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LIBRARY
pniPfM 5030

JUN 1 5 1972
TREASURY DEPARTMENT

- 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.

fBanking institutions generally may submit
- 2 - /tenders for account of customers provided
J the names of the customers are set forth
1 in such tenders.
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 incorpo-

rated banks and trust companies and from responsible and recognized dealers in inv

ment securities. Tenders from others must be accompanied by payment of 2 percent o
the face amount of Treasury bills applied for, unless the tenders are accompanied
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 submit-

ting 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 tender

in whole or in part, and his action in any such respect shall be final. Subject to

these reservations, noncompetitive tenders for $ 200,000or less for the additional
bills dated

October 15, 1961
y ( 91
days remaining until maturity date on
'
5p£x£
2$3xx)c
April 12, 1962
) and noncompetitive tenders for $ lpp, QQQ 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 respec-

tive issues. Settlement for accepted tenders in accordance with the bids must be
made or completed at the Federal Reserve Bank on January 11, 1962 , in cash or

other immediately available funds or in a like face amount of Treasury bills mat
ing January 11, 1962 . Cash and exchange tenders will receive equal treatment.

xp^E
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 eyaniafclaBh* as- such, and

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE, W8®E$ffl% January 2, 1962
3Q0QOQQQQOCXXXXXXlpgpG^^
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 January 11, 1962 , in the amount
of $1,700,575,000 , as follows:

91 -day bills (to maturity date) to be issued January 11. 1962 y

"xJ&jF

j^T
in the amount of $1,100,000,000 , or thereabouts, represent-

ing an additional amount of bills dated October 15, 1961 ,
and to mature

April 12, 1962

amount of $600,142,000

, originally issued in the

y the additional and original bills

to be freely interchangeable.
182 -day bills, for $600,000,000 , or thereabouts, to be dated
January 11. 1962 y and to mature July 12. 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 closin
hour, one-thirty o'clock p.m., Eastern Standard time, Monday, January 8, 1962

Tenders will not be received at the Treasury Department, Washington. Each tende
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
mmmu,juiuu*mmn«iLnmmMt]>Mii>»mmsrsnmmMUt,Mii»uwiuw

FOR IMMEDIATE RELEASE

mi. LIIHH mi

]

•

—

•

—

WASHINGTON, D.C.
January 2, 1962

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 January 11,1962, In the amount of
$1,700,573,000, as follows:
91-day bills (to maturity date) to be issued January 11, 1962,
in the amount of $1,100,000,000, or thereabouts, representing an
additional amount of bills dated October 13, 19ol, and to
mature April 12, 1962, originally Issued in the amount of
$600,142,000,
the additional and original bills to be freely
interchangeable.
182-day bills, for $600,000,000, 0r thereabouts, to be dated
January 11, 1962, and to mature July 12, 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 Standard
time, Monday, January 8, 1962.
. 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.
Banking institutions generally stay submit tenders for account of
customers provided the names of the customers are set forth In such
tenders. Others than banking institutions will not be permitted to
submit tenders except for their own account. Tenders will be received
•without deposit from incorporated banks and trust companies and from
responsible and recognized dealers in investment securities
Tenders
from others must be accompanied by payment of 2 percent of the face
amount of Treasury bills applied for, unless the tenders are
C
D-^48
or
?rust comjany" eXPre3S gUaranty of payment b^ an incorporated bank

- 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
October 13, 196l, (91-days remaining until maturity date on
April 12, 1962)
and noncompetitive tenders for $100,000
or less for the 182-day bills without stated price from any one
bidder will be accepted in full at the average price (in three
decimals) of accepted competitive bids for the respective Issues.
Settlement for accepted tenders in accordance with the bids must be
made or completed at the Federal Reserve Bank on January 11, 1962,
in cash or other immediately available funds or in a like face
amount of Treasury bills maturing January 11, 1962. Cash and
exchange tenders will receive equal treatment. Cash adjustments
will be made for differences between the par value of maturing
bills accepted in exchange and the issue price of the new bills.
The Income derived from Treasury bills, whether Interest or
gain from the sale or other disposition of the bills, does not have
any exemption, as such, and loss from the sale or other disposition
of Treasury bills does not have any special treatment, as such,
under the Internal Revenue Code of 195^. The bills are subject to
estate, inheritance, gift or other excise taxes, whether Federal or
State, but are exempt from all taxation now or hereafter imposed on
the principal or interest thereof by any State, or any of the
possessions of the United States, or by any local taxing authority.
For purposes of taxation the amount of discount at which Treasury
bills are originally sold by the United States is considered to be
interest. Under Sections b$h (b) and 1221 (5) of the Internal
Revenue Code of 195^ the amount of discount at which bills issued
hereunder are sold is not considered to accrue until such bills are
sold, redeemed or otherwise disposed of, and such bills are excluded
from consideration as capital assets. Accordingly, the owner of
Treasury bills (other than life insurance companies) issued hereunder
need include in his income tax return only the difference between
the price paid for such bills, whether on original issue or on
subsequent purchase, and the amount actually received either upon
sale or redemption at maturity during0O0
the taxable year for which the
return is made, as ordinary gain or loss.
Treasury Department Circular No. 4l8, Revised, and this notice,
Federal
prescribe
of. theirReserve
issue.
the terms
Bank
Copies
of
orthe
Branch.
of Treasury
the circular
billsmay
andbegovern
obtained
the from
conditions
any

4
^muary 3, 1962
Ii«g0IATE RELEASE
TKSASimY TO RAISE $L-l/Z 70 $l-j/^ BILLXOST
Ifca Treasury will receive tender* on Tuesday, Jaguar? 9, 19^2,
for $2 billion, or thereabouts, of Treasury Bills to be dated
January X§, 1962, and to nature on January 15, 1963. Sfet £*roceed* of
these bill* will be used to pay off $1*0/2 billion of OBft-year Treasury3
Bills which come due on January $5. 1962, sad to supply **• Treasury with
$500 million of new cash to aeet la pert its current cash retail aw gats,

today*
In addition id the $500 million of new cash to be rallied ia this
aactioa, the Treasury will anaomee duriag t&e latter part of next v&tk
the salefcf cash of additional Treasury securitiee saoustia*; to about
$1 to *1-1/^ billion.
t

Ene cash to be borrowed in these operatioaa isUI* it is estJjnted,

in the abaesee of any unforeseen developsanta, neat tte Treasury's oaa*.
re<3Uireawnts m t l l the latter part of March*

9--S? / - %J (j
wrHeffelflnger/gws V \

TREASURY DEPARTMENT
WASHINGTON, D.C.
FOR IMMEDIATE RELEASE

\ Q

January 3, 1962

TREASURY TO RAISE $1-1/2 TO $1-3A BILLION
NEW CASH IN JANUARY
The Treasury will receive tenders on Tuesday, January 9, 1962,
for $2 billion, or thereabouts, of Treasury Bills to be dated
January 15, 1962, and to mature on January 15, 1963*

^ e proceeds of

these bills will be used to pay off $l-l/2 billion of one-year Treasury
Bills which come due on January 15, 1962, and to supply the Treasury with
$500 million of new cash to meet in part its current cash requirements.
The customary invitation for tenders to these bills is being issued
today.
In addition to the $500 million of new cash to be raised in this
auction, the Treasury will announce during the latter part of next week
the sale for cash of additional Treasury securities amounting to about
$1 to $1-1/4 billion.
The cash to be borrowed in these operations will, it is estimated,
in the absence of any unforeseen developments, meet the Treasury1 s cash
requirements until the latter part of March.

P-3^9

- 3-

are exempt from all taxation now or hereafter imposed on the principal or int

thereof by any State, or any of the possessions of the United States, or by a

local taxing authority. For purposes of taxation the amount of discount at wh

Treasury bills are originally sold by the United States is considered to be i

terest. Under Sections 454 (b) and 1221 (5) of the Internal Revenue Code of 1

the amount of discount at which bills issued hereunder are sold is not consid

to accrue until such bills are sold, redeemed or otherwise disposed of, and s

bills are excluded from consideration as capital assets. Accordingly, the own

of Treasury bills (other than life insurance companies) issued hereunder need

clude in his income tax return only the difference between the price paid for

bills, whether on original issue or on subsequent purchase, and the amount ac

received either upon sale or redemption at maturity during the taxable year f
which the return is made, as ordinary gain or loss.

Treasury Department Circular No. 418 (current revision) and this notice, pre-

scribe the terms of the Treasury bills and govern the conditions of their iss

Copies of the circular may be obtained from any Federal Reserve Bank or Branc

- 2-

banking institutions will not be permitted to submit tenders except for their
account. Tenders will be received without deposit from incorporated banks and

trust companies and from responsible and recognized dealers in investment secu

Tenders from others must be accompanied by payment of 2 percent of the face am

of Treasury bills applied for, unless the tenders are accompanied by an expres
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

Treasury Department of the amount and price range of accepted bids. Those subm

ting tenders will be advised of the acceptance or rejection thereof. The Secre

of the Treasury expressly reserves the right to accept or reject any or all te

in whole or in part, and his action in any such respect shall be final. Subjec
to these reservations, noncompetitive tenders for $ 400.000 or less without

stated price from any one bidder will be accepted in full at the average price
three decimals) of accepted competitive bids. Settlement for accepted tenders

accordance with the bids must be made or completed at the Federal Reserve Bank
January 15, 1962

in cash or other immediately available funds or in a like

face amount of Treasury bills maturing j^mi^rj 15v 1962 Cash and exchange

tenders will receive equal treatment. Cash adjustments will be made for differ

ences between the par value of maturing bills accepted in exchange and the iss
price of the new bills.

The income derived from Treasury bills, whether interest or gain from the sale

or other diipoiition of the bills, does not have any exemption, as such, and l

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 sub

to estate, inheritance, gift or other excise taxes, whether Federal or State, b

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
Wednesday, January-3, 1962 . m
^^ TREASURY INCREASES 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 January 15. 1962 y in the amount
of $ 1,501,672,000

, to be issued on a discount basis under competitive and

noncompetitive bidding as hereinafter provided. The bills of this series wil
dated January 15, 1962 , and will mature January 15, 1965 , when

the face amount will be payable without interest. They will be issued in bea

form only, and in denominations of $1,000, $5,000, $10,000, $50,000, $100,00
$500,000 and $1,000,000 (maturity value).
Tenders will be received at Federal Reserve. Banks and Branches up to the

closing hour, one-thirty p.m., Eastern Standard time, Tuesday, January 9. 19
x£&jbc
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 tende

price offered must be expressed on the basis of 100, with not more than thre

imals, e. g., 99.925. Fractions may not be used. (Notwithstanding the fact t

these bills will run for 565 days, the discount rate will be computed on a b

discount basis of 360 days, as is currently the practice on all issues of Tr
bills.) It is urged that tenders be made on the printed forms and forwarded

the special envelopes which will be supplied by Federal Reserve Banks or Bra
on application therefor.
Banking institutions generally may submit tenders for account of customers

provided the names of the customers are set forth in such tenders. Others th

36^

January 3* 1962
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 January 15, 1962, in
the amount of $1,501,672,000, to be issued on a discount basis under
competitive and noncompetitive bidding as hereinafter provided. The
bills of this series will be dated January 15, 1962, and will mature
January 15, 1963, 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, $50,000, $100,000 $500,000
and $1,000,000 (maturity value).
Tenders will be received at Federal Reserve Banks and Branches
up to the closing hour, one-thirty p.m., Eastern Standard time,
Tuesday, January 9, 1962. 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 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 bills.) It
is urged that tenders be made on the printed forms and forwarded in
the special envelopes which will be supplied by Federal Reserve
Banks or Branches on application therefor.
Banking institutions generally may submit tenders for account of
customers provided the names of the customers are set forth in such
tenders. Others than banking institutions will not be permitted to
submit tenders except for their own account. Tenders will be
received without deposit from incorporated banks and trust companies
and from responsible and recognized dealers in investment securities.
Tenders from others must be accompanied by payment of 2 percent 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
D-350
and
price
of accepted
Those
submitting
will
advised
of range
the acceptance
orbids.
rejection
thereof.
Thetenders
Secretary
ofbe

- 2 the Treasury expressly reserves the right to accept or reject any or
all tenders, in whole or in part, and his action in any such respect
shall be final. Subject to these reservations, noncompetitive
tenders for $400,000 or less without stated price from any one
bidder will be accepted In full at the average price (in three
decimals) of accepted competitive bids. Settlement for accepted
tenders in accordance with the bids must be made or completed at
the Federal Reserve Bank on January 15, 1962, in cash or other
immediately available funds or in a like face amount of Treasury
bills maturing January 15, 1962. Cash and exchange*tenders will
receive equal treatment. Cash adjustments will be made for
differences between the par value of maturing bills accepted in
exchange and the issue price of the new bills.
The income derived from Treasury bills, whether interest or
gain from the sale or other disposition of the bills, does not have
any exemption, as such, and loss from the sale or other disposition
of Treasury bills does not have any special treatment, as such, under
the Internal Revenue Code of 1954. The bills are subject to estate,
inheritance, gift or other excise taxes, whether Federal or State,
but are exempt from all taxation now or hereafter imposed on the
principal or interest thereof by any State, or any of the
possessions of the United States, or by any local taxing authority.
For purposes of taxation the amount of discount at which Treasury
bills are originally sold by the United States is considered to be
interest. Under Sections 454 (b) and 1221 (5) of the Internal
Revenue Code of 1954 the amount of discount at which bills issued
hereunder are sold is not considered to accrue until such bills are
sold, redeemed or otherwise disposed of, and such bills are
excluded from consideration as capital assets. Accordingly, the
owner of Treasury bills (other than life insurance companies) Issued
hereunder need include in his income tax return only the difference
between the price paid for such bills, whether on original Issue or
on subsequent purchase, and the amount actually received either upon
sale or redemption at maturity during the taxable year for which
the return is made, as ordinary gain or loss.
Treasury Department Circular No. 4l8 (current revision) 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 ReserveoOo
Bank or Branch.

TREASURY DEPARTMENT
WASHINGTON, D.C.
January 3, 1961
FOR IMMEDIATE RELEASE

WITHHOLDING OF APPRAISEMENT ON
PORTLAND CEMENT

The Treasury Department is instructing customs field officers
to withhold appraisement on white portland cement from Japan pending
a determination as to whether this merchandise is being sold in the
United States at less than fair value. Notice to this effect is
being 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 law.
The dollar value of imports received during the first 8 months
of 1961 was approximately $200,000.

0O0

lu
TREASURY DEPARTMENT
WASHINGTON, D.C.
January 3, 1961
FOR IMMEDIATE RELEASE

WITHHOLDING OF APPRAISEMENT ON
PORTLAND CEMENT

The Treasury Department is instructing customs field officers
to withhold appraisement on white portland cement from Japan pending
a determination as to whether this merchandise is being sold in the
United States at less than fair value- Notice to this effect is
being 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 law.
The dollar value of imports received during the first 8 months
of 1961 was approximately $200,000.

0O0

Paris, December 15, 1961

Dear Mr. Minister:
This is In reply to your letter of December 15, 196l,
setting forth the understandings reached during the recent
discussions in Paris with respect to the procedure to be
followed by the Participating Countries and Institutions
in connection with the borrowings by the International
Monetary Fund of Supplementary Resources under credit
arrangements which we expect will be established pursuant
to a decision of the Executive Directors of the Fund.
On behalf of the United States of America, I am
pleased to confirm that we are In agreement with the
statement of understandings as set forth in your letter
of December 15, 196l. I am attaching, in accordance
with your suggestion, the French text of this letter of
confirmation.
Sincerely yours,

(Signed) Douglas Dillon
Douglas Dillon

Monsieur Wilfrid Baumgartner,
Ministre des Finances et des Affaires
Economiques,
93, rue de Rivoli,
Paris (ler)

I shall appreciate a reply confirming that the foregoing represent
the understandings which have been reached with respect to'the procedure to
be followed in connection with borrowings by the International Monetary Fund
under the credit arrangements to which I have referred.
•».)

I am sending identical letters to the other participants - that is
Belgium, Canada, Germany, Italy, Japan, 'The Netherlands, Sweden, the United
Kingdom. Attached is a verbatim text of this letter in English. The French
and English texts and the replies of the participants in both languages shall
be equally authentic. I shall notify all of the participants of the confirmations received in response to this letter.

BAUMGARTNER

E. When agreement is reached under paragraph D, each participant
shall inform the Managing Director of the calls which it is prepared to meet
under its credit arrangement with the Fund. '
F. If a participant which has loaned its currency to the Fund
under its credit arrangement with the Fund subsequently requests a reversal
of its loan which leads to further loans to the Fund by other participants,
the participant seeking such reversal shall consult with the Managing Directoj
and with the other participants.
For the purpose of the consultative procedures described above,
participants will designate representatives who shall be empowered to act
with respect to proposals for use of the Supplementary Resources.
It is understood that in the event of any proposals for calls under
the credit arrangements or if other matters should arise under the Fund decision requiring consultations among the participants, a consultative meeting
will be held among all the participants. The representative of France shall
be responsible for calling the first meeting, and at that time the participants will detemdne who shall be the Chairman • The Kanaging Director of the
Fund or his representative shall be invited to participate in these consultative meetings.
It is understood that in order to further the consultations envisaged, participants should, to the fullest extent practicable, use the facilities of the intearhational organizations to which they belong in keeping each
other informed of developments in their balances of payments that could give
rise to the use of the Supplementary Resources,
These consultative arrangements, undertaken in a spirit of international cooperation, are designed to insure the stability of the international
payments system*

OVER

B. If the Managing Director makes a proposal for Supplementary
Resources to be lent to the Fund, the participants shall consult on this
proposal and inform the Managing Director of the amounts of their currencies
which they consider appropriate to lend to the Fund, taking into account the
recommendations of the Managing Director and their present and prospective
balance of payments and reserve positions. The participants shall aim at
reaching unanimous agreement.
C. If it is not possible to reach unanimous agreement, the
question whether the participants are prepared to facilitate, by lending
their currencies, an exchange transaction©]? stand-by arrangement of the kind
covered by the special borrowing arrangements and requiring the Fund*s resour
ces to be supplemented in the general order of magnitude proposed by the
Managing Director, will be decided by a poll of the participants.
The prospective drawer will not be entitled to vote. A favorable
decision shall require the following majorities of the participants which
take part in the vote, it being understood that abstentions may be justified
only for balance of payments reasons as stated in paragraph D j
(l) a two-thirds majority of the number of participants voting; an
(2) a three-fifths majority of the weighted votes of the participants voting, weighted' on the basis of the commitments to the
Supplementary Resources,,
D. If the decision in paragraph C is favorable, there shall be
further consultations among the participants, and with the Managing Director,
concerning the amounts of the currencies of the respective participants which
will be loaned to the Fund in order to attain a total in the general order of
magnitude agreed under paragraph C. If during the consultations a participant
gives notice that In its opinion, based on its present and prospective balance of payments and reserve position, calls should not be made on it, or that
calls should be for a smaller amount than that proposed, the participants
shall consult among themselves and with the Managing Director as to the additional amounts of their currencies which they could provide so as to reach
the general order of magnitude agreed under paragraph C

B. If the Managing Director makes a proposal for Supplementary
Resources to be lent to the Fund, the participants shall consult on this
proposal and inform the Managing Director of the amounts of their currencies
which they consider appropriate to lend to the Fund, taking into account the
recommendations of the Managing Director and their present and prospective
balance of payments and reserve positions. The participants shall aim at
reaching unanimous agreement.
C« If it is not possible to reach unanimous agreement, the
question whether the participants are prepared to facilitate, by lending
their currencies, an exchange transaction ©r stand-by arrangement of the kind
covered by the special borrowing arrangements and requiring the Fund's resour
ces to be supplemented in the general order of magnitude proposed by the
Managing Director, will be decided by a poll of the participants.
The prospective drawer will not be entitled to vote. A favorable
decision shall require the following majorities of the participants which
take part in the vote, it being understood that abstentions may be justified
only for balance of payments reasons as stated in paragraph D :
(l) a two-thirds majority of the number of participants voting,* an
(2) a three-fifths majority of the weighted votes of the participants voting, weighted' on the basis of the commitments to the
Supplementary Resources*
D. If the decision in paragraph C is favorable, there shall be
further consultations among the participants, and with the Managing Director,
concerning the amounts of the currencies of the respective participants which
will be loaned to the Fund in order to attain a total in the general order of
magnitude agreed under paragraph C. If during the consultations a participant
gives notice that in its opinion, based on its present and prospective balance of payments and reserve position, calls should not be made on it, or that
calls should be for a smaller amount than that proposed, the participants
shall consult among themselves and with the Managing Director as to the additional amounts of their currencies which they could provide so as to reach
the general order of magnitude agreed under paragraph C#.

15
MINISTERE DES

FINANCES

IE MINISTRE
Le 15 Decembre 1961

Dear Mr. Secretary,

The purpose of v this letter is to set forth the understandings
reached during the recent discussions in Paris with respect to the procedure
to be followed by the Participating Countries and Institutions, (hereinaftei
referred to as "the participants") in connection with borrowings by the
International Monetary Fund of Supplementary Resources under credit arrangements which we expect will be established pursuant to a decision of the
Executive Directors of the Fund.
This procedure, which would apply after the entry into force of
that decision with respect to the participants which adhere to it in accordance with their laws^ and which would remain in effect during, the period of
the decision, is as follows :
A« A Participating Country which has need to draw currencies frc
the International Monetary Fund or to seek a stand-by agreement with the
Fund in circumstances indicating that the Supplementary Resources might be
used, shall consult with' the Managing Director of the Fund first and then
with the other participants.

OV*ER
2 Honorable DOUGLAS DILLON
2CRETARY OF THE TREASURY

16
- 4 li

Ctyg^ ^lir it 4§ no^ expe<^

J^Mjv tKe i^\f^ V^J w111 bc necestary to Mead the
Bretton Woods Agreements Act to give authority, to make to

to the Fund under the conditions governing these srrangeswwats.

• 3 embodied in the isore detailed arraag«a«mts which have no** been
completed, | ^ 0 % A t 9 / t ^ ^

Diseussieos of this subject were continued, m& representatives of the 16 participating countries worked out the
detailed arrange^mts set forth 1m the letters at meetings
in mld*&e«e«feer in Far is.

The decision of the Executive

ftlreetors of the Fumi eoss>lete4 preparations for the establishwent of the borrowing arra^gesieitt.
thetaarrottUtgajrrangement will cow* into effect when at
least 7 countries whose constituents total not lea® than $5.3 billion
hav® formally advised the ftod of their adherence to the
ar^asige^mt after eewpletion of the mecessafy legislative approval
m

other legal re^nirewtmts •
The borrowing arrangement eould he of great assistance to

the Onit#d State*, as veil as t© any of the other participating
countries, im sieetiiig teeqwrary balance of payaMsits difficulties,
sS

The fitndf£ ability to forestall or cope with an impairment

of tli® international monetary system will he greatly strengthened
bf the new arrangettatits * This will benefit the entire free
wmM

economy.
Participation by the United State® is subject to Congressional

appr ova 1 *

,ifi$^(^^

^ — ^ *Uy.

j^u^

~t^ ^Se^. /j/t^

J. v ^

^iffC Oliililll i iffflrW*^
The Treasury today releaaed an exchange of correspondence
between M. Wilfrid Bewmgartner, Minister of Finance of France,
and Treasury Secretary Douglas Dillon.

The exchange of letters

— which took place in Paris December 15 -• represents the
agreement of the United Status te the procedures which would
be followed by 10 principal Industrial countries in acting
to provide supplementary resources to the International
Monetary Fund when needed to avoid impairment of the inter*
national monetary system.

Identical notes are being exchanged

between the French Government and the other participating
governments — Belgium, Canada, Germany, Italy, Japan, the
Netherlands, Sweden and the United Kingdom.
The International Monetary Fund alao announced today the
decision of the Fund governing its own participation In the
new borrowing arrangements, which will Involve $6 billion
in commitments by the participants, of which the United States
share would be $2 billion.
Under the procedures set forth in the exchange of letters
with the Government of France, If one of the 10 participating

- ^^o ^
**<* -Is*. aeflriUSftn
' a drawing im stsnd^y^*ij«wig€SSwe^ from the International
Monetary fund* it would consult with the Managing Director of
the fund and with the other participating countries. The Managing
Director would then make a proposal to borrow, and the participating
countries concerned would inform the Fund of the amounts -of their
currencies, up to their*total commitments, which they would be
prepared to lend. The procedures provide that the participating
countries should try to reach unanimous agreement,
unanimous agreement, a &kfc*MW

falling

voting procedure would be used

to decide whether resources should be provided to the Fund la
the amounts required.

7tV

m&tm

«ur« l»ata£ s;vT**smaje#

President Kennedy *~ in his balance of payments meesage 4fc ^

February 6 -- called for a strengthening and more'effective
use of international monetary institutions, particularly the
Fund, to provide increased reserves, mmi to provide H thd Han
flexibility required to aw&pmt

a healthy md

growing world economy.1

Soon after that the Fund initiated studies on ways in
which the fund could be strengthened.

Secretary Dillon at the

same time began discussions with other governments, and In
September, at the Annual Meeting of the Fund in Vienna, general
agreement was reached among the ten countries on the principles

^-3f]

NEW IMF BCRRGWINfc AGREEMENT PROCEDURES
OUTLINED IN B&BMGARTNER-JDILLON CCRRESPONDENCE

TREASURY DEPARTMENT
WASHINGTON, D.C.
January 5, 1962

HOLD FOR RELEASE UNTIL 12:00 NOON(EST)
MONDAY, JANUARY 8, 1962
NEW IMP BORROWING AGREEMENT PROCEDURES
OUTLINED IN BAUMGARTNER-DILLON CORRESPONDENCE
The Treasury today released an exchange of correspondence
between M. Wilfrid Baumgartner, Minister of Finance of France,
and Treasury Secretary Douglas Dillon. The exchange of letters —
which took place in Paris December 15 — represents the agreement
of the United States to the procedures which would be followed by
10 principal industrial countries in acting to provide supplementary
resources to the International Monetary Fund when needed to avoid
impairment of the international monetary system. Identical notes
are being exchanged between the French Government and the other
participating governments — Belgium, Canada, Germany, Italy,
Japan, the Netherlands, Sweden and the United Kingdom.
The International Monetary Fund also announced today the
decision of the Fund governing its own participation in the new
borrowing arrangements, which will involve $6 billion In
commitments by the participants, of which the United States' share
would be $2 billion.
Under the procedures set forth in the exchange of letters
with the Government of France, if one of the 10 participating
countries needs to make a drawing from the International Monetary
Fund requiring use of the new resources, it would consult with the
Managing Director of the Fund and with the other participating
countries. The Managing Director would then make a proposal to
borrow, and the participating countries concerned would inform the
Fund of the amounts of their currencies, up to their total commitments, which they would be prepared to lend. The procedures
provide that the participating countries should try to reach
unanimous agreement. Failing unanimous agreement, a voting
procedure would be used to decide whether resources should be
provided to the Fund in the amounts required.
President Kennedy — in his balance of payments message last
February 6 — called for a strengthening and more effective use of
international monetary institutions, particularly the Fund, to
n-^R1
provide increased reserves, and to provide "the flexibility
required to support a healthy and growing world economy."

- 2 Soon after that the Fund initiated studies on ways in which
the Fund could be strengthened. Secretary Dillon at the same time
began discussions with other governments, and in September, at the
Annual Meeting of the Fund in Vienna, general agreement was
reached among the ten countries on the principles embodied in the
more detailed arrangements which have now been completed.
Discussions of this subject were continued, and representatives
of the 10 participating countries worked out the detailed arrangements set forth in the letters at meetings in mid-December in Faris.
The decision of the Executive Directors of the Fund completed
preparations for the establishment of the borrowing arrangement.
The borrowing arrangement will come Into effect when at least
7 countries whose commitments total not less than $5.5 billion
have formally advised the Fund of their adherence to the arrangement after completion of the necessary legislative approval or
other legal requirements.
The borrowing arrangement could be of great assistance to the
United States, as well as to any of the other participating
countries, in meeting temporary balance of payments difficulties.
The Fund's ability to forestall or cope with an impairment of the
international monetary system will be greatly strengthened by the
new arrangements. This will benefit the entire free world economy.
Participation by the United States is subject to Congressional
approval. It will be necessary to amend the Bretton Woods
Agreements Act to give authority to the Treasury to make loans to
the Fund under the conditions governing these arrangements.

oOo

22
sVHNISTERE DES FINANCES

IE M1NISTRE
Le 15 De*cembre 1961

J)ear Mr. Secretary,

The purpose ofvthis letter is to set forth the understandings
reached during the recent discussions in Paris with respect to the procedure
to be followed lay the Participating Countries and Institutions, (hereinafter
referred to as "the participants") in connection with borrowings by the
International Monetary Fund of Supplementary Resources under credit arrange-j
ments which we expect will be established pursuant to a decision of the
J
Executive Directors of the Fund.
\
.

This procedure, which would apply after the entry into force of
that decision with respect to the participants which adhere to it in accor- |
dance with their laws, and which would remain in effect during, the period of
the decision, is as follows s
A« A Participating Country which has
the International Monetary Fund or to
Fund in circumstances indicating that
used, shall consult with* the Managing
with the other participants„

Honorable D0UG1AS

DILLON

JRETARY OF THE TREASURY

need to draw currencies frc
seek a stand-by agreement with the
the Supplementary Resources might be
Director of the Fund first and then

B. If the Managing Director makes a proposal for Supplementary
Resources to be lent to the Fund, the participants shall consult on tliis
proposal and inform the Managing Director of the amounts of their currencies
fahich they consider appropriate to lend to the Fund, taking into account the
recommendations of the Managing Director and their present and prospective
balance of payments and reserve positions. The participants shall aim at
reaching unanimous agreement.
C. If it is not possible to reach unanimous agreement, the
question whether the participants are prepared to facilitate, by lending
their currencies, an exchange transaction ©r stand-by arrangement of the kind
covered by the special borrowing arrangements and requiring the Fund,s resources to be supplemented in the general order of magnitude proposed by the
Managing Director, will be decided by a poll of the participants.
The prospective drawer will not be entitled to vote. A favorable
decision shall require the following majorities of the participants which
take part in the vote, it being understood that abstentions may be justified
only for balance of payments reasons as stated in paragraph D :
(l) a two-thirds majority of the number of participants voting; and
(2) a three-fifths majority of the weighted votes of the participants voting, weighted' on the basis of the commitments to the
Supplementary Resources«,
D. If the decision in paragraph C is favorable, there shall he
further consultations among the participants, and with the Managing Director,
concerning the amounts of the currencies of the respective participants which
will be loaned to the Fund in order to attain a total in the general order of
magnitude agreed under paragraph C. If during the consultations a participant
gives notice that in its opinion, based on its present and prospective balance of payments and reserve position, calls should not be made on it, or that
calls should be for a smaller amount than that proposed, the participants
shall consult among themselves and with the Managing Director aB to the additional amounts of their currencies which they could provide so as to reach
the general order of magnitude agreed under paragraph C»

. E. When agreement is reached under paragraph D, each participant
shall inform the Managing Director of the calls which it is prepared to meet
under its credit arrangement with the Fund. '
F. If a participant which has loaned its currency to the Fund
under its credit arrangement with the Fund subsequently requests a reversal
of its loan which leads to further loans to the Fund by other participants,
the participant seeking such reversal shall consult with the Managing Director
and with the other participants.
For the purpose of the consultative procedures described above,
participants will designate representatives who shall be empowered to act
with respect to proposals for use of the Supplementary Resources.
It is understood that in the event of any proposals for calls under
the credit arrangements or if other matters should arise under the Fund decision requiring consultations among the participants, a consultative meeting
will be held among all the participants. The representative of France shall
be responsible for calling the first meeting, and at that time the participants will determine who shall be the Chairman. The Managing Director of the
Fund or his representative shall be invited to participate in these consultative meetings.
It is xindejsfcood that in order to further the consultations envisaged, participants should, to the fullest extent practicable, use the facilities of the international organizations to wliich they belong in keeping each
other informed of developments in their balances of payments that could give
rise to the use of the Supplementary Resources.
These consultative arrangements, undertaken in a spirit of international cooperation, are designed to insure the stability of the international
payments system.

OVER

I shall appreciate a reply confirming that the foregoing represents
the understandings which have been reached with respect to the procedure to
be followed in connection with borrowings by the International Monetary Fund
under the credit arrangements to which I have referred.
V.

I am sending identical letters to the other participants - that is,
Belgium, Canada, Germany, Italy, Japan, The Netherlands, Sweden, the United
Kingdom. Attached is a verbatim text of this letter in English. The French
and English texts and the replies of the participants in both languages shall
be equally authentic. I shall notify all of the participants of the confirmations received in response to this letter.

BAUMGARTNER

Paris, December 15, 196l

Dear Mr. Minister:
This is In reply to your letter of December 15, 196l,
setting forth the understandings reached during the recent
discussions in Paris with respect to the procedure to be
followed by the Participating Countries and Institutions
in connection with the borrowings by the International
Monetary Fund of Supplementary Resources under credit
arrangements which we expect will be established pursuant
to a decision of the Executive Directors of the Fund.
On behalf of the United States of America, I am
pleased to confirm that we are in agreement with the
statement of understandings as set forth in your letter
of December 15, 196l. I am attaching, in accordance
with your suggestion, the French text of this letter of
confirmation.
Sincerely yours,

(Signed) Douglas Dillon
Douglas Dillon

Monsieur Wilfrid Baumgartner,
Mlnistre des Finances et des Affaires
Economiques,
93, rue de Rlvoli,
Paris (ler)

vWn ®

1^^

FOR IMMEDIATE RELEASE
WILLIAM N. TURPIN NAMED DIRECTOR
OF THE EXECUTIVE SECRETARIAT OF THE TREASURY
Secretary Dillon today named William N. Turpin to be

Director of the Executive Secretariat of the Treasury, the central
coordinating staff of the Treasury Department which serves the

Secretary and the Under Secretary. Mr. Turpin, who has been servin
as Deputy Director of the Secretariat, replaces Thomas W. Wolfe,
who has been appointed to a one-year executive fellowship at the
Center for Advanced Study of the Brookings Institution.
Mr. Turpin was born in Macon, Georgia. He is a graduate of

Dartmouth College and holds an M.A. degree from Oxford University,
where he studied as a Rhodes Scholar. He served in the Marine
Corps during the second World War. He has been a Foreign Service

Officer since 1948, serving at posts in Munich and Belgrade as wel

as in Washington. He was Consul and economic officer at the Americ
Embassy in Moscow from 1956 to 1958.
S
Mr. Wolfe, who haflf headed the Executive Secretariat since its
A

on
creation/January 23, 1961, will, during his year at Brookings
make a study of the impact of the public debt on the economy. He

joined the Treasury as a fiscal economist in 1949, and was formerl
Assistant Chief of the Debt Analysis Staff.

J --*

*****«*».

TREASURY DEPARTMENT
WASHINGTON,
January 8, 1962
FOR IMMEDIATE RELEASE
WILLIAM N. TURPIN NAMED DIRECTOR
OF THE EXECUTIVE SECRETARIAT OF THE TREASURY
Secretary Dillon today named William N. Turpin to be
Director of the Executive Secretariat of the Treasury, the
central coordinating staff of the Treasury Department which
serves the Secretary and the Under Secretary. Mr. Turpin, who
has been serving as Deputy Director of the Secretariat,
replaces Thomas W, Wolfe, who has been appointed to a one-year
executive fellowship at the Center for Advanced Study of the
Brookings Institution.
Mr. Turpin was born In Macon, Georgia. He is a graduate
of Dartmouth College and holds an M.A. degree from Oxford
University, where he studied as a Rhodes Scholar. He served'
in the Marine Corps during the second World War. He has been
a Foreign Service Officer since 19^8, serving at posts in
Munich and Belgrade as well as In Washington. He was Consul
and economic officer at the American Embassy in Moscow from
1956 to 1958.
Mr. Wolfe, who has headed the Executive Secretariat since
its creation on January 23, 196l, will, during his year at
Brookings make a study of the Impact of the public debt on the
economy. He joined the Treasury as a fiscal economist in 19^9,
and was formerly Assistant Chief of the Debt Analysis Staff.
0O0

D-352

27
Accordingly, w e do not presently see that any sound public
purpose would be served by the elimination of the Security National Bank
as an independent institution.
*' Finally, it should be pointed out that an acquisition such as
this would, in the interest of consistency of approach to banking problems

of a similar nature, undoubtedly face this office with the question of possib
reconsideration of its recent denial of the merger of the National Bank of
Westchester and The First National City Bank of New York. "

January A, 1962
^>^g

' w * 5 ^* •*Jt*-»

The Comptroller of the Currency m a d e the following comment
on the announcement of the proposed acquisition of the Security National
Bank of Long Island by the Marine Midland Corpor ation:

"It would be regrettable indeed if the Security National Bank
were now to pass from the banking scene as an independent institution,
and no justification is now seen for such an occurrence. It seems clear
that the public interest would best be served if the Security National Bank
were to remain in independent competition with the Franklin National Bank,
The Meadow Brook National Bank, and the other banks in Long Island. The

management conflict in the Security National B ank ^Jff I mm 1Ifi iwil \ Jti

llgMBffffifrliffiSfes* should be resolved by the introduction of new directi
management, free of sny connection with the present conflicting management
interests, as this office has strongly urged.
The Security National Bank has enjoyed good growth, and
obviously has superb growth prospects with its fine branch system on the
Island* Maintenance of the Security National Bank as an indepdndent

institution is also essential to a balanced banking structure and to the ser
of the convenience and needs of the people on Long Island.

TREASURY DEPARTMENT
WASHINGTON. D.C.
January 8, 1962
FOR IMMEDIATE RELEASE
COMPTROLLER OF THE CURRENCY COMMENTS ON PROPOSED ACQUISITION
OF SECURITY NATIONAL BANK OF LONG ISLAND BY THE
MARINE MIDLAND CORPORATION
The Comptroller of the Currency made the following comment
on the announcement of the proposed acquisition of the Security
National Bank of Long Island by the Marine Midland Corporation.
"It would be regrettable indeed If the Security National Bank
were now to pass from the banking scene as an independent
Institution, and no justification is now seen for such an occurrence.
It seems clear that the public interest would best be served if the
Security National Bank were to remain in independent competition
with the Franklin National Bank, The Meadow Brook National Bank,
and the other banks in Long Island. The management conflict in
the Security National Bank should be resolved by the Introduction of
new direction and management, free of any connection with the
present conflicting management interests, as this office has strongly
urged.
"The Security National Bank has enjoyed good growth, and
obviously has superb growth prospects with its fine branch system
on the Island. Maintenance of the Security National Bank as an
independent institution is also essential to a balanced banking
structure and to the service of the convenience and needs of the
people on Long Island.
"Accordingly, we do not presently see that any sound public
purpose would be served by the elimination of the Security
National Bank as an independent institution.
"Finally, it should be pointed out that an acquisition such
as this would, In the interest of consistency of approach to
banking problems of a similar nature, undoubtedly face this
office with the question of possible reconsideration bf its
recent denial of the merger of the National Bank of Westchester
and The First National City Bank
0O0of New York."

TREASURY DEPARTMENT

W A S H I N G T O N , D.C.
January 8, 1962

FOR IMMEDIATE RELEASE

In regard to the proposed consolidation
of Security National Bank of Long Island, Huntington,
New York and the Peconie Bank, Sag Harbor, New York,
under the charter and title of the former, the
Comptroller of the Currency, James J. Saxon, today
advised the presidents of the banks that the proposal
would not be acted upon pending disposition of the
proposed acquisition of Security National Bank of Long
Island by Marine Midland Corporation.

31
TREASURY DEPARTMENT
WASHINGTON. D.C.
January 8, 1962

FOR IMMEDIATE RELEASE

?as trsastsry Dspsrtnsnt aonouaefcdl last evening t&st the tenders for two s&rls* of
f rsaswy tolls, cm* ssriss to b« u s d & U s a s l i«ra» ©f tfes © H i s dated Ostoosr 13, M i
and ta* otter ssriss to b© dated 4unsi7 11, 196&* which ware offered on Jmmr? f$ mm
opened at ths Federal ftsssn* iastks on January !• Tenders wer© invited for $l,100,000#d
or ti^reabouts, of 91~day bill;; and for ^600,000,000, or tteroaaottts, of ld2-day billfi.'
fits details of tbs two series are an followst
'J
XS2*day f reasury bills
M H 3 S or lOTPfE©
99Msjr Treasury bills
r
s f f r ^ ,Jfty lg f lf6|
G G H m i t X V I *I88t
^Hiai ll te a M J
»«
M8I
Iminftl tats
nigh
3.090*
Urn
99 *tij'
S8.to?
Airer&g®
99.2*6
3.0T3* }J

xazr

totaling |312»^JO
of the mount of' 91-day bill® bid for si %im low price was accepted
k$ percent of the mount of lit~$»y W U s bid for at the tor pries

torn ttnsas « m x & Fat ASD leatrrai at m s o u * assists dutncisi
Applied For
^^KL
Mew iork
Philadelphia
01®¥©3jtnd
Atlanta
Ctosago
St. £omis
GMty
ratio

r Kgtw^w
l*3#3*3i3?*l»
rt9760fOOQ
41,09*000
tt,7«7»OQQ
il*,368,eN9©
a3?tWfW
36,3Sf,«©
XL#8TOy0GO
3S,t36,«o
00,107,003,000

32,*ja,oo0
18,632,000
fcfcftMtt
2,196,000
22,126,000
8,999,000
l?5*19©f0O0
IC®,067,00®
30,017,000
0,1*6,000
is»57ofoo®
5,620,00©
£7,236,000
6,380,000
Sf,300,000
U,636,000
01,1110,363,0002/
JMllMff 11,132*1139,000
13,760*000

7,1*21,000
13,632,00®
2,198,000
8,799,000
1|6,&7,000
6,1*6,000
i*,l$0,0O0
6*100,001
S,S>,JSjpfiSJS
•6OOJ0SK»#M§4

00*5,336,000fl*jft**Mft«Utlf*tsao^rs s**spt*4 st ifee s w a g s prios of 99»2&
* X a s M s * 057,9*0,000 nsusos^stltifs taiidsrs aooaptsot at ttis average pries of 96«Wf
1/ ©n a eonpoii t a a w of ts* nam Um&k awl for tfes sss» amount in?ssts4, ths rat«ra n|
these M i l s «ssld p w l J s yiaiils of t®l|£f for th* 91-day bills, and 3.U65, for tnj
lOMsgr bills. Interest rates on bills are <poUd In toims of iSftfe discount with
tks i 4 m r#l*to4 ^® ife® fues ®mm% of tlMi M i l * psytsl* si s*tn«ity vsttov to«
ths s » i » i tewsii^ sa4 ifeoir Isisgik i« m o t m l n m o s r of <!sy» relstst to s ^ - H f
/ear. In contrast, yields on osrtiflostss, notes, and bondjs are computed in tsisi
of Ufout*** m %£m msmmfc terostsd, and m i s t s tos msissr of dsys rsajsining U sa,
iat®r#st psp&smi fjsris4 is tisi «.st«sl mmtm* of d s » is, tte psrtod, nitli »omis»w»i
if mors than w oonpo© period is JJKVO1V»4.

^-3^3 "Mi ^.T^,

TREASURY DEPARTMENT
FOR RELEASE A. M. NEWSPAPERS,
Tuesday, January 9, 1962.

W A S H I N G T O N , D.C
January 8, 1°62

RESULTS OF TREASURY1 S WEEKLY BILL OFFERING
The Treasury Department announced last evening that the tenders for two series of
ijreasury bills, one series to be an additional issue of the bills dated October 13, 1961,
p d the other series to be dated January 11, 1962, which were offered on January 2, were
opened at the Federal Reserve Banks on January 8. Tenders were invited for $1,100,000,000
jr thereabouts, of 91-day bills and for $600,000,000, or thereabouts, of 182-day bills.
Che details of the two series are as follows:

[RANGE OF ACCEPTED
COMPETITIVE BIDS:
,High
Low
Average

91-day Treasury bills
maturing April 12, 1962
Approx. Equiv.
Price
Annual Rate
99.296~a7
2.785$
99.283 ~
2.836$
99.286
2.823$ 1/

182-day Treasury bills
maturing July 12, 1962
Approx. Equiv.
Price
Annual Rate
98.U60 b/
37555?
98.1*38 "
3.090$
98.1*1*7 ,
3.073$ 1/

a/ Excepting one tender of $100,000\ b/ Excepting two tenders totaling $312,000
70 percent of the amount of 91-day bills bid for at the low price was accepted
lrj> 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:
Applied For
District
Accepted
Applied For
Boston
0
1*1,1*72,000
I
36,872,000
917,^83,000
New York
l,U93,li37,0OO
61*8,657,000
12,1*21,000
Philadelphia
28,760,000
13,760,000
18,632,000
Cleveland
62,038,000
1*3,536,000
2,198,000
Richmond
II*, 71*7,000
11*, 71*7,000
8,999,000
Atlanta
2l*,368,000
22,128,000
102,067,000
Chicago
237,090,000
175,190,000
8,1*68,000
St. Louis
36,387,000
30,087,000
5,650,000
Minneapolis
21,870,000
15,570,000
8,380,000
Kansas City
38,236,000
27,236,000
1;,636,000
Dallas
2l*,600,000
22,300,000
30,227,000
San Francisco
8U,278,00Q
50,278,000
TOTALS
$2,107,283,000
$l,100,363,000c/ $1,132,1*39,000

Accepted
1*61*,683,00Q
7,1*21,000
13,632,000
2,198,000
8,799,000
1*6,517,000
6,1*68,000
1*, 150, 000
8,280,000
1*,636,000
19,977,000
$600,039,000 d/

Includes $21*5,336,000 noncompetitive tenders accepted at the average price of 99.286
Includes $57,962,000 noncompetitive tenders accepted at the average price of 98.1*1*7
On a coupon issue of the same length and for the same amount invested, the return on
these bills would provide yields of 2.88$, for the 91-day bills, and 3.16$, for the
182-day bills. Interest rates on bills are quoted in terras of bank discount with
the return related to the face amount of the Dills payable at matvirity 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.

