waterways Corporation
Total—Commerce Department
Defense Department:
Military functions:
Secretary of Defense
Army
Navy
Total--Military functions
201,314,3.
-77,629,09,
105,074,16
11,945,72;.
236,935,899
513,675
228,180,893
21,931,495
198,175,318
-87,622,468
144,500,893
9,991,722
16,000,000
854,332,753
166,395,691
296,498,746
294,246,012
287,068,560
2,402,103,729
16,000,000
854,332,753
246,387,605
161,010,068
301,370,489
132,081,111
1,917,698,526
-79,991,914
135,488,677
-7,124,476
154,987,448
484,405,202
2,765,108,160
4,437,409,896
1,672,301,735
1,561,390,62*
120,827,215
17,289,574
1,880,957,885
9,845,670
1,760,130,670
-7,443,904
1,685,868,24*
-2,363,14^
27,962,335
24,465,242
29,436,202
18,321,289
1,473,867
-6,143,952
-17,785,16$
6,814,64,
2,955,652,528
6,375,970,945
3,420,318,416
8,200
9,444,334
3,360
752
7,252,990
2,967
-7,447
-2,191,344
-393
9,455,895
7,256,710
-2,199,185
62,492,222
521,779
1,760,279
101,170,144
497,193
1,626,121
38,677,921
-24,586
-134,158
22,796,1$
_137,24&
38,519,177
22,379,161
38,760,580
88,136,144
83,679,999
11,939,772
64,774,282
103,293,460
-41,531,03
-437,219,72
448,992,15
-53,311,65
139,925,24
297,560,07
_-279/5
TABLE X-SUPPLEMENTARY TABLE OF RECEIPTS AND EXPENDITURES OF PUBLIC
ENTERPRISE (REVOLVING) FUNDS-JUNE 30,1961-Continued
•
Fiscal year 1961 to date
Classification
Receipts
Expenditures
Net receipts (-)
or expenditures
17
Corresponding
fiscal year 1960
Net receipts (-)
or expenditures
Defense Department--Continued
Civil functions:
Army:
$102,648,554
242,902
526,717
7,910,235
111,328,409
$108,948,836
27,530
46,932
7,365,851
116,389,150
$6,300,282
-215,372
-479,785
-544,384
5,060,741
-$2,174,689
58,049
936,513
-973,289
176,102,692
219,682,610
43,579,918
20,225,745
241,793
233,207
-8,585
-8,343
3,574,944
3,435,871
-139,072
-170,629
3,816,737
3,669,078
-147,658
-178,973
2,984,032
3,098
3,246,763
3,787
262,730
689
856,193
6,944
2,608,721
1,617,005
1,061,656
58,707,566
-1,547,065
57,090,561
-1,780,775
32,032,395
10,014,437
10,955,459
941,022
90,639
1,176,390
2,283,277
1,106,886
625,691
31,369
2,648,179
17,125,279
-29,399
3,483,750
-84,668
61,224,506
-76,610
167,648
-217,313
38,208,515
1,969
6,131,929
17,040,610
99,433,021
31,704,812
252,910,388
3,437,562
301,500,000
2,685,906
48,589,611
-751,655
-2,067,280
256,347,950
304,185,906
47,837,956
-2,067,280
880,461,813
487,616,369
-2,153,415
Health, Education, and Welfare Department:
Public Health Service—Operation of commissaries,
Social Security Administration --Operating fund,
Total--Health, Education, and Welfare Department.
Interior Department:
Bureau of Indian Affairs:
Bureau of Reclamation:
Ft. Peck project, Montana
Upper Colorado River Basin fund
Bureau of Mines--Development and operation of
Fish and Wildlife Service--Bureau of Commercial
Office of Territories—Loans to private trading enterprises, Trust Territory of the Pacific Islands
Virgin Islands Corporation
Alaska Railroad revolving fund
Total--Interior Department
Labor Department:
Advances to employment security administration
account, unemployment trust fund
Farm labor supply fund
Total—Labor Department
Post Office Department--Postal fund
Treasury Department:
Office of the Secretary:
Reconstruction Finance Corporation liquidation fund
Civil defense program fund
Bureau of Accounts—Government losses in shipment
Office of the Treasurer—Check forgery insurance fund
Total—Public enterprise funds
6
3,472,157,972
4,352,619,785
4,909,662
162,767
958,112
25,293
-3,951,550
-137,474
-14,267,391
-145,340
1,376
216,948
87,470
227,798
86,093
10,849
35,955
-2,670
5,290,755
1,298,673
-3,992,081
-14,379,446
10,221,808,221
15,651,564,199
5,429,755,977
4,293,212,212
TABLE XL-SUPPLEMENTARY TABLE OF RECEIPTS AND EXPENDITURES OF TRUST
ENTERPRISE (REVOLVING) FUNDS-JUNE 30, 1961
(Included in expenditures in Table IV on a net basis)
Fiscal year 1961 to date
Classification
Receipts
Independent offices:
Civil Service Commission:
Employees health benefits fund
Employees life insurance fund
federal Communications Commission:
J£° n a l Capital Housing Authority:
yperation and maintenance, properties aided by
Public Housing Administration
General Services Administration:
Kecords activities: National Archives trust fund
Housing and H o m e Finance Agency:
federal National Mortgage Association:
37
Loans for secondaryy market
Other
m<m.e. operations
n
Department of Agriculture:
warmers H o m e Administration:
Mate rural rehabilitation funds
Department of Defense - Civil:
n,? s}*teB Soldiers' H o m e :
united States Soldiers' H o m e revolving fund
Department of Justice:
Alien Property activities
Federal Prison System:
commissary funds, Federal prisons
Expenditures
Net receipts (-)
or expenditures
Corresponding
fiscal year 1960
Net receipts (-)
or expenditures
$296,242,567
190,882,347
1,625,000
$272,979,333
139,977,661
2,083
-$23,263,233
-50,904,686
-1,622,916
-444,045,191
201,289
209,205
7,916
-9,588
8,690,734
9,012,703
321,968
2,580,122
591,604
542,835
-48,769
-38,626
870,332,753
1,550,494,659
854,332,753
1,481,722,237
-16,000,000
-68,772,422
41,531,035
946,471,695
12,150,871
10,861,314
-1,289,556
2,261,326
115,254
123,028
7,773
-7,658
4,502,215
7,328,853
2,826,638
4,620,352
2,202,121
2,209,757
7,635
25,824
2,938,031,419
2,779,301,768
-158,729,650
953,389,292
Na
18
TABLE XII--COMPARATIVE STATEMENT OF BUDGET RECEIPTS AND EXPENDITURES
BY MONTHS OF THE FISCAL YEAR 1961
(Figures are rounded in millions of dollars and may not add to totals.)
Classification
July
August
De- Janu- FebSep- Octo- Noru- March April May June
tem- ber vem- cem- ary
ary
ber
ber
ber
ComCumu- parable
lative
thru
June
B U D G E T RECEIPTS
Internal Revenue:
Individual income taxes withheld
Individual income taxes—other
Corporation income taxes
Excise taxes
Employment taxes
Estate and gift taxes
Internal revenue not otherwise
classified
Customs
Miscellaneous receipts
Gross budget receipts
Deduct:
Transfers to:
Federal old-age and survivors
insurance trust fund
Federal disability insurance trust
fund
Highway trust fund
Railroad retirement account
Unemployment trust fund
Refunds of receipts
Total deductions
Subtotal receipts
L,055 $4,849 $2,527 $1,066 $4,527 $2,591 $1,049 $4,78l|$2,413 $916 $4,743
786 759 3,403
147 1,959
230
121
383 2,149
346
956
444
3,492
409
534
481
455
3,331
5,799
493
670
411
861 1,082
918
831 1,072
995 1,121 1,024 1,021 1,069 1,008
792
348 1,814 1,348
389 1,295
596
736 2,020
383 1,608
161
116
139
171
151
121
171
190
244
119
187
84
325
93
223
91
221
92
212
87
214
80
591
82
286
70
236
88
199
85
292
73
662
fe2,450
1,937 13,175
5,246 21,765
1,067 12,069
1,173 12,502
145 1,916
84
540
1,008
4,001
3.976 8,590 10,211 3,641 7,900 8.751 5,537 9,153 11,878 7,359 9,767 12,642 99,405
678
342 1,112
510
282 1,328 1,173
658 1,784
1,025 10,623
61
262
52
2
167 203
161
805 2,106 1,216
31 102
268
253
81
15
1
1
29
173
815 1,592
36
240
48
1
61
22 120 112
156
62
223
235
237
201
213
13
77
77
14
48
32
289
2
2
15
64
530 1,792 1,296 1,036
636 2,579 3.353 2,233 3,293
102 963
238 2,923
44
571
1
345
242 5,752
1,652 21,178
335 1,396
30 128
296
257
83
17
897
3,170 6,484 8,995 2,827 6,308 7,854 4,901 6,574 8,525 5,126 6,473 10,989 78,227
1
Less: Certain interfund transactions43
... 30
211
8
4
14
55
36
6
1
1
240
649
Net budget receipts F .Y. 1961
3,128 6.454 8,981 ^2,823 6.300 7,643 4.846 6,537 8.524 5,125 6,467 10,749 77,578
Comparable totals F .Y. 1960
3,212
5,654 8,463 3,018 5,889 7,339 4,867 7,237 9.580 5.064 6,550 10,891 77,763
BUDGET EXPENDITURES
Legislative Branch
The Judiciary
Executive Office of the President
Funds appropriated to the President:
Mutual security-economic
dooL__»LcUXL<C?
o o . « o o o a o o « o o * O Q O o o o * o
Other
Independent Offices:
Atomic Energy Commission
Civil Aeronautics Board
Export-Import Bank of Washington ...
Federal Aviation Agency
National Aeronautics and Space
Administration
National Science Foundation
Small Business Administration
Tennessee Valley Authority
U . S. Information Agency
Veterans Administration
Other
General Services Administration.
Housing and H o m e Finance Agency:
Federal National Mortgage Association:
Secondary market operations
Management and liquidating functions
Special assistance functions
Other
Agriculture Department:
Commodity Credit Corporation
„
Other
C o m m e r c e Department
Defense Department:
Military functions:
Office of Secretary of Defense
Department of the A r m y
Department of the Navy.»
Department of the Air Force
Total Military functions
Military assistance
Civil functions
Health, Education, and Welfare
Department
Justice
Interior
State
Post
Labor
Office
Department
Department
Department
Department
Department
10
5
5
10
5
5
17
4
5
125
134
3 r -1
167
r2
144
r 5
230 225 217
6
6
9
14
8
-6
49
53
64
59
52
71
15
13
6
•A
22
4
8
1
4
5
3
r 9
r 8 rll
r 9
415
482 423
433
r 70 r 26 r 17 r 17
-2
37
42
27
-19
36
52
23
-3
-15
17
14
9
41
9
10
31
73
39
-36
284 263 346
223
176 192
172
421
43
54
113
37
229
5
30
51
56
6
(*)
1
r8
449
r 12
31
-11
2
6
6
284
271
37
10
4
5
12
4
8
121
r 6
128
r 7
11
4
5
r
219
6
-56
43
27
11
12
5
6
14
5
6
134
52
TO
174
-8
151
5
159
-30
1,792
3
236
8
5
65
73
9
8
3
11
488
17
41
231
7
19
49
84
12
7
7
8
452
23
28
246
8
3
50
70
33
6
7
12
449
15
33
13
-8
(*)
56
49
191
35
-11
-17
4
55
214
218
54
7
-22
8
46
441
160
46
244 2,716
86
7
37
1
639
55
744
88
143
14
90
13
39
6
119
10
450 5,401
265
20
387
48
16
-10
-80
-15
135
-1
427
57
642 3,432
138 2,522
498
30
10
4
10
4
6
175
-1
151
4
161
11
221
6
-26
56
67
8
23
-5
r 8
452
r 18
44
202
7
11
50
48
8
-6
7
9
454
18
29
217
8
34
54
49
9
8
-1
15
456
12
30
-27
-19
14
13
428
199
25
-24
4
29
40
258
226
-25
-13
-17
7
46
(*)
157
49
103
113
99
64
90
85
89
94
88
91
97
88
953
860 840
902
765
821
830
786
815
905
847
805
979 1,030
852
934
982 1,131
943 1,026 1,111
972 1,107 1,139
1,439 1,658 1.637 1,588 1,595 1.749 1,558 1,605 1,817 1.527 1,752 1,853
3,120 3,609 3,601 3,434 3,532 3,862 3,408 3,462 3.943 3,391 3,803 4,048
1,101
10,130
12,204
19,776
43,211
129
56
121
91
79
93
76
107
115
83
125
79
89
73
88
65
99
65
135
67
89
74
294
117
1,440
971
277
58
21
45
74
57
297
81
24
40
75
17
303
97
29
47
85
20
299
64
22
53
30
22
297
64
21
51
50
20
279
61
23
59
30
18
338
60
23
58
54
23
326
65
22
49
96
315
69
29
69
82
21
308
55
23
-114
138
15
306
60
24
140
82
15
338
67
23
333
135
21
3,685
801
284
831
929
253
TABLE XII-COMPARATIVE STATEMENT OF BUDGET RECEIPTS AND EXPENDITURES
BY MONTHS OF THE FISCAL YEAR 1961-Continued
19
(Figures are rounded in millions of dollars and m a y not add to totals.)
Classification
July
August
SepDeOcto- N o Janu- Febtemv
e
m
cemru- March April
ber
ary
ber
ber
ber
ary
May
June
ComCumu- parable
lative period
thru
F.Y.
June
1960
BUDGET EXPENDITURES--Continued
Treasury Department:
Interest on refunds of receipts, etc ..
Unclassified expenditure transfers
Deduct: Certain interfund transactions1.
$806 $751 $736 $748 $734 $765
9
7
11
8
6
8
64
88
78
77
145
69
30
1
2
(*)
(*) (*)
(*)
(*)
(*)
6,214 6,833 6,808 6,832 6,781 7,058
43
30
14
4
8
211
$775 $719 $726 $722 $717 $763 $8,962
7
5
8
93
13
6
7
73
74
976
90 r 78
62
79
4
1
50
1
2
10
(*)
(*)
(*)
(*)
(*)
(*)
(*)
6,524 6,272 7,013 6,451 7,175 8,188 82,152
55
36
1
1
6,450 7,169 7,948 81,503
76,539
6,172 6,803 6,793 6,829 6,773 6,847
6,470 6,236 7,012
Comparable totals F . Y . 1960
6,523 6,280 6,334 6,863 6,590 6,601
6,157 6,142 6,423 6,032 6,073 6,521 76,539
-349 +2,188 ^4,006
-473 +796 -1,624
-3,311
-626 +2,129 -3,846
-701 +738 -1,290 +1,095 +3,157
Comparable totals F . Y . 1960
77,233
694
Budget expenditures F .Y. 1961
Budget surplus (+) or deficit (-) F.Y. 1961-3,044
28
649
6
240
$9,180
86
865
+301 +1,512 -1,325
-702 +2,801 -3,925
+1,224
-968 + 476 +4,370 +1,224
•Less than $500, 000.
r
Revised due to reclassification.
TABLE XIII-BUDGET EXPENDITURES BY MAJOR FUNCTIONS43
(Figures are rounded in millions of dollars and may not add to totals.)
Function
Fiscal Year 1961
thru
June, 1961
Fiscal Year 1960
thru
June, 1960
Actual
Fiscal Year 1960
Actual
Fiscal Year 1959
$47,389
$45,627
$45,627
$46,426
2,281
1,833
1,833
3,780
5,262
5,060
5,060
5,174
4,863
4,419
4,419
4,421
5,482
4,838
4,838
6,529
2,008
1,713
1,713
1,669
3,881
2,782
2,782
3,421
1,931
1,695
1,695
1,606
9,055
9,266
9,266
7,671
82,152
77,233
77,233
80,697
649
81,503
694
76,539
694
76,539
80,342
International affairs and finance
Interest
Undistributed
Total
Less: Certain interfund transactions1
Continued from page 14
26,
355
FOOTNOTES
Represents estimated adjustments to reclassify expenditures for
comparability with the latest budget appropriation structure. These
adjustments are m a d e between the major categories of expenditures
and, therefore, do not affect the total expenditures for military
functions. Amounts shown for the respective Departments represent
the expenditures as recorded in books of account of the Departments
and do not include any adjustments for comparability.
*J Gives effect to return of advances. (See footnote 28).
Includes return of advances with offsetting amounts reflected
under Navy, Procurement, and Research, development, test and
evaluation.
Represents net cash transactions under provisions of Sec. 2(a)(3)
of Public L a w 85-141, approved August 14, 1957.
Expenditures previously m a d e from the appropriation for the
fiscal year 1961 under this classification have been transferred to
we Unemployment Trust Fund pursuant to Public L a w 87-14, approved March 31, 1961.
1
Includes advance of $250,000,000 to the Unemployment Trust
Fund, Employment security administration account m a d e pursuant
,*o provisions of Public L a w 87-14, approved M a r c h 31, 1961, which
has-been repaid, along with interest in the amount of $2,910,388.
Reduced by $5,644,052 representing transfer of expenditures
P i o u s l y m a d e from the appropriation for Salaries and Expenses,
**ol to the Unemployment Trust Fund pursuant to Public L a w 87-14,
approved March 3lf 1961.
3
Gives effect to reimbursements collected for administrative support furnished to other agencies amounting to approximately $64,*66,070.
3
*Represents adjustment of estimates of amounts of Federal unemployment taxes appropriated and transferred to the Unemployment
Trust Fund for the fiscal year ended June 30, 1960, pursuant to Title
IX, Social Security A m e n d m e n t s of 1960, P. L. 86-778, approved
September 13, I960.
35
Expenditures are stated on an accrual basis.
36
Totals shown for trust receipts and trust expenditures exclude
certain inter-trust fund transactions which are included in the detail
of both trust receipts and trust expenditures. The transactions deducted consist mainly of financial interchanges between trust funds
resulting in receipts and expenditures.
37
T h e association exchanged preferred stock in the amount of
$16,000,000 for notes in the s a m e amount held by the Secretary of
the Treasury in accordance with Public L a w 85-104, July 12, 1957.
38
Includes investments in amount of $435,100 for the Management
and Liquidating functions fund and $6,584,250 for the Special Assistance functions fund.
39
Includes $10,700,000 investment in obligations of Federal N a tional Mortgage Association, Secondary Market Operations.
*°The security transactions of Government-sponsored enterprises
are included in deposit fund accounts (net) and excluded from net
sales or investments of Government agencies in public debt securities and net sales or redemptions of obligations of Government
agencies in the market.
41
Further breakdown of this classification is not available in time
for publication in this statement.
^Represents changes in cash on hand, in banks held outside the
Treasurer's account, deposits in transit and cash payments not yet
covered by vouchers processed through accounts.
43
Data only on major classifications is available at the time of
publication of this statement. For sub-functions see the ensuing
issues of (1) Budgetary Appropriations and other Authorizations and
(2) the Treasury Bulletin.
