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u.~. Treq~Ltt1
::J>4pL __
~e~, l{e)ectses
'\ ,
L'n~ARY
P(l()M
50~O
JUN 1 5 1972
TREASURY DEPARTMENT
United States Savings Bonds Issued and Redeemed
1
1nrougn
~ecember
31, 1962
(Dcl-lar amounts in millions - rounded and will not necessarily add to totals)
•
-r.
Amount
Issued
1I
Amount
Redeemed
Amount
Outstanding
1I
1\'ATURED
Series A-1935 - D-1941 •••••••••• $' 5,003
Series F & G-1941 - 1950 ••••••••
28,512
$
. $ 4,988
28,196
21
% Outstand~
of Amt.Iss~
.30 %.
15
316
loll
300
1,312
2,114
2,559
2,220
1,224
1,340
1,492
1,560
1,451
1,282
1,441
1,833
1,902
2,013
1,931
1,921
2,009
1,952
2,119
2,4 0 5
2,229
16.48
16.32
16.34
16.99
18.82
23.12
26.91
29.09
30.94
33.04
33.70
36.23
40.59
41.81
42.69
42.62
45.18
48.96
50.94
55.65
63.09
7$.18
~====~======~=======*======
UNlvOOURED
Series E: JI
1941 •••••••••••••••••••••
1942 •.•••••••••••••••••••
1943 •.•.•••••.•••••.•••••
1,820
8,03 8
12,936
15,061
, 11,793
5,293
4,980
5,129
5,042
4,392
3, 80 4
3,977
4,516
4,549
4,715
4,531
4,252
4,103
3,832
3,808
3,812
2,851
1944 ••••.••..••••• "•.•..•
1945 •••••••••••••••••••••
1946
1947
19/.8
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
•••••••••••••••••••••
•••.•••••.•••••••••••
• • eo- • • • • • • • • • • • • • • • • •
•••••••••••••••••••••
•••••••••••••••••••••
•••••••••••••••••••••
•••••••••••••••••••••
••••••••••••••••••.••
•••..••••••••••.••..•
•••••••••••••••••••••
•••••••••••••••••••••
•••••••••••••••••••••
••••..•••.••••••••.•.•
•••••••••••••••••••••
•••••••••••••••••••••
•••••••••••••••••••••
•••••••••••••••••••••
Unclass ified ••••••••••••••••••
Total Series E................
Series H-1952 - 1962 :::..........
Total Series E and H
..........
1,520
6,726
10,822
12,502
9,573
4,068
3,641
3,636
3,4 82
2,942
2,522
2,536
2,683
2,647
2,701
2,600
2,330
2,094
1,880
1,689
1,407
622
t - _........L."'"
?'/Oo-.
?--+___....!..,....L~"'-5--+_ _--=-..
')''''J. _ _.J-_ _-::.-~I
123,658
85,071
38,587
31.20
I
132,376
86,876
45,499
34.37
I
:===8~,=71=8===:====1~,8=0=6==:~==~6:,~9=1=2=====:===~79~.~2~8=~
Series F and G:
I
\
365
104
-184
285
45.97
49.06
I
1,005
429
107
184
720
28.36
I
4,695
2,659
2,036
43.37
122,720
331
L.2l2
47,866
.99
34.68
28.06
1951 •••••••••••••••••••••
1952 •••••••••••••••••••••
Unclassified ••••••••••••••••••
794
212
G..........
Total Series F, G, J and K ••••
Total Series F and
J
r---~---~-----~----~---~--~~~-.
Series J and K-1952 - 1957 •••••• t--.::3;..z.~6~90~+_...;:;.1.L.;
,9:.::::3~9_+-_..;!;1;.Z..7.!..;5~1~_-+__,;;;t...!..47:.!;.4~:5~
All Series
11
2.1
11
~ :r°an.dt~ ::t"'
al -
. . . . . . .. I
170,586
I
Includes accrue~ discount.
OFFICE OF FISCAL ASSISTANT
Current redemptl0n value.
SECRETARY
At option of owner bonds may be held and will earn interest for additional. periods
after original maturity dates.
.
'I
j
I
\Tnited .states Savings Bonds Issued and Redeemed Through December 31, 1962
(Dollar amounts in millions - rounded and will not necessarily add to totals)
Am01.Ult
Issued
11
Amount
Redeemed
II
Amount
Outstan.dmg
21
% Outstand'll1g
of Amt.Issue d
l~OOURED
Series A-1935 - D-1941 •••••••••• $ 5,003
28,512
Series F & 0-1941 - 1950 o • • • • • • •
JlNMATURED
Series E: 31
1941
1942
1943 • ••••••••••••••••••••
1944
,
1945
1946 • ••••••••••••••••••••
1947
19/,8
1949 •••••••••••••••••••••
1950
1951 • ••••••••••••••••••••
1952 • ••••••••••••••••••••
1953
1954 ' ••••••••• e • • • • • "
1955 • • • • • • • • • •.• • • • • • e • •
1956
1957
.,
1958 • • • • • -• • • • • • • • • • • e _ • • •
1959 • ••••••••••••••••••••
1960 • ••••••••••••••••••••
1961 • ••••••••••••••••••••
1962 •••••••••••••••••••••
•
•
••••••••••••••• $
• • • • • • • • • • • • .., ~ 0
••••
•••••
·............. ......
•
• • • • • • • • • • • CI • • • • • • • •
•••••••••••••••• G ••••
•
••.•••••
(I
••••••••••••
•
••••••••••••• 0
••••••
·.....................
f'I It • • •
ct •
·.................. .
•
••••••••••• 0 •• ~ •••••
Unclassified ••••••••••••••••••
Total Series E
• • • • • • • • • • • • • • 51 •
Series H-1952 - 1962 ~ ••••••••••
Total Series E and H
• u • • • 4iJ. • • • •
1,820
8,038
12,936
15,061
11,793
5,293
4,980
5,129
5,042
4,392
3,804
3,977
4,516
4,549
4,715
4,531
4,252
4,103
3,832
3,808
3,812
2,851
$ 4,988
28,196
1,520
6,726
10,822
12,502
9,573
4,068
3,641
3,636
3,4 82
2,942
2,522
2,536
2,683
2,647
2,701
2,600
2,330
2,094
1,880
1,689
1,407
622
$
15
316
.30
1.11
300
1,312
2,114
2,559
2,220
1,224
1,340
1,492
1,560
1,451
1,282
1,441
1,833
1,902
2,013
1,931
1,921
2,009
1,952
2,119
2,405
2,229
16.32
16.34
16.99
18.82
23.12
26.91
29.09
30.94
33.04
33.70
36.23
40.59
41.81
42.69
42.62
45.18
48.96
50.94
55.65
63.09
7$.18
16. it s
-
L??
i.L &)
_?i.
123,658
8,718
85,071
1,806
38,587
6,912
31.20
79.28
132,376
86,876
45,499
34.37
794
212
365
104
-184
285
45.97
49.06
Series F and G:
......................
1951
1952 •••••••••••••• ".•••
Unclassified ••••••••••••••••••
Total Series F and G ••••••••••
1,005
429
107
184
720
Series J and K-1952 - 1957 ••••••
Total Series F, G, J and K ••••
3.690
4,695
1.939
2,659
1.751
2,036
47.45
43.37
{10tal matlL"ed ••••••
.All Series
Total unmatu=ed ••••
Grand Total .~ ••••••
33,515
137,QZl
170,586
33,1 84
331
47.5:25
47,866
~8
0 ••
11
2J
1/
-
82,~:2~
122,720
28.36
.99
28.06
Includes accrue~ discount.
OFFICE OF FISCAL ASSISTANT SECRETARY
Current redemptl.on value.
At option of owner bonds may be held and will earn interest for additional periods
after original maturity dates,
%
TREASURY DEPARTMENT
Wa.shington
FOR IMMEDIATE RELEASE
January 2, 1963
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 $ 2,100,000,000 , or thereabouts, for
:00
cash and in exchange for Treasury bills me.turing January 10, 1963
of $ 2,001,454,000 , as follows:
~
91 -day bills (to ma.turity date) to be issued
tQ
m
, in the amount
January 10, 1963
m
,
in the amount of $ 1,300,000,000 , or thereabouts, represent-
m
ing an additional amount of bills dated October 11, 1962
and to mature
April 11, 1963
tJ)J
amount of $ 700,610,000
tm
:tEl
,
, originally issued in the
, the additional and original bills
to be freely interchangeable.
182 -day bills, for $
lfri
800,0~00
January 10, 1963
, or thereabouts, to be dated
~
, and to mature _J_u_g
___l_l"",,~1~9~6_3_ _ __
tDf
tfij
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 fom 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, Janui§:t7, 1963
Tenders will not be received at the Treasury Department, Washington.
Each tender
must be for an even multiple of $1,000, and in the case of competitive tenders the
price offered must be expressed on the basis of 100, with not more than three
•
- 2 -
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 or trust company.
Dmnediately after the closing hour, tenders will be opened at the Federal
Reserve Banks and Branches, following which public announcement will be made by
the Trea.sury Department of the amount and price range of accepted bids.
Those
submitting tenders will be advised of the acceptance or rejection thereof.
The
secretary of the Treasury expressly reserves the right to accept or reject any
or all tenders, in whole or in part, and his action in any such respect shall be
final.
Subject to these reservations, noncompetitive tenders for $ 2XWOO or
less for the additional bills dated
ing until maturity date on
April .1963
$ 10.0 or less for the 182
(
october. 1962
(id
(
, (91
(mo
days remain-
) and noncompetitive tenders for
-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 ten-
ders in accordance with the bids must be IDMe or completed at the Federal Reserve
Banks on
January 10, 1963
, in eash or other immediately available f'unds or
(ii5j
in a like face amount of Treasury bills maturing .-.;J_a.nua.ry_---'
........~=0::!r-l-9-6..;.3--.
Cash
- 3 -
and excha..nBC tenders will receive equru. treatment.
Caoh adjustments will be made
for differences betHcen the p3.r value of maturj.ng bills accepted in exchange and
the issue price of the new bills.
The income derived from TreD.sury 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 disponition of Trennury bills does not have any special
treo..tm0nt, as such, under the Internal Revenue Code of 1954.
The bills are subject
to estR.t.e, inheritance, gift or other excise ta.xes, whether Federal or state, but
are exempt from all taxation now or herea.fter imposed on the principal or interest
thereof by a.ny sta.te, or any of the possessions of the United sta.tes, or by any
loca.l taxinB authority.
For purposes of ta::ation 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
othe~(ise
bills are excluded from consideration as capital a.ssets.
disposed of, and such
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 a.ctually
received either upon sale or redemption at maturity during the taxable year
which the return is
~~de,
~or
as ordinary gain or loss.
Treasury Department Circular No. 418 (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 Reserve Bank or Branch.
TREASURY DEPARTMENT
e::.gEt
*ee!:::'::::sro::;;e;;*
,4
5 :15"
.#$
1
d')'!
itl
I
:5L!LX:;C:::::::::ZZ~t
$1,"29*( e
Mil"#' 75
Hi'
IV
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
$2,100,000,000, or thereabouts, for cash and in exchange for
Treasury bills maturing January 10,1963,
in the amount of
$2,001,454,000, as follows:
91-day bills (to maturity date) to be issued
in the amount of $1,300,000,000, or thereabouts,
additional amount of bills dated October 11,1962,
mature April 11,1963,
originally issued in the
$700,610,000,
the additional and original bills
interchangeable.
January 10, 1963,
representing an
and to
amount of
to be freely
182-day bills, for $800,000,000,
or thereabouts, to be dated
January 10~ 1963, and to mature July 11,,1963.
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).
'
'renders will 'be received at li'ederal Reserve Banks and Branches
up to the clOSing hour, one-thirty p.m., Eastern Standard
time,Monday, January 7, 1963. ,
Tenders will not be
received at the Treasury DeJ?artment, Washington. Each tender must
be for an even multiple or $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 tende.rs are
accompanied by an express guaranty of payment by an incorporated bank
or trust company.
D-709
-
,)
6
:1t'('
exempt,
1'1'0111
aLL
t~'Gl~ion
now 01'
l.ltcrcof l)y ruW SU.l.i.c, or DJlY of the
1 (JeLl I tux.i nr: au l.hor.tty •
hcrcaf~cr
:imp08cd on the princIpal or inl.erest
pO~~Gcssions
of the UnIted States, or by alW
For purp08cn of tpxnLJon l.he amount
01'
discount at which
'l'l'eu[:ury bills nrc ori().nnlly Gold by Lhe United States is considered to be interest.
Uncler Sections 4:J4 (b) and 1221 (5) of the Internal Revenue Code of 1954
the nmount of discount at llhich bills issued hereunder are sold is not considered
to accrue W1til such bills are sold, redcemcd or otherwise disposed of, and such
bills
Oi'
£11'('
c);clu(lcrl from conrd.(lr-rat-LOI1 [U; C".p l tal
n..;~~ctG.
Accordingly, the mmer
'l'reUGlU-Y biLLs (oLher 11,:111 1 ii'e .inGlu'unce companies) issued hereunder need in-
cludc in hj.G income ta.x return only the di1':Lcrence bctween the price paiel for such
billa, ,·rhethcr on ortcinu1
1:;[;u('
or on l;llb::;cqucnt pm"chaae, and the amount actually
received either upon Gale or redemption at mHturity durinG the taxable year for
"'hich the return is made, as oru inol'Y
C;~:in
or loss.
'l'l'cnsury Department Circular No. 4:18 (currcnt revision) and this notice, prescribe the terms of the rrreasury biJ.ls snd govern thc conditions of their issue.
Copies of the circular may be obta.ined from any Federal Reser.re Bank or Branch.
- 2 -
banking insti tutiono will not be pend tLed to subnrl t tenders except for their own
nccOlmt.
Tenders ,vill be received
vT.I
thout deposit from
incorporat~d
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
euaranty of payment by an incorporated banJ.c or trust company.
Irrunediately after the closing hour, tenders will be opened at the Federal Reserve Banks and Branches, follmvine "hich J}ublic announcement '\viII be made by the
Treasury Dcpai'"l;ment of the Dmount and price range of accepted bids.
ting t.enders vrill be advised of the acceptance or rejecLion thereof.
'l'hose submltThe Secretary
of the rrreasury e;::pressly reserves the riGht to nccept or reject any or all tenders,
in '·Thole or in part, and his action in any such respect shall be final.
to these reservations, noncompetitive tenders for
*
4~O
Subject
or less '\vi thout
stated price from anyone bidder "rill be accepted in full at the . average price (in
three decimals) of accepted competitive bids.
Settlement for accepted tenders in
accordance vrith t.he bids must be made or completed at the Federal Reserve Barlle on
JanuarIJj' 1963
,in cash or other immediately available funds or' in a like
face amount of Treasury bills maturinG
tenders vrill receive equal treatment.
January 15, 1963
~
.' Cash and exchange
Cash adjustments vrill be made for differ-
ences betvleen the par value of maturinc bills accepted in exchange and the issue
pr:tce of the nevr bills.