•353

foa aoxaos A. M.

9, 1962

m&mmm,

> ^ m r y 10 f I9*j,

IB0OUS OT llSaOWro O0sVBUftHJLomiu»
ffeefraajrary
thereabouts, of
15, 1963, *totli
9.

evening that the teadsrs t&t 12,000,000,000
tolls to be dated January 15, I960, and to aster*
offered am January 3, «srs opened at the

tile details of tnis issus are as follows:
total applied far * 03*6^9^7,000
total aecsptsd
- 2,000,032,000

(includes 1169,199,000
ooaaoapatitlv* Dasis
fall st the average price ***** below}

competitive HUBS (accepting k tenders totaling &*120,OQO)
JfigH

* 96.614 Equivalent rats of discount
- 96.570
s
s
a
s
- 16.588
a
a
a
a

3l36yi » •

3.3165 •

• }/

<M peresat of the saaaat bid for at the low price was accepted)
fatal
ADDliad

i~H~

599,000
1,57**105,000
51,9^,000
171**60,000

rtdiadslphia

fcl*lM,ooo
*7,@|0*0O0
322,506,000
2^,296,000
36*900*0X1
61*9*6*000
37*176*000

St. Louis
•oli

oily

Dallas
San Frsasis**
TOTAL

13*6*9*6*7,000

Total

r ^

1*099,000
l*U*l,35O,O0O
0f*95*,000
05*9*6^00
27,01*6,000
39,828,000
lt7,956,000
15**O6,O0O
17,930,000
37,^6,000
22*176,000

at*2gaSS§

a* i***|.JJ* gww

1/ 0® a conpoa issu* of ths sama length and for too saaa asjsuat invested, the
tliass tolls would p*tyrtte a yiaXd of 3.50*. Interest rats* on toll* are
t*ms of bank discount vita the return related to tor face amount of too iUlS
able at **t«rity ratfesf tlaa the amount invested and their length in actual
*f Says relat*4 to a 3&0-**jr year. X* contrast, yields on certificates,
bonds are ec*putsd 1* tarns of interest on toe
aatount
sad
rela of
period
toinvested,
ths actual
nuaber
ths of
period,
oar
days with
reaainin>> 1* as interest payaent period
to
ths
actual
nisaber
than on* soap©* period is

tj-y^

1W^

Co.T.lf. s

«3 v^

TREASURY DEPARTMENT
WASHINGTON, D.C. ^ * ^ > ^
FOR RELEASE A. M. NEWSPAPERS, January 9, 1962
Wednesday, January 10, 1962.
RESULTS OF TREASURY1S 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 January 15, 1962, and to mature
January 15, 1963, which were offered on January 3, were opened at the Federal Reserve
Banks on January 9The details of this issue are as follows:
Total applied for - $3,61*9,61*7,000
Total accepted
- 2,000,032,000

(includes $189,199,000 entered on a
noncompetitive basis and accepted in
full at the average price shown below)

Range of accepted competitive bidss (Excepting 1* tenders totaling $1*, 120,000)
High - 96.614 Equivalent rate of discount approx. 3.3UO# per annum
Low
- 96-572
e
a
s
e
a
3.38l# »»
tt
Average
- 96.588
•»
•«
»
•
3.3662 «
(k9 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
$
61*,599,000
2,57U,105,000
52,95U,000
171,1*66,000
1*1,11*6,000
1*7,078,000
322,506,000
21*,296,000
36,980,000
61,91*6,000
37,176,000
215,395,000
$3,61*9,61*7,000

" 1 /

Total
Accepted
$
33,099,000
1,1*1*1,350,000
22,95U,000
85,9U6,000
27,01*6,000
39,828,000
127,956,000
15,1*06,000
17,930,000
37,91*6,000
22,176,000
128,395,000
$2,000,032,000

1/ On a coupon issue of the same length and for the same amount invested, the retur
these bills would provide a yield of 3.50$. 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, an<
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 ii
the period, with semiannual compounding if more than one coupon period is involved

D-351*

WEBS M E A S E

-2 -

Mr. Watson is kl years old and a native of Cleveland, Old*.
He Is * graduate of Western Reserve University in Cleveland sad
the Central States Banking School of the University of Wisconsin in
Madison, Wisconsin. The new Chief Examiner served as a Lieutenant
sad bomber pilot with the Eighth Air Fore* la England during
World War XI. Mr. Watson is married sad has one son.
/
/

,~J(Signea)i/James j*. Saron
/

Jaass J. SSJSOB
Coisptroller of the Currency

TREASURY DEPARTMENT
tm tmmnzm BESSASE

WASHINGTON, D.C.

January 8, 19&

emmmm m *m ««i .msmmm
mm f. wmm cms? natcmAii mm
EXAMINER
Oo^rfcrollar of the Currency Jsatas J. Saxon today anaouaead
the s^prpo^atroat of Mr* Justin $* Watsoa as Chief ffetioaal Bank
Ixssiaar of the tfeited State® to succaed Mr. Reed Solan nfco
resided effective January 5, 196s*
Mr. Bolaa nsus had a long *ad ©UrtlajaisaM career in the
©ffiee of Om Ooi^troller of am Currency since 1925. la September
19^1 Mr. tkOm was s$pjdated ttstvia* I M a f latioaal Bank Ixaisiner
of the iifcth Federal Beserva Mstrict and since that time has served
as Mstriet Chief mtioaal Bsnfc mm&smr

of the Eighth, fsata sad

Eleventh Federal Beserve Districts. Up. Itelaa was appointed CShief
Satioaal lank Maaatiisr of Om tJattsd States in May i960.
Mr* Watson has been a wmflbm of Om Coi^ta*ll«r *s staff since
19*5* a* was ccB****isaa& * Ifetiotial Bank Sawaiaer in 1951 sad
ea»teed osaks in the fteth F*o*v*i &***¥** Mstrlct until 1957 waam
a* was ©pointed an Assistant Chief national Bank npytiwut la tha
lashiagtoa Office. Mr. Watsoa has been District Chief Ifetioaal Beak
Itasiasr of the Fourth Federal Beserva mstriet la Cleveland tounion
post a* was appointed la Hsry i960. Ha assumed M s new duties today.

<0- 55"^"

TREASURY

EPARTMENT
WASHINGTON, D.C.
January 9, 1962

FOR IMMEDIATE RELEASE
COMPTROLLER OP. THE CURRENCY APPOINTS
JUSTIN T. WATSON CHIEF NATIONAL BANK EXAMINER
Comptroller of the Currency James J. Saxon today announced
the appointment of Mr. Justin T. Watson as Chief National Bank
Examiner of the United States to succeed Mr. Reed Dolan who
resigned effective January 5, 1962.
Mr. Dolan has had a long and distinguished career in the
Office of the Comptroller of the Currency since 1925. In
September 1951 Mr. Dolan was appointed District Chief National
Bank Examiner of the Sixth Federal Reserve District and since that
time has served as District Chief National Bank Examiner of the
Eighth, Tenth and Eleventh Federal Reserve Districts. Mr. Dolan
was appointed Chief National Bank Examiner of the United States
in May i960.
Mr. Watson has been a member of the Comptroller's staff since
19^5* He was commissioned a National Bank Examiner in 1951 and
examined banks in the Fourth Federal Reserve District until 1957
when he was appointed an Assistant Chief National Bank Examiner
in the Washington Office. Mr. Watson has been District Chief
National Bank Examiner of the Fourth Federal Reserve District In
Cleveland to which post he was appointed in May i960. He assumed
his new duties today.
Mr. Watson is 4l years old and a native of Cleveland, Ohio.
He is a graduate of Western Reserve University in Cleveland and
the Central States Banking School of the University of Wisconsin
in Madison, Wisconsin. The new Chief Examiner served as a
Lieutenant and bomber pilot with the Eighth Air Force in England
0O0 is married and has one son.
during World War II. Mr. Watson
D-355

KmX%XMMTOQ3

sale or other disposition of Treasury bills does not have any special treatment,
such, under the Internal Revenue Code of 1954. The bills are subject to estate,
inherrbancc, pift or other excise taxes, whether Federal or State, but are exempt

•:11 taxation now or hereafter imposed on the principal or interest thereof by an
qr any of the possessions of the United States, or by any local taxing authority.

purposes of taxation the amount of discount at which Treasury bills are originall

by the United States is considered to be interest. Under Sections 454 (b) and 122

of the Internal. Revenue Code of 1954- the amount of discount at which bills issue

under are sold is not considered to accrue until such bills are sold, redeemed or

wise disposed of, and such bills are excluded from consideration as. capital asse

Accordingly, the owner of Treasury bills (other them life insurance companies) is

hereunder need include in his income tax return only the difference between the p
paid for such bills, whether on original issue or on subsequent purchase, and the

actually received either upon sale or redemption at maturity during the taxable y
for which the return is made, as ordinary gain or loss.

Treasury Department Circular Wo. 418 (current revision) and this notice, prescrib
the terms of the Treasury bills and govern the conditions of their issue. Copies
circular may be obtained from any Federal RescI've Bank or Branch.

- 2-

printed forms and forwarded in the special envelopes which will be supplied by Feder
Reserve Banks or Branches on application therefor.

f Banking institutions generally may submit tenders for account of customers provide

the names of the customers are set forth in such tenders. Others than banking instit
tions will not be permitted to submit tenders except for their own account. Tenders

be received without deposit from incorporated banks and trust companies and from res
sible 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 incorpora
honk, 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 Treasui
expressly reserves the right to accept or reject any or all tenders, in whole or in

and his action in any such respect shall be final. Subject to these reservations, no
competitive tenders for $200,006 or less for the additional bills dated October 19,
1961 , ( 91 days remaining until maturity date on April 19, 1962 ) 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 de

mals) of accepted competitive bids for the respective issues. Settlement for accepte

tenders in accordance with the bids must be made or completed at the Federal Reserve
on January 18, 1962 , in cash or other immediately available funds or in a like

xpg£
face amount of Treasuiy bills maturing

January 18, 1962

. Cash and exchange tenders

xlplj

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 bill
The income derived from Treasuiy bills, whether interest or gain from the sale or
other disposition of the bills, does not have any exemption, as such, and loss from

TREASURY DEPARTMEM1
Washington

FOR IMMEDIATE. RELEASE^ January 10, 1962

TREASURY'S WEEKLY BILL OFFERING
The Treasuiy Department, by this public notice, invites tenders for two series

of Treasury bills to the aggregate amount of $ 1,700?000,000 , or thereabouts,

cash and in exchange for Treasury bills maturing January
18. 1962 s in the amo
ry it
..o S

of $1,700,096,000

pEJc
91

T5F

, as follows:

-day bills (to maturity date) to be issued

*Tgr

January 18. 1962

in the amount of $1,100,000,000 , or thereabouts, representing an additional amount of bills dated October 19, 1961 ,
and to mature April 19, 1962

, originally issued in the

amount of $ 600,557,000 , the additional and original bills
to be freely interchangeable.
182 -day bills, for $600,000,000 , or -thereabouts, to be dated
January 18, 1962 , and to mature July 19. 1962 •

PI#

SET

The bills of both series will be issued on a discount basis under competitive

and noncompetitive bidding as hereinafter provided, and at maturity, their fo

will be payable without interest. They will be issued in bearer form only, and

denominations of $1,000, $5,000, $10,000, $50,000, $100,000, $500,000 and $1,00
(maturity value).

Tenders will be received at Federal Reserve Banks and Branches up to the closi

hour, one-thirty p.m., Eastern Standard time, Monday. January IB, 1962 Tenders
will not be received at the Treasury Department, Washington. Each tender must

for an even multiple of $1,000, and in the case of competitive tenders the pri

offered must be expressed on the basis of 100, with not more than three decima
e. g., 99.925. Fractions may not be used. It is urged that tenders be made on

TREASURY DEPARTMENT
WASHINGTON. D
January 10, 1962
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
$ 1,700,000,000,or thereabouts, for cash and In exchange for
Treasury bills maturing January 18, 1962, In the amount of
$1,700,096,000, as follows:
91-day bills (to maturity date) to be issued January 18, 1962,
in the amount of $1,100,000,000, or thereabouts, representing an
additional amount of bills dated October 19, 196l, and to
mature April 19, 1962, originally issued in the amount of
$600,357,000,
the additional and original bills to be freely
interchangeable.
182-day bills, for $600,000,000, or thereabouts, to be dated
January 18; 1962, and to mature July 19, 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, $50,000, $100,000, $500,000 and $1,000,000
(maturity value).
Tenders will be received at Federal Reserve Banks and Branches
up to the closing hour, one-thirty p.m., Eastern Standard
time, Monday, January 15, 1962.
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.
Banking institutions generally may submit tenders for account of
customers provided the names of the customers are set forth in such
tenders. Others than banking Institutions will not be permitted to
submit tenders except for their own account. Tenders will be received
without deposit from incorporated banks and trust companies and from
responsible and recognized dealers In investment securities. Tenders
from others must be accompanied by payment of 2 percent 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-356
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
October 19, 196l, (91-days remaining until maturity date on
April 19, 1962)
and noncompetitive tenders for $100,000
or less for the 182-day bills without stated price from any one
bidder will be accepted in full at the average price (in three
decimals) of accepted competitive bids for the respective issues.
Settlement for accepted tenders in accordance with the bids must be
made or completed at the Federal Reserve Bank on January 18, 1962,
•to.^ti'.'.or other immediately .available, futids or. in a like face
l$&<$^^
1<#>2. cash and
?
'e^%&$ie^^^^^
treatment. Cash adjustments
!
wiflT 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
0O0 the taxable year for which the
return is made, as ordinary gain or loss.
Treasury Department Circular No. 4l8 (current, revision) and this
notice prescribe the terms of -the Treasury bills and govern the
conditions
their Bank
Issue.
Copies of the circular may be obtained from
any Federalof
Reserve
or Branch.

TREASURY DEPARTMENT
lashlngton, 0. C.
D&2DIATB BSLEASE

D-357

THURSDAY, JANUARY 11, 1962

PHELOHNAOT DATA ON IMPORTS FOR CONSUMPTION 0? DNMANUPACTtHSD LEA© AND ZINC CHARtSABLS TO THE OUOTAS ESTABLISHED
BY P92SIDSNTIAL PROCLAMATION NO. 3257 G? SEPTEMBER 22, 195*
OBABTERLT CBOTA PERIOD • January I - March 31, (962
IMPORTS • January J -.January 6, !962 ( or as noted)
ITEM 394
ITEM 393
ITEM 392
s Lead bullion or base bullion,
8
s lead in pigs and bars, load
t
*
t
t Leadi-bearing ores, flue dust,t droae, reolaiaad lead, scrap
s Zino-bearing ores of all kinds,: Zine ia bloo*s, pige, or sla&s;
and sattes
s lead, antiaonial lead, antli exeept pyrites containing- not ts only
old and
zine, fit sine
to worn-out
be reaanufaetursd,
J
t aonial scrap lead, type aatal, :
over 3 ^ °^ *!*•
' *"~ and eino
'"^skianings
: " dross,
i all alloys or combinations of t
:Quarterly Quota
t
lead n.s.p.f.
i_Quarterly Quota.
__
:
s Quarterly Quota,
Imports 8 By Weight
Imports
t&tarterijr
Quota,
Imports t
Dutiable Lead
lEDorta t Dutiable Zlns
s Dotlabia Lead
(Pounds I
(Pounds)
(Pounds)
(Pounds)
ITEM 391

Country
of
Production

Australia

10,030,000 5,877,325*

23,680,000 9,931,157
5,440,000

Belgian Congo
Belglua and
Luxemburg (total)
Bolivia

5,040,000

Canada

13,440,000

7,065,^8*

37,840,000

U,269,278

!,608,5^9*
13,^0,000

15,920,000

!,U?C,098*

66,480,000

3,600,000

Italy
36,880,000

Mexleo
Pern

16*, 160, 000

Dn. So* Afrioa

14,880,000

6*, 56*0,000

8»!,I82

12,880,000

6,560,000

15,760,000

661,256*

6,080,000

•Imports as of January 8
The above country designations are those specific in President!*! Proclamation No. 3257
of September 22, 1958. Since that date the names of certain countries have been changed.
PBSS-AHSO 1H THZ Btja2ATJ OF CCSTOUS

70,480,000

3, 20 *,»36

6,320,000

35,120,000

2,519,685

3,760,000

17,840,000

l?,8i*0,000

lM,fl80,000

Yugosloria
All other foreign
eountries (total)

7,520,000

6,080,000

T8EASSRT DEPARTMENT
lashington, B« C*

BSfiDIATE BSLEASE

THURSDAY, JANUARY, 11, 1962

D-357

PRELIMINART DATA ON IMPORTS FOR CONSUMPTION OF UNMANUFACTU13D LEAD AND ZINC CHARGEABLE TO THE ODOTAS ESTABLISHES
B? PRESIDENTIAL PROCLAMATION NO« 3257 07 SEPTEMBER 22, 1958
ODABTERLY QUOTA PERIOD • January I - March 51, 1962
t_ IMPORTS • January i -.January 6, 1962 ( or as noted)

Country
of
Production

Australia

ITEM 391
ITEM 392
*'
s Lead
beaa bullion
unman or base
oass bullion,
ouxj.JLOn,
°s
a
s lead in pigs and bars, lead
8 Lead^bearing^ores, flue dust,* dross, reolaiasd lead, scrap
and sattes
. iQ3£f antiiaooial lead, antis aonial scrap lead, type aatal,
i all alloys or combinations of
!Quarterly Quota
*
xCuartarly Quota
lead n.s.?.fa
: Dutiable. Lead
Iaports t Dutiabls Lead
Dsoorts
(Pounds)
(Pounds)
10,080,000

5,877,325*

ITEM 393
ITEM 394
t
zi
t
%
s Zins-bearing ores of all kinds,* Zine la blooks, pigs, or slabs|
j exeept pyrites containing not s old end-worn-out zino, fit
»
over 3 # of zino
* only to be reaanufactured, sins
s
s
dross, and tine skianinga
s
:tQuarterly Quota
sQuarterly Quota
Iaporta
x Dutiable Zins
laports. : By Weight
(Pounds)
(Pounds)

23,680,000 9,931,157

Belgian Congo

5,440,000

Belgium and
Luxaaburg (total)
BoltviA

5,040,000

Canada

13,440,000

13,^0,000

15,920,000

l,*»70,098*

Mexico

36,880,000

On* So. Africa

14,880,000

6,560,000

8»!,I82

12,880,000

I*>,M8,!93

37*840,000

»*,269,278

3,600,000

70,480,000

5,204,13*

6,320,000

35,120,000

2,519,685

3»76o,ooo

17,840,000

J?,8M0,000

1^,880,000

Yugosloria
All other foreign
countries (total)

66,480,000
m

16,160,000

7,065,^8*

!,£08,5**9*

Italy

Peru

7»520,ooo

6,560,000

15,7&>*0OO

661,256*

6,080,000

•leports es of January 8
The above country designations are those specified in Presidential Proclamation No. 3257
of September 22, 1958. Since that date the names ef certain countries have been changed.

6,080,000

TRBASORT DEPARTMENT
lashington, D . C.

4 4

IMMEDIATE BSLEASE

THURSDAY, JANUARY 11, 1962 D-358
PRELIMINART DATA ON IMPORTS FOR CONSUMPTION OF DNMANUFACTDBSD LEAD AND ZINC CHARGEABLE TO THE QUOTAS ESTABLISHED
BT PRESIDENTIAL PROCLAMATION NO* 3257 0? SEPTEMBER 22, 1958
flDABTBRLT QUOTA PERIOD • October i - December 31, I96I
IKKHttS •

October

|- . December 31, 1961

ITEM 391
_ _
ITEM 392
i
'
t
Lead bullion or base bullion,
*
* lead in pigs and bars, lead
Country
s Lead^bearing ores, flue dust, 1 dross, reolaiaed lead, scrap
°/
•
* a d seattes
: lead, antiaonial lead, antiPromotion
s
t aonial scrap lead, type aatal,
*
1 all alloys or combinations of
- - -*
»
lead n.s.p.f.
sQuarterly
ftiotaraSr^erly
Quota"
t Dutiable. Lead
Imports 1 Dutiable Lead
Bsporta
(Pounds) ~
(FoSndsl
Australia 10,080,000 10,080,000 23,680,000 25,680,000 - . .
Belgian Congo . . . 5,440,000 Ss^.SH?
Belgiua and ,
Luxeaburg (total)

ITEM 393
ITEM 394
t
1
1
1
s Zinc-bearing ores of all kinds, $ Zlno in blocks, pigs, or slabs;
1 except pyrites containing- not s old and worn-out 2ino, fit
:
over 3£ of tino
1 only to be reaanufacturad, tine
t
:
dross, and sine skiaalngs
»
,,•,•*
icaariarly Quota,
.ot^^-a^y Quirta
t Dutiable Zlns
Inports : By
ffelgbt
teports
"
(Pounds)
'
(Pounds)

7,520,000

Bolivia 5,040,000 5,o«40,000 - - .
Canada 13,440,000 13,^0,000 15,920,000 15,920,000 66,480,000 66,480,000 37,840,000 37,840,000
I*a*T - . . 3,600,000
Mexico - 36,880,000 36,880,000 70,480,000 70,480,000 6,320,000 5,00«*,962
P#ru

16,160,000 16,160,000 12,880,000 12,875,96*1 35,120,000

55,I20,000

3,760,000

3,759,838

On. So. Afrioa 14,880,000 I»4,e80,000
Yugoslavia - 15,760,000 15,695,674
All other foreign
oouatries (total)

6,560,000

6,080,000

17,840,000

The above country designations are those specified in Presidential Proclamation Mo. 5257
of September 12, 1958. 8,nce that date the na B e 6 of certain country have teen change/
PHSPAKSa TM THZ BTEUEAU OT CUSTOMS

17,8*10,000

6,080,000

TREASDRT DEPARTMENT
lashingteo* D . 0*

IMMEDIATE RELEASE

THURSDAY, JANUARY 11, 1962

D-358

PRELIMINART DATA ON IMPOSTS FOR CONSUMPTION OF UNMANUFACTURED LEAD AND ZINC SHAREABLE TO THE ODOTAS ESTABLISHED
BT PRESIDENTIAL PROCLAMATION NO. 3257 OF SEPTEMBER 22, 195«
GDABTSRLY QDOTA PERIOD • October i - December 31, I96i
D^O^S • October V - December 31, 196 J
ITEM 391

ITEM 392
nana bullion
wjumva or
or base
o&ss bullion,
DUXlien,
V« Lead
*
t lead in pigs and bars, lead
j Lead-bearing ores, flue dust,i dross, reclaimed lead, scrap
6ad
* .
=»**<*«
* lead, antiaonial lead, antit
t aonial scrap, lead, type aatal,
*
J all alloys or ooabinatlons of
tQuarterly Quota
tQuarterly Quota
*
*
lead n.s.p.f.
1 Dutiable. Lead
Imports t Dutiable Lead
Eeporta
(Pounds)
(Pounds)
10,080,000
23,680,000 23,680,000
iO,OSO,000
*

Country
_ ® r ..
Production

Australia

__
ITEM 393
ITEM 394
I
sS
t
8
j Zinc-bearing ores of all kinds,* Zino in blooks, pigs, or slabs:
j except pyrites containing not s old and w>rn-out 2ino, fit
t
over 3£ of d n o
j only to be ^manufactured, zinc
t
,
dro.s, aad ^ ^ skl3IBlllgB
;
1 Quarterly Quota
tsQcariarly Quota
: Dutiable Zins
laports g By Weljght
Imports
(Pounds)
(Pounds)'

Belgian Congo

5,440,000

Belgium and
Lux9aburg (total)
Bolivia

5,040,000

5,0MQ,G00

Canada

13,440,000

i3,M«o,ooo

15,920,000

5,920,000

66,460,000

66,*i80,000

Italy

7,520,000

37,840,000

37,8*10,000

3,600,000

Mexico
Peru

16,160,000

Dn. So. Afrioa

14,880,000

l*»,880,000

Yugosloria
All other foreign
countries (total)

5,»»38,8*i7

6,560,000

36,880,000

70,480,000

70,*»80,000

6,320,000

5,004,962

12,880,000

12,875,96*1

35,120,000

3,760,000

3,759,838

15,760,000

I5,695,6?*i

6,080,000

17,840,000

I7,8*J0,000

The above country designations are those specified in Presidential Proclamation No. 3257
of September 22, i958. Since that date the names of cerxain countries have been ch a n d
anged

6,080,000

TREASURY DEPARTMENT
Washington

IMMEDIATE RELEASE

THURSDAY, JANUARY 11, 1962

D-359

The Bureau of Customs announced today the following preliminary
figures showing the imports for consumption from January 1, 1961, to
December 30, 1961, inclusive, of commodities for which quotas were
established pursuant to the Philippine Trade Agreement Revision Act
of 1955:

Commodity
Buttons

Imports
as of
Dec. 30, 1961

Established Annual
Quota Quantity
765,000

Gross

261,567

Cigars

180,000,000

Number

Coconut oil...

403,200,000

Pound

162,093,272

Cordage

6,000,000

Pound

5,406,817

Tobacco

5,850,000

Pound

5,958,105

7,428,947

TREASURY DEPARTMENT
Washington

IMMEDIATE RELEASE

THURSDAY, JANUARY 11, 1962

D-359

Commodity

Buttons.

:Established Annual
: Quota Quantity
765,000

Unit
of
Quantity
Gross

Imports
as of
Dec. 30, 1961
261,567

Cigars

180,000,000

Number

Coconut oil

403,200,000

Pound

162,093,272

Cordage,...

6,000,000

Pound

5,406,817

Tobacco....

5,850,000

Pound

5,958,105

7,428,947

~£-

48
COTTON CARD STRIPS made from cotton having * staple of less than 1-3/16 inches in length, COMBER
WASTE, LAP WASTE, SLIVER WASTE, AND ROVING 7,fASTE, AETHER 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
United Kingdom . . . . .
Canada
*
France
British India
Netherlands
.
Switzerland . . . . . . . .
Belgium
Japan . . . . . . . . . .
China .
Egypt
.
Cuba .
Germany
Italy

Established
TOTAL QUOTA

:
Total Imports
s Established s
Imports
s Sept. 20, 1961, to s 33-l/3£ of s Sept. 20, 1961
t Jan. 8, 1962
; Total Quota ; to Jan. 8, 1962

4,323,457
239,690
227,420
69,627
68,240
44,388
38,559
341,535
17,322
8,135
6,544
76,329
21.263

1,598,082
239,690
75,807
69,627
22,747
42,019

5,482,509

1,441,152

75,807

22,747
14,796
12,853

22,747
12,505

34,462

25,443
7,083

23,484

2,417,434

1,599,886

335,000

1/ Included in total imports, column 2.
Prepared in the Bureau of Customs.
The country designations listed in this press release are those
specified in Presidential Proclamation No. 2351 o£ September 5, 1939.
Since that date the names of certain countries have been changed.

1,575,695

TREASURY DEPARTMENT
Washington, D. C.
Q
IMMEDIATE RELEASE

D-360

THURSDAY, JANUARY 11, 1962
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 l-l/8 inches other than rough or harsh under 3/V'
Imports September 20, 1961, to January 8, 19b2
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
k73,12k
5,203
237
9,333

Imports
779,456
22,050
1,372,035
8,883,259
618,723
114,908

Established Quota

Country of Origin
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 ...

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, 1961r - January 8. 1962
Established Quota (Global) - 1+5,656,^20 Lbs.
Staple Length Allocation Imports
1-3/8" or more
39,590,778
1-5/32" or more and under
1-3/8" (Tanguis)
1,500,000
1-1/8" or more and under
I-3/8"
4,565,642

39,590,778
548,588
4,565,642

752
871
124
195
2,240
71,388
21,321
5,377
l6,00k

689

Imports
_
-

TREASURY DEPARTMENT
Washington, D. C.

D-360

IMMEDIATE. RELEASE

THURSDAY, JANUARY 11, 1962
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/V1
Imports September 20, 1961, to January 8, 1962
Country of Origin
Egypt and the AngloEgyptian Sudan ...
J
eru
British India
China
Mexico
Brazil
Union of Soviet
Socialist Republics .
Argentina
Haiti
Ecuador
:....

Established Quota
783,816
247,952
2,003,^83
1,370,791
8,883,259
618,723
475,12*+
5,203

237
9,333

Imports
779,456
22,050
1,372,035
8,883,259
618,723
114,908

Established Quota

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/Other French Africa ...
Algeria and Tunisia ...

1/ Other than Barbados, Bermuda, Jamaica, Trinidad, and Tobago,
2/ Other than Gold Coast and Nigeria.
3/ Other than Algeria, Tunisia, and Madagascar.
Cotton 1-1/8" or more
Imports August 1, 19611 - January 8. 1962
Established Quota (Global) - 45,656,^20 Lbs.
Staple Length Allocation Imports
1-3/8" or more
39,590,778
1-5/32" or more and under
1-3/8" (Tanguis)
. 1,500,000
1-1/8" or more and under
1-3/8"
4,565,642

39,590,778
548,588
4,565,642

752
871
124
195
2,240
71,388
. 21,321
. 5,377
16,004
689

Imnorts

•^2~

COTTON WAStSS
(In pounds)
COTTON CARD STRIPS maderfrom cotton having-a staple of less than 1-3/16 inches in length, COliBER
WASTE, LAP WASTE, SLIVER WASTE, AND ROVING 7/ASTS, WHETHER OR NOT MANUFACTURED OR OTHEKVISE
ADVANCED IN VALUEs Provided, however, that not more than 33-1/3 percent of the quotas shall
be filled by cotton wastes other than comber wastes made from cottons of 1-3/16 inches or more
in staple- length in the- case- of the- following countries* United Kingdom, France, Netherlands,
Switzerland, Belgium, Germany, and Italys

Country of Origin

Established
TOTAL QUOTA

:
Total Imports
: Established s
Imports
: Sept. 20, 1961, to : 33-l/3£ of : Sept. 20, 1961
; Jan. 8, 1962
; Total Quota t to Jan. 8, 1962

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

1,598,082
239,690
75,807
69,627
22,747
42,019

5,482,509

.1,441,152

1,441,152

—

75,807

22,747
14,796
12,853

22,747
12,505

34,462

25,443
7.088

23,484

2,417,434

1,599,886

335,000

1/ Included in total imports, column 2,
Prepared in the Bureau of Customs.
The country designations listed in this press release are those
specified in Presidential Proclamation No. 2351 of September 5, 1939,
Since that date the names of certain countries have been changed.

1,575,695

TREASURY DEPARTMENT
Washington, D. C.

IMMEDIATE RELEASE
THURSDAY, JANUARY 11. .1962.

D-361

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, 19^1, as modified by the President's
proclamation of April 13, 19^2, for the 12 months commencing May 29, 19 61 ,
as follows:

Wheat flour, semolina,
crushed or cracked
wheat, and similar
wheat products

Wheat
Country
of
Origin

Imports
Established :
Quota
:May 29, 1%1,
;to Jan. 8, 1962
(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
100
Brazil
Union of Soviet
Socialist Republics
100
Belgium >
100

800,000

795,000,

Established :
Imports
Quota
:May 29, 1%\,
:to Jan. 8, 1962
(Pounds)
(Pounds)
3,815,000
24,000
13,000
13,000
8,000

3,815,000

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
-

4,000,000

3,815,150

75,ooo
1,000
5,000

5,ooo

795,024

TREASURY DEPARTMENT
Washington, D. C.

r;9

IMMEDIATE RELEASE

D-361

THURSDAY. JANUARY 11. 1962.

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 61,
as follows:

Country
of
Origin

Wheat flour, semolina,
crushed or cracked
wheat, and similar
wheat products
Established :
Imports
Quota
:May 29, 1961,
:to Jan. 8, 1962
(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
1,000
Rumania
Guatemala
100
100
Brazil
Union of Soviet
Socialist Republics
100
Belgium
100
800,000

795,000

Established :
Imports
Quota
:May 29, 1961,
:to Jan. 8, 1962
(Pounds)
(Pounds)
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
1,000

3,815,000

150

795,024

4,000,000

3,815,150

-2-

Commodity

Period and Quantity

; Unit
Imports
: of
as of
: Quantity Dec. 30. 1961

Absolute Quotas:
Butter substitutes, including
butter oil, containing 45%
or more butter fat

Calendar Year 196L-1,200,000
Calendar Year 1962-1,200,000

Pound
Pound

Quota Filled
Quota Filled*

Cotton products, except cotton
wastes, produced in any stage
preceding the spinning into
yarn

12 raos. from
Sept. 11, 1961

1,000

Pound

Quota Filled

Peanuts, shelled, unshelled,
blanched, salted, prepared or
preserved (incl. roasted peanuts but not peanut butter)

12 mos. from
Aug. 1, 1961

1,709,000

Pound

682,162*

Jan. 31, 1962
Argentina
Paraguay
Other Countries

5,525,000
741,000
234,000

Pound
Pound
Pound

2,694,254*
630*

Tung Oil Nov. 1, 1961-

*Imports through January 8, 1962

TREASURY DEPARTMENT
Washington
IMMEDIATE RELEASE

D-362

THURSDAY, JANUARY 11, 1962

The Bureau of Customs announced today preliminary figures showing the imports
for consumption of the commodities listed below within quota limitations from the
beginning of the quota periods to December 30, 1961, inclusive, as follows:

Commodity

Period and Quantity

: Unit
:
Imports
: of
:
as of
:Quantity:Dec. 30, 1961

Tariff-Rate Quotas:
Cream, fresh or sour Calendar Year 1,500,000 Gallon 282
Whole Milk, fresh or sour Calendar Year 3,000,000 Gallon 206
Cattle, 700 lbs. or more each
(other than dairy cows)

Oct. 1, 1961Dec. 31, 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

42,708

200,000

Head

32,107

32,600,645

Pound

Quota Filled

Pound
Pound

23,300,050
2,597,395

Pieces

47,211,133*

Tuna Fish Calendar Year 57,114,714 Pound 56,252,179
White or Irish potatoes:
Certified seed
Other

12 mos. from
Sept. 15, 1961

114,000,000
36,000,000

Walnuts Calendar Year 5,000,000 Pound Quota Filled
Stainless steel table flatware
(table knives, table forks,
table spoons)

•Imports through January 5, 1962

Nov. 1, 1961Oct. 31, 1962

69,000,000

TREASURY DEPARTMENT
Washington
;MMEDIATE RELEASE

D-362

THURSDAY, JANUARY 11, 1962

The Bureau of Customs announced today preliminary figures showing the imports
:or consumption of the commodities listed below within quota limitations from the
jeginning of the quota periods to December 30, 1961, inclusive, as follows:

Commodity

Period and Quantity

: Unit
:
Imports
: of
:
as of
:Quantity:Dec. 30, 1961

Tariff-Rate Quotas:
]ream, fresh or sour

Calendar Year

1,500,000

\fhole Milk, fresh or sour,

Calendar Year

3,000,000 Gallon

206

Oct. 1, 1961Dec. 31, 1961

120,000 Head

42,708

12 mos. from
April 1, 1961

200,000 Head

32,107

battle, 700 lbs. or more each
(other than dairy cows)

battle less than 200 lbs. each,

Gallon

282

Fish, fresh or frozen, filleted,
etc., cod, haddock, hake, pollock, cusk, and rosefish

Calendar Year

Tuna Fish,

Calendar Year 57,114,714 Pound 56,252,179

White or Irish potatoes:
Certified seed
Other

12 mos. from
Sept. 15, 1961

Walnuts

Calendar Year 5,000,000 Pound Quota Filled

Stainless steel table flatware
(table knives, table forks,
table spoons)

Nov. 1, 1961Oct, 31, 1962

'*Imports through January 5, 1962

32,600,645

114,000,000
36,000,000

69,000,000

Pound

Pound
Pound

Pieces

Quota Filled

23,300,050
2,597,395

47,211,133*

-2-

Commodity

Period and Quantity

: Unit
: of
:Quantity

Imports
as of
Dec. 30. 1961

Absolute Quotas:
Butter substitutes, including
butter oil, containing 45%
or more butter fat
,

Calendar Year 196U1,200,000
Calendar Year 1962-1,200,000

Pound
Pound

Quota Filled
Quota Filled*

Cotton products, except cotton
wastes, produced in any stage
preceding the spinning into
yarn

12 mos. from
Sept. 11, 1961

1,000

Pound

Quota Filled

Peanuts, shelled, unshelled,
blanched, salted, prepared or
preserved (incl. roasted peanuts but not peanut butter)...

12 mos. from
Aug. 1, 1961

1,709,000

Pound

682,102*

Nov. 1, 1961Jan. 31, 1962
Argentina
Paraguay
Other Countries

5,525,000
741,000
234,000

Pound
Pound
Pound

2,694,254*
630*

Tung Oil

* Imports through January 8, J. 9 62

COMPTROLLER OF THE CURRENCY
TREASURY DEPARTMENT
WASHINGTON 25
ADDRESS REPLY TO
•COMPTROLLER OF THE CURRENCY"

JAN 10 1962

TO ALL NATIONAL BANKS:

Heretofore it has been the general policy and practice of this
Office in granting approval to an application for the establishment
of a branch to require that it open for business within a period of
not more than six months after approval. Similarly, extensions of
time have been granted for periods generally not exceeding six months.
Moreover^ such applications have been initially addressed to this
Office for consideration.
Careful re-examination has resulted in the finding that these
policies and procedures are unrealistic, and have also placed a
heavy and unnecessary administrative burden on this Office.
Therefore^ effective February 1, 1962, approval of all branch
applications will be granted with an expiration date of twelve
months. Extensions of time., when justified,, will similarly be given
for a period up to twelve months. Requests for extensions of time
must be submitted in writing directly to the office of the appropriate
District Chief National Bank Examiner no later than sixty days prior
to the original expiration date. Such requests for extension must
be supported by evidence of tangible progress toward establishment of
the branch.
Under normal circumstances, extensions of time for the establishment of branches will not be granted unless the foregoing conditions
have been met.

JAMES J. SAXON
Comptroller of the Currency

B^iSTiL'TE F&£g&SE

January II, 1962

*mgmm m& BOKBDW $x moos m
OFFERim WSBE 4 PERCSST BOMBS
The Treasury announced today that it will complete the borrowing for its
present seasonal cash requirements by offering investors an additional $1
billion of the 4 percent bonds maturing October 1, 1969. About $1.4 billion
of these bonds are already outstanding, of which about $1.3 billion are held
outside Federal Reserve and other official accounts. Subscriptions will be
received for one day only, on Monday, January IS, at a price of 39.75 (to
yield about 4.04$), plus the accrued interest from last October 1 to the payment date. Payment say be made through credit to Treasury tax and loss accounts,
and will be due on January 24.
In addition to the amount of bonds to be offered for public subscripticu>
the Secretary of toe freasary reserves the rigjit to allot up to $100 million
of the bonds to government Investment Accounts.
Any subscriptions for the bonds addressed to a federal Reserve Bank or
Breach, or to tae treasurer of the United states, Washington 25, ©. C , and
placed in the mall before micbiight, January 15, will be considered as timely.
Subscriptions to the 4 percent Treasury Bonds of 1963 from frantrHTig institutions generally for their 01m account and from States, political subdivisions or Instrumentalities thereof, public pension and retirement and
other public funds, and dealers who sake primary markets in Government securities
and report daily to the Federal Beserve Bank of W&v forlt their positions i&th
respect to Government securities and borrowings thereon, will be received
without deposit. Subscriptions from all others must be accompanied by payment of
25 percent of the amount of bonds applied for, not subject to withdrawal until
after allotment. Subscriptions from commercial h&n&s for their own account will
be restricted in each case to an amount not exceeding 5 percent of the combined
amount of time and savings deposits, including time certificates of deposit, or
IS percent of the cerabined capital, surplus and undivided profits, of the subscribing banfe, vaichever is greater.
Ihe Secretary of the Treasury reserves the right to reject or reduce any
subscription, to allot less than the amount of bonds applied for, and to make
different percentage allotments to various classes of subscribers.
Commercial banks and other lenders are requested to refrain from salting
unsecured loans, or loans collateralized in whclt or in part by the bonds subscribed for, to cover the deposits required to be paid when subscriptions are
entered, and banks will be required to make the usual certification to that effect.
All subscribers to the bonds are required to agree not to purchase or to
sell or to sake any agreements with respect to the purchase or sale or other
disposition of the additional bonds subscribed for under this offering, until
after sddni^t, January 15.

TREASURY DEPARTMENT
WASHINGTON, D.C.

N^V^

FOR IMMEDIATE RELEASE January 11, 1962
TREASURY WILL BORROW $1 BILLION BY
OFFERING MORE 4 PERCENT BONDS •
The Treasury announced today that it will complete the borrowing for its
present seasonal cash requirements by offering investors an additional $1
billion of the 4 percent bonds maturing October 1, 1969. About $1.4-billion
of these bonds are already outstanding, of which about $1.2 billion are held
outside Federal Reserve and other official accounts. Subscriptions will be
received for one day only, on Monday, January 15, at a price of 99.75 (to
yield about 4.04$), plus the accrued interest from last October 1 to the payment date. Payment may be made through credit to Treasury tax and loan accounts,
and will be due on January 24.
In addition to the amount of bonds to be offered for public subscription,
the Secretary of the Treasury reserves the right to allot up to $100 million
of the bonds to Government Investment Accounts.
Any subscriptions for the bonds addressed to a Federal Reserve Bank or
Branch, or to the Treasurer of the United States, Washington 25, D- C , and
placed in the mail before midnight, January 15, will be considered as timely.
Subscriptions to the 4 percent Treasury Bonds of 1969 from banking institutions generally for their own account and from States, political subdivisions or instrumentalities thereof, public pension and retirement and
other public funds, and dealers who make primary markets in Government securities
and report daily to the Federal Reserve Bank of New York their positions with
respect to Government securities and borrowings thereon, will be received
• without deposit. Subscriptions from all others must be accompanied by payment of
25 percent of the amount of bonds applied for, not subject to withdrawal until
after allotment. Subscriptions from commercial banks for their own account will
be restricted in each case to an amount not exceeding 5 percent of the combined
amount of time and savings deposits, including time certificates of deposit, or
15 percent of the combined capital, surplus and undivided profits, of the subscribing bank, whichever is greater.
The Secretary of the Treasury reserves the right to reject or reduce any
subscription, to allot less than the amount of bonds applied for, and to make
different percentage allotments to various classes of subscribers.
Commercial banks and other lenders are requested to refrain from making
unsecured loans, or loans collateralized in whole or in part by the bonds subscribed for, to cover the deposits required to be paid when subscriptions are
entered, and banks will be required to make the usual certification to that effect
All subscribers to the bonds are required to agree not to purchase or to
.sell or to make any agreements with respect to the purchase or sale or other
disposition of the additional bonds subscribed for under this offering, until
after midnight, January 15.

D-363 o0°

TREASURY DEPARTMENT
Washington
^

January 12, 1962

FOR RELEASE UPON DELIVERY
STATEMENT OP THE HONORABLE DOUGLAS DILLON
SECRETARY OP THE TREASURY OP THE UNITED STATES
UPON ARRIVAL IN OTTAWA OP THE AMERICAN MEMBERS
OP THE JOINT UNITED STATES-CANADIAN COMMITTEE
ON TRADE AND ECONOMIC AFFAIRS, FRIDAY,
JANUARY 12, 1962, 10:00 A.M.

,Jt is a genuine pleasure for my colleagues and me to be
in Ottawa for the Seventh meeting of the Joint United StatesCanadian Committee on Trade and Economic Affairs.
These frank and friendly consultations are proof positive
of the determination of our two governments to seek harmonious
resolution of the problems confronting us in these difficult
and changing times.
We are looking forward to the discussions we shall^have
here today and tomorrow with our Canadian colleagues, for we
are convinced that problems shared by our two countries can
best be solved in the spirit of candor and mutual understanding that has always characterized the meetings of the Joint
Committee. We are equally convinced that the discussions
will better enable both Canada and the United States to take
advantage of the increasing opportunities for freer trade and
accelerated economic progress that lie ahead.