20
TABLE XIV--SUMMARY OF PUBLIC DEBT AND GUARANTEED OBLIGATIONS
OUTSTANDING JUNE 30, 1961 AND
COMPARATIVE FIGURES FOR JUNE 30, 1960
June 30, 1961
Title
June 30, 1960
Average interest rate b
Average interest rate b
A m o u n t outstanding
Percent
a
2.586
a
2.538
3.073
3.704
2.829
$35,220,290,000
1,502,900,000
13,337,993,000
56,257,146,000
80,829,778,750
3.063
187,148,107,750
3.408
2.000
2.000
2.730
47,514,265,368
116,819,500
19,221,000
5,830,308,000
3.330
53,480,613,868
3.219
54,496,635,605
3.122
240,628,721,618
3.396
238,341,936,755
2.637
2.000
2.826
2.125
2.000
2.700
2.000
3.956
3.519
3.000
3.071
3.000
3.000
2.875
2.803
3.072
10,381,384,000
556,400,000
2,298,952,000
50,000,000
86,163,000
16,200,171,000
138,000,000
32,180,000
1,071,433,000
234,034,000
5,759,371,000
3,503,534,000
4,624,985,000
45,042,887,000
106,280,000
2.586
2.000
2.607
2.000
2.000
2.575
2.000
3.954
3.519
3.500
3.064
3.000
3.250
2.625
2.772
3.297
9,367,341,000
694,300,000
2,017,410,000
59,000,000
53,572,000
16,412,594,000
104,000,000
29,178,000
1,106,540,000
1,335,000
5,803,089,000
3,585,967,000
5,580,307,000
44,899,246,000
84,613,000
283,241,182,755
444,608,630
Public debt:
Interest-bearing debt:
Public issues:
Marketable obligations:
Treasury bills (regular series)
Treasury bills (tax anticipation series)
Certificates of indebtedness (regular series)
Treasury notes
Treasury bonds
Other bonds
Total marketable obligations
Non-marketable obligations:
United States savings bonds
Depositary bonds
Treasury bonds-R. E . A . series
Treasury bonds, investment series
Total non-marketable obligations
Total public issues
Special issues:
Civil service retirement fund
Federal Deposit Insurance Corporation
Federal disability insurance trust fund
Federal h o m e loan banks
Federal Housing Administration funds
Federal old-age and survivors insurance trust fund ...
Federal Savings and Loan Insurance Corporation
Foreign service retirement fund
Government life insurance fund
Highway trust fund
National service life insurance fund
Railroad retirement account
Unemployment trust fund
Veterans special term insurance fund
Total special issues
Total interest-bearing debt
Matured debt on which interest has ceased
Debt bearing no interest:
International Monetary Fund ..
International Development Association
Other
Total gross public debt
Guaranteed obligations not owned by the Treasury:
Interest-bearing debt
Matured debt on which interest has ceased
Total guaranteed obligations not owned by the Treasury
Total gross public debt and guaranteed obligations
a
C o m p u t e d on true discount basis.
bBeginning with the statement for D e c e m b e r 31, 1958, the c o m puted average interest rate on the public debt is based upon the rate
of effective yield for issues sold at p r e m i u m s or discounts. Prior to
D e c e m b e r 31, 1958, the computed average rate w a s based upon the
coupon rates of the securities. This rate did not materially differ from
the rate computed on the basis of effective yield. The Treasury, h o w -
285,671,608,618
349,355,209
Percent
a
3.815
$33,414,810,000
i'.m
17,656,6.6,00.
4.058
2.639
2.902
3.449
51,483,384,000
81,247,247,150
49,800,000
183,845,301,150
3.293
2.000
47,543,786,105
169,925,500
*2.*732
6,782,924,000
2,238,000,000
2,496,000,000
57,652,200
396,322,582
288,970,938,610
3.144
239,694,000
521,450
Amount outstanding
4__,'.6M62
286,330,760,848
2.681
139,305,000
536,775
240,215,450
139,841,775
289,211,154,060
286,470,602,623
ever, announced on N o v e m b e r 18, 1958, that there m a y be more
frequent issues of securities sold with p r e m i u m s or discounts
whenever appropriate. This "effective-yield" method of computing
the average interest rate on the public debt will reflect m o r e accurately the interest cost to the Treasury, and is felt to be in accord
with the intent of Congress w h e r e legislation has required the use of
such rate for various purposes.
Source: Prepared by the United States Treasury Department on the basis of reports received f r o m Govt, disbursing and collecting agencies
F o r sale by the Superintendent of D o c u m e n t s , U . S. G o v e r n m e n t Printing Office, Washington 25, D. C .
Subscription price $6.00 per year (domestic), $ 1 1 . 0 0 per year additional (foreign mailing), includes all issues of
the daily and monthly T r e a s u r y statements; no single copies are sold.
GPO 914611
TREASURY DEPARTMENT
°4
WASHINGTON, D.C.
July 20, 1961
FOR IMMEDIATE RELEASE
TREASURY DECISION ON PORTLAND GRAY OMHS
UNDER THE ANTIDUMPING ACT
The 'Treasury Department has determined that portland
gray cement from Ibrtugal is toeing, or is likely to toe,
sold at less than fair value within the meaning of the
Antidumping Act.
Accordingly, this case is toeing referred to the
United States Tariff Commission for an injury determination.
Notice of the determination and of the reference of
the case to the Tariff Commission willtoepublished in
the Federal legister*
The dollar value of imports of this merchandise from
Bortugal received during i960 was approximately $605,000.
TREASURY DEPARTMENT
WASHINGTON, D.C
July 20, 1961
FOR IMMEDIATE RELEASE
TREASURY DECISION ON PORTLAND GRAY CEMENT
UNDER THE ANTIDUMPING ACT
The Treasury Department has determined that Portland
gray cement from R>rtugal is being, or is likely to toe,
sold at less than fair value within the meaning of the
Antidumping Act.
Accordingly, this case is toeing referred to the
United States Tariff Commission for an injury determination
Notice of the determination and of the reference of
the case to the Tariff Commission willtoepublished in
the Federal Register.
The dollar value of imports of this merchandise from
Bartugal received during i960 was approximately $605,000.
«jr 1®* l*6l
wm must A. i. MBMPSBS,
Friday, j a l y n , lift.
SISOST OF TttafSMPS f)-_A MttlWt 2to-MI Til 4J.__Xf_.T20i BILL OJTO8IIB
Th. Treas__7 .eperisieat &«w»_t»-d laat aveaiag that the ._&____ for 13,500,000,0.
or tteareabowta, of fax AtMeipaiioo Serlae 2ii..-d_y rrmmnrj billi te b_ dtted July jf &
1961, and to mature March S3, 19&?, Wfctieti were ©ffe_*d on Only 13, were opened at D M
Federal Baaerre Bank* ©» <#__? 20.
The ..tails of tfei. Is... are __ follows*
total applied for - t5.Hj6#95S»Q00
Total accepted
- 3,501^051,000
(liic2vd.e ?$11,736,000 entered en a
nencKaspetitive basis aa_ accepted is
fell at tha average priea ehewn bale.}
lang* of accepted eenfotittee Mias (Ixeeftiag foar tendere totaling 19,200,090)
i%a - 9i«k00 Iftiivaleat fata af diacount approx. ..JbQOK par ammi
I*»
- 9ft.JfO
•
* »
»
»
Average
- 9I.34S
*
• •
•
»
2.520$ "
..feS3* •
•
*
(25 pereeat of tise ami. t»M for at the law priea «ta* accepted)
Federal Reserve fatal fatal
Blatrlet
fiRS O«5;&,tto
Applied far
Accepted
| ]E3g_,.*
lew fork
2,l69,SlS,000 ^
1,.23,5&0,000
Philadelphia
2l#,?3»,00a
_85,fe&9,«W
Claaaltt.
.31,212,000
319,012,000
Richmond
113,016,000
96,116,000
Atlanta
177,6.0,000
U&,.90,-6©
Chicago
601,181,000
54? ,681,000
St. I*w_*
12_,_3S,OQO
81,678,000
lflimMp-lia
1,6,953,000
131,703,000
faaeas City
106,569,000
99,569,000
_•__••
338,605,000
260,605,000
San Francisco
391,668,000
2.6.918,QUO
TOTAL tS,lk*,9$B,9QQ 13,501,051,000
l / 0 a « conpnn immt of the same length and for the sane «_*__* ioreste., the return m
thaea .ilia would prorl_« a yield of _.5§#- Interest rate* on allla are qaote. ii
tents of bank discount with tfee return related te the face «_to__t of tbe bills
able at maturity rattier tte*a tt» anonat intaatad and their length in aetata
of days related to a 360-day year. In contrast, yields on certificates, setae,
bonds ara eosputed in t a m e of interest en the aeouat ittveated, and relate the
bmr of days imaialag ia an iatarest payment period to the actual ntmber of
the period, with swiaiwial co»po.ndi_j? if mum thae one coupon period i» iavsli
D-177
43
TREASURY DEPARTMENT
W A S H I N G T O N , D.C.
July 20, 1961
FOR RELEASE A.M. NEWSPAPERS,
Friday, July 21, 196l.
RESULT OF TREASURY'S $3-l/2 BILLION 2l*0-DAY TAX ANTICIPATION BILL OFFERING*
The Treasury Department announced last evening that the tenders for $3,500,000,000,
or thereabouts, of Tax Anticipation Series 2l*0-day Treasury toills totoedated July 26,
1961, and to mature March 23, 1962, which were offered on July 13, were opened at the
Federal Reserve Banks on July 20.
The details of this issue are as follows:
Total applied for - $5,11*6,958,000
Total accepted
- 3,501,051,000
(includes $511,736,000 entered on a
noncompetitive toasis and accepted in
full at the average price shown below)
Range of accepted competitive bids: (Excepting four tenders totaling $9,200,000)
High - 98.1*00 Equivalent rate of discount approx. 2 e 1*00$ per annum
,!
lf
tf
Low
- 98.320
"
"
2.520$ M
,f
,f
fl
t!
,!
Average
- 98.31*5
2.^83^ *
*
" 1/
(25 percent of the amount bid for at the low price was accepted)
Federal Reserve
District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Total
Total
Applied for
Accepted
$ 11*9,850,000
$ 260,1*25,000
2,169,515,000
1,223,51*0,000
21*0,939,000
185,1.89,000
1*31,212,000
319,012,000
110,016,000
98,116,000
177,6iiO,000
ll|l*,890,000
601,181,000
51*9,681,000
122,235,000
81,678,000
1146,953,000
131,703,000
106,569,000
99,569,000
388,605,000
260,605,000
391,668,000
256,918,000
$3,501,051,000
TOTAL
$5,11*6,958,000
1/ On a coupon issue of the same length and for the same amount invested, the return on
these toills would provide a yield of 2.55#e Interest rates ontoillsare quoted in
terms oftoankdiscount with the return related to the face amount of the toills payable at maturity rather than the amount invested and their length in actual numtoer
of days related to a 360-day year. In contrast, yields on certificates, notes, and
bonds are computed in terms of interest on the amount invested, and relate the number of days remaining in an interest payment period to the actual number of days in
the period, with semiannual compounding if more than one coupon period is involved,
D-177
L k*
«'
"s^'
___
TREASURY DEPARTMENT
WASHINGTON, D.C.
July 21, 1961
FOR IMMEDIATE RELEASE
PRELIMINARY RESULTS OF TREASURY'S CURRENT EXCHANGE OFFERING
Preliminary figures show that about $11,804 million, or 94e2$,of Treasury securities maturing from August 1 through October 1, 1961, aggregating $12,536 million, have
been exchanged for the three new issues included in the current exchange offering.
About $732 million, or 5.8$, of the four maturing issues remain for cash redemption.
Of the maturing securities held outside the Federal Reserve Banks and Government
accounts, 9«8# were not exchangede The unexchanged part of the August 1 maturities
amounted to 5*8$ of the public holdings. The unexchanged part of the September and
October maturities amounted to 17«9# of those publicly held.
A breakdown of the subscriptions is as follows:
Maturing issues
exchanged
Nov e 15, 1962
Notes
(in millions)
Total
Aug, 15, 1964 Bonds of 1968
(Addl. Issue) Exchanged
Notes
Total
Outstandii
$4,568
$3,056
$134
$ 7,758
$ 7,829
Aug a 1 notes
654
971
289
1,914
2,136
Septa 15 bonds
666
880
314
1,860
2,239
Octa 1 notes
183
81
8
272
332
$6,071
$4,988
$745
$11,804
$12,536
Federal Reserve Banks
and Govt a accounts
3,386
1,600
58
5,044
All others
2,685
3,388
687
6,760
$6,071
$4,988
$745
$11,804
Aug. 1 certificates
Total
Subscribers
Total
Final figures regarding the exchange will be announced af*ter final reports are
received from the Federal Reserve Banks.
D-178
*T sj ~f
TREASURY DEPARTMENT
WASHINGTON, D.C.
\ V V y
JUly 21, 1961
FOR IMMEDIATE RELEASE
PRELIMINARY RESULTS OF TREASURY'S CURRENT EXCHANGE OFFERING
Preliminary figures show that about $11,804 million, or 94.2#, of Treasury securities maturing from August 1 through October 1, 1961, aggregating $12,536 million, have
been exchanged for the three new issues included in the current exchange offering.
About $732 million, or 5.8#, of the four maturing issues remain for cash redemption.
Of the maturing securities held outside the Federal Reserve Banks and Government
accounts, 9*8# were not exchanged. The unexchanged part of the August 1 maturities
amounted to 5*8$ of the public holdings. The unexchanged part of the September and
October maturities amounted to 17«9# of those publicly helde
A breakdown of the subscriptions is as follows: (in millions)
Maturing issues
exchanged
Nov. 15, 1962
Notes
Aug . 15, 1964 Bonds of 1968
Total
(Addl. Issue) Exchanged
Notes
Total
Outstanding
$4,568
$3,056
$134
$ 7,758
$ 7,829
Aug. 1 notes
654
971
289
1,914
2,136
Sept, 15 bonds
666
880
314
1,860
2,239
Oct a 1 notes
183
81
8
272
332
$6,071
$4,988
$745
$11,804
$12,536
3,386
1,600
58
5,044
Aug. 1 certificates
Total
Subscribers
Itederal Reserve Banks
and Govt, accounts
All others 2,685 3,388 687 6,760
Total $6,071 $4,988 $745 $11,804
Final figures regarding the exchange will be announced after final reports are
received from the Federal Reserve Banks.
TREASURY DEPARTMENT
WASHINGTON, D.C.
July 21, 1961
FOR RELEASE, TUESDAY A.M.
JULY 25, 1961
NEW EMPLOYMENT POLICY MOVES
TAKEN BY ENGRAVING & PRINTING BUREAU
New moves to improve employment opportunities for minority
groups in the Treasury Department's Bureau of Engraving and
Printing were announced today.
Robert A. Wallace, Treasury Employment Policy Officer reported that an employment policy officer has been named to
process complaints of racial discrimination in the Bureau, and
a five-man policy review board has been appointed to review such
complaints.
The steps were taken as interim measures pending completion
of the Treasury's overall review of employment policy complaints at
the Bureau. Meanwhile, the Bureau's first Negro machinist has been
hired.
The Bureau's 3,000 employees manufacture money and stamps for
the Government.
The Bureau's new Employment Policy Officer is Jay L. Esserman.
The new Employment Policy Review Board consists of 3 Negro employees,
Conwell Jones, Thomas Tibbs and Richard Redmond, in addition to
Esserman who is the Chairman, and Arthur Barron. The Board will
review all complaints of discrimination filed by minority group
members and make recommendations for appropriate action. In addition,
it will advise the Director on any administrative steps that may be
taken to prevent discrimination.
The Bureau's first Negro machinist is Samuel Ficklin, formerly
a tool maker at the Naval Weapons Plant. Mr. Ficklin began work at
the Bureau on July 19th, 1961.
D-179
«*iy ab, 1 9 a
»» my^ ^ a. nay -^t^diafl |^ gt iya, ;
assays or r«__«s^«EaESU aiu, ;F?Fiii»a
the _ r<s«e«y Pff«r»—ni announced lest svaadag the* tfee tenders far .eo aerie, of
1-Mtttiy billa, HIS sertec to be » e&iiU*«#l iaaae af the aiUa dated April 2?, l ^ L
end tfco other aeriea U be date, ^aly 27, 1 9 & , nfeiefc asre offered *_ July i?, ««•*
opened at the Federal Psaermi £aafce an July Sit. Y — m . .
invited far $l,1.9,eoOwO0C:
or mmr^mmm,
af ?X-dny Villa awl far *5uo,*»#«», or
a? ISI-day Mlla,
fba detail, af tbe ts. aeries a m aa follows*
IASSS
-_r NQBorm
MHo.
CCI9*!?Jflfl BXDSs
ftramial _____
______
2.27SS
S«.?;3
*E.763
59-1*33
1/
J6 paftsasi af t*#
totAt ^RjBas imam
^100*000*
af & - d a y biiia bid for _t the lea pe^ee aes
af 162-day M H a bid . '•;- at tlw low w i a a
r» ASS A C Q U O C s_ JVHHIJ. nasais :_as.«ss3i
A__n__Li__{d F£_p
aav T«rtc
t_rtla#_.__vla
2^U* V
7i4>ii«,aae
7a*»e_.2,ooo
7,232,000
17,613,001
?H,0 : J0
11,^22,000
66,831,000
ll,7U,000
fe,U7,000
14,170,000
12,007,000
Aaeeafced
a,23S,aoo
Ht,a_.3,000
HsHM" 3
**0y <0m.0y mm'
^31,000
8,?J1#Q00
%$mk$$m9d&
fc,2**V*°
19,666,000
liil* ^ 8 * 0 0 0
_M3i_J»
St. iouls
tQ&»9S8,doo
17,0.2,000
fc,2U,OoO
riroaapalli*
»#??2,.!>.*3
ife,>$i»oad
Jba97,')00
Kansas City
t6,5«5,ooo
16f107f009
12,170, 000
TOmllam
20,1137,300
c«__t*v
b,00?,000
Saa fianaiaaa
*w&:
lk.l27.0» ,
tOTALS
$5oa,a5o,w»y
J^ j'nfttaiM ^JOljS^pOOO
U*e
at the
of 9t»763*
9?*lt33
laoladee t3S,flili,Q00 noaeonpeUU'ta tendon* eeeepted at Use average prise
prioe af
M a aaepor. isso* af tbe s a w length and far the 9mm mmwA lnreated, tfee return as
tfceae M l l a asald provide yields af 2.2S«, far the ?l»-day Mile, and 2.515 far the
152-day Villa. Interest rataa ©a M l l a are quoted in taraa af aaak diaaaant with
U » return related to the f &s_ aaaaat af Urn M l l a paj-^l« at »turit. retVer toaa
Use **»»& inaaatad and tnair langtit la eotual tsjmb^e of deya related to a 360-daf
ywor. £ B aoatraat, yielda on eertifloatae, notes, and beads are eoapufced in laxaa
af interaat oa Um m&mt inwested, aol relate the ncafear af days raaaiaing in an
lAnaraat i«owea*. period totiseactual na**ar of dc$a in *&• paa4*e* M t h
ooBpeUadiae if »ore than ana eonpaa period is invalaad.
>,QQ0
lj0,.e?,0Q0
28,329,00®
1
9
O'/fO
TREASURY DEPARTMENT
4&
wmrmmm
WASHINGTON, D.
July 2U, 1961
TOR RELEASE A« M. NEWSPAPERS, Tuesday5 July 2$? 1961.
RESULTS OF TREASURYS3 WEEKLY BILL OFFERING
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 April 27, 1961,
and the other series to be dated July 27, 1961, which were offered on July 19, were
gpened at the Federal Reserve Banks on July 2l*. Tenders were invited for $1,100,000,000,
or thereabouts, of 91-day bills and for $500,000,000, or thereabouts, of 182-day bills.