The income derived from Treasury bills, ,mether interest or gain from the sale
or other disposition of the billo, 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 estat.e, inheritance, gift or other excise taxes, vmether Federal or state, but
7
TREASURY DEPARTMENT
Washington
January 2, 1963
FOR INHEDIATE RELEASE
URY INCREASES ONE-YEAR BIIJ.,S
The Treasury Depart.ment, by this public notice, invites tenders for
$ 2,500,000,000 , or thereabouts, of
ill
in exchance for Treasury bills maturing
of
$ 2,OOl1iS5 •000
365
-dny Treasury bills, for cash and
m January 15, 1963
------~~~~--------
,to be issued on a discount basis under competitive and
noncompetitive bidding as hereinafter provided.
dated
January
~
, in the amount
1963
~be
, and will mature
the face amount will be payable without interest.
bills of this series will be
_J_a_n_u_a_r~y=-..-1_5....:';......1_9_6_4__ ,
"'hen
~
They will be issued in bearer
form only, and in denominations of $1,000, 40,000, $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, Wednesday, January 9, 196~.
~
Tenders "dll 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 dec1mals, e. g., 99.925.
Fractions may not be used.
these bills will run for
365
W
(Notwithstanding the fact that
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 ,nIl 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
TREASURY DEPARTMENT
January 2, 1963
FOR IMMEDIATE RELEASE
TREASURY INCREASES ONE-YEAR BILLS
The Treasury Department, by tllis puhlic notice, invites tenders
for $2,500,000,000, or thereabouts, of 36S-day Treasury bills, for
cash and in exchange for Treasury bills maturing January 15, 1963, in
the amount of $2,001,255,000, 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, 1963, and will mature
January 15, 1964, 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,
Wednesday, January 9, 1963. 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 and price range of
D-710
-
')
-
accepted bids. Those submi t t ing tender S \vi 11 be advised of the
acceptance or rejection thlTt',Jf.
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 reserva t ions, 11l)nCOmpe tit i ve tenders for $400, 000 or les s
without stated price from anyone bickier will be accepted in full at
the average price (in three decimals) of accepted competitive bids.
Settlement for accepted tl~nders in accordance with the bids must be
made or completed at the Federal Reserve Bank on January 15, 1963, in
cash or other immediately available funds or in a like face amount of
Treasury bills maturing January 15, 1963. 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 sal e 0 rot her dis po sit i l,n l) r the bill s, doe s not ha ve any
exemption, as such, and loss [rom 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 taxatiun now or hereafter imposed on the principal
or interest thereof by any StaLe, or any of the possessions of the
United States, or by any local taxing authority. For purposes of
taxation the ~lount 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 (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
fran any Federal Reserve Bank or Branch.
000
TREtSllR't . :IVi':~ Ca.!i'F;TI·rlVE tH 0D~5 l'O1l BOlfOS
GHOIC~; OFl OR :l-l/a PckC!:ln' COO:.+(»I INTEREST lAT~
'~ct
tng T!:e.a8ury .jecretary Henry R. Fowlr.:- rod., annouaced that
blritie,.-s ",ill be offeTaJ thf! option of bIdding upon either a Ii p.reeat
19H 'I.";~", rhe fit it to 00 sold to underY« i t.erli U'Ilder coaapeti t lve
bldcin~.
(~aeh
bidder may g'Jb.it only one bid whicb must
The luccett»ful bidder will b.
s~ec1fJ'
0".
requl~ed
public.
to Btort Itt the
~astern
Fe(i~n:& 1 ~esarve Banl~
Standar{j Time. on Jat1Wiry
of
~.,
N~'
York not l.ater. than 12: 01) nOOll
1;63.
Fiftal bid • .use be
rec<!!lved at tho i4llte ,,18("e no:: litter than 11:1){) •••• , !.astern Stan&.cd
Time t on Tuesdal. Janu..ary
therf'afte~
,··ill be
..
'~,
1·H53.
!h(! bonds \'.'ill be ds:=ec' January 17, l'H,3.
ilay8bl'~ ~n
February 15 Anr: fu..;ust
is
of
e.a~,:h
Intaraat.
year until the
The .t~l.·st intere&t CGUpoa t payahle
fund. not
late~
thar, 11:·;) a ••• , r.::ast@cn .t:,llncia("tl ·liJH. on JanWlcy 17,19
TREASURY DEPARTMENT
January
FOR IMMEDIATE RELEASE
TREASURY elVES COMPETITIVE BIDDERS FOR BONDS
CHOICE OF 4 OR 4-1/8 PERCENT COUPON INTEREST RATE
Acting Treasury Secretary Henry H. Fowler today announced that
bidders will be offered the option of bidding upon either a 4
percent or 4-1/8 percent coupon rate for the $250,000,000 Treasury
bonds of 1988-93, the first to be sold to underwriters under
competitive bidding. Each bidder may submit only one bid which
must specify one of these two coupon rates. The successful bidder
will be required to make a bona fide reoffering of all the bonds
to the investing public.
As previously announced, bidders must file a Notice of Intent
to Bid at the Federal Reserve Bank of New York not later than
12:00 noon, Eastern Standard Time, ~on January 4, 1963. Final bids
must be received at the same place not later than 11:00 a.m.,
Eastern Standard Time, on Tuesday, January 8, 1963.
The bonds will mature on February 15, 1993, but may be called
for payment on February 15, 1988, or any interest payment dace
thereafter. The bonds will be dated January 17, 1963.
Interest
will be payable on February 15 and August 15 of each year until the
bonds mature or are called. The first interest coupon, payable
August 15, 1963, will cover interest accrued between January 17,
1963 and August 15, 1963.
Payment for the bonds must be made in immediately available
funds not later than 11:00 a.m., Eastern Standard Time, on
Jan~ary 17, 1963.
000
D-711
- 3 He has maintained an active interest in education and
civic affairs
g
He is a former member of the Arlington
County School Board and a former PTA President, and has
been active in the American Society for Public Administration,
in church activities, and with
th~
Boy Scouts of Americao
- 2 -
who was one of the pioneers in the field of government
budgeting.
In addition to having held a variety of budgetary
positions, he has also served as Deputy Director for
Management, Office of Personnel, State Department, and
Director, Office of Personnel, Department of Agriculture.
Mr. Betts was born in Wisconsin in 1914.
He attended
Platteville State Teachers College and Vernon County
Normal School, majoring in education.
He has studied at
the Department of Agriculture Graduate School, the Foreign
Service Institute, and ¢he Columbia Teachers College,
Columbia University.
He participated in several conferences
and seminars conducted by the Brookings Institution and
the Bureau of the Budget.
Before entering government service, Mr. Betts was a
teacher and principal in rural and elementary schools in
Wisconsin.
t/
i
I
_,
1',.1
I"
C. BETTS, JR. APPOINTED NEW
BUDGET OFFICER OF TREASURY DEPARTMENT
E~~EST
V.ull~ ~~-~~~
Mr. Ernest C. Betts, Jr.
b22f)=-:=a'lDt1 as ~a6d"'·
b••
Mr. Betts, whose appointment becomes effective January 14,
1963, succeeds Colonel Willard L. Johnson who retired
December 31, 1962.
Mr. Betts is now the Director, Office of the Budget,
State Department.
He has broad
~-experience
budget as well as general administration a
in both
During his 24 years
of Government service, he has held progressively responsible
positions in financial management, iIt-personnel, general
administration, and
~
the Foreign Service o
During his early years in the Agriculture Department
Mr. Betts worked as a budget exam;ner under Mr
-L.
0
W A
0
0
J ump
TREASURY DEPARTMENT
January 4, 1963
FOR IMMEDIATE
RELE~SE
LRNEST C. BETTS, JR. APPOINTED NEW
BUDGET OFFICER OF TREASURY DEPARTMENT
The Treasury Department today announced the appointment of
Mr. Ernest C. Betts, Jr. as Budget Officer. Mr. Betts, whose
appointment becomes effective January 14, 1963, succeeds Colonel
Willard L. Johnson who retired December 31, 1962.
Mr. Betts is now the Director, Office of the Budget, State
Department. He has broad experience in both budget as well as
general administration. During his 24 years of government service,
he has held progressively responsible positions in financial
management, personnel, general administration, and the Foreign
Service.
During his early years in the Agriculture Department Mr. Betts
worked as a budget examiner under Mr. W. A. Jump who was one of the
pioneers in the field of government budgeting. In addition to
having held a variety of budgetary positions, he has also served as
Deputy Director for Management, Office of Personnel, State Department, and Director, Office of Personnel, Department of Agriculture.
Mr. Betts was born in Wisconsin in 1914. He attended Platteville State Teachers College and Vernon County Normal School, majoring
in education. He has studied at the Department of Agriculture
Graduate School, the Foreign Service Institute, and Columbia Teachers
College, Columbia University. He participated in several conferences
and seminars conducted by the Brookings Institution and the Bureau
of the Budget.
Before entering government service, Mr. Betts was a teacher
and principal in rural and elementary schools in Wisconsin.
He has maintained an active interest in education and c~v~c
affairs. He is a former member of the Arlington County School Board
and a former PTA President, and has been active in th2 American
Society for Public Administration, in church activities, and with
the Boy Scouts of America.
000
D-7l2
The Department of state and the Treasury Department today
announced that the American Embassy in Cairo, United Arab Republic,
has been authorised to sell to American tourists Egyptian pounds
received by the United States from the sale of surplus agricultural
commodities.
The action was taken under a recent Executive Order which put
into effect a 1961 amendment to the Agricultural Trade Development
and Assistance Act of 1954.
Since enaotment
or
this amendment, provisions for salas to
tourists have been inoluded in agreements with seventeen countries;
however, in most of these countries the currencies held by the
United States, and which would otherwise be available for this
purpose, are presently expected to be needed to meet United States
operational expenees in these countries, and sales to tourists at
this time have not been
authori~ed.
In still other countries, where
the United statea holds currencies in exces8 of its normal operational
requirements, individual agreements must be negotiated with such
countries before the currencies oan be sold to American tourists.
American tOuriBts, upon presentation of paesport, can obtain
Egyptian pounds at the American EmbaBsy in Cairo in exchange for
United states currency, personal checks drawn on a bank in the United
Statee, or certain other United States dollar instruments.
:/J
Cleared with State/OTF:FF-ERCheney
(r
(rtr{t~tU~~
~l
/ 5/ ~ _ ? 3?J'
- /s
I
~ ~-
i
(~..,~.... )
TREASURY DEPARTMENT
f#Mti'ilZmz
January 7, 1963
FOR IMMEDIATE RELEASE
U. S. TOURISTS
BUY EGYPTIAN
POUNDS AT CAIRO EMBASSY
M~Y
The Department of State and the Treasury Department today
announced that the American Embassy in Cairo, United Arab Republic,
has been authorized to sell to American tourists Egyptian pounds
received by the United States from the sale of surplus agricultural commodities.
The action was taken under a recent Executive Order which put
into effect a 1961 amendment to the Agricultural Trade Development
and Assistance Act of 1954.
Since enactment of this amendment, prov~s~ons for sales to
tourists have been included in agreements with seventeen countries;
however, in most of these countries the currencies held by the
United States, and which would otherwise be available for this
purpose, are presently expected to be needed to meet United States
operational expenses in these countries, and sales to tourists at
this time have not been authorized. In still other countries,
where the United States holds- currencies in excess of its normal
operational requirements, individual agreements must be negotiated
with such countries before the currencies can be sold to American
tourists.
American tourists, upon presentation of passport, can obtain
Egyptian pounds at the American Embassy in Cairo in exchange for
United States currency, personal checks drawn on a bank in the
United States, or certain other United States dollar instruments.
000
D-7l3
TREASURY DEPARTMENT
-
OR RELEASE A. JI;. NE\'JSPAPERS,
Qesday, January 8, 1963.
January 7, 1963
HESUL'l'S OF TRZASlJRY'S \'JEEKLY BILL OFFERING
The Treasury Department announced last evening that the tenders for two series of
reasury bills, one series to be an additional issue of the bills dated October 11, 1962,
1d th8 other series to be dated January 10, 1963, which were offered on January 2, were
)8ned at the Federal Reserve Banks on January 7. Tenders were invited for ;~1,300,OOO,,000,
~ thereabouts, of 91-day bills and for $800,000,000, or thereabouts of 182-day bills.
The
~tails of the two series are as follows:
ums OF ACCEPTED
)}IPETITIVE BIDS:
High
Low
Average
91-day Treasury bills
maturing April 11, 1963
Approx. Equiv.
Price
Annual Rate
2.900%
99.267 ~
99.259
2.931%
99.262
2.920%
.
-11
182-day Treasury bills
maturing July llz 1963
Approx. Equiv.
Price
Annual Rate
98.508
2.951%
2.975%
98.496
2.966% ~I
98.501
~ Excepting two tenders totaling $350,000
35 percent of the amount of 91-day bills bid for at the low price was accepted
7 percent of the amount of l82-day bills bid for at the low price was accepted
1'l'AL
TEIIDK~S
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
TOT.U.S
Applied For
27,630,000
$
1,555,133,000
29,188,000
35,426,000
22,458,000
36,590,000
251,675,000
38,53 0 ,000
19,598,000
41,694,000
33.1706,000
104,133 z000
$2,195.1 761 ,000
Accepted
$
17,630 ,000
801,133,000
11,188,000
35,426,000
21,808,,000
32,610,000
189,795,000
32,530,,000
14,123,000
40,482,000
28,056,000
72 l 601,000
$1,300,382,000
··
:
·
~-
!f
Applied For
$ 16,227,000
1,194,787,000
10,721,000
38,509,000
8,,486,,000
7,492,,000
155,566,,000
7,,679,000
5,.841,000
21,303,,000
10,965,000
64,140,000
$1,541,716,000
Accepted
$ 10,367,000
656,027,000
5,,721,000
1l,093,000
7,486,000
6,313,000
47,776,000
5,679,000
3, 3J.~1, 000
15,185,OCO
6,035,000
25,525 z000
$800,548,000
Y
Includes $293,462,000 noncompetitive tenders accepted at 'Ghe avera1e price of 99.262
Includes $63,918,000 noncompetitive tenders accepted at the average price of 98.501
On a coupon issue of the same length and for the same amount invested, the return on
these bills 'Vwuld provide yields of 2. 98)~, for tr.e 91-day bills, and 3.05>0, for the
182-day bills. Interest rates on bills are quoted in terrilS of bank discount with
the return related to the face aTI10unt of the bills payable at maturity rather than
the amolliit invested and tteir length in actual nu~ber 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 nunber of days in the period, with serciannual
conlpounding if more than one coupon r;eriod is involved.
D-714
- 3 -
I
The bidding of the various syndicates indicates their combined judg-
ment that borrowing of this amount can be readily fitted into the
existing rate structure.
It clearly indicates that it is possible
for the Treasury to tap the long-term market in this amount with a
minimum impact on the supply of funds related to the needs of the
economy.