0O0

TREASURY DEPARTMENT
Washington
January 12, 1962
FOR RELEASE UPON DELIVERY
STATEMENT OF THE HONORABLE DOUGLAS DILLON
SECRETARY OF THE TREASURY OF THE UNITED STATES
UPON ARRIVAL IN OTTAWA OF THE AMERICAN MEMBERS
OF THE JOINT UNITED STATES-CANADIAN COMMITTEE
ON TRADE AND ECONOMIC AFFAIRS, FRIDAY,
JANUARY 12, 1962, 10:00 A.M.

It is a genuine pleasure for my colleagues and me to be
in Ottawa for the Seventh meeting of the Joint United StatesCanadian Committee on Trade and Economic Affairs.
These frank and friendly consultations are proof positive
of the determination of our two governments to seek harmonious
resolution of the problems confronting us in these difficult
and changing times.
We are looking forward to the discussions we shall have
here today and tomorrow with our Canadian colleagues, for we
are convinced that problems shared by our two countries can
best be solved In the spirit of candor and mutual understanding that has always characterized the meetings of the Joint
Committee. We are equally convinced that the discussions
will better enable both Canada and the United States to take
advantage of the increasing opportunities for freer trade and
accelerated economic progress that lie ahead.

0O0

1/11/62
IW RELEASE WQS DELITECT
TOAST BELIV&&MB mT TBS mtMMUmAMl ¥ POfflSI Am* fiTT Tfmf
* • • • • ' a*

aw a^Jmej* w ajfcaefcaeey

e V e>

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elF^FejPa^emm^ew

MrJ^m0tjmJmm

SEOtrWtY « t H T M A S W f Of I B IWITKO SttfteV
A? A DX58£& HEETIMO Of 1KB J O I W W X T » STATESCASASUK CGKHITTKS 08 TEAM A » « W I O C AITAIKS,
OTTAWA COWTtT CLUB, OTTAWA, CAKAfiA,
FEHSA*, JAtflNtY 12, 1942, S:00 P.M.
loaorasle Kinlaters aad Dlttiagjiiished Qmeetsi
The changing pattern of iateraatloael eveata is aoastaatly
cresting new ecoeoaic proaleas — as well as fresh opportiffiities —
for both Canada and the Ihtited Stataa.
The resolution of thees problem* amy reatiire readjustaaat, aa4
evaa sacrifice, the fulfillment of oar oppcrtuaities will call fat
joint effort am4 cooperation. 1 believe that both proa lama aad ep~
port&aitles eaa beat he sat to our mutual banafit if we adhere to
ear shared principle of a&aonragiag expended international trade ay
reducing trada barriers.
Ha of the Halted Stataa attach great importaaee t© the meeting*

63
TREASURY.DEPARTMENT
Washington
January 12, 1962
FOR RELEASE UPON DELIVERY
TOAST DELIVERED BY THE HONORABLE DOUGLAS DILLON,
SECRETARY OP THE TREASURY OP THE UNITED STATES,
AT A DINNER MEETING OP THE JOINT UNITED STATESCANADIAN COMMITTEE ON TRADE AND ECONOMIC AFFAIRS,
OTTAWA COUNTRY CLUB, OTTAWA, CANADA,
FRIDAY, JANUARY 12, 1962, 8:00 P. M.
Honorable Ministers and Distinguished Guests:
The changing pattern of international events is constantly cresting new economic problems — as well as fresh opportunities — for
both Canada and the United States.
The resolution of these problems may require readjustment, and
even sacrifice. The fulfillment of our opportunities will call for
joint effort and cooperation. I believe that both problems and
opportunities can best be met to our mutual benefit if we adhere to
our shared principle of encouraging expanded international trade by
reducing trade barriers.
We of the United States attach great importance to the meetings of
the Joint United States-Canadian Committee on Trade and Economics for
we are discussing more than matters of mutual adjustment. We are
discussing ways in which to take advantage of trading developments in
the whole new era opening up before us. Success In our efforts will
help to create an ever-rising level of material well-being, not only
for our own peoples, but for all free men, everywhere.- It will also
augment the security of the free world.
We are, today, at an historic moment — a crossroads, if you
will — and future generations may well look back upon the coming
months in international economic affairs as a period in which our
efforts helped measurably to shape their future for the better.
And now, I should like to propose a toast:
Gentlemen, the Queenj

0O0

- 2-

Th
rn m
® security is a new denomination in the series of
ireasury Bills, the shortest term security sold by the Treasury
«?°?u i i s d i s t i n suished by a portrait of a former Secretary
01 the Treasury. The first of the $50,000 denomination were dated
to £???. ' 1 9 %* a n d w e r e l s s u e d today as part of the sale of
*d billion of 365 day Treasury Bills to mature on January 15, 1963
ine new denomination was added to permit easier handling of large
dollar amounts of Treasury Bills, and in so doing to save considerable expense by the Government.
Although termed "Treasury Bills", these securities differ
from the familiar wallet-size currency in both size and usage.
The Bills produced by the Treasury!s Bureau of Engraving and Printing are sold at a special type of auction each week, and the
resulting average price — or discount below face value — represents
the current weekly "Treasury Bill rate." They are also sold in
special issues when the Treasury borrows funds within a short term
period of time.
The likeness of Secretary Carter Glass on the new Bill is
an adaptation of an engraving made in 1919 by G. F. C. Smillie,
based on a photograph by Underwood and Underwood of New York City.
The recent adaptation was done by Charles A. Brooks.
Other members of the Glass family attending the ceremony
and to whom the brochures were presented were: Admiral Richard P.
Glass and wife of Washington, D.C.; Mrs. Elizabeth Glass Barlow
of Bronxville, N.Y.; Thomas R. Glass and wife, of Lynchburg,
Virginia, a member of the House of Delegates of the Commonwealth
of Virginia; Carter Glass, III and wife and son, Carter, IV, of
Lynchburg, Virginia; General Manager of the News and the Daily
Advance of that City; Miss Margaret Bannister of Charlottesville,
Virginia; Mrs. Susie Glass Lee and husband, Rev\ Richard H. of
Reidsville, N.C.; Mrs. Jennie Glass McDaniel of Lynchburg, Virginia.
Mrs. Margaret Lucado Garlick of Charlottesville, Virginia; Powellw
Glass, Jr. and wife and daughter Ann of Bay St. Louis, Mississippi,
Dr. Robert M. Boatwright of Danville, Virginia; and Mrs. Glenn B.
Updike, Jr., of Danville, Virginia.

0O0

TREASURY DEPARTMENT
WASHINGTON, D.C.
January 15, 1962
FOR RELEASE AFTER 3:00 p.m.
January 15, 1962
NEW GOVERNMENT SECURITY TO HONOR CARTER GLASS
Secretary Douglas Dillon today announced the first issue of
a new $50,000 security in the Treasury Bill series at a ceremony
attended by members of the family of the former Senator Carter
Glass, whose portrait is engraved on the new security.
Senator Harry F. Byrd of Virginia, Chairman of the Senate
Finance Committee, joined Treasury Secretary Dillon and
Under Secretary Henry H. Fowler in a ceremony in the latter's
office, in which hangs a portrait of Senator Glass-as Secretary
of the Treasury in President Woodrow Wilson's Cabinet.
Secretary Dillon welcomed to the Treasury 21 members of the
Glass family, including Dr. Meta Glass of Charlottesville, Virginia,
sister, and Mrs. John G. (Mary Archer Glass) Boatwright, daughter
of the former Secretary, who resides in Danville, Virginia.
Senator Byrd presented members of the family with a descriptive
brochure commemorating the issuance of the new security. The
brochure contains an enlarged illustration of the face of the new
Treasury Bill and a tribute to Carter Glass who served as Secretary of the Treasury from December 16, 1918, until February 2,
192Q, when he resigned to accept appointment as Senator from*
Virginia. He served in the Senate for 26 years.
Secretary Dillon, in welcoming the group to the Treasury,
said that although Carter Glass's service to the country as Senator was over a longer span of years "his contribution as Secretary
of the Treasury was no less distinguished". The Secretary also
reminded his listeners that President Woodrow Wilson, on November
17, 1919, wrote to Secretary Glass, who was resigning his cabinet
post before entering the Senate:
"While your occupancy of the Office of Secretary of the
Treasury has been brief, the Administration of its
affairs under your guidance has moved forward to the
highest levels of efficiency and high devotion to the
public interest."

D-364

TREASURY DEPARTMENT
WASHINGTON, D.C.
January 15, 1962
FOR RELEASE AFTER 3:00 p.m.
January 15, 1962
NEW GOVERNMENT SECURITY TO HONOR CARTER GLASS
Secretary Douglas Dillon today announced the first issue of
a new $50,000 security in the Treasury Bill series at a ceremony
attended by members of the family of the former Senator Carter
Glass, whose portrait is engraved on the new security.
Senator Harry F. Byrd of Virginia, Chairman of the Senate
Finance Committee, joined Treasury Secretary Dillon and
Under Secretary Henry H. Fowler in a ceremony in the latter's
office, in which hangs a portrait of Senator Glass as Secretary
of the Treasury in President Woodrow Wilson's Cabinet.
Secretary Dillon welcomed to the Treasury 21 members of the
Glass family, including Dr. Meta Glass of Charlottesville, Virginia,
sister, and Mrs. John G. (Mary Archer Glass) Boatwright, daughter
of the former Secretary, who resides in Danville, Virginia.
Senator Byrd presented members of the family with a descriptive
brochure commemorating the issuance of the new security. The
brochure contains an enlarged illustration of the face of the new
Treasury Bill and a- tribute to Carter Glass who served as Secretary of the Treasury from December 16, 1918, until February 2,
1920, when he resigned to accept appointment as Senator from
Virginia. He served in the Senate for 26 years.
Secretary Dillon, in welcoming the group to the Treasury,
said that although Carter Glass's service to the country as Senator was over a longer span of years "his contribution as Secretary
of the Treasury was no less distinguished". The Secretary also
reminded his listeners that President Woodrow Wilson, on November
17, 1919, wrote to Secretary Glass, who was resigning his cabinet
post before entering the Senate:
"While your occupancy of the Office of Secretary of the
Treasury has been brief, the Administration of its
affairs under your guidance has moved forward to the
highest levels of efficiency and high devotion to the
public Interest."

D-364

67
- 2-

The security is a new denomination in the series of
Treasury Bills, the shortest term security sold by the Treasury.
Each Bill is distinguished by a portrait of a former Secretary
of the Treasury. The first of the $50,000 denomination were dated
January 15, 1962, and were issued today as part of the sale of
$2 billion of 365 day Treasury Bills to mature on January 15, 1963.
The new denomination was added to permit easier handling of large
dollar amounts of Treasury Bills, and in so doing to save considerable expense by the Government.
Although termed "Treasury Bills", these securities differ
from the familiar wallet-size currency, in both size and usage.
The Bills produced by the Treasury's Bureau of Engraving and Printing are sold at a special type of auction each week, and the
resulting average price — or discount below face value — represent
the current weekly "Treasury Bill rate." They are also sold in
special issues when the Treasury borrows funds within a short term
period of time.
The likeness of Secretary Carter Glass on the new Bill is
an adaptation of an engraving made in 1919 by G. F. C. Smillie,
based on a photograph by Underwood and Underwood of New York City.
The recent adaptation was done by Charles A. Brooks.
Other members of the Glass family attending the ceremony
and to whom the brochures were presented were: Admiral Richard P.
Glass and wife of Washington, D.C; Mrs. Elizabeth Glass Barlow
of Bronxville, N.Y.; Thomas R. Glass and wife, of Lynchburg,
Virginia, a member of the House of Delegates of the Commonwealth
of Virginia; Carter Glass, III and wife and son, Carter, IV, of
Lynchburg, Virginia; General Manager of the News and the Daily
Advance of that City; Miss Margaret Bannister of Charlottesville,
Virginia; Mrs. Susie Glass Lee and husbanci, Rev. Richard H. of
Reidsville, N.C.; Mrs. Jennie Glass McDan5el of Lynchburg, Virginia;
Mrs. Margaret Lucado Garlick of Charlottesville, Virginia; Powell
Glass, Jr. and wife and daughter Ann of Bay St. Louis, Mississippi,
Dr. Robert M. Boatwright of Danville, Virginia; and Mrs. Glenn B.
Updike, Jr., of Danville, Virginia.

0O0

iff^Wawy TOffigJi»ffl.AaS S B 2ae follow txaiwacti^&j **«rc ssssle :a direct asal ^mrammA eaearlties
of the ^irerisesmt for ttecgory Ltwesfcaest c M other mmmfiM dssrine th#
aoatfc of Q^ssfto©*?

act ^B^^^S ..•, # 27»&tf»ai».00

if>

TREASURY DEPARTMENT
WASHINGTON, D.C.
Dotombo'g Vj,

IMMEDIATE RELEASE
TREASURY MARKET TRANSACTIONS IN IWWUMWR

During Itomirtiei? 196l, 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

0O0

D-334

TREASURY DEPARTMENT
WASHINGTON, D.C.
January 15, 1962

FOR IMMEDIATE RELEASE
TREASURY MARKET TRANSACTIONS IN DECEMBER

During December 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 $27,826,200.

0O0

D-365

STATUTORY DEBT LIMITATION
A* of December 31, -jo^

Washington, J a n . 1 5 , 1962_
amended, provides that the face amount of obligations issued under authority
f«»,»o* u.. .u„ IT-:^J o.„*»-. ( exce p t such guar",000,000,000
i the current re, r, ,
. , , - . -,
..
,
prior to maturity at the option of the holder
shall be considered as its face amount." The Act of June 30, 1961 (P. L. 87-69 87th Congress) provides that during the
periodThe
beginning
on July
1961 the
andface
ending
June of
30,
1962, the above
limitation
($285,000,000,000)
shall
bestill
temporarilv
infollowing
table1,
shows
amount
obligations
outstanding
and the
face amount which
can
be issued
y
creased
bylimitation:
$13,000,000,000.
under
this
_?ef^°aJl ?LfAecond

Libert

y , B ? ^ A?l»

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
$43,443,626,000
Certificates of indebtedness
5,509,218,000
Treasury notes
71,526.282.000
Bonds Treasury.,
75^85,565.050
•Savings (current redemption value).
47,457,867,248
Depositary
153,621,500
R. E. A. series
22,619,000
Investment series
5,074.247.000
Certificates of Indebtedness Foreign series
450,000,000
Foreign Currency series
46,285,000
Special Funds 6,380,094,000
Certificates o-f indebtedness
Treasury notes
6,921,833,000
Treasury bonds
30,217,837,000
Total interest-bearing
Matured, interest-ceased
Bearing no interest:
51,637,810
United States Savings Stamps
Excess profits tax refund bonds
738,535
Special notes of the United States
2,388,000,000
Internat'l Monetary Fund series
115,304,400
Internat'l Develop. Ass'n. series
25,000,000
Inter-American Develop. Bank series.
Total
Guaranteed obligations (not held by Treasury):
Interest-bearing :
Debentures: F.H.A. & D C Stad. Bds
329,671,000
Matured, interest-ceased
488,525
Grand total outstanding
Balance face amount of obligations issuable under above authority.
Reconcilement with Statement of the Public Debt

$298,000.000.00<|

$120,479,126,000

128,193,919,798
496,285,000

43,519,764.000
_292,689,094,798
460,582,410

2,580,680,745
.295,730,357,953

33011591525

296.060.517,^78
1,939,^82,522

December 3 1 , I96l
(Date)

(Daily Statement of the United States Treasury,
December 29,
(Date)
Outstanding 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

D-366

1961
296,168,761,215
296,498,920,7^0
438.403,26^
296,060,517,^

79
1 s_

STATUTORY DEBT LIMITATION
As of December 31, 1961

~j~ n W
Washington, ^ n » - Q j

iQ&>
l9b2

.
~ ,.
D -- any one time. For purpos
demotion 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, 1961 (P. L. 87-69 87th Congress) provides that during the
period beginning on July 1, 1961 and ending June 30, 1962, the above limitation ($285,000,000,000) shall be temporarily increased by $13,000,000,'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
<t*onQ f\r\<~\ r\r\r\
Outstanding^298,000.000.000
Obligations issued under Second Liberty Bond Act, as amended
Interest-bearing:
Treasury bills
$43,443,626,000
Certificates of indebtedness
5,509 ,218 , 000
Treasury notes
,
71.526.282.000
$120,479,126,000
Bonds Treasury
\
75,^85,565,050
•Savings (current redemption value)
47,457,867,248
Depositary
_
153,621,500
R. E. A. series
22,619,000
Investment series
5,074.247.000
128,193,919,798
Certificates of Indebtedness Foreign series
450,000,000
Foreign Currency series
_
46.285.000
496,285,000
Special Funds Certificates of indebtedness
6,380,094,000
Treasury notes
6,921,833,000
Treasury bonds
30,217.837.000
43,519,764,000
Total interest-bearing
292 , 689 , 094 , 798
Matured, interest-ceased
460,582,410
Bearing no interest:
United States Savings Stamps
5 1 , 637 , 810
Excess profits tax refund bonds
738,535
Special notes of the United States :
Internat'l Monetary Fund series
2,388,000,000
Internat'l Develop. Ass'n. series
115,304,400
Inter-American Develop. Bank series
25,000,000
2,580,630,745
Total
295,730,357,953
Guaranteed obligations (not held by Treasury):
Interest-bearing :
Debentures : F. H. A. & D C Stad. Bds
329 , 6?1, 000
Matured, interest-ceased
.
488,525
330,159,525
Grand total outstanding
296,060 , 517 ,478
Balance face amount of obligations issuable under above authority
!
1,939,482,522
Reconcilement with Statement of the Public Debt December 31, 196l
(Date)

(Daily Statement of the United States Treasury,
December 2 9 , 1961 )
Outstanding 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

D-366

296,168, ?6l, 215
330,159 t 52^
296,498,920,740
438 f 403 ,262
296,060,517,478

7-3

Xlm frmmarj ®mputemt& ^m»%mm& laat «vatttng tiutt Om t«ad»ra far t«o s«i#® *f
Traftaiiry bills, oa* a»ri«» to bt mt mMttUml
imm &£ am Wlls datad Ort#fe» Xff nfi,
« M tut atbar mrkm to be ditad item**? 18, 1962* afeleb **r« tffarad *a J B M & J T 10» a m
aaaaad ni U * Fadaral £*aarfa Daaka *a ^mmmrj IS* t t s A w «•*• laffttad £nr
M A ® ^ ^ , or taaraatooata, af 9I«*4aj Mil* «a* f«r 1600*000*000* @r tlattiaaatta* @f
X02*4ftjr Milt* Thft dtUUii af tia* ttm »«rt#s ax* at follatftu
a t u i 0? ACCEPTED
91~i$j f rmmwty bill*
2*f«4qr ti^iawry biH«
Frloa Aimal «*t#
BtgH
Lou

99.2*7 2.1W
99.300

2.9?S!
2.910* g

f . T W |/

12 ptr«&s& ©f tte w » l of fi-^iy trill* bid far at ta» low prio®
5? peresnfc of tb* aaetsst of 18$*»d«y allla bid far at tba lew prle® van &$«&ept#«!
TOTAL T&iOSHS AJWUSB FOft 4KB ACtiKPfSD SI FS&&AL IISEOT DBST«ICT8i

|sng^
MladalpbU
cn«v*i*ad
fllftbg^Sfflld

AtUmte
Cfeiaftgo
St, JUmslft
giasMipells
.tenia City
Oallaa
San F f atQtALS
«is»

1,538,2*5,000
3*»9B9»oeo
56*937*000
12,9*3*000
2b,73**O0O
206*199*000
bitoo6,ooo
20,560,000
«5»26$fO0O
X6*60M00
#2,l59,«i3»0OO

Acstgtad

JOT

Mif«StCw
16*969,000
29,913*000
12,5*3»O0O
3JM79»000
3Ma6,ooo
1»»O90»OOO
i89iak9oao

l9ltt»376»000

%m9<m

2,30,000
6,366*000
9%m7,om
s*taf,Q©o
7,136,900
9*902,000
6,Ii3290Q0
11*101,71*7,0001/ ei*306,O55
12iMM22
tO0Q

i tmym
gO9f0&MO0
bti65«ooo
2fm«ooo
$»672»000
30f99StO«
5»332iO00
#00,153.»W:

laeimdss f26oy913»0O0 mese«sf#titl'f« t«nd»r« «««^pUd at ih» mmmm
prim of 99*390
XfieliMtes |63»019*{>30 si©2&e«p«titiwi i»fii#ws MM»«pi«l «t th§ »¥#»§# pirieo @f 96*Wf
m m mmp@:& I M R M of tl» M U B « I®agth and for tfe» M M «aonBft imv®®te4f tte r#t«m m
%mm bill® i»ai4 provids ji«lfc «f 2.U*» for tat »~<3»3f b l U t f nad. 3 » » i f ffcr ^ «
l62*Klftjr bills* Iai#-»»t vmUm onfell!®« » ^B0t^4 in U m «f bank d i t w w i wi%&
tb» r#tmm r*l»tttd t# tm tm® mmmA mi am bill* pftjpmfelft at Mturltf »th»r tbMi
tb* «RO«at iOT«i*4 »»1 ttetr i#^tli ia »€t«l ft«nb«r of i»yn r*l«t#d to « 360~*i*3r
j « r * Xo eotttrmstf ji#ld® «& e#rtif lettM* a»t«s# and boato «r* «©»p«*#d im t « M
oftotttioftto» th§ a»@;stat isnmfmd, ami relatt tti» avatar of 4«y» i^wiiBiai la «s
IfttMMftt ptymmt p&r%®4 to tba a«toal aoabtr of d*y» In tbt p«rloda «il^ ® ^ i i » » »
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TREASURY DEPARTMENT
W A S H I N G T O N , D.C.
January 15, 1962

FOR RELEASE A. M. NEWSPAPERS,
Tuesday, January 16, 1962.

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 October 19, 196]
and the other series to be dated January 18, 1962, which were offered on January 10, wei
opened at the Federal Reserve Banks on January 15. Tenders were invited for
$1,100,000,000, or thereabouts, of 91-day bills and for $600,000,000, or thereabouts, oi
182-day biHs. The details of the two series are as followss
182-day Treasury bills
91-day Treasury bills
RANGE OF ACCEPTED
maturing July 19, 1962
maturing April 19, 1962
COMPETITIVE BIDS*
Approx. Equiv.
Approx. Equiv,
Price
Annual Rate
Price
Annual Rate
High
95.507
—T?&5%
99.306
2?j\3%
Low
98.1*96
2.975$
99.291
2.781$
Average
98.1*99
2.970$ 1/
99.300
2.770$ l/
12 percent of the amount of 91-day bills bid for at the low price was accepted
£7 percent of the amount of 182-day bills bid for at the low price was accepted
TOTAL TENDERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS?
District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
TOTALS

Applied For

Accepted

3l,76U,6W

:t Applied For

15,759,000 , $
ji
j.
,:
i
jt

1,538,285,000
3^,989,000
56,037,000
12,983,000
2ii,738,000
208,199,000
!ll,006,000
20,560,000
1*5,285,000
18,60U,000
126,593,000

661,685,000
16,989,000
29,913,000
12,583,000
19,01l*,000
151,879,000
31*,006,000
1U,090,000
32,660,000
l8,10l*,000
95,065,000

$2,159,01*3,000

$1,101,71*7,000 a./

s
jt
jj
j
j.

3,785,000
1,111*, 376,000
9,165,000
11*, 703,000
2,355,000
6,368,000
95,887,000
8,1*19,000
7,236,000
9,902,000
6,1*32,000
27,1*27,000

$1,306,055,000

Accepted

3,773,000

509,06i*,000
1^,165,000
8,508,000
2,291,000
5,672,000
30,998,000
6,70U,000
3,236,000
8,687,000
5,332,000
11,723,000
$600,153,000 t

a/ Includes $260,913,000 noncompetitive tenders accepted at the average price of 99»30C!
E/ Includes $63,019,000 noncompetitive tenders accepted at the average price of 98.1*99
1/ On a coupon issue of the same length and for the same amount invested, the return or
these bills would provide yields of 2.83$, for the 91-day bills, and 3.06$, for th«
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-367

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

other excise taxes, whether Federal or State, but are exempt

ell taxation now or hereafter imposed on the principal or interest thereof by any

or any of the possessions of the United States, or by any local taxing authority.

pur-poses of taxation the amount of discount at which Treasury bills are original

by the United States is considered to be interest. Under Sections 454 (b) and 122
t -

of the Internal Revenue Code of .1954 the amount of discount at which bills issued here-

under are sold is not considered to accrue until such bills are sold, redeemed or

wise disposed of, and such bills are excluded from consideration as. capital asse

Accordingly, the owner of Treasuiy bills (other than life insurance companies) is

hereunder need include in his income tax return only the difference between the p

paid for such bills, whether on original issue or on subsequent purchase, and the

actually received either upon sale or redemption at maturity during the taxable y
for-which the return is made, as ordinary gain or loss.

Treasuiy Department Circular No. 418 (current revision) and this notice, prescrib
the terms of the Treasury bills and govern the conditions of their issue. Copies
circular may be obtained from any Federal Reserve Bank or Branch.

printed forms and forwarded in the special envelopes which will be supplied by Federal
Reserve Banks or Branches on application therefor.

Banking institutions generally may submit tenders for account of customers provided

the names of the customers are set forth in such tenders. Others than banking insti

tions will not be permitted to submit tenders except for their own account. Tenders

be received without deposit from incorporated banks and trust companies and from re
sible 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 fo

unless the tenders are accompanied by an express guaranty of payment by an incorpor
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 Treasur

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 Treasu

expressly reserves the right to accept or reject any or all tenders, in whole or in

and his action in any such respect shall be final. Subject to these reservations, n

competitive tenders for $ 200,000 or less for the additional bills dated October 26
&
TO
1961
( 91
days remaining until maturity date on April 26, 1962
) and

-^aar

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

mals) of accepted competitive bids for the respective issues. Settlement for accept

tenders in accordance with the bids must be made or completed at the Federal Reserv
on

Jaaaegy 25, 1962 , in cash or other immediately available funds or in a like

face amount of Treasury bills maturing January 25, 1962 Cash and exchange tender:
X2QCJL

will receive equal treatment.

Cash adjustments will be made for differences between the

far value of maturing bills accepted in exchange and the issue price of the new bil
The income derived from Treasuiy bills, whether interest or gain from the sale or

)ther disposition of the bills, does not have any exemption, as such, and loss from

TREASURY DEPARTMEM1
Washington
FOR IMMEDIATE RELEASE, Jaaaary 17, 1962

rimxxxmmxft
* ' ''
4

'-•''•'

TBEASURT'S WEEKLY BILL OFFERING
The Treasuiy Department, by this public notice, invites tenders for two series
of Treasury bills to the aggregate amount of $ 1,700,000,000 , or thereabouts,

cash and in exchange for Treasuiy bills maturing January 25. 1962 » in the amou
of $ 1,701,561,000 , as follows:

m
91

-day bills
maturity
date) to be issued
January 25, 1962
in the (to
amount
of $ 1,100,000,000
, or thereabouts,
representing an additional amount of bills dated October 26. 1961 s

ST
and to mature April 26, 1962
, originally issued in the
amount of $ 600,143,000
, the additional and original bills
to be freely interchangeable.
182 -day bills, for $ 600,000,000 , or thereabouts, to be dated

afiST
January 25. 1962

, and to mature

July gfif iftSS

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, $50,000, $100,000, $500,000 and $1,000
(maturity value).

Tenders will be received at Federal Reserve Banks and Branches up to the closin

hour, one-thirty p.m., Eastern Standard time, Monday, January 22, 1962 . Tender

will not be received at the Treasuiy Department, Washington. Each tender must b

for an even multiple of $1,000, and in the case of competitive tenders the pric

offered must be expressed on the basis of 100, with not more than three decimal

e. g., 99.925. Fractions may not be used. It is urged that tenders be made on t

TREASURY DEPARTMENT
WASHINGTON. D.C.
January 17. 1962
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
$ 1,700,000,000, or thereabouts, for cash and in exchange for
Treasury bills maturing January 25, 1962, in the amount of
$ 1,701,361,000, as follows:
91-day bills (to maturity date) to be issued January 25, 1962,
in the amount of $1,100,000,000, or thereabouts, representing an
additional amount of bills dated October 26, 1961, and to
mature April 26, 1962, originally issued in the amount of
$600,143,000, the additional and original bills to be freely
interchangeable.
182-day bills, for $600,000,000, or thereabouts, to be dated
January 25. 1962, and to mature July 26, 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, $50,000, $100,000, $500,000 and $1,000,000
(maturity value).
Tenders will be received at Federal Reserve Banks and Branches
up to the closing hour, one-thirty p.m., Eastern Standard
time, Monday, January 22, 1962.,
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.
Banking institutions generally may submit tenders for account of
customers provided the names of the customers are set forth in such
tenders. Others than banking institutions will not be permitted to
submit tenders except for their own account. Tenders will be received
without deposit from incorporated banks and trust companies and from
responsible and recognized dealers in investment securities. Tenders
from others must be accompanied by payment of 2 percent of the face
amount
of Treasury bills applied for, unless the tenders are
D-368
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 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
October 26, 196l, (91-days remaining until maturity date on
Ap-il 26, 1962)
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 January 25, 1962,
in cash or other immediately available funds or in a like face
amount of Treasury bills maturing January 25, 1962. 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
0O0 the taxable year for which the
return is made, as ordinary gain or loss.
Treasury Department Circular No. 4l8 (current, revision) and this
notice prescribe the terms of -the Treasury bills and govern the
conditions
any
Federalof
Reserve
their Bank
issue.
or Branch,
Copies of thfe circular may be obtained from

TREASURY DEPARTMENT
WASHINGTON, D.C.
January 17, 1962
FOR IMMEDIATE RELEASE
RESULTS OF TREASURY'S CURRENT CASH OFFERING

The Treasury today announced a 60 percent allotment on subscriptions
in excess of $50,000 for the current cash offering of an additional
$1 billion, or thereabouts, of k percent Treasury Bonds of 1969. Subscriptions for $50,000 or less will be allotted in full. Subscriptions
for more than $50,000 will be allotted not less than $50,000.
In addition to the amount allotted to the public, $100 million of
these bonds were allotted to Government Investment Accounts.
Reports received thus far from the Federal Reserve Banks show that
subscriptions for the bonds total about $1,619 million, of which about

$215 million were received from subscribers in the savings-type investor
groups, $1,258 million from commercial banks for their own account and
$146 million from all others.
Details by Federal Reserve Districts as to subscriptions and
allotments will be announced next week.

0O0

D-369

TREASURY DEPARTMENT
fiSar^T"

W A S H I N G T O N , D.C.
January 17, 1962
FOR IMMEDIATE RELEASE
RESULTS OF TREASURY'S CURRENT CASH OFFERING

The Treasury today announced a 60 percent allotment on subscriptions
in excess of $50,000 for the current cash offering of an additional
$1 billion, or thereabouts, of 4 percent Treasury Bonds of 1969. Subscriptions for $50,000 or less will be allotted in full.

Subscriptions

for more than $50,000 will be allotted not less than $50,000.
In addition to the amount allotted to the public, $100 million of
these bonds were allotted to Government Investment Accounts.
Reports received thus far from the Federal Reserve Banks show that
subscriptions for the bonds total about $1,619 million, of which about
$215 million were received from subscribers in the savings-type investor
groups, $1,258 million from commercial banks for their own account and
$146 million from all others.
Details by Federal Reserve Districts as to subscriptions and
allotments will be announced next week.

0O0

D-369

TREASURY DEPARTMENT

WASHINGTON, D.C.
January 18, 1962

FOR IMMEDIATE RELEASE
TREASURY DECISION ON TELEPHONE CABLE
UNDER THE ANTIDUMPING ACT

The Treasury Department has determined that paperinsulated, lead-covered telephone cable from Canada 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 determination will be published in the Federal
Register.
Virtually

a H of the shipments were for defense purposes

and the statistics as to the volume of imports are not
available.

TREASURY DEPARTMENT
WASHINGTON. D.C
January 18, 1962

FOR IMMEDIATE RELEASE
TREASURY DECISION ON TELEPHONE CABLE
UNDER THE ANTIDUMPING ACT
The Treasury Department has determined that paperinsulated, lead-covered telephone cable from Canada 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 determination will be published in the Federal
Register.
Virtually all of the shipments were for defense purposes
and the statistics as to the volume of imports are not
available.

- 22 -

It is my conviction that depreciation reform, including both
the administrative revision of depreciation guidelines and the
investment credit, is not only the best way to bring about a higher
investment level, but is absolutely necessary if we are to grow
at a more rapid rate and maintain widespread international confidence
in our currency.

83
- 21 -

Summary and conclusion
I consider our program of depreciation reform — including
the investment credit — a central part of our economic policy.
Our two most important long-range economic problems today are to
stimulate growth in the domestic economy and to eliminate the
deficit in our balance of payments.
Comparison with other industrialized countries shows, as would
be expected, that those countries with higher levels of investment
in productive equipment have higher levels of economic expansion.
As for our balance of payments, the most effective way to eliminate
that deficit is to increase our exports. Indications are that other
countries have been modernizing more rapidly, thus stepping up their
productivity, lowering costs, and offering stiffer competition to
our own producers, not only in foreign markets, but in domestic markets
within the United States as well. To meet that competition our manufacturers need the increased stimulus to investment and modernizationwhich can best be brought about by these changes in tax policy.
It is no exaggeration to say that at the present time, one of
the most important policy goals of the Administration is to increase
productive private investment, for both domestic and international
reasons. We need to make sure that our tax laws are fostering a
strong flow of funds into investment in new productive facilities.

. 20 -

of textile products. This was followed, early this week, by simiar
action with respect to apparel manufacturers. Revised tax lives for
other segments of the textile industry are being developed as rapidly
as possible.
The Treasury accelerated action with respect to the textile industry
in response to the President's directive of May 2. Our actions taken
thus far have provided reductions in Bulletin "F" guideline lives for

depreciation of machinery and equipment of about 40 percent, specificall
from 25 years or more to 15 years for production machinery and from
15 to 20 years to 12 years for finishing equipment in the textile mill
products industry and from 15 to 9 years for sewing equipment. Because
many firms were depreciating their assets on the basis of lives considerably shorter than those suggested in Bulletin MFV, the actual
average reduction in tax lives will be equal to 12 to 15 percent.
The new guidelines for the textile industry are designed to take into

account increased rates of obsolescence due to such factors as accelera-

tion of technological innovation and increasingly intensive internationa
competition. They are far more realistic lives than the old ones and
will bring a reduction in the wide variance among firms in depreciation
allowances, thus improving equity. In addition, the new lives involve
fewer differences among closely related assets. TTiey will recognize
the growing importance of the use of the system approach to factory
organization (in contrast with an assemblage of more or less unrelated
machines). They will also simplify accounting for depreciation, and
facilitate the use of composite and group depreciation. \

- 19 -

involves establishment of tax lives for broad classes of assets.
At the same time our procedures must be sufficiently flexible to
allow for recognition of the varying circumstances surrounding the
economics of the operation of individual firms within industries
as well as varying practices with respect to replacement policy,
intensity of use of machinery and equipment, and practices with
respect to repairs and maintenance.
Substantial simplification and elimination of controyersy between
the tax agent and the taxpayer will be achieved with the enactment
by Congress of that feature of the bill now before the Ways and
Means Committee -which will permit disregarding the first 10 percent
of salvage value for purposes of computing annual depreciation charges.
Flexibility and simplification of the system of depreciation will
require one important safeguard. This important safeguard is available in the Treasury's proposal to tax as ordinary income gains from
the sale of depreciable assets to the extent of prior depreciation
charged after December 31, i960. This amendment of section 1231 of
the Internal Revenue Code, now pending before the Ways and Means
Committee, will assist greatly in facilitating the achievement of
administrative depreciation practices that are fully in keeping
with the requirements of the economy of 1962.
As you know, we began to move ahead with our revision of depreciation guidelines in October, when we announced new average useful
lives for machinery and equipment used in the spinning and weaving

- 18 engineering studies and statistical analyst will provide, on the
basis of information never before gathered in such volume and detail,
the necessary guidance for this full scale revision. Our basic
objective is to provide realistic tax lives in the light of past
actual practices and present and foreseeable technological innovations and other factors affecting obsolescence. Following the
promulgation of the new guidelines, further revisions may be forthcoming with respect to any particular industry on the basis of
subsequent engineering studies that may be requested and found
necessary.
Complementary to, but not subsidiary to this objective of providing realistic lives, is our aim of achieving a far more simple and
flexible system of depreciation under the directive of the Internal
Revenue Code which, as I indicated earlier, requires that "reasonable
allowances" for depreciation be permitted.
The existing Bulletin "F™, with its suggested useful lives for
some 5,000 items of depreciable property, is a morass of detail. One
of the important goals of our revision program is to reduce this
detail. I intend to move toward guideline lives for broad classes
of assets usedyby each of the industries in our economy. The
•Treasury Depreciation Survey has clearly demonstrated that one of
the major irritants now experienced by American business stems from
the detail of existing guidelines. A large proportion of our
respondents has expressed a strong preference for a system that

- 17 -

The data presented in the bottom portion of Table 1 demonstrate
clearly that, especially within the first two years of the "Iiff* of
an asset, even a revision to provide realistic tax lives will not,
by itself, place the United States in a position comparable to that
of its most immediate foreign competitors. The achievement of this
objective, rather, requires "both the investment tax credit and the
faster write-offs that would be permitted under depreciation policies,
which, in broader recognition of the increasing importance of
oosolescence in the postwar world, would permit American firms to
assume shorter tax lives for depreciable property.
Reviewing this summary and analysis, three important conclusions
emerge: (l) Shorter tax lives alone will not do the job of bringing
American industry abreast of its foreign competitors with respect to
tax allowances for investment. (2) The investment credit will make
a major contribution toward achieving that goal. (3) The combination of the credit and the forthcoming revision of depreciation guidelines will place the United States on substantially equal footing with
other major industrial nations. These conclusions underscore the
necessity for the Treasury's two-pronged program of revised,
realistic depreciation and the investment credit.
Objectives of depreciation revision
It is my firm intention to announce new guidelines for depreciation during the course of the spring of this year. These guidelines
will cover all major assets for all industries. The combination of

-16 This picture changes dramatically, however, when the proposed
investment credit enters. In terms of its effect on current liability,
the 8 percent investment tax credit is equivalent to an incentive
allowance of approximately l6 percent for corporations subject to the
52 percent corporate income tax rate and about 27 percent for
corporations subject only to the normal tax rate of 30 percent. 1/
The bottom seven rows of Table 1 indicate the effect on comparable
allowances for new depreciable assets that would be achieved if the
8 percent investment tax credit were currently in force. Assuming
the existing weighted average Bulletin "F" life of about 19 years,
the equivalent first-year deductions would be 26.5 percent. In
combination with a somewhat shorter life of 15 years, we find that
the first year's equivalent deductions in the United States would
be equal to 29-3 percent of the cost of new depreciable assets.
This proportion is higher than that which obtains in Belgium, France,
West Germany, Italy, and the Netherlands. First-year deductions or
their equivalents would remain substantially higher than those permitted in the United States only in Japan and the United Kingdom.
For the first five years of the life of the asset, permissible deductions would still exceed appreciably those allowed in the United States
in Belgium, France, Italy, the Netherlands, and Sweden. But allowances
in the United States would be approximately the same as those allowed
in Canada, West Germany, Japan, and the United Kingdom.
1/ Both the investment credit and the incentive allowance have greater
~" overall effects than a similar initial allowance because they do not
reduce the amount of depreciation that may be taken over the life
of an asset.

-15 Table 1
Comparison of depreciation deductions, initial and incentive allowances l/
for industrial equipment in leading industrial countries with similar
deductions and allowances in the United States
under actual and various proposed plans
Depreciation deductionst, initial
Representative
and incentive allowances
: First
: First 2
tax lives
: First 5
year
: years
: years
(Percentage of cost of asset)
Belgium
8 years
Canada
10
France
10
West Germany
10
Italy
10
Japan
l6
Netherlands
10
Sweden
5
United Kingdom
27
United States:
Without investment_credit and_
lives equal to current Bulletin "F"|
weighted^average of T 9 years"
With lives of:
1 5 years
l4 years
13 years
12 years
11 years
10 years
With investment credit and lives
equal to current Bulletin "F"
weighted average of 19 years
With lives of:
15 years
l4 years
13 years
12 years
11 years
10 years

22.5$
30.0
25.0
20.0
25.0
43.4
26.2
30.0
39.0

45.0/0
44.0
43.8
36.0
50.0
51.0
^9.6
51.0
46.3

10.5

19.9

42.7

13.3
14.3
15.4
16.7
18.2
20.0

24.9
26.5
28.4
30.6
33.1
36.O

51.1
53.7
^6.6
59.8
63.0
67.2

26.5

35.9

58^7

29.3
30.3
31.4
32.7
34.2
36.0

40.9
42.5
44.4
46.6
49.1
52.0

67.1
69.7
72.6
75.8
79.0
83.2

92.5/o
71.4
76.3
67.2
100.0
68.2
85.6
100.0
64.0

Treasury Department, Office of Tax Analysis
January 18, 19^2
l/ The deductions and allowances for each of the foreign countries have been
computed on the basis that the investment qualifies fully for any special
allowances or deductions permitted. The deductions in the United States have
been determined under the double declining balance depreciation method, without
regard to the limited first-year allowances for small business.
2/ For purposes of this table, the proposed 8 percent investment credit has been
considered as equivalent to a 16 percent investment allowance. For corporations
subject only to the 30 percent normal tax it is equivalent to an incentive alio""
ance of 27 percent. The initial allowance of 20 percent of each year's invests
up to $10,000, is not taken into account because of its relatively small impact

- 14 -

incentive allowances.

Initial allowances, which add very appreciably

to the deduction that may be taken in the year of acquisition of a
depreciable asset, are permitted in Canada, Italy, Japan, the
Netherlands, Sweden, and the United Kingdom.
The impact of ordinary depreciation plus initial and incentive
allowances on the amounts that may be deducted in the year in which
a new asset is acquired is shown in the second column of the table.
Here it may be seen that the percentage of the cost of an asset that
may be deducted in the first year ranges from 20 percent in West

Germany to 43.4 percent in Japan, compared with as low as 10.5 percent in
United States.
Columns 3 and 4 of Table 1 show the percentage of the cost of
the asset that may be deducted during the first two and first five
years of its life. Here, again, it may be seen that the deductions
permitted in each of the nine industrialized foreign countries comprise a far higher proportion of the cost of industrial machinery
and equipment than is permitted under current law and practices in
the United States. For the first five years of the life of the asset,
the relevant proportion falls within the range of 60 to 70 percent
for West Germany, Japan, and the United Kingdom, between 70 and 80
percent for Canada and France, and 85 to as much as 100 percent for
Belgium, Italy, the Netherlands, and Sweden. In sharp contrast, the
applicable percentage in the United States is 42.7 under the present
average Bulletin "F" life and 51*1 percent for the commonly used
15-year life.

Depreciation abroad
Because American industry does not operate in a setting entirely
of our own making, but is actively in competition at home and abroad
with foreign producers, our practices with respect to depreciation
policy need to be examined in the light of foreign experience. Thus
the Treasury has gathered a substantial amount of information on
depreciation practices in leading foreign industrial nations from
a wide variety of published and unpublished sources, including our
Embassy personnel and officials of foreign governments.
In today's highly competitive world we find widespread use of
initial allowances and incentive allowances supplementing depreciation charges. Thus for the major industrialized nations of the free
world — Belgium, Canada, France, West Germany, Italy, Japan, the
Netherlands, Sweden, and the United Kingdom — we have assembled
reliable information with respect not only to depreciation practices,
but also regarding initial and incentive allowances.
Hie information presented in the first column of Table 1 shows
that the typical or representative tax life permitted with respect
to production machinery and equipment in each of these countries,
except Japan and the United Kingdom, is substantially lower than it
is in the United States. Moreover, in addition to ordinary depreciation, Belgium, the Netherlands, the United Kingdom, and under
certain conditions, Sweden, permit the deduction from income of

9?
- 12 -

Another source of information being used is the major suppliers
of machinery and equipment to each of the industries. Officials of
the firms producing the various types of capital goods are being
interviewed with a view to obtaining insights into technological
developments which may be expected to have a bearing on the useful
life of the machinery and equipment used and expected to be used in
each of the industries.
Conferences with major trade associations and individual firms
representing large segments of these industries have been arranged.
At these conferences taxpayers and spokesmen for groups of taxpayers
have been encouraged to present briefs supporting each industry's
position with respect to depreciation policy. These conferences have
thus far proved to be an excellent forum for the exchange of views
between industry representatives, the Treasury and the technical
personnel of the Internal Revenue Service.
As a final step, an engineering report is being prepared by each
of the industry teams, setting out its findings and recommendations
with respect to the average useful lives of items of depreciable
property used in the industry studied. These reports are expected
to reflect the expert opinions of the engineers, after giving full
consideration to all of the factors brought into the picture.