The details of the two series are as follows:
RANGE OF ACCEPTED
COMPETITIVE BIDSs
High
Low
Average
91-day Treasury bills
maturing October 26, 1961
Approx. Equiv,
Price
Annual Rate
2.176$
99.U50
2.275$
99.1*25
2.214$ 1/
99.U33
182-day Treasury bills
maturing January 25, 1962
Approx. Equiv.
Price
Annual Rate
98.781* a/
2.1*05$
2.1467$
98.753
2.1^6$ y
98.763
a/ Excepting one tender totaling $100,000.
29 percent of the amount of 91-day bills bid for at the low price was accepted.
36 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
Applied For
Accepted
Accepted
Boston
$7,1*57,000
$
38,01*8,000 $
28,0U8,000
$ 7,1*57,000
New York
7U9,852,000
1,236,275,000
392,952,000
716,1*25,000
Philadelphia
7,232,000
25,089,000
2,232,000
10,089,000
Cleveland
17,813,000
28,329,000
1U,613,000
28,329,000
Richmond
931,000
8,931,000
931,000
8,931,000
Atlanta
U,U22,000
19,666,000
U, 222,000
19,1*53,000
Chicago
68,831,000
201,958,000
39,831,000
11*1,958,000
St# Louis
1*, 711,000
19,792,000
U,211,000
17,082,000
Minneapolis
U,117,000
ll*, 991*, 000
3,297,000
m,99U,000
Kansas City
1U,170,000
12,170,000
U6,525,ooo
U3,525,ooo
Dallas
12,007,000
U,007,000
20,107,000
16,107,000
55,120,000
,__^_
San Francisco
16,127,000
1,4,127,000
55,120,000
$1,100,061,000
b
/
$907,670,000
TOTALS
$500,050,000 c/
"$1,711*,83U,000
V Includes $201,262,000 noncompetitive tenders accepted at the average price of 99«U33«
y Includes $35,8U_4,000 noncompetitive tenders accepted at the average price of 98.763.
1/ On a coupon issue of the same length and for the same amount invested, the return on
these bills would provide yields of 2.29$, for the 91-day bills, and 2.51$ for the
182-day bills. Interest rates on bills are quoted in terms of bank discount with
the return related to the face amount of the bills payable at maturity rather than
the amount invested and their length in actual number of days related to a 360-day
year. In contrast, yields on certificates, notes, and bonds are computed in terms
of interest on the amount invested, and relate the number of days remaining in an
interest payment period to the actual number of days in the period, with semiannual
compounding if more than one coupon period is involved.
H80
REFER TO FILE NO.
TREASURY DEPARTMENT
^4 v
WASHINGTON 25, D. C.
OFFICE OF THE CHIEF
U. S. SECRET SERVICE
July 21, 1961
Dear Mr. Secretary:
fmx over thirty-three years I have been In the Secret Service,
almost thirteen of them In the capacity of Chief. Mftth your permission t mould like to make application for retirement to be
effective not later than August 31, 1961.
I regret taking this action and feel that I have been
most fortunate to have these thirty-three years In government,
and particularly In the Treasury Department, I de need a complete
rest.
The United States Secret Service la an outstanding law
enforcement agency and I know it Is widely respected as such
throughout the world a X hope that in some small way I have contributed to the standing of this Service which has been so much
a part of my life*
During the short time you have hem Secretary of the Treasury,
X have appreciated the fine cooperation and assistance of yourself
and your staff, n-d would like to take this opportunity to express
toy very warm thanks to you.
Yours sincerely,
U. £• Baughman
Chief, U. S« Secret Service
Honorable Douglas Dillon
Secretary of the Treasury
Washington, D« C,
^rfc,:.. &*•*'•••*«_:
-
;;
j»»a
J W y t5 # t M i
Beer Chief
It t» with genuine regret that 1 accept your decision to
retire as Chief ef the United States Sacret Service, effective August 3i t H»6i. X appreciate your desire, after 33 years
of daJirsf.il pwbttc service, for r*ft and fnr Hortt f1 nip * to
w t e to your personal affairs.
record l a the Seerot Stervieo im Mm Impressive
Over the Tears, van &_ro_£res_HMi steadily from clerk to Secret
__
^*»» f ^^Br-aup
<*v^w^r
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jp ^ a W M * * ^ «|^ •£-
sMBaWlw m
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mmF*mmMmmmmm?mmm^mMm9mj^t .
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mm\rmmmfmmsmm "-m* mm
*mfmmw-mwmmmMm^m*y£'' - ^KWrnmrnkw jtf/S -*Rse__B»_BM__NHi8i^^ £
mpmm
the M g h o s t ©oat I n th* Service, which * e & hove qrcom>l#d olth
^
etiooo&efial hefi.wr.ftfi voti h__.vt_i ___ei__b_________i ___n acgceotloiia
In technical e&forca&oat with a definite talent for adsainiatraclot-..
^l^^ff^^^^wN^-^^^^SP1 ^ P o ^ p
mm^mm
K
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mm?^^^mmr*J^*^^my^mm^mmmr^m^mm
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^mm^mmfi^r^^mmpmm^\mm^mmmmm9^mmmmmrmmr W J A v W ^ *
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'mmmtmFm^mwmjmwmmf mm mjwmmtmmmmmmimmp.
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^^v^^^^*"**^ve^R*^_rl^^'^^*W^__^
4% el0sely**laait or|$&*ii$atio& oiitoii has reflected your leader**
ship. The high standards o f yeifonrtDeo o # the Service, the
out&taading degree o f loyalty find devotion o f tho near to the
Service* tho excellent relationships o f tho Service vitif local
Chat c e o te made o n your awn character, integrity, and personal
l JiU ;5J r
qualities.
'- - - ~r *
skePaii ^araatwUfe a^^af- m^mmt-mrmtjj SHS^aiaaai^ejpai.. jm-x*m*x& ts mkmnm+MK^mmmuBWp ^•ej^aaawep ^w ^»*a
y©« success and happiness i n the years
Douglas Dillon
M r , 9« l.«
Chief, n* 8 . S<_cret Service
Washington 2 5 , 9* C
CDD:gp
7/24/61
^L^C4^C«^X
Oof (I Secret
U
Jvly-L^tCL
Service Chief Baughman to Retire
E. Baughman, Chief of the United States Secret Service,
A^*y
t^dsty announced his intention to retire, effective not later
than August 31, 196l.
In a letter to Treasury Secretary Douglas Dillon, Chief Baughma
said:
In reply, the Secretary wro6e Chief Baughman:
V
\
—
/
v
TREASURY DEPARTMENT
44.-
W A S H I N G T O N , D.C.
July 25, 1961
IMMEDIATE RELEASE
SECRET SERVICE CHIEF BAUGHMAN TO RETIRE
U. E. Baughman, Chief of the United States Secret Service,
has announced his intention to retire, effective not later than
August 31, 1961.
In a letter to Treasury Secretary Douglas Dillon, Chief
Baughman said:
Dear Mr. Secretary:
For over thirty-three years I have been in the
Secret Service, almost thirteen of them in the
capacity of Chief. With your permission I would
like to make application for retirement to be
effective not later than August 31, 1961.
While I regret taking this action and feel
that I have been most fortunate to have these thirtythree years in government, and particularly in the
Treasury Department, I dp need a complete rest.
The United States Secret Service is an outstanding law enforcement agency and I know it is widely
respected as such throughout the world. I hope that
in some small way I have contributed to the standing
of this Service which has been so much a part of my
life.
During the short time you have been Secretary
of the Treasury, I have appreciated the fine
cooperation and assistance of yourself and your
staff, and would like to take this opportunity to
express my very warm thanks to you.
Yours sincerely,
U. E. Baughman
Chief, U. S. Secret Service
if
-2-
44
In reply, the Secretary wrote Chief Baughman:
Dear Chief Baughman:
It is with genuine regret that I accept your
decision to retire as Chief of the United States
Secret Service, effective August 31, 1961. I
appreciate your desire, after 33 years of dedicated
public service, for rest and for more time to devote
to your personal affairs.
Your record in the Secret Service is an
impressive one. Over the years, you progressed
steadily from clerk to Secret Service Agent, to
Special Agent in Charge, and, finally, to the
highest post in the Service, which you have occupied
with distinction since 19^8. As Chief, you have been
singularly successful because you have combined an
exceptional background in technical enforcement with
a definite talent for administration.
Under your direction, the Secret Service has
operated as a closely-knit organization which has
reflected your leadership. The high standards of
performance of the Service, the outstanding degree
of loyalty and devotion of the men to the Service,
the excellent relationships of the Service with
local police authorities -- these are perhaps the
best commentary that can be made on your own character,
integrity, and personal qualities.
You will be sorely missed. The President joins
me in wishing you success and happiness in the years
ahead.
Sincerely,
Douglas Dillon
0O0
STATEMENT OF STANLEY S. SURREY
ASSISTANT SECRETARY OF THE TREASURY
BEFORE THE SENATE FINANCE COMMITTEE
ON H. R. 10
TUESDAY, JULY 25, 1961
10:00 A.M., EDT
,,..,
**&
The Treasury Department welcomes this opportunity to
present its views on H. R. 10, MTo encourage the establishment of voluntary pension plans by self-employed individuals."
The problem with which this bill is concerned -- how to treat
the retirement savings of the self-employed for tax purposes -is an important one.
The objective of H. R. 10 is to give self-employed people
a tax postponement advantage for income set aside in qualified
pension plans generally comparable to that now received by
employees covered by such plans who now are not required to
include their employer's pension contributions currently in
their taxable income. Under the bill, self-employed people
covered by pension plans meeting the requirements described
below would be allowed income tax deductions, within certain
limits, for pension contributions made on their own behalf.
In general, the income set aside in such pension plans would
remain free of tax until received by the individual, when it
would be included in income for tax purposes. In addition,
the earnings on the income so set aside would likewise be
. 2 -
4
^
exempt from tax prior to withdrawal. Since income tends to
decline in the retirement years and older people receive
favored tax treatment under a number of provisions, the
deferment of tax from the time when the self-employed
individual makes the pension contributions until the time
he receives the pension benefits would shift income to
lower income tax brackets. In addition to reducing taxes,
the postponement of the time when tax is payable, both as
respects the amounts set aside and the earnings on such
amounts, would provide substantial interest savings to
covered self-employed individuals by allowing them to
retain the use of funds for a longer period of time.
Principal Features of H. R. 10
Under this bill, self-employed people (including partners) would be allowed to be covered by qualified pension
plans. Individuals would be considered self-employed for
this purpose if they own more than a 10 percent interest in
the business. In general, individuals who have an interest
in the business which does not exceed 10 percent would be
treated as employees for pension purposes.
45u
- 3 Self-employed people with fewer than four employees
would be allowed to establish pension plans for themselves
without making any provision for the retirement needs of
their employees.
In such cases, a self-employed individual
would be permitted to contribute and deduct contributions
for himself up to 10 percent of his self-employment income
with a maximum of $2,500 a year.
Since self-employment
income represents the entire net income from a trade or
business, the tax deductions of the self-employed people
would be based on income attributable to capital invested
in the business as well as on income from personal services.
Self-employed individuals with four or more employees
would have to cover their employees under the qualified
pension plan in order to secure coverage in the plan for
themselves.
In such cases, the pension plan would be
required to cover all employees, other than part-time and
seasonal employees, who have at least three years of service.
The covered employees would have to be given nonforfeitable
rights to the contributions made for them.
Where the self-employed individuals qualify as having
four or more employees, the contributions on their own behalf
-4 -
45J
would not be limited to the 10 percent -- $2,500 allowance.
In such cases, a self-employed individual would be permitted
to contribute and deduct for himself any amount without
limit except that the ratio of his contributions for himself to his self-employment income could not exceed the
ratio of contributions to earnings of any of his covered
employees. If the self-employed individual's deductible
contributions for himself did not exceed one-third of the
total deductible contributions, the plan could be coordinated with the social security system by treating the
employer's actual social security contributions for himself
and his employees as if they were made under the private
plan for purposes of determining whether the ratio test is
met. Once a self-employed individual qualified as having
four or more employees in any year his deductible contributions for himself would no longer be limited to the 10 percent -- $2,500 allowance, even though his employees drop
below this number in any subsequent year.
Except in the event of severe disability or death,
benefits for self-employed individuals would not be payable
before the age of 59-1/2 and would have to begin before the
452
- 5age 70-1/2. The retirement benefits received from the plans
by the self-employed individuals would be taxable as ordinary
income. Averaging treatment would be accorded lump-sum distributions. In general, the tax on such distributions
received after age 59-1/2 would be equal to five times the
increase in tax resulting from including in income one-fifth
of the distribution. Except in case of disability, distributions of $2,500 or more to self-employed people prior to
age 59-1/2 would be taxed at not less than 110 percent of
the liability resulting from spreading the distribution over
the taxable year and the preceding four years.
Retirement funds could be invested with a bank as trustee
or used to purchase retirement annuities from an insurance
company or face amount certificates. Custodial accounts could
also be set up with banks if the investment is solely in regulated investment company stock. In addition, the self-employed
individual could purchase and distribute to his employees in
the plan a special nontransferable United States bond redeemable after age 59-1/2 or disability.
The bill would be effective for taxable years beginning
after December 31, 1961.
- 6-
453
Problems raised by H. R. 10
The Treasury Department recognizes that the present law
does not give self-employed people tax treatment for their
retirement savings comparable to that now accorded to
employees covered by employer financed pension plans.
However, H. R. 10 as passed by the House does not provide a
satisfactory solution.
If it is to be effective in achieving its objective,
any legislation designed to achieve comparable tax advantages
for self-employed people under pension plans should at least
have the following attributes:
1. It should at least grant approximately the same tax
treatment under pension plans to self-employed people and
corporate owner-managers. Since the principal justification
for granting tax advantages for the retirement savings of the
self-employed is that they are not given the pension advantages now received by corporate owners, any legislation which
results in treating these groups in a markedly different
fashion would merely represent a temporary expedient and
not a lasting solution. Moreover, if corporate owner-managers
retain important tax advantages over the self-employed
454
. 7 -
individuals for pension purposes an artificial tax incentive would remain for self-employed people to change their
businesses to the corporate form wherever possible in order
to secure greater pension advantages.
Self-employed indi-
viduals who now cannot incorporate would also continue to
seek State legislation permitting them to do so.
2.
To prevent the use of pension plans to secure undue
advantages, there should at least be appropriate limitations
on the pension contributions made for self-employed people
and corporate owner-managers.
At present, despite the non-
discrimination requirements imposed by the law on qualified
plans, it is difficult to check abuses which arise when
owner-managers of closely held corporations establish pension
plans primarily for their own benefit.
In some cases, for
example, the contributions under the plan may be used mainly
to provide substantial benefits to che owner-managers and•
other employees may receive only nominal benefits or none at
all.
For example, a plan covering only salaried employees,
which is within the purview of Section 401 (a) (5) of the
Internal Revenue Code,could result in the coverage of the
owner-managers to the exclusion of all other employees. Any
455
- 8 «
legislation allowing self-employed people to be covered by
qualified plans should not create problems of this type for
plans covering self-employed people but instead should contain appropriate provisions eliminating these abuses where
they now exist.
3. In seeking to remove discrimination against selfemployed people, the legislation should not grant them coverage under pension plans under such conditions as would create
a counter discrimination against their employees. Historically, the objective of granting favored tax treatment to
qualified pension plans has been to encourage the establishment of plans to meet the retirement needs of employees. In
order to achieve this objective, the Internal Revenue Code
contains an entire set of provisions which were designed to
confine the special tax treatment to plans which do not discriminate as to coverage or benefits in favor of owner-managers
and highly paid employees as compared with the rank and file
of employees. In view of this background it is especially
important that any legislation in this field should require
self-employed individuals securing pension coverage for themselves to provide comparable coverage for their employees
without any arbitrary exclusion of certain groups of employees0
4-58
- 9 H. R. 10 does not meet these requirements. Its adoption
would create new serious discriminations to replace the problems that it seeks to solve by allowing self-employed people
to be covered by qualified pension plans. It would result
in very substantial differences in tax treatment for pension
purposes not only for self-employed individuals as compared
with owner-managers of corporations and for self-employed
people as compared with their employees but also among selfemployed people themselves.
In some situations, self-employed individuals would
receive more favorable treatment than corporate owner-managers;
in other situations, the reverse would be true. For example,
where there are no employees other than the owner, corporate
owner-managers would receive more favorable treatment than
the self-employed. In such cases, H.R. 10 limits the amounts
that a self-employed individual can contribute on his own
behalf to 10 percent of his self-employment income or $2,500
a year. In contrast, in accordance with the present provisions
of the Code, nondiscriminatory contributions to qualified pension plans on behalf of corporate owner-managers would not be
subject to any specific dollar limit.
- 10 -
457
On the other hand, where there are from one to three
employees, H. R. 10 would allow self-employed individuals
to secure pension coverage for themselves without making any
provision for the retirement needs of their employees.
Under present law, the owner-manager of a corporation does
not have a comparable privilege. In order to secure pension
coverage for himself he would have to establish a nondiscriminatory plan which could not automatically exclude all other
employees though it could exclude employees on the basis of
a nondiscriminatory classification and seasonal and parttime employees as well as those with not more than five
years of service.
Where there are four or more employees besides the owner,
both the self-employed individual and the corporate ownermanager would be required to extend coverage under the plan
to their employees in order to be covered themselves. However, in such cases, there would be important differences in
the qualification rules for the plans established by selfemployed persons and plans established by corporations in
regard to the conditions under which employees would have to
be covered, the rights that employees would have to contributions
458
-nmade on their behalf and the method of coordinating the
private pension plan with the social security system.
Besides failing to produce the same tax treatment for
self-employed individuals and corporate owner-managers under
pension plans, H. R. 10 discriminates against employees when
it allows self-employed individuals with fewer than four
employees to secure coverage in qualified plans for themselves without making any provision for the retirement needs
of their employees.
There is no logical basis for such an
arbitrary exclusion of employees from the benefits of the
pension plans covering the self-employed.
Since self-
employed individuals very frequently have less than four
employees, the practical effect of the exclusion would be
to deprive a large number of employees of the benefits of
the new pension plans that would be established under the
bill.
There also are not adequate safeguards to check abuses
in contributions for self-employed people with more than four
employees.
Under H. R. 10, such individuals would be permitt
to make pension contributions for themselves exceeding the
459
- 12 10 percent -- $2,500 limit, presumably on the theory that
they would have to grant coverage to such employees and
make substantial contributions for them. However, since
the contributions to the plan would be based on the selfemployment income of the owner, including income from
capital invested in the business, and the compensation of
the employees, the bulk of such contributions would be
made for the owner in those cases where employees earn
modest salaries and the owner's self-employment income is
large. In such cases, the immediate tax reduction received
by the self-employed individuals as a result of the deduction
for his own contribution could greatly exceed the contribution
made for his employees. Though some part of this tax reduction might be offset by the tax resulting in later years
when the pension is received and included in taxable income,
the net tax benefits to such a self-employed individual would
generally be substantial.
Self-employed individuals, having once qualified for the
larger allowances as employers of four or more individuals,
can continue to contribute amounts in excess of the 10 percent
$2,500 limit in subsequent years even if they have no employees
- 13 -
46u
in such years. Also, because the bill specifically permits
a self-employed individual to exclude from the plan employees
who have less than three years of service and at the same
time to count them in determining whether he has at least
four employees , it would be possible for the self-employed
individual to contribute for himself more than the basic
10 percent -- $2,500 amounts without making any contributions
on behalf of any other individual. As a result, some selfemployed people would be able to deduct annual contributions
substantially exceeding $2,500 indefinitely even though they
never have any employees who qualify under the plan.