000
- 2 "'1
a
.1 .
.-
a syndicate headed by First Boston Corporation, Continental
Illinois National
Bank~ Trust Co. of Chicago, and Discount
1fOf4
Corporation of New York)and 80 others.
$99.Sfei4 for a 4 percent
coupon, resulting in a net besis cost of money of 4.016334 percent.
- - , and by C. F. Childs & Co., Inc.:
$loo.ooOOOfor a 4-1/8
percent coupon, resulting in a net basis cost of money of 4.124621
percent.
secretary Dillon said:
\'The bidding by the four syndicates indicates that the market has
responded with keen interest to this first offering of bonds at
competitive bidding and has provided the base for the potential development of an , important new instrument for debt management.
The winning
bid is highly satisfactory to the Treasury from the standpoint of interest
cost; the second bid was within $275 of the winning bid.
\~The experience in the distribution of these securities, of course,
will be of great interest to the Treasury in demonstrating the efficacy
of this approach to the wider distribution of Treasury offerings for cash
in
~he
long-term area.
, '. I
~V
FOR IMMEDIATE RELEASE
The Secretary of the Treasury announced today that a syndicate
C. J. Devine and Company, Salomon Bros. and Hutzler,
headed by:
Bankers Trust Co., Chase Manhattan Bank, First National City Bank
of New York, Chemical
Bank~W
York Trust Co., and the First National
Bank of Chicago, and 67 others, was the successful bidder for the $250
million Treasury Bonds of 1988-93 offered today at competitive bidding.
The winning bid was $99.85111 per $100 of face amount for a 4 percent
coupon, which results in a net basis cost of money to the Treasury
of 4.008210 percent, calculated to maturity.
winning
sy~ate
~It is understood that the
is reoffering the bonds at par.
Other bids submitted were:
a syndicate headed by Morgan Guaranty Trust Co. of New York,
Bank of America, N.T. and S.A., San Francisco, Blyth & Co., Inc.,
Halsey Stuart & Co., Inc., and Aubrey G. Lanston & Co., Inc., and
others;
$99.85100 for a 4 percent coupon, resulting in a
net basis cost of money of 4.008216 percent.
~;r
TREASURY DEPARTMENT
January 8, 1962
FOR IMMEDIATE RELEASE
TREASURY ANNOUNCES RESULTS OF COMPETITIVE
BIDDING FOR $250 MILLION TREASURY BONDS
The Secretary of the Treasury announced today that a syndicate
headed by: C. J. Devine and Co~pany, Salomon Bros. and Hutzler,
Bankers Trust Co., Chase Manhattan Bank, First National City Bank
of New York, Chemical Bank New York Trust Co., and the First
National Bank of Chicago, and 67 others, was the successful bidder
for the $250 million Treasury Bonds of 1988-93 offered today at
competitive bidding. The winning bid was $99.85111 per $100 of
face amount for a 4 percent coupon, which results in a net basis
cost of money to the Treasury of 4.008210 percent, calculated to
maturity.
It is understood that the winning syndicate is reoffering the
bonds at par.
Other bids submitted were:
a syndicate headed by Morgan Guaranty Trust Co. of
New York, Bank of America, N.T. and S.A., San Francisco,
Blyth & Co., Inc., Halsey Stuart & Co., Inc., and
Aubrey G. Lanston & Co., Inc., and 47 others; $99.85100
for a 4 percent coupon, resulting in a net basis cost
of money of 4.008216 percent •
.•. a syndicate headed by First Boston Corporation,
Continental Illinois National Bank and Trust Co. of
Chicago, and Discount Corporation of New York,and 80
others: $99.71014 for a 4 percent coupon, resulting in
a net basis cost of money of 4.016334 percent •
•.. and by C. F. Childs & Co., Inc.: $100.00000 for a
4-1/8 percent coupon, resulting in a net basis cost of
money of 4.124621 percent.
D-715
- 2 -
Secretary Dillon said:
"The bidding by the four syndicates indicates that the
market has responded with keen interest to this first offering
of bonds at competitive bidding and has provided the base for
the potential development of an important new instrument for
debt management. The winning bid is highly satisfactory to the
Treasury from the standpoint of interest cost; the second bid
was within $275 of the winning bid.
"The experience in the distribution of these securities, of
course, will be of great interest to the Treasury in demonstrating
the efficacy of this approach to the wider distribution of
Treasury offerings for cash in the long-term area.
"The bidding of the various syndicates indicates their
combined judgment that borrowing of this amount can be readily
fitted into the existing rate structure. It clearly indicates
that it is possible for the Treasury to tap the long-term market
in this amount with a minimum impact on the supply of funds
related to the needs of the economy."
000
D- 715
TREASURY DEPARTMENT
January 9, 1963
FOR IMMEDIATE RELEASE
TREASURY MARKET TRANSACTIONS IN DECEMBER
During December 1962, 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 $19,455,000.
000
D-716
TREASURY DEPARTMENT
January 9, 1963
FOR IMMEDIATE RELEASE
TREASURY MARKET TRANSACTIONS IN DECEMBER
During December 1962, 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 $19,455,000.
000
D-716
- 3 -
ann.
cxchr'.n~c
tenders will receive equ::u treatment.
Cash adjustments will be made
for differences bctuccn the p:l.r value of ma.turing bills accepted in exchange and
the issue price of the new bills.
The income derived fro'11 Trco:mry bills, whether interest or gain from the sale
or other disposition of the bills, does not hnve any exemption, as such, and loss
from the sale or other diGposition of Tre:J.nury bills does not ha.ve a.ny special
treptmr:nt, ()s such, under the Internal Revenue Code of 1954.
The bills are subject
to estate, inheritance, gift or other excise taxes, whether Federal or sta.te, but
a.re exempt from all toxation 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
loc~ 1
toxi n~ (luthori ty.
For JJurpoGes of to> I1tion the runount of discount a.t which
Tre~r;ury
bills are orieinally sold by the United states is considered to be in-
tere~t.
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 Trea.sury bills (other thon 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 actwUly
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 (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 Reserve Bank or Branch.
oo 2 -
decimals, e. g., 99.925.
Fractions may not be used.
It is urged that tenders
be made on the printed forms and forwarded in the special envelopes which will
be supplied by Federal Reserve Banks or Branches on application therefor.
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.
Dmnediately after the closing hour, tenders will be opened at the Federal
Reserve Banks and Branches, following which public a.nnouncement will be made by
the Treasury Department of the amount and price range of accepted bids.
Those
submitting tenders will be advised of the acceptance or rejection thereof.
The
secretary of the Treasury expressly reserves the right to accept or reject any
or all tenders, in whole or in part, and his action in any such respect shall be
final.
Subject to these reservations, noncompetitive tenders for $ 200,000 or
(M¥
less for the additional bills dated
ing until maturity date on
$
1~0
or less for the
April
October 18, 1962
~963
, (
91
days remain-
~
)(MC)C
) and noncompetitive tenders for
182 -day bills without stated price from any 'one
~
bidder will be accepted in :f'ull at the average price (in three decimals) of acoo
cepted competitive bids for the respective issues.
ders in accordance with the bids must be
Banks on
January 17, 1963
m~e
Settlement for accepted ten-
or completed at the Federal
Reserv~
, in cash or other immediately available funds or
5{59
in a like face amount of Treasury bills maturing
_J_a_n_u_a_r_y~1:-:7~,_1_9_6_3_ _ •
5(&9
Cash
TREASURY DEPARTMENT
Washington
January 9, 1963
FOR IHMEDIATE RELEASE
X){}{){}OOoooooooo~oeeoOOOOOOO(}QQ{)::
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 $ 2, 10~0 ,000 , or thereabouts, for
cash and in exchange for Treasury bills ma.turing
of
$2!100~!000
91
January 17, 1963
~
, as follows:
-day bills (to maturity date) to be issued
W
, in the amount
in the amount of
$1,300,0~000
January~
Wi
amount of $
April
1~1963
700!~000
,
,or thereabouts, represent-
ing an additional amount of bills dated October
and to mature
1963
~
1962
, originally issued in the
,the additional and original bills
to be freely interchangeable.
182
~
-day bills, for $ 800,000,000
~
_J_a_n_u_a_r.;..y~1=-7oi-'_1_9_6_3__ ,
, or thereabouts, to be dated
and to mature
{&#
_~J_u_l~y_l_8.f,=1r:9_6_3_ __
~
The bills of both series will be issued on a discount basis under competitive
and noncompetitive bidding as hereinafter provided, and at maturity their face
amount will be payable without interest.
They will be issued in bea.rer fom 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 14, 1963
{&if
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
TREASURY DEPARTMENT
_=;;6 g
Sli lb@#?S!:ft821ft ft. fij, t 15
i
$ fi
i\
I Xi ... 91$JluPeo
gli a4MM
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
$2,100,000,000 or thereabouts, for cash and in exchange for
Treasury bills maturing January 17, 1963, in the amount of
$ 2,100,520,000 as follows:
91-day bills (to maturity date) to be issued January 17, 1963,
in the amount of $1,300,000,000, or thereabouts, representing an
additional amount of bills dated October 18, 1962, and to
mature April 18, 1963,
originally issued in the amount of
$ 700,038,000, the additional and original bills to be freely
interchangeable.
182-day bills, for $800,000,000,
or thereabouts, to be dated
January 17, 1963, and to mature July 18, 1963.
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 Ii'ederal Reserve Banks and Branches
up to the closing hour, one-thirty p.m., Eastern Standard
time, Monday, January 14, 1963.,
Tenders will not be
received at the Treasury De~artment, 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 oe 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_
D-717
- 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 18 1962 (91 days remaining until maturit¥ date on
April 18, i963)
and noncompetitive tenders for $ 100,000
or less for the 182-day bills without stated price from anyone
bidder will be accented 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 Ban~ on January 17,1963,
in cash or other immediately available funds or in a like face
amount of Treasury bills maturing January 17, 1963. Cash and
exchanGe b.:nders V-lill 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 exerilpt 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 (current revision) and thiS
notice prescrib'a the terms of the Treasury bills and govern the
conditions of their issue. Copies of the circular may be obtained fr~
any Federal Reserve Bank or Branch.
000
i- 'j:( llEL!.ASi A. M. iiEWSPAPF..a8,
InVeNt
Januarz 10, 1263.
tlESOLTS )f Tro;'.AStJitI'S ou-tlAJt -dILL Jmxrs3
The Treaaury (Mpartment annoUDced last o"eu1nc that t.he t4m4era, tor $2,$00,000,000,
or thereabout-a, of l6S-da,. 'l'reuU17 bill. to be dated JanUI7 lS, 1]6), and to ..tun
Janutlr;y IS, lib4, whioh were offered on Jarma17 2, _ " oJMll*l at the h4eral .Mn.
:lank8 on Jan uary I.
The detatl. or thi. 1a.ue are aa tollow.l
Total applied tor Total accepted
-
is,244,b61,OOO
(include. $243,110,000 entered oa a DODoo.petlt.l" Mais aDd accepud in full
at the .,..ra,. prloe .hovn belcnt)
2,$01,2$0,000
lWl&e of acoepted COIIlpetitiYe b1ct..
(2xcept1ng t.bNe tUtJen totalin& .S,)OO,OOO)
- 96. iS8 Equ1ftlent rate of di.oount. approx.
High
Low
Average
j.OOOS per anrn.
- 96.9)8
..
II..
II
•
3.0201.
..
_ 96. 943
If
.,.
"
•
:).015 1, n
")/
(13 percent 01 the ..,unt bid tOl" at t,he low pJ1... vaa accept_)
Total
Aoplled lor
i
8081.oD
Hew tork
Pblladelph1.a
11,079,000
.3,877,616 ,000
S8,b61,OOl
216,5$0,000
Clenlud
~
6,§7§,006
1,1)~,OOa,0Q0
11,951,000
118,2)9,000
iU• ..,DCl
Atlan\a
19,)S.3,OOO
Cb1eqo
;n.. Loui.
479,381,000
S9,703,ooo
)06,S94,ooo
42.S&o.ooo
1),840,(K)()
~1,268.000
41,614,000
61,917,000
~1nneapol1a
lanaa. City
..11••
2S6.829.00q
~ ~ranci.co
lO,~l,OOO
28,082,000
29,410,000
16 J .5l4,ooo
43,607,000
112 ,o4$,\X!!
15.2Wl.J.61,OOO
~,501,2SO,OOO
sue 1enitn an.:..~ tor tr. saa. aaount invested, the ret.... ,
'fOTAL
]j
coupon issue of the
the •• bill. would provide ~ yield of J.l)h. int.ere.t rate. on bills are quot,-rdll
t.ru ot bank d11ccunt with the retunl related \0 t Be tace &i"l1OUD\ ot t.he oUle
at. _t.vrit,1 nt_r thaD the UOUDt. lrw•• toed aDd t.he1l' leDg\u in act.ual nu.ber .t
JD •
nlated to • )6o-da.Y year. In coatraa1., ytelo. on een1l1cat.e., note., awl ~ ...
.-pu\ed ill tel'M ot i.ntenat on \be aaouat 1nTe.ted, and relate the n\llber or dill
~ining in an inteZ'Vat paywtnt per10cl \0 t.he act.ual. nuaber of day- 1n the pe~,
V1 tb aemiannual compoundinG if .1iOr"e than one coupon period is invol .... d.
TREASURY DEPARTMENT
FOR RELEASE A. M. NEWSPAPERS,
Thursday, January 10, 1963.
January 9, 1963
RESULTS OF
TRK~UrlyIS
ONE-YEAR BILL OFFERING
The Treasury Department announced last evening that the tenders for $2,500,000,000,
or thereabouts, of 365-day Treasury bills to be dated January 15, 1963, and to mature
~anua~y 15, 1964, which were offered on January 2, were opened at the Federal Reserve
3anks on January 9.
The details of this issue are as follows:
Total applied for - $5,244,461,000
Total accepted
- 2,501,250,000
(includes $243,310,000 entered on a noncompetitive basis and accepted in full
at the average price shown belm.)')
Range of accepted competitive bids:
High
Low
Average
(Excepting three tenders totaling $5,300,000)
- 96.958 Equivalent rate of discount approx. 3.000% per annum
96.938
It
II
It
tI
u
3.020% II
II
_ 96.943
II
It
tI
If
II
3.015.% It
"
Y
(13 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
$ 71,079,000
3,877,645,000
58,461,000
216,550,000
19,353,000
47,268,000
479,381,000
59,70),000
47,614,000
67,977,000
. 42,580,000
256,850,000
Total
Accepted
$
8,979,000
1,739,008,000
11,951,000
118,239,000
10,981,000
28,082,000
306,594,000
29,4l0,000
18, 5It!. , 000
43,607,000
13,840,000
172,045,000
$5,244,461,000
$2,501,250,000
/ On a coupon issue of the same length and for the same amount invested, the return on
these bills would provide a yield of 3.13%. Interest rates on bills are quot8d 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-718
- 4 earned on the bond, and for the amount of the deduction when
the bond was purchased.