- 11 -

Each engineer assigned to a team has the experience and training
which qualify him to render expert opinion as to the useful life of
depreciable assets used in the industry under study. In most cases
the engineering team is made up of one engineer designated by the
Washington office and two field engineers.
After the engineering teams were formed, they were assembled in

the national office simultaneously for briefing and general instructions
At that time each team arranged a tentative schedule of activities,
including conferences with industry personnel and inspection trips
to selected representative plants.
The selection of these plants has been subject to extreme care,
so as to insure access to the greatest possible variety of operating
conditions within each industry. Inspection trips involve the
observation of actual plant operations and discussions with management officials associated with each plant. The discussions are
designed to elicit management views as to the useful lives they
believe should be assigned to various items of depreciable property.
In order to secure fullest cooperation, all visits to plants have
been preceded by letters from the Commissioner of Internal Revenue
to the appropriate company officials, briefly explaining the project
and requesting cooperation and assistance.
Our engineers seek further information through the inspection
of plant records of purchases and retirements of machinery and
equipment and other records which may have a bearing on the taxpayer's operating practices and policies.

- 10 -

u- si

With the help of consultants the Treasury is proceeding as rapidly
as possible with the analysis of the data. Our findings thus far tend
to confirm those arrived at on the basis of the Treasury Depreciation
Survey in that they too tend to demonstrate that the existing depreciation guidelines are outmoded and in need of revision.
The engineering studies
In order to supplement the statistical data being developed we
have also undertaken engineering studies. While statistical data show
what practice has been, engineering studies are designed to disclose the
nature of current and prospective technological developments. Internal
Revenue Service engineers have completed an engineering study of the
textile industry and are currently engaged in similar studies in the
following industries: aircraft, automobiles, electrical machinery and
equipment, machine tools, railroads, and steel. The six were selected
because they are large, basic industries and because, among them, they
represent major types of U.S. business activity. They also differ
widely in their level of automation and their recent experience with
technological change. The studies being conducted for these industries
are expected to be completed by the end of this month.
Because of their importance in our program of revision and because
of the widespread publicity which has been accorded to them, I should
like to describe briefly for you the nature of our engineering studies.
For the purpose of carrying out our studies of the industries
named, seven teams of three engineers each were formed and each team
was assigned to conduct a study of one of the selected industries.

- 9The life of depreciable assets study
Our second study, designed to complement the Treasury Depreciation

Survey, was also started on a full scale in i960 and pursued with sharply
stepped-up intensity after the beginning of 1961. This study, known as
the Life of Depreciable Assets Study, is based on a tabulation of the
detailed depreciation information submitted on 1959 corporation income
tax returns. The data are drawn from the returns of a large representative statistical sample of more than 50,000 corporations. It is designed
to provide more detailed information by asset type, year of acquisition,
and depreciation method used than that obtained from the Treasury Depreciation Survey. Moreover, whereas the latter provides information
primarily for corporations with assets in excess of $5 million, the LDA
covers the full range of corporations classified by size.
The great mass of data provided by the Life of Depreciable Assets
Study is indicated by the fact that when all of the tabulations have
been delivered to the Treasury they will be contained in a pile of
documents that will stand seven feet high. Final deliveries are
expected within the next few weeks. I regard this unprecedentedly
detailed and massive compilation of data as a potential source of
information of great value. It will not only provide hitherto unavailable information on depreciation practices, but it will also be
extremely useful as a source of information that has not been available in the past on many aspects of the operation of our corporate
economy.

-8 of the depreciation system. With the cooperation of the Small Business
Administration, the questionnaire portion of the survey material was
also mailed to approximately 7,600 small businesses. Completed returns
were received from about 2,000 of the large corporations and 1,300 of
the smaller firms.
A preliminary report on the questionnaire portion of this survey,
dealing chiefly with business opinions on alternative approaches to
depreciation reform, was issued in January 1961. Early in 1961 the processing of the statistical data was accelerated and by the fall of that

year, thanks to the prodigious efforts put forth by the Statistics Divisio

of the Internal Revenue Service, the compilations of the data were complet
These compilations provide a vast mass of data which the Treasury is
intensively engaged in analyzing. This analysis is not yet complete, but
some indications of the nature of the findings may be indicated at this
point. The 1,900 corporations which responded with usable data account

for close to one-half of all corporate depreciable assets and approximatel
half of all corporate depreciation charges taken in 1959.
The survey results available at this date indicate that in general
depreciation charges allowed to American corporations have by no means
been liberal. This conclusion is based on two major findings. One is
that the amount of fully depreciated assets reported is surprisingly
small. The other is that the ratio of depreciation reserves to gross
depreciable assets is below the level commonly accepted as a measure of
conservative depreciation practices.

- 7The Treasury depreciation studies
In order to obtain fuller insight into the problem, the Treasury, in
i960, initiated two major studies designed to provide an adequate factual
background on the operation of existing depreciation practices and tax
lives actually being used. We have, in addition, carefully studied depreciation practices in nine of the other leading industrial nations of the
world.
Both of the Treasury^ major depreciation studies are elaborate,
detailed, statistical surveys. One is based on a questionnaire survey of
corporations. The other draws its data from a tabulation of information

contained in the depreciation schedules submitted as part of the corporate
income tax returns for 1959* These studies were first undertaken on a

pilot study basis in 1959* designed to test their feasibility and to perfe
statistical procedures.
The Treasury depreciation survey
In July i960 the Treasury Department asked approximately 2,700 large

corporations to supply information on the amount of their depreciable asse
reserves for depreciation, depreciation deductions, and fully depreciated
property, as well as the service lives being used in the depreciation of
various types of property, and the extent to which the new methods of
depreciation permitted under the Internal Revenue Code of 1954 had been
adopted. In addition, a questionnaire was distributed to these corporations requesting information on depreciation practices, experience under

the existing law, and opinions on various alternative proposals for revisi

- 6This policy has since been incorporated into the regulations under the
1954 Internal Revenue Code.
The Revenue Act of 1954 marked an important new direction in depreciation policy. New liberalized methods—the declining-balance method
at twice the corresponding straight-line rate and the sum-of-the-yearsdigits formula—were specifically authorized. These new methods permit
acceleration of the timing of deductions for depreciation and concentrate
more of the capital recovery for tax purposes in the early years of an
asset's life. However, neither the 1954 Code nor administrative policy
provided changes with respect to useful lives over which assets might
be written off.
In the period following the 1954 Code liberalization the Treasury
continued to study the question of useful life determination and possible
revision of Bulletin F. It was recognized that Bulletin F was outmoded,
but the task of carrying through a realistic revision proved difficult.
One major project the object of which was to revise Bulletin F was

undertaken by the Treasury with the cooperation of non-government advisers
in the years 1956 to 1958. This project provided suggested new guideline
schedules for tax lives, but the Treasury believed that these schedules
did not give adequate recognition to increasingly rapid obsolescence
and,consequently, did not indicate a sufficient shortening of useful
lives in many cases.

-5-

allowances in a manner which would be more equitable than an arbitrary
and broadside percentage reduction. This proposal was accepted by the
Congressional committees and the Treasury proceeded to issue its now

rather famous T. D. 4422. This document shifted to the taxpayer the burden
of proof as to the correctness of depreciation and paved the way for redetermining useful lives of depreciable property for tax purposes along
more stringent lines. Following the issuance of T.D. 4422, the administration of depreciation was considerably tightened, although the extent
of readjustment has sometimes been exaggerated.
Subsequently, in 1942, the still used Bulletin F was issued as a guide
to tax lives. Conflict and controversy between taxpayers and administra-

tive officials continued, although eased somewhat by several developments.
The first of these were the provisions for accelerated amortization
for defense and defense related facilities, adopted as emergency measures
in 19*40 and again in 1950. In 1946 more general administrative approval

was given to the use of the 150 percent declining-balance method of comput
ing depreciation. A major change in administrative policy was introduced
in 1953. This new policy, designed to reduce controversies over depreciation, was contained in Revenue Rulings 90 and 91. These new rulings
implied in large measure a return, to pre-1934 arrangements. They stated,
in effect, that the Internal Revenue Service would generally not disturb
depreciation deductions claimed and revenue agents would propose adjustments only where there was a clear and convincing basis for a change.

- 4deduction a reasonable allowance for the exhaustion, wear and tear

(including a reasonable allowance for obsolescence)...." of property us
in a trade or business or held for the production of income.
Brief history of depreciation under the income tax
Because I believe that the history of administrative and legislative

procedures in the depreciation area will help to place the present situ
in proper focus, I shall briefly describe that history.
For the twenty years following the introduction of our modern income

tax, considerable freedom was allowed to the taxpayer in the determinat
of depreciation. Deductions taken by taxpayers for depreciation were

generally not challenged by the Internal Revenue Service unless it coul
be shown by clear and convincing evidence that they were unreasonable.

Through most of this period tax rates were relatively low—the top rates

the corporate and personal income taxes, for example, were at 12.5 a&d 2
percent, respectively—and depreciation evoked few problems.

However, in the early thirties when tax rates were raised substantially

Congress became very much concerned about the level of depreciation all

In 1933 a Subcommittee of the Committee on Ways and Means reviewed depr

tion policy in connection with the major tax revision of 1934. It repor

that excessive depreciation was being taken and recommended legislation

provide a 25 percent across-the-board reduction in depreciation allowan
for the next three years.
The Treasury objected to this approach and suggested instead that
it be permitted administrative discretion to tighten up depreciation

- R-}
-3Introduction
Depreciation is one of the most difficult items of business costs
to deal with under income tax accounting. As a charge against income or

addition to business costs, it is designed to spread the cost to busines

of using depreciable capital assets over their useful economic lives. It

purpose is to charge to each accounting year a proportion of^the origina
cost of each asset so that over the life of the asset there will be re-

flected its loss of value due to wear and tear, including the destructiv
forces of the elements, and obsolescence.
At best, the depreciation to be charged against each year's income

can be only an informed estimate. Establishing the rate at which any giv
asset is to be depreciated over its economically useful life is made
particularly difficult by the fact that obsolescence is a function of
prospective developments and future changes in technology, wage rates

relative to the cost of capital, competitive conditions, consumer tastes
preferences and demand, and other forces that cannot be foreseen with

accuracy. And it is not surprising that depreciation for income tax pur-

poses has long been a subject of controversy among accountants, economis

and lawyers, and between the taxpayer and those responsible for administration of the income tax. In consequence it is appropriate that the

general rule governing depreciation, as set forth in the Internal Revenu

Code of 1954, states only that "There shall be allowed as a depreciation

i no
- 2 The changes being made will assist American business in its efforts
to modernize and expand. The law calls for a reasonable allowance

for depreciation, including a recognition of obsolescence as a factor
The new guidelines will be designed to meet this requirement.
The new guidelines will be based on three major sources of information. The first, initiated by my predecessor, is a survey of business

opinion and practice regarding depreciation. The second, also started
by Secretary Anderson, is a study based on information drawn from
corporate tax returns. This was designed to supply additional data
on actual current experience. The third, begun late last year, is a

group of engineering studies of six major industries aimed at supplementing the statistical data. In addition, we have studied foreign
depreciation laws and practices.
Although our work has not been completed, there is sufficient
evidence to indicate a real need for revision. We also plan to
establish procedures for continuous review and revision of the new

guidelines to take account of current developments affecting deprecia
This administrative revision of depreciation ~- if complemented by
the investment credit now before the Congress -- will place American

industry on a substantially equal footing with its foreign competitor

STATEMENT OF THE HONORABLE DOUGLAS DILLON
SECRETARY OF THE TREASURY
BEFORE THE
JOINT COMMITTEE ON INTERNAL REVENUE TAXATION
JANUARY 18, 1962
2:00 P.M.

I am happy to have this opportunity to appear before this
Committee to discuss the work the Treasury has been doing in the area
of depreciation reform. As you know, the first step of this reform
was completed last fall with, the announcement of new depreciation
guidelines for a major part of the textile industry. A further step

was taken this week with the announcement of new guidelines for machinery
and equipment used by apparel manufacturers. This spring we plan to
announce new guidelines for major types of assets for all other
industries.

D-370

1 n,4

STATEMENT OF THE HONORABLE DOUGLAS DILLON
SECRETARY OF THE TREASURY
BEFORE THE
JOINT COMMITTEE ON INTERNAL REVEMJE TAXATION
JANUARY 18, 1962
2:00 P.M.

I am happy to have this opportunity to appear before this
Committee to discuss the work the Treasury has been doing in the area
of depreciation reform. As you know, the first step of this reform
was completed last fall with the announcement of new depreciation
guidelines for a major part of the textile industry. A further step

D-370

„ 2 -

The changes being made will assist American business in its efforts
to modernize and expand. The law calls for a reasonable allowance
for depreciation, including a recognition of obsolescence as a factor.
The new guidelines will be designed to meet this requirement.
The new guidelines will be based on three major sources of information. The first, initiated by my predecessor, is a survey of business
opinion and practice regarding depreciation. The second, also started
by Secretary Anderson, is a study based on information drawn from
corporate tax returns. This was designed to supply additional data
on actual current experience. The third, begun late last year, is a
group of engineering studies of six major industries aimed at supplementing the statistical data. In addition, we have studied foreign
depreciation laws and practices.
Although our work has not been completed, there is sufficient
evidence to indicate a real need for revision. We also plan to
establish procedures for continuous review and revision of the new

guidelines to take account of current developments affecting depreciation
This administrative revision of depreciation — if complemented, by
the investment credit now before the Congress — will place American
industry on a substantially equal footing with its foreign competitors.

1 H^
J, KJ "~s

- 3 Introduction
Depreciation is one of the most difficult items of business costs
to deal with under income tax accounting. As a charge against income or
addition to business costs, it is designed to spread the cost to business
of using depreciable capital assets over their useful economic lives. Its
purpose is to charge to each accounting year e proportion of the original
cost of each asset so that over the life of the asset there will be reflected its loss of value due to wear and tear, including the destructive
forces of the elements, and obsolescence.
At best, the depreciation to be charged against each year's income

can be only an informed estimate. Establishing the rate at which any given
asset is to be depreciated over its economically useful life is made
particularly difficult by the fact that obsolescence is a function of
prospective developments and future changes in technology, wage rates
relative to the cost of capital, competitive conditions, consumer tastes,
preferences and demand, and other forces that cannot be foreseen with
accuracy. And it is not surprising that depreciation for income tax pur-

poses has long been a subject of controversy among accountants, economists
and lawyers, and between the taxpayer and those responsible for administration of the income tax. In consequence it is appropriate that the
general rule governing depreciation, as set forth in the Internal Revenue
Code of 1954, states only that "There shall be allowed as a depreciation

- 4 deduction a reasonable allowance for the exhaustion, wear and tear
(including a reasonable allowance, for obsolescence)...." of property used
in a trade or business or held for the production of income.
Brief history of depreciation under the income tax
Because I believe that the history of administrative and legislative

procedures in the depreciation area will help to place the present situatio
in proper focus, I shall briefly describe that history.
For the twenty years following the introduction of our modern income
tax, considerable freedom was allowed to the taxpayer in the determination
of depreciation. Deductions taken by taxpayers for depreciation were
generally not challenged by the Internal Revenue Service unless it could
be shown by clear and convincing evidence that they were unreasonable.
Through most of this period tax rates were relatively low—the top rates of
the corporate and personal income taxes, for example, were at 12.5

d 25

percent, respectively—and depreciation evoked few problems.
However, in the early thirties when tax rates were raised substantially,

Congress became very much concerned about the level of depreciation allowan

In 1933 a Subcommittee of the Committee on Ways and Means reviewed deprecia
tion policy in connection with the major tax revision of 1934. It reported
that excessive depreciation was being taken and recommended legislation to
provide a 25 percent across-the-board reduction in depreciation allowances
for the next three years.
The Treasury objected to this approach and suggested instead that
it be permitted administrative discretion to tighten up depreciation

^, U ^

- 5 allowances in a manner which would be more equitable than an arbitrary
and broadside percentage reduction. This proposal was accepted by the
Congressional committees and the Treasury proceeded to issue its now

tive officials continued, although eased somewhat by several developments.
The first of these were the provisions for accelerated amortization
for defense and defense related facilities, adopted as emergency measures
in 19^0 and again in 1950. In 19^+6 more general administrative approval

was given to the use of the 150 percent declining-balance method of comput
ing depreciation. A major change in administrative policy was introduced
in 1953. This new policy, designed to reduce controversies over depreciation, was contained in Revenue Rulings 90 and 91. These new rulings
implied in large measure a return to pre-1934 arrangements. They stated,
in effect, that the Internal Revenue Service would generally not disturb
depreciation deductions claimed and revenue agents would propose adjustments only where there was a clear and convincing basis for a change.

acceleration of the timing of deductions for depreciation and concentrate
more of the capital recovery for tax purposes in the early years of an
asset's life. However, neither the 1954 Code nor administrative policy
provided changes with respect to useful lives over which assets might
be written off.
In the period following the 1954 Code liberalization the Treasury

continued to study the question of useful life determination and possible
revision of Bulletin F. It was recognized that Bulletin F was outmoded,
but the task of carrying through a realistic revision proved difficult.
One major project the object of which was to revise Bulletin F was

undertaken by the Treasury with the cooperation of non-government adviser
in the years 1956 to 1958. This project provided suggested new guideline
schedules for tax lives, but the Treasury believed that these schedules
did not give adequate recognition to increasingly rapid obsolescence
and,consequently, did not indicate a sufficient shortening of useful
lives in many cases.

- 7The Treasury depreciation studies
In order to obtain fuller insight into the problem, the Treasury, in
I960, initiated two major studies designed to provide an adequate factual
background on the operation of existing depreciation practices and tax
lives actually being used. We have, in addition, carefully studied depreciation practices in nine of the other leading industrial nations of the
world.
Both of the Treasury's major depreciation studies are elaborate,
detailed, statistical surveys. One is based on a questionnaire survey of
corporations. The other draws its data from a tabulation of information
contained in the depreciation schedules submitted as part of the corporate
income tax returns for 1959. These studies were first undertaken on a
pilot study basis in 1959, designed to test their feasibility and to perfect
statistical procedures,
The Treasury depreciation survey
In July i960 the Treasury Department asked approximately 2,700 large
corporations to supply information on the amount of their depreciable assets,
reserves for depreciation, depreciation deductions, and fully depreciated
property, as well as the service lives being used in the depreciation of
various types of property, and the extent to which the new methods of
depreciation permitted under the Internal Revenue Code of 1954 had been
adopted.

In addition, a questionnaire was distributed to these corpora-

tions requesting information on depreciation practices, experience under
the existing law, and opinions on various alternative proposals for revision

- 8of the depreciation system. With the cooperation of the Small Business
Administration, the questionnaire portion of the survey material was
also mailed to approximately 7,600 small businesses. Completed returns
were received from about 2,000 of the large corporations and 1,300 of
the smaller firms.
A preliminary report on the questionnaire portion of this survey,
dealing chiefly with business opinions on alternative approaches to
depreciation reform, was issued in January 1961. Early in 1961 the processing of the statistical data was accelerated and by the fall of that

year, thanks to the prodigious efforts put forth by the Statistics Divisio

for close to one-half of all corporate depreciable assets and approximate
half of all corporate depreciation charges taken in 1959.
The survey results available at this date indicate that in general
depreciation charges allowed to American corporations have by no means
been liberal. This conclusion is based on two major findings. One is
that the amount of fully depreciated assets reported is surprisingly
small. The other is that the ratio of depreciation reserves to gross
depreciable assets is below the level commonly accepted as a measure of
conservative depreciation practices.

-9 The life of depreciable assets study
Our second study, designed to complement the Treasury Depreciation

Survey, was also started on a full scale in i960 and pursued with sharply
stepped-up intensity after the beginning of 1961. This study, known as
the Life of Depreciable Assets Study, is based on a tabulation of the
detailed depreciation information submitted on 1959 corporation income
tax returns. The data are drawn from the returns of a large representative statistical sample of more than 50,000 corporations. It is designed
to provide more detailed information by asset type, year of acquisition,
and depreciation method used than that obtained from the Treasury Depreciation Survey. Moreover, whereas the latter provides information
primarily for corporations with assets in excess of $5 million, the LDA
covers the full range of corporations classified by size.
The great mass of data provided by the Life of Depreciable Assets
Study is indicated by the fact that when all of the tabulations have
been delivered to the Treasury they will be contained in a pile of
documents that Will stand seven feet high. Final deliveries are
expected within the next few weeks. I regard this unprecedentedly
detailed and massive compilation of data as a potential source of
information of great value. It will not only provide hitherto unavailable information on depreciation practices, but it will also be
extremely useful as a source of information that has not been available in the past on many aspects of the operation of our corporate
economy.

- 10 -

what practice has been, engineering studies are designed to disclose the
nature of current and prospective technological developments. Internal
Revenue Service engineers have completed an engineering study of the
textile industry and are currently engaged in similar studies in the
following industries: aircraft, automobiles, electrical machinery and
equipment, machine tools, railroads, and steel. The six were selected
because they are large, basic industries and because, among them, they
represent major types of U,B. business activity. They also differ
widely in their level of automation and their recent experience with
technological change. The studies being conducted for these industries
are expected to be completed by the end of this month.
Because of their importance in our program of revision and because
of the widespread publicity which has been accorded to them, I should
like to describe briefly for you the nature of our engineering studies.
For the purpose of carrying out our studies of the industries
named, seven teams of three engineers each were formed and each team
was assigned to conduct a study of one of the selected industries.

1 OQ
«L KJ '-'

- 11 -

Each engineer assigned to a team has the experience and training
which qualify him to render expert opinion as to the useful life of
depreciable assets used in the ind.ustry under study. In most cases
the engineering team is made up of one engineer designated by the
Washington office and two field engineers.
After the "engineering teams were formed, they were assembled in

the national office simultaneously for briefing and general instructions.
At that time each team arranged a tentative schedule of activities,
including conferences with industry personnel and inspection trips
to selected representative plants.
The selection of these plants has been subject to extreme care,
so as to insure access to the greatest possible variety of operating
conditions within each industry. Inspection trips involve the
observation of actual plant operations and discussions with management officials associated with each plant. The discussions are
designed to elicit management views as to the useful lives they
believe should be assigned to various items of depreciable property.
In order to secure fullest cooperation, all visits to plants have
been preceded by letters from the Commissioner of Internal Revenue
to the appropriate company officials, briefly explaining the project
and requesting cooperation and assistance.
Our engineers seek further information through the inspection
of plant records of purchases and retirements of machinery and
equipment and other records which may have a bearing on the taxpayer's operating practices and policies.

- 12 -

Another source of information being used is the major suppliers
of machinery and equipment to each of the industries. Officials of
the firms producing the various types of capital goods are being
interviewed with a view to obtaining insights into technological
developments which may be expected to have a bearing on the useful
life of the machinery and equipment used and expected to be used in
each of the industries.
Conferences with major trade associations and individual firms
representing large segments of these industries have been arranged.
At these conferences taxpayers and spokesmen for groups of taxpayers
have been encouraged to present briefs supporting each industry's
position with respect to depreciation policy. These conferences have
thus far proved to be an excellent forum f6r the exchange of views
between industry representatives, the Treasury and the technical
personnel of the Internal Revenue Service.
As a final step, an engineering report is being prepared by each
of the industry teams, setting out its findings and recommendations
with respect to the average useful lives of items of depreciable
property used in the industry studied. These reports are expected
to reflect the expert opinions of the engineers, after giving full
consideration to all of the factors brought into the picture.

- 13 -

Depreciation abroad
Because American industry does not operate in a setting entirely
of our own making, but is actively in competition at home and abroad
with foreign producers, our practices with respect to depreciation
policy need to be examined in the light of foreign experience. Thus
the Treasury has gathered a substantial amount of information on
depreciation practices in leading foreign industrial nations from
a wide variety of published and unpublished sources, including our
Embassy personnel and officials of foreign governments.
In today's highly competitive world we find widespread use of
initial allowances and incentive allowances supplementing depreciation charges. Thus for the major industrialized nations of the free
world -- Belgium, Canada, France, West Germany, Italy, Japan, the
Netherlands, Sweden, and the United Kingdom --we have assembled
reliable information with respect riot only to depreciation practices,
but also regarding initial and incentive allowances.
The information presented in the first column of Table 1 shows
that the typical or representative tax life permitted with respect
to production machinery and equipment in each of these countries,
except Japan and the United Kingdom, is substantially lower than it
is in the United States. Moreover, in addition to ordinary depreciation, Belgium, the Netherlands, the United Kingdom, and under
certain conditions, Sweden, permit the deduction from income of

- 14 -

incentive allowances. Initial allowances, which add very appreciably
to the deduction that may be taken in the year of acquisition of a
depreciable asset, are permitted in Canada, Italy, Japan, the
Netherlands, Sweden, and the United Kingdom.
The impact of ordinary depreciation plus initial and incentive
allowances on the amounts that may be deducted in the year in which
a new asset is acquired is shown in the second column of the- table.
Here it may be seen that the percentage of the cost of an asset that
may be deducted in the first year ranges from 20 percent in West

Germany to 43.4 percent in Japan, compared with as low as 10.5 percent in t
United States.
Columns 3 and 4 of Table 1 show the percentage of the cost of
the asset that may be deducted during the first two and first five
years of its life. Here, again, it may be seen that the deductions
permitted in each of the nine industrialized foreign countries comprise a far higher proportion of the cost of industrial machinery
and equipment than is permitted under current law and practices in
the United States. For the first five years of the life of the asset,
the relevant proportion falls within the range of 60 to 70 percent
for West Germany, Japan, and the United Kingdom, between 70 and 80
percent for Canada and France, and 85 to as much as 100 percent for
Belgium, Italy, the Netherlands, and Sweden. In sharp contrast, the
applicable percentage in the United States is 42.7 under the present
average Bulletin "F" life and 51.1 percent for the commonly used
15-year life.

7 1 -'
**• «L~ J.

-15 Table 1
Comparison of depreciation deductions, initial and incentive allowances 1/
for industrial equipment in leading industrial countries with similar
deductions and allowances in the United States
under actual and various proposed plans
depreciation deductions, initial
Representative : and incentive allowances
First 2
First 5
tax lives
First
years
years
year
(Percentage of cost of asset)
22.5$
45.0/o
92.5$
Belgium
8 years
30.0
44.0
71.4
Canada
10
25.O
43.8
76.3
France
10
20.0
36.O
67.2
West Germany
10
25.b
50.0
•
100.0
Italy t
10
43.4
51.0
68.2
Japan
l6
26;2
49.6
85.6
Netherlands
10
30.0
51.0
100.0
Sweden
5
39.0
46.3
64.0
United Kingdom
27
United States:
Without investment credit and
lives equal to current Bulletin "F",
10.5
42.7
19.9
weight"ed-average of "T9~years
With lives of:
24.9
51.1
13.3
1 5 years
26.5
53.7
14.3
l4 years
28.4
^6.6
15.4
13 years
30.6
59.8
16.7
12 years
18.2
63.0
33.1
11 years
36.0
67.2
20.0
10 years
With investment credit and lives •
equal to current Bulletin "F" J*J
26.5
58.7
35.9
weighted average of 19 years
4o.9
With lives of:
67.I
29.3
15 years
42.5
69.7
30,3
44.4
72.6
31.4
l4 years
46.6
75.8
13 years
32.7
34.2
79.0
49.1
12 years
36.0
52.0
83.2
11 years
10
years
Treasury Department, Office of Tax Analysis
January 18, 1962
1/ The deductions and allowances for each of the foreign countries''have been
computed on the basis that the investment qualifies fully for any special
allowances or deductions permitted. The deductions in the United States have
been determined under the double declining balance depreciation method, without
regard to the limited first-year allowances for small business.
2/ For purposes of this table, the proposed 8 percent investment credit has been
considered as equivalent to a 16 percent investment allowance. For corporations
subject only to the 30 percent normal tax it is equivalent to an incentive allowance of 27 percent. The initial allowance of 20 percent of each year*s investment,
up to $10,000, is not taken into account because of its relatively small impact.

-16 This picture changes dramatically, however, when the proposed
investment credit enters. In terms of its effect on current liability,
the 8 percent investment tax credit is equivalent to an incentive
allowance of approximately l6 percent for corporations subject to the
52 percent corporate income tax rate and about 27 percent for
corporations subject only to the normal tax rate of 30 percent. 1/
The bottom seven rows of Table 1 indicate the effect on comparable
allowances for new depreciable assets that would be achieved if the
8 percent investment tax credit were currently in force. Assuming
the existing weighted average Bulletin "F" life of about 19 years,
the equivalent first-year deductions would be 26.5 percent. In
combination with a somewhat shorter life of 15 years, we find that
the first year's equivalent deductions in the United States would
be equal to 29.3 percent of the cost of new depreciable assets.
This proportion is higher than that which obtains in Belgium, France,
West Germany, Italy, and the Netherlands. First-year deductions or
their equivalents would remain substantially higher than those permitted in the United States only in Japan and the United Kingdom.
For the first five years of the life of the asset, permissible deduc-

tions would still exceed appreciably those allowed in the United States
in Belgium, France, Italy, the Netherlands, and Sweden. But allowances
in the United States would be approximately the same as those allowed
in Canada, West Germany, Japan, and the United Kingdom.
1/ Both the investment credit and the incentive allowance have greater
overall effects than a similar initial allowance because they do not
reduce the amount of depreciation that may be taken over the life
of an asset.

- 17 The data presented in the bottom portion of Table 1 demonstrate
clearly that, especially within the first two years of the life of
an asset, even a revision to provide realistic tax lives will not,
by itself, place the United States in a position comparable to that
of its most immediate foreign competitors. The achievement of this
objective, rather, requires both the investment tax credit and the
faster write-offs that would be permitted under depreciation policies,
which, in broader recognition Of the increasing importance of
obsolescence in the postwar world, would permit American firms• to
assume shorter tax lives for depreciable property.
Reviewing this summary and analysis, three important conclusions
emerge: (l) Shorter tax lives alone will not do the job of bringing
American industry abreast of its foreign competitors with respect to
tax allowances for investment. (2) The investment credit will make
a major contribution toward achieving that goal. (3) The gambina-.
tion of the credit and the forthcoming revision of depreciation guidelines will place the United States on substantially equal footing with
other major industrial nations. These conclusions underscore the
necessity for the Treasury's two-pronged program of revised,
realistic depreciation and the investment credit.
Objectives of depreciation revision
It is my firm intention to announce new guidelines for depreciation during the course of the spring of this year. These guidelines
will cover all major assets for all industries. The combination of

- 18 engineering studies and statistical analys s will provide, on the
basis of information never before gathered in such volume and detail,
the necessary guidance for this full scale revision. Our basic
objective is to provide realistic tax lives in the' light of past
actual practices and present and foreseeable technological innovations and other factors affecting obsolescence. Following the
promulgation of the new guidelines, further revisions may be forthcoming with respect to any particular industry on the basis of
subsequent engineering studies that may be requested and found
necessary.
Complementary to, but not subsidiary to this objective of providing realistic lives, is our aim of achieving a far more simple and
flexible system of depreciation under the directive of the Internal
Revenue Code which, as I indicated earlier, requires that "reasonable
allowances" for depreciation be permitted.
The existing Bulletin "F", with its suggested useful lives for
some 5>000 items of depreciable property, is a morass of detail. One
of the important goals of our revision program is to reduce this
detail. I intend to move toward guideline lives for broad classes
of assets used by each of the industries in our economy. The
Treasury Depreciation Survey has clearly demonstrated that one of
the major irritants now experienced by American business stems from
the detail of existing guidelines. A large proportion of our
respondents has expressed a strong preference for a system that

11 Q
~L -a. w'

- 19 involves establishment of tax lives for broad classes of assets.
At the same time our procedures must be sufficiently flexible to
allow for recognition of the varying circumstances surrounding the
economics of the operation of individual firms within industries
as well as varying practices with respect to replacement policy,
intensity of use of machinery and equipment, and practices with
respect to repairs and maintenance.
Substantial simplification and elimination of controversy between
the tax agent and the taxpayer will be achieved with the enactment
by Congress of that feature of the bill now before the Ways and
Means Committee which Will permit disregarding the first 10 percent
of salvage value for purposes of computing annual depreciation charges.
Flexibility and simplification of the system of depreciation will
require one important safeguard. This important safeguard is available in the Treasury's proposal to ;tax as ordinary income gains from
the sale of depreciable assets to the extent of prior depreciation
charged after December 31, i960. This amendment of section 1231 of
the Internal Revenue Code, now pending before the Ways and Means
Committee, will assist greatly in facilitating the achievement of
administrative depreciation practices that are fully in keeping
with the requirements of the economy of 1962.
As you know, we began to move ahead with our revision of depreciation guidelines in October, when we announced new average useful
lives for machinery and equipment used in the spinning and weaving

- 20 of textile products. This was followed, early this week, by similar
action with respect to apparel manufacturers. Revised tax lives for
other segments of the textile industry are being developed as rapidly
as possible.
The Treasury accelerated action with respect to the textile industry
in response to the President's directive of May 2. Our actions taken
thus far have provided reductions in Bulletin "F" guideline lives for

depreciation of machinery and equipment of about 40 percent, specifical
from 25 years or more to 15 years for production machinery and from
15 to 20 years to 12 years for finishing equipment in the textile mill
products industry and from 15 to 9 years for sewing equipment. Because
many firms were depreciating their assets on the basis of lives, considerably shorter than those suggested in Bulletin "FV, the actual
average reduction in tax lives will be equal to 12 to 15 percent.
The new guidelines for the textile industry are designed to take intc

account increased rates of obsolescence due to such factors as accelera

tion of technological innovation and increasingly intensive internation
competition. They are far more realistic lives than the old ones and

will bring a reduction in the wide variance among firms in depreciation
allowances, thus improving equity. In addition, the new lives involve
fewer differences among closely related assets, ^They will recognize
the growing importance of the use of the system approach to factory
organization (in contrast with an assemblage of more or less unrelated
machines). . They will also simplify accounting for depreciation, and
facilitate the use of composite and group depreciation.

- 21 Summary and conclusion
I consider our program of depreciation reform -- including
the investment credit -- a central part of our economic policy.
Our two most important long-range economic problems today are to
stimulate growth in the domestic economy and to eliminate the
deficit in our balance of payments.
Comparison with other industrialized countries shows, as would
be expected, that those countries with higher levels of investment
in productive equipment have higher levels of economic expansion.
As for our balance of payments, the most effective way to eliminate
that deficit is to increase our exports. Indications are that other
countries have been modernizing more rapidly, thus stepping up their
productivity, lowering costs, and offering stiffer competition to
our own producers, not only in foreign markets, but in domestic markets
within the United States as well. To meet that competition our manufacturers need the increased stimulus to investment and modernization
which can best be brought about by these changes in tax policy.
It is no exaggeration to say that at the present time, one of
the most important policy goals of the Administration is to increase
productive private investment, for both domestic and international
reasons. We need to make sure that our tax laws are fostering a
strong flow of funds into investment in new productive facilities.

- 22 -

TREASURY DEPAKT3VENT
SAVINGS BONDS DIVISION

1 1 ry
"L-L^

January 19, 1962
FOR IMMEDIATE RELEASE
A number of queries have recently been received along the lines
of the following question:
In light of the action of many banks in raising interest
rates on savings accounts to the new 4 percent ceiling permitted
by the Federal Reserve Board, does the Treasury plan to increase
the rates paid on Series E and H Savings Bonds?
The Treasury has responded as follows:
No. Considering all of the advantages of Savings Bonds
to the individual saver, we believe the yield of 3-3Afo to
maturity is an attractive one. Not only does this rate compare
favorably with the nationwide average rate for savings, but the
Savings Bond offers the individual the ultimate in security, a
highly liquid asset with an assured return guaranteed by the
full faith and credit of the United States Government. That is
why, once a savings bond is purchased, the owner can be assured
of the interest for the full life of the bond. No bank can give
that kind of assurance; there is no certainty as to how long
any bank can continue to pay any particular rate of interest.
In addition, the owner of a Savings Bond enjoys many
other special advantages. The bond can readily be converted
to cash in time of emergency. If it is lost, stolen, or
destroyed, it will be replaced without charge. It can be
purchased in installments through the Payroll Savings Plan in
industry, and many hanks also offer an automatic purchase plan,
without charge to the customer. For many people, the
automatic quality of saving through Savings Bonds is of great
value in itself. In addition, there are certain tax
advantages — accrued interest on E Bonds need not be declared
for income tax purposes until the bonds are cashed or reach
final maturity.
Finally, the Savings Bond has a unique appeal to the
patriotic American. Through the Savings Bond Program,
he can buy a share in his country's future and a stake
in the free way of life. For all of these reasons, we are
confident that the present Savings Bond package will continue
to merit an important place 0O0
in the savings plans of all
Americans.

TREASURY DEPARTMENT
SAVINGS BONDS DIVISION
Washington
January 19. 1962
FOR IMMEDIATE RELEASE
A number of queries have recently been received along the lines
of the following question:
In light of the action of many banks in raising interest
rates on savings accounts to the new 4 percent ceiling permitted
by the Federal Reserve Board, does the Treasury plan to increase
the rates paid on Series E and H Savings Bonds?
The Treasury has responded as follows:
No. Considering all of the advantages of Savings Bonds
to the individual saver, we believe the yield of 3-3/4$ to
maturity is an attractive one. Not only does this rate compare
favorably with the nationwide average rate for savings, but the
Savings Bond offers the individual the ultimate in security, a
highly liquid asset with an assured return guaranteed by the
full faith and credit of the United States Government. That is
why, once a savings bond is purchased, the owner can be assured
of the interest for the full life of the bond. No bank can give
that kind of assurance; there is no certainty as to how long
any bank can continue to pay any particular rate of interest.
In addition, the owner of a Savings Bond enjoys many
other special advantages. The bond can readily be converted
to cash in time of emergency. If it is lost, stolen, or
destroyed, it will be replaced without charge. It can be
purchased in installments through the Payroll Savings Plan in
industry, and many banks also offer an automatic purchase plan,
without charge to the customer. For many people, the
automatic quality of saving through Savings Bonds is of great
value in itself. In addition, there are certain tax
advantages — accrued interest on E Bonds need not be declared
for income tax purposes until the bonds are cashed or reac.h
final maturity.
Finally, the Savings Bond has a unique appeal to the
patriotic American. Through the Savings Bond Program,
he can buy a share In his country's future and a stake
in the free way of life. For all of these reasons, we are
confident that the present Savings Bond package will continue
to merit an important place in the savings plans of all
oOo
Americans.

- 21 our nation to its true potential, to distribute the benefits of

growth among :aril our people, and to share our way of life with

A
all the peoples of the world who choose the path of freedom.

oOo

1 1Q

- 20 -

"^"

guarantee that there will never be another recession. To prepare for

that possibility, President Kennedy has asked for three major coun
cyclical measures: broadened unemployment insurance, a standby
program of public works, and the authority to promptly initiate
limited and temporary tax reductions. These are needed in the
earliest stages of recession — when quick action can accomplish
effective results.
The achievement of our economic goals will not be easy. But
it is our responsibility to demonstrate to the world the economic

vitality of a free nation, and the value of a free enterprise soci

wehere j government I labor, business, fandv finance work together
the framework of a competitive price system, responding to the
market forces of supply and demand.
The stimulus of competition has brought us the highest standard

of living/trie worlcU^ Let us use our economic strength to develop

- 19 At home, I think everyone agrees that our first obligation is to

reduce the unacceptably high level of unemployment. To be sure, for
the last two months unemployment has dropped close to six percent,
after hovering near seven percent most of the year. And we expect it
„, .«,w>

t£<. s?-^i^*%C

to drop jsm/ five percent e^tes«»^s&sfyear, as. &S& long-range expansion
&t8&K&Zpyl?&& takes hold. However, there is a
hard core of unemployment which continued expansion may not touch.
_^£-£M-&-~
That is why we urgently need a manpower retraining bill, to e±±
\

the lingering human misery and chronic economic wast,e*Xsuch unemployment
represents.
In addition, nearly a million young people in our country are

neither earning nor learning. This dismal fact illustrates the need

for a Youth Employment Opportunities Act, to/seel that such fright
waste of our national potential does not continue.
And finally, although we look forward to prosperity, we cannot

- 18 -

$1-1/2 billion. However, we also lost $5 billion in gold# whjwh <^

i^fo|x our overall gold and international investment position show
a loss for the three year period of only about. $3.5 billion net,
contrast to the deterioration in our current /M^Mfg^ position of
$11 billion as measured by our balance of payments account.
F

-%WJia^aX£»fi**VV

While this[indicates/that our (position
A. """

_ ^

long-term

is. considerably stronger than/_jfeej balance of payments figures
Jjsaeg&tl indicate, it in no way reduces the importance of putting

early end to the substantial §^|g£ deficits (thad we have (been hav

A,
since 1949. #Ma: jthe fact is that! we (cannot look only to our long^)
\

it'0"""'-*

!•«'« -"**

[term position but\ must? jalso! put? our current balance in orderf
to end the drain on our gold stocks.
I have outlined the principal elements of our foreign and domestic
economic policy. Our prospects, both at home and abroad, are good,
but we have much to do to ensure that they remain so.

- 17 -

-f r\

long-term claims represented by U. S.

investment abroad.

For the three years 1958 through I960, for instance, our payments
deficits totalled $11 billion, of which about $5 billion represented
Uf\ gold losses and $6 billion represented liquid dollar, gains by

foreigners. However, t-l* • i m'. i. ..• \u ' "Tn^^^^^fly • •T^V^^rr^'^usrr^

g o l d r.-d .n-Jklr-fyH

e^oJbslai^^^1^F3j|i was to a large extent
^

by increased U. S. holdings of-both
/

t -

--~7

short-term and long-term foreign assets. ll^s^±^m^<yx^.t ;f^^i^^^^
| |H

^V»« Jv .e**~'**"

K
ldBtir^^^^jld^nd^TiquId dollar u^ets^'^our^ cTa"id^*^iipSit foreigners
a

^VWL-p.'.:^*.c,--..

,;*€otal foreign assets and investments of all sorts in the United

Rose- _
States ^Sicreased[ by a bout $13 billion from the end of 1957 to the
end of 1960. During the same period, total U. S. government and
private loans and investments abroad (excluding loans repayable in ,.

c* - •>. /local /urrency) increased by about $14.5 billion —

a net gainVof

10 -

-*-Cu-

Such short term flows, when carried to excess, can be unhealthy -

even dangerous. We have worked hard/in many waysj to neutralize th
We have held our short-term interest rates at levels thatjmegated
the attraction of foreign market rates. The Federal Reserve has

increased the legal limit on the interest that may be paid on time

deposits, thus enabling American banks to compete more effectively
with their foreign counterparts. Our most recent step was taken

earlier this month when the United States and nine other members o

the International Monetary Fund agreed that $6 billion in addition

resources should be provided for standby lending commitments to th
Fund. These supplementary resources would be used to protect the

world payments system, and would be available to the 10 participat
countries, including the United States.
One aspect of our balance of payments deficit is worth stressing:
The balance of payments is an accountinav transactions" that affect

the 3jte^^^gy^Qrr^.^r^ftn of the United States. It does not reflect

1 00

- 15
flow from one financial center to another

in search of higher interest rates or speculative Sains^J, The

result was a substantial outflow of short-term funds from the
United States, which in 1960 amounted to $2 billionJ?mula^Aftfefeg*

tjS^t

fndd&hort-term outflow obscured f. dramatic improvement /£>
This large short-term outflow obscured the dramaticeimprovement in our
)asic balance during I960 and led to an overall deficit of $3.9 billion — '

Althoughi/altered in nature, substantial short-term outfit continued duri
1961.
1s&*c****5

-^m&

"J^hort-term flows can be caused by /many/ factors/^— a lessening
of confidence ^M^^^^i^^ or disparities in interest rates* as
in the fall of I960 —-or s^^^@2a^^^i^^^Mte^iesasas^g^6. as was
largely the case this past year, when fx&ZfpSss^fx'J:* the outflow
in the form of bank loans to Japan to finance her growing imports.

- 14 -

io A
J. C -?

is just beginning to probe huge potential markets for them. ' Succe
in Lulling QUI,1 I>< jtUiotjS^ will require bold enterprise and skillful
competition.
If American business is to find new customers in Europe, we
must deal with the Common Market on the matter of mutual tariff
reduction.

Congress must grant the President power to negotiate on

a broader basis than present legislation allows. If Congress fails
to provide this authority, American producers will be seriously
handicapped in their efforts to retain and to expand their share
of this large and rich trading area.

v£.
rtJ^<*A***d

Now, let me turn to our overall payments deficit, which includec
(^ft^SSrBssS^OFn^ ideit^frtSfe s erdfoad- e ar-lier^-^aur^oyer a
our basic deficit and short-term capital fejlflows.
Through 1959,
/thes^flows were small and usually favorable to our balance of payments,
A.
This was natural, since the currencies of other industrialize
countries were not generally convertible, hence, not too attractive
to foreign holders. However, with convertibility, money began to

125'
- 13 =
Export-Import Bank and the insurance industry. Finally, American
business —

of which only a small percentage is in the export fiel(

lust aggressively search out foreign trading opportunities whereever they may be. This is in the bestj tradition of our trading
forebears, and it has never been more necessary than today.
Fortunately, the possibilities for increasing our overseas sales
are excellent. The world is entering an entirely new trading era
that holds out great promise for our exporters. In the case of our

existing markets , we have only to look at the scope of the resurge
prospe&fcty of Western Europe, and the emergency of the European
, / — *

Common Market, to see Europe's potential for our gxiwulcH And, although our markets in less-developed areas are limited today, as
•e&id

these countries grow and prosper, their demands for our ^m'adtwlis will
also grow.