Another important defect of the present bill is that the
pension contributions by the self-employed on their own behalf
would be based on their self-employment income which generally
includes income from capital invested in the business as well
as personal service income. This would give self-employed
people an important advantage over covered employees since,
under present law, pension contributions for covered employees,
including owner-managers of corporations, are based on earned
income alone.
- 14 -
461
H. R. 10 would involve a revenue loss amounting to an
estimated $358 million annually on a full-year basis. Over
one-fourth of this revenue loss would be accounted for by
the fact that the bill would allow self-employed people to
base their allowable deductions for pension contributions on
self-employment income instead of on personal service income
alone. These estimates assume that actual deductions for
contributions made by self-employed people on their own
behalf would be only a part of the maximum allowable, ranging from 15 percent of the maximum for taxpayers with less
than $3,000 of income to 66-2/3 percent of the maximum for
those with more than $20,000 of income. Particularly in
view of the present budgetary situation, it would clearly
not be appropriate to incur a revenue loss of this magnitude
for legislation which would not constitute an adequate solution to the tax treatment of the retirement savings of selfemployed people.
Because of these compelling considerations, the Treasury
Department is opposed to the enactment of H. R. 10. Though
it seeks to equalize the tax treatment of retirement savings,
the bill creates many inequities and unjustifiable differences
- 15 in tax treatment.
As you know, the President has directed
the Treasury to undertake the research and preparation of a
comprehensive tax reform program to be submitted to the
Congress next year. A major aspect of this program will be
a broadened and more equitable tax base and reconsideration
of the rate structure. We believe that the problem which
H. R. 10 seeks to meet should more appropriately be considered in connection with such a general tax program so
that this problem could be evaluated in the context of the
entire program. At the same time this would permit consideration of the problem in the light of a general examination
of issues in the pension and retirement area and in the context of the rate structure that may result from a re-examination of the existing structure. Accordingly, the Department
recommends that legislation dealing with the tax treatment of
the retirement savings of self-employed people be deferred
until it can be considered in the perspective of the entire
tax reform program.
Comparison of principal items of assets and liabilities of active national banks - Continued
&Q0
(In thousands of dollars)
.Increase or decrease :Increase or decrease
Apr. 12,
Dec. 31, * Mar. 15,
'since Dec. 31. I960
since Mar. 15. I960
:
1961
i960
I960
* Amount : Percent* Amount
. percent
LIABILITIES
Deposits of individuals, partnerships, and corporations:
Demand
61,274,612
Time
38,922,341
Deposits of U. S. Government
1,568,138
Postal savings deposits
8,206
Deposits of States and political
subdivisions
9,187,440
Deposits of banks
8,611,099
Other deposits (certified and
officers' checks, etc.)
1.492.826
Total deposits
121,064,662
Rediscounts, and other liabilities
for borrowed money
686,157
Other liabilities
3.003.841
Total liabilities, excluding capital accounts
124.754.660
CAPITAL ACCOUNTS
Capital stock:
Common
3,457,622
Preferred
1.472
Total
3.459.094
Surplus
5,572,040
Undivided profits
2,047,520
Reserves
267.531
Total surplus, profits and
reserves
7.887.091
Total capital accounts
11.346.185
Total liabilities and
capital accounts
136.100.845
RATIOS:
Percent
f
U.S. Gov t securities to total assets
23.77
Loans
Capital
& discounts
accounts to
tototal
tota_Ldeposits
assets
46.73
9.3?
63,131,263
36,761,292
3,448,244
8,300
60,223,228
34,182,165
2,717,522
8,457
-1,856,651
2,161,049
-1,880,106
-94
-2.94
1,051,384
1.75
5.88
4,740,176 13.87
-54.52 -1,149,384 -42.30
-1.13
-251 -2.97
9,297,327
10,439,491
7,925,607
8,226,436
-169,887
-1,828,392
-1.18
-17.51
1,261,833 15.92
384,663
4.68
1.824.934
124,910,851
1.416.171
114,699,586
-332.108
-3,846,189
-18.20
-3.08
76.655
6,365,076
110,590
3.141.088
1,559,321
2.619.138
575.567
..137.247
520.45
-4.37
128.162.529
118.878.045
-3.407.869
-2.66
3,341,320
1.530
3.342.850
5,446,143
2,030,052
279.293
3,240,119
3.037
3.243.156
5,110,791
1,850,560
241.406
116,302
-58
116.244125,897
17,468
-11.762
7.755.488
11.098.338
7,202.757
10.445.913
131.603
247.847
139.260.867
Percent
23.49
45.74
8.99
5.41
5.55
-873,164-56.00
384.703 14.69
5.876,615
4.94
3.48
217,503
6.71
-3.79
-1.565 -51.53
3.48
215.938
6.66
2-31461,249
93)3
.86
196,960 10.64
-4.21
26.125 10.82
1.70
2.23
684.334
900.272
9.50
8.62
129.323.958
~3.160.022 -2.27 6.776.887
5.24
Percent
22.96
46.67
9»ll NOTE: Minus sign denotes decrease.
*
Statement showing comparison of principal items of assets and liabilities of active national banks
as of April 12, 196lf December 31 f I960 and March 15 f I960
464
(In thousands of dollars)
Apr. 12, 1 Dec. 31,
1961
* I960
t
Number of banks
ASSETS
Commercial and industrial loans
Loans on real estate
Loans to financial institutions
All other loans.....
Total gross loans
Less valuation reserves.
Net loans
U. S. Government securities:
Direct obligations
Obligations fully guaranteed
Total U. S. securities
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
Currency and coin
Reserve with Federal Reserve banks....
Balances with other banks
Total cash, balances with other
banks, including reserve balances and cash items in
process of collection
Other assets
Total assets
I Mar. 15,
I960
t
4,523
4,530
23,629,812
15,546,391
4,412,882
21.342.176
64,931,261
1.335.382
63.595.879
23,979,387
15,534,206
4,279,954
21.206.658
65,000,205
1.306.537
63.693.668
4,541
ilncrease or decreasejlncrease or decrease
:since Dec. 31.1960 tsince Mar. 15. I960
* Amount: Percent
* Amount : Percent
-18
-7
22,626,857
15,188,117
4,681,984
19.082.959
61,579,917
1.224.894
60.355.023
32,228,779
122.019
32,350,798
32,615,321
96.402
32,711,723
29,639,498
53.702
29,693,200
-349,575
12,185
132,928
135.518
-68,944
<$&*&*-5
m^W
v
*'
-386,542
25.617
-360,925
9,927,654
1,325,874
9,408,711
1,407,576
9,020,152
1,403,833
518,943
-81,702
333.660
324.184
43.937.986 43.852.194
107.533.865 107.545.862
1.855,804
1,721,492
10,148,726
10,641,581
13.435.586
16.311.433
306.750
40.423.935
100.778.958
1,596,856
11,088,277
13.183.068
9.476
85.792
-11.997
134,312:
-492,855
-2.875.847
.1.46
.08
3.11
.64
-.11
2.21
-.15
1,002,955
358,274
-269,102
2.259.217
3.351,344
110.488
3.240.856
4.43
2.36
-5.75
11.
5.44
9.02
5.37
-1.19
26.57
--TOO
2,589,281
68.317
2,657,598
8.74
127.22
8w95
5.52
-5.80
907,502
-77,959
10.06
-5.55
2.92
26.910
3.514.051
8.77
"^»69
~»oi
6,754,907:
ZME
7.80
-4.63
.17.63
-11.28
2.84
258,948
-939,551
252.518
-428.085
-450.065
]l_i_ZZ_S______i_.
25.440.116 28.674.506
3.126.864
3.040.499
136.100.845 139.260.867
25.868.201
2.676.799
129.323.958
-3.234.390
86.365
-3.160.022
16.22
-8.4?
1.92
161
- 2 -
^
purpose of purchasing or carrying stockst bonds, and other securities of $1,757,000 (
increased $1799000,000. Other loans, including loans to farmers and other loans to
individuals (repair and modernization and installment cash loans, and single^payment
loans) amounted to $12*736,000,000. The percentage of net loans and discounts
(after deduction of valuation reserves of $1,335*382*000) to total assets on
April 12, 1961 was 46.73 in comparison with 46.67 in March i960.
Total investments of the banks in bonds, stocks, and other securities aggregated
$43*938,000,000. Included in the investments were obligations of the United States
Government of $32*351*000,000 ($122,019*000 of which were guaranteed obligations).
These investments, representing 23*77 percent of total assets, showed an increase of
$2,658,000,000 since March 15, i960. Other bonds, stocks, and securities of
$11*587*000,000, including $9*928,000*000 of obligations of States and other politic*
subdivisions, showed an increase of $856,000,000.
Cash of $1*856,000*000, reserves with Federal Reserve banks of $10,149,000*000,
and balances with other banks (including cash items in process of collection) of
$13*435*000*000, a total of $25,440,000,000, showed a decrease of $428*000,000e
Rediscounts and other liabilities for borrowed money of $686,000,000 showed a
decrease of $873*000,000 in the period.
Total capital funds of the banks on April 12, 1961 of $11,346,000,000, equal to
9.37 percent of total deposits, were $900,000,000 more than in March i960 when they
were 9.11 percent of total deposits.
Included in the capital funds were capital
stock of $3,459*000,000, of which $1*472,000 was preferred stock; surplus of
$5*572,000,000; undivided profits of $2,047,000*000 and capital reserves of
$268,000,000.
TREASURY DEPARTMENT
Comptroller of the Currency
Washington
466
July 26, 1961
RELEASE A.M. NEWSPAPERS
THURSDAY, JULY 27, 1961
COMPTROLLER OF THE CURRENCY REPORTS TOTAL ASSETS AND LIABILITIES
OF ACTIVE NATIONAL BANKS ON APRIL 12, 1961
The total assets of the 4,523 active national banks in the United States and
possessions on April 12, 1961 amounted to $136*100,000*000, it was announced
today by Comptroller of the Currency Ray M. Gidney. The total assets showed an
increase of $6,800,000,000 over the amount reported by the 4,541 banks on
March 15, I960*
The deposits of the banks on April 12* 1961 were $121,000*000,000, an increase
of $6,365*000,000 in the period. Included in the deposit figures were demand
deposits of individuals, partnerships, and corporations of $61*000.000.000, an
increase of more than $1,000,000,000, and time deposits of individuals, partnerships^
and corporations of $39*000,000,000, an increase of $4,740,000,000. Deposits of the
United States Government of $1,568,000,000 decreased $1*149,000,000; deposits of
States and political subdivisions of nearly $9*200*000,000 increased $1,262,000*000;
and deposits of banks of $8,611,000,000 showed an increase of $385*000,000. Postal
savings deposits were $8*206,000 and certified and officers1 checks, etc. were
$1,493*000.000.
Gross loans and discounts on April 12, 1961 of $65,000*000,000 showed an increas
of $3*351*000,000 over March 15* I960. Commercial and industrial loans amounted to
$23*630,000,000 and increased more than $1,000,000,000 during the year, while loans
on real estate of $15,546,000,000 increased $358,000,000. Loans to financial
institutions amounted to $4,413,000,000, a decrease of $269,000,000. Retail
automobile installment loans of $4,893,000,000 showed an increase of $306,000,000.
Other types of retail installment loans of $1,956,000,000 showed an increase of
$384,000,000. Loans to brokers and dealers in securities and to others for the
D-183
TREASURY DEPARTMENT
Comptroller of the Currency
Washington
A 67
^
July 26, 1961
RELEASE AeM. NEWSPAPERS
THURSDAY, JULY 27, 1961
COMPTROLLER OF THE CURRENCY REPORTS TOTAL ASSETS AND LIABILITIES
OF ACTIVE NATIONAL BANKS ON APRIL 12, 1961
The total assets of the 4,523 active national banks in the United States and
possessions on April 12, 1961 amounted to $136,100*000,000, it was announced
today by Comptroller of the Currency Ray Me Gidney. The total assets showed an
increase of $6,800,000,000 over the amount reported by the 4,541 banks on
March 15* I960.
The deposits of the banks on April 12, 1961 were $121*000,000,000, an increase
of $6,365*000,000 in the period. Included in the deposit figures were demand
deposits of individuals, partnerships, and corporations of $61,000,000,000, an
increase of more than $1*000,000*000, and time deposits of individuals, partnerships*
and corporations of $39*000,000,000, an increase of $4,740,000,000. Deposits of the
United States Government of $1,568,000,000 decreased $1,149*000,000; deposits of
States and political subdivisions of nearly $9*200,000,000 increased $1,262,000,000;
and deposits of banks of $8*611,000,000 showed an increase of $385*000,000. Postal
savings deposits were $8*206,000 and certified and officers* checks, etc. were
$1*493,000.000.
Gross loans and discounts on April 12, 1961 of $65,000,000,000 showed an increase
of $3,351,000,000 over March 15, I960. Commercial and industrial loans amounted to
$23,630,000,000 and increased more than $1,000,000,000 during the year, while loans
on real estate of $15,546,000,000 increased $358,000,000. Loans to financial
institutions amounted to $4,413,000,000, a decrease of $269,000,000. Retail
automobile installment loans of $4,893*000,000 showed an increase of $306,000,000.
Other types of retail installment loans of $1,956,000,000 showed an increase of
$384 000 000. Loans to brokers and dealers in securities and to others for the
D-183
- 2 -
purpose of purchasing or carrying stocks, bonds, and other securities of $1,757,000
increased $179,000,000* Other loans, including loans to farmers and other loans to
individuals (repair and modernization and installment cash loans, and single-payment
loans) amounted to $12,736,000,000. The percentage of net loans and discounts
(after deduction of valuation reserves of $1,335,382,000) to total assets on
April 12, 1961 was 46.73 in comparison with 46.6? in March i960.
Total investments of the banks in bonds, stocks, and other securities aggregate*
$43,938,000,000. Included in the investments were obligations of the United States
Government of $32,351*000,000 ($122,019,000 of which were guaranteed obligations).
These investments, representing 23^77 percent of total assets, showed an increase of
$2,658,000,000 since March 15, i960. Other bonds, stocks, and securities of
$11,587*000,000, including $9,928,000,000 of obligations of States and other politic;
subdivisions, showed an increase of $856,000,000.
Cash of $1,856,000,000, reserves with Federal Reserve banks of $10,149,000,000,
and balances with other banks (including cash items in process of collection) of
$13*435,000,000, a total of $25,440,000,000, showed a decrease of $428,000,000.
Rediscounts and other liabilities for borrowed money of $686,000,000 showed a
decrease of $873,000,000 in the period.
Total capital funds of the banks on April 12, 1961 of $11,346,000,000, equal to
9*37 percent of total deposits, were $900,000,000 more than in March i960 when they
were 9.U percent of total deposits. Included in the capital funds were capital
stock of $3,459*000,000, of which $1,472,000 was preferred stock; surplus of
$5,572*000,000; undivided profits of $2,047,000,000 and capital reserves of
$268,000,000.
3
Statement showing comparison of principal items of assets and liabilities of active national banks
as of April 12, 1961, December 31, I960 and March 15, I960
(In thousands of dollars)
5
^
A T W 12
*
1961
:
:
x
Dee 'Vi
I960
z
Number of banks 4,523 4,530 4,541 -7 ^18
ASSETS
Commercial and industrial loans
23,629,812
23,979,387
Loans on real estate
15,546,391
15,534,206
Loans to financial institutions
4,412,882
4,279,954
All other loans.....
21.342.176
21.206,658
Total gross loans
64,931.261 65,000,205
Less valuation reserves.
1.335.382
1.306.537
Net loans
63.595.879
63.693.668
U. S. Government securities r
Direct obligations
32,228,779
32,615,321
Obligations fully guaranteed
122.019
96.402
Total U. S. securities.
32,350,798
32,711,723
Obligations of States and political
subdivisions*
9,927,654
9,408,711
Other bonds, notess and debentures..... 1,325,874
1,407,576
Corporate stocks, including stocks
of Federal Reserve banks...
333.660
324.184
Total securities...
43.937.986
43.852.194
Total loans and securities
107.533.865 107.545.862
Currency and coin
1,855,804
1,721,492
Reserve with Federal Reserve banks.... 10,148,726
10,641,581
Balances with other banks
13.435.586
16,311,433
Total cash, balances with other
banks, including reserve balances and cash items in
process of collection
25.440.116
28,674,506
Other assets
3.126,864
3.040.499
Total assets
136.100.845 139.260,867
4**
:
Mar "K
* I960
s
^Increase or decrease:Increase or decrease
:since Dec. 31.1960 :since Mar. 15. I960
* Amount: Percent
* Amount : Percent
22,626,857
15,188,117
4,681,984
19.082.959
61,579,917
1.224.894
60.355.023
-349,575
12,185
132,928
135.518
-68,944
28.845
-97.789
-1.46
.08
3.H
.64
I7ll
2.21
-.15
1,002,955
358,274
-269,102
2.259.217
3,351,3^4
110.488
3.240.856
4.43
2.36
-5.75
11.84
5.44
9.02
5.37
29,639,498
53.702
29,693,200
-386,542
25.617
-360,925.
-1.19
26.57
-1.10
2,589,281
8.74
68.317 127.22
2,657,598
8.95
9,020,152
1,403,833
518,943
-81,702
5.52
-5.80
907,502
-77,959
306.750
40,423.935
100.7731958
17596,856
11,088,277
13.183.068
9.476
85.792
-11.997
134,312
-492,855
-2.875.847
2.92
.20
-*01
77§0
-4.63
-17.63
26.910
3.514.051
6.754.907
258,948
-939,551
252.518
8.77
8.69~
6.70
16.22
-8.47
1.92.
25.868.201
2.676,799
129.323.958
-3.234,390
86,365
-3.160.022
-11.28
2.84
-2.27
-428.085
450.065
6.776.887
-1.65
16.81
5.24,
10.06
-5.55
4
Comparison of principal items of assets and liabilities of active national banks - Continued
:
1961
•
s
I960
:
:
I960
•
:
Amount
: Percent J Amount
*
• Percent
•
—a-»p^__»™____.»___._________________M™____________.__»____________i_____________________^
LIABILITIBS
Deposits of individuals, partnerships, and corporations:
Demand
Time
Deposits of U. S. Government
Postal savings deposits
Deposits of States and political
subdivisions
Deposits of banks
Other deposits (certified and
officers' checks, etc.)
Total deposits
•Rediscounts, and other liabilities
for borrowed money
Other liabilities
Total liabilities, excluding capital accounts
61,274,612
38,922,341
1,568,138
8,206
63,131,263
36,761,292
3,448,244
8,300
60,223,228
34,182,165
2,717,522
8,457
-1,856,651
2,161,049
-1,880,106
-94
-2.94
5.88
-54.52
-1.13
9,187,440
8,611,099
9,297,327
10,439,491
7,925,607
8,226,436
-109,887
-1,828,392
-1.18
-17.51
1,261,833
384,663
15.92
4.68
1.492.826
121,064,662
1.824,934
124,910,851
1.416.171
114,699,586
-332.108
-3,846,189
-18.20
-3.08
76.655
6,365,076
5.41
5.55
686,157
3.003.841
110,590
3.141.088
1,559,321
2.619.138
575,567
-137.247
520.45
-4.37
124,754.660
128.162.529
118.878.045
-3.407.869
-2.66
3,341,320
1.530
3.342.850
5,446,143
2,030,052
279.293
3,240,119
2..02Z
3.243.156
5,110,791
1,850,560
241.406
116,302
^ -58
116.244
125,897
17,468
-11.762
3.48
-3.79
3.43
2.31
.86
-4.21
7.755.488
11.098,338
7.202.757
10.445.913
131.603
247.847
1.70
2.23
CAPITAL ACCOUNTS
Capital stock:
Common..