When an employee redeems his bonds
he is subject to tax for the interest on the bonds and any
amount contributed by
Because the
bo~ds
his
employero
represent a form of savings and have some
features comparable to Series E and H Savings Bonds, their
sales will be reflected in Savings Bonds reports.
No yearly
sales goal will be set for these bonds; nor will they be
promoted within the franework of special Savings Bond canpaigns.
HO'Never, since Savings Bonds representatives work closely with
banks and other financial institutions in promoting and servicing
the Savings Bonds program, their assistance in this new area
should materially aid in the understanding of the terms and
co~ditions
of the Retirem=nt Bonds o
- 3 ,
The Retirement Bonds may only be registered in the names of
natural persons in single ownership or beneficiary form.
They may
~
be purchased only in connection with bond purchase
plans and pension and profit sharing plans as described in the
1962 Act.
The new retirement bonds must be registered in the
name of the self-employed person or the employee for whom they
are bought.
Bond purchase plans using the new retirement plan bonds
and meeting the requirements of the new law will enjoy income
tax advantages similar to those granted to pension and profit
sharing plans.
Self-employed persons can deduct from income
subject to tax up to $1250 annually for contributions to their
own retirement.
When a self-employed person redeems his bond
he becomes liable, for income tax purposes, for the interest
- 2 -
to the issuing agents. ~l;i1~ike Savings Bonds, the bonds will
bear interest from the first of the month in which the authorized
issuing agent receives payment for them.
The bonds will be sold at par in denominations of $50,
$100, $500, and $1,000, and will provide an investment yield
of 3-3/4 percent a year, compounded semi-annually.
Interest,
together with the principal, will be paid only upon redemption.
The bonds will increase in redemption value at the end of each
half-year period following their issue date.
In accordance with
the law and regulations contained in the attached Department
Circular Number 1-63, the bonds cannot be redeemed until their
owners reach 59-1/2 years of
~~:e~i:oL
disability.
bo~ds
Interest on the
~
the owner's death or
stops five years after the
death of the person in whose name it is registered.
D R AFT
R E LEA S E
~----~---~~-----
January 10, 1963
FOR IM'1EDIATE RELEASE
NEW TREASURY RETIREMENT PhL\.N BOND OFFERED
The Secretary of the Treasury today announced the offering
of United States
Retirem~nt
Plan Bonds ulder the Self-Employed
Individuals Tax Retirement Act of 1962.
Applications for the bonds will be available at banks
and other financial institutions during the week of January 210
Bonds bought during January will bear interest from
January 1, 19630
Like Series H Savings Bonds, the new bonds may be purchased
at any Federal Reserve Bank or Branch, or direct from the
Office of the Treasurer of the United States, the only
authorized issuing agents.
Banks and other financial institu-
tions will take applications for issue and redemption of these
bonds, as they do for Series H Savings Bonds, for transmittal
TREASURY DEPARTMENT
; !lSi !tu'S' , +"'t!$
iI
iA
#is
I' ';;;!I
January 10, 1963
FOR IMMEDIATE RELEASE
NEW
TRJ~ASURY
RETIREMENT PLAN BOND OFFERED
The Secretary of the Treasury today announced the offering
of United States Retirement Plan Bonds under the Self-Employed
Individuals Tax Retirement Act of 1962.
Applications for the b~)nds will be available at banks and
other financial institutions during th2 week of January 21.
Bonds bought during January will bear interest from January 1, 1963.
Like Series H Savings Bonds, the ne-", bonds may be purchased
at any Federal Reserve Bank or branch, or direct from the Office
of the Treasurer of the United States, the only authorized
issuing agents.
Banks and other financial institutions will
take applications for issue and redemption of these bonds, as
they do for Series H Savings Bonds, for transmittal to the
issuing agents. Like Savings Bonds, the bonds will bear
interest from the first of the month in which the authorized
issuing agl~nt receives paym2nt for them.
The bonds will be sold at par in denominations of $50, $100,
$500,and $1,000, and will provide an investment yield of 3-3/4
percent a year, compounded semi-annually. Interest, together
with the principal, will be paid only upon redemption. The bonds
will increase in redemption value at the end of each half-year
period following their issue date.
In accordance with the law
and regulations contained in the attached Department Circular
Number 1-63, the bonds cannot be redeemed until their owners
reach 59-1/2 years of age, except upon the owner's death or
disability.
Interest on the bonds stops five years after the
death of the person in whose name it is registered.
The Retirement Bonds may only be registered in the nam2S of
natural persons in single o'NDership or beneficiary form.
They
may be purchased only in connection with bond purchase plans and
pension and profit sharing plans as described in the 1962 Act.
D-719
- 2 The new retiren12nt bonds must be registered in the n.J.me of the
self-employed person or the employee for whom they are bought.
Bond purchase plans using the new retirement plan b~nds and
meeting the requirements of the new law will enjoy income tax
advantages similar to those granted to pension and profit
sharing plans. Self-employed persons can deduct from income
subject to tax up to $1250 annually for contributions to their
own retirement. When a self-employed person redeems his bond
he becomes liable, for income tax purposes, for the interest
earned on the bond, and for the amount of the deduction when
the bond was purchased. When an employee redeems his bonds he
is subject to tax for the interest on the bonds and any anount
contributed by his employer.
Because the bonds repres~nt a form of savings and have some
features comparable to Series E and H Savings Bonds, their sales
will be reflected in Savings Bo~ds reports. No yearly sales
goal will be set for these bonds; nor will they be promoted within
the framework of special Savings Bond campaigns. However, since
Savings Bonds representatives work closely with banks and other
financial institutions in promoting and servicing the Savings
Bonds program, their assistance in this new area should
materially aid in the understanding of the terms and conditions
of the Retirement Bonds.
000
D-7l9
January 10, 1963
SUMMARY OF TERMS AND CONDITIONS
ON
UNITED STATES RETIREMENT PLAN BOND
(For detailed information on the terms and conditions,
Treasury Department Circular, Public Debt, Series
No. 1-63 should be consulted)
A.
Effective date:
January 1, 1963
B.
Issuing and Paying
Agencies
Federal Reserve Banks and branches
or the Office of the Treasurer of
the United States.
c.
Denominations:
$50, $100, $500, $1,000
D.
Issue date:
First day of month in which
payment is received by an issuing
agent.
E.
Maturity date:
Interest ceases 5 years after
death of the individual in whose
name bond is purchased.
F.
Interest:
Interest accrues through increase
in redemption value at beginning
of each half-year period providing
an investment yield of 3.75 per
cent, compounded semi-annually.
G.
Redeemability:
Not redeemable except in case of
death or disability, until owner
attains age 59-1/2 years.
H.
Partial Redemption:
If face value is greater than $50,
and only in amounts corresponding
to authorized denominations.
I.
Reissue:
Bonds will be reissued to add,
eliminate, or substitute a
beneficiary.
- 2 J.
Safety:
Bo~ds
K.
Taxation:
Bonds are subject to estate,
inheritance or oth2r excise taxes,
whether Federal or State.
L.
Income tax privileges:
Certain deduction for all or part
of purchase price of bonds for the
taxable year of purchase8
M.
Income Tax Liability:
Wh2n self-employed person redeems
bonds, liability accrues for
interest earned on bond and for
a~ount of deduction taken for the
year of purchaseQ
will be reissued if lost,
stolen, or destroyed~
When employee redeems bonds, liabilit
accrues for interest on bonds and
for aDY amount contributed toward
purchase price by employero
N.
Registration - Eligible
Subscribers:
May be registered only in name of
o.
Redeemability prior
to maturity at option
of Treasury:
None
P.
Nontransferance:
Bonds cannot be transferred, sold,
or used as collateral.
Q.
Annual Limitation:
Purchases in anyone year up to
$5,000 in the name of one owner.
employee or self-employed person
for whom purchased, in single
o-Nnership and beneficiary forms.
TREASURY DEPART~~
WASHINGTON, D.C.
TITLE 31--MONEY AND FINANCE
CHAPTER II--FISCAL SERVICE
PART 341--REGULATIONS GOVERNING UNITED STATES
RETIREMENT PLAN BONDS
1963
Department Circular
Public Debt Series -- No. 1-63
TREASURY DEPARrMENT,
OFFICE OF THE SECRETARY,
Washington,
Fiscal Service
Bureau of the Public Debt
Sec.
341.0.
Offering of bonds.--The Secretar.y of the Treasury,
under the authority of the Second Liberty Bond Act, as amended, and
pursuant to the Self-Employed Individuals Tax Retirement Act of
1962, offers for sale, effective as of January 1, 1963, bonds of
the United States, designated as United States Retirement Plan
Bonds.
The bonds will be available for investment only to (1) bond
purchase plans and (2) pension and profit-sharing plans, as described
in Sections
of 1954.
405
and
401,
respectively, of the Internal Revenue Code
This offering of bonds will continue until terminated
by the Secretary of the Treasury.
Sec. 341.1.
Description of bonds.--(a)
Investment yield
(lnterest).--United States Retirement Plan Bonds, hereinafter
sometimes referred to as Retirement Plan Bonds, will be issued
at par.
The investment yield (interest) on the bonds will be
3-3/4 percent per annum, compounded semiannually, as set forth
in the table of redemption values appended to this circular.
Such interest will be paid only upon redemption of the bonds.
The accrual of interest will continue until the bonds have been
2
redeemed or have reached maturity, whichever is earlier, in accordance with these regulations.
(b)
~.--The
maturity date of any bond issued under this
oircular shall be indeterminate, but unless sooner redeemed in
accordance with these regulations, its investment yield will cease
on the interest accrual date coinciding with, or, where no such
ooincidence occurs, the interest aocrual date next preceding, the
first day of the sixtieth (60th) month following the date of death
of the person in whose name it is registered.
(0)
Denominations--issue date.--Retirement Plan Bonds will be
available only in registered form and in denominations of $50, $100,
$500, and $1,000.
At the time of issue, the issuing agent will
enter in the upper right-hand portion of the bond the issue date
(whioh shall be the first day of the month and year in whioh payment of the purchase price is received b,y an authorized issuing
agent), and will imprint the agent's validating stamp in the lower
right-hand portion.
The issue date, as distinguished from the date
in the agent's validating stamp, will determine the date from which
interest will begin to accrue on the bond.
A Retirement Plan Bond
shall be valid only if an authorized issuing agent receives payment
therefor, duly inscribes, dates, stamps, and delivers it.
Seo. 341.2.
RegistratiQn.--(a)
General.--The registration ot
Retirement Plan Bonds is limited to the names of natural persons in
their own right, whether adults or minors, in either single ownership
or beneficiary form.
A bond registered in beneficiary form will be
insoribed substantially as follows (for example):
payable on death to (2£ P.O.D.) Richard B. Roe."
"John A. Doe
No more than one
beneficiary may be designated on a bonde
(b)
Inscri~~Qll.--The inscription on the face of each bond
will show the name, address, date of birth, and the social security
account number of the registered owner, as well as information as
to whether he is a self-employed individual or an employee, and
the amount he contributed (if any) out of his own funds toward the
purchase price of the bond.
In the case of any self-employed
indi vidual (who is treated as an employee for the purpose of
Sections 405 and 401 of the Internal Revenue Code of 1954), this
amount would be that portion of the purchase price he contributed
(if any) as an employee and vrhich he will not tak~' luto account in
determining the amount deductible for Federal income tax purposes.
The name of the beneficiary, if one is to be designated, will also
be shown in the inscription.
Sece 341.3.
Purchase of bonds.--(a)
Agencies.--Retirement
Plan Bonds may be purchased over-the-counter or b.Y mail from Federal
Reserve Banks and Branches and the Office of the Treasurer of the
United States, Washington 25, D.
C~
Customers of.commercial banks
and trust companies may be able to arrange for the purchase of the
bonds through such institutions, but only the Federal Reserve Banks
and Branches and the Treasurer's Office are authorized to aot as
official agencies, and the date of reoeipt of the application and
p~ent
issued.
b.Y an official agency will govern the dating of the bonds
4
(b) Applications.--Applications for the purchase of Retirement
Plan Bonds should be made on Form PD 3550, accompanied by a remittance to cover the purchase price.
subject to collection.
Personal checks will be accepted,
Checks, or other forms of exchange, should
be drawn to the Federal Reserve Bank or Treasurer of the United
States, as the case Dilly be.
Checks payable by endorsement are not
acceptable.
(c) Delivery.--Delivery of bonds will be made
mail at the risk and expense uf the United
State~
ill
person, or by
at the address
given by the purchaser, but only within the United States, its
territories and possessions, the Commonwealth of Puerto Rico, and
the Canal Zone.
No mail deliveries elsewhere will be nade.
If the
registered owner temporarily resides abroad, the bonds will be
delivered to such addreos in the United States as the purchaser
directs.
Sec. 341.4.
Proof of Purchase.--At the time a Retirement Plan
Bond is issued, the issuing agent will furnish therewith to the
purchaser, and in cases where the purchaser is different from the
person in whose name the bond is inscribed, to the registered owner
as well, proof of the purchase on Fernl PD 3550.
The form will show
the names and addresses of the purchaser and of the registered owner,
the latter's date of birth, social security account number and his
classification (i.e., self-effiployed individual or employee), the
number of bonds issued, a description thereof by issue date, serial
numbers, denorrdnations, and registration, together with information
5
as to the amount ot his contributions (if any) toward the purchase
price of the bonds.
Sec. 341.5.
Limitation on holdings.--Tha limit on the amount
ot any Retirement Plan Bonds issued during anyone calendar year
that may be purchased in the name ot anyone person as registered
owner Is $5,000 (face value).
Seo. 341.6.
Nontransferability.--United States Retirement Plan
Bonds are not transferable, and may not be sold, disoounted or
pledged as oollateral for a loan or as security tor the performanoe
of an obligation, or for
Sec. 341.7.
~
other purpose.
Judicial proceedings.--No judicial determination
will be reoognized which would give effeot to an attempted voluntary
transfer inter vivos of a Retirement Plan Bond.
Otherwise, a claim
against a registered owner will be recognized when established b.1
valid judicial proceedings, but in no case will payment be made to
the purchaser at a sale under a levy or to the officer authorized
to levy upon the property of the owner under appropriate process to
satisty a money judgment unless or until the bond has become eligible
for redemption pursuant to these regulations.
Neither the Treasur,y
Department nor any of its agencies will accept notices of adverse
claims or of pending judicial proceedings or undertake to protect
the interests ot litigants who do not have posseSSion of the bond.
Sec~
(a)
341.8.
Payment or redemption durini lifetime
or
owner.--
At age 59t or thereafter.--A Retirement Plan Bond will be
rede~
able at Its current redemption value upon the request or the registered
6
owner (or a person recognized as entitled to act on his behalf),
provided he is
59!
years of age or older.
The owner's age will be
determined from the date of birth shown on the face of the bond,
provided, however, that the Secretary of the Treasury reserves the
right in any case or class of cases to require proof, in the form of
a duly certified copy of his birth certificate, that the owner has
attained the age of
59~
years.