Furthermore, in Europe and other parts of the world, thousands

of American products are still virtually unknown. American business

- 12 -

third affects our payments position.

We are making vigorous efforts

to cut the balance of payments impact of foreign economic aid still

further, and we hope to get it down to approxiniately/tw«n-fey^>er--centl

^ A
In the long run, however, the only way to eliminate our basic

deficit is by increasing our export surplus. This will require the

combined efforts of management, labor, and government. Management

and labor must work together to assure reasonable price stability

so that our exporters can maintain their price competitiveness —

and, we hope, improve it. Industry must modernize at a rapid rate.

I have already told you what ^he [Government is doing in the field of

y
depreciation reform to assis/modernization.

Government must also

help to assure a supply of export credit to our traders as good as
that "available to their overseas competitors. We ftr,ni r--i-iL^fpn>

position to do so for the first time through the operation of an

export^insurance program developed[with the combined efforts off the

- 11 "

'c ' 7

or offsetting the dollar outflow that inevitably accompanies the
stationing of troops overseas. We are doing just that through a

combination of economies and cooperative arrangements with certain
of our allies. As a result, we can look forward to a substantial
reduction in the dollar drain of our overseas forces.
In the case of private investment, we do not desire to reduce

the flow abroad by imposing'controls that would run counter to the
principles of free trade and free competition so basic to our
national purpose. We can, however, lessen/^Special inducements to

American investment in other industrial countries that are part of
our present tax system. That is why we are urging tax legislation
to minimize such incentives.
Although our foreign assistance programs contribute to our

G U Y FLovv/p
annual dollar /loss \ they do so to a far lesser degree than their over-

all amount might suggest. Two-thirds of all foreign aid expenditur
are now being made here in the United States. Only the remaining

- 10 -

oil to Europe, 1961 provided the best record since we started running
deficits in 1949. True, advance repayments of long-term debt—<\

amounting to $650 million — were unusually large last year. However, the improvement was still substantial.
But improvement in our basic deficit is not enough. We must

bring it under complete control so that we can look forward to ful
balance — and to surpluses; whenever they may be required in our

overall national interest. We can accomplish this only by enlargin
our export surplus, and by reducing outpayments when we can do so

without jaimxnrsirtn^J activities vitally important to our Nation'
future.
Q(jufa
Ourguaiipnaj^security and our responsibilities to the free
world require us to keepYtroops abroad. We cannot endanger our

security by withdrawing them in order to balance our international
accounts. But we can and must find every possible way of limiting

- 9 -

9Q
American products or services.
Our trade surplus — the excess of commercial exports over
imports of goods and services — is substantial. But in recent

years it has not been large enough to offset the balance of paymen

impact of our overseas operations. I SESs'shortfall constitutes th

A
basic deficit in our international payments.
Preliminary figures indicate that last year our basic deficit
was <3^f*Tth±rd of the basic deficit of $1.9 billion in 1960, and
was far below the $4.3 billion in 1959. During the first six

months of 1961 we actually ran a surplus in our basic accounts, as

imports shrank because of the recession. During the third quarter,

a sharp rise in imports brought with it ^/renewal of a substantial
basic deficit which continued in the final quarter of the year -at a eg£35»topal»3»y diminished rate. With the sole exception of 1957,

when the Suez Canal was closed and we exported unusual quantities

- 8«L \J SJ

advances which have altered previous standards of obsolescence.

This has already been largely accomplished for the textile industr
and we plan to announce revisions in depreciation guidelines for
all other major industries this Spring.
Such use of tax policy to stimulate the modernization and

expansion of productive equipment is a major part of our effort to
accelerate the long-range economic growth we need to achieve our
true potential£2M-&1

of^pame^l^. (jThe heart of our balance of payments problem is this

We must generate a large enoughjjtrade surplus to counterbalance o
essential expenditures abroad. These expenditures include, in

relative order of magnitude: first, the cost of our military force
overseas; second, private American investment in other countries;
and third, that portion of our foreign aid not spent here for

tQ1
±

V J

- 7as new markets create new demand, and increased research and
technology penetrate new -manufacturing frontiers.
Finally, and most important, heavier investment will help to

maintain price stability through lower production costs and highe

iilg--43i&-pr0^i?eciT^f^^

-that- wilT^ISenefit the consumer

In addition to presenting a balanced budget, we are also proposing changes in our tax treatment of depreciation to stimulate
business investment in productive machinery and equipment. Our
program of depreciation reform involves both new legislation and
the full use of existing administrative authority. On the legis-

lative side, we are asking for an eight percent tax credit for ne

investment in productive equipment. On the administrative side, -

are updating depreciation schedules to take account of technologi

- 6 -

100
^ . V-' s —

J^y contributing to rapid modernization of productive machinery and
equipment. More modern equipment means more efficient production,
and lower unit cost — hence more competitive capacity.

As a

result, friendly foreign nations are providing increasingly stiff
competition for American manufacturers, both here and abroad.
For the future, then, a major goal of our economic policy is
a sharply increased level of productive private investment, be-

cause

^ h <viic:

— fit will*, help our balance of payments by making our manufacturers
more competitive, thus increasing our export surplus.
— [it will^help speed

'pfyMc economic growth by increas«*_———

ing our productive capacity^/by iontr^butMig to^a'^higher level-\
pr odub t ivi ty^ and

--fit willl help reduce unemployment by providing more jobs

r
/

-5-

;c?

Our policy of balancing the budget and simultaneously stimu-

lating the flow of funds into private channels , reflects our

belief that government spending is not a satisfactory substit

for private investment. We look to private funds to finance t

new factories, new tools, and new machinery that create more,
better, and cheaper goods. A substantial and increasing flow

private investment is essential to economic growth in our fre
^society. TT \\ P/STCl/^B/^T^^/^^j
ipver the past decade, nearly all of the major industrial
nations of the free world had a substantially higher rate of

domestic investment than the United States. Furthermore, thei

ratio of productive investment to total output has been growi

whereas ours has been declining. Investment sparked the phen
growth of Japan and the Common Market countries of Western Europe.

Largely because of increased defense needs, coupled with
recession-level revenues, our national budget was in deficit -- a
deficit that, because of the recession, was both acceptable and
inevitable. However, the economic growth forecast for 1962, with
resulting higher revenues, makes it both desirable and possible to
achieve a fully balanced budget in Fiscal Year 1963, as the
President has recommended.
^ A balanced budget stimulates#investment because it makes it
unnecessary for the government to tap the!(/*»flow *»"off savings and
credit that would otherwise be available for private investment.
A balanced budget also facilitates the task of our monetary

fttV&
authorities, who£seek^to assure an adequate supply of funds for
private investment at the same time that they guard against inflation . ___ ^w_ _ _ _^,„...«..— — • »— «.,....,,

- 3 And, finally, to maintain reasonable price stability, so

that our citizens may enjoy the full fruits of their savings^Vthat

our economic gains are not wiped out by inflation, andTthat our go
can compete successfully in world market places.
We made considerable progress over the past year toward
£*&sa objectives. At the close of 1961, our domestic economy
reached record highs in terms of gross national product, personal
income, industrial production, and manufacturers' sales and new
orders. Unemployment has finally begun to drop, and we expect it
to decline further in the months ahead. Our gold loss in 1961 was
just half the 1960 figure, the basic deficit in our balance of
payments was cut by two-thirds, and the overall deficit by more
than a third.

Thise gains were achieved in good measure because our fiscal
and monetary policies were geared toAast year's recession and
early recovery.

1 o,

- 2 -

strong — idling along at half speed -- or running at full throttle,

To achieve that potential, our immediate economic goals are

these:

First, to reduce unemployment. We simply cannot afford the

misery and waste of having a large part of our labor force idle.

Second, to reach a rate' of economic growth sufficient to

assure jobs for the millions of workers entering the labor market

in the years ahead, to guarantee to our citizens the benefits of

a thriving economy, and to build the capacity to meet our inter-

national obligations

J/TILIIUUL

fa443ns rru^mas™a.lj=*H»tiy hfiavy-4AY

Third, to eliminate the deficit in our international balance

of payments, and its accompanying gold loss, for a sound dollar

is as essential abroad as it is at home.

OTSRu'aTf?lS^1tW2

REMARKS BY*THE HONORABLE DOUGLAS DILLON
SECRETARY OF THE TREASURY
AT THE 1962 SAVINGS BONDS CONFERENCE
SHERATON-PARK HOTEL, WASHINGTON, D. C.
JANUARY 19, 1962, 1:&57P.M.

I want to thank you for your interest in the Savings Bonds
Program. We value it as one of the Treasury's most important tools
in managing the public debt, as well as a most effective way of
encouraging individual citizens to share in the financial affairs
of Government. It is also one of our country's most successful
volunteer undertakings. Through the years, it has enlisted the
patriotic support of hundreds of thousands of people, under the
leadership of distinguished individuals like yourselves. With your
help, the Savings Bonds program will make an ever greater contribution to the economic strength we urgently require to fulfill the
heavy responsibilities history has thrust upon us.
Our economic policy plays a vital role in meeting those responsi
bilities, for it will determine whether the future finds us weak or

13?

TREASURY DEPARTMENT
Washington

January 19, 1962
FOR RELEASE P.M. NEWSPAPERS
FRIDAY, JANUARY 19, 1962
REMARKS BY THE HONORABLE DOUGLAS DILLON
SECRETARY OP THE TREASURY
AT THE 1962 SAVINGS BONDS CONFERENCE
SHERATON-PARK HOTEL, WASHINGTON, D. C.
JANUARY 19, 1962, 1:00 P. M.
I want to thank you for your interest in the Savings Bonds
Program. We value it as one of the Treasury's most important tools
in managing the public debt, as well as a most effective way of
encouraging individual citizens to share in the financial affairs of
Government. It is also one of our country's most successful volunteer
undertakings. Through the years, it has enlisted the patriotic support
of hundreds of thousands of people, under the leadership of
distinguished individuals like yourselves. With your help, the
Savings Bonds program will make an ever greater contribution to the
economic strength we urgently require to fulfill the heavy
responsibilities history has thrust upon us.
Our economic policy plays a vital role in meeting those
responsibilities, for it will determine whether the future finds us
weak or strong — idling along at half speed — or running at full
throttle, powered by our tremendous productive potential.
To achieve that potential, our immediate economic goals are these:
First, to reduce unemployment. We simply cannot afford the
misery and waste of having a large part of our labor force idle.
Second, to reach a rate of economic growth sufficient to assure
jobs for the millions of workers entering the labor market in the
years ahead, to guarantee to our citizens the benefits of a thriving
economy, and to build the capacity to meet our international
obligations.
Third, to eliminate the deficit In our international balance of
payments, and its accompanying gold loss, for a sound dollar is as
essential abroad as it is at home.
And, finally, to maintain reasonable price stability, so that
our citizens may enjoy the full fruits of their savings, so that
our economic gains are not wiped out by inflation, and so that our
goods can compete successfully in world market places.
D-371

1 OQ

- 2 -

^°^

13}E
We made considerable progress over the past year toward these
objectives. At the close of 196l, our domestic economy reached
record highs in terms of gross national product, personal income,
industrial production, and manufacturers' sales and new orders.
Unemployment has finally begun to drop, and we expect it to decline
further in the months ahead. Our gold loss in 1961 was just half the
i960 figure, the basic deficit in our balance of payments was cut by
two-thirds, and the overall deficit by more than a third.
These gains were achieved in good measure because our fiscal and
monetary policies were geared to the requirements of last year's
recession and early recovery.
Largely because of increased defense needs, coupled with
recession-level revenues, our national budget was in deficit — a
deficit that, because of the recession, was both acceptable and
inevitable. However, the economic growth forecast for 1962, with
resulting higher revenues, makes it both desirable and possible —
barring unpredictable international emergencies — to achieve a fully
balanced budget in Fiscal Year 1963, as the President has recommended.
One of our most urgent national needs is a heavily accelerated
flow of private investment into productive' channels. A balanced
budget stimulates such investment because it makes it unnecessary
for the government to tap the savings and credit that would otherwise
be available for private investment. A balanced budget also
facilitates the task of our monetary authorities, who strive to assure
an adequate supply of funds for private investment at the same time
that they guard against inflation.
Our policy of balancing the budget and simultaneously stimulating
the flow of funds into private channels, reflects our firm belief
that government spending is not a satisfactory substitute for private
investment. We look to private funds to finance the new factories,
new tools, and new machinery that create more, better, and cheaper
goods. A substantial and increasing flow of private investment is
essential to economic growth in our free society.
It is disturbing, therefore, that our present level of investment
is far from adequate. Over the past decade, nearly all of the major
industrial nations of the free world had a substantially higher
rate of domestic investment than the United States. Furthermore,
their ratio of productive investment to total output has been growing,
whereas ours has been declining. Investment sparked the phenomenal
growth of Japan and the Common Market countries of Western Europe, by
contributing to rapid modernization of productive machinery and
equipment. More modern equipment means more efficient production,
and lower unit cost — hence more competitive capacity. As a result,
friendly foreign nations are providing increasingly stiff competition
for American manufacturers, both here and abroad.

i A\ 4

- 3 -

5teJ-\J

For the future, then, a major goal of our economic policy is a
sharply increased level of productive private investment, because
it will:
— Help our balance of payments"by making our manufacturers
more competitive, thus increasing our export surplus.
— Help speed economic growth by increasing our productive
capacity.
— Help reduce unemployment by providing more jobs as new
markets create new demand, and increased research and technology
penetrate new manufacturing frontiers.
Finally, and most important, heavier investment will help to
maintain price stability through lower production costs and higher
productivity.
In addition to presenting a balanced budget, we are also
proposing changes in our tax treatment of depreciation to stimulate
business investment in productive machinery and equipment. Our
program of depreciation reform involves both new legislation and
the full use of existing administrative authority. On the legislative
side, we are asking for an eight percent tax credit for new investment
in productive equipment. On the administrative side, we are updating
depreciation schedules to take account of technological advances
which have altered previous standards of obsolescence. This has
already been largely accomplished for the textile industry, and we
plan to announce revisions in depreciation guidelines for all other
major industries this Spring.
Such use of tax policy to stimulate the modernization and
expansion of productive equipment is a major part of our effort to
accelerate the long-range economic growth we need to achieve our true
potential and to improve our balance of payments.
The heart of our balance of payments problem is this: We must
generate a large enough commercial trade surplus to counterbalance our
essential expenditures abroad. These expenditures include, in
relative order of magnitude: first, the cost of our military forces
overseas; second, private American investment in other countries;
and third, that portion of our foreign aid not spent here for American
products or services.
Our trade surplus — the excess of commercial exports over
imports of goods and services — is substantial. But in recent years
it has not been large enough to offset the balance of payments impact
of our overseas operations. That shortfall constitutes the basic
deficit in our international payments.

- 4 '1 di
Preliminary figures indicate that last year our basic deficit
was no more than a third of the basic deficit of $1.9 billion in
i960, and was far below the $4.3 billion in 1959. During the first six
months of 1961 we actually ran a surplus in our basic accounts, as
imports shrank because of the recession. During the third quarter,
a sharp rise in imports brought with it the renewal of a substantial
basic deficit which continued in the final quarter of the year —
although at a diminished rate. With the sole exception of 1957,
when the Suez Canal was closed and we exported unusual quantities of
oil to Europe, 1961 provided the best record since we started running
deficits in 19^9. True, advance repayments of long-term debts —
amounting to $650 million — were unusually large last year. However,
the improvement was still substantial.
But - improvement in our basic deficit is not enough. We must
bring it under complete control so that we can look forward to full
balance — and to surpluses; whenever they may be required in our
overall national interest. We can accomplish this only by enlarging
our export surplus, and by reducing outpayments when we can do so
without curtailing activities vitally important to our Nation's future.
Our own security and our responsibilities to the free world
require us to keep our troops abroad. We cannot endanger our
security by withdrawing them In order to balance our international
accounts. But we can and must find every possible way of limiting
or offsetting the dollar outflow that inevitably accompanies the
stationing of troops overseas. We are doing just that through a
combination of economies and cooperative arrangements with certain of
our allies. As a result, we can look forward to a substantial
reduction in the dollar drain of our overseas forces.
In the case of private investment, we do not desire to reduce the
flow abroad by Imposing controls that would run counter to the
principles of free trade and free competition so basic to our national
purpose. We can, however, lessen the special inducements to
American investment in other industrial countries that are part of our
present tax system. That is why we are urging tax legislation to
minimize such incentives,,
Although our foreign assistance programs contribute to our
annual dollar outflow^ they do so to a far lesser degree than their
overall amount might suggest. Two-thirds of all foreign aid
expenditures are now being made here in the United States. Only the
remaining third affects our payments position. We are making
vigorous efforts to cut the balance of payments impact of foreign
economic aid still further, and we hope to get it down to
approximately one fifth.

- 5-

1 A0

In the long run, however, the only way to eliminate our basic
deficit is by increasing our export surplus. This will require the
combined efforts of management, labor, and government. Management
and labor must work together to assure reasonable price stability so
that our exporters can maintain their price competitiveness — and,
we hope, improve it. Industry must modernize at a rapid rate.
I have already told you what Government is doing in the field of
depreciation reform to assist modernization. Government must also
help to assure a supply of export credit to our traders as good as
that available to their overseas competitors. We will very soon be
in a position to do so for the first time through the operation of an
export credit insurance program developed jointly by the ExportImport Bank and the insurance industry. Finally, American
business — of which only a small percentage is now in the export
field — must aggressively search out foreign trading opportunities
wherever they may be. This is in the best tradition of our trading
forebears, and it has never been more necessary than today.
Fortunately, the possibilities for increasing our overseas sales
are excellent. The world is entering an entirely new trading era
that holds out great promise for our exporters. In the case of our
existing markets, we have only to look at the scope of the resurgent
prosperity of Western Europe, and the emergence of the European
Common Market, to see Europe's potential for our exports. And,
although our markets in less-developed areas are limited today, as
these countries grow and prosper, their demands for our goods will
also grow.
Furthermore, in Europe and other parts of the world, thousands
of American products are still virtually unknown. American business
is just beginning to probe huge potential markets for them. Success
in developing these markets will require bold enterprise and
skillful competition.
If American business is to find new customers in Europe, we
must deal with the Common Market on the matter of mutual tariff
reduction. Congress must grant the President power to negotiate on
a broader basis than present legislation allows. If Congress fails
to provide this authority, American producers will be seriously
handicapped in their efforts to retain and to expand their share of
this large and rich trading area.
Now, let me turn to our overall payments deficit, which reflects
both our basic deficit and short-term capital flows. Through 1959,
short-term flows were small and usually favorable to our balance of
payments. This was natural, since the currencies of other
industrialized countries were not generally convertible, hence, not
too attractive to foreign holders. However, with convertibility,
money began to flow from one financial center to another in search

- 6-

143
of higher interest rates or speculative profits. The result was a
substantial outflow of short-term funds from the United States, which
in I960 amounted to $2 billion.
This large short-term outflow obscured the dramatic improvement
in our basic balance during i960 and led to an overall deficit of
$3.9 billion.
Although altered in nature, substantial short-term
outflows continued during 1961.
These short-term flows can be caused by various factors —
a lessening of confidence or disparities in interest rates — as
in the fall of i960, or credits related to trade — as was largely
the case this past year, when a substantial part of the outflow was
in the form of bank loans to Japan to finance her growing imports.
Such short term flows, when carried to excess, can be unhealthy —
even dangerous. We have worked hard to,neutralize them. We have
held our short-term interest rates at levels that largely negated
the attraction of foreign market rates. The Federal Reserve has
increased the legal limit on the interest that may be paid on time
deposits, thus enabling American banks to compete more effectively
with their foreign counterparts. Our most recent step was taken
earlier this month when the United States and nine other members of
the International Monetary Fund agreed that $6 billion in additional
resources should be provided for standby lending commitments to the
Fund. These supplementary resources would be used to protect the
world payments system, and would be available to the 10 participating
countries, including the United States.
One aspect of our balance of payments deficit is worth stressing:
The balance of payments is an accounting of transactions that affect
the gold and liquid liability of the United States. It does not
reflect long-term claims represented by U. S. Investment abroad.
For the three years 1958 through i960, for instance, our payments
deficits totalled $11 billion, of which about $5 billion represented
our gold losses and $6 billion represented liquid dollar gains by
foreigners. However, this loss was to a large extent matched by
increased U. S. holdings of both short-term and long-term foreign
assets.
Total foreign assets and investments of all sorts in the
United States rose by about $13 billion from the end of 1957 to the
end of i960. During the same period, total U. S. government and
private loans and investments abroad (excluding loans repayable in
local currency) increased by about $14.5 billion — a net gain to the
United States of $1-1/2 billion. However, we also lost $5 billion
in gold. Thus our overall gold and international investment position
showed a loss for the three year period of only about $3.5 billion net,
in contrast to the deterioration in our current position of $11 billioi
as measured by our balance of payments account.

- 7-

While this demonstrates that our long-term position is
considerably stronger than balance of payments figures alone indicate,
it in no way reduces the importance of putting an early end to the
substantial payments deficits we have had since 1949. We must
get our current balance in order so as to end the drain on our gold
stocks.
I have outlined the principal elements of our foreign and
domestic economic policy. Our prospects, both at home and abroad, are
good, but we have much to do to ensure that they remain so.
At home, I think everyone agrees that our first obligation is to
reduce the unacceptably high level of unemployment. To be sure, for
the last two months unemployment has dropped close to six percent,
after hovering near seven percent most of the year. And we expect it
to drop below five percent by the end of the year, as long-range
expansion takes hold. However, there is a hard core of unemployment
which continued expansion may not touch. That is why we urgently
need a manpower re-training bill, to ease the lingering human misery
and chronic economic waste that such unemployment represents.
In addition, nearly a million young people in our country are
neither earning nor learning. This dismal fact illustrates the need
for a Youth Employment Opportunities Act, to ensure that such
frightening waste of our national potential does not continue.
And finally, although we look forward to prosperity, we cannot
guarantee that there will never be another recession. To prepare for
that possibility, President Kennedy has asked for three major countercyclical measures: broadened unemployment insurance, a standby
program of public works, and the authority to promptly initiate
limited and temporary tax reductions. These are needed in the
earliest stages of recession — when quick action can accomplish
effective results.
The achievement of our economic goals will not be easy. But
it is our responsibility to demonstrate to the world the economic
vitality of a free nation, and the value of a free enterprise society
where labor, business, finance, and government work together within
the framework of a competitive price system, responding to the market
forces of supply and demand.
The stimulus of competition has brought us the world's highest
standard of living. Let us use our economic strength to develop
our nation to Its true potential, to distribute the benefits of
growth among our people, and to share our way of life with all the
peoples of the world who choose the path of freedom.

oOo

TREASURY DEPARTMENT
WASHINGTON, D.C.
January 19, 1962
FOR IMMEDIATE RELEASE
TREASURY DEPARTMENT RECRUITING PERSONNEL
The Treasury Department today announced a recruitment program
to fill a number of positions in the Washington and Baltimore
Offices of its various agencies. In most cases the position will
be filled by qualified persons recruited from outside the
Department.
Salaries for beginning positions range from $4,345 to $6,435 a
year; however, there are openings for positions paying up to
$12,210 a year. Included among the positions now, or soon to be
available, are statisticians and statistical assistants; research
analysts; management trainees and specialists; attorneys;
physicists; chemists; engineers (civil, electrical, mechanical,
and marine); revenue officers and revenue agents; and clerkstenographers .
The basic eligibility requirement for most of the professional
positions in the Treasury Department, as in other government
agencies, is qualifying in the Federal Service Entrance Examination,
popularly referred to as FSEE. This examination will be given a
number of times early this year in most large cities throughout
the country.
Forms for the Federal Service Entrance Examination may be
obtained from the Civil Service window of most Post Offices. The
scheduled dates of the examination are as follows: February 10
(filing deadline, January 25); March 17 (filing deadline, March l);
April 14 (filing deadline, March 29);May 12 (filing deadline,
April 26).
Applicants for the position of Revenue Officer must pass the
Federal Service Entrance Examination. Internal Revenue Agents must
have 3 years of acceptable accounting experience and pass a written
test but this is not necessary for those who have 4 years of
college, Including 24 semester hours of accounting
The beginning
salary
for most
of these
$4,345
or $5,355
Thelevel
Treasury
Department
ispositions
solicitingisthe
cooperation
ofper
colleges, universities, and civic organizations to encourage
graduating college seniors, and all other qualified, to take the
Federal Service Entrance Examination this spring
0O0

TREASURY DEPARTMENT

//&

WASHINGTON, D.C.
January 19, 1962
FOR IMMEDIATE RELEASE
TREASURY DEPARTMENT RECRUITING PERSONNEL
The Treasury Department today announced a recruitment program
to fill a number of positions in the Washington and Baltimore
Offices of its various agencies. In most cases the position will
be filled by qualified persons recruited from outside the
Department.
Salaries for beginning positions range from $4,345 to $6,435 a
year; however, there are openings for positions paying up to
$12,210 a year. Included among the positions now, or soon to be
available, are statisticians and statistical assistants; research
analysts; management trainees and specialists; attorneys;
physicists; chemists; engineers (civil, electrical, mechanical,
and marine); revenue officers and revenue agents; and clerkstenographers.
The basic eligibility requirement for most of the professional
positions in the Treasury Department, as in other government
agencies, is qualifying in the Federal Service Entrance Examination,
popularly referred to as FSEE. This examination will be given a
number of times early this year in most large cities throughout
the country.
Forms for the Federal Service Entrance Examination may be
obtained from the Civil Service window of most Post Offices. The
scheduled dates of the examination are as follows: February 10
(filing deadline, January 25); March 17 (filing deadline, March l);
April 14 (filing deadline, March 29);May 12 (filing deadline,
April 26).
Applicants for the position of Revenue Officer must pass the
Federal Service Entrance Examination. Internal Revenue Agents must
have 3 years of acceptable accounting experience and pass a written
test but this is not necessary for those who have 4 years of
college, including 24 semester hours of accounting. The beginning
salary level for most of these positions is $4,345 or $5,355 per
annum.
The Treasury Department is soliciting the cooperation of
colleges, universities, and civic organizations to encourage
graduating college seniors, andoOo
all other qualified, to take the
Federal Service Entrance Examination this spring.

TREASURY DEPARTMENT
WASHINGTON, D.C.
January 22, 1962

FOR IMMEDIATE RELEASE
TREASURY DECISION ON PORTLAND CEMENT
UNDER THE ANTIDUMPING ACT

The Treasury Department has determined that portland cement,
other than white, nonstaining portland cement, from the Dominican
Republic, is being, or is likely to be, sold at less than fair
value within the meaning of the Antidumping Act.
Accordingly, this case is being 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 will be published in the Federal Register.
The dollar value of imports received during the year 1961 was
approximately $384,000.

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TREASURY DEPARTMENT
WASHINGTON, D.C.
January 22, 1962
)R RELEASE A. M. NEWSPAPERS, Tuesday, January 23, 1962.
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 October 26, 1961,
ad the other series to be dated January 25, 1962, which were offered on January 17, were
pened at the Federal Reserve Banks on January 22. Tenders were invited for $1,100,000,000
r thereabouts, of 91-day bills and for $600,000,000, or thereabouts, of 182-day bills. Thf
etails of the two series are as follows:
OF ACCEPTED
OMPETITIVE BIDS:

High
Low
Average

91-day Treasury bills
maturing April 26, 1962
Approx. Equiv,
Annual Rate
Price
99.325
2.670$
99.319
2.691$
99.321
2.688$ 1/

182-day Treasury bills
maturing July 26, 1962
Approx. Equiv.
Annual Rate
Price
*
*
s

98.558
98.537
98.5U6

2.852$
2.89U$
2.875$ 1/

80 percent of the amount of 91-day bills bid for at the low price was accepted
35 percent of the amount of 182-day bills bid for at the low price was accepted
!0TAL 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
$
3U,828,000
1,752,173,000
27,715,000
62,1*98,000
10,1*23,000
26,1*10,000
232,665,000
27,31U,000
22,655,000
Ul,713,000
19,156,000
68,1*65,000
$2,326,015,000

Accepted
17,1*21*,000
$
73U,770,000
11,865,000
1*0,298,000
10,U23,000
21,832,000
137,826,000
18,899,000
18,305,000
28,518,000
1U,556,000
U6,875,000
$1,101,591,000

Applied For
$
8,071,000
886,21*6,000
8,238,000
17,289,000
5,61*6,000
8, ll*i*, 000
111*, 362,000
8,5lU,000
i*,7l*8,00Q
12,660,000
8,787,000
33,611,000
$1,116,316,000

Accepted
$ 8,071,000
1*51,196,000
3,238,000
12,289,000
5,li|.6,000
7,7UU,000
52,362,000

7,5iU,ooo
1*,1*23,000
12,660,000
U,787,000
30,611,000
$600,01*1,000 b /

Includes $213,1*66,000 noncompetitive tenders accepted at the average price of 99.321
Includes $1*8,061,000 noncompetitive tenders accepted at the average price of 98.51*6
On a coupon issue of the same length and for the same amount invested, the return on
these bills would provide yields of 2.71$ £or t h e 91-day bills, and 2.96$, 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-372

TREASURY DEPARTMENT
WASHINGTON, D.C.
January 23, 1962
FOR IMMEDIATE RELEASE

COMPTROLLER OF THE CURRENCY TO HOLD PUBLIC HEARING ON PROPOSED
NEW NATIONAL BANKING ASSOCIATION IN HOLDENVILLE, OKLAHOMA.
The Comptroller of the Currency announced today that he had, at
the request of the organizers of the proposed Citizens National Bank
of Holdenville, Holdenville, Oklahoma, ordered a public hearing on
the application to form a new national bank in Holdenville, Oklahoma.
The hearing is scheduled for 9:30 A.M., Friday, February l6, 1962, in
Room ^119, Main Treasury Building, Washington, D. C.
The hearing will be on an informal basis. All persons desiring
to testify should notify the Comptroller of the Currency by February 12,
1962.

0O0

TREASURY DEPARTMENT
WASHINGTON, D.C.
FOR IMMEDIATE RELEASE

January 23, 1962

SUBSCRIPTION AND ALLOTMENT FIGURES FOR TREASURY'S CURRENT CASH OFFERING
The Treasury Department today announced the subscription and allotment
figures with respect to the current offering of the additional amount of
$1,000 million, or thereabouts, of 4$ Treasury Bonds of 1969, due October 1,
1969.
Public subscriptions were allotted 60 percent with subscriptions for
$50,000 or less being allotted in full and those for more than $50,000
being allotted not less than $50,000.
Subscriptions and allotments were divided among the several Federal Reserve Districts and the Treasury as follows %
Federal Reserve
District

Total Subscriptions Received

Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
Govt. Inv. Accts.

Total

D-373

108,160,500
492,034,500
93,786,500
119,635,500
76,400,500
93,577,500
256,070,500
65,514,000
58,693,500
65,940,500
68,628,000
119,783,000
484,500
100,000,000

$1,718,709,000

Total
Allotments
$

66,932,500
298,502,000
58,896,500
75,112,000
48,326,000
59,813,500
161,348,000
44,349,000
0«7, 1..J..I « O U U

45,139,000
43,450,500
, 73,149,000
564,500
100,000,000
$1,114,494,000

i ZA
* 3 is a cause to which you can devote yourself wholeheartedly. I

congratulate you, Admiral, on your outstanding record in the serv
and wish you all. success la the future.

Aad now X should Ilk® to

read the official citation accompanying the distinguished service
modal with which your country in honoring you today.

JL w w

- 2 of American merchant ships is duo in a© small measure to your of
with the Merchant Marine Safety Council.
This same interest in merchant marine safety was further
developed whoa you served as Commander of the ninth Coast Guard
District with headquarters in Cleveland. At that time you became
particularly conveosant with the problems of shipping on the
Great lakes.
After this assignment you returned to Coast Guard Headquarters,
where, for the past eight years, as Chief of Staff aad Assistant
Commandant of the Coast Guard, you have worked unceasingly to

increase tho efficiency of the Coast Guard both as a military for
and as a merchant marine safety agency.
On February 1 you will end your long and distinguished career
in the Coast Guard. But your talents will not ho lost to your
country. For you will assume tho Vies Presidency of the Lake

Carriers' Association, an organisation dedicated to Improving saf
standards for shippers in the flssst Lakes area. This I am sure

REMARKS BY TREASURY SECRETARY DOUGLAS DILLON
AT PRESENTATION OF THB DISTINGUISHED 8EKVICE
MEDAL TO VICE ADMIRAL J. A. HIRSCHFIELD, U.S.
COAST GUARD, IN ROOM 4121, TREASURY BUILDING,
WASHINGTON, D. C., TUESDAY, JANUARY 23, 1062,
4:00 P.M.
Much as happened since you were commissioned an ensign in 1924.
Your nine years service on line and engineering duty with the
Destroyer Force served you very well on convoy duty in the CUTTER
CAMPBELL in the submarine-infested North Atlantic. On that
memorable day of February 23, 1043, you drove off five enemy

submarines and sank a sixth by ramming her. In that action you wer
wounded and received the Navy Cross as well as the Order of the
Purple Heart.
Somehow between assignments you also managed to acquire a

Bachelor of Laws degree from George Washington University and were
admitted to the District of Columbia Bar. This training and your
administrative talents helped you to pioneer a new era for the
Coast Guard in maritime safety. This Is a subject which has been

very close to your heart. I am sure that much of the progress mads
by the Coast Guard in improving the safety and efficiency

REMARKS BY TREASURY SECRETARY DOUGLAS DILLON
AT PRESENTATION OF THE DISTINGUISHED SERVICE
MEDAL TO VICE ADMIRAL J. A. HIRSCHFIELD, U.S.
COAST GUARD, IN ROOM 4121, TREASURY BUILDING,
WASHINGTON, D. C., TUESDAY, JANUARY 23, 1062,
4:00 P.M.
Much as happened since you were commissioned an ensign in 1924.
Your nine years service on line and engineering duty with the

Destroyer Force served you very well on convoy duty in the CUTTER
CAMPBELL In the submarine-infested North Atlantic. On that
memorable day of February 23, 1043, you drove off five enemy

submarines and sank a sixth by ramming her. In that action you we
wounded and received the Navy Cross as well as the Order of the
Purple Heart.
Spmehow between assignments you also managed to acquire a

Bachelor of Laws degree from George Washington University and wer
admitted to the District of Columbia Bar. This training and your
administrative talents helped you to pioneer a new era for the
Coast Guard in maritime safety. This is a subject which has been

very close to your heart. I am sure that much of the progress mad
by the Coast Guard in improving the safety and efficiency

1 C;Q
- 2 of American merchant ships is due in no small measure to your efforts
with the Merchant Marine Safety Council.
This same interest in merchant marine safety was further
developed when you served as Commander of the Ninth Coast Guard
District with headquarters in Cleveland, At that time you became
particularly conversant with the problems of shipping on the
Great Lakes.
After this assignment you returned to Coast Guard Headquarters,
where, for the past eight years, as Chief of Staff and Assistant
Commandant of the Coast Guard, you have worked unceasingly to
increase the efficiency of the Coast Guard both as a military force
and as a merchant marine safety agency.
On February 1 you will end your long and distinguished career
in the Coast Guard, But your talents will not be lost to your
country. For you will assume the Vice Presidency of the Lake
Carriers* Association, an organization dedicated to improving safety
standards for shippers In the Gvest Lakes area. Thia I am sure

1 £Q
j , \j ••-?

. 3 is a cause to which you can devote yourself wholeheartedly. I

congratulate you, Admiral, on your outstanding record in the serv
and wish you all success in the future. And now I should like to

read the official citation accompanying the distinguished service
medal with which your country is honoring you today.

sale or other disposition of Treasury bills does not have any special treatment,
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

ell taxation now or hereafter imposed on the principal or interest thereof by any
or any of the possessions of the United States, or by any local taxing authority.

purposes of taxation the amount of discount at which Treasuiy bills are originall

by the United States is considered to "be interest. Under Sections 454 (b) and 12

of the Internal Revenue Code of .1954 the amount of discount at which bills issue

under are sold is not considered to accrue until such bills are sold, redeemed or

wise disposed of, and such bills are excluded from consideration as, capital asse

Accordingly, the owner of Treasuiy bills (other them life insurance companies) is
hereunder need include in his income- tax return only the difference between the
paid for such bills, whether on original issue or on subsequent purchase, and the

actually received either upon sale or redemption at maturity during the taxable y
for •.which the return is made, as ordinary gain or loss.

- 2-

printed forms and forwarded in the special envelopes which will be supplied by Fede
Reserve Banks or Branches on application therefor.

Banking institutions generally may submit tenders for account of customers provided

the names of the customers are set forth in such tenders. Others than banking insti

tions will hot be permitted to submit tenders except for their own account. Tenders

"be received without deposit from incorporated banks and trust companies and from r
sible 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 fo

unless the tenders are accompanied by an express guaranty of payment by an incorpor
bonk 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 Treasur

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 Treasu

expressly reserves the right to accept or reject any or all tenders, in whole or in
and his action in airy such respect shall be final. Subject to these reservations,

competitive tenders for $ 200,000 or less for the additional bills dated November 2

3pbQx~"
, ( 91

days remaining until maturity date on May 5, 1962

3I5EJ
) 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 d

mals) of accepted competitive bids for the respective issues. Settlement for accept

tenders in accordance with the bids must be made or completed at the Federal Reserv
on February 1, 1962 , in cash or other immediately available funds or in a like

face amount of Treasuiy bills maturing February 1, 1962 . Cash and exchange tenders

will receive equal treatment. Cash adjustments will be made for differences between

par value of maturing bills accepted in exchange and the issue price of the new bil
The income derived from Treasuiy bills, whether interest or gain from the sale or

other disposition of the bills, does not have any exemption, as such, and loss from

TREASURY DEPARTMENT
Washington

ISL

FOR IMMEDIATE RELEASE January 24, 1962
TREASURY'S IAJEEKLI BILL OFFERING
The Treasuiy Department, by this public notice, invites tenders for two series

of Treasuiy bills to the aggregate amount of $1,800,000,000 , or thereabouts, f

cash and In exchange for Treasury bills maturing February 1, 1962 , in the amou
of $1.700.255.000 , as follows:
91 -day bills (to maturity date) to be issued February 1, 1962 ,
in the amount of $1,200,000,000 , or thereabouts, representing an additional amount of bills dated November 2, 1961
and to mature

May 5, 1962

, originally issued in the

amount of $ 600,405,000 , the additional and original bills
to be freely interchangeable.
182 -day bills, for $ 600,000,000 , or thereabouts, to be dated
February 1, 1962 , and to mature August 2, 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, $50,000, $100,000, $500,000 and $1,000
(maturity value).

Tenders will be received at Federal Reserve Banks and Branches up to the closin
hour, one-thirty p.m., Eastern Standard time, Monday, January 29, 1962 Tenders

will not be received at the Treasury Department, Washington. Each tender must b

for an even multiple of $1,000, and in the case of competitive tenders the pric

offered must be expressed on the basis of 100, with not more than three decimal

e. g., 99.925. Fractions may not be used. It is urged that tenders be made on t

January 24, 1962
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
$1,800,000,000, or thereabouts, for cash and in exchange for
Treasury bills maturing February 1, 1962, in the amount of
$1,700,235,000, as follows:
91-day bills (to maturity date) to be Issued February 1, 1962,
In the amount of $1,200,000,000, or thereabouts, representing an
additional amount of bills dated November 2, 1961, and to
mature May 3. 1962,
originally issued in the amount of
$ 600,403,000, the additional and original bills to be freely
interchangeable.
182-day bills, for $600,000,000, or thereabouts, to be dated
February 1, 1962, and to mature August 2, 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, $50,000, $100,000, $500,000 and $1,000,000
(maturity value).
Tenders will be received at Federal Reserve Banks and Branches
up to the closing hour, one-thirty p.m., Eastern Standard
time, Monday, January 29, 1962.
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.
Banking Institutions generally may submit tenders for account of
customers provided the names of the customers are set forth in such
tenders. Others than banking institutions will not be permitted to
submit tenders except for their own account. Tenders will be received
without deposit from incorporated banks and trust companies and from
responsible and recognized dealers in investment securities. Tenders
from others must be accompanied by payment of 2 percent of the face
D-374
amount
of Treasury bills applied for, unless the tenders are
or
accompanied
trust company.
by an express guaranty of payment by an Incorporated bank

TREASURY DEPARTMENT
WASHINGTON, D.C.
., . January 2£, 1962
-- o J
FOR IMMEDIATE RELEASE

COMPTROLLER OF THE CURRENCY TO HOLD KJBLIC HEARING ON
APPLICATION OF THE FIRST NATIONAL BANK OF PROVINCETOWN,
PROVINCETOWN, MASSACHUSETTS, TO ESTABLISH A BRANCH IN
CHATHAM, MASSACHUSETTS.

The Comptroller of the Currency announced today that at the request

of The First National Bank of Provincetown, Provincetown, Massachusetts

the Cape Cod Trust Company of Harwich Port, Massachusetts, The Cape Cod

Five Cents Savings Bank, Harwich Port, Massachusetts, the Chatham Trust
Company, Chatham, Massachusetts, and the Commissioner of Banks of

Massachusetts he has ordered a public hearing on the application of The
First National Bank of Provincetown, Provincetown, Massachusetts, to
establish a branch in Chatham, Massachusetts.
The hearing is scheduled for 9:30 A.M., Monday, February 12, 1962,
in Room 4119, Main Treasury Building, Washington, D. C.
The hearing will be on an informal basis and all persons desiring

to testify should notify the Comptroller of the Currency by February 7j
1962.

0O0

TREASURY DEPARTMENT
WASHINGTON, D.C.
January 2£, 1962
FOR IMMEDIATE RELEASE

COMPTROLLER OF THE CURRENCY TO HOLD PUBLIC HEARING ON
APPLICATION OF THE FIRST NATIONAL BANK OF PROVINCETOWN,
PROVINCETOWN, MASSACHUSETTS, TO ESTABLISH A BRANCH IN
CHATHAM, MASSACHUSETTS.
The Comptroller of the Currency announced today that at the request
of The First National Bank of Provincetown, Provincetown, Massachusetts,
the Cape Cod Trust Company of Harwich Port, Massachusetts, The Cape Cod
Five Cents Savings Bank, Harwich Port, Massachusetts, the Chatham Trust
Company, Chatham, Massachusetts, and the Commissioner of Banks of
Massachusetts he has ordered a public hearing on the application of The
First National Bank of Provincetown, Provincetown, Massachusetts, to
establish a branch in Chatham, Massachusetts.
The hearing is scheduled for 9:30 A.M., Monday, February 12, 1962,
in Room 4119, Main Treasury Building, Washington, D. C.
The hearing will be on an informal basis and all persons desiring
to testify should notify the Comptroller of the Currency by February 7,
1962.

0O0

i W w

TREASURY DEPARTMENT
Washington
For Release on Delivery

An Address by Mr. Herbert K. May, Chief, Latin American
Division, Office of International Finance, at the U. S.
Coast Guard Academy, New London, Connecticut, Friday,
January 26, I962, 8:00 p.m., EST.
President Kennedy announced on March 13, I96I, that he was calling
on all the people of the Western Hemisphere "to join in a new Alliance
for Progress — a vast cooperative effort, unparalleled in magnitude and
nobility of purpose, to satisfy the basic needs of the American people
for homes, work and land, health and schools." He said that "our
unfulfilled task is to demonstrate to the entire world that man's
unsatisfied aspiration for economic progress and social justice can
best he achieved by free men working within a framework of democratic
institutions" '• and he proposed for that purpose that the American
Republics "begin on a vast new Ten Year Plan,for the Americas — a
plan to transform the 1960s into an historic decade of democratic
progress."
From the perspective of one who has worked on Latin American
problems for almost twenty years,. I consider it no exaggeration to
say that the preservation of Latin America within the community of
free and democratic nations depends greatly upon the success of the
Alliance.
In my opinion, the Alliance for Progress is a true innovation.
It is not simply the normal, and usually reliable, product of
adjustment to the lessons derived from previous trials and errors.
Of course, the lessons of the past did provide important guidance
toward formulation of the Alliance. Our long and close relations
with Latin America — particularly since the inception of President
Franklin Roosevelt's Good Neighbor Policy — provided an invaluable
fund of experience, a fund which was heavily drawn upon when the
Alliance was formulated. However, the Alliance reflects also a
fundamental reorientation of perspective. It reflects a fundamentally new approach to our relations with Latin America. And
since it is important that this new approach be understood, I am
especially grateful for this opportunity to try to explain It.