3,457,622
Preferred
1,472
Total
3.459.094
Surplus
5,572,040
Undivided profits.....
2,047,520
Reserves
267.531
Total surplus, profits and
reserves
7.887.091
Total capital accounts
11.346,185
Total liabilities and
capital accounts
136.100.845
RATIOS:
Percent
f
U.S. Gov t securities to total assets
23.77
Loans & discounts to total assets
46.73
Capital accounts to total deposits
9»37
139.260.867
Percent
23.49
45.74
8.99
1,051,384
1.75
4,740,176 13.87
-1,149,384 -42.30
-251 -2.97
-873,164-56.00
384.703 14.69
5.876.615
4.94
217,503
6.71
-1.565-51.53
215*938
6.66"
461,2499lW
196,960 10.64
26.125 10.82
684.334
900.272
9.50.
8.62
129.323.958
-3.160.022 -2.27
6.776.887
5.24
Percent
.22.96
46.67
NOTE: Minus sign denotes decrease.
9.11
46?
BETA - MODIFIED
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 BETA - MODIFIED °
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 incorpo-
rated banks and trust companies and from responsible and recognized dealers in inves
raent 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
TO
bills dated May U, 1961
jnj
November 2, 1961
pp:
, (
91
days remaining until maturity date on
iwr
) and noncompetitive tenders for $ 100,000 or less for the
—JS8F~
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 respec
tive issues. Settlement for accepted tenders in accordance with the bids must be
made or completed at the Federal Reserve Bank on August 3, 1961 , in cash or
other immediately available funds or in a like face amount of Treasury bills maturing August 3, 196l Cash and exchange tenders will receive equal treatment.
;
3SBF
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 an^f easemsstioa... as such, and lo
47
Exhibit 2-A
SnaXXXKBBIXIIEX
TREASURY DEPARTMENT
Washington
July 26, 1961
FOR IMMEDIATE RSISASB
TREASURY'S WEEKLY BILL OFFERING
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
August 3, 196l
, in the amount
of $ l,701sliili_>000 > a-s follows:
91 -day bills (to maturity date) to be issued August 3. 196l ,
in the amount of $ 1,100,000^000 , or thereabouts, representing an additional amount of bills dated
May hf 1961
9
and to mature
November 2, 196l 9 originally issued in the
122 (including $100,10U,000 issued June 14, 1961]
amount of $ 600,356.000 / , the additional and original bills
ma
to be freely interchangeable.
182 -day bills, for $ 600.000.000 > or thereabouts, to be dated
August 3. 1961
, and to mature
February 1. 1962
•
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
Daylight Saving
hour, one-thirty o'clock p.m., Eastern/SSy5ffiB& time, Monday. July 31. 196l
«
tm
"
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
-( YL-
TREASURY DEPARTMENT
WASHINGTON, D.C.
FOR IMMEDIATE RELEASE
July 26, 1961
TREASURY'S WEEKLY BILL OFFERING
The Treasury Department, by this public notice, Invites tenders
or 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 August 3, 1961
in the amount of
$ 1,701,144,000 as follows:
91 -day bills (to maturity date) to be issued August 3, 196l,in the
amount of $ 1,100,000,000, or thereabouts, representing an additional
amount of bills dated May 4, 1961
, and to mature November 2, 1961
originally issued in the amount of $600,356,000 (including $100,104,000
issued June 14, 1961
), the additional and original bills
to be freely interchangeable.
182-day bills, for $600,000,000 or thereabouts, to be dated
August 3, 1961 and to mature February 1, 1962.
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 Daylight
Saving time, Monday, July 31* 196l
. 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
D-184
or trust company.
- 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 Departmment 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
May 4, 1961
(91 days remaining until maturity date on
November 2, 1961) and noncompetitive tenders for $100,000
or less for thel82 -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 onAugust 3, 1961,
in cash or other immediately available funds or in a like face
amount of Treasury bills maturing August 3, 196l0
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.
0O0
Treasury Department Circular No. 4l8, Revised, and this notice,
prescribe the terms of the Treasury bills and govern the conditions
of theirReserve
issue. Bank
Copies
of the circular may be obtained from any
Federal
or Branch.
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forgeries of money, Government checks, bonds and other securities,
which are the special responsibilities of the Secret Service.
Also, Chief Baughman has launched new and more intensified training
programs for members of the Secret Service.
The Treasury head also praised the Chief for promoting closer
cooperation with local and State enforcement agencies within the
United States, and effective coordination with world-famous police
organizations of other nations.
The Treasury Secretary concluded by telling Chief Baughman he
had "earned the respect and admiration of the men you have led."
A biography of Chief Baughman is attached.
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TREASURY DEPARTMENT
WASHINGTON, D.C.
FOR IMMEDIATE RELEASE
July 28, 196l
SECRET SERVICE CHIEF RECEIVES HIGH AWARD
FROM SECRETARY DILLON
Treasury Secretary Douglas Dillon today conferred the Departments
most coveted honor — the Exceptional Service Award — upon
U. E. Baughman, retiring Chief of the U. S. Secret Service, calling
him "one of the worldfs best and most successful law enforcement
officers."
The award was m$de by Secretary Dillon at 12:30 p.m. today,
with Secret Service and Treasury representatives and members of
Cftef Baughmanfs family present.
The Treasuryfs Exceptional Service Award ~ manifested by a
gold medal, a lapel device and an inscribed certificate signed by the
Secretary of the Treasury — is conferred only upon those Treasury
employees who distinguish themselves by exceptionally valuable service
within or beyond their required duties.
Among the standards for this award are two which Chief Baughman
has particularly displayed during his 13-year term as head of the
Secret Service, Secretary Dillon said. These are demonstrations of
outstanding courage and voluntary risk of personal safety in the face
of danger, and the development and improvements of methods and
procedures which accomplished extraordinary results for the Treasury
Department.
Secretary Dillon said Chief Baughmanfs best known Job was that
of protecting the President.
"You and your agents have carried out this exacting assignment
in more corners of the globe than during any other comparable period.
"The proof of how well you have done your Job is clear: although
they have been subjected to threats and even attacks, your distinguishe
charges have come through safe and unharmed."
Secretary Dillon congratulated Chief Baughman for his contribution
to the Secret Service in less dramatic but none the less effective ways
The development and use of new detection techniques has resultedj*5ncr
tighter enforcement during a period characterized by a sharply rising
crime rate, including those crimes connected with counterfeiting ana
D-185
TREASURY DEPARTMENT
475
WASHINGTON, D.C.
FOR IMMEDIATE RELEASE
July 28, 196l
SECRET SERVICE CHIEF RECEIVES HIGH AWARD
FROM SECRETARY DILLON
Treasury Secretary Douglas Dillon today conferred the Department's
most coveted honor — the Exceptional Service Award — upon
U. E. Baughman, retiring Chief of the U. S. Secret Service, calling
him "one of the world's best and most successful law enforcement
officers."
The award was made by Secretary Dillon at 12:30 p.m. today,
with Secret Service and Treasury representatives and members of
Chief Baughman!s family present.
The Treasury's Exceptional Service Award — manifested by a
gold medal, a lapel device and an inscribed certificate signed by the
Secretary of the Treasury — is conferred only upon those Treasury
employees who distinguish themselves by exceptionally valuable service
within or beyond their required duties.
Among the standards for this award are two which Chief Baughman
has particularly displayed during his 13-year term as head of the
Secret Service, Secretary Dillon said. These are demonstrations of
outstanding courage and voluntary risk of personal safety in the face
of danger, and the development and improvements of methods and
procedures which accomplished extraordinary results for the Treasury
Department.
Secretary Dillon said Chief Baughman's best known Job was that
of protecting the President.
"You and your agents have carried out this exacting assignment
in more corners of the globe than during any other comparable period.
"The proof of how well you have done your Job is clear: although
they have been subjected to threats and even attacks, your distinguished
charges have come through safe and unharmed*"
Secretary Dillon congratulated Chief Baughman for his contributions
to the Secret Service in less dramatic but none the less effective ways.
The development and use of new detection techniques has resulted in
tighter enforcement during a period characterized by a sharply rising
crime rate including those crimes connected with counterfeiting and
<9vF^T
47forgeries of money, Government checks, bonds and other securities,
which are the special responsibilities of the Secret Service.
Also, Chief Baughman has launched new and more intensified training
programs for members of the Secret Service.
The Treasury head also praised the Chief for promoting closer
cooperation with local and State enforcement agencies within the
United States, and effective coordination with world-famous police
organizations of other nations.
The Treasury Secretary concluded by telling Chief Baughman he
had "earned the respect and admiration of the men you have led."
oOo
TREASURY DEPARTMENT
477
WASHINGTON, D.C.
July 28, 1961
IMMEDIATE RELEASE
TREASURY DECISION ON RAYON STAPLE FIBER
UNDER THE ANTIDUMPING ACT.
The Treasury Department has determined that rayon
staple fiber from Japan is not being, nor likely to be,
sold in the United States at less than fair value withing the meaning of the Antidumping Act. Notice of the
determination will be published in the Federal Register,
The dollar value of imports of rayon staple fiber
received from Japan during i960 was approximately
$370,000.
5c°*f
TREASURY DEPARTMENT
'"
WASHINGTON, D.C.
July 28, 1961
IMMEDIATE RELEASE
TREASURY DECISION ON RAYON STAPLE FIBER
UNDER THE ANTIDUMPING ACT.
The Treasury Department has determined that rayon
staple fiber from Japan is not being, nor likely to be,
sold in the United States at less than fair value withing the meaning of the Antidumping Act. Notice of the
determination will be published in the Federal Register.
The dollar value of imports of rayon staple fiber
received from Japan during i960 was approximately
$370,000.
470
- 20 (2) Section 6038 (b) (relating to effect of failure
to furnish information required by section 6038 (a)) is
amended by inserting before "the amount of taxes paid or
deemed paid" in the first sentence the following: "and
in applying section 957 (relating to foreign tax credit for
corporate shareholders of controlled foreign corporation)
to such domestic corporation for any taxable year,".
(c) Effective Date.—The amendments made by this section shall
apply with respect to annual accounting periods of foreign corporations beginning after December 31> 1961, and to taxable years in
which or with which such annual accounting periods end.
- 19 "(2)
4?0
In applying the first sentence of subparagraphs
(A) and (B), and in applying subdivision (i) of subparagraph (c),
of section 318 (a) (2), if a partnership, estate, trust, or
corporation owns, directly or indirectly, more than 50 percent
of the total combined voting power of all classes of stock
entitled to vote, or of the total value of shares of all classes
of stock, of a corporation, it shall be considered as owning all
of the outstanding stock of such corporation.
"(3) In applying subparagraph (c) of section 318 (a) (2)~
"(A) For purposes of subdivision (i) thereof, the
50 percent limitation contained in subparagraph (C) shall
not apply; and
"(B) For purposes of subdivision (ii) thereof, a
5 percent limitation shall apply in lieu of the 50 percent
limitation contained in subparagraph (c), and stock owned
by a corporation by reason of the application of subdivision (ii)
shall not be considered as owned by it for purposes of applying subdivision (i) in order to make another the constructive
owner of such stock"(b) Technical and Clerical Amendments.—
(l) Section 901 (relating to foreign tax credit) is amended
by striking out "section 902" and inserting in lieu thereof
"sections 902 and 957".
r O JL
- 18 - •
"(2) does not choose to have the benefits of subpart
A of this part for the taxable year in which he receives a
distribution or amount which is excluded from gross income
under section 955 and which is attributable to undistributed
tax haven profits of the controlled foreign corporation
which were included in his gross ihcome for the taxable
year referred to in paragraph (l),
no deduction shall be allowed under section l6h for the taxable
year in which such distribution or amount is received for any income,
war profits, or excess profits taxes paid or accrued to any foreign
country or to any possession of the United States on or with
respect to such distribution or amount.
"SEC. 959- RULES FOR DETERMINING STOCK OWNERSHIP.
"(a) Section 318 (a)(relating to constructive ownership of
stock) shall apply to the extent that the effect is to make a
foreign corporation a controlled foreign corporation under section
952, is to make a person taxable under section 953 (a) (3), or is
to make persons related persons under section 954 (d) except—
"(1) In applying paragraph (l) (A), subdivision (ii)
shall be deemed to apply to the individual's brothers and
sisters (whether by the whole or half blood), ancestors, and
lineal descendants.
482
m, I J m,
"(l) the amount by which the applicable limitation
under section 904 (a) for the taxable year referred to in
subsection (a) (l) was increased by reason of the inclusion
in gross income of the amount of undistributed tax haven
profits of the controlled foreign corporation included under
section 953 (a) (l) and the amount, if any, included in gross
income under section 957 (a) with respect to the amount so
included under section 953 (a) (l), reduced by
"(2) the amount of any income, war profits, and excess
profits taxes paid, or deemed paid, or accrued to any foreign
country or possession of the United States which were
allowable as a credit under section 901 for the taxable
year referred to in subsection (a) (l) and which would not
have been allowable but for the inclusion in gross income of
the amounts described in paragraph (l) of this subsection.
"(c) Cases in Which Taxes Not to be Allowed as Deduction.—In
the case of any taxpayer who—
"(l) chose to have the benefits of subpart A of this
part for a taxable year in which he was required under
section 953 (a) (l) to include in his gross income the
undistributed tax haven profits of a controlled foreign
corporation, and
48
- 16 income, war profits, or excess profits taxes to any foreign
country or to any possession of the United States, and
"(2) chooses to have the benefits of subpart A of this
part for the taxable year in which he receives a distribution
or amount which is excluded from gross income under section
955 and which is attributable to undistributed tax haven
profits of the controlled foreign corporation which were
included in his gross income for the taxable year referred to
in paragraph (l), and
"(3) for the taxable year in which such distribution
or amount is received, pays, or is deemed to have paid, or
accrues income, war profits, or excess profits taxes to a
foreign country or to any possession of the United States
with respect to such distribution or amount,
the applicable limitation under section 904 for the taxable year
in which such distribution or amount is received shall be increased
as provided in subsection (b), but such increase shall not exceed
the amount of such taxes paid, or deemed paid, or accrued with
respect to such distribution or amount.
"(b) Amount of Increase.—The amount of increase of the
applicable limitation under section 904 (a) for the taxable year
In which the distribution or amount referred to in subsection
(a) (2) is received shall be an amount equal t o —
4R4
- 15 -
"(2) Taxes paid by foreign corporation and not deemed
paid by domestic corporation.—Any portion of a distribution
from a foreign corporation received by a domestic corporation
which is excluded from gross income under section 955 shall
be treated by the domestic corporation as a dividend, solely
for purposes of taking into account under section 902 any income,
war profits, or excess profits taxes paid to any foreign country
or to any possession of the United States, on or with respect
to the accumulated profits of such foreign corporation from which
such distribution is made, which were not deemed paid by the
domestic corporation under subsection (a) for any prior taxaHe
year.
M
SECc 958. SPECIAL RULES FOR FOREIGN TAXES PAID IN YEAR OF RECEIPT
OF PREVIOUSLY TAXED EARNINGS AND PROFITS OF COimOLLED
FOREIGN CORPORATIONS.
"(a) Increase in Section 904 Limitation.—In the case of any
taxpayer who'll) either (A) chose to have the benefits of subpart A
of this part for a taxable year in which he was required under
section 953 (a) (l) to include in his gross Income the
undistributed tax haven profits of a controlled foreign corporation, or (B) did not pay or accrue for such taxable year any
485
- ik then, under regulations prescribed by the Secretary or his delegate,
such domestic corporation shall be deemed to have paid the same
proportion of the total income,, war profits, and excess profits
taxes paid (or deemed paid, if paragraph (l) and section 902 (b)
apply) to a foreign country or possession of the United States for
the annual accounting period which the amount of such undistributed
tax haven profits bears to the amount of the total earnings and
profits. Taxes deemed paid under this subsection shall, be included
in gross income in the same manner as amounts described in section
953 (a) (1).
"(b) Application of Section 902.—
"(l) Taxes deemed paid by domestic corporation.—If a
domestic corporation receives a distribution from a foreign
corporation, any portion of which Is excluded from gross
income tinder section 955* the income, war profits, and
excess profits taxes paid or deemed paid by such foreign
corporation to any foreign country or to any possession of
the Uhited States In connection with the earnings and
profits of such foreign corporation from which such distribution Is made shall not be taken into account for purposes of
section 902 to the extent such taxes were deemed paid by such
domestic corporation under subsection (a) for any prior
taxable year.
- 13 "(l) In general.— Under regulations prescribed by the
Secretary or his delegate, the adjusted basis of stock or
other property with respect to which a United States person
receives an amount which is excluded from gross income
under section 955 (a) shall be reduced by the amount so
excluded*
"(2) Amount in excess of basis.—To the extent that
an amount excluded from gross income under section 955 (a)
exceeds the adjusted basis of the stock or other property
with respect to which it is received, the amount shall be
treated as gain from the sale or exchange of property.
"SEC. 957. TAXES DEEMED PAID BY CORPORATE UNITED STATES PERSONS.
"(a) Taxes Paid by a Foreign Corporation.—For purposes of
subpart A of this part, if there is included, under section
953 (a) (l), in the gross income of a domestic corporation the
undistributed tax haven profits—
"(l) of a foreign corporation 10 percent of the voting
stock of which is directly owned by such domestic corporation,
"(2) of a foreign corporation at least 50 percent of
the voting stock of which Is directly owned by a foreign
corporation at least 10 percent of the voting stock of which
is In turn directly owned by such domestic corporation,
487
- 12 to such United States person.
"(c) Special Rule.—For purposes of applying subsection (a)
or (b) the Secretary or his delegate may by regulations prescribe
rules for tracing, through a chain of ownership described in
section 953 (a) (2), undistributed tax haven profits for an
annual accounting period of a controlled foreign corporation which
have once been included in the gross income of a United States person.
"SEC. 956. ADJUSTMENTS TO BASIS OF STOCK IN CONTROLLED FOREIGN
CORPORATIONS AND OF OTHER PROPERTY.
"(a) Increase in Basis.—IMder regulations prescribed by the
Secretary or his delegate, the basis of a Itoited States personfs
stock in a controlled foreign corporation, and the basis of
property of a United States person by reason of which he is
considered under section 953 (a) (2) as owning stock of a controlled
foreign corporation, shall be increased by the amount required to
be included in his gross income under section 953 (a) (l) with
respect to such stock or with-respect to such property, as the
case may be, but only to the extent to which such amount is included
In gross income in the return of such person, increased or decreased
by any adjustment of such amount in any redetermination of his tax
liability.
"(b) Reduction in Basis.—
-11 -
annual period on the basis of which such corporation regularly
computes its income in keeping its books.
"SEC. 955* EXCLUSION FROM GROSS INCOME AND TAX HAVEN PROFITS OF
PREVIOUSLY TAXED EARNINGS AND PROFITS.
"(a) Exclusion from Gross Income.—For purposes of this
chapter, the undistributed tax haven profits for an annual
accounting period of a foreign corporation which are once included
in the gross income of a Uhited States person under section 953 (a)
(l) shall not, when distributed to such person directly or indirectly
through a chain of ownership described raider section 953 (a) (2), be
again included in the gross income of such United States person.