If such evidence is unavailable, one
of the following documents may be furnished in lieu thereof:
(1)
(2)
(3)
(4)
(5)
(6)
Church records of birth or baptism
Hospital birth record or certificate
Physician's or midwife's birth record
Certification of Bible or other family record
Military, naturalization or immigration records
other evidence of probative value
Similar documentary evidence will also be required to support any
claim made by an owner that the date of birth shown on his bond is
incorrect.
(b)
Prior to age
59t years.--A
Retirement Plan Bond will be
paid at its then current redemption value upon a registered owner's
request (or by a person recognized as entitled to act on his behalf)
prior to his attainment of age 5~ years upon submission of a
physician's statement or any similar evidence shOwing that the owner
has become disabled to such an extent that he is unable to engage in
any Bubstantial, gainful activity by reason of any medically deter-
minable physical or mental impairment which can be expected to result
in death or to be of long-continued and indefinite duration.
The
follOwing are examples of impairments which would ordinarily be
considered as preventing substantial, gainful activity:
7
(1)
Loss of use of two limbs.
(2) Certain progressive diseases which have resulted in
the physical loss or atrophy of a limb, such as diabetes,
multiple sclerosis, or Buerger's disease.
Diseases of the heart, lungs, or blood vessels which
have resulted in major loss of heart or lung reserve as
evidenced by X-ray, electrocardiogram, or other objective
findings, so that despite medical treatment breathlessness,
pain, or fatigue is produced on slight exertion, such as
walking several blocks, using public transportation, or doing
small chores.
(3)
Cancer which 1s inoperable and progressive.
Damage to the brain or brain abnormality which has
in severe loss of judgment, intellect, orientation,
or memory.
(6) Mental diseases (e.g., psychosis or severe psyohoneurosis) requiring continued institutionalization or constant
supervision of the individual~
Loss or diminution of vision to the extent that the
affected individual has a central visual acuity of no better
than 20/200 in the better eye after best correction, or has
a limitation in the fields of vision such that the widest
diameter of the visual fields subtends an angle no greater
than 20 degrees
(7)
6
(8)
Permanent and total loss of speech.
(9)
Total dl3afness uncorrectible by a hearing aid.
In any case coming undl3r the provisions of this paragraph, the
evidence referred to above must be submitted to the Bureau of the
Public Debt., Division of Loans and Currency, Washington 25, D. C.,
for approval before any bonds may be paide
Ifl after review of the
evidence, the Secretary <of the Treasury is satisfied that the owner's
disability has been established, a letter will be furnished authorizing payment of his Retirement Plan Bonds"
This letter must be
presented each time any of the owner's bonds are submitted for payment to a Federal Reserve Bank or Branch or to the Orfice of the
Treasurer of the United States"
8
(c)
ReQuests for payrnent.--(l)
By Owner.--~nen redemption of
any Retirement Plan Bond is desired by the registered owner under
(a) above, it should be presented, uith the request for payment on
the back of the bond signed end duly certified, to a Federal Reserve
Bank or Branch or to the Office of the Treasurer of the United
States, Washington 25, D. C.
If payment is requested under (b)
above, the letter described therein should accompany the bond.
(2)
By P!?rson other th§.D. o"\..rner.--vlhen redemption of any
Retirement Plan Bond is desired by the legal guardian,
con~ttee,
conservator, or sireilar representative of the o\mer's estate under
(a) above, it should be presented, with the request signed as described below, to a Federal Reserve Bank or Branch or to the Office
of the Treasurer of the United States.
If payment is requested
under (b) above, the letter described therein should accompany the
bond. *
The request for payment, in either case, should be signed
by the representative in his fiduciary capacity before an authorized
certifying officer, and must be supported by a certificate or a
certified copy of the letters of the appointment from the court
making the appointment, under seal, or other proof of qualification
if the appointment was not made by a court.
Except in the case of
corporate fiduciaries, such evidence should state that the appointment is in full force and should be dated not more than one year
prior to the presentation of the bond for payment.
*
In any case in which a legal representative has not been appointed
for the estate of a registered ovner who has attained the age of
5~- years, or who bas beco~e disabled, a person seeking payment of
a bond on the owner I 5 behalf should furnish a complete ste_tement of
the circumstances to tbe Bureau of the Public Debt DiviSion of Loana
and Currency, \Jashington 25, D. C. Appropriate in;tructions will
then be furnished.
(d)
9
Partial redemotlon. --A Retirement Plan Bond in a denomination
greater than $$0 (face value) lo!hich is othenrise eligible for redemption
~
be redeemed in part, at current
red~nption
value, upon the request of
the registered Ol-mer (or a person recogIlized as entitled to act on his
behalf), but only in amounts corresponding to authorized denominations.
In any case in which partial redemption is desired, before the request
for payment is signed, the phrase "to the extent of $ _ (face value)
and reissue of the remainder" should be appended to the request.
Upon
partial redemption of the bond, the remainder will be reissued as of the
original issue date.
No partial redemption of a bond will be made after
the death of the owner in whose name it is registered.
Sec. 341.9.
(a)
Payment or redemption after death of owner.--
Ord_er of precedence where owner not survived by beneficia;y.--If the
registered
o~mer
of a Retirement Plan Bond dies before it has been pre-
sented and surrendered for payment, and there is no beneficiar.y shown
thereon, or i f the designated beneficiar,y predeceased the ol-mer, the
bond shall be paid in the following order of precedence:
(1) To the duly appointed executor or administrator
of the estate of the owner, who should sign the request for
payment on the back of the bond in his representative capacity
before an authorized certifying officer, such request to be
supported by a court certificate or a certified copy of his
letters of appointment, under seal of the court, which should
show that the appointment is in full force and effect, and be
dated within six months of its presentation;
(2) I f no legal representative of the deceased registered
owner's estate has been or will be appointed, to the widow or
widower of the owner;
(3) I f none of the above, to the child or cr~ldren of the
owner and the descendants of deceased children by representation;
10
(4) It
none of the above, to the parents of the owner,
or the survivor of them;
(5) It none of the above, to other next-of-kin ot the
owner, as determined by the law of the domicile ot such
owner at the time of his death.
In any case coming under the provisions of this paragraph, a
dul7
oertified cop,y ot the registered owner·s death certifioate will
ordinar~ be
required.
Proot of death of the benef'iciar,y, i t any,
will be required where he predeceased the owner.
Payment ot bonds
UDder (l) will be made by a Federal Reserve Bank or Branch or by
the Offioe of the Treasurer of the United States, Washington 25,
D. C.
Payment ot bonds under (2) to (5) vill be made upon reoeipt
ot applioations on Form PD 3565, together with the bonds and supporting evidence, by the Bureau of the Publio Debt, Division ot
Loans and Currency, Washington 25, D. C.
(b)
Order of precedence where beneficiatY surviYed
owner.--
It the registered owner of a Retirement Plan Bond dies before it
has been presented and surrendered for payment, and the benefici8l'7
shown thereon survived the owner, the bond shall be paid in the
tollowing order of precedencea
(I)
To the designated beneficiary upon his presentation
and surrender of the bond vi th the request for payment signed
and duly certified, such payment to be made to the exclusion
of any other person who ~ have been named beneficiary b.r
the registered owner in a bond purchase plan, or under a
pension or profit-sharing plan;
(2) If the designated beneficiary survived the registered
owner but failed to present the bond for payment during his ow
lifetime, payment will be made in the order of precedenoe
specified in (I) to (5) of paragraph (a) above to the legal
representative, surviTing spouse, Children, parents, or next-orkin of such beneficiary-, and in the manner provided therein.
In any case coming lJIlder the provisions ot this paragraph, a
d1117
11
certified oop,y of the registered owner's death certificate viII ordinarilJ be required.
Proof of death of the
benefici~
viII also be
required vhere be survived the owner but failed to present the bond
tor payment during his own lifetime.
P~ent
of a bond to a desig-
nated beneficiary- viII be made by Federal Reserve Bank or Branch
or
~
the Treasurer of the United States, Washington 25, D.
(c)
c.
Ownership of redemption proceeds.--The orders of preced-
ence set forth in (a) and (b) above, except in cases 'Where redemption
1s made for the account of a registered ovner, are for the Department's convenience in discharging its obligation on a Retirement
Plan Bond.
The discharge of the obligation in accordance therewith
shall be final so far as the Department is concerned, but those
provisions do not otherwise purport to determine ownership of the
redemption proceeds of a bond.
Sec. 341.10.
Reissue.--(a)
Addition or change ot beneficiarz.--
A Retirement Plan Bond viII be reissued to add a beneficiary in the
case of a single ownership bond, or to eliminate or substitute a
beneficiary in the case of a bond registered in beneficiary form
upon the owner's request on Form PO 3564.
No consent will be re-
quired to support any reissue transaction from a beneficiar,r vhose
name is to be removed from the registration of a Retirement Plan Bond.
If the registered owner dies atter the bond has been presented and
surrendered tor reissue, upon reoeipt of notioe thereof by the agency
to vhich the request tor reissue vas submitted, such request shall
be treated
8.S
ineffective, provided the notice ot death is received
by" the Federal Reserve Bank or Branch or the Office
ot the Treasurer
ot the United States, Washington 25, D. C., to vhich the request vas
12
sent, in sufficient time to withhold delivery, by mail or otherwise,
of the reissued bond.
(b)
Error in issue-change of name.-Reissue of a Retirement
Plan Bond will be JI18.de where an error in issue has occurred, as well
as in cases where the owner t s name has been changed by marriage,
divorce, annulment, order of court, or in 8IlY other legal manner,
upon appropriate request, supported by satisfactory evidence.
Information as to the procedure to be followed in securing such
reissue
m~
be obtained from a Federal Reserve Bank or the Office
of the Treasurer of the United States, Washington 25, D. C.
Sec. 341.11.
attorn~,
Use of power of attorney.-No designation of an
agent, or other representative to request
~ent
or
reissue on behalf of the owner, beneficiary, or other person entitled
under Section 341.9, other than as provided in these regulations,
will be recognized.
Sec. 341.12.
Lost, stolen, or destrQyed bonds.--It a Retirement
Plan Bond is lost, stolen, or destroyed, a substitute may be issued
upon identification of the bond and proof or its loss, theft, or
destruction.
A description of the bond by denomination, serial
nwnber, issue date and registration should be furnished at the time
the report of loss, theft, or destruction is made.
Such report.
should be sent to the Bureau or the Public Debt, D1vision ot Loans
and Currency, Washington 25, D. C.
Full instructions tor obtaining
substitute bonds will then be given.
Sec. 341.13.
Taxation.-The tax treatment provided under
Section 405 of the Internal Revenue Code or 1954 shall apply to all
13
Retirement Plan Bonds.
The bonds are subject to estate,
inheritanc~
or other excise taxes, whether Federal or State, but are exempt
from all taxation now or hereafter imposed on the principal or
interest thereof
authority.
qy
any State, munioipality, or any local taxing
Inquiries concerning the application of any Federal tax
to these bonds should be directed to the District Director of
Internal Revenue of the taxpayer1s district or to the Internal
Revenue Service, Washington 25, D. C.
Sec. 341.14.
Certifying officer§.--Officers authorized to
certify requests for payment or for any other transaction involving
Retirement Plan Bonds include:
(a)
Post offices~Any postmaster, acting postmaster, or
inspector-in-charge, or other post office official or clerk designated for that purpose.
A post office official or clerk, other than
a postmaster, acting postmaster, or inspeotor-in-charge, should
certify in the name of the postmaster or acting postmaster, followed
by his own signature and official title.
Signatures of these
officers should be authenticated by a legible imprint of the post
office dating stamp.
(b)
Banks and trust companiee.--Any officer or a Federal
Reserve Bank or Branch, or of a bank or trust company chartered
under the laws of the United States or those of any State, Commonwealth, or Territory of the United States, as well as any employees
of such bank or trust company expressly authorized to act for that
purpose, "'ho should sign over the title "Designated Employee."
Certifications by any of these officers or designated employees
should be authenticated by either a legible imprint of the corporate
seal, or, where the institution is an authorized issuing agent for
United States Savings Bonds, Series E, by a legible imprimt
~f
its
dating stamp.
(c)
Issuing agents of Series E
~avings
bonds.--Any oUic·er
of a corporation or any other organization which is an authorized
issuing agent for United States Savings Bonds, Series Eo
All
certifications qy such officers must be authenticated by a legible
imprint of the issuing agentts dating stamp.
(d)
Foreign countries.--In a foreign country requests may be
signed in the preeence of and be certified by any United States
diplomatic or consular representative, or the manager or other
officer of a foreign branch of a bank or trust company incorporated
in the United States whose signature is attested by an imprint of
the corporate seal or is certified to the Treasury Department.
If
such an officer is not available, requests may be Signed in the
presence of and be certified by a notary or other officer authorized
to administer oaths, but hie official character and jurisdiotion
should be certified by a United States diplomatic or consular
officer under seal of his office.
(e)
Special proyisions~-The Commissioner of the Public Debt,
the Chief of the Division of Loans and Currency, or any Federal
Reserve Bank or Branch i8 authorized to make special provision for
certification in any particular case or class of cases where none
of the officers authorized above i8 readily aecessible.
15
Sec.
341.15. General provisions.--(a) Regulations.--All
Retirement Plan Bonds shall be subject to the general regulations
prescribed by the Secretary with respect to United States securities, which are set forth in Treasury Department Circular No. 300,
current revision, to the extent applicable.
Copies of the general
regulations may be obtained upon request from any Federal Reserve
Bank or Branch or the Office of the Treasurer of the United States.
(b)
Reservation as to issue of bonds.--The Secretary of the
Treasury reserves the right to reject
~
application for the pur-
chase of Retirement Plan Bonds, in whole or in part, and to refuse
to issue or permit to be issued any such bonds in any case or
~
class or classes of cases i f he deems such action to be in the
public interest, and his action in any such respect shall be final.
(c)
Additional requirements.--In any case or any class of
cases arising under this circular the Secretary of the Treasury may
require such additional evidence as may in his judgment be necessary,
and may require a bond of indemnity, with or without surety, where
he may consider such bond necessary for the protection of the
United States.
Cd)
Waiver of requirements.--The Secretar.y of the Treasury
reserves the right, in his discretion, to waive or modify any provision or provisions of this Circular in any particular case or
class of cases for the convenience of the United States, or in order
to relieve any person or persons of unnecessary hardship, i f such
16
action is not inconsistent with law, does not impair any existing
rights, and he is satisfied that such action would not subject the
United Statee to any substantial expense or liability.
(e)
Fiscal agents.--Federal Reserve Banks and Branches, as
fiscal agents of the United States, are authorized to perform such
services as may be requested of them
~
the Secretary of the Treasury
in connection with the issue, delivery, redemption, reissue, and
payment of Retirement Plan Bonds.