-2-

1 QQ
±. w -~>

First, however, let me describe very briefly some of the principal
considerations which form the background for the Alliance for Progress.
It is estimated that the average income per person in Latin America
is about $300 per year. Low as that average income is, furthermore, it
is important to recognize that while some Latin Americans earn more than
$300 per year — sometimes very much more — many Latin Americans earn
less than $300 per year, sometimes very much less. Poverty is widespread in Latin America, and that poverty is so extreme in some regions
as to be almost unimaginable to most Americans. Deplorable housing and
sanitation facilities, serious malnutrition and high mortality rates are
characteristic of much of Latin America. The very low per capita incomes
of some countries are being impaired, moreover, by high, rates of population growth and by declining levels of exportation.
No one familiar with these conditions of economic distress can be
surprised about the political unrest prevalent in the area. However,
it would be a serious mistake to attribute the political unrest
exclusively to economic factors. As we look around Latin America —
indeed, as we look around the globe — we find that political unrest
is sometimes greater within the countries of relatively high income
than within those of relatively low income. Even within any particular
country, we sometimes find that political unrest is most severe in the
regions having the highest Incomes. If we are to help strengthen the
forces for freedom and democracy in Latin America we must unquestionably
place special stress on efforts to promote the economic welfare of the
area. But efforts to promote economic welfare are not likely to be
enough. For nowhere is it more evident than in Latin America that man
does not live by bread alone.
A fresh, but sometimes icy, wind has been blowing in Latin America
during the past 15 or 20 years. Economic and social conditions which
once were tolerated everywhere as temporarily necessary, or which were
even accepted as natural and inevitable, are no longer being tolerated
or accepted. The word, "reform", is becoming common in political
slogans. More and more voices are being heard asking for agrarian
reform,tax reform, education reform, banking reform, and foreign
exchange reform.
'
Some observers have described the changing scene in Latin America
as a so-called "revolution of rising aspirations." This "revolution"
is being manifested in part in the fact that increasing numbers of people
are finding it reasonable to aspire for better homes, more and better
food, better health, and even for washing machines, television sets, and
automobiles. But the "revolution" is being manifested also in the fact
that increasing, numbers of tenant farmers are finding it reasonable to
aspire for their own plots of land and increasing numbers of Illiterate
parents are finding it reasonable to aspire that their children be
taught to read and write.

-3«L O /

The demand for social justice is becoming louder and more urgent.
The positions of the richer and more influential groups of society are no
longer considered to be inevitable, if not sacrosanct. Students, farmers,
laborers, even business groups, are challenging the propriety of the
influence once exercised as a matter of right by a few large landowners.
Changes in the status quo are in the air all over Latin America.
Governments have already been elected on platforms promising such
changes, and the fact that changes will be made effective everywhere
can no longer be doubted.
There can be doubt now only about one question: In what direction
or directions will those changes take place? In the desire to stimulate
economic development, so as to raise national and per capita incomes, will
the policies and practices adopted toward that end be really effective,
or will they serve instead only to weaken the present productive base,
while failing to replace it by a stronger base? Will present social
evils be overcome, or will the methods chosen for that purpose be
ineffective and even, perhaps, create new evils to add to, or supplant,
the present ones?
In that segment of President Kennedy's speech of March 13, which I
quoted earlier, he spoke of his belief that "our unfulfilled task is to
demonstrate to the entire world that man's unsatisfied aspiration for
economic progress and social justice can best be achieved by free men
working within a framework of democratic institutions." When the
representatives of the twenty Latin American Republics and the United
States met at Punta del Este in Uruguay in August, 1961, they all —
with the single exception of Cuba — agreed with this article of faith
and agreed to bend all of their efforts in support of what came to be
known as the Charter of Punta del Este. This basic document set down
the broad policies to be followed by those countries, individually and
collectively, to promote the Alliance for Progress, with the objective,
again as expressed by President Kennedy on March 13, that "the close
of this decade will^^Q the beginning of a new era in the American
experience. The living standards of every American family will be on
the rise — basic education will be available to all — hunger will be
a forgotten experience — the need for massive outside help will have
passed — most nations will have entered a period of* self-sustaining
growth — and — although there will be still much to do — every
American Republic will be the master of its own revolution and its
own hope and progress."
The President's reference to the Latin American need, at present,
for "massive outside help" requires a special comment. Secretary Dillon,
who was Chairman of the U. S. Delegation to the Conference at Punta del
Este, told that Conference on August 7> 196l, that, "Looking to the
years ahead, and to all sources of external financing — from inter
national institutions, from Europe and Japan as well as from North
America, from new private investment as well as from public funds --

-4 -

Latin America, if It takes the necessary internal measures, can reasonably
expect Its own efforts to be matched by an inflow of capital during the next
decade amounting to at least twenty billion dollars. And most of this will
come from public sources. The problems, I am convinced, will no- longer lie
in shortages of external capital, but in organizing effective development
programs so that both domestic and foreign capital can be put to work
rapidly, wisely, and well."
It is natural that most observers have focused on Secretary Dillon's
reference to "at least twenty billion dollars." This is in fact a massive
sum. It can make a very great contribution to the economic and social
progress of Latin America. However, careful attention should also be
placed upon two other points made in that statement. He said that Latin
America can reasonably expect such an inflow of capital "if it takes the
necessary internal measures." He said also, that while the expected inflow
of capital would overcome the shortage of external capital for Latin America,
the problem in that area will be "in organizing effective development
programs so that domestic and foreign capital can be put towork rapidly,
wisely, and well."
I would like to focus this evening on those two points, inasmuch as
they constitute two of the most important aspects in which the Alliance
for Progress represents an innovation in inter-American relations.
First, let us look a bit more closely at the need for organizing
effective development programs. This need derives in large part from
the fact that the economic and social development of Latin America does
not depend exclusively, or even primarily, upon the receipt of funds
from abroad. All economists who have analyzed the Latin American scene
agree that if the economic and social development of Latin America is
to proceed as we all want it to proceed, each of the Latin American
countries participating in the Alliance for Progress must make a mammoth
effort to put its own internal resources to the best possible use. Help
from abroad can only help. It cannot do the job alone. It can provide
a greatly needed supplement to the internal resources available within
Latin America. But no matter how great the foreign assistance, the
economic and social development of Latin America would move forward at
a very slow pace or would not move forward at all if the various Latin
American countries were at the same time to relax their own efforts.
Secretary Dillon pointed out, in a speech before the Inter-American
Economic and Social Council on November 30, 1961, that "dollars don't
mean development. At the very outset, our opportunity for success can~be
wiped out, and the hope of the hemisphere can be betrayed, if we assume
that the Alliance for Progress is no more than a loan program. It is,
and will be, far more. Loans there will certainly be. But we have no
Intention — now or later — of making loans for other than sound
reasons of development or need. At Punta del Este we agreed that thir
was to be a genuine Alliance, with full cooperation and matched effort,

ipQ

- 5and that the other republics would make their own entry into the decade of
development. We will be a partner in hemispheric progress, but we do not
intend, and in fact we cannot, carry the whole load. Fully 80 percent of
the resources needed to move the hemisphere into the twentieth century must
come from Latin America itself."
It was for this reason that the Latin American countries participating
in the Alliance for Progress agreed at Punta del Este to concentrate upon
the formulation, as soon as possible, of long-term national development
programs which would contain the following principal elements among others:
(l) The establishment of mutually consistent targets in expanding productive
capacity in industry, agriculture, mining, etc.,...and In improving conditions
of urban and rural life, (2) The assignment of specific priorities, and the
description of methods, to achieve those targets, (3) The determination of
direct governmental operations and of measures designed to promote private
enterprise in support of the development program, and (4) The pursuit of
basic fiscal and monetary policies directed toward the maintenance of price
stability, so as to encourage maximum savings and the best possible utilization of private investment funds.
The process whereby sound development programs may be formulated is
a highly technical one, and I will not bore you with any of its details.
I wish to emphasize, however, that development programming, as envisioned
in the Alliance for Progress, consists of much more than the construction
of mechanical models by economists and engineers operating under the
influence of textbooks and slide rules. Secretary Dillon stated that "if"
Latin America "takes the necessary internal measures" it may reasonably
expect an Inflow of at least 20 billion dollars during the next ten years.
The formulation of technically sound national development programs is
critical for that purpose. However, the Charter of Punta del Este
emphasizes that those programs must not only be technically sound,
but must also call for implementation of a series of basic economic and
social reforms.
The participating countries considered those reforms so important
that they gave them rpecial prominence in the "Declaration to the Peoples
of America" which served as the introduction to the Charter. I will not
quote the full "Declaration" here, but I believe that you will attain a
fuller appreciation of the "revolution of rising aspirations" in Latin
America if I cite just a few of the reforms highlighted in that Declaration as representing the goals to which the peoples of the Continent
are dedicating themselves:
"To carry out urban and rural housing programs to
provide decent homes for all our people.
"To encourage ... programs of comprehensive agrarian
reform ... so that ... the land will become for the
man who works it the basis of his economic stability,
the foundation of his increasing welfare, and the
guar ant e e of TTis~ freed bmHana dignity^

- 6"To assure fair wages and satisfactory working conditions
to all our workers.
"To wipe out illiteracy; to extend ... the benefits of
primary education to all Latin Americans; and to provide
broader facilities, on a vast scale, for secondary and
technical training and for higher education.
"To press forward with programs of health and sanitation
in order to prevent sickness, combat contagious disease,
and strengthen our human potential.
"To reform tax laws, demanding more from those who have
most, to punish tax evasion severely, and to redistribute
the national income in order to benefit those who are
most in need, while, at the same time, promoting savings
and investment and reinvestment of capital."
It might be useful at this point to caution against any tendency to
put economic development and social development into separate, and even
conflicting, compartments. It is true that foolishly devised programs for
social development may interfere with sound economic development,just as
foolishly devised programs for economic development may interfere with
sound social development. Wisdom is necessary for the formulation of
each type of development. But -- assuming such wisdom -- economic
development and social development will not only move along together,
but will be mutually reinforcing.
The establishment of new factories, the improvement of agricultural
productivity, the expansion and strengthening of transportation systems —
all of these and many other types of growth usually encompassed within the
concept of "economic" development will tend to increase national incomes,
thereby making possible an increase of per capita incomes and such social
advances as better housing and easier access to "basic and higher education.
On the other hand, the reforms usually encompassed jwithlh the concept of
"social" development may greatly facilitate "economic" development.
Agrarian reform, for example, may lead to better land use and, therefore,
higher agricultural production. Encouragement to I6w cost housing may
help strengthen the construction industry. Improvement in school systems -^l*^? 1 1 1 ^ ^ e o f tlie most necessary"of social reforms in Latin America —
is also one of"thei more important requirements for economic development,
in view of the need in every developed and developing country for a
literate people, with various forms of technical and managerial skills.
However, social and economic reforms can not be accomplished easily.
It is no easy matter to change ways of life, to uproot traditions, which
have prevailed in Latin America for centuries. It is no easy matter to
establish these reforms in such a way as to be harmonious with all of the
measures necessary for achievement of economic development. But it is
only through the firm achievement of these goals that all of the peoples
of Latin America will participate fully in the benefits of economic
development. It is only in this way that the Alliance for Progress will

- 7have proven to be successful. And we of the United States can not bring
those reforms to pass. They can only be devised and implemented by the
Latin Americans themselves. This is why "self-help" is a major prerequisite for U. S. assistance under the Alliance. And this is why I
believe that this greatly increased insistence upon "self-help" is part
of a new and major change in the relations between the United States and
Latin America.
I want now to refer to one other, and highly important, respect in
which the Alliance for Progress reflects a major change in Inter-American
relations. I am referring to the steps outlined in the Charter of Punta
del Este for implementation of the Alliance. The United States Government
as well as American investors have provided a great deal of effective
assistance to promote the economic development of Latin America, especially
since the end of the Second World War. Just during the decade of the
1950s, U. S. Government assistance to Latin America totalled about $3-5
billion, of which the Export-Import Bank_alone^ provided $2.2 billion in
long-term loans. In addition, new U. S.^private investment in Latin
America during that decade almost doubled, increasing from $3»7 billion
to $7«2 billion. Also, the United States Government supported the
creation in 1959 of "the Inter-American Development Bank and agreed to
provide $450 million toward the capital resources of that Bank. Moreover,
the United States Government undertook at Bogota, Colombia, in September,
i960, to provide $500 million for a social development program, based on
self-help, in Latin America.
Nevertheless, I think it fair to say Latin Americans have never been
confident about the circumstances under which they might obtain additional
assistance. Lack of confidence in this regard has in turn led to certain
consequences harmful not only to the development of those countries,
but harmful also to the promotion of better Inter-American relations.
Among those harmful consequences may be mentioned the fact that Latin
American Governments have frequently failed to concentrate their efforts
on the formulation of sound loan applications because of a skepticism
or cynicism as to the willingness of the U. S. Government to give those
applications favorable consideration. Also, there has been an undue
propensity in some countries to emphasize the political urgency, rather
than the economic merits, of many of the loan applications which have
in fact been submitted. Finally, even where governmental and private
borrowers in Latin America have sought to prepare"soundT applications
for U. S. loans, the applications have frequently proven to be unacceptable because of poor technical preparation.
The formulation of sound development programs and implementation of
"self-help" measures will contribute greatly toward the preparation of
sound loan applications. We believe that the same objectives will be
considerably abetted, however, by utilization of the instrumentalities
established in the Charter of Punta del Este for implementation of the
Alliance. For these instrumentalities provide a unique importance to
the word "Alliance" in the Alliance for Progress.

-8 The most important instrumentality established for that purpose is
the so-called "Panel of Experts." The specific members of the Panel of
Experts were selected at the meeting of the Inter-American Economic and
Social Council which closed on December 9y 196l- The Panel consists of
nine men highly experienced in problems of economic development. Of the
nine men, seven are Latin Americans who have had considerable experience
in development planning in their own countries; one is a highly qualified
American economist; and one is a highly qualified British economist. The
Panel of Experts was formally convened for the purpose of beginning its
work early this month.
It is too early to describe in detail the procedures which will be
followed by the Panel of Experts in carrying out its assignment. Nevertheless, the importance of the Panel for the implementation of the Alliance
for Progress is so great that I feel that I should tell you a little about
the role set out for it in the Charter of Punta del Este.
The Charter of Punta del Este provides that each participating
Government may, if it so wishes, present its program for economic
and social development for consideration by the Panel of Experts. The
Panel of Experts will appoint a separate small Subcommittee to consider
the program of each such country. That Subcommittee, utilizing such
expert assistance from other sources as it may require, "will study the
development program, exchange opinions with, the interested government
as to possible modifications and, with the consent of the government,
report its conclusions to the Inter-American Development Bank and to
other governments and institutions that may be prepared to extend
external financial and technical assistance in connection with the
execution of the program." It is further provided in the Charter of
Punta del Este that the Inter-American Development Bank "may undertake
the negotiation required to obtain such financing, including the organization of a consortium of credit institutions and governments disposed
to contribute to the continuing and systematic financing, on appropriate
terms, of the development program."
Secretary Dillon stated at Punta del Este that the United States
Government would expect the recommendations of the Panel of Experts
"to be of great importance in determining the allocation of our own
resources to Latin America for development purposes. We would also
expect other friendly governments which are potential suppliers of
capital, together with the international institutions in which we participate, to accept these expert recommendations as a major factor in
their decisions on aid for Latin America."
Considerable importance should also be attached to the fact that the
Organization of American States and the Inter-American Economic and Social
Council, the Inter-American Development Bank, and the United Nations
Economic Commission for Latin America have all dedicated themselves and
all of their resources toward provision of such technical assistance and
all other assistance as they can provide toward implementation of the

«*»•

- 9Alliance for Progress. The
a whole-hearted and vigorous
American collaboration, with
social welfare of all of the

Alliance for Progress does in fact represent
alliance, embracing all organs of Interthe objective of promoting the economic and
peoples of the Americas.

I wish now to make special reference to the man who has been designated
by President Kennedy as the U. S. Coordinator of the Alliance for Progress.
He is Mr. Teodoro Moscoso. Mr. Moscoso was born of American parents in
Spain in nineteen hundred and ten. After graduating from the University of
Michigan in 1932 he became active in the business and civic life of Puerto
Rico and in 1950 he became Administrator of the Economic Development
Administration of Puerto Rico. He remained in that capacity until March
I961 when he was appointed U. S. Ambassador to Venezuela. In his capacitynow as the U. S. Coordinator of the Alliance for Progress and as Regional
Administrator for Latin America in our Agency for International Development,
Mr. Moscoso's responsibilities for pulling together all of the many and
diverse aspects of the U. S. policy as they affect Latin America are very
great. I want to take this opportunity to express my own enthusiasm for
the appointment of Mr. Moscoso. His experience, intelligence, and energy
are all of a very high order and his willingness to undertake this task
has reconfirmed the likelihood that the Alliance for Progress will, in
fact, prove to he a success.
In closing, I wish to revert to President Kennedy's statement that
"our unfulfilled task" -- the task which he placed on the shoulders of the,
Alliance for Progress — "is to demonstrate to the entire free world that
man's unsatisfied aspiration for economic progress and social justice can
best be achieved by free men working within a framework of democratic
institutions." The peoples of Latin America are demanding increasingly,
and ever more urgently, that changes be made in their mode of life, to
the end that they live more comfortably and with greater personal dignity.
The United States Government believes that their objectives are worthy
objectives, closely similar in almost every respect to those which have
motivated the people of the United States throughout our own history.
We believe that, if the people of Latin America do what they can to help
themselves, it is In the interest of the United States to do what we
reasonably can do to help them reach those objectives.
The Alliance for Progress is designed to offer the peoples of Latin
America the realistic expectation of better days to come. It is designed
to demonstrate that the people of the United States stand ready to help.
them_at.tain—tho.se better days. It is designed to demonstrate that_free
mftrij working together in a true spirit of brotherMod,_can_j:each_goals
undreamed of. and certainly unattained, by men living in chains^ He
have offered Latin America the hope and expectation. We must now see
that hope and expectation are translated into reality.

Statement of Douglas Dillon
Secretary of the Treasury
before the Committee on Appropriations
United States Senate
January 29, 1962
Mr. Chairman and members of the Committee:

I am pleased to participate with the Director of the Budget Bureau in
discussing the 1963 budget with you, I will direct my remarks to the revenue
estimates and the economic outlook.
Budget receipts for the fiscal year 1961 totaled $77.7 billion. They
are estimated to rise by $4.4 billion to $82.1 billion in the current fiscal
year and further by $10.9 billion to $93*0 billion in the fiscal year 1963.
Over four-fifths of all Federal revenues come from taxes on incomes
earned by individuals and corporations, but in the case of corporations and
non-withheld personal incomes only with a considerable lag. For the fiscal
year ending June 3°> 1962, the bulk of our tax receipts are based on incomes
earned during calendar year 1961. And again, for the fiscal year ending
June 30> 1963> the bulk of our collections are based on economic activity in
calendar 1962. That is why the table I am submitting shows receipts for
fiscal years and economic activity for calendar years.
All major tax sources, as indicated in the attached table, show increases
for both fiscal years 1962 and 1963. The individual income tax will continue
as the single most important source of revenue and provides more than
50 percent of budget receipts in the two fiscal years. Receipts from that
source are estimated to show substantial gains in both fiscal years.
Receipts from the corporation income tax, the second most important
source of revenue, are expected to rise only slightly in the fiscal year 1962
because corporate profits in I96I were only very little better than in i960.
In fiscal 1963, corporation income tax receipts, reflecting a sharp improvement in profits during calendar 1962, should increase by $5-3 billion,
accounting for almost 50 percent of the rise in total (revenues.
Relatively substantial gains are also estimated for the other major
sources of tax revenue, the excise taxes, estate and gift taxes and customs.
Revenues from miscellaneous receipts, primarily from non-tax sources, are
expected to drop sizably in 1962 but to rise in I963 to a level somewhat
higher than that of 1961.
Estimated receipts of $93.0 billion in the fiscal year 1963 represent an
increase of 13-3 percent over the estimates of $82.1 billion for I962. This
increase, larger than the average annual increase to be expected, is not inconsistent with gains in revenues during recovery periods. Receipts in the
fiscal year i960, reflecting the economic recovery from the 1957-1958 recession,
rose 14.5 percent over fiscal year 1959. Receipts increased almost 16 percent
in the fiscal year 1956 as compared to 1955 after adjusting that year for the
effect of the acceleration of corporation income tax collections under the
Mills plan.

These revenue estimates reflect our belief that the economy which has
already achieved substantial recovery from\the I96O-I96I recession will
continue to move forward and that substantial further gains in employment
and incomes will be realized. The economic projections underlying our
revenue estimates may be expressed in terms of three important economic
measures: gross national product, personal income and corporate profits.
Gross national product, the total value of goods and services produced,
rose from a seasonally adjusted annual rate of $501 billion in the first
quarter of 1961 to $542 billion in the fourth quarter. This is a rise of
$41 billion or 8.2 percent, an average quarterly rise in excess of 2\ percent. For I96I as a whole, gross national product was $521 billion. The
projected continuation of this expansion, but at a somewhat slower average
rate of 2 percent, would result in a gross national product in the calendar
year 1962 of $570 billion. This is an increase of $49 billion over the
calendar year 1961.
A further expansion through and beyond the end of 1962 would be entirely
consistent with past experience. Even the shortest postwar recovery, that
of 1958-1960, lasted 25 months.
Personal income, which did not decline significantly during the
I96O-I96I recession, partly because of anti-recession measures, rose from
a seasonally adjusted annual rate of $405 billion in the first quarter of
calendar year I96I to $429 billion in the fourth quarter. By December,
the rate had reached $431.3 billion, bringing the total for the year as a
whole to $417 billion. For the calendar year 1962, personal income Is
expected to rise to $448 billion, a figure consistent with the increase in
the value of goods and services anticipated for that year.
Corporate profits normally fluctuate sharply over the business cycle.
In the first quarter of calendar year I96I, the annual rate had dropped to
$39.6 billion, $8.5 billion below the $48.1 billion rate for the same
quarter of the preceding year. Since then, profits have risen sharply, and
current indications are that they exceeded a $50 billion rate in the fourth
quarter. However, because they began the year at such' a low level,
corporate profits for calendar year I96I as a whole are now estimated at
$46 billion, not much higher than the total of $45 billion in i960. This
relatively small difference in annual corporate profits for the two years
is responsible for the limited rise in corporate income tax receipts in
the fiscal year 1962.
A continued rise from the fourth quarter 1961 level of over $50 billion
is expected to carry corporate profits for the calendar year I962 to
$56J billion, an increase of approximately $10| billion above 1961. This is
in line with past experience during similar recovery periods. The increase
in percentage terms comes to less than 23 percent, compared to the increase
of 25 percent in 1959 and nearly 32 percent in 1955.

17C
- 3Estimated profits for I962 would be approximately 9.9 percent of gross
national product, significantly less than the ratio of 10.7 percent in 1956,
the last fully comparable year as far as general business activity is
concerned. In 1959, when the long steel strike cut sharply into profits
and curtailed revenues, the ratio was only slightly lower than projected
for 1962.
In summary, we anticipate that the recovery movement will remain strong,
but that the recent very rapid rate of expansion, typical of the early
months of recovery, will slow somewhat during the latter part of the period
underlying fiscal year 1963 receipts. Our projections appear reasonable and
realistically attainable on the basis of past experience during comparable
recovery years.
Our revenue estimates for 1963 have been prepared on the assumption that
the present tax rates on corporation income and certain excises are extended
for another year beyond their scheduled expiration date of June 30, 1962.
Postponement of these changes for another year will prevent a revenue loss
of $2.8 billion in 1963* The estimates further assume that the recommendations
of the President with respect to transportation taxes will be enacted.
With regard to tax legislation, extensive and careful consideration has
already been given to the proposals ennumerated in the President's special
tax message to the Congress last April. The House Committee on Ways and
Means has made action on these recommendations its first order of business
this year. We particularly urge enactment of the tax credit for investment
in depreciable equipment, with any net reduction in fiscal I963 revenues
resulting from its adoption to be offset by additional revenues from the
enactment of other measures to remove defects and inequities in the tax
structure. Only in that way can the overall balance be maintained, so that
the budget may play its proper role in encouraging growth without inflation
in the economic setting likely to prevail in the months ahead.
In closing may I express my appreciation for this opportunity of
explaining to the Senate Appropriations Committee the basis of our revenue
projections and estimates. I look forward to working with the Committee In
the best interests of the Nation.

1 77

Net budget receipts
Budget receipts, actual fiscal year 196l and estimated
fiscal years I962 and 1963; and underlying
income assumptions
(In billions of dollars)
Estimated
: Fiscal : Fiscal
: year : year
: 1962 ; 1963
Receipts
Individual income tax:
Withheld
,
Not withheld
Total
,
Corporation income tax ,
Excise taxes ...........
Estate and gift taxes .,
Customs
Miscellaneous receipts ,
Net budget receipts

28.3
13.0
41,3
21.0

31.5
13.5
45.0
21.3

9.1
1.9
1.0
3.4

9.6
2.1
1.2
2.9

77.7

82.1

35.2
14.1
49.3
26.6
10.0

2.3
1.3
3.5
93.0

Calendar years

Income levels
Gross national product
Personal income
Corporate profits ....

I960

1961

504.4
402.2
45.0

521.2
416.7
46.1

* 1962

570.0
447.6
56.5

1 7Q

nm mmm>
BBSIUS

A. N. mmmm®,

zmmxr *£# x^s

or f flusimp* *miar BIU* amaiaa

tbe Treasary Ss©art»ejst announced last evaaiaf tbnt the
bUls, one series to be a» Additional is*** of the bills dated Boveaber 2,
and tbe ether series to bs dated Febraary 1, 19629 which wars offered on Janoary 21*,
at tbo Federal asserts Basks em January 2?. Tenders were invited far $1,200
i* of n~$*& bUls sal far 1600,000,00©, or tnsrssbeats, of 192-day
fas detail* of the two aeries are as follow
11-day Sroaswry bUls
MSIS or kommm
Maturing aagast 2t 1*62
« * W r t f May |ff 1*62
C0&rlfXfX¥5 BISOt
Approx* looiv.
Aaaaal Bats
?&ios
Anaaal lata
;Ii^h
r,
96.5U
S*w
n.m*/
f>«B—
Average
**«313
2.71W
fS>.3l£ of H^ t 0O0|
2. WWI Smmptem
1/
®» tsadsr of «io,ooo
of tbe
of H-d*y bills bid for at the low prioa was
of tea
of lS2-day bills bid for at tbe low prioa was

fotAL wmm

A^ase rat AMB A s o m W m mmm*

tta*
YSfm
Atlanta

z,m,«»

St. Lsals
Xaaeaa City
Bellas
San Francisco
|(^Jjp
>aj|j
TOTALS

mwm

Asolied For
1,628,238,000
J*S,9@S,000
9f5bt#oo@
17,i»70#000
2X9,274,000
28,112,000
22,756,000
35,185,00®
29,326,000
^,a3^ab»000

2if7S§*aoo

nzsnicssi
Armllod For
^$7000
1,077,105,000
6,657,000

i,aS4*,ooo
9,5fe2,ooo
3,921,000
15,100,000
9^,570,000
XTSfSAeOM
12412,093
5#TO#oo®
17,811,000
3,030,000
2fe,905,000
7,332,000
2k,J2o,Q00
10,71B,000
Sl^gllOOO a/ $1,33^,152,000
H,201,10a*000
?Si32U2SS

Aeosstad
1*71,770,000

35.JTM*
3,775»S*

Xaeladas H9S,68©,0O0 noncompetitive toadors accepted at too *****& pries of ft*3
Includes 1*3,216,000 noncompetitive tendere accepted at the average price of 9S.JU
On a coupon Issue of the smm length aad for tbe sans aaouot invested, the retort at
those b U l s woald provide yiolSof 2.76|, for His ^ ~ b u S ^ S f 3.3*7*** O*
li2-dsy bills. Interest rates oa b U l s are quoted ia tenia of bank dissoaat with
! S 2 5 2 5 t^^Jt^J^n**!****
£*\ttJUi W a b X s at smtarity rathsr tttj
the amount invested aad their laajth ia sotsml asabar of days related to a 360-dg
year, la contrast,
yields
oa ©artifioatea.
aad
period
to tbe
aetaal aaaborno
oftea,
days
ia bonds are ooaantsd in tea*
if ias
of interest oa
invested,
relate
the noahar of days rssslatag ia mh
«waaoaat
than one
coupon aad
period
is involved.
interest payment period to tbe actual avabsr of days ia the aoriod. aitb saatsaaef]

%h in^M^oO-

37 j

/11
TREASURY DEPARTMENT
f c i » » n g * ,"':wtHMimu.vmn^^yffi

WASHINGTON. D.C.
m RELEASE A. M. NEWSPAPERS,
Tuesday, January 30, 1962.

January 29, 1962

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 November 2, 1961,
and the other series to be dated February 1, 1962, which were offered on January 24, were
opened at the Federal Reserve Banks on January 29. Tenders were invited for $1,200,000,00'
or thereabouts, of 91-day bills and for $600,000,000, or thereabouts, of 182-day bills.
The details of the two series are as follows:
182-day Treasury bills
91-day Treasury bills
maturing August 2, 1962
maturing May 3, 1962
Approx. Equiv.
Approx. Equiv.
Price
Price
Annual
Rate
Annual Rate
High
98.520
b/
99.322 a/
2.682$
Low
98.511 "
99.313 "
2.718$
2.945$
Average
98.514
99.316
2.705$ 1/
2.939$ 1/
a/ Excepting one tender of $l50,000j b/ Excepting one tender of $10,000
37 percent of the amount of 91-day bills bid for at the low price was accepted
48 percent of the amount of 182-day bills bid for at the low price was accepted

'MNGE OF ACCEPTED
[COMPETITIVE BIDS:

—???m—I"

TOTAL TENDERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:
District
Applied For
Accepted
Applied For
Boston
14,473,000
30,473,000
$
5,665,000
New York
775,483,000
1,628,238,000
1,077,105,000
Philadelphia
11,849,000
32,849,000
6,657,000
Cleveland
28,758,000
46,908,000
17,118,000
Richmond
9,542,000
9,542,000
1,454,000
Atlanta
15,100,000
17,470,000
3,921,000
Chicago
175,454,000
219,274,000
99,570,000
St. Louis
22,112,000
28,112,000
5,775,000
Minneapolis
17,811,000
22,756,000
8,080,000
Kansas City
24,905,000
35,905,000
7,332,000
Dallas
24,326,000
29,326,000
10,718,000
San Francisco
81,291,000
112,591,000
90,757,000
TOTALS
$2,213,444,000
$1,201,104,000 c/ $1,334,152,000

Accepted
$ 5,465,000
471,770,000
1,622,000
8,956,000
1,204,000
2,721,000
35,570,000
3,775,000
2,370,000
6,087,000
5,223,000
55,547,000
$600,310,000 &/

c/ Includes $198,680,000 noncompetitive tenders accepted at the average price of 99.316
3/ Includes $43,276,000 noncompetitive tenders accepted at the average price of 98.514
T/ On a coupon issue of the same length and for the same amount invested, the return on
these bills would provide yields of 2.76$, for the 91-day bills, and 3.02$, 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
D-375compounding if more than one coupon period is involved.

The Continuing Challenge
The continuing economic challenge "before us Is clear: we
must fashion the most effective arrangements possible to assure
that our free economy will reach its unrivalled potential and
enable us to fulfill our responsibilities for leadership in the
free world.

In meeting that challenge, we are acting in those

areas where Government can appropriately and helpfully initiate
new programs and policies. Equally Important, we have tried to
be conscious of those things Government cannot do, or that the
private sector of our economy can do better.
The essential and unique characteristic of the American
economy is the strength it derives from individual freedom for
all of us —

as workers, employers, owners, and consumers.

In shaping our program for the years ahead, we are working toward
the sort of environment that will strengthen and preserve that
precious heritage.

oOo

- 15will powerfully reinforce the effectiveness of the Fund, and
could be of:great assistance to the United States. Enabling
legislation will be submitted to the Congress shortly.
Economic Security and Stabilization
The President has proposed a series of measures to promote
greater economic security for all our people, to permit more of our
citizens to share fairly in the growth of the economy, and to reduce
the hardships and waste of recurrent recessions. Aid to depressed
areas and worker retraining can help speed growth and eliminate
pockets of hardship. Broadened unemployment insurance can both
reduce personal misfortune and strengthen the "automatic stabilizers
that have helped prevent our postwar recessions from turning into
full scale depressions. And, a reserve shelf of public works will
strengthen our defenses against a possible future recession.
The President has also set before you a carefully devised plan
for introducing an element of flexibility Into our tax structure.
The measure would facilitate a timely, but temporary, reduction in
personal income tax rates, at his initiative, in the event of a
serious business downturn.

Its significance lies in the fact that

a reduction in personal tax rates could speedily give a powerful
boost to consumer spending power at critical junctures, when delay
might permit cumulative downward forces to take hold. Adequate
safeguards are provided, including strict limits on the amount and
duration of* any such tax reduction. This carefully circumscribed
delegation of authority to the President, always subject to
Congressional veto, would be a significant addition to our arsenal
of anti-recessionary weapons.

-1Ufinancial powers on a periodic basis. These discussions havi 0 ^
laid the foundation of common understanding and cooperation that
is a prerequisite for effective international action to prevent,
limit, or offset currency movements that could undermine a stable
monetary system.

They have been supplemented by Federal Reserve

participation in the regular meetings of European central bankers
at Basle, and by bilateral consultations with our principal
financial partners.
The Treasury also has undertaken the purchase and sale of
foreign currencies for the first time in a generation. These
operations helped at certain critical periods to reduce incentives
to shift funds abroad on a speculative basis or to take advantage
of temporary differentials in the exchange markets. The Federal
Reserve has also recently decided to undertake operations in
foreign currencies, a development which we in Treasury regard as
highly promising.

Chairman Martin will be elaborating further on

this approach during his testimony this afternoon.

I look forward

to our continued cooperation with the Federal Reserve in the
international field, just as in the domestic area.
Finally, and most significant for the strengthening of the
international monetary system, Is the * agreement reached among ten
of the major industrialized countries to buttress the resources
and capabilities of the International Monetary Fund by lending it
specified amounts of their own currencies when necessary to cope
with temporary stresses. This $6 billion of standby facilities,
including almost $2-1/2 billion of European Common Market
currencies, will both reduce the livelihood of. a "run" on any
member currency and provide the means to withstand the Impact off
a speculative attack should one develop. The new arrangements

- 13 year.

Some shifts recorded as an outflow were apparently promptly

reinvested in the New York market by agencies of foreign banks1.
This again seems to be the case particularly with Canadian banks
and their agencies. We cannot as yet pinpoint the relative weight
of all these factors. There are serious questions whether our
conventionaleclas§ifications of short-term capital flows accurately
reflect their true significance for the balance of payments. This
difficult subject is presently a matter of intensive study.
Certainly, the fact that the exchange markets have been calm for
months belies any implication that these recent outflows are a
symptom of concern about the dollar. So does the fact that a much
smaller proportion of the dollars flowing abroad was converted into
gold during 1961/ In addition early and necessarily fragmentary
data for January indicate that these unusual outflows have ceased.
Strengthening the International Monetary System
Whatever their cause, the large flows of short-term capital
since the institution of currency convertibility by major foreign
countries provide evidence of the need to bulwark the dollar and
the whole international payments mechanism against their potentially
disturbing Impact.

In a world of convertible currencies and free

markets, sizable flows of liquid funds between markets can be
expected as a natural response to myriad changes in both our ow^l and
foreign economies. The danger is that,under certain circumstances^
they may set off self-propelling speculative movements.
During the past year, we have used three approaches in dealing
with this problem:
For many months, the Treasury, operating within the framework of
the newly created Organization of Economic Cooperation and
Development, has been conducting fruitful consultations with other

- 12 to an overall deficit —

including short-term capital outflows'5!-

approximating $2.5 billion, down from $3.9 billion in i960 and from
an average of $3.7 billion over the three years 1958-1960,
Much remains to be done before equilibrium is restored.
Some year-end figures now becoming available and tentative data
for the fourth quarter emphasize the need for caution. The
over-all deficit appears to have risen to well over $1 billion in_
the final quarter, considerably above the average for the first
three quarters of the year.
The increase in the deficit from the third to fourth quarters
appears to have been entirely a matter of short-term capital
outflows — one of the most elusive Items to pin down statistically.
Estimates now at hand suggest that these flows, for the ye^r as a
whole,were almost as large as in i960.
There were, however,

clear and significant differences in

the character of these outflows. In i960, reflecting some
uncertainty over the stability of the dollar, the outflow had been
in considerable part of a speculative character, and the flows were
quickly translated into a drain of gold. This disruptive
speculation ceased early in 1961. There was, however, a continuing
outflow of short-term funds over the first three quarters of 1961,
related largely to an increase in the financing of foreign trade
by American banks.
In the fourth quarter, a further outflow from this source was
coupled with large shifts of liquid funds to foreign markets —
partly in response to Interest rate differentials, and partly
related to certain quirks in the impact of domestic and foreign tax
treatment of earnings of American companies with operations in
Canada resulting from changes made in Canadian tax laws during the

- 11 expanding our export potential and forging a strong Atlantic
trading partnership.

To seize this opportunity, President Kennedy

has sent to Congress a new Trade Expansion Act.
Increased exports are, over the long run, the most effective
means of eliminating our

basic balance of payments deficit in

a manner consistent with our other objectives and responsibilities.
But because of our current position, other efforts to reduce the
drains directly related to our overseas commitments must be
continued and reinforced.
One of the most important is the negotiation' of arrangements
with certain of our allies to offset the dollar outflow arising
from maintaining our military forces overseas. In addition, a
large portion of our economic assistance is being tied to
purchases in this country.

And, the proposed legislation to

equalize the impact of the corporate income tax on business
operations at home and in developed countries abroad would eliminate
a special stimulus to investment in industrialized nations.
The Balance of Payments in 1961
Although some of these measures have been in effect for only
a limited period of time and others are yet to be undertaken,
our balance of payments showed substantial improvement for 1961 as
a whole. While firm data are still not available, current
indications are that the basic deficit — the net of all our
recorded transactions except volatile short-term capital flows —
declined to roughly $600 million, as compared to almost $2 billion
during i960.

A part of this improvement — almost $700 million —

can be credited to advance repayments by foreigners of long-term
Government loans. Nevertheless, the improvement in the remainder
of the basic account was substantial.

Preliminary figures point

- 10 the nature of these proposals would be premature, but a thoroughgoing reform of this type will almost certainly entail some
adjustments in the basic individual tax rates.
Toward Payments Equilibrium
Tax reform to stimulate modernization of our industrial
equipment provides a foundation for other efforts to improve our
balance of payments position, Including measures aimed directly at
increasing exports to the large and rapidly growing markets of
Europe and other developed countries. The Administration is
pursuing with vigor its program to make more American businesses
aware of the opportunities in foreign markets, to familiarize those
markets with American products, and to enlarge and speed the flow
of information between American producers and their potential
markets. A new and comprehensive program of export credit insurance
undertaken by the Export-Import Bank in cooperation with private
insurance companies and banks,is now ready and will provide
simplified procedures and comprehensive risk guarantees fully
equivalent to those long available to most of our competitors
i

abroad.
In today's world, export markets;^are highly competitive.
The rapid growth and consolidation of the European Common Market,
creating a free Internal market but protected from outsiders by a
wall of uniform tariffs, poses a serious problem — but it also
presents a great opportunity.

The problem is that we must assure

- 9"* -*
•J •V *>

Based on exhaustive statistical and engineering studies,
these administrative actions, consistent with the present law,

recognize past experience and practices as well as the impact of
technological advances and other factors on the economic life of
plant and equipment. They will provide a much more realistic basis
for taxation, and will stimulate business modernization and
expansion. They can not alone, however, assure the necessary flow
of funds into new productive facilities, nor will they place
American firms on an equal footing with their competitors abroad,
where special incentive allowances are commonplace. To achieve
this, revision of depreciation guidelines must be accompanied by
the proposed investment credit. These Coordinated reforms go
together and should not be separated.
In enacting the investment credit,we must also recognize the
need to avoid a loss of revenue that could jeopardize the prospects
for a vigorous recovery with stable prices. It is for this
reason that the President is urging the simultaneous enactment of
tax reforms that will balance the cost of the investment credit
and at the same time eliminate certain defects' and inequities in
our tax structure.
Meanwhile the Treasury is continuing its intensive review of
the broad Issues of tax reform, Including the structure of the
personal Income tax. Fundamental changes of this sort inevitably
require careful preparation, and close analysis of a welter of
detail.

In the end, Congressional hearings will provide the
111 II i—

linr'HUf 'llllliiliiii n | iimilrtl||il|||ifiiuiiiniii|H W i

i urn in

best assurance of a full and fair appraisal of the implications of
any basic change in the tax laws.

The President plans to submit to

the Congress later In this session a broad program of tax reform
so that this process of public scrutiny can get underway promptly,
looking to enactment of the reform in 1963. Anv comment now on

-*<^g

- 8growing by roughly 5 percent per year, while generally maintaining
a strong external payments position.

Nor is it mere happenstance

that some other countries, where productive investment has been a
relatively small proportion of G.N.P.,have had to cope with
relatively slow growth and recurrent payments difficulties.
Certainly growth alone, or larger investment by itself, is
no guarantee of external balance. But foreign experience
strongly suggests that our twin objectives can be not only
compatible, but mutually reinforcing.
In our economy, investment in plant and equipment is properly
the province of private businesses, individually responding to
the profit motive and competitive pressures by increasing
production efficiencies and seeking out new markets. The
Government nevertheless has an essential role to play in maintaining
an economic climate that will encourage and facilitate the investment process.
I have mentioned the role of budgetary policy in this regard.
But a balanced budget alone cannot meet cur urgent need to
increase our rate of investment in productive capital equipment.
It is also vitally important that our tax system should recognize
the need to accelerate the modernization of our physical plant
and equipment.
This is why the Administration has attached first priority,
among tax reform measures, to the investment credit and the
related revision In depreciation schedules. The first steps
toward depreciation reform have already been taken with the new"
depreciation allowance guidelines for most of the textile industry.
Revisions in guidelines for other industries will be announced
this spring.

- 7while we anticipate that the total debt on June 30 of this year
will be somewhat lower than the current figure of over
$297-1/2 billion, prompt enactment of an increased ceiling is
needed to restore some margin for flexibility and unforeseen
contingencies —

a margin that has been virtually exhausted by the

higher defense expenditures required to meet the Berlin crisis,
which developed after the enactment of the current limit of
$298 billion.
Measures to Encourage Investment
A balanced budget in times of relative prosperity means that
the Federal government on an overall basis does not draw on the
national flow of savings available for investment. Thus a balanced
budget in these circumstances promotes the flow of private
investment.
Why is an increase in such investment so important to us today?
At the heart of the matter is the fact that it makes possible
greater productive efficiency.

Gains in efficiency are necessary

for growth at home, for price stability, and for aggressive
penetration of foreign markets. Thus, increased investment is the
key to achieving our major objectives —growth and external
balance —

simultaneously in the years ahead.

And, this is where

the American economy has fallen furthest behind in recent years.
Since the mid '50's Investment in capital equipment in the
United States has averaged less than

6 percent of the Gross National

Product as compared to about 7 percent during the earlier postwar
years.

By contrast, German investment has been averaging about

12 percent of G.N.P. during recent years, French between 8 and
9 percent, and the Common Market countries as a group about
10 percent.

It is not a coincidence that these countries have been

- 6projections of a further rise in the Gross National Product to
$570 billion In 1962 that underlie the revenue estimates are entirely
reasonable. Without raising tax rates an advance of this sort will
generate revenues slightly larger than expenditures. Under the
economic conditions we foresee, the achievement of such a balance is
highly important in avoiding inflationary pressures as the economy
moves closer to its full potential.
One result of this budget will be to reduce the possibility
severe strains on the monetary system as the economy expands —
strains that could bring sharp and sudden increases in interest
rates and unsettling market reactions that impede the flow of
savings into productive investment.

In 1956 and 1957, and

particularly in 1959* strains of this sort appeared to be
developing at a time when too much of the burden of maintaining
balanced growth and curbing excesses was thrust upon the monetary
authorities.

Monetary policy is an essential and powerful tool

for facilitating appropriate adjustments in the economy. But
unless it is supported by appropriate budgetary policy, the results
can be capricious and unpredictable, contributing too little to
either stability or growth.
The Debt Ceiling
The President's recent request to raise the temporary debt
limit to $308 billion is the result of an unavoidable
concentration of revenues in the final half of fiscal 1963 — a
concentration that stems largely from the normal recurring
seasonal pattern of tax receipts. Borrowing of about $9 billion
will be necessary between the end of this fiscal year and the
principal tax payment dates^ in fiscal 1963 — even though the
budget for the fiscal year as a whole is balanced. Moreover,

-5Our Basic Goals
,~#This does not mean, of course, that all the policies

appropriate to the past twelve months are suitable for meeting the

challenges of 1962. With recovery largely completed, the domestic
focus must now be on maintaining forward momentum while guarding
against inflationary pressures as our resources are more fully
utilized.

Confidence in the dollar has been maintained. To

sustain that confidence, further progress toward a long-run
equilibrium in our basic international accounts is a necessity.
Our fundamental objectives — domestic growth and a payments
balance — must be pursued together, within the framework of free
markets.

All Administration policy is pointed toward that end.

We reject policies that presume irreconcilable conflict between our
objectives;, policies

that attach sole priority to growth, or

sacrifice growth to external equilibrium.