For purposes of this chapter, any amount excluded from gross
income under this subsection shall be treated by the taxpayer
as a distribution which is not a dividend.
"(b) Exclusion from Tax Haven Profits.—For purposes of
section 953 (a) (l), the undistributed tax haven profits for an
annual accounting period of a controlled foreign corporation which
are once included in the gross Income of a United States person
under section 953 (a) (l) shall not, when distributed through a
chain of ownership described under section 953 (a) (2), be also
Included In the tax haven profits of another controlled foreign
corporation in such chain for purposes of the application of section
953 (a) (l) to such other controlled foreign corporation with respect
- 10 -
"(l)
such persons are an individual, estate, trust,
or partnership, and a corporation and more than 50 percent
of the total combined voting power of all classes of stock
entitled to vote, or of the total value of shares of all
classes of stock, of such corporation is owned, directly or
indirectly, by or for such individual, estate, trust, or
partnership;
"(2) such persons are two corporations, one of which
owns, directly or indirectly, more than 50 percent of the
total combined voting power of all classes of stock entitled
to vote, or of the total value of shares of all classes of
stock, of the other corporation; and
"(3) such persons are corporations and more than 50
percent of the total combined voting power of all classes
of stock entitled to vote, or of the total value of shares of
all classes of stock, of one corporation, and more than
50 percent of the total combined voting power of all classes
of stock entitled to vote, or of the total value of shares of
all classes of stock, of the other corporation are owned,
directly or indirectly, by or for the same persons.
"(e) Annual Accounting Periods.—For purposes of this subpart,
the annual accounting period of any foreign corporation is the
430
- 9"(6) Insurance or reinsurance.--The insurance or reinsurance of United States risks which, if they materialized, would
result directly or indirectly in compensation to a related person.
"(d) Related Persons.—For purposes of this section, two persons
are related if—
"(l) such persons are an individual, estate, trust, or
partnership, and a corporation and more than 50 percent of the
total combined voting power of all classes of stock entitled to
vote, or of the total value of shares of all classes of stock,
of such corporation is owned, directly or indirectly, by or
for such individual, estate, trust, or partnership;
"(2) such persons are two corporations, one of which owns,
directly or indirectly, more than 50 percent of the total
combined voting power of all classes of stock entitled to
vote, or of the total value of shares of all classes of stock,
of the other corporation; and
"(3) such persons are corporations and more than 50 percent of the total combined voting power of all classes of
stock entitled to vote> or of the total value of shares of all
classes of stock, of one corporation, and more than 50 percent
of the total combined voting power of all classes of stock
entitled to vote, or of the total value of shares of all classes
of stock, of the other corporation are owned, directly or indirectly, by or for the same persons.
"(e) Annual Accounting Periods.--For purposes of this subpart,
the annual accounting period of any foreign corporation is the
49i
-8 "(2) Rentals and royalties.—The receipt of rentals,
royalties, or similar amounts for the use of, or for the
privilege of using, patents, copyrights, secret processes and
formulas, good will, trade-marks, trade brands, franchises,
motion picture films, television tapes, or other rights or
property (whether real or personal), outside the country
under the laws :>of which the controlled foreign corporation is
created or organized if such amounts are received from any
person (whether or not related),
"(A) with respect to rights or property
acquired by the controlled foreign corporation from
a related person, or
"(B) with respect to motion picture films,
television tapes, or recordings.
"(3) Interest.—The receipt of interest on bonds, notes,
or other interest-bearing obligations of related persons.
"(4) Dividends.—The receipt of dividends from a corporation which is a related person except as provided in section 955 (b).
"(5) Personal services.—The performance or furnishing of
technical, managerial, engineering, architectural, scientific,
skilled, or like services performed outside the country in which
the controlled foreign corporation is created or organized—
"(A) if such services are performed or furnished for
or on behalf of a related person, or
"(B) if such services are substantially managed or directed
by officers or employees transferred from a related person.
- 7controlled foreign corporation to processing,
manufacturing, or assembling if the cost (other
than the cost of purchased materials) of such
processing, manufacturing, or assembling, is
less than 20 percent of the amounts realized from
the sales of the resulting product.
"(ii) Product of processing, manxifacturing, or
assembling by a related person.—Subdivision (i) of
subparagraph (A) shall not apply to the purchase of
personal property from a related person, created or
organized in the same country as is the controlled
foreign corporation, and the sale of such property
if it is the product of processing, manufacturing,
or assembling in such country by such related person
and if the cost (other than the cost of purchased
materials) of such processing, manufacturing, or
assembling is at least 20 percent of the amounts
realized from the sales of such product by the
controlled foreign corporation.
"(iii) Agricultural products.—Subdivision
(ii) of subparagraph (A) shall not apply to the
purchase or other acquisition of personal property
and its sale to a related person if such personal
property consists of agricultural or horticultural
products of the foreign country under the laws of
which the controlled foreign corporation is created
or organized.
-6 Tax Haven Transaction.—For purposes of this subpart
tax haven transaction1 means:
"(l) Purchase or sale of personal property.—
"(A) Purchase and sale—
"(i) The purchase or other acquisition of
personal property from a related person and its
sale, or
"(ii) the purchase or other acquisition of
personal property and its sale to a related person,
if such property is sold for -ultimate use, consumption,
or disposition outside the country under the laws of which
the controlled foreign corporation is created or organized.
"(B) Commissions.—Services performed for a related
person in connection with—
"(i) the sale of personal property, or
"(ii) the purchase of personal property,
if such property is sold or purchased for ultimate use,
consumption, or disposition outside the country under the
laws of which the controlled foreign corporation is created
or organized.
"(C) Special rules.—
"(i) Products of processing, manufacturing, or
assembling by the controlled foreign corporation.—
For purposes of subparagraph (A), 'the purchase or
other acquisition of personal property and its sale
shall include the purchase of raw materials or
manufactured products which are subjected by the
494
- 5 or his delegate, as an amount distributed to such person as a
dividend by the controlled foreign corporation on the last day of
the annual
accounting period of such corporation.
"SEC. 95*K
DEFINITIONS.
"(a) United States Person.—For purposes of this subpart,
the term 'Uhited States person' means—
"(l) an individual who is a citizen or resident of
the United States,
"(2) a domestic corporation,
"(3) a domestic partnership, or
"(k) an estate or trust (other than an estate or
trust the gross Income of which under this subtitle
includes only income from sources within the Uhited States).
11
(b) Undistributed Tax Haven Profits.~
"(l) Tax haven profits.—For purposes of this subpart,
the term 'tax haven profits' for an annual accounting period of
a controlled foreign corporation means the amount of its earnings and profits for such period (determined without regard to
distributions) which is attributable to tax haven transactions.
"(2) Undistributed tax haven profits.—For purposes of
this subpart, the term • undistributed tax haven profits1 of a
controlled foreign corporation for an annual accounting period
is an amount which bears the same ratio to the total undistributed earnings and profits for such period as the tax haven
profits for such period bear to total earnings and profits for
such period (determined without regard to distributions).
6S\h
m, 1+ -
he owns through one or more foreign corporations, foreign
partnerships, or estates or trusts (the gross income of
which under this subtitle includes only income from sources
within the United States). For purposes of the preceding sentence,
stock owned, directly or indirectly, by or for a foreign corporation, foreign partnership, or an estate or trust (the gross
income of which under this subtitle includes only income
from sources within the Uhited States) shall be considered as
being owned proportionately by its shareholders, partners, or
beneficiaries.
"(3) Less than3,0 percent ownership.—No person shall be
required to include any amount in gross income under paragraph
(l) unless he can be considered, by applying the rules of
constructive ownership of section 959> as owning, directly
or indirectly,io percent or more of the total combined
voting power of all classes of stock entitled to vote, or of
the total value of shares of all classes of stock,of the
controlled foreign corporation.
"(b) Treatment as Dividends.—Any amount included in the
gross income of a Uhited States person under subsection (a) for any
taxable year shall be treated, except for purposes of section
902 (other than section 902 (b) if section 957 (a) (l) applies)
and except as provided in regulations prescribed by the Secretary
- 3"(l) Amount included.—If a foreign corporation is a
controlled foreign corporation on any day of an annual
accounting period beginning after December 31, 196l, every
Uhited States person who has a direct or indirect interest
(as described in paragraph (2)) in such corporation on the
last day in such period on which such corporation is a
controlled foreign corporation shall include in his gross
income, for his taxable year in which or with which such period
ends, that portion of the corporation's undistributed tax
haven profits for such period which is equal to the amount
that would have been distributed with respect to such direct
or indirect interest if on such last day there had been
distributed pro rata to its shareholders by the corporation
an amount which bears the same ratio to such ^distributed tax
haven profits as the part of such period during which the
corporation is a controlled foreign corporation bears to the
entire period.
"(2) Direct or indirect interest.—For purposes of
paragraph (l), a direct interest in a controlled foreign
corporation consists of stock in such corporation which a
Uhited States person owns directly, and an indirect interest
consists of stock in a controlled foreign corporation which
- 2 -
"SEC. 951- UNDISTRIBUTED TAX HAVEN PROFITS OF CONTROLLED FOREIGN
CORPORATIONS TAXED TO CERTAIN UNITED STATES PERSONS.
"The undistributed tax haven profits of a controlled foreign
corporation shall be included in the gross income of Uhited States
persons owning a direct or Indirect interest in such corporation
in the manner and to the extent set forth in this subpart.
"SEC. 952. CONTROLLED FOREIGN CORPORATIONS.
"For purposes of this subpart, the term 'controlled foreign
corporation' means any foreign corporation—
"(l) of which more than 50 percent of—
"(A) the total combined voting power of all
classes of stock entitled to vote, or
"(B) the total value of shares of all classes
of stock
is owned, directly or indirectly (within the meaning of
section 959), by no more than 5 United States persons on
any day during the annual accounting period of such
foreign corporation, and
"(2) which for its annual accounting period is not a
foreign personal holding company (as defined in section 552) •
"SEC. 953. AMOUNTS INCLUDED IN GROSS INCOME OF UNITED STATES
PERSONS.
"(a) Undistributed Tax Haven Profits.—
-H_WiL'V„3_ AHriSV3M.I.
Pv i7 Wd Id lflP 1961
iiNfl NOIlCIf; _'"';_.„
N0I103S S3.IA.2. _ J V u
July 28, 1961
Tentative Draft of Bill to Impose Income Tax on
U. S. Taxpayers Deriving Tax Haven Profits
through Controlled Foreign Corporations
DJO;.
. COIOT^O]__LED FOREIGN CORPORATIONS.
(a) Tax on United States Shareholders.—Part III of subchapter
N of chapter 1 (relating to income from sources without the Uhited
States) is amended by adding at the end thereof the following new
subpart:
"Subpart F - Controlled Foreign Corporations
"Sec. 951- Undistributed tax haven profits of controlled
foreign corporations taxed to certain United
States persons.
"Sec. 952. Controlled foreign corporations.
"Sec. 953- Amounts Included In gross income of Uhited
States persons.
"Sec. 954. Definitions.
"Sec. 955* Exclusion from gross Income and tax haven
profits of previously taxed earnings and
profits.
"Sec. 956* Adjustments to basis of stock in controlled
foreign corporations and of other property.
"Sec. 957- Taxes deemed paid by corporate United States
persons.
"Sec. 958. Special rules for foreign taxes paid in year
of receipt of previously taxed earnings and
profits of controlled foreign corporations.
"Sec. 959- Rules for determining stock ownership.
"~%^3->
-k(7) Tax haven insurance*
Income derived by a
controlled foreign corporation from insurance or reinsurance of
risks situated in the United States, if a related entity is the
potential beneficiary of such insurance or reinsurance.
The tax treatment to be accorded income derived by a controlled
foreign corporation engaged in construction abroad or international
transport is still under study.
srThe7typerr*or^
tions_of_the normal patte*r_^-^
object of insulating^lacoma«u
l)
W____„.-„..v.VS»i!_-..'_>'i-l~M_ft»^**^,»*-'';*i''"*'' ''
'"""""
""
^hill.wa
_tmi>^^
• t.ions. jX
would "not be applicable^Je^sgajBg^^ to the profits of
a foreign subsidiary corporation which purchased products from a
related entity if the products were used in further manufacturing,
provided the value added by such manufacturing equalled 20 percent
or more of the value of the finished product.
Provision is made in the draft for the allowance of a credit
to U.S. corporations for the income taxes paid by the controlled
foreign corporation, along the lines allowed under existing law.
The undistributed tax haven income of a controlled foreign corporation which has once been taxed would not again be taxed upon
distribution to shareholders.
T£ /I/ 7/9 T'lSC
- 3 (2) Tax haven pttrc_u_sing»6____bd___-y-- Income derived by a
controlled foreign corporation from the purchase of goods and its
sale to a related entity for use outside the country in which the
controlled foreign corporation was create^..
(3) Tax haven commission_5.ouboitfL3_aasyv- Commissions derived
—1
,
L
T-T
m^mm^mimJm^mmmmTmmmm^mymSKm
by a controlled foreign corporation from transactions similar to
those described in (l) and (2) above except that it acts as an
agent or broker instead of on its own account.
(k) Tax haven licensing # TOb«^^«r^
Income derived by a
controlled foreign corporation from rentals or royalties for the
use of patents, copyrights, trade-marks, or other property outside
the country in which the company was created, if the rjpights or
property were acquired from a related entity, and in the case of
motion picture films, television tapes and recordings, irrespective
of whether they were acquired from a related entity.
(5) Tax haven holding company.
.i^wii-ni
.minium m i
iu JI—-M»«J.U
Income derived by a controlled
•dimiHMi-ii •—•"•="• ,n r.i-ii... | irri i 'i i M"Trf_r_-"*-^l
*
h
foreign corporation from the holding of securities cs# related companies^
(6) Tax haven service ouboidioipyM
Income derived by a
controlled foreign corporation from furnishing or performing
technical, managerial, engineering or similar services if such
services are supplied to, or on behalf of, a related entity, or
if such services are managed or directed by officers or employees
transferred(for this purposeNfrom a related entityvV
"'"I
- 2/ Under the suggested legislation, tax would apply to a U. S.
shareholder owning 10 percent or more of the stock of a foreign
corporation which is controlled by five U. S. shareholders or
fewer. A controlled foreign corporation would be one in which
these U. S. shareholders centrolJ^l 50 percent or __Boro of the
stock. For the purpose of determining both control of a corporation
and a 10 percent interest in a corporation, constructive rules of
stock ownership similar to those now in the income tax law
(sec. 318 and 5*A), would be applied to stock owned by closely
related members of a family or by corporations under common control.
/ Only those profits of a controlled foreign corporation would
be taxable to the U. S. shareholders which arise out of tax haven
transactions, so that part of the profits of a controlled foreign
corporation may be taxable currently and part may be subject to/
r
continued tax deferral. In general, tax haven transactions are
those between related enterprises in which one of the parties to
the transaction derives its income from sources outside the
country in which it is created. A foreign corporation which engages
in manufacturing activity abroad would not be considered as engaging
in tax haven transactions.
The following types of income- would be treated as being
derived from tax haven transactions:
(l) Tax haven export? suboidiary. Income derived by a controlled
foreign corporation from the purchase of goods from a related
eQrpffisa&^pn and the sale of such goods for use outside the country
in which the controlled foreign corporation is created.
I
-2The draft attempts to identify in specific terms the type
of transactions typically regarded as being of a "tax haven"
variety, in that they involve a corporation created in a foreign
country which characteristically derives its income from sources
outside that country.
A corporation of this type thus consti-
tutes a buffer between such income and the U. S. parent ty
means of which it is hoped to immunize the income from U. S. tax.
C^£A*s£*~y P~ * /
Pf
TREASURY RELEASES DRAFT OF PROPOSED
"TAX HAVEN" LEGISLATION
ASE
4S§
502
ML
A draft of suggested legislation calling for a current tax
f\
on the income of U. S. shareholders derived through controlled
foreign corporations engaging in "tax haven" transactions was
made public by the Treasury Department today. The draft was
released by the Secretary of the Treasury at the request of
the Ways and Means Committee of the House of Representatives.
The Treasury and the Committee will welcome comments to
aid in the Committee's further study of this subject. The
proposals in the draft were submitted to the Committee for
legislative consideration. They constituted a revision of the
Treasury's original proposals, and were prepared in the light
of testimony presented to the Committee during the hearings on
the Treasury's original proposal.
TREASURY DEPARTMENT
WASHINGTON, D.C.
July 28, 1961
IMMEDIATE RELEASE
TREASURY RELEASES DRAFT OP PROPOSED
"TAX HAVEN" LEGISLATION
A tentative draft of suggested legislation calling for a current
tax on the income of U. S. shareholders derived through controlled
foreign corporations engaging In "tax haven" transactions was made
public by the Treasury Department today * The draft was released by
the Secretary of the Treasury at the request of the Ways and Means
Committee of the House of Representatives,.
The Treasury and the Committee will welcome comments to aid in
the Committee's further study of this subject. The proposals in the
draft were submitted to the Committee for legislative consideration*
They constituted a revision of the Treasury's original proposals, and
were prepared in the light of testimony presented to the Committee
during the hearings on the Treasury's original proposal*
The draft attempts to identify In specific terms the type of
transactions typically regarded as being of a "tax haven" variety, In
that they involve a corporation created In a foreign country which
characteristically derives its Income from sources outside that country#
A corporation of this type thus constitutes a buffer between such
income and the U. S. parent corporation by means of which it is hoped
to immunize the income from U. S* tax.
Under the suggested legislation Income tax would apply to a
U* S. shareholder owning 10 percent or more of the stock of a foreign
corporation which is controlled by five U. S. shareholders or fewer«,
A controlled foreign corporation would be one in which these U. S.
shareholders owned more than 50 percent of the stock. For the purpose
of determining both control of a corporation and a 10 percent Interest
in a corporation, constructive rules of stock ownership similar to
those now in the income tax law (sec. 318 and 5^*0* would be applied
to stock owned by closely related members of a family or by
corporations under common control.
Only those profits of a controlled foreign corporation would be
taxable to the U. S. shareholders which arise out of tax haven
transactions, so that part of the profits of a controlled foreign
corporation may be taxable currently and part may be subject to
D-186
«
2
continued tax deferral*
In general, tax haven transactions are
those between related enterprises in which one off the parties to
the transaction derives Its income from sources outside the country
In which It is created*
A foreign corporation iwhich engages in
manufacturing activity abroad would not be considered as engaging
in tax haven transactions*
The following types of income would tee treated as being derived
from tax haven transactions%
(1) Tax haven exports* Income derived by a controlled foreign
corporation from tne purchase of goods from a related entity and the
sale of such goods for use outside the country in which the controlled
foreign corporation is created.
(2) Tax haven purchasing. Income derived by a controlled foreign
corporation from the purchase of goods and its sale to a related entity
for use outside the country in which the controlled foreign corporation
was created*
(3) Tax haven commissions. Commissions derived by a controlled
foreign corporation from transactions similar to those described in
(l) and (2) above except that it acts as an agent or broker instead
of on its own account.
(4) Tax haven licensing. Income derived by a controlled foreign
corporation from rentals or royalties for the use of patents, copyrights,
trade-marks, or other property outside the country in which the company
was created, if the rights or property were acquired from a related
entity, and in the case of motion picture films, television tapes and
recordings, irrespective of whether they were acquired from a related
entity.
(5) Tax haven holding' company income. Income derived by a
controlled foreign corporation from the holding of stock or securities
in related companies.