(f)
Reservation as to terms of circular.--The Secretary of the
Treasury may at any time, or from time to time, supplement or amend
the terms of this Circular, or any amendments or supplements thereto.
******
Compliance with the notice, public procedure, and effective
date requirements of the Administrative Procedure Act (P.L. 404,
79th Cong.; 60 Stat. 237) is found to be impracticable and
unnecessary with respect to this document.
-
~
Seeretar,y
or
the Treasury
TABLE OF REDEMPTION VALUES PROVIDING AN INVESTMENT YIELD OF 3-3/4
PERCENT PER ANNUM FOR BONDS BEARING ISSUE DATES BEGINNING JANUARY 1, 1963
Table shows how the Retirement Plan Bonds bearing issue dates beginning January 1, 1963,
by denomination, increase in redemption value during successive half-year periods following issue. The redemption values have been determined to provide an investment yield
of 3.75 percent 11 per annum, compounded semiannually, on the purchase price from issue
date to the beginning of each half-year period. The period to maturity, is indeterminate
in accordance with the proviSions of Sec. 341.1(b) of this circular. ~
$50~00
Issue Price
0
11
g;
.:
$500.00
$1,000.00
Redemption values during each half-year period
(Values increase on first day of period shown)
Period after issue date
First 1/2 year •••••••••
1/2 to 1
year •••••
to 1-1/2 years ••••
1
1-1/2 to 2
years ••••
to 2-1/2 years ••••
2
years ••••
2-1/2 to 3
to 3-1/2 years ••••
3
years ....
3-1/2 to 4
4
to 4-1/2 years ....
years ••••
4-1/2 to 5
to 5-1/2 years ••••
5
5-1/2 to 6
years ••••
to 6-1/2 years ••••
6
6-1/2 to 7
years ••••
to 7-1/2 years ••••
7
years ••••
7-1/2 to 8
8
to 8-1/2 years ••••
years ••••
8-1/2 to 9
to 9-1/2 years ••••
9
years ••
9-1/2 to 10
10
to 10-1/2 years ••
10-1/2 to 11
years ••
11
to 11-1/2 years ••
years ••
11-1/2 to 12
12
to 12-1/2 years ••
12-1/2 to 13
years ••
13
to 13-1/2 years ••
13-1/2 to 14
years ••
1)~
to 14-1/2 years
years ••
14-1/2 to 15
15
to 15-1/2 years ••
years ••
15-1/2 to 16
16
to 16-1/2 years ••
yee.rs ••
16-1/2 to 17
17
to 17-1/2 years ••
years ••
17-1/2 to 18
18
to 18-1/2 years ••
years ••
18-1/2 to 19
19
to 19-1/2 years ••
years ••
19-1/2 to 20
20
to 20-1/2 years ••
$100.00
$ 50.00
50.94
51.89
52.87
53.86
51~.87
•
?/
55.90
56.9 4
58.01
59.10
60.21
61.34
62.49
63.66
64.85
66.07
67.31
68.57
69.85
71.16
72.50
73.86
75.24
76.65
78.09
79.55
81.05
82.56
84.11
85.69
87.30
88.93
90.60
92.30
94.03
95.79
97.59
99.42
101.28
103.18
105.12
$100.00
101.88
103.79
105.73
107.71
109.73
111.'(9
113.89
116.02
118.20
120.41
122.67
12h.97
12'( .31
129.70
132.13
13h.61
137.14
139.71
142.33
1h4.99
147.71
150.48
153·30
156.18
159.11
162.09
165. 1 3
168.23
171.38
174.59
177.87
181.20
184-.60
188.06
191.59
195 .. 18
198.84
202.57
206 31
210.23
0
$ 500.00
509.38
518.93
528.66
538.57
548.67
558.95
569.43
580.11
590.99
602.07
613.36
624.86
636.57
643.51
660.67
673.06
685.63
698.53
711.63
724.97
738.57
75:3.42
766.52
700 .. 90
795.54
810.45
625.65
8hl.13
856.90
872.97
889.34
906.01
923.00
940.31
957.9 4
975.90
99 4 .. 20
1,012.84
1,031 • 83
1,051.17
$1,000.00
1,018.75
1,037.85
1,057.31
1,077.14
1,097.33
1,117.91
1,1}S .87
1,160.22
1,181.98
1,204.14
1,226.72
1,2h9.72
1,273.15
1,297.02
1,321.3 4
1,346.11
1,371.35
1,397007
1,h23.26
1, 4h 9.95
1,477.13
1,504.63
1,533.05
1,561.79
1,591.07
1,620.91
1,651.30
1,682.26
1,713.80
1,745.94
1,778.67
1,812.02
1,846.00
1,880.61
1,915.87
1,951.80
1,988.39
2,025.67
2,063.66
2,102.35
Based on redemption values of $1,000 bond.
At a future date prior to January 1, 1983 (20 years after issue date of the
first bonds) this table will be extended to show redemption values for
periods of holding of 20-1/2 years and beyond.
Table 3
Comparison of Tax Liability at Various AGI Levels Under Present
Law and Under Proposed Revised Rates
Joint Return with Two Dependents and Standard Deduction
Adjusted
gross
income
Liability
under
present
tax law
Revised
rate tax
liability
Dollar
reduction
in tax
liability
Percentage
decrease
in tax
liability
$3,000
60
42
18
30.0
5,000
420
296
124
29·5
7,500
877
663
214
24.4
10,000
1,372
1,068
304
22.2
20,000
4,124
3,282
842
20.4
4:l56
Table 2
Comparison of Tax Liability at Various AGI Levels Under Present
Law and Under Proposed Revised Rates
Joint Return with No Dependents and Standard Deduction
Adjusted
gross
income
Liability
under
present
tax law
Revised
rate tax
liability
Dollar
reduction
in tax
liability
Percentage
decrease
in tax
liability
$3,000
300
210
90
30.0
5,000
660
488
172
26.1
7,500
1,141
879
262
23·0
10,000
1,636
1,284
352
21.5
20,000
4,532
3,606
926
20.4
47
Table 1
Comparison of Tax Liability at Various AGI Levels Under Present
Law and Under Proposed Revised Rates
Single Individual with Standard Deduction
Adjusted
gross
income
Liability
under
present
tax law
Revised
rate tax
liability
Dollar
reduction
in tax
liability
Percentage
decrease
in tax
liability
$3,000
422
318
104
24.6
5,000
818
642
176
21.5
7,500
1,405
1,116
289
20.6
10,000
2,096
1,668
428
20.4
20,000
6,412
5,088
1,324
20.6
TREASURY DEPARTMENT
January 14, 1963
The following tables are provided to illustrate the
effects of President Kennedy's proposed reductions in
individual income tax rates when they become fully
effective in 1965.
The income figures given are for total income before
exemptions and deductions.
The tax estimates apply only
to taxpayers using the standard deduction.
The tax estimates do not include the effects of
proposed changes in the tax treatment of certain types of
personal income or expenditures which will be presented in
detail at a later date.
Attachments 3
TREASURY DEPARTMENT
January 14, 1963
The following tables are provided to illustrate the
effects of President Kennedy's proposed reductions in
individual income tax rates when they become fully
effective in 1965.
The income figures given are for total incQme before
exemptions and deductions.
The tax estimates apply only
to taxpayers using the standard deduction.
The tax estimates do not include the effects of
proposed changes in the tax treatment of certain types of
personal income or expenditures which will be presented in
detail at a later date.
Attachments 3
Table 1
Comparison of Tax Liability at Various AGI Levels Under Present
Law and Under Proposed Revised Rates
Single Individual with Standard Deduction
Adjusted
gross
income
: Liability
under
present
tax law
Revised
rate tax
liabili ty
Dollar
reduction
in tax
liability
Percentage
decrease
in tax
liability
$3,000
422
318
104
24.6
5,000
818
642
176
21.5
7,500
1,405
1,116
289
20.6
10,000
2,096
1,668
428
20.4
20,000
6,412
5,088
1,324
20.6
Table 2
Comparison of Tax Liability at Various AGI Levels Under Present
Law and Under Proposed Revised Rates
Joint Return with No Dependents and Standard Deduction
,
Adjusted
gross
income
;Liability
under
present
tax law
Revised
rate tax
liability
Dollar
reduction
in tax
liabili ty
Percentage
decrease
in tax
liability
$3,000
300
210
90
30.0
5,000
660
488
172
26.1
7,500
1,141
879
262
23·0
10,000
1,636
1,284
352
21.5
20,000
4,532
3,606
926
20.4
Table 3
Comparison of Tax Liability at Various AGI Levels Under Present
Law and Under Proposed Revised Rates
Joint Return with Two Dependents and Standard Deduction
Adjusted
gross
income
Liability
. under
present
tax law
Revised
rate tax
liability
Dollar
reduction
in tax
liability
Percentage
decrease
in tax
liability
$3,000
60
42
18
5,000
420
296
124
29·5
7,500
877
663
214
24.4
10,000
1,372
1,068
304
22.2
20,000
4,124
3,282
842
20.4
.
30.0
~,
.f (lA rtEL:A,3:;; .•• ..~. I''::~~!S?! p.-;as,
1 uuadal l January 12' 1963.
c.:: :_:L'13
.'iF' Ta".ASU.U' 5 wl"'EKLJ BILL 0FniUNG
loe ; reasury Jopartaent announced 1ut .Ten'nc tbat tbe teoder8 for tllO lerS... .r
HoeaBury bills, one eeries to be an additional i8Sue of tbe bUll daMel October 18,
and the other series to be dated .Janu17 17, 196), which wre ottereel on JaDuaJ7 9, . .
opened at the l'eder&! ..eae"e 8anlca on JanUU'J 1la. T....I"II.re lDrited tor 11,)OO,~
or thereabouts, of ~l-da'y bUls and tor $600,000,000, or thereabout. ot 182-daT "1111.
detaUs of tne tvc. serle. are u followl
1*
iU:dF JF ACG1LP'r::-;n
CJMPF.'l'ITIV;" BIOO:
I
I
•
•
Approx. .
Pric.
I
. i,;:h
LOW
#6.52a
)) ';:(jre~i1t
0 t
13 percent
Oi.
0istrict
Applied lor
'loston
$
?ll.Uadel,1!dat
Cleveland
,I.1enr..ond
i\tlallta
-:';,icago
:,)t. LtHlis
-'.irmf'..4polis
!\ansaS ::~H,y
;;allas
,.an:rau11.seo
2.932%
Y
the. amount of :II-day btU. bi.d for at the low price was acoep\ed
. he ~\~~()U{lt 01' It32-da,: bUls ;.lid for at the low price Y&8 accepted
TOTAL 'F.NDEn5 A?PLF'D ?Oti AaO ACCEmn BI FEDERAL
:.. ew iork
2.912%
2. 941;C
98. S13
J5.518
" vera~::(:
Uly•
Annual aate
34,829,000
1,)89,937,000
34,154,000
~!:~aVE
AoceEted
s
Applied ii'or
Accepted
;~
t
I
S
J
2),449,000
728,OS9,000
1d,))I,000.
41,6S6,{X)O
39,6S8,ooo
I
22 ,040,000
1S,)~9,OOO
I
42,755,(00)4,7)),000.
255,2:;},000
152 ,219,000
c
54,268,000
24,169,000
53,709,000
44,901,000
t
I
)6,056,000
174.256,000
DISTRICTS.
16,66'~,OOO
Wa,400,OOO
25,0S6,000
10,8914,000
984,082,000
9,007,000
2,,8:;;1,000
10,012,000
7,587,000
I
116,900,000
9,6)0,000
9.547,000
12,d52,OOO
I
11,447,000
4,719,000
6)1,659,000
4,0(>7,000
10,~'71,000
10,012,000
7 ,)71,000'
5ti ,908,000
b,8)O,OOO
7,612,000
0,852,000
:),571,000
42,021,000
37,521,000
; '';L:
t2,)6),158,OOO
$1,)O1,101,OOO!l $1,250,0)8,000
$800, ObS,ooo- ;'
a/ includes ':;'331,;5),0',)0 nonCOtllpet1tive Untie" accepted at the ••• rage price ot 99.111
0/ ~nclu,ie5 ~:70, "r)4,OOO noncompetitiTe tendeM! accepted at tba aTerag. prla. of ge.SlI
'In • c"upon iseue or liMit same leIll!;tn and for the . . . . .ount invested, the ret....
tne8e ~U18 would t:·rovide field. of 2.~5£., for the 91-day bUl" and 3.02', for
lb2-,lal bills. ~nterest rate. on billl are quoted in tU'IUI of bank d1.aco\1llt vl__
t.~le retum related to the rao. aount of the bill. papble at . .turity rat..... ~
the amount inT•• ted and th.eir lengtn in actual nuaber ot ciaya related to • ~
lear. tn eontra.t, yieIdB on certificates, not •• , and boDda are COMput.ed 1a w_
':.If intereet on ~he &!~;OUDt inveet.d, and relate the D1aIber ot da,. remaining 111 •
intert:lt paYJt',~nt. ~r1?d to tne act.\I&l maber of d&.re in the period, with . . . s a .
eOlrh"lOundln~ 1..i. More tnan one COupon period 1.. in.,ol.,ed.
II
lS7,la26,ooo.
*
TREASURY DEPARTMENT
IR RELEASE A. M. NEHSPAPErtS,
lesday, January 15, 1963.
January Ih, 1963
RESULTS OF' T.itEASURY'S I'lEEKLY BILL OFFERING
The Treasury Department announced last evenin~ that the tenders for two series of
'easury bills, one series to be an additional issue of the bills dated October 18, 1962,
~ the other series to be dated January 17, 1963, which were offered on January 9, were
,ened at the Federal Reserve Banks on January 14. Tenders were invited for $1,300,000,000,
'thereabouts, of 91-day bills and for $800,000,000, or thereabouts of 182-day bills. The
~tails of the two series are as follows:
.NGE OF ACCEPTED
)MPETITIVE BIDS:
High
Low
Average
91-day Treasury bills
maturing Arril 18, 1963
Approx. Equiv.
Price
Annual Rate
2.868%
99.275
2.888%
99.270
99.271
2.884% "J:.,/
·•
182-day Treasury bills
Maturing July 18, 1963
Approx. Equiv.