These purported solutions

are both unacceptable and unworkable in a world in which our
capacity to grow is being challenged and our allies in freedom need
the strength and stability assured by a solid dollar.
Success in reaching our twin objectives will require hard
decisions, not only by those who shape the financial policies of
Government, but also by those who set price and wage policies for
management and labor.
A Balanced Budget
The President's Budget Message is a financial reflection of our
national needs and priorities. Expenditures will rise moderately in
fiscal 1963, almost entirely because of defense needs and despite
painstaking elimination of non-essential spending, both military and
civilian.

These expenditures can and should be supported by a "grow-

ing economy.

In the light of past experience and current trends, the

-4rates, while less important in influencing investment activity at
home, can play a critical role in directing the flow of liquioS
capital between the financial centers of the world.

Here, Treasury

debt management policy, as well as greater flexibility in the
day-to-day conduct of open market operations, was an important
factor.
Working in close cooperation with the Federal Reserve, the
Treasury, in financing the deficit, increased the outstanding
total of securities maturing within a year by more than $10 billion.
At the same time, there was no shortening of the average maturity
of the marketable public debt, largely as a result of the
continued use of the "advance refunding" technique. This type of
financing involves the exchange of outstanding issues for longer
maturities, with a minimum Impact on market conditions and flows
of funds into productive investment.
This combination of a budgetary deficit with flexible monetary
and debt management policies, carefully attuned to the realities
of the balance of payments as well as domestic needs, was
appropriate both in terms of magnitude and timing. The extremes
of the 1958 recession — when the deficit reached nearly
$12-1/2 billion and interest rates dropped sharply, only to surge
abruptly higher as recovery started — were successfully avoided.
Financial policies were stimulating without being inflationary;
the threat of disturbing short-term capital outflows was
ameliorated.
fashion.

Moreover, business expansion has proceeded in orderly

Today, signs of the sort of excesses that breed

instability and require sudden changes in policy are notable for
their absence.

- 3This positive approach entailed, under the particular

^^^

circumstances then prevailing, acceptance of a sizable budgetary
deficit — which was further enlarged by the higher levels of
defense spending called for by the Berlin crisis. At a time when
human and industrial resources were readily available to expand
output, the rising trend of Government outlays and the consequent
deficit were important factors in speeding the recovery without
creating pressures on the price structure.
The stimulating effects of the budget were reinforced by
monetary and credit policies. Throughout the past year, the credit
markets have had ample funds to meet the combined demands of
businesses, individuals, and the various levels of government —
thus facilitating a revival in capital outlays, higher levels of
home building, and steady progress toward meeting the accumulated
needs of local governments.

In sharp contrast to other recovery

periods since World War II, lending rates have held almost steady,
particularly in the long-term area. Both corporations and state and
local governments can still raise funds at virtually the same cost
as a year ago. Mortgage rates, after declining in the early part
of 196l, have been substantially unchanged since last spring.
This stability was particularly striking in a year when the total
funds raised In the capital markets by corporations, homebuyers, and state and local governments, reached a new all-time
peak.
All this was accomplished without permitting rates for
short-term money market instruments to drop to the extremely low
levels characteristic of earlier periods of easy money and
recession.

That was a significant achievement, for short-term

- 2However, the economy is still operating well below Its full
potential.

Our growth rate over recent years has hardly been
Mi

satisfactory.

Unemployment is still at an unacceptably high level.

The deficit In our international accounts, while smaller, remains
troublesome.

And, the very progress of the past year, not only in

this country but in other parts of the free world, has brought with
it new problems to which we must find solutions.
Financial Policies in 1961
There is no single, easy explanation for our progress during
1961.

A large part of the answer lies in the natural vitality

of our type of market economy operating under conditions of overall price stability — the fundamental prerequisite for all our
attempts to achieve faster growth at home while simultaneously
working toward a sustainable balance In our International accounts.
That price stability, in turn, can be traced primarily to sharp
gains in industrial efficiency and worker productivity as output
expanded from its recession level — gains that enabled industry
to pay higher wages and to increase profits without raising prices.
Government policy supplied another large part of the answer.
First, there was the psychological, but nonetheless real,
reaction that flowed from President Kennedy's earliest
statements and programs. At home, the President's clear intent to
deal with the recession promptly and effectively helped restore
confidence in the economic outlook, encouraging expanded investment
and spending.

Similarly, the President's expressed determination

to maintain the strength of the dollar internationally without
resort to protection, controls, and restraints met with a prompt
response. The speculative capital outflow subsided and the gold
drain was sharply reduced.

TREASURY DEPARTMENT
Washington
•*• Q £
L

FOR RELEASE ON DELIVERY

^'"

STATEMENT OF THE HONORABLE DOUGLAS DILLON
SECRETARY OF THE TREASURY
BEFORE THE
JOINT ECONOMIC COMMITTEE
TUESDAY, JANUARY 30, 1962, 10:00 A.M.,EST.
Mister Chairman and Committee Members:
The past twelve months have been an active, and I think
fruitful, period in terms of our economic policy.

In*many ways,

remarkable progress has been evident. Nevertheless, urgent
problems remain.

I am grateful for this opportunity to review with

Nearly a million workers

were added to non-farm payrolls. Industry, while working longer
hours at higher pay, is also earning greater profits. And, while
providing a higher standard of living for our citizens, we have
strengthened our military defenses and contributed further to
the economic progress of other, less fortunate nations.
This progress was achieved within a context of general price
stability.

On that solid base, exports reached a record volume,

contributing to a significant reduction in our basic balance of
payments deficit.

At the*same time, defenses against potentially5

disturbing short-term capital movements are being greajtly reinforced.
As a result, confidence in the dollar has been strengthened.
D-376

1 QC
TREASURY DEPARTMENT
Washington
FOR RELEASE ON DELIVERY

In*many ways,

remarkable progress has been evident. Nevertheless, urgent
problems remain.

I am grateful for this opportunity to review with

you today both our recent experience and our plans for meeting the
needs of the future.
Progress and Problems
Last year began in recession, but closed with output and
income at new record highs. The personal hardship and economic
waste of unemployment were reduced. Nearly a million workers
were added to non-farm payrolls. Industry, while working longer
hours at higher pay, is also earning greater profits. And, while
providing a higher standard of living for our citizens, we have
strengthened our military defenses and contributed further to
the economic progress of other, less fortunate nations.
This progress was achieved within a context of general price
stability.

On that solid base, exports reached a record volume,

contributing to a significant reduction in our basic balance of
D-376*

- 2 1 Q7
payments deficit. At the same time, defenses against potentially
disturbing short-term capital movements are being greatly reinforced.
As a result, confidence in the dollar has been strengthened.
However, the economy is still operating well below its full
potential.

Our growth rate over recent years has hardly been

satisfactory.

Unemployment is still at an unacceptably high level.

The deficit In our international accounts, while smaller, remains
troublesome. And, the very progress of the past year, not only in
this country but in other parts of the free world, has brought with
it new problems to which we must find solutions.
Financial Policies in 196l
There is no single, easy explanation for our progress during
1961.

A large part of the answer lies in the natural vitality

of our type of market economy operating under conditions of overall price stability — the fundamental prerequisite for all our
attempts to achieve faster growth at home while simultaneously
working toward a sustainable balance in our international accounts.
That price stability, in turn, can be traced primarily to sharp
gains in industrial efficiency and worker productivity as output
expanded from its recession level — gains that enabled industry
to pay higher wages and to increase profits without raising prices.
Government policy supplied another large part of the answer.
First, there was the psychological, but nonetheless real,
reaction that flowed from President Kennedy's earliest

1 QQ
•i. W ^_.

- 3statements and programs. At home, the President's clear intent to
deal with the recession promptly and effectively helped restore
confidence in the economic outlook, encouraging expanded investment
and spending. Similarly, the President's expressed determination
to maintain the strength of the dollar internationally without
resort to protection, controls, and restraints met with a prompt
response. The speculative capital outflow subsided and the gold
drain was sharply reduced.
This positive approach entailed, under the particular
circumstances then prevailing, acceptance of a sizable budgetary
deficit — which was further enlarged by the higher levels of
defense spending called for by the Berlin crisis. At a time when
human and industrial resources were readily available to expand
output, the rising trend of Government outlays and the consequent
deficit were important factors in speeding the recovery without
creating pressures on the price structure.
The stimulating effects of the budget were reinforced by
monetary and credit policies. Throughout the past year, the credit
markets have had ample funds to meet the combined demands of
businesses, individuals, and the various levels of government

—

thus facilitating a revival in capital outlays, higher levels of
home building, and steady progress toward meeting the accumulated
needs of local governments.

In sharp contrast to other recovery

13°
- 4 as a year ago. Mortgage rates, after declining in the early part
of 1961, have been substantially unchanged since last spring.
This stability was particularly striking in a year when the total
funds raised In the capital markets by corporations, homebuyers, and state and local governments, reached a new all-time
peak.
All this was accomplished without permitting rates for
short-term money market instruments to drop to the extremely low
levels characteristic of earlier periods of easy money and
recession. That was a significant achievement, for short-term
rates, while less important in Influencing investment activity at
home, can play a critical role in directing the flow of liquid
capital between the financial centers of the world.

Here, Treasury

This combination of a budgetary deficit with flexible monetary
and debt management policies, carefully attuned to the realities
of the balance of payments as well as domestic needs, was
appropriate both in terms of magnitude and timing. The extremes
of the 1958 recession — when the deficit reached nearly
$12-1/2 billion and interest rates dropped sharply, only to surge
abruptly higher as recovery started — were successfully avoided.
Financial policies were stimulating without being inflationary;
the threat of disturbing short-term capital outflows was
ameliorated. Moreover, business expansion has proceeded in orderly
fashion. Today, signs of the sort of excesses that breed
instability and require sudden changes in policy are notable for
their absence.
Our Basic Goals
This does not mean, of course, that all the policies
appropriate to the past twelve months are suitable for meeting the
challenges of 1962. With recovery largely completed, the domestic
focus must now be on maintaining forward momentum while guarding
against inflationary pressures as our resources are more fully
utilized.

Confidence in the dollar has been maintained. To

All Administration policy is pointed toward that end.

- 6We reject policies that presume irreconcilable conflict between our
objectives;, policies

that attach sble priority to growth, or

sacrifice growth to external equilibrium.

These purported solutions

are both unacceptable and unworkable in a world in which our
capacity to grow is being challenged and our allies in freedom need
the strength and stability assured by a solid dollar.
Success in reaching our twin objectives will require hard
decisions, not only by those who shape the financial policies of
Government, but also by those who set price and wage policies for
management and labor.
A Balanced Budget
The President's Budget Message is a-financial reflection of our
national needs and priorities. Expenditures will rise moderately in
fiscal 19^3, almost entirely because of defense needs and despite
painstaking elimination of non-essential spending, both military and
civilian. These expenditures can and should be supported by a growing economy.

In the light of past experience and current trends, the

projections of a further rise in the Gross National Product to
$570 billion in 1962 that underlie the revenue estimates are entirely
reasonable. Without raising tax rates an advance of this sort will
generate revenues slightly larger than expenditures. Under the
economic conditions we foresee, the achievement of such a balance is
highly important in avoiding inflationary pressures as the economy
moves closer to its full potential.
One result of this budget will be to reduce the possibility of
severe strains on the monetary system as the economy expands —
strains that could bring sharp and sudden increases In Interest

**» Kt* i^,

- 7 rates and unsettling market reactions that impede the flow of
savings into productive investment.

In 1956 and 1957, and

particularly in 1959, strains of this sort appeared to be
developing at a time when too much of the burden of maintaining
balanced growth and curbing excesses was thrust upon the monetary
authorities. Monetary policy is an essential and powerful tool
for facilitating appropriate adjustments in the economy. But
unless it is supported by appropriate budgetary policy, the results
can be capricious and unpredictable, contributing too little to
either stability or growth.
The Debt Ceiling
The President's recent request to raise the temporary debt
limit to $308 billion is the result of an unavoidable
concentration of revenues in the final half of fiscal 1963

concentration that stems largely from the normal recurring
seasonal pattern of tax receipts. Borrowing of about $9 billion
will be necessary between the end of this fiscal year and the
principal tax payment dates In fiscal 1963 — even though the
budget for the fiscal year as a whole is balanced. Moreover,
while we anticipate that the total debt on June 30 of this year
will be somewhat lower than the current figure of over
$297-1/2 billion, prompt enactment of an increased ceiling is
needed to restore some margin for flexibility and unforeseen
contingencies — a margin that has been virtually exhausted by the
higher defense expenditures required to meet the Berlin crisis,
which developed after the enactment of the current limit of
$298 billion.

^O 1

- 8Measures to Encourage Investment
A balanced budget in times of relative prosperity means that
the Federal government on an overall basis does not draw on the
national flow of savings available for investment. Thus a balanced
budget in these circumstances promotes the flow of private
investment.
Why is an increase in such investment so important to us today?
At the heart of the matter is the fact that it makes possible
greater productive efficiency.

Gains In efficiency are necessary

for growth at home, for price stability, and for aggressive
penetration of foreign markets. Thus, increased Investment is the
key to achieving our major objectives -—growth and external
balance —

simultaneously in the years ahead.

And, this Is where

the American economy has fallen furthest behind in recent years.
Since the mid '50's investment in capital equipment in the
United States has averaged less than

6 percent of the Gross National

Product as compared to about 7 percent during the earlier postwar
years. By contrast, German investment has been averaging about
12 percent of G.N.P. during recent years, French between 8 and
9 percent, and the Common Market countries as a group about
10 percent. It is not a coincidence that these countries have been
growing by roughly 5 percent per year, while generally maintaining
a strong external payments position.

Nor is it mere happenstance

that some other countries, where productive investment has been a
relatively small proportion of G.N.Pf,have had to cope with

on A
- 9 dlJ ?
relatively slow growth and recurrent payments difficulties.
Certainly growth alone, or larger investment by itself, is
no guarantee of external balance. But foreign experience
strongly suggests that our twin objectives can be not only
compatible, but mutually reinforcing.
In our economy, investment in plant and equipment is properly
the province of private businesses, individually responding to
the profit motive and competitive pressures by increasing
production efficiencies and seeking out new markets. The
Government nevertheless has an essential role to play in maintaining
an economic climate that will encourage and facilitate the investment process.
I have mentioned the role of budgetary policy in this regard.
But a balanced budget alone cannot meet cur urgent need to
increase our rate of investment In productive capital equipment.
It is also vitally important that our tax system should recognize
the need to accelerate the modernization of our physical plant
and equipment.
This is why the Administration has attached first priority,
among tax reform measures, to the investment credit and the
related revision in depreciation schedules. The first steps
toward depreciation reform have already been taken with the new
depreciation allowance guidelines for most of the textile industry.
Revisions in guidelines for other industries will be announced
this spring.

9na
- 10 Based on exhaustive statistical and engineering studies,
these administrative actions, consistent with the present law,
recognize past experience and practices as well as the impact of
technological advances and other factors on the economic life of
plant and equipment. They will provide a much more realistic basis
for taxation, and will stimulate business modernization and
expansion. They can not alone, however, assure the necessary flow
of funds into new productive facilities, nor will they place
American firms on an equal footing with their competitors abroad,
where special Incentive allowances are commonplace. To achieve
this, revision of depreciation guidelines must be accompanied by
the proposed investment credit. These coordinated reforms go
together and should not be separated.
In enacting the investment credit,we must also recognize the
need to avoid a loss of revenue that could jeopardize the prospects
for a vigorous recovery with stable prices. It is for this
reason that the President is urging the simultaneous enactment of
tax reforms that will balance the cost of the investment credit
and at the same time eliminate certain defects' and inequities in
our tax structure.
Meanwhile the Treasury is continuing its Intensive review of
the broad issues of tax reform, including the structure of the
personal income tax. Fundamental changes of this sort inevitably
require careful preparation, and close analysis of a welter of
detail.

In the end, Congressional hearings will provide the

!
o r% /~\

^ ! 1k
!*«=• Vc^

- 11 "
best assurance of a full and fair appraisal of the implications of
any basic change in the tax laws. The President plans to submit to
the Congress later in this session a broad program of tax reform
so that this process of public scrutiny can get underway promptly,
looking to enactment of the reform In 1963. Any comment now on
the nature of these proposals would be premature, but a thoroughgoing reform of this type will almost certainly entail some
adjustments in the basic individual tax rates.
Toward Payments Equilibrium
Tax reform to stimulate modernization of our industrial
equipment provides a foundation for other efforts to Improve our
balance of payments position, including measures aimed directly at
increasing exports to the large and rapidly growing markets of
Europe and other developed countries. The Administration is
pursuing with vigor its program to make more American businesses
aware of the opportunities in foreign markets, to familiarize those
markets with American products, and to enlarge and speed the flow
of information between American producers and their potential

markets. A new and comprehensive program of export credit insuranc<
undertaken by the Export-Import Bank In cooperation with private
insurance companies and banks,is now ready and will provide
simplified procedures and comprehensive risk guarantees fully
equivalent to those long available to most of our competitors
abroad.

?0 7
i

- 12 In today's world, export markets are highly competitive.
The rapid growth and consolidation of \ the European Common Market,
creating a free internal market but protected from outsiders by a
wall of uniform tariffs, poses a serious problem — but it also
presents a great opportunity.

The problem is that we must assure

ourselves of access to the richest of our foreign markets — a
market to which we export almost $3-1/2 billion per year, a far
larger amount than we import from the same area. The opportunity
lies in the mutual negotiation of lower tariffs on a reciprocal
basis for broad groups of products,at one and the same time
expanding our export potential and forging a strong Atlantic
trading partnership. To seize this opportunity, President Kennedy
has sent to Congress a new Trade Expansion Act.
Increased exports are, over the long run, the most effective
means of eliminating our

basic balance of payments deficit in

One of the most Important is the negotiation of arrangements
with certain of our allies to offset the dollar outflow arising
from maintaining our military forces overseas. In addition, a
large portion of our economic assistance is being tied to
purchases in this country.

And, the proposed legislation to

/ '\j ^

- 13 equalize the impact of the corporate income tax on business
operations at home and in developed countries abroad would eliminate
a special stimulus to investment in industrialized nations.
The Balance of Payments in 1961
Although some of these measures have been in effect for only
a limited period of time and others are yet to be undertaken,
our balance of payments showed substantial improvement for 1961 as
a whole. While firm data are still not available, current
indications are that the basic deficit — the net of all our
recorded transactions except volatile short-term capital flows —
declined to roughly $600 million, as compared to almost $2 billion
during i960.

A part of this Improvement — almost $700 million —

can be credited to advance repayments by foreigners of long-term
Government loans. Nevertheless, the improvement in the remainder
of the basic account was substantial. Preliminary figures point
to an overall deficit —

including short-term capital outflows —

approximating $2.5 billion, down from $3.9 billion in i960 and from
an average of $3.7 billion over the three years 1958-1960.
Much remains to be done before equilibrium is restored.
Some year-end figures now becoming available and tentative data
for the fourth quarter emphasize the need for caution. The
over-all deficit appears to have risen to well over $1 billion in
the final quarter, considerably above the average for the first
three quarters of the year.

OflQ
&» w w

- 14 The increase in the deficit from the third to fourth quarters
appears to have been entirely a matter of short-term capital
outflows — one of the most elusive items to pin down statistically.
Estimates now at hand suggest that these flows, for the year as a
whole,were almost as large as in i960.
There were, however,

clear and significant differences in

*» «fc. w ,

- 15 conventional classifications of short-term capital flows accurately
reflect their true significance for the balance of payments. This
difficult subject is presently a matter of intensive study.
Certainly, the fact that the exchange markets have been calm for
months belies any implication that these recent outflows are a
symptom of concern about the dollar.

So does the fact that a much

smaller proportion of the dollars flowing abroad was converted into
gold during 1961. In addition early and necessarily fragmentary
data for January indicate that these unusual outflows have ceased.
Strengthening the International Monetary System
Whatever their cause, the large flows of short-term capital
since the institution of currency convertibility by major foreign
countries provide evidence of the need to bulwark the dollar and
the whole international payments mechanism against their potentially ;
disturbing impact.

In a world of convertible currencies and free

markets, sizable flows of liquid funds between markets can be
expected as a natural response to myriad changes in both our own and
foreign economies. The danger is that,under certain circumstances,
they may set off self-propelling speculative movements.
During the past year, we have used three approaches in dealing
with this problem:
For many months, the Treasury, operating within the framework of
the newly created Organization of Economic Cooperation and
Development, has been conducting fruitful consultations with other
financial powers on a periodic basis. These discussions have

- 16 laid the foundation of common understanding and cooperation that
is a prerequisite for effective international action to prevent,
limit, or offset currency movements that could undermine a stable
monetary system. They have been supplemented by Federal Reserve
participation in the regular meetings of European central bankers
at Basle, and by bilateral consultations with our principal
financial partners.
The Treasury also has undertaken the purchase and sale of
foreign currencies for the first time in a generation. These
operations helped at certain critical periods to reduce incentives
to shift funds abroad on a speculative basis or to take advantage
of temporary differentials in the exchange markets. The Federal
Reserve has also recently decided to undertake operations in
foreign currencies, a development which we in Treasury regard as
highly promising.

Chairman Martin will be elaborating further on

this approach during his testimony this afternoon.

I look forward

to our continued cooperation with the Federal Reserve in the
international field, just as in the domestic area.
Finally, and most significant for the strengthening of the
international monetary system, is the agreement reached among ten
of the major industrialized countries to buttress the resources
and capabilities of the International Monetary Fund by lending it
specified amounts of their own currencies when necessary to cope
with temporary stresses. This $6 billion of standby facilities,
including almost $2-1/2 billion of European Common Market
currencies, will both reduce the likelihood of a "run" on any

- 17 member currency and provide the means to withstand the Impact of
a speculative attack should one develop. The new arrangements
will powerfully reinforce the effectiveness of the Fund, and
could be of great assistance to the United States. Enabling
legislation will be submitted to the Congress shortly.
Economic Security and Stabilization
The President has proposed a series of measures to promote
greater economic security for all our people, to permit more of our
citizens to share fairly in the growth of the economy, and to reduce
the hardships and waste of recurrent recessions. Aid to depressed
areas and worker retraining can help speed growth and eliminate
pockets of hardship. Broadened unemployment insurance can both
reduce personal misfortune and strengthen the "automatic stabilizers
that have helped prevent our postwar recessions from turning into
full scale depressions. And, a reserve shelf of public works will
strengthen our defenses against a possible future recession.
The President has also set before you a carefully devised plan
for introducing an element of flexibility Into our tax structure.
The measure would facilitate a timely, but tempbrary, reduction in
personal income tax rates, at his initiative, in the event of a
serious business downturn.

Its significance lies in the fact that

a reduction In personal tax rates could speedily give a powerful
boost to consumer spending power at critical junctures, when delay
might permit cumulative downward forces to take hold.

Adequate

safeguards are provided, including strict limits on the amount and
duration of any such tax reduction. This carefully circumscribed
delegation of authority to the President, always subject to
Congressional veto, would be a significant addition to our arsenal
of anti-recessionary weapons.
The Continuing Challenge
The continuing economic challenge before us is clear: we
must fashion the most effective arrangements possible to assure
that our free economy will reach its unrivalled potential and
enable us to fulfill our responsibilities for leadership In the
free world.

In meeting that challenge, we are acting in those

areas where Government can appropriately and helpfully Initiate
new programs and policies. Equally important, we have tried to
be conscious of those things Government cannot do, or that the
private sector of our economy can do better.
The essential and unique characteristic of the American
economy is the strength it derives from individual freedom for
all of us —

as workers, employers, owners, and consumers.

In shaping our program for the years ahead, we are working toward
the sort of environment that will strengthen and preserve that
precious heritage.

oOo

TREASURY DEPARTMENT
WASHINGTON, D.C. \^
January 31, 1962

FOR IMMEDIATE RELEASE
TREASURY DECISION ON REFINED CAMPHOR
UNDER THE ANTIDUMPING ACT

The Treasury Department lias determined that refined
camphor from Taiwan is not being, nor likely to be, sold in
the United States at less than fair value within the meaning
of the Antidumping Act. Hotice of the determination -wiH be
published in the Federal Register.
Appraising officers are being instructed to proceed
with the appraisement of this merchandise from Taiwan without
regard to any question of dumping.
The dollar value of imports of the involved merchandise
received during 1961 was approximately $33,000.

TREASURY DEPARTMENT
WASHINGTON, D.C. \s
January 31, 1962

FOR IMMEDIATE RELEASE
TREASURY DECISION ON REFINED CAMPHOR
UNDER THE ANTIDUMPING ACT

The Treasury Department has determined that refined
camphor from Taiwan is not being, nor likely to be, sold in
the United States at less than fair value within the Waning
of the Antidumping Act. 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 Taiwan without
regard to any question of dumping.
The dollar value of imports of the involved merchandise
received during 1961 was approximately $33,000.

-3-

2is

4. The insurance or reinsurance of U.S. risks
(or risks in connection with tax haven transactions)
where a related U. S. business entity is the beneficiary
or is instrumental in placing the Insurance or
reinsurance.
Certain exemptions from these general definitions of "tax
haven transactions" are included in the proposal, however.
Among the exceptions are:
1. The resale by a foreign-based corporation, outside
the country in which it is established, of agricultural or
mineral products purchased in its country of location.
The previous Treasury draft contained this exemption for
agricultural but not for mineral products.
2. The use of a local sales company to sell products
to be used within the country of its incorporation.
3. The receipt of dividends and interest by a holding
company incorporated in the same country as the payor
corporation.
4. The use of a sales subsidiary, incorporated in the
same country, by a U.S.-controlled manufacturing subsidiary
which actually does a substantial portion of its manufacturing
in that country. This exception will be allowed only in
cases where the local tax imposed on the separate companies
is substantially the same as it would have been with a onecompany operation.
The new draft also contains a provision permitting an offset
of losses in previous years against tax liabilities. A threeyear loss carryback and five-year loss carryforward would be
permitted.
Other changes from the earlier draft permit earnings from
existing "tax haven corporations" to be taxed in the same manner
as those of ordinary domestic corporations, if desired by the
companies.
The draft also provides that a specific company which can
establish that it is not avoiding taxes by reason of its place of
incorporation and which should not, therefore, be subject to the
provisions of the legislation, will not be covered. There was no
such provision in the earlier draft.
The draft also makes certain technical changes concerning
allocations of dividend distributions, definitions and other matters

oOo

which frequently do not add so much as 20 per cent to the value of
the purchased raw materials but do involve a "substantial
transformation" of the product, would continue to be eligible for
tax deferral.
Earnings from construction and shipping operations would also,
in general, remain unaffected by the new Treasury "tax haven"
proposal.
The draft bill describes a "tax haven" operation as one
conducted by a company (l) in which more than 50 per cent of the
voting stock is held by American citizens or corporations;
(2) which receives income from sales or other activities conducted
outside the country in which it is organized; and (3) which deals
with legally related business entities. Generally, all three
tests must be met.
Under the present proposal, as with the previous one,
U. S. shareholders in "tax haven" companies would be taxed on
earnings arising from specific types of "tax haven transactions."
Earnings of a U.S.-controlled foreign subsidiary engaging in
some operations defined as "tax haven transactions" and in other
operations which do not fall within this definition, would
generally be subject to taxation on that portion of the earnings
derived from "tax haven transactions."
When only 20 per cent or less of the subsidiary's earnings
are attributable to "tax haven transactions," however, none of the
income would be taxed unless and until returned to the United
States. Conversely, in cases where 80 per cent or more of the
income is derived from "tax haven transactions" the entire income
of the subsidiary would be taxable.
Both the 80 per cent and 20 per cent rules are new provisions
not contained in the previous draft of the legislation.
"Tax haven transactions" as defined in the proposal include:
1. The purchase by a U.S.-controlled foreign corporation
of property from a related business entity and its resale
for consumption or use outside of the country in which the
subsidiary is Incorporated.
2. The receipt of dividends, interest and royalty
income from related business entities.
3. The performance of services by a U.S.-controlled
foreign corporation outside of its country of incorporation.

TREASURY DEPARTMENT
WASHINGTON, D.C.
January 31, 1962
FOR RELEASE: UPON DELIVERY
(Expected about 12:00 Noon
Wednesday, January 31, 1962)
TREASURY SUBMITS REVISED "TAX HAVEN" PROPOSALS
TO THE HOUSE WAYS & MEANS COMMITTEE
The Treasury today submitted to the House Ways and Means
Committee a revised draft of proposed legislation to tax earnings
derived from so-called "tax haven" operations of American
businesses overseas.
The new draft replaces a proposal submitted last July and has
been prepared in the light of the comments obtained on the earlier
version.
The "tax haven" proposal is aimed at ending opportunities for
American companies to avoid taxation by establishing subsidiaries
in countries with low or no taxes and conducting activities through
and from these U.S.-controlled foreign companies. Treasury's new
draft proposal, like the previous one, would require U. S. shareholders to pay taxes on earnings from such "tax haven" operations
regardless of whether they were carried out in industrialized or
newly developing countries. Such shareholders are typically
corporations rather than individuals.
(A separate Administration proposal, not involved in this draft
and not currently under consideration by the Ways and Means
Committee, would reach any sort of American business operation
through subsidiaries in industrialized nations.)
The "tax haven" proposal would not affect earnings resulting
from manufacturing and substantial processing operations conducted
by U.S.-controlled foreign subsidiaries -- even if the subsidiary
meets the other tests of a "tax haven" operation. The previous
draft permitted deferral of U.S. taxes on earnings from manufacturing
and processing operations only if those operations added at least
20 per cent td the value of the finished product. The new
(
liberalized test would permit deferral if "substantial transformation
takes place in the products purchased and subsequently re-sold by
the subsidiary.
The change from the previous draft means, for example, that
earnings from oil refinery and chemical processing operations,
D-377

TREASURY DEPARTMENT
WASHINGTON, D.C.
January 31, 1962
FOR RELEASE: UPON DELIVERY
(Expected about 12:00 Noon
Wednesday, January 31, 1962)
TREASURY SUBMITS REVISED "TAX HAVEN" PROPOSALS
TO THE HOUSE WAYS & MEANS COMMITTEE
The Treasury today submitted to the House Ways and Means
Committee a revised draft of proposed legislation to tax earnings
derived from so-called "tax haven" operations of American
businesses overseas.
The new draft replaces a proposal submitted last July and has
been prepared in the light of the comments obtained on the earlier
version.
The "tax haven" proposal is aimed at ending opportunities for
American companies to avoid taxation by establishing subsidiaries
in countries with low or no taxes and conducting activities through
and from these U.S.-controlled foreign companies. Treasury's new
draft proposal, like the previous one, would require U. S. shareholders to pay taxes on earnings from such "tax haven" operations
regardless of whether they were carried out in industrialized or
newly developing countries. Such shareholders are typically
corporations rather than individuals.
(A separate Administration proposal, not involved in this draft
and not currently under consideration by the Ways and Means
Committee, would reach any sort of American business operation
through subsidiaries in industrialized nations.)
The "tax haven" proposal would not affect earnings resulting
from manufacturing and substantial processing operations conducted
by U.S.-controlled foreign subsidiaries — even if the subsidiary
meets the other tests of a "tax haven" operation. The previous
draft permitted deferral of U.S. taxes on earnings from manufacturing
and processing operations only if those operations added at least
20 per cent td the value of the finished product. The new
liberalized test would permit deferral if "substantial transformation"
takes place In the products purchased and subsequently re-sold by
the subsidiary.
The change from the previous draft means, for example, that
earnings from oil refinery and chemical processing operations,
D-377

- 2 which frequently do not add so much as 20 per cent to the value of
the purchased raw materials but do involve a "substantial
transformation" of the product, would continue to be eligible for
tax deferral.
Earnings from construction and shipping operations would also,
in general, remain unaffected by the new Treasury "tax haven"
proposal.
The draft bill describes a "tax haven" operation as one
conducted by a company (l) in which more than 50 per cent of the
voting stock is held by American citizens or corporations;
(2) which receives Income from sales or other activities conducted
outside the country in which it is organized; and (3) which deals
with legally related business entities. Generally, all three
tests must be met.
Under the present proposal, as with the previous one,
U. S. shareholders in "tax haven" companies would be taxed on
earnings arising from specific types of "tax haven transactions."
Earnings of a U.S.-controlled foreign subsidiary engaging in
some operations defined as "tax haven transactions" and in other
operations which do not fall within this definition, would
generally be subject to taxation on that portion of the earnings
derived from "tax haven transactions."
When only 20 per cent or less of the subsidiary's earnings
are attributable to "tax haven transactions," however, none of the
income would be taxed unless and until returned to the United
States. Conversely, in cases where 80 per cent or more of the
income is derived from "tax haven transactions" the entire income
of the subsidiary would be taxable.
Both the 80 per cent and 20 per cent rules are new provisions
not contained in the previous draft of the legislation.
"Tax haven transactions" as defined in the proposal include:
1. The purchase by a U.S.-controlled foreign corporation
of property from a related business entity and its resale
for consumption or use outside of the country in which the
subsidiary is incorporated.
2. The receipt of dividends, interest and royalty
income from related business entities..
3. The performance of services by a U.S.-controlled
foreign corporation outside of its country of incorporation.

- 34. The insurance or reinsurance of U.S. risks
(or risks In connection with tax haven transactions)
where, a related U. S. business entity is the beneficiary
or is instrumental in placing the insurance or
reinsurance.
Certain exemptions from these general definitions of "tax
haven transactions" are included In the proposal, however.
Among the exceptions are:
1. The resale by a foreign-based corporation, outside
the country in which it is established, of agricultural or
mineral products purchased in its country of location.
The previous Treasury draft contained this exemption for
agricultural but not for mineral products.
2. The use of a local sales company to sell products
to be used within the country of its incorporation.
3. The receipt of dividends and interest by a holding
company incorporated in the same country as the i>ayor
corporation.
4. The use of a sales subsidiary, incorporated in the
same country, by a U.S.-controlled manufacturing subsidiary
which actually does a substantial portion of its manufacturing
in that country. This exception will be allowed only in
cases where the local tax imposed on the separate companies
Is substantially the same as it would have been with a onecompany operation.
The new draft also contains a provision permitting an offset
of losses in previous years against tax liabilities. A threeyear loss carryback and five-year loss carryforward would be
permitted.
Other changes from the earlier draft permpLt earnings from
existing "tax haven corporations" to be taxed in the same manner
as those of ordinary domestic corporations, if desired by the
companies.
The draft also provides that a specific company which can
establish that it is not avoiding taxes by reason of Its place of
incorporation and which should not, therefore, be subject to the
provisions of the legislation, will not be covered. There was no
such provision in the earlier draft.
The draft also makes certain technical changes concerning
allocations of dividend distributions, definitions and other matters.

oOo

January 31, 1962

EXPLANATION OF REVISED DRAFT
OF PROPOSED TAX HAVEN LEGISLATION

2?^
"~

Background. The President's 1961 tax message recommended that the
present deferral of U. S. income taxation accorded to foreign subsidiaries
controlled by U. S. shareholders be eliminated. An exception was to be
provided for those subsidiaries incorporated in less developed countries
and deriving substantially all of their income from sources within such
countries. The Ways and Means Committee, after consideration of the
Administration's proposal indicated that it would be willing to consider
more limited legislation designed to reach "tax havens". Accordingly,
the Treasury Department prepared a tentative draft of tax haven legislation
which was released to the public on July 28, 196l. A revised draft has
now been prepared in the light of comments of taxpayers and further study
by the Treasury.
General Description. The revised draft would end tax deferral for
those operations of foreign corporations controlled by U. S. interests
which cause the most serious distortions in the taxation of foreign
income. The draft relies on the pattern of operation of typical tax
haven companies, i.e., entities formed in countries such as Switzerland
and Panama which impose little or no tax on foreign income allocated to
or routed through entities incorporated under their laws. These companies,
which U. S. interests often employ in organizing their operations abroad,
are designed to minimize the impact of U. S. and foreign taxes on their
foreign activities. Since the deferral of taxation for such entities
constitutes the most serious departure from tax neutrality in the foreign
tax area, the elimination of such tax deferral could contribute substantially
toward the goal of the President's earlier proposal as well as curbing
considerable tax abuse.
The key element in the draft is the description of tax haven
transactions. This description, as indicated above, is based upon the
pattern of typical tax haven operations. While there are various types
of transactions, as a general matter a tax haven company normally deals
with related entities and receives income which is generated or derived
from sources outside of the country in which it is incorporated. The
element of dealing with related entities means that there are no armslength standards necessarily involved in its transactions, and income may
be allocated within a wide range in accordance with considerations of tax
advantage. The element of receiving income which is generated or derived
from sources outside the country of incorporation means that the income
has no necessary connection with the country of incorporation, and transactions giving rise to the income may be arranged in many instances with
regard for considerations of tax advantage.
More specifically, based on these factors, the draft classifies the
following, for example, as tax haven transactions:
(a) The purchase by a controlled foreign corporation
of property from a related party and its resale

-2for use or consumption outside of the country
in which it is incorporated.
(b) The receipt of dividends, interest, and royalty
income from related entities.
(c) The performance of services by a controlled
foreign corporation outside of (or for
businesses located outside of) its country
of incorporation.
(d) The insurance or reinsurance of U. S. risks (or
risks in connection with tax haven transactions)
where a related U. S. party stands to benefit as
a beneficiary or is instrumental in placing such
insurance or reinsurance.
On the other hand, tax haven companies do not typically carry on
substantial activities such as manufacturing, or processing, assembling,
or other production that is substantial in nature. Such activities are
not considered to give rise to tax haven profits and are generally unaffected by the draft. Still other important' exceptions are provided for
transactions which do not typically reflect tax haven company operations:
(a) The resale of agricultural or mineral products
purchased by a controlled foreign corporation
in its country of incorporation;
(b) the resale, of purchased products for use in a
country of incorporation; or
(c) the receipt of dividends and interest by a
holding company incorporated in the same
country as the payor corporation.
Also, transactions which are covered by the draft, but which give rise
to profits that do not escape normal tax burdens by reason of the country
of incorporation, would not be included. Construction would not in
general be directly affected by the draft. Shipping activities are also
not covered.
Under the revised draft, any profits arising out of "tax haven
transactions" are classified as "tax haven profits" and a pro rata portion
of such profits is deemed to have been distributed as a dividend and is
taxed directly to the U. S. persons who are considered owners of the
corporation. A credit for foreign taxes that may have been paid on such

&— £*. \^s

-3profits is provided so that, as is generally the case under the Code,
there can be no "double" taxation by two jurisdictions. There are
also provisions for allowing a deduction (or a refund of tax previously
collected) in the event of losses from tax haven transactions. Further,
once profits have been taxed they may in general be distributed without
further U. S. tax being imposed. For example, a corporation could distribute tax free an amount sufficient to pay the U. S. tax (after the
credit for foreign taxes) on the tax haven profits. These provisions
are consistent with the objective of the draft to end deferral of
taxation for tax haven operations, but to impose no harsh tax consequences .
In the interests of administrative simplicity, if the gross income
from tax haven transactions is less than 20 percent of total gross
income, none of the corporation's profits would be taxed to its U. S.
owners. For similar reasons, if such income exceeds 80 percent of the
total gross income, a pro rata portion of all of the corporation's
profits is taxed to such U. S. persons. Also, provision is made so
that a foreign corporation may elect to be taxed on income from all
sources in the same manner as a domestic corporation, thereby relieving
its U. S. shareholders of the tax on tax haven profits. The availability
of this election ensures that a tax haven subsidiary will generally not
be placed in a less advantageous tax position than if it had initially
been incorporated as a domestic corporation.
The draft would tax a U. S. person only where (l) U. S. persons as
a group may be considered to have control over the financial policies
of the foreign corporation, and (2) such person has a substantial ownership interest in the foreign corporation. Two tests are applied in determining whether such conditions exist. First, a group of five or less
U. S. persons must have a stock interest of more than 50 percent in the
foreign corporation. Second, any single U. S. shareholder is not taxed
on a pro rata share of the tax haven profits unless such shareholder
owns a stock interest of at least 10 percent in the foreign corporation.
In both instances, special rules for determining ownership are provided.
Various technical rules contained in the draft, for example those
relating to the foreign tax credit, are in accord with those normally
prevailing under the Code. Also, in many areas, the draft builds'on
presently existing rules and provides no special rules. For example,
the normal rules relating to non-recognition of income in blocked
currency situations would be relied upon where applicable. In brief,
the technical aspects of the draft are designed to end deferral for tax
haven operations in as simple and orderly a manner as is possible.

-4Changes from July 28 draft
The revised draft differs from the draft released on July 28,
1961, in minor technical respects and in the following important
respects, which generally constitute liberalizations:
(a) Discretionary exception
Corporations that are able to satisfy the Secretary
or his delegate that their place of incorporation
does not result in a reduction of taxes with respect
to any transaction will be relieved from the application of the draft as to such transaction.
(b) Election to be taxed as U. S. corporation
Already existing tax haven corporations (other than
life insurance companies) can generally elect to be
taxed on income from all sources in the same manner as
a domestic corporation.
(c) Actual distributions allocated to tax haven profits
All distributions from a controlled foreign corporation
are designated as being out of current and previous
tax haven profits, to the extent there are any, so that
all tax haven profits, once taxed, may be distributed without further U. S. tax, regardless of whether or not the
corporation has other earnings and profits, either
current or accumulated.
(d) Right to receive tax-free distribution of tax haven
profits
If a U. S. person is once taxed on a deemetl distribution
of tax haven profits, such person or any successor in
interest will be entitled to receive such profits tax
free.
(e) Losses and allowance of carrybacks and carryforwards
Tax haven profits will not be deemed distributed in
any year in which losses from non-tax haven transactions exceed tax haven profits. In addition, if
losses from non-tax haven transactions exceed the
non-tax haven income for any year, such excess may
be carried back three years and carried forward five
years against tax haven profits for such years. U. S.
shareholders previously taxed would be granted a refund.

-5(f) De minimus (20$) rule
Where tax haven income is less than 20 percent of total
gross income, U. S. shareholders will not be taxed.
(g) All income treated as tax haven income (80^)rule
Where more than 80 percent of the income of a controlled
foreign corporation is derived from tax haven transactions, all of its income is treated as tax haven income.
This may not be considered a liberalizing change except
insofar as it eliminates complexities of separate accounting for tax haven and non-tax haven profits.
(h) Generalized standard for manufacturing activities
Instead of a mathematical formula, the revised draft
relies upon a general standard to determine when
activities constitute manufacturing. The standard is
"substantial transformation", which is defined as
"manufacturing, construction, or production, processing,
or assembling activities", which are, under regulations,
considered to be "substantial" in nature.
(i) Definition of control
The definition of control of a foreign corporation has
been changed so as to require that U. S. persons own
more than 50 percent of the combined voting power.
Under the July 28 draft, 50 percent of the voting
power or 50 percent of the total value would have
satisfied the definition.
(j) Dividend and interest exception where both corporations
in same country
The receipt of dividends or interest from a related
corporation will not be treated as tax haven income
if both corporations are incorporated in the same
country and the payor corporation has a substantial
part of its operations in such country.

-6(k) Sales subsidiary for foreign manufacturing corporation
A controlled foreign corporation engaged in manufacturing
may sell its product through a sales subsidiary incorporated
in the same country provided that the manufacturing company
has a substantial part of its operations in such country
and provided no substantial reduction in tax results from
the use of such subsidiary.
(l) Exception for purchase of locally-extracted minerals
In addition to the exception relating to the purchase
of locally-grown agricultural products, the revised
draft has a similar exception for the purchase by a
controlled foreign corporation of locally-produced
minerals and other extractive products.
(m) Elimination of attribution from nonresident alien
Individuals
*
For purposes of determining whether'U. S. persons own
more than 50 percent of the stock of a foreign corporation or whether any single U. S. person owns more than
10 percent, stock owned by a nonresident alien individual
will not be attributed so as to make a U. S. citizen or
resident the owner thereof.