(6) Tax haven service income. Income derived by a controlled
foreign corporation from furnishing or performing technical, managerial,
engineering or similar services if such services are supplied to, or
on behalf of, a related entity, or if such services are managed or
directed by officers or employees transferred from a related entity
for this purpose9
505
(7) Tax haven Insurance. Income derived by a controlled foreign
corporation from insurance or reinsurance of risks situated in the
United States, if a related entity is the potential beneficiary of such
insurance or reinsurance.
The tax treatment to be accorded Income derived by a controlled
foreign corporation engaged in construction abroad or International
transport is still under study.
The draft would not be applicable to the profits of a foreign
subsidiary corporation which purchased products from a related entity
if the products were used in further manufacturing, provided the value
added by such manufacturing equalled 20 percent or more of the value
of the finished product.
Provision is made in the draft for the allowance of a credit to
U. S. corporations for the income taxes paid by the controlled foreign
corporation, along the lines allowed under existing law.
The
undistributed tax haven Income of a controlled foreign corporation
which has once been taxed would not again be taxed upon distribution
to shareholders.
Text of the tentative draft of suggested legislation is attached.
July 28, 1961
Tentative Draft of Bill to Impose Income Tax on qp^
U. S. Taxpayers Deriving Tax Haven Profits
through Controlled Foreign Corporations
SEC.
0L\.
CONTOOLLED FOREIGN CORPORATIONS.
(a) Tax on Ifaited States Shareholders.--Part III of subchapter
N of chapter 1 (relating to income from sources without the Uhited
States) is amended by adding at the end thereof the following new
subpart:
"Subpart F - Controlled Foreign Corporations
"Sec. 951* Undistributed tax haven profits of controlled
foreign corporations taxed to certain Uhited
States persons.
"Sec. 952. Controlled foreign corporations.
"Sec. 953- Amounts included in gross income of Uhited
States persons.
"Sec. 95^. Definitions.
"Sec. 955- Exclusion from gross income and tax haven
profits of previously taxed earnings and
profits.
"Sec. 956. Adjustments to basis of stock in controlled
foreign corporations and of other property.
"Sec. 957. Taxes deemed paid by corporate Uhited States
persons.
"Sec. 958. Special rules for foreign taxes paid in year
of receipt of previously taxed earnings and
profits of controlled foreign corporations.
"Sec. 959. Rules for determining stock ownership.
2 -
"SEC. 951*
UNDISTRIBUTED TAX HAVEN PROFITS OF CONTROLLED FOREIGN
CORPORATIONS TAXED TO CERTAIN UNITED STATES PERSONS.
"The undistributed tax haven profits of a controlled foreign
corporation shall be included in the gross income of United States
persons owning a direct or indirect interest in such corporation
in the manner and to the extent set forth in this subpart.
• "SEC. 952. CONTROLLED FOREIGN CORPORATIONS.
"For purposes of this subpart, the term • controlled foreign
corporation1 means any foreign corporation—
"(l) of which more than 50 percent o f —
"(A) the total combined voting power of all
classes of stock entitled to vote, or
"(B) the total value of shares of all classes
of stock
is owned, directly or indirectly (within the meaning of
section 959), by no more than 5 United States persons on
any day during the annual accounting period of such
foreign corporation, and
"(2) which for its annual accounting period is not a
foreign personal holding compajoy (as defined in section 552).
"SEC. 953. AMOUNTS INCLUDED IN GROSS INCOME OF UNITED STATES
PERSONS.
"(a) Undistributed Tax Haven Profits.—
507
- 3,f
(l) Amount included.—If a foreign corporation is a
controlled foreign corporation on any day of an annual
accounting period beginning after December 31, 196l, every
Uhited States person who has a direct or indirect interest
(as described in paragraph (2)) in such corporation on the
last day in such period on which such corporation is a
controlled foreign corporation shall include in his gross
income, for his taxable year in which or with which such period
ends, that portion of the corporation's undistributed tax
haven profits for such period which is equal to the amount
that would have been distributed with respect to such direct
or indirect Interest if on such last day there had been
distributed pro rata to its shareholders by the corporation
an amount which bears the same ratio to such undistributed tax
haven profits as the part of such period during which the
corporation is a controlled foreign corporation bears to the
entire period.
"(2) Direct or indirect interest.—For purposes of
paragraph (l), a direct interest in a controlled foreign
corporation consists of stock in such corporation which a
Uhited States person ovns directly, and an indirect Interest
consists of stock in a controlled foreign corporation which
- hhe owns through one or more foreign corporations, foreign
partnerships, or estates or trusts (the gross income of
which under this subtitle includes only income from sources
within the Itoited States). For purposes of the preceding sentence
stock owned, directly or indirectly, by or for a foreign corporation, foreign partnership, or an estate or trust (the gross
income of which under this subtitle includes only income
from sources within the Uhited States) shall be considered as
being owned proportionately by its shareholders, partners, or
beneficiaries.
"(3) Less than 10 percent ownership.—No person shall be
required to include ajny amount in gross income under paragraph
(l) unless he can be considered, by applying the rules of
constructive ownership of section 959, as owning, directly
or indirectly,io percent or more of the total combined
voting power of all classes of stock entitled to vote, or of
the total value of shares of all classes of stock,of the
controlled foreign corporation.
"(b) Treatment as Dividends.—Any amount included in the
gross income of a Uhited States person under subsection (a) for any
taxable year shall be treated, except for purposes of section
902 (other than section 902 (b) if section 957 (a) (l) applies)
and except as provided in regulations prescribed by the Secretary
508
- 5or his delegate, as an amount distributed to such person as a
dividend by the controlled foreign corporation on the last day of
the annual
accounting period of such corporation.
"SEC. 95^e
DEFINITIONS.
"(a)
Uhited States Person.—For purposes of this subpart,
the term 'Uhited States person1 means—
"(1)
an individual who is a citizen or resident of
the United States,
"(2)
a domestic corporation,
"(3)
a domestic partnership, or
"(h) an estate or trust (other than an estate or
trust the gross income of which under this subtitle
includes only income from sources within the Ifaited States).
"(b) Undistributed Tax Haven Profits.-"(l) Tax haven profits.--For purposes of this subpart,
the term "tax haven profits' for an annual accounting period of
a controlled foreign corporation means the amount of its earnings and profits for such period (determined without regard to
distributions) which is attributable to tax haven transactions.
"(2) Undistributed tax haven profits.—For purposes of
this subpart, the term •undistributed tax haven profits1 of a
controlled foreign corporation for an annual accounting period
is an amount which hears the same ratio to the total undistributed earnings and profits for such period as the tax haven1
profits for such period bear to total earnings ai.d- profits for
such period (determined without regard to distributions).
-6 Tax Haven Transaction.—For purposes of this subpart
r
tax haven transaction1 means:
"(l) Purchase or sale of personal property.—
"(A) Purchase and sale—
"(i) The purchase or other acquisition of
personal property from a related person and its
sale, or
"(ii) the purchase or other acquisition of
personal property and its sale to a related person,
if such property is sold for ultimate use, consumption,
or disposition outside the country under the laws of which
the controlled foreign corporation is created or organized.
"(B) Commissions.—Services performed for a related
person in connection with—
"(i) the sale of personal property, or
"(ii) the purchase of personal, property,
if such property is sold or purchased for ultimate use,
consumption, or disposition outside the country under the
laws of which the controlled foreign corporation is created
or organized.
"(C) Special rules. ~
f,
(i) Products of processing, manufacturing, or
assembling by the controlled foreign corporation.—
For purposes of subparagraph (A), the purchase or
other acquisition of personal property and Its sale
shall include the purchase of raw materials or
manufactured products which are subjected by the
_, H
m,
W W
W
controlled foreign corporation to processing,
manufacturing, or assembling if the cost (other
than the cost of purchased materials) of such
processing, manufacturing, or assembling, is
less than 20 percent of the amounts realized from
the sales of the resulting product.
"(ii) Product of processing, manufacturing, or
assembling by a related person.--Subdivision (i) of
subparagraph (A) shall not apply to the purchase of
personal property from a related person, created or
organized in the same country as is the controlled
foreign corporation, and the sale of such property
if it is the product of processing, manufacturing,
_r
or assembling in such country by such related person
and if the cost (other than the cost of purchased
materials) of such processing, manufacturing, or
assembling is at least 20 percent of the amounts
realized from the sales of such product by the
controlled foreign corporation.
"(iii) Agricultural products.—Subdivision
(ii) of subparagraph (A) shall not apply to the
purchase or other acquisition of personal property
and its sale to a related person if such personal
property consists of agricultural or horticultural
products of the foreign country under the laws of
which the controlled foreign corporation is created
or organized.
-8 "(2) Rentals and royalties.--The receipt of rentals,
royalties, or similar amounts for the use of, or for the
privilege of using, patents, copyrights, secret processes and
formulas, good will, trade-marks, trade brands, franchises,
motion picture films, television tapes, or other rights or
property (whether real or personal), outside the country
under the laws of which the controlled foreign corporation is
created or organized if such amounts are received from any
person (whether or not related),
"(A) with respect to rights or property
acquired by the controlled foreign corporation from
a related person, or
"(B) with respect to motion picture films,
television tapes, or recordings.
"(3) Interest.—The receipt of interest on bonds, notes,
or other interest-bearing obligations of related persons.
"(4) Dividends.—The receipt of dividends from a corporation which is a related person except as provided in section 955 (b).
"(5) Personal services.--The performance or furnishing of
technical, managerial, engineering, architectural, scientific,
skilled, or like services performed outside the country in which
the controlled foreign corporation is created or organized-"(A) if such services are performed or furnished for
or on behalf of a related person, or
"(B) if such services are substantially managed or directed
by officers or employees transferred from a related person.
- 9"(6) Insurance or reinsurance.--The insurance or reinsurance of United States risks which, if they materialized, would
result directly or indirectly in compensation to a related person.
"(d) Related Persons.—For purposes of this section, two persons
are related if-"(l) such persons are an individual, estate, trust, or
partnership, and a corporation and more than 50 percent of the
total combined voting power of all classes of stock entitled to
vote, or of the total value of shares of all classes of stock,
of such corporation is owned, directly or indirectly, by or
for such individual, estate, trust, or partnership;
"(2) such persons are two corporations, one of which owns,
directly or indirectly, more than 50 percent of the total
combined voting power of all classes of stock entitled to
vote, or of the total value of shares of all classes of stock,
of the other corporation; and
"(3) such persons are corporations and more than 50 percent of the total combined voting power of all classes of
stock entitled to vote, or of the total value of shares of all
classes of stock, of one corporation, and more than 50 percent
of the total combined voting power of all classes of stock
entitled to vote, or of the total value of shares of all classes
of stock, of the other corporation are owned, directly or indirectly, by or for the same persons.
"(e) Annual Accounting Periods.—For purposes of this subpart,
the annual accounting period of any foreign corporation is the
«* 10 *
"(1) such persons are an individual, estate, trust,
or partnership, and a corporation and more than 50 percent
of the total combined voting power of all classes of stock
entitled to vote, or of the total value of shares of all
classes of stock, of such corporation is owned, directly or
indirectly, by or for such individual, estate, trust, or
partnership;
"(2) such persons are two corporations, one of which
owns, directly or indirectly, more than 50 percent of the
total combined voting power of all classes of stock entitled
to vote, or of the total value of shares of all classes of
stock, of the other corporation; and
"(3) such persons are corporations and more than 50
percent of the total combined voting power of all classes
of stock entitled to vote, or of the total value of shares of
all classes of stock, of one corporation, and more than
50 percent of the total combined voting power of all classes
of stock entitled to vote, or of the total value of shares of
all classes of stock, of the other corporation are owned,
directly or indirectly, by or for the same persons.
"(e) Annual Accounting Periods.—For purposes of this subpart,
the annual accounting period of any foreign corporation is the
annual period on the basis of which such corporation regularly
computes its income in keeping its books.
"SEC. 955. EXCLUSION FROM GROSS INCOME AND TAX HAVEN PROFITS OF
PREVIOUSLY TAXED EARNINGS AND PROFITS.
"(a) Exclusion from Gross Income.—For purposes of this
chapter, the undistributed tax haven profits for an annual
accounting period of a foreign corporation which are once included
in the gross income of a Uhited States person under section 953 (a)
(l) shall not, when distributed to such person directly or indirectly
through a chain of ownership described under section 953 (a) (2), be
again included in the gross income of such Uhited States person.
For purposes of this chapter, any amount excluded from gross
income under this subsection shall be treated by the taxpayer
as a distribution which is jxot a dividend.
"(b) Exclusion from Tax Haven Profits.—For purposes of
section 953 (a) (l), the undistributed tax haven profits for an
annual accounting period of a controlled foreign corporation which
are once included in the gross income of a United States person
under section 953 (a) (l) shall not, when distributed through a
chain of ownership described under section 953 (a) (2), be also
included in the tax haven profits of another controlled foreign
corporation in such chain for purposes of the application of section
953 (a) (l) to such other controlled foreign corporation with respect
12
to such Uhited States person.
"(c) Special Rule.—For purposes of applying subsection (a)
or (b) the Secretary or his delegate may by regulations prescribe
rules for tracing, through a chain of ownership described in
section 953 (a) (2), undistributed tax haven profits for an
annual accounting period of a controlled foreign corporation which
have once been included in the gross income of a Uhited States person.
"SEC. 956. ADJUSTMENTS TO BASIS OF STOCK IN CONTROLLED FOREIGN
CORPORATIONS AND OF OTHER PROPERTY.
"(a) Increase in Basis.—Under regulations prescribed hy the
Secretary or his delegate, the basis of a United States person's
stock in a controlled foreign corporation, and the basis of
property of a Uhited States person by reason of which he is
considered under section 953 (a) (2) as owning stock of a controlled
foreign corporation, shall be increased by the amount required to
be included in his gross income under section 953 (a) (l) with
respect to such stock or with-respect to such property, as the
case may be, bub only to the extent to which such amount is included
in gross income in the return of such person, increased or decreased
by any adjustment of such amount in any redetermination of his tax
liability.
"(b) Reduction in Basis.—
- 13 "(l) In general.—Under regulations prescribed by the
Secretary or his delegate, the adjusted basis of stock or
other property with respect to which a United States person
receives an amount which is excluded from gross income
under section 955 (a) shall be reduced by the amount so
excluded.
"(2) Amount in excess of basis.—To the extent that
an amount excluded from gross income under section 955 (a)
exceeds the adjusted basis of the stock or other property
with respect to which it is received, the amount shall be
treated as gain from the sale or exchange of property.
"SEC. 957. TAXES DEEMED PAID BY CORPORATE UNITED STATES PERSONS.
"(a) Taxes Paid by a Foreign Corporation.—For purposes of
subpart A of this part, if there is included, under section
953 (a) (l), in the gross income of a domestic corporation the
undistributed tax haven profits—
"(l) of a foreign corporation 10 percent of the voting
stock of which is directly owned by such domestic corporation,
"(2) of a foreign corporation at least 50 percent of
the voting stock of which is directly owned by a foreign
corporation at least 10 percent of the voting stock of which
is in turn directly owned by such domestic corporation,
then, under regulations prescribed by the Secretary or his delegate,
such domestic corporation shall be deemed to have paid the same
proportion of the total income, war profits, and excess profits
taxes paid (or deemed paid, if paragraph (l) and section 902 (b)
apply) to a foreign country or possession of the Uhited States for
the annual accounting period which the amount of such undistributed
tax haven profits bears to the amount of the total earnings and
profits. Taxes deemed paid under this subsection shall be included
in gross income in the same manner as amounts described in section
953 (a) (1).
"(b) Application of Section 902.—
"(l) Taxes deemed paid by domestic corporation.—If a
domestic corporation receives a distribution from a foreign
corporation, any portion of which is excluded from gross
income under section 955, the income, war profits, and
excess profits taxes paid or deemed paid by such foreign
corporation to any foreign countiy or to any possession of
the Uhited States in connection with the earnings and
profits of such foreign corporation from which such distribution is made shall not be taken into account for purposes of
section 902 to the extent such taxes were deemed paid by such
domestic corporation under subsection (a) for any prior
taxable year.
- 15 "(2) Taxes paid by foreign corporation and not deemed
paid by domestic corporation.—Any portion of a distribution
f*om a foreign corporation received by a domestic corporation
^Hhich is excluded from gross income under section 955 shall
be treated by the domestic corporation as a dividend, solely
for purposes of taking into account under section 902 any income,
war profits, or excess profits taxes paid to any foreign country
or to any possession of the Uhited States, on or with respect
to the accumulated profits of such foreign corporation from which
such distribution is made, which were not deemed paid by the
domestic corporation under subsection (a) for any prior taxable
year.
"SEC. 958. SPECIAL RULES FOR FOREIGN TAXES PAID IN YEAR OF RECEIPT
OF PREVIOUSLY TAXED EARNINGS AND PROFITS OF CONTROLLED
FOREIGN CORPORATIONS.
"(a) Increase in Section 90^ Limitation.—In the case of any
taxpayer who—
"(l) either (A) chose to have the benefits of subpart A
of this part for a taxable year in which he was required under
section 953 (a) (l) to Include in his gross income the
undistributed tax haven profits of a controlled foreign corporation, or (B) did not pay or accrue for such taxable year any
- lb -
income, war profits, or excess profits taxes to any foreign
country or to any possession of the Uhited States, and
"(2) chooses to have the benefits of subpart A of this
part for the taxable year in which he receives a distribution
or amount which is excluded from gross income under section
955 and which is attributable to undistributed tax haven
profits of the controlled foreign corporation which were
Included in his gross income for the taxable year referred to
In paragraph (l), and
"(3) for the taxable year in which such distribution
or amount is received, pays, or is deemed to have paid, or
accrues Income, war profits, or excess profits taxes to a
foreign country or to any possession of the United States
with respect to such distribution or amount,
the applicable limitation under section 90^ for the taxable year
In which such distribution or amount is received shall be increased
• as provided in subsection (b), but such increase shall not exceed
the amount of such taxes paid, or deemed paid, or accrued with
respect to such distribution or amount.
"(b) Amount of Increase.—The amount of increase of the
applicable limitation under section 90^ (a) for the taxable year
In which the distribution or amount referred to in subsection
(a) (2) is received shall be an amount equal to—
- 17"(l) the amount by which the applicable limitation
under section 90^ (a) for the taxable year referred to in
subsection (a) (l) was increased by reason of the inclusion
in gross income of the amount of undistributed tax haven
profits of the controlled foreign corporation included under
section 953 (a) (l) and the amount, if any, Included in gross
Income under section 957 (a) with respect to the amount so
included under section 953 (a) (l), reduced by
"(2) the amount of any Income, war profits, and excess
profits taxes paid, or deemed paid, or accrued to any foreign
country or possession of the Uhited States which were
allowable as a credit under section 901 for the taxable
year referred to in subsection (a) (l) and which would not
have been allowable but for the inclusion in gross Income of
the amounts described in paragraph (l) of this subsection.
"(c) Cases In Which Taxes Not to be Allowed as Deduction-—In
the case of any taxpayer who'll) chose to have the benefits of subpart A of this
part for a taxable year in which he was required under
section 953 (a) (l) to include in his gross income the
undistributed tax haven profits of a controlled foreign
corporation, and
- 18 - •
"(2)
does not choose to have the benefits of subpart
A of this part for the taxable year in which he receives a
distribution or amount which is excluded from gross income
under section 955 and which is attributable to undistributed
tax haven profits of the controlled foreign corporation
which were included in his gross ihcome for the taxable
year referred to in paragraph (l),
no deduction shall be allowed under section l6k for the taxable
year in which such distribution or amount is received for any income,
war profits, or excess profits taxes paid or* accrued to any foreign
country or to any possession of the Uhited States on or with •
respect to such distribution or amount.