Annual Rate
Price
2.912%
98.528
2.941%
98.513
98.518
2.932%"J:.,/
93 percent of the amount of 91-day bills bid for at the low price was accepted
13 percent of the amount of 182-day bills bid for at the low price was accepted
ITAL TENDEns APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:
·
·
·
District
AcceEted
AEE1ied For
Acce:eted
AEElied For
Boston
10,894,000 $ 4,719,000
$
23,449,000
$ 34,829,000 ;$
New York
984,082,000
631,659,000
728,059,000
1,589,937,000
Philadelphia
4,007,000
9,007,000
18,332,000 •
34,184,000
Cleveland
10,971,000
25,851,000
41,656,000
39,858,000
Richmond
10,012,000
10,012,000
22,040,000
15,999,000
Atlanta
7,377,000
7,587,000
42,755,000
34,733,000
Chicago
116,908,000
58,908,000
152,219,000
255,299,000
St. Louis
8,830,000
9,830,000
54,268,000
4'-t, 901,000
Minneapolis
7,612,000
9,547,000
16,669,000
24,169,000
Kansas City
12,852,000
8,852,000
44,400,000
53,709,000
Dallas
11,447,000
9,577,000
25,056,000
36;,1056,000
San Francisco
42
37
021z000
174,256,000
157 z426 z000
z521 z000
z
TarALS
$800,01.6,000 EI
$1,301,101,000 !/ $1,250,038,000
$2,363,158,000
, Includes $331,959,000 noncompetitive tenders accepted at the average price of 99.271
. Includes $70,734,000 noncompetitive tenders accepted at the average price of 98.518
On a coupon issue of the same length and for the same amount invested, the return on
these bills would provide yields of 2.95%, for the 91-day bills, and 3.02~, for the
l82-day bills. Interest rates on bills are quoted in terms of bank discount v~th
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 bonis are computed in te~ns
of interest on the amount invested, and relate the number of days remaining in an
interest payment period to the act~al nunber of days in the period, with semiannual
compounding if more than one coupon period is involved.
·
·
··
e
'7~o
-3Bureau of the Public Debt, the Internal Revenue Service and the Secretary of
the Treasury's Office.
All Treasury Bureaus received commendation for giving more than "their
fair share" to the United Givers Fund in 1962.
- END -
-2is a leader in collecting tremendous sums of money, is also in the forefront
in practicing efficiency and saving taxpayers' money."
"President Kennedy, in signing the 1962 Federal employees pay bill,
cited Internal Revenue as an agency which has increased productivity
in recent years.
rapidl~
One indication of this is the fact that the cost of
collecting each one dollar of tax has decreased from over one cent in 1940
to less than half a cent in 1960," Mr. Caplin said.
"Only through
the cooperative efforts of all concerned, management
and employees alike, in the National and in the Field Offices, can a Federal
agency really do a good job of developing savings to taxpayers through
new and improved methods of operation," Mr. Caplin said.
The Secretary of the Treasury's 1961 Safety Award for bureaus with more
than 1,000 personnel went to the Bureau of Accounts which reported a 61
per cent improvement in the 1961 accident frequency rate over its four-year
average, and a 57 per cent improvement over its 1960 rate.
The Office of the Treasurer was winner for the second time in four
years of the Secretary's Safety Award for bureaus with less than 1,000
personnel.
Recognition was based on an improvement of 67 per cent in accident
frequency over the Office's 1960 rate and 40 per cent over its four-year
average.
The Bureau of Accounts also placed first in the Treasury's Payroll Savings
Awards, winning the Minute Man Certificate for 100 per cent participation.
Concord Minute Man Awards for 90 per cent or more participation went to the
U. S. Secret Service, the Bureau of Narcotics. the Savings Bonds Division, the
't. , '~.'
I..•
r
/
'i
The Internal Revenue: :':.lcr'.'ice, '.>,hich annually takes in billions of
dollars in tax collections, has come up with ways of saving a substantial
portion of the taxpayers' money through improvement of its own operations.
Internal
~evenue
has \fOn the Treasury Department's top award for fiscal year
19()2 for employee suggestions and '-lork inprovement resulting in savings of
ff}"(O.~
$1.5 in Federal flmds for 1962 alone.
~
\
()A./
j
.,1l,
~ ..H ....
."" ..... ~,A
'-'
,11' t·....~
~
The Treasury also)laB announced awards for safety, payroll savings and
contributions to the United Givers Fundrito other Treasury agencies.
Internal Revenue leads the l-r-other Treasury agencies in the Department's
participation in the U. S. Civil Service Commission's 1962 Incentive Awards
Program, a program sponsoreci annually to further savings of Federal fWlds
through employees' ideas for improvement and increased productivity. .
t '. ,,.~. ,...··f V....l ....'l..- )~,_,T..t;.,<: I,L~\~3 J \~,,~~~~ J '~'nll'~~' :i,. jll\'"tl",~r;~"" fIH
f , ,-=-rsecretary of the Treasury Douglas Dillon, in annoWlcing the awards;l
.~
pointed out that savings b;y' Internal Revenue represent 80 per cent of a
tutal sa'rinss of :$1. 7 '11111ion in Federal ft:nds by all Treasury agencies
in 1962.
A single suggestion !nade by two aadi tors in Internal Revenue's San
Francisco Dist~i.ct Office in 19(2 saved $677,000 in taxpayers' money.
Jack ',:006. and Fre.i J. Cehs \.[on the largest individual cash award __
,n.395 --
:;i. 'len in the entire Fe'~r;::'al syste:a last year for originating
j
rcplacecr,ent of hand processing '.>;i th cO"llputers and autotypist machines in
the pr2para t ion of tax aU.ii -+:. reports.
CO;::lissioner of Internal ~e'lenue :·~o!'timer M. Caplin, who received the
Tre3.S~2;'3
2',;ar,i for his a;,;enc J', said, "The Internal Revenue Service, which
TREASURY DEPARTMENT
January 15, 1963
FOR IMMEDIATE RELEASE
TREASURY AGENCIES CITED FOR
SAVINGS, SUGGESTIONS AND GIVING
The Internal Revenue Service, which annually takes in billions
of dollars in tax collections, has come up with ways of saving a
substantial portion of the taxpayers' money through improvement of
its own operations. Internal Revenue has won the Treasury
Department's top award for fiscal year 1962 for employee suggestions
and work improvement resulting in savings of $1.5 million in Federal
funds for 1962 alone.
The Treasury also has.announced awards to other Treasury
agencies for achievements in safety, payroll savings and contributions
to the United Givers Fund.
Internal Revenue leads the Treasury agencies in the Department's
participation in the U. S. Civil Service Commission's 1962
Incentive Awards Program, a program sponsored annually to further
savings of Federal funds through employees' ideas for improvement
and increased productivity.
Treasury Under Secreta.ry Robert V. Roosa, who made the
presentation last week, pointed out that savings by Internal
Revenue represents 80 per cent of a total savings of $1.7 million
in the Incentive Awards Program by all Treasury agencies in 1962.
A single suggestion made by two auditors in Internal Revenue's
San Francisco District Office in 1962 saved $677,000 in taxpayers'
money. Jack Wood and Fred J. Ochs won the largest individual cash
award -- $3,895 -- given in the Treasury Department last year, for
originating replacement of hand processing with computers and
autotypist machines in the preparation of tax audit reports.
Commissioner of Internal Revenue
received the Treasury's award for his
Revenue Service, which is a leader in
of money, is also in the forefront in
saving taxpayers' money."
D-72l
Mortimer M. Caplin, who
agency, said, "The Internal
collecting tremendous sums
practicing efficiency and
- 2 -
"President Kennedy, in signing the 1962 Federal employees pay
bill, cited Internal Revenue as an agency which has increased
productivity rapidly in recent years. One indication of this is
the fact that the cost of collecting each one dollar of tax has
decreased from over one cent in 1940 to less than half a cent in
1960," Mr. Caplin said.
The Treasury's 1961 Safety Award for bureaus with more than
1,000 personnel went to the Bureau of Accounts which reported a
61 per cent improvement in the 1961 accident frequency rate over
its four-year average, and a 57 per cent improvement over its
1960 rate.
The Office of the Treasurer was winner for the second time
in four years of the Secretary's Safety Award for bureaus with
less than 1,000 personnel. Recognition was based on an improvement
of 67 per cent in accident frequency over the Office's 1960 rate
and 40 per cent over its four-year average.
The Bureau of Accounts also placed first in the Treasury's
Payroll Savings Awards, winning the Minute Man Certificate for
100 per cent participation. Concord Minute Man Awards for 90
per cent or more participation went to the U. S.. Secret Service,
the Bureau of Narcotics, the Savings Bonds Division, the Bureau
of the Public Debt, the Internal Revenue Service and the Secretary
of the Treasury's Office.
All Treasury Bureaus received commendation for giving more than
"their fair share" to the United Givers Fund in 1962.
000
TREASURY DEPARTMENT
Washington
FOR RELEASE ON DELIVERY
REMARKS OF THE HONORABLE ROBERT V. ROOSA,
UNDER SECRETARY OF THE TREASURY FOR MONRI'ARY AFFAIRS,
BEFORE THE FREEDOM BOND DRIVE TREASURY-INDUSTRY CONFERENCE
AT THE STATLER HILTON HOTEL, WASHINGTON, D. C.,
ON WED~~SDAY, JANUARY l6, 1963, 10:30 A.M., EST
On behalf of Secretary Dillon and all of us in the Treasury, I
welcome you to this conference and thank you for your willingness to
help us in one of the most important areas of our debt management
operations, the United States Savings Bond Program.
Through the years, American industry has made a substantial contribution to the financial stability of this country through its active
promotion of the Payroll Savings Plan.
This effective Industry-Treasury
cooperation started with the very beginning of the program in 1941.
During the war years, it was an important part of the war financing
effort; and throughout the postwar years, the Payroll Savings Plan has
been the solid foundation of the Savings Bond Program, the source of
50
percent of all E Bond sales.
Savings Bonds, that is bonds of the E and H Series, now account
for over one-fifth of the Government debt that is in the hands of the
public.
They give every individual a chance to have some part in the
debt financing of his Government, at a reasonable return without exposure
to market risk.
The assured rates of interest onE and H bonds have, over
the years, averaged out at least as well as those obtainable on any
alternative savings instrument which is even roughly as safe and as
immediately convertible into cash.
D-122
- 2 -
Since the continued success of this program is a vital part of
our debt management effort, and since it depends so heavily on the
support of volunteers, it is especially gratifying that the E and H
Savings Bonds have maintained their place in our debt structure during
the past year, a year when the competitive pressure from higher rates on
bank deposits and savings and loan shares, in particular, has been of
unusual intensity.
The progress of the Savings Bond Program in 1962 would not have
been possible if it had not been for the substantial increase in Payroll
Savings promotional activity_
During the first eleven months of 1962,
campaigns in more than 9,000 industrial fi Ilns produced one million new
enrollments, 15 percent more than in the same months of 1961.
This
effort was undoubtedly responsible for the fact that we sold more than
73 million E Bonds, the largest number of separate pieces of E Bonds sold
since 1957.
This year we hope to do even better, and that is why we are here
today.
The success of the 1963 Freedom Bond Drive, in which we hope to
sell bonds to every American family, will depend primarily on what we can
do in the Payroll Savings area.
The prinCipal pUIpose of our meeting today
is to tell you about our objectives, and how you can help us meet them as
leaders of Payroll Savings campaigns in the great industries which you
represent.
- 3The group, of which you are members, is to be known as the United
States Industrial Payroll Savings Committee.
You have each been
selected, first, because of your influence and prestige within your
particular industry; and, second, because in your own company you have
demonstrated your strong personal interest in a successful Payroll Savings
Program.
Our Savings Bond staff is ready to carry out the programs which
you devise to reach the major companies in your various industries.
your leadership is the key to success.
But
In exercising that leadership,
your personal experience and belief in the Savings Bond Program is allimportant.
As citizens, we all value particularly two special attributes of
the Savings Bond Program.
The first of these is the fact that, through
Payroll Savings, many people who might not otherwise have saved at all
have learned how to save and how to build their own family security.
This is an attribute that all who believe in a free enterprise economy
should value.
The second attribute of the program is the great moral
and social value in having the ownership of the public debt of this
country as broadly based among as many of our citizens as possible.
This is an intangible factor, but an important one.
It is something
that any democracy that wishes to manage its finances in a sound manner
should promote; and it is only through the Savings Bond Program that
this sort of truly broad public ownership of the public debt is possible
on a direct basis.
- 4Those of us responsible for the management of the Federal debt
also have a special concern for the role of the Savings Bond Program
as part of our effort in the year ahead.
of financing a substantial budget deficit.
The Treasury faces the prospect
The economic impact of this
deficit will depend, to a very considerable extent, upon the manner in
which the deficit is financed.
We in the Treasury are determined to so
finance the deficit that it will not produce or nourish inflation.
The
aim of Governmental economic policy is to promote growth by removing the
tax shackles that now hobble economic incentives.
That aim will not be
fulfilled if incentives are at the same time dulled or chilled by inflationary financing.
v~ile
determined that there shall be adequate
finance available for the growth which the economy so urgently needs,
the debt managers of the Treasury and the money managers of the Federal
Reserve will be joined in a common effort to keep the dollar sound -- at
home and abroad.
This means, of course, that a substantial proportion of the deficit
must be financed out of savings, rather than through new money creation.
No one can lay down a precise formula for such financing in advance.
That is why these are tasks for judgment and not for machine computers.
But we believe that the record of monetary policy and debt management
shows that we have over the past two years found both the ability and the
determination to finance the deficits of those years in a non-inflationru7
manner -- without in any way impairing the ready availability of credit
- 5that was encouraged by the Federal Reserve.
We can and will exert the
same effort to the same end again -- in meeting the deficit that is now
in prospect.
A resolute debt management policy is not only required for our own
domestic financial stability; it is also essential for continued progress
toward solving our other pressing deficit -- that in our balance of payments.
The United States is the banker for the entire Free World.
If we
are to merit the continued confidence of other nations in the soundness
of the American dollar -- confidence upon which much of the international
payments mechanism of the entire Free World is based -- we must continue
to so handle our financial affairs that foreign holders know their
balances here are fully usable in practice and fully safe in principal.
The daily affairs of international financial relations keep us in
close touch wi til the financial leaders of the governments of the Free
World. We know they are not alarmed at the prospect of a deficit induced
by the refonn of our tax structure because they see it as a reform which
will permanently improve incentives for creative work and investment.
They have also been reassured by the Administration's program to keep
non-defense expenditures down while permitting only essential defense,
space, and interest costs to rise.
These foreign financial officials
have every right, however, to expect us as their bankers to finance our
deficit in a manner which, while strengthening their bank, does not
generate inflationary pressures.
- 6 But let me turn for a moment to other aspects of this balance of
payments deficit, a deficit that still continues in the general magnitude
of two billion dollars annually.
1:lhile debt management and monetary
policy are basic influences on capital flows into or out of the United
States, and while their direct influence on economic conditions also has
significant repercussions on the international competitive position of
the United States, the balance of payments gap cannot be closed without
greater effort on other fronts as well.
of payments drain
creat~d
As many of you know, the balance
by our overseas military expenditures is being
cut sharply by the determined efforts of our Defense Department with the
excellent cooperation of some of our Allies.
The net drainsof dollars
attributable to economic ajrl, or to any of the other Government programs
which spend money abroad, have been brought under tight control through
the introduction of what we have christened "the gold budget. 1t
But
there has not yet been enough recognition of the job that still remains
for energetic private business enterprise.
Despite a succession of measures promoted by the Export-Import Bank,
which now assures any firm in the United States export credit facilities
that are the equal of those available in any other country of the world,
and despite the launching of a vigorous new progrrun in the DepartmEnt of
Commerce to help American enterprise discover export opportunities abrooo,
it now appears that the commercial merchandise exports of this country
rose in 1962 by less than 2 percent.