-7Detailed description
(l) Definition of tax haven transactions (Section 955)
(a) Purchase of personal property and its sale
The purchase of personal property by a controlled foreign corporation
and its sale constitutes a tax haven transaction if the purchase is from a
related person or if the sale is to a related person. Exceptions to this
rule are made i f —
(i) the property purchased is resold for use in the country In
which the controlled foreign corporation is created, or
(ii) the property purchased is an agricultural product or
mineral of the country in which the controlled foreign corporation
is created, or
(iii) the property purchased is manufactured by a related
person created in the same country as the controlled foreign
corporation and the two corporations together pay the same taxes
which would have been payable if their operations were carried
on by a single corporation created in such country.
Typical situations to which the draft will apply are as follows:
(i) A controlled Panamanian corporation purchases property
from its U.S. parent corporation and sells such property for use
in Brazil to related or unrelated persons. The profits of the
Panamanian company would be tax haven profits.
(ii) A controlled Swiss company purchases materials in
Japan from related or unrelated persons and sells them to a
related controlled German company for use in its manufacturing
processes. The profits of the Swiss company would be tax haven
profits.
Since the draft covers only transactions involving both a purchase
and a sale, it does not apply to a controlled foreign corporation which
manufactures or produces the product which it sells. A problem arises
if the controlled foreign corporation purchases parts or materials from
a related corporation which it then transforms into a final product. In_
this case, the draft would not apply if the purchased goods were subjected
to "substantial transformation." For this purpose, processing, assembling,
or other production which is substantial in nature as well as manufacturing
is considered "substantial transformation."
It follows from the preceding discussion that there would remain
under the rules of the draft a wide range of transactions between related
persons that would not result in any tax haven profits. These transactions
may be illustrated as follows:

-8(i) A controlled German corporation can purchase personal
property manufactured by a related person in Germany and s e H
such property to an unrelated person for use in Germany or
outside Germany. Thus, a manufacturing corporation may
generally have a sales subsidiary if incorporated in the same
country provided no substantial tax avoidance is involved.
(ii) A controlled German corporation could purchase from
related persons in the United States and France materials (of
any kind or origin), from which the controlled German corporation
manufactures a product, and sell such manufactured product to a
related or unrelated person for use in Germany or outside Germany.
(iii) A controlled Brazilian corporation could purchase
from an unrelated person agricultural products or minerals
of Brazil and sell them to a related person for use in Brazil
or outside Brazil.
(iv) A controlled German corporation can purchase personal
property of any kind from a related or unrelated person created
anywhere in the world and sell it to a related or unrelated
person for use in Germany.
There is no restriction under the draft on sales transactions
which do not involve related persons. Thus, a controlled foreign
corporation can purchase from an unrelated person personal property
of any kind or origin and sell such property to an unrelated person
for use anywhere in the world whether or not the controlled foreign
corporation subjects it to manufacture.
(b) Test of manufacturing ("Substantial transformation")
Two types of tests were considered for purposes of determining
whether a controlled foreign corporation has engaged in manufacturing
(or processing, assembling, or other production which is substantial
in nature), one, a general standard and the other, a mathematical
formula. As indicated above, this test is relevant in only two
situations:
(i) Where property is purchased from a related person
and transformed into a final product which is then resold
outside the country of incorporation. If the production
activities are considered "manufacturing", the profits of
the production company are not tax haven profits.
(ii) Where property is purchased from a related person
created in the same country as the purchaser and resold outside of the country of incorporation. If the related person
is engaged in "manufacturing", the sales subsidiary's profits
are not tax haven profits.

-9The test adopted is a general standard which looks to whether
"substantial transformation" has occurred. "Substantial transformation" is defined as "manufacturing, construction, or production,
processing, or assembling activities", which are, under regulations,
considered to be "substantial" in nature. In usual cases, application of this standard will not be a difficult matter. Thus, refining
activities would ordinarily qualify, while labeling activities would
ordinarily not. In difficult cases, flexibility will be present to
make sure, consistent with the draft, that only corporations whose
activities are substantially in the nature of trading are treated as
having tax haven profits.
(c) Commission services
Sales or service commissions received for furnishing of services
in connection with sales transactions which are the same in substance
as those classified as tax haven transactions also give rise to tax
haven profits. Such transactions are different only in form from
transactions in which the controlled corporation acts on its own
account•
(d) Rents and royalties
Rents or royalties received by a controlled foreign corporation
for use of property or rights outside the country in which the
controlled foreign corporation is created would be tax haven profits
if —
(i) the property or rights were obtained from a related
person, or
(ii) the rents or royalties were received from a related
person.
Thus, if a U.S. person transferred an intangible right such
as a patent to a controlled Swiss corporation which licensed users
in Germany, the royalties received would be tax haven profits,
whether or not the users were related persons. However, if the
patent rights had been obtained from an unrelated person, the
royalties would be tax haven profits only if the German licensees
were related persons. In either case, rents or royalties from
Swiss users would not be tax haven profits.
The rule would cover not only rents or royalties for the use
of intangible rights such as patents but also for the use of
tangible property, for example, rents received by a Swiss corporation from a related person in Brazil for the use of industrial or
commercial equipment in Brazil.

-10. (e) Interest and dividends
Dividends and interest received by a controlled foreign
corporation from a related person would be tax haven profits except
to the entent that—
(i) the dividends were received from a related corporation
created and having a substantial part of the assets used in its
trade or business in the same country as the recipient controlled
foreign corporation, or
(ii) the dividends were paid out of tax haven profits
previously taxed to U.S. persons.
A controlled foreign corporation created in a country which
imposes no tax on holding companies often holds stock in operating
companies. Dividends or interest paid to the holding company can
thus be transferred from one operating company to another without
the Imposition of the U.S. tax. The decision whether to invest such
profits in the United States or other foreign countries may be
distorted by the factor that a U.S. tax would be Imposed if the
dividends are repatriated to the United States while no U.S. tax
would be payable if the earnings are invested or held abroad. To
remove the resulting incentive to foreign investment, income freed
as dividends or interest from the investment in a particular
country would be subjected to U.S. tax (after credit for foreign
taxes) so that the decision as between investment in the United
States or abroad would be neutral as to taxes.
The exception for dividends received from a corporation created
and having a substantial part of the assets used in its trade or
business in the same country as the holding company will exempt cases
where local law imposes a tax on the accumulated earnings of an
operating corporation but allows a deduction for distributions of
such earnings to a holding corporation created in the same country.
Often the holding company recontributes its earnings to the capital
of the operating corporation. Also, dividends paid by a sales, service
or finance subsidiary of a manufacturing company might be exempt under
this provision where the provision's requirements are met.
(f) Services
Compensation received by a controlled foreign corporation for
furnishing technical, managerial, engineering, architectural,
scientific, skilled, or like services will be treated as tax haven
income if such controlled foreign corporation (a) either —
(i) performs such services outside of the country in which
it is incorporated; or
(ii) performs such services for or on behalf of a
trade or business carried on outside of the country in which
the service company is incorporated,

J9 7
$~ c. ,
-11and (b) either —
(i) the services are furnished for or on behalf of a
related person; or
(ii) the services are furnished for or on behalf of an
unrelated person but are in substantial part performed,
managed or directed by officers or employees transferred from
a related person within the taxable year or the two preceding
years.
The application of the draft may be illustrated by the following
examples:
(i) A controlled Swiss corporation receives fees for
managing a manufacturing operation in Germany. The: services
are performed in Germany. If the manufacturing operation in
Germany is owned by a related person, the fees would be tax
haven profits.
(ii) The facts are the same as in the preceding example
except that the services are performed partly in Germany and
partly in Switzerland. Nevertheless, all of the profits from
such services will be treated as tax haven profits.
(iii) The facts are the same as in the first example
except that the manufacturing entity is located in Switzerland
and the services are performed in Switzerland. No part of
the profits would be treated as tax haven profits.
(iv) A controlled Swiss corporation renders technical
services to a manufacturing operation in Germany not owned
by a related person. The services are performed in Germany.
Under such circumstances the profits of the Swiss corporation
would be treated as tax haven profits only if the services were
in substantial part performed, managed or directed by officers
or employees transferred from a related person, such as, for
example, its U.S. parent, and if such transfer had occurred
within the taxable year or the two prior years.
(v) The facts are the same as in the preceding example
except that the services are performed in Switzerland.
Nevertheless, the profits will, because of the location of
the German entity, be treated as tax haven profits.
(vi) If the facts were the same as in the preceding
example except that the German entity were now located in
Switzerland, the profits would not be tax haven profits.
(g) Insurance
Income received for insuring or reinsuring U.S. risks, or foreign
risks incurred in connection with tax haven transactions, would be
treated as tax haven profits in two situations:

- 12 (i) if there would be an indemnity or other payment directly
or indirectly to a related person in the event the risks materialized; or
(ii) if a related person was instrumental in securing such
insurance or reinsurance for the controlled foreign corporation.
The application of the draft may be illustrated as follows:
(i) A United States corporation engaged in the insurance business
creates a controlled foreign corporation and reinsures U.S. risks
with such foreign corporation. The profits of the foreign subsidiary
would be tax haven profits.
(ii) A domestic finance company requires its debtor to insure
with an unrelated insurance company which in turn reinsures with a
foreign corporation controlled by the finance company. The profits
of such a controlled foreign corporation would be tax haven profits
since the finance company was instrumental in the placing of such
reinsurance with its controlled foreign corporation.
(iii) A U.S. corporation has a controlled Panamanian corporation
which purchases goods from the U.S. corporation for sale for use in
Venezuela. The U.S. corporation has a controlled Bahamian corporation
which insures the goods while in transit. The profits of the Bahamian
corporation are treated as tax haven profits regardless of whether
the insurance is placed by the U.S. corporation or the Panamanian
corporation or the purchaser.
(iv) A domestic corporation in the business of selling
automobiles also acts as an insurance agent of its controlled
foreign corporation subsidiary so that the insurance contract
is directly between the purchaser of the automobile and the
agent's foreign subsidiary. Since the domestic corporation
was instrumental in securing the business for the foreign
subsidiary, the profits of the foreign subsidiary are tax haven
profits. The same result would be reached even if the domestic
corporation merely encouraged the purchaser to place the
insurance with the foreign subsidiary and did not formally
act as agent.
(2) Related person
The July 28 draft would define related persons as —
(a) a corporation and an individual, partnership, estate, or
trust where such individual, partnership, estate or trust controls
the corporation directly or indirectly; or
(b) two corporations where one is in control of the other; or
(c) two corporations controlled by the same persons.
For this purpose, control of a corporation means ownership, directly or
indirectly, of more than 50 percent of voting power of all the stock
entitled to vote.

-13-'
(3) Exception for non-tax avoidance situations
Because the draft relies on the concept of activities outside of a
country of incorporation, some situations which would not normally be
considered tax haven situations might be reached. The draft therefore provides an exception for tax haven profits of a foreign corporation that can
satisfy the Secretary or his delegate that their place of incorporation does
not result in a reduction of taxes on such profits. Thus, for example, a
corporation conducting its activities in a country or countries other than
the country of its incorporation may be able to demonstrate that its tax
liabilities on some or all of its transactions would have been no greater
had it been incorporated in the country or countries in which it operates
and, accordingly, be relieved of the application of the draft as to such
transactions.
(4) Exception for income from U. S. sources
A complete exception from the draft's application is made for any
earnings and profits derived from U. S* sources. The exception applies only
if such profits are subject to United States tax.
(5) Taxation of U. S. shareholders
The draft would tax U. S. persons owning, directly, or indirectly,stock
in a controlled foreign corporation, on their pro rata share of the tax
haven profits of the controlled foreign corporation as if such pro rata
portion had been distributed to them.
(6) Definition of control by U. S. persons and persons taxed
The proposal would apply with respect to the undistributed tax haven
profits of "controlled foreign corporations," defined as those in which 5
or less U. S. persons own more than 50 percent of the stock entitled to vote.
However, only those U. S. persons owning at least 10 percent of the voting
stock or of the value of all the stock would be taxed. Constructive ownership rules described below are applied in this connection to determine the
existence of the .50 percent or 10 percent requirements. Such constructive
rules would not apply for purposes of imposing tax on U. S. persons, such
persons being taxed only on a, pro rata share determined with respect to
their direct or indirect (as differentiated from contstuctive) ownership.
The above rules are believed to result in taxing U. S. persons only
where such persons as a group may be considered to have power over the
financial policies of the foreign corporation and where each such person
has a substantial ownership interest in the foreign corporation. While
the 10 percent rule may permit some shareholders to go untaxed in situations where it would be fair to impose tax and is partially responsible
for some technical complexities In the draft, such rule was considered to
be desirable in order to insure that only a shareholder would be taxed
who has a substantial ownership interest and is likely to have a voice in
the corporation's affairs.

-14-

(7) Amount of deemed distribution of tax haven income .
Because the July 28 draft embodies a transactional approach, only
profits from tax haven transactions will, in general, be treated as a
constructive distribution to U. S. owners.
While, in general, employing the transactional approach, the
draft does achieve simplicity in some cases by providing that a
corporation over 80 percent of whose gross income is from tax haven
transactions will be considered as having all tax haven income and a corporation with less than 20 percent tax haven income will be considered
as having no tax haven income. In other words, the transactional
approach will require separation of accounts only in cases where tax
haven income is between 20 and 80 percent of total gross income. Furthermore, since these limitations on the use of the transactional approach
are in terms of gross income, they do not require the complex accounting
that would be called for if the test were in terms of earnings and profits
The 20 percent rule would avoid the burden of accounting for the
income from tax haven transactions where the amount of such income does
not seem to be substantial in the light of a company's entire activities.
This test permits, for example, a controlled foreign corporation engaged
in manufacturing and selling to round out its product line by the
purchase from a related person of a product for which the foreign market
is too small to justify production abroad. The 80 percent test avoids
the burden of accounting where the amount of non-tax haven income does
not seem significant in the light of a company's entire activities. Both
tests remedy the complexity of the transactional approach in those cases
in which its sensitivity does not seem warranted.
(8) Deemed distributions direct to U. S. persons
The proposal treats the tax haven profits of a controlled foreign
corporation as a direct distribution from such corporation to the U. S.
persons who are the first U. S. persons in the chain of ownership running
from the corporation to such U. S. persons. In addition to direct ownership, a limited rule of indirect ownership is applicable here for the
purpose of determining such a U. S. person's pro rata share; stock in a
corporation owned" by a foreign corporation, foreign partnership, foreign
estate or trust (taxed like a nonresident alien), is treated as owned
proportionately by the.shareholders, partners, or beneficiaries.
(9) "Earnings and profits" as measure of deemed dividend
Under the draft, tax haven profits would be treated as having been
constructively distributed as a dividend to U. S. shareholders. The

)Q
-15-

"earnings and profits" from tax haven transactions seemed, conceptually, to
be the most appropriate standard by which to determine constructive distributions of tax haven profits, since the normal Code standard for determining the taxability to a shareholder of a corporate distribution is the
"earnings and profits" of a corporation.
Furthermore, the "earnings and profits" concept seemed more desirable
than other possible tests (such as, for example, "taxable income") because
it had the practical merit in a large range of cases of not imposing any
accounting obligations not already present under existing law. For example,
the earnings and profits of a foreign corporation must already be computed
under the Code in order to determine the taxability as dividends of distributions made by foreign corporations to U. S. shareholders. Similarly, as
a condition for claiming a credit under section 902 for foreign taxed paid
by a foreign subsidiary, a domestic corporation is already required to
compute the earnings and profits of the foreign subsidiary.
(10) Treatment of losses
Under the July 28 draft as revised, no tax is imposed on U. S. persons
with respect to the tax haven profits of a controlled foreign corporation
for a taxable year unless the corporation has over-all profits for such
year. Thus, if net losses from non-tax haven transactions for a taxable
year exceed the net profits from tax haven transactions for such a year,
the U. S. owners would not be taxed for such year. Further, the draft
would allow a five-year carryover and a three-year carryback against tax
haven profits of the excess of losses from tax haven transactions over
net profits from non-tax haven profits in any given year. In connection
with the carryback of tax haven losses, a refund of tax would be permitted
to U. S. shareholders who had paid taxes on deemed distributions in prior years
These rules give recognition to losses in a way which is consistent
with the basic purposes of the draft. If use of such losses against U. S.
profits is desired, the corporation may elect to be taxed as a domestic
corporation provided that it does so before the beginning of the taxable year.
i

(11) Exclusion for actual distributions of income once taxed as
constructive distributions
To prevent taxing income once as a constructive distribution and a
second time as an actual distribution, an exclusion from gross income would be
provided for a dividend from profits which already had been taxed to a United
States shareholder as tax haven profits of a controlled foreign corporation.
The exclusion would apply even though the actual distribution of such income
were made through a chain of entities by which the United States person

-16(12) Allocation of current tax haven profits and other earnings and
profits to actual dividend distributions
Since the purpose of the draft, in deeming constructive distributions
of tax haven profits, is merely to end deferral of taxation for such income,
the rules governing actual distributions are designed to permit earnings
and profits from tax haven transactions to be distributed without penalty.
Thus, actual distributions would be applied first against current earnings
and profits from tax haven transactions, then against its most recently
accumulated tax haven profits. For example, assume that X, a domestic corporation , wholly owns Y, a foreign corporation, which has current earnings
and profits of $100 of which $1*0 is from tax haven transactions and $60
from non-tax haven activities, that it has $10 of accumulated tax haven
earnings and profits, and that $50 is currently paid out as a dividend.
Under the draft, $*40 would be included in X's gross income as a deemed distribution of tax haven profits. Out of the $50 actual distribution, $*l0
would be considered as having been paid out of current tax haven earnings
and profits and the additional $10 dividend would be designated as being
out of the accumulated tax haven profits so that the shareholder would have
no additional taxes to pay by reason of the actual distribution. Thus, It
would be permitted without any additional tax to the shareholders, to distribute the amount needed to pay the shareholders' taxes on the deemed
distribution and to allow the balance of the tax haven income to remain with
the company.
(13) Adjustments to basis of stock
To prevent doubling up of tax burdens where stock in a controlled
foreign corporation is sold at a gain which reflects the retained tax
haven profits already taxed to the shareholder, the basis of the stock
would be increased by an amount equal to the deemed distribution. A corresponding reduction In the basis would be made when such profits were
actually distributed.
(l4) Foreign tax credit
The July 28 draft would allow with respect to a deemed distribution of
tax haven profits, the foreign tax credit allowed under existing law for
ordinary dividend distributions. The credit would be for taxes imposed on
the tax haven earnings during the taxable year of the controlled corporation
in which such earnings are deemed distributed. Since existing law allows no
indirect credit to individuals with respect to actual dividends, the July 28
draft would, similarly, not allow an indirect credit to individuals with
respect to deemed distributions from a controlled foreign corporation.
An additional credit would be allowed for foreign taxes such as withholding taxes which had not been imposed at the time the deemed distributions was
taxed. Where a United States person receives an actual distribution which is
excluded from income because it was once taxed as income deemed distributed,
the section 904 foreign tax credit limitation would be Increased so that in

. £— V-' v/

- 17 -

the year of an actual distribution a credit w u l d be allowed for foreign
taxes imposed on such income subsequent to the year of the deemed distribution. In case the U. S. person did not have sufficient tax liability in the
year of the actual distribution to make use of theincrease in the section 904
limitation, the excess would be treated as an overpayment of taxes so that a
refund of U. S. tax would be allowed.
(15) Constructive ownership of stock
For the purpose of determining whether 5 or fewer U. S. persons control
a foreign corporation or whether any United States person owns less than
10 percent of the stock of a foreign corporation, the constructive rules of
ownership of section 318 would apply with various modifications such as the
following:
(a) There would be no attribution from a nonresident alien
individual to a citizen or resident;
(b) A foreign entity which owns more than 50 percent of the
stock in a foreign corporation would be considered as owning all
the stock of such corporation for the purposes pf attributing such
stock to the owners of such foreign entity;
(c) The requirement that a shareholder own more than 50 percent
of the stock of a corporation before stock owned by such corporation
could be attributed to the shareholder, would be eliminated;
(d) Stock of one corporation owned by a 50 percent shareholder
in a second corporation which is attributed to the second corporation
would not then be reattributed from such second corporation so as to
make any other shareholder the owner of the stock of the first corporation;
(e) Similarly, stock owned by a partner or a beneficiary of an
estate or trust which was attributed to the partnership, estate or
trust would not then be reattributed so as to make another partner or
beneficiary the owner of such stock.
(l6) The election to be taxed on income from all sources
A foreign corporation (other than life insurance companies) which
desired to relieve shareholders of being taxed on undistributed income could
do so by electing to be taxed on income from sources both within and without
the United States in the same manner as a domestic corporation. In general,
such a corporation would be taxed on each year's taxable income as if it
were a domestic corporation and would be entitled to the various elections
available to a domestic corporation, such as to join in a consolidated return
under sections 1501 et se^. However, section 367 of the Code (relating to

- 18 -

tax-free reorganizations, liquidations, etc., of foreign corporations)
would remain applicable to 'such a corporation.
(17) Exceptions to section 367
The July 28 draft would contain no exception to section 367 of the
Code (relating to tax-free reorganizations, liquidations, etc., of foreign
corporations). It is thought that existing administrative practice is
broad enough to grant clearance for simplification of structure in appropriate cases.
(18) Information
Based on the precedent of section 6035 (relating to returns of officers
and shareholders of foreign personal holding companies), a U. S. citizen or
resident who is an officer or a director of a controlled foreign corporation
would be required to return information. To the extent required by regulations, such information would include the names and addresses of all persons
owning stock and the class and number of shares owned by each person; the
amount, and date of each distribution during the taxable year; the gains,
profits and income with the adjustments made to determine earnings and
profits for the period during which the corporation is a controlled foreign
corporation.
In addition, each United States person who owns 10 percent or more of
the total combined voting power or value of all classes of stock of a
controlled foreign corporation would be required to return such information
as is required by regulations on its earnings and profits.

232
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
oil taxation now or hereafter imposed on the principal or interest thereof by any
or any of the possessions of the United States, or by any local taxing authority.

purposes of taxation the amount of discount at which Treasury bills are originally

by the United States is considered to be interest. Under Sections 454 (b) and 1221

•of the Internal Revenue Code of 1954 the amount of discount at which bills issued
under are sold is not considered to accrue until such bills are sold, redeemed or

wise disposed of, and such bills are excluded from consideration as. capital asset

Accordingly, the owner of Treasuiy bills (other than life insurance companies) iss

hereunder need include in his income tax return only the difference between the pr
paid for such bills, whether on original'issue or on subsequent purchase, and the

actually received either upon sale or redemption at maturity during the taxable ye
for which the return is made, as ordinary gain or loss.

Treasuiy Department Circular No. 418 (current revision) and this notice, prescribe

the terms of the Treasury bills and govern the conditions of their issue. Copies o
circular may be obtained from any Federal Reserve Bank or Branch.

printed forms and forwarded in the special envelopes which will be supplied by Federal
Reserve Banks or Branches on application therefor.

Banking institutions generally may submit tenders for account of customers provided

the names of the customers are set forth in such tenders. Others than banking insti

tions will not be permitted to submit tenders except for their own account. Tenders

be received without deposit from incorporated banks and trust companies and from re
sible 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 fo

unless the tenders are accompanied by an express guaranty of payment by an incorpor
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 Treasur

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 Treas

expressly reserves the right to accept or reject any or all tenders, in whole or in

and his action in any such respect shall be final. Subject to these reservations, n

competitive tenders for $ 200,000 or less for the additional bills dated November 9
1961 , ( 91 days remaining until maturity date on May 10, 1962 ) 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 d

mals) of accepted competitive bids for the respective issues. Settlement for accept

tenders in accordance with the bids must be made or completed at the Federal Reserv
on February 8, 1962. , in cash or other immediately available funds or in a like

xjSr)
face amount of Treasuiy bills maturing February 8, 1962

. Cash and exchange tender:

vail receive equal treatment. Cash adjustments will be made for differences between

par value of maturing bills accepted in exchange and the issue price of the new bil
The income derived from Treasuiy bills, whether interest or gain from the sale or

other disposition of the bills, does not have any exemption, as such, and loss from

TREASURY DEPARTMENT
Washington

p- 0
*~ *-*-'

FOR IMMEDIATE RELEASE^ January 31, 1962
^ TREASURY' S WEEKLY BILL OFFERING
The Treasuiy Department, by this public notice, invites tenders for two series
of Treasuiy bills to the aggregate amount of $1,800,000,000 , or thereabouts, for
cash and in exchange for Treasury bills maturing February 8, 1962

in the amount

of $1,805,088,000 , as follows:
91 -day bills (to maturity date) to be issued February 8, 1962 >
in the amount of $1,200,000,000 , or thereabouts, representing an additional amount of bills dated

November 9. 1961

and to mature May 10, 1962 , originally issued in the
amount of .$500,252,000

, the additional and original bills

to be freely interchangeable.
182 -day bills, for $ 600,000,000 , or thereabouts, to be dated
February -8, 1962 , and to mature August 9, 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 a

will be payable without interest. They will be issued in bearer form only, and in

denominations of $1,000, $5,000, $10,000, $50,000, $100,000, $500,000 and $1,000,0
(maturity value).
Tenders will be received at Federal Reserve Banks and Branches up to the closing
hour, one-thirty p.m., Eastern Standard time, Monday, February 5. 1962 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

TREASURY DEPARTMENT
•i

r\ i v • 1 v j JU* j ^i

^I.WJM.'»<i..!L>MU.1M.|»lJ«l.-«W'-»lJW.ll^JFimi»IWl«H.llliaiJIUJMIlJMHIL«aiJIII

Ill

—

•

&~ \~>
—

—

WASHINGTON. D.C.
January 31, 1962
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
$1,800,000,000, or thereabouts, for cash and in exchange for
Treasury bills maturing February 8,1962, in the amount of
$1,805,088,000, as follows:
91-day bills (to maturity date) to be Issued February 8, 1962,
In the amount of $1,200,000,000, or thereabouts, representing an
additional amount of bills dated November 9,19ol, and to
mature May 10, 1962,
originally issued In the amount of
$500,252,000, the additional and original bills to be freely
interchangeable.
182-day bills, for $600,000,000, or thereabouts, to be dated
February 8-, 1962, and to mature August 9, 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, $50,000, $100,000, $500,000 and $1,000,000
(maturity value).
Tenders will be received at Federal Reserve Banks and Branches
up to the closing hour, one-thirty p.m., Eastern Standard
"time, Monday, February 5, 1962.,
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.
Banking institutions generally may submit tenders for account of
customers provided the names of the customers are set forth in such
tenders. Others than banking Institutions will not be permitted to
submit tenders except for their own account. Tenders will be received
without deposit from incorporated banks and trust companies and from
responsible and recognized dealers in investment securities. Tenders
from others must be accompanied by payment of 2 percent of the face
D-378 of Treasury bills applied for, unless the tenders are
amount
or
accompanied
trust company.
by an express guaranty of payment by an incorporated bank

- 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
November 9,1961, (91-days remaining until maturity date on
May 10, 1962)
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 February 8, 1962,
in cash or other immediately available funds or in a like face
amount of Treasury bills maturing February 8, 1962. 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 k^k (b) and 1221 (5) of the Internal
"Revenue Code of 195^ the amount of discount at which bills issued
hereunder are sold is not considered to accrue until such bills are
sold, redeemed or otherwise disposed of, and such bills are excluded
from consideration as capital assets. Accordingly, the owner of
Treasury bills (other than life Insurance companies) issued hereunder
need include in his income tax return only the difference between
the price paid for such bills, whether on original issue or on
subsequent purchase, and the amount actually received either upon
sale or redemption at maturity during
oOo the taxable year for which the
return is made, as ordinary gain or loss.
Treasury Department Circular No. 4l8 (current, revision) and this
notice prescribe the terms of the Treasury bills and govern the
conditions
any Federalof
Reserve
their Bank
issue.
or Branch.
Copies of the circular may be obtained froi

n 4

United States Savings Bonds Issued and Redeemed Through Ojanuary 31, 1962

(Dollar amounts in millions - rounded and will not necessarily add to totals)
Amount
Amount
Amount
% Outstand:
Issued 1/ Redeemed 1/ Outstanding 2/ of Amt.Issi
MATURED
Series A-1935 - D-1941 ..
Series F & G-1941 - 1949

MATURED
-.3/
Series E:
1941
1942
1943
1944
1945
1946
•.
1947
1948
1949
.'
1950
1951
1952
1953
1954
1955
1956
1957 ....:
1958
1959
1960
1961
1962 (included inunclass.)
Unclassified
.,
Total Series E

5,003
26,082

4,986
25,816

1,810
7,990
12,861
14,981
11,722
5,254
4,939
5,086
4,994
4,345
3,762
3,914
4,429
4,482
4,650
4,469
4,186
4,035
3,765
3,734
3,420

1,435
6,558
10,645
12,291
9,395
3,972
3,538
3,520
3,357
2,813
2,375
2,343
2,582
2,545
2,590
2,479
2,200
1,949
1,713
1,460
777

17
266

325
1,431
2,216
2,690
2,327
1,282
1,402
1,566
1,637
1,532
1,387
1,571

M47

.34
1.02

17.96
17.91
17.23
17.96
19.85
24.40
28.39
30.79
32.78
35.26
36.87
40.14
41.70
43.22
44.30
44.53
47.42
51.70
54.50
60.90
77.28

425

1,937
2,060
1,990
1,985
2,086
2,052
2,274
2,643
-80

H9474
7,989

81.014
1,539

38.160
6,451

32.02
80.75

127,163

82,553

44,610

35.08

2,426
791
211

1,778
407
100
102

648
385
111
-102

26.71
48.67
52.61

3,428

2,386

Series J and K-1952 - 1957
Total Series F, G, J and K ....

3,674

1,827

1,042
1,848

30.40
50.30

7,10?

4T213

2,889

40.67

31,085
134,266
165,351

30,802
86,766
117,568

283
47,500
47,783

.91
35.38
28.90

Series H-1952 - 1962 .

Total Series E and H
Series F and G:
1950
1951
1952
Unclassified
Total Series F and G

{Total matured
Total unmatured ....
Grand Total

345

1/ Includes accrued discount.
V Current redemption value.
OFFICE OF FISCAL ASSISTANT SECRETARY
V At option of owner bonds may be held and will earn interest for additional periods
after original maturity dates.
\l Includes maturedJaouds which have not been presented for redemption.

t~\ o

- 4 Other matters covered in the report are the strengthening of

management improvement facilities and techniques, cooperative us
of resources between the Department's various bureaus and with
other agencies of government, improved work methods and

simplified procedures, and organizational changes made to improv

and strengthen the alignment] of Treasury If unctionsj, includin
establishment of an Executive Secretariat in the Office of the
Secretary.

oOo

- 3 The Treasury's entire disbursing process, from initial check-

writing to final reconciliation of check payments, is being adapt
to streamlined automatic data processing methods. Savings bonds
are now also processed electronically. The Internal Revenue
Service is using automatic data processing equipment to process
tax returns and is establishing a central facility where

information on taxpayers and tax sources will be available quick
by electronic means.
Improvements in the manufacture of coins and currency also

produced savings. A new printing process which produces $1 silver
certificates on dry paper on high speed rotary intaglio presses,
has extended the life of currency by 30 percent, with annual
savings of over $1 million.
Special emphasis on recruiting of high caliber personnel
and a sizable increase in training activity are noted in the

report. This is part of a long-range plan to staff the Departmen

with personnel of top competence and the potential ability to fi
positions of major responsibility.

- 2 administrative operations. The improvements ... are important,
not only because they increase the efficiency of our internal
functions, but because they increase the Department's
effectiveness in its cooperative efforts with other agencies."
The Secretary said he had a strong personal interest in further

improving management operations and called upon Treasury officia
for continued leadership in carrying the program forward
successfully.
Every bureau and office of the Department had a part in the
improvement program and about 2,500 employee suggestions were
adopted under the incentive award program. Awards to employees
ranged from $10.00 to $300.00.
"Die principal savings for the Treasury came from a stepped-up

program to mechanize manual operations and to modernize equipmen
Ibis program requires that automation be planned far enough in

advance to permit employee reductions to be handled by attrition
retraining for other positions, or transfer.

f"\ /™;. '•'")
fc_ *-< VJ"

^RELEASE ¥w(L
TREASURY REPORT SHOWS $10 MILLION
SAVED BY BETTER MANAGEMENT
The Treasury saved more than $10 million in operating costs
during 1961 fiscal year by improvements in the management of
manpower, space, and equipment, according to a progress report
issued today.
Of the total, $8 million represented annual recurring savings
to the government, and the balance a one-time benefit. About
$3 million of the savings resulted from employee suggestions.
Secretary Douglas Dillon, shortly after assuming office
last January, asked the heads of Treasury bureaus and offices

to make special efforts to find "faster and more expert ways" to
handle the Department'sfexistingjwork load Eo tha.t--i.ts

The Secretary termed the report "an impressive account of
progress made over the past fiscal year in improving Treasury's

TREASURY DEPARTMENT

239

WASHINGTON, D.C.
February 2, 1962
FOR IMMEDIATE RELEASE

TREASURY REPORT SHOWS $10 MILLION
SAVED BY BETTER MANAGEMENT
The Treasury saved more than $10 million in operating costs
during 1961 fiscal year by improvements in the management of
manpower, space, and equipment, according to a progress report
issued today.
Of the total, $8 million represented annual recurring savings
to the government, and the balance a one-time benefit. About
$3 million of the savings resulted from employee suggestions.
Secretary Douglas Dillon, shortly after assuming office last
January, asked the heads of Treasury bureaus and offices to make
special efforts to find "faster and more expert ways" to handle
the Department's increasing work load.
The Secretary termed the report "an impressive account of
progress made over the past fiscal year in improving Treasury's
administrative operations. The improvements ... are important not
only because they increase the efficiency of our internal functions,
but because they increase the Department's effectiveness in its
cooperative efforts with other agencies." The Secretary said he
had a strong personal interest in further improving management
operations and called upon Treasury officials for continued
leadership in carrying the program forward successfully.
Every bureau and office of the Department had a part in the
improvement program and about 2,500 employee suggestions were
adopted under the incentive award program. Awards to employees
ranged from $10.00 to $300.00.
The principal savings for the Treasury came from a stepped-up
program to mechanize manual operations and to modernize equipment.
This program requires that automation be planned far enough in
advance to permit employee reductions to be handled by attrition,
retraining for other positions, or transfer.
D-379

—

»»

i ^

The Treasury's entire disbursing process, from initial checkwriting to final reconciliation of check payments, is being adapted
to streamlined automatic data processing methods. Savings bonds
are now also processed electronically. The Internal Revenue
Service is using automatic data processing equipment to process
tax returns and is establishing a central facility where information
on taxpayers and tax sources will be available quickly by
electronic means.
Improvements in the manufacture of coins and currency also
produced savings. A new printing process which produces $1 silver
certificates on dry paper on high speed rotary intaglio presses,
has extended the life of currency by 30 percent, with annual
savings of over $1 million.
Special emphasis on recruiting of high caliber personnel and
a sizable increase in training activity are noted in the report.
This is part of a long-range plan to staff the Department with
personnel of top competence and the potential ability to fill
positions of major responsibility.
Other matters covered in the report are the strengthening of
management improvement facilities and techniques, cooperative use
of resources between the Department's various bureaus and with
other agencies of government, improved work methods and simplified
procedures, and organizational changes made to improve and
strengthen the coordination of Treasury activities, including the
establishment of an Executive Secretariat in the Office of the
Secretary.

oOo

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TREASURY DEPARTMENT

^°

WASHINGTON, D.C.
IMMEDIATE RELEASE February 1, 1962
TREASURY TO RERTND $11.7 BILUON OF TREASURY NOTES
MATURING FEBRUARY 15, AND APRIL 1, 1962
The Treasury is offering holders of $11,731 million of four issues of
Treasury notes maturing February 15, 1962, and April 1, 1962, the right to
exchange them for any of the following securities:
3-1/2$ Treasury certificates of indebtedness dated
February 15, 1962, due February 15, 1963, at par; or
4$ Treasury notes dated February 15, 1962, due August
15, 1966, at par.
Cash subscriptions for the securities listed above will not be received.
The maturing Treasury notes which may be exchanged for the new securities are as follows:
(in Millions)
$647.1 - 3-5/8$ Treasury notes of Series A-1962, dated
May 1, 1957, due February 15, 1962;
$1,435.0 - 4$ Treasury notes of Series D-1962, dated
February 15, 1959, due February 15, 1962;
$9,098.0 - 3-1/4$ Treasury notes of Series F-1962, dated
November 15, 1960, due February 15, 1962;
$551.2 - 1-1/2$ Treasury notes of Series EA-1962, dated
April 1, 1957, due April 1, 1962.
The subscription books will be open only on February 5 through February 7
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, and placed in the mail before midnight February 7 will be considered as
timely. The new securities will be delivered February 15, 1962. The certificates
of indebtedness will be available only in bearer form but the Treasury notes will
be made available in registered form, as well as bearer form.

D-380

-f

-2-

Interest on the new 3-1/2$ 12-month Treasury certificates of indebtedness
will be paid on August 15, 1962 and February 15, 1963. Interest on the 4$
Treasury note is payable semiannually on August 15 and February 15 •
Exchanges of the 3-5/8$, 4$, and 3-l/4$ Treasury notes maturing
February 15, 1962, may be made for a like face amount of either the 3-1/2$
Treasury certificates maturing February 15, 1963, or the 4$ Treasury notes
maturing August 15, 1966. Coupons dated February 15, 1962 on these maturing
notes should be detached by holders and cashed when due. Holders of the 1-1/2$
Treasury notes Series EA-1962, maturing April 1, 1962, may exchange them for a
like face amount of the new 3-1/2$ Treasury certificates or the 4$ Treasury notes.
Exchanges of the l-l/2$ Treasury notes, Series EA-1962, will be made with
interest adjustments as of March 1, 1962,
Coupons dated April 1, 1962 must be attached to the l-l/2$ Treasury notes
when surrendered. Adjustments with the holders who exchange their 1-1/2$ notes
will be made as follows:

1-1/2$ Treasury
notes exchanged
for

Credits per $1,000
Accrued
interest
on 1-1/2$
note to
3/1/62

3-1/2$ certificate 2/15/63

$6,22253

4$ note, 8/15/66 $6.22253

- 0 -

Charges per $1,000 Difference
Accrued,
to be paid
interest
to
to 3/1/62
subscriber

$1.35359

$4. 8689^

$1.54696

$4.67557

-6-

<22u* M*&$J^

most heinous crimes against humanity and «£i*e<*»«eaas£ illustrates the

kind of international cooperation which benefits the peoples of all

ft,m Assistant Secretary Reed said.

Mr. Reed expressed

his appreciation to the Justice and State Departments for the

assistance rendered by them.

24E

- 5 -

implicated Rubino and Luciano in their narcotics conspiracy. Rubino
was arrested at Naples on January 25, 1962. Luciano was questioned
the morning of January 26, ^62?and was instructed to return the
following day for more detailed interrogation, but on the afternoon
of that day Luciano died at the Naples airport.
James A. Reed, Assistant Secretary of the Treasury, under
whose supervision the Bureau of Narcotics operates, said he was
impressed with the cooperation and coordination of the ia
police forces involved.
HeWar t icu lar<
Spanish authorities

the Spanish police and the
-CJaj^^A—,xiig|[jI|j,lj|^^'jj^A.

rll§*Ki the Italian police for their
work with U.S. Treasury agents against persons suspected of
smuggling narcotics into the United States.
"Illicit trafficking in narcotic drugs is one of the

- 4 havoin smugg 1 liig-rmtTy^tiie^^Rt^e^^feafcea*< ftll of the American and

Mr. Giordano said that Italian authorities l w c long had

Italian police were led to an American, Henry Rubino, who held
joint business interests with Vincent MauroJln Miami and IJi^Yoi-lg1*
Jggg It was discovered that Rubino was in contact with fugitives
Mauro, Caruso and Maneri. This led to the discovery of the
fugitives in Barcelona and Majorca, where they were arrested on
January 22-23 of this year.
Following the arrests in Spain, the Italian Teeasury Police/

vA—w.-iT Mv&f.-<.

-'^

,»ff

f A«.-'y"s>^is

./*
%j^^''iiF'

OV'* .

/>/

. 3 -

The United States Commissioner at New York City set bonds of $250,0
on Mauro and Caruso at the time of their arrest. The bonds were
later reduced to $50,000 each. This was furnished and the two
were set at liberty. Maneri, who was at liberty on a $5,000 immigration bond was released on an additional $10,000 bail bond.
On September 19, 1961, the date set for their appearance in
Federal Court at New York City to plead to the indictment, all
three defendants failed to appear. Their bonds were forfeited and
warrants were issued for their arrest. Two other defendants in
this case disappeared and were later found murdered.
The remaining 11 defendants in the conspiracy were tried and
found guilty on all charges on December 27, 1961. They are
scheduled for sentencing later this month.
During this same period, Italian Treasury police were investi

*49
- 2 Riviera, to London, and finally to Spain.
Mr. Giordano said that when the fugitives were in Spain, their

activities were connected with Charles "Lucky1' Luciano who was t
living in Naples. Italian Treasury police, he said, had been

questioning Luciano as to his role in assisting the three fugitiv
and Luciano fs arrest was imminent when he died on January 26.
On October 21, 1960, U.S. Treasury narcotics agents, working

with the police of Westchester County, New York, arrested four me

for possession of 23 1/2 pounds of pure heroin — worth an estimat

$3 million on the illegal market. Subsequent investigation result

in a narcotics conspiracy case involving 16 American and Canadian
defendants.
Vincent Mauro, Frank Caruso and Salvatore Maneri were considered

by the Narcotics Bureau to be principal members of this conspirac

A three-month international man-hunt led by U. S. Treasury
narcotics agents for three fugitives from a New York conspiracy
trial is scheduled to end with the return of the trio to the

United States Saturday night, Henry L. Giordano, Acting Commission
of Narcotics, announced today.
Scheduled to arrive at New York International Airport from
Madrid, Spain, at 7:15 p.m. tomorrow, are Vincent Mauro, Frank

Caruso, and Salvatore Maneri, escorted by four Spanish police offi
cers and a U.S. Treasury narcotics agent. The fugitives will be
arrested on the basis of outstanding fugitive warrants previously
issued by the U.S. District Court at New York City.
Their arrest will climax a chase by Treasury narcotics agents
who traced the movements of the trio from Nassau, Bahamas, to

Kingston, Jamaica, to Caracas, Venezuela; to Nice on the French

TREASURY DEPARTMENT
WASHINGTON. D.C.
February 2, 1962
IMMEDIATE RELEASE
TREASURY NARCOTICS AGENTS TO RETURN
FUGITIVES TO U. S. SATURDAY
A three-month international man-hunt led by U. S. Treasury
narcotics agents for three fugitives from a New York conspiracy
trial is scheduled to end with the return of the trio to the
United States Saturday night, Henry L. Giordano, Acting Commissioner
of Narcotics, announced today.
Scheduled to arrive at New York International Airport from
Madrid, Spain, at 7:15 p.m. tomorrow, are Vincent Mauro, Frank
Caruso, and Salvatore Maneri, escorted by four Spanish police
officers and a U. S. Treasury narcotics agent. The fugitives will
be arrested on the basis of outstanding fugitive warrants previously
issued by the U. S. District Court at New York City.
Their arrest will climax a chase by Treasury narcotics agents
who traced the movements of the trio from Nassau, Bahamas, to
Kingston, Jamaica, to Caracas, Venezuela; to Nice on the French
Riviera, to London, and finally to Spain.
Mr. Giordano said that when the fugitives were in Spain, their
activities were connected with Charles "Lucky" Luciano who was then
living in Naples. Italian Treasury police, he said, had been
questioning Luciano as to his role in assisting the three fugitives,
and Luciano's arrest was imminent when he died on January 26.
On October 21, i960, U. S. Treasury narcotics agents, working
with the police of Westchester County, New York, arrested four men
for possession of 23-1/2 pounds of pure heroin — worth an
estimated $3 million on the illegal market. Subsequent investigation
resulted in a narcotics conspiracy case involving 16 American and
Canadian defendants.
Vincent Mauro, Frank Caruso and Salvatore Maneri were
considered by the Narcotics Bureau to be principal members of this
conspiracy. The United States Commissioner at New York City set
bonds of $250,000 on Mauro and Caruso at the time of their arrest.
The bonds were later reduced to $50,000 each. This was furnished
and the two were set at liberty. Maneri, who was at liberty on a
$5,000 immigration bond was released on an additional $10,000
D-381
bail bond.

*"> «---' *».

- 2
On September 19, 196l, the date set for their appearance in
Federal Court at New York City to plead to the indictment, all
three defendants failed to appear. Their bonds were forfeited arid
warrants were issued for their arrest. Two other defendants in
this case disappeared and were later [found murdered.
The remaining 11 defendants in the conspiracy were tried and
found guilty on all charges on December 27* 196l. »They are
scheduled for sentencing later this month.
During this same period, Italian Treasury police, who were
investigating narcotics trafficking in their country, were able to
implicate all of the American and Canadian conspirators in the
New York narcotics case, from leads furnished them by U. S.
i
narcotics agents.
Mr. Giordano said that Italian authorities had long had
Luciano under surveillance. A few months ago, while keeping him
under surveillance, Italian police were led to an American,
Henry Rubino, who held joint business interests with Vincent Mauro.
It was discovered that Rubino was in contact with fugitives Mauro,
Caruso and Maneri. This led to the discovery of the fugitives in
Barcelona and Majorca, where they were arrested on January 22-23
of this year.
Following the arrests in Spain, the Italian Treasury Police
implicated Rubino and Luciano in their narcotics conspiracy.
Rubino was arrested at Naples on January 25, 1962. Luciano was >
questioned the morning of January 26, and was instructed to return the
following day for more detailed interrogation, but on the afternooon
of that day Luciano died at the Naples airport.
James A. Reed, Assistant Secretary of the Treasury, under whose
supervision the Bureau of Narcotics operates, said he was impressed
with the cooperation and coordination of the police forces involved.
He expressed thanks particularly to the Spanish police and the
Spanish authorities, and the Italian police for their work with
U. S. Treasury agents against persons suspected of smuggling
narcotics into the United States.
"Illicit trafficking in narcotic drugs is one of the most
heinous crimes against humanity and this case illustrates the
kind of international cooperation which benefits the peoples of all
countries. The help of the Spanish and Italian police officials is
greatly appreciated and has contributed materially to U.S. law
enforcement," Assistant Secretary Reed said. Mr. Reed expressed his
appreciation to the Justice and State Departments for the assistance
rendered by them.
oOo

4» u ^

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,

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