"SEC. 959* RULES FOR DETERMINING STOCK OWNERSHIP.
"(a) Section 318 (a)(relating to constructive ownership of
stock) shall apply to the extent that the effect is to make a
foreign corporation a controlled foreign corporation under section
952, is to make a person taxable under section 953 (a) (3), or is
to make persons related persons under section 95^ (d) except-"(1) In applying paragraph (l) (A), subdivision (ii)
shall be deemed to apply to the individual's brothers and
sisters (whether by the whole or half blood), ancestors, and
lineal descendants.
C1 K
- 19 "(2) In applying the first sentence of subparagraphs
(A) and (B), and in applying subdivision (i) of subparagraph (c),
of section 318 (a) (2), if a partnership, estate, trust, or
corporation owns, directly or indirectly, more than 50 percent
of the total combined voting power of all classes of stock
entitled to vote, or of the total value of shares of all classes
of stock, of a corporation, it shall be considered as owning all
of the outstanding stock of such corporation.
"(3) In applying subparagraph (c) of section 318 (a) (2)—
"(A) For purposes of subdivision (i) thereof, the
50 percent limitation contained in subparagraph (c) shall
not apply; and
"(B) For purposes of subdivision (ii) thereof, a
5 percent limitation shall apply in lieu of the 50 percent
limitation contained in subparagraph (c), and stock owned
by a corporation by reason of the application of subdivision (ii)
shall not be considered as owned by it for purposes of applying subdivision (i) in order to make another the constructive
owner of such stock.
"(b) Technical and Clerical Amendments.—
(l) Section 901 (relating to foreign tax credit) is amended
by striking out "section 902" and inserting in lieu thereof
"sections 902 and 957".
- 20 -
(2) Section 6O38 (b) (relating to effect of failure
to furnish information required by section 6O38 (a)) is
amended by inserting before "the amount of taxes paid or
deemed paid" in the first sentence the following: "and
in applying section 957 (relating to foreign tax credit for
corporate shareholders of controlled foreign corporation)
to such domestic corporation for any taxable year,".
(c) Effective Date.—The amendments made by this section shall
apply with respect to annual accounting periods of foreign corporations beginning after December 31* 1961, and to taxable years in
which or with which such annual accounting periods end.
TREASURY DEPARTMENT
WASHINGTON, D.C
July 31, 1961
FOR IMMEDIATE RELEASE
SUBSCRIPTION FIGURES FOR CURRENT EXCHANGE OFFERING
The results of the Treasury's current exchange offering of
3-1/4$ notes dated August 1, 1961, maturing November 15, 1962,
3-3/4$ notes dated August 1, 1961, maturing August 15, 1964, and
3-7/8$ bonds of 1968 (addl. issue) dated June 23, 1960, maturing May 15, 1968
are summarized in the following tables.
Maturing Issues
3-1/8$ Ctfs., C-1961
4J. Notes, A-1961
2-3/4$ Bonds of 1961
1-1/2$ Notes, E0-1961
Total
Exchange Subscriptions
3-1/4$ 3-3/4$ 3-7/8$
Notes
Notes
Bonds
Total
(In mill .7>ns)
Eligible
for Exchange
$4,558
657
679
183
$6,077
$ 7,829
2,136
2,239
332
$12,536
vi
District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
Total
D-187
3-1/8$ Ctfs.,
Series C-1961
*
$3,045
994
891
89
$5,019
$130
291
317
8
$746
$ 7,733
1,942
1,887
280
$11,842
$ 96
194
352
52
$694
"
2-3/4$ Bonds 1-1/2$ Notes, Total for
4$ Notes,
Series A-1961 of 1961
Series EO-1961 H-1962 Notes
371,000
$
34,332,000 $ 36,980,000 $ 43,776,000 $
280,983,000 304,331,000 140,288,000
3,879,284,000
1,185,000
19,483,000
10,726,000
25,676,000
81,772,000
7,259,000
32,882,000
101,610,000
7,901,000
1,670,000
6,632,000
39,269,000
13,618,000
2,978,000
22,890,000
49,728,000
103,880,000
19,884,000
74,057,000
143,279,000
18,920,000
18,591,000
2,248,000
32,227,000
18,844,000
18,648,000
1,233,000
11,533,000
12,625,000
23,705,000
2,230,000
19,669,000
18,532,000
12,714,000
3,247,000
23,069,000
110,171,000
40,230,000
560,000
190,422,000
1,568,000
1,221,000
7,601,000
$4,557,699,000
For Cash
Redemption
$656,890,000
$678,790,000
$183,153,000
$
115,459,000
4 ,604,886,000
57,070,000
223,523,000
55,472,000
89,214,000
341,100,000
71,986,000
50,258,000
58,229,000
57,562,000
341,383,000
10,390,000
$6,076,532,000
- 2
51 /
Bxchanges for 5-5/4$ Notes of Series E-1964
federal Reserve 3- 1/8$ Ctfs.,
^strict
Series C-1961
loston
few York
ttladelphia
lleveland
(ichmond
klanta
Jhicago
it. Louis
Minneapolis
Lisas City
Dallas
San Francisco
treasury
Total
$
4$ Notes,
2-3/4$ Bonds 1-1/2$ Notes,
Series A-1961 of 1961
Series £0-1961
55,799,000 $ 40,499,000
2 ,516,080,000 448,598,000
13,022,000
25,606,000
41,411,000
61,193,000
15,887,000
12,418,000
43,843,000
34,183,000
165,970,000 158,162,000
26,108,000
38,315,000
11,476,000
35,580,000
31,187,000
54,691,000
11,466,000
40,291,000
109,845,000
42,713,000
1,537,000
2,780,000
$ 38,574,000
410,066,000
24,224,000
54,275,000
17,104,000
29,803,000
152,199,000
31,358,000
23,421,000
36,671,000
26,560,000
45,050,000
2,166,000
$ 1,396,000
49,702,000
1,085,000
2,700,000
1,745,000
1,173,000
16,475,000
2,602,000
1,142,000
7,042,000
978,000
2,800,000
$3 ,044,874,000 $993,786,000
$891,471,000
$88,840,000
m>
u»
Total for
E-.1964 Notes
136,268,000
3 ,424,446,000
63,937,000
159,579,000
47,154,000
109,002,000
492,806,000
98,383,000
71,619,000
129,591,000
79,295,000
200,408,000
6,483,000
$5 ,018,971,000
Exchanges for 3-7/8$ Bonds of 1968 (Additional Issue)
Federal Reserve
District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St* Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
Total
3-1/8$ C t f s . ,
Series C-1961
2-3/4$ Bonds 1-1/2$ Notes,
4 $ Notes,
Series EO-1961
Series A-1961 o f 1 9 6 1
$ 14,125,000
82,622,000
2,436,000
1,164,000
257,000
3,630,000
11,152,000
1,617,000
712,000
3,462,000
1,877,000
6,475,000
104,000
$ 18,094,000
102,379,000
5,993,000
12,439,000
5,354,000
11,175,000
47,478,000
13,424,000
6,571,000
19,898,000
15,879,000
11,980,000
20,281,000
$ 11,205,000
173,107,000
8,240,000
17,393,500
2,491,500
3,648,000
35,839,500
7,446,000
4,167,500
12,621,500
6,487,500
13,153,000
21,282,000
$
8,000
4,220,000
54,000
166,000
30,000
115,000
1,595,000
746,000
30,000
634,000
554,000
104,000
$129,633,000
$290,945,000
$317,082,000
$8,256,000
a*
•»
Total for
Bonds o f 1 9 6 8
$ 43,432,000
362,328,000
16,723,000
31,162,500
8,132,500
18,568,000
96,064,500
23,233,000
11,480,500
36,615,500
24,797,500
31,712,000
41,667,000
$745,916,000
- o-
Maturing Issues
3-1/8$ Ctfs., C-1961
4$ Notes, A-1961
2-3/4$ Bonds of 1961
1-1/2$ Notes, E0-1961
Total
*-> •=_ v /
lligible for Exchange
Federal Reserve
iblicly Held
Banks and Government Accounts
(In millions)
For Cash RedeniDtion
$ of Public
$ of Total
Holdings
Outstanding
$2,957
2,081
2,127
327
$4,872
55
112
5
1.2
9.1
15.7
15.7
3.2
9.3
16.5
15.9
$7,492
$5,044
5.5
9.3
C1 Q
B M& far at tls& law jarlw urn maipted
^ iC KJ
TREASURY DEPARTMENT
WASHINGTON. D.C.
July 31, 1961
FOR RELEASE A. M. NEWSPAPERS, Tuesday August 1, 1961
RESULTS OF TREASURY'S IdEEKLY BILL OFFERING
The Treasury Department announced last evening that the tenders for two series o
Treasury bills, one series to be an additional issue of the bills dated May U, 1961,
and the other series to be dated August 3, 1961, which were offered on July 26, were
opened at the Federal Reserve Banks on July 31. Tenders were invited for $1,100,000,000,
or thereabouts, of 91-day bills and for $600,000,000, or thereabouts, of 182-day bills.
The details of the two series are as follows:
RANGE OF ACCEPTED
COMPETITIVE BIDS:
91-day Treasury bills
maturing November 2, 1961
Approx. Equiv.
Price
Annual Rate
2.271$
99.U26
2.3lU$
99.Ul5
2.300$ 1/
99.U19
.__*_-__w<_»w^B-„^__i^w_i.^B^^--^wwii.-^»«i->i--i^^__-a^fciM>»«^-*w»*^
High
Low
Average
mZmm
m*m
i__n i m
IM.W_-J
182-day Treasury bills
maturing February 1, 1962
Approx. Equiv.
Price
Annual Rate
2.538$
98.717 a/
98.702
2.567$
98.707
2.557$ 1/
a/ Excepting one tender of $100,000
89 percent of the amount of 91-day bills bid for at the lox* price was accepted
7_4 percent of the amount of 182-day bills bid for at the low price was accepted
Accepted
Applied For
Accepted
Applied For
District
Boston
1,080,000
$
33,3U2,000 $
$ k,730,000 $
1U,337,000
New York
523,298,000
1,399,179,000
937,988,000
718,38U,000
Philadelphia
1,301,000
25,206,000
6,311,000
9,820,000
Cleveland
10,966,000
25,686,000
16,609,000
25,686,000
Richmond
1,295,000
8,959,000
1,295,000
8,959,000
Atlanta
3,176,000
21,028,000
3,836,000
18,328,000
Chicago
27,672,000
188,765,000
113,637,000
125,995,000
St. Louis
2,8U6,000
2i*,193,000
3,8i|6,000
19,193,000
Minneapolis
3,01U,000
26,085,000
5,01U,000
20,865,000
Kansas City
U8,563,000
18,1471,000
37,2U3,000
i2,UU5,ooo
Dallas
13,967,000
2,1421,000
13,967,000
2,326,000
San Francisco
000
97,881,000
22,090,000
88,111,
10,899,000
000 c/
r
TOTALS
$l,912,b ?C000
£L,10<_y3BB,000 b/ $1,136,2U8,000
$ 600,318,
b/ Includes $210,971,000 noncompetitive tenders accepted at the average price of 99.U19
c/ Includes $38,930,000 noncompetitive tenders accepted at the average price of 98.707
1/ On a coupon issue of the same length and for the same amount invested, the return on
these bills would provide yields of 2.35$, for the 91-day bills, and 2.63$ for the
182-day bills. Interest rates on bills are quoted in terms of bank discount with
the return related to the face amount of the bills payable at maturity rather than
the amount invested and their length in actual number of days related to a 360-day
year. In contrast, yields on certificates, notes, and bonds are computed in terms
of interest on the amount invested, and relate the number of days remaining in an
interest payment period to the actual number of days in the period, with semiannual
compounding if more than one coupon period is involved*
D-188
-2-
$?.,
University in the fall semester of 1960 where he studied problems
of underdeveloped countries. During World War II he served in the
South Pacific Theater.
In August, 1959, Mr. Bullitt organized the book airlift to
Moscow to reopen the Bookmobile at the American National Exhibition
He was elected to the Municipal Council, Franklin Township, Somerse
County, New Jersey last year.
Mr. Bullitt, 36, was born in Philadelphia. He married the
former Lelia Myers Wardwell in November 1954. They have a son,
Tommy, aged 5, and a daughter, Clarissa, aged 3.
oOo
J{J{
J
£', 'H>
^9
H m s i i / , J u l y _3/, t<jfM
JOHN C. BULLITT NAMED DEPUTY ASSISTANT SECRETARY
OF THE TREASURY
Treasury Secretary Douglas Dillon today announced the appointment
of John C. Bullitt, an attorney from Princeton, N. J., as Deputy
Assistant Secretary of the Treasury.
Mr. Bullitt will assist Assistant Secretary John M. Leddy in
carrying out the Departments responsiblities in international
financial and monetary affairs.
Mr. Bullitt has been with the law firm of Shearman & Sterling
of New York City, where he specialized in general corporate practice
and in negotiating- domestic and foreign loan transactions for the
firm's banking clients. In addition to his law practice Mr. Bullitt
operates a sheep farm in Griggstown, New Jersey.
Mr. Bullitt received his A. B. degree from Harvard in 1950 and
his law degree from the University of Pennsylvania Law School in
1953. He is a member of the Bar Association of the City of New York.
He was a visiting student at Woodrow Wilson School at Princeton
J
A
5? Q
TREASURY DEPARTMENT
WASHINGTON, D.C
July 31, 1961
FOR RELEASE: 5:00 P.M.
Monday, July 31, 196l
JOHN C. BULLITT NAMED DEPUTY ASSISTANT SECRETARY
OF THE TREASURY
Treasury Secretary Douglas Dillon today announced the appointment of John C. Bullitt, an attorney from Princeton, N. J., as
Deputy Assistant Secretary of the TreasuryMr. Bullitt will assist Assistant Secretary John M. Leddy In
carrying out the Department's responsibilities In international
financial and monetary affairs.
Mr. Bullitt has been with the law firm of Shearman & Sterling
of New York City, where he specialized in general corporate practice
and in negotiating domestic and foreign loan transactions for the
firm's banking clients. In addition to his law practice Mr. Bullitt
operates a sheep farm in Griggstown, New Jersey.
Mr. Bullitt received his A.B. degree from Harvard In 1950 and
his law degree from the University of Pennsylvania Law School in
1953. He Is a member of the Bar Association of the City of
New York. He was a visiting student at Woodrow Wilson School at
Princeton University in the fall semester of i960 where he studied
problems of underdeveloped countries. During World War II he
served in the South Pacific Theater.
In August, 1959, Mr. Bullitt organized the book airlift to
Moscow to reopen the Bookmobile at the American National Exhibition.
He was elected to the Municipal Council, Franklin Township,
Somerset County, New Jersey, last year.
Mr. Bullitt, 36, was born in Philadelphia. He married the
former Lelia Myers Wardwell in November 195^. They have a son,
Tommy, aged 5, and a daughter, Clarissa, aged 3.
0O0
D-189
c;
STATEMEHT BY ASSISTANT SECRETARY OF THE TREASURY JOHN M. LEDDY
AMENDMENT OF THE ARTICLES OF AGREEMENT OF THE INTERNATIONAL
FINANCE CORPORATION BEFORE THE SENATE FOREIGN RELATIONS
COMMITTEE. MONDAY. JULY 31. 1961, 10:30 A.M.
rygWn»»^U!MI_W«-W.l B I ||U M |-||ff-Bqft |
Chairman and Members of the Committees
I am glad to have this opportunity to appear in support
of legislation to authorize United States approval of an
amendment to the Articles of Agreement of the International
Finance Corporation* This amendment would make it possible
for the Corporation to make equity investments under limited
conditions* It would improve the Corporations effectiveness
in investing in the developing countries and would, therefor
be consistent with the purposes of the United States in parti
pating in the Corporation.
The IFC is an affiliate of the International Bank for
Reconstruction and Development, or World Bank, which has had
an impressive record under the leadership of its President,
Mr. Eugene Black. The Corporation has 59 member countries
and an authorized capital of $100 million, of which $96.6
million has been paid in dollars. The United States subscrip-
tion, which we paid when we joined in 1956, is $35.2 million,
or 36.4&«
52» 2 The Corporation provides a multilateral source of
capital which directly encourages the private enterprise
sectors of the developing countries of the free world.
IFC invests in small or medium-sized private enterprise
projects, generally those involving light and medium
manufacturing or production of basic materials.
Since its inception in 1956, the Corporation has made
40 investment commitments in 18 countries totaling $44 million
9
of which $24 million has actually been disbursed. Its
investments average a little over $1 million each in size.
Additional private investment funds, committed alongside the
funds of the IFC, have amounted to over $125 million, or
roughly $3 of new private investment stimulated by each $1
of IFC investment. Thus, the total investment generated by
IFC participation has amounted to nearly $170 million.
The legislation before you today is necessary because
of the limitation in Article III, Section 2(a) in IFC's
Articles that:
"....financing [by the Corporation] is not to
take the form of investments in capital stock.18
526
«_» "* f_s
This provision has sharply restricted IFC°s freedom of action
in making investments and has forced it to resort to convertible debentures, long-term stock options, and other means
of making investments on terms approaching that of equity
participation.
These alternative techniques, which have been resorted
to in order to avoid direct stock purchase, are often complex, cumbersome, and unfamiliar to businessmen in many of
the developing countries. A detailed explanation of these
problems and of the need for authority to make equity investments is contained in a memorandum of February 10, 1961, from
the President of the Corporation which I would like to submit
for the record.
The purpose of the original limitation on the power of
the Corporation to invest in common stock, was intended to
keep the Corporation out of the business of day-to-day
management. The present proposal, while permitting IFC to
make investments in the form of stock, would not project the
Corporation into a management position in the firms in which
it invests. Management responsibilities would continue to
lie with the private owners of these firms. This amendment
would not alter those basic responsibilities.
527
- 4 The proposed amendment to IFC's Articles would eliminate
Article III, Section 2, as presently drafted and substitute
a new Section which would read:
"The Corporation may make investment of its
funds in such form or forms as it may deem
appropriate in the circumstances."
In addition, Article III, Section 3, Subsection (iv), which
now reads
"The Corporation shall not assume responsibility
for managing any enterprise in which it has
invested"
would be amended by adding
"....and shall not exercise voting rights for
such purpose or for any other purpose which,
in its opinion, properly is within the scope
of managerial control."
With these changes the Corporation will be in a position
to make equity investments and to exercise voting rights when
legally required in connection with such matters as Corporate
reorganization, increase of capitalization, etc* It would
however be enjoined from voting on questions properly within
the management's sphere.
52*>
- 5 It is in the interest of the United States to give the
IFC this new flexibility. The need for it has been demonstrated by the course of IFCfs operations in the last five
yearse The Board of Directors of the Corporation has unanimously recommended the adoption of this amendment, and the
National Advisory Council on International Monetary and
Financial Problems has endorsed the action. On June 19, the
&_mse of Representatives approved this measure by a vote of
329 to 18.
This legislation would authorize the Secretary of the
Treasury, as United States Governor of the IFC, to vote in
favor of the amendment. I recommend that the Committee give
its support to passage by the Congress of this bill.
Treas.
HJ
10
.A13P4
v.126
U.S. Treasury Dept.
Press Releases
U.S. TREASURY LIBRARY
1 0031498
1
,'.
@FedFRASER