In the same year, American imports
- 7rose by 10 percent.
That is the kind of gap which American business
must find a way to close.
The balance of payments challenge is a
challenge not only to the American Govermlent but to the American economy
in all its parts.
Already, the more aggressive and adventurous among American business
enterprises have discovered that their overseas sales can be increased
sharply; that there are
irr~ense
new markets to be penetrated with profite
As the achievements of some are matched with the performance of many,
the most important remaining piece in the balance of payments puzzle
will be fitted into place.
Meanwhile, of course, so long as deficits continue in the balance
of payments, we must expect and be prepared for gold outflows of the
magnitude experienced during the past two years.
Possible outflows com-
parable to those that occurred early in 1962 are already visible as a
result of the seasonal trade patterns that are developing at the beginning
of 1963.
But there are also hopeful signs that American business may
soon be able to break out of the trade patterns of the past and find a
larger part in the flourishing markets of the rest of the world.
Certainly
that thrust will be strengthened as we maintain stability of costs and
prices at home while providing new incentives toward profitable expansion
by means of the tax program which the President has already outlined,
and to which I believe Secretary Dillon will refer again when he meets
with you later todaY6
- eReturning to the point where I began these remarks, however, I
cannot stress too emphatically the integral place which is filled in
this panorama of our Nation's economic problems and potentialities by
the Program on which we are focusine our.attention here today.
A
vigorous Savings Bonds Program will make it possible for the Treasury
to finance a part of the Federal Government's budget deficit through the
voluntary savings of millions of American people.
That will provide one
of the most effective direct avenues for each American to make his individual contribution toward the same objectives that I have just mentioned
for the various arms of Government and for the business and financial
communities.
It is because that voluntary program is of such crucial
significance that I hope you will find JOur new assignment, as it will be
outlined to you later this monling, both satisfying and challenging. We
are plaCing on you a major portion of our hope for the success of the
Savings Bond Program in 1963.
U. S. INDUSTHIAL PAYROLL SAVINGS CONFERENCE
/./'
'"
:, '-' --Port~Afo Jarvis
James T. Crili'ln
Vi ce E,re s iden t
Se al:'--s/, no e bu ck & Comp any
/,
V"
.
Harold -1. Hoa~
As ~j,~'tan t Tre asurer
A. y P Company
;
i
~ Pre~dent
~ft and Company
i
.
v/
/
Thomas v/i'ones
Pres~t
l
/_~/' No~rop Corporation
A?
,T .- .....,
,J
/~
{ ,-C'larence A. Kelley
President
/""
Dixie Ohio Express, Inc. '
Le onar<r Vogt
~~i:'s'tant Comptroller . ./
~ternationa~ Shoe Company
()-J;:
... _/~~
Haro~d W. Comfort
President
Borden Company
'<
I
r
r,
,
/
\vi
am W. Lynch
lairman and 'President
Texas Power & Light Company
Alexander )l. Galloway
.. \vilbur L. Camp
Assistant to the President
Atchiso~topeka & Santa Fe,
Pre~id~/
9;
,)
q
J~{eynolds
Tobacco Company
Harold S.,Geneen
Presiderit
In~~tional Tel
Thomas F. Owens
,/
Tr~~~'r
& Tel Corp.
N~onal Lead Company~-~
Wilfred D.'-Cillen
,/
Pre sid e)l't
I3ell filephoIJ.e Company of Pa.
"--"
/
se/on
-')L. G.
'~ Vice Pr'sident
'/
Genepa~
v
,
Motors Corporation
/
;
Frank .R.;....--}-(illiken
...1,/
Prywrdent
--K"ennecott Copper Corporation
Charles
Hyers, Jr.
Pres' ent
t""""B
ington Industries, Inc.
J
E. F. dUPOI).~
L
Dire ctor,/
E. I.d~Pont de Nemours & Company
,\, Horris Nj)),isen
1,/
"
Pre s ido1ft
3abc~~k & Wilcox Company
./
,
.... , \ ,
./
~
H. C. R(')b son
TreasH'rer
AncAor Hocking Glass Corporation
C. L. Burrill
Director
Standard Oil of New Jersey....--
/
Ellwood F. Curtis
Executive Vice President
Deere and Company
:Reed: @. HURt
.g •• 61ft.lit
.Cr.....
,
~J:. ~;
Litchfield, Jr.
Aluminum Company of America
/
Ru ssel1./j}'{Young
~~~-aEmt
v'
~dyear Tire & Rubber Company
R.
~ence
'-,.I ;"') ,'President
.Q
lUI I i
ls ott
Cbl'.b 61 a Usa.
,Af~' I. Romnes
f ~
President
~
/ / .. ,
./ /
\vestern Ely.ctric Company
.'
. , Albe¢ L. Williams
.'," J/ Pye"sident
-......../' An ternational B~iness ~lach•
Inc.
,_. . . . .
Leslie B. Worthington:
Pre s iden t
[.../
,,' U. S. Steel Corporation
C. E. woo.lmz'
a
Pre sid e t
.
Del ta .lUr ' lnes
r:
"--",,"'-
L_~~_.~~_~d
the industrialists that
t~
are making a
substantial contribution to the growth and strength of our
economy.
"You are aelding considerably to that contribution
by your initiative, your guidance and your enthusiasm in
helping to further the progress of the payroll savings plan.
Already your abilities and your energies are responsible
for the
succ~ss
of the plan in your companies.
Now you
ure undertaking to extendf your efforts throughout your
respective industries.
~ few more direct means by which you, as
\--c:t-/7
individual cizizens
~r
bolster our nations financial
position than by promoting savings bonds ownership on the
--:~><'J,.
part of your employees--and on the part of employees of other
companies in your industry through the
•
\'-.J/
coopera~h
of their
executives."
(_s~_:etary
Dillon called on the industrialists to
report to him on the results of their industry wide campaigns
in the months ahead.
L..;L.~Lof
those attending the Ldustrial.$avings
~onference is attached.
1$,.,aiS
I In al:dition to Secretary Dillon, the industry leaders
LFT.'~()v ~ ~
~Ch::1irman,
-
were ~~.eL1t;J \';illiam :.lcChesnf'Y Martin, Jr.,
/\
of Governors, Federal Reserve System;
Robert V.
Board
Roosa,
Under Secretary of the Treasury for Monetary Affairs;R.Duane
Saunders,
:J.nd
0irector of the Treasury's Office of Debt Analysis;
l~illiam
II.
Neal, National Director of the Savings Bonds
Division.
secretary Dillon, speaking to the groujJ at . l u n c h r '
called the Savings Bond
Program vital to the success of the
\
Treasury's Debt Management Program.
"T~e
1. ';'4 .~' ,~ •.6 ..J
II ,/1 (". ;'.-:- t"Vt' a .
people who buy bonds buy them to save,
/
as a long term investment.
i'
/\
They buy them
Thus they help reduce the dangers
of inflation in our economy by saving, rather than spending-and they help us to avoid the inflationary possibilities of
our debt by their long term investment.
payroll savings plan .•. is the only method fort
investing in bonds on an installment basis.
For millions
of Amf'ricans, the payroll savings plan marks the#fference
between saving systematically and not saving at all."
....,... . r~·-t·
,
TREASURY RELEASr,
f-~j,)
.~. IL _
(2 ..~ ..~
/
::.....
(~'~'Utrt"·
/
/1
AI't\/,.
L~J-#? ,,/~"
IJ.P
January 16, 1963
Twenty-seven leading industrialists met today with Secretary
..
....-,~
... --- ..
,
Uillon and other Treasury officials to launch the 1963
Payroll Savings Bonds Campaign in American industries.
an appointment by the
Secretary to se~ve on the J.S.
~.'m=:wf'.fldFU,iill~1>
Commi t
,
te~..atAl laie
~.~' .,.~
"*".'i-tft:e+aa.
Industrial Payroll Savings
"", .. ,.. ~~.;~:~
, ·r,~i~~f:··~~~*~"'·;"··
~~~'Tw-t
/ . \.
riiWY;.
e;
on debt
.. ,. '{i~anag':>ment problems, f isca 1 and monetary policies, and SaviI,lgs
('
' , ' .•. '.
Bond :oa15 for 1963.
~w-r.~'~"'" -~ ,,~
....
-
.. . . . . - -••- -
The Committee members will seek the
.J
co-oferation of executives in companies within their respective industries to initiate person-to person Payroll
Savings Drives.
I~
/ Secretary Dillon appointed Mr. Harold S. Geneen, President
/.---_.-._-
of International Telephone and Telegraph, Chairman of the
Committee.
The Payroll Savings Camvaign which Mr. Geneen
conducted in his company resulted in ITT's achieving the greatest
percentage increase in farticipation in the Payroll Savings
of any major company in the Jnited ~tates during 1962.
,
.,
I
--,....~-.t·_t-={:,;_.~ 7 e; ~fit.t.
/ __
"_-';
TREASURY DEPARTMENT
January 16, 1963
FOR RELEASE AFTERNOON NEWSPAPERS
WEDNESDAY, JANUARY 16, 1963
INDUSTRY LEADERS HEAR TREASURY HEADS;
WILL LAUNCH 1963 BOND DRIVE
Twenty-seven leading industrialists met today with Secretary
Dillon and other Treasury officials to launch the 1963 Payroll
Savings Bonds Campaign in American industries.
Earlier, the industrialists accepted an appointment by the
Secretary to serve on the U.S. Industrial Payroll Savings Committee.
The Committee' members will seek the co-operation of executives in
companies within their respective industries to initiate person-toperson Payroll Savings Drives. They are being briefed today on
debt management problems, fiscal and monetary policies, and Savings
Bond goals for 1963.
Secretary Dillon appointed Mr. Harold S. Geneen, President of
International Telephone and Telegraph, Chairman of the Committee.
The Payroll Savings Campaign which Mr. Geneen conducted in his
company resulted in ITT's achieving the greatest percentage increase
in participation in the Payroll Savings Plan of any major company
in the United States during 1962.
In addition to Secretary Dillon, the industry leaders were
briefed earlier by William McChesney Martin, Jr., Chairman,
Board of Governors, Federal Reserve System; Robert V. Roosa,
Under Secretary of the Treasury for Monetary Affairs; R. Duane
Saunders, Director of the Treasury's Office of Debt Analysis; and
William H. Neal, National Director of the Savings Bonds Division.
Secretary Dillon, speaking to the group at lunch, called the
Savings Bond Program vital to the success of the Treasury's Debt
Management Program.
"The people who buy bonds buy them to save," he said. "They
buy them as a long-term investment. Thus they provide a hand-core
of assured savings upon which our debt management can rely, while
the remainder of the debt is placed in ways that will help avert
the dangers of deflation or inflation."
D-723
- 2 -
"The payroll savings plan ... is the only method for investing
in bonds on an installment basis. For millions of Americans, the
payroll savings plan marks the difference between saving systematically
and not saving at all."
He told the industrialists that they are making a substantial
contribution to the growth and strength of our economy. "You are
adding considerably to that contribution by your initiative, your
guidance and your enthusiasm in helping to further the progress
of the payroll savings plan. Already your abilities and your
energies are responsible for the success of the plan in your
companies. Now you are undertaking to extend your efforts throughout your respective industries.
"There are few more direct means by which you, as individual
citizens can bolster our nations financial position than by
promoting Savings Bonds ownership on the part of your employees -and on the part of employees of other companies in your industry
through the cooperation of their executives."
Secretary Dillon called on the industrialists to report to
him on the results of their industry wide campaigns in the months
ahead.
A list of those attending the Industrial Savings Bonds
Conference is attached.
Attachment
U. S. INDUSTRIAL PAYROLL SAVINGS CONFERENCE
') C·
I
C. L. Burrill
Director
Standard Oil of New Jersey
Clarence A. Kelley
President
Dixie Ohio Express, Inc.
Wilbur L. Ca:np
Assistant to the President
Atchison, Topeka & Santa Fe
Lawrence Litchfield, Jr.
President
Aluminum Company of A~erica
Harold W. Comfort
President
Borden Company
William W. Lynch
Chairman and President
Texas PONer & Light Company
Ellwood F. Curtis
Executive Vice President
Deere & Company
Frank R. Milliken, President
Kennecott Copper Corporation
Russell DeYoung
President
Goodyear Tire & Rubber Company
E. F. duPont
Director
E.I. duPont de Nemours & Company
Alexander H. Galloway
President
R. J. Reynolds Tobacco Company
Harold S. Geneen
President
International Tel & Tel Corp.
Wilfred D. Gillen
President
Bell Telephone Company of Pa.
James T. Griffin
Vice President
Sears, Roebuck & Company
Haro ld D. Hoag
Assistant Treasurer
A & P Company
Charles F. Myers, Jr.
President
Burlington Industries, Inc.
Morris Nielsen, President
Babcock & Wilcox Company
Thomas F. Owens
Treasurer
National Lead Company
M. C. Robson
Treasurer
Anchor Hocking Glass Corporation
H. I. Romnes
President
Western Electric Company
L. G. Seaton
Vice President
General Motors Corporation
Leonard Vogt
Assistant Comptroller
International Shoe Company
Albert L. Williams, President
International Business Machines, Inc.
Porter M. Jarvis
President
Swi f t & Comp any
C. E. Woolman, President
Delta Air Lines
Thomas V. Jones
President
Northrop Corporation
Leslie B. Worthington
President
U.S. Steel Corporation
concerned >.vitn the 8Oundne •• of our country'. flac.l po.itloa.
a8 well as with Its level of economic ~rowtb.
tax program will help
\18
make
~iant
the Pre.ideat t
atride. forward.
•
The
GlOve.
Your objectives in the fortru:om11l6 campaign w1ll va.y frca
industry to i.ndustry.
the over-riding
:~oal
So \iil1 tne pattern of operation..
will be the same:
Jut
to get •• many cOIIp.a1e •
• a po •• ible in each of your industries to conduct energetic
p8TaoD-to-person drives.
pro~resa
cl08ely.
bope we can
a~ain
'..-,le
will, of course, be following 10tlr
At some convenient time late in the year 1
ait down together to evaluate tbe results.
Meanwhile, each of you knows beat bow to enlist the active
support of the top executives in your leadiD6 companie..
confident
tl~t
your efforts will be highly sueca•• ful.
000
1_
l'raa.aury t 8 ~Vl.ngli ~lMls JiYiau..on, O\.Itliu.ed our ,'ayroll Sdiags
Pl£ll for twa Freedom bond '-'rive awl the part that your
Committee can play in
.pearn~aaiU6
tae GDrollment of a million
IDIlke them 80 -- tlle apirit of teamwork &nC pride witnin tb.
lA~try.
tn. aVMilab11ity of auch iDOuatry r-eoarcea •• trade
aaaoci.tiona and tae trade pres..
But,
a1w~ys.
the detexmiD1ag
Uctor was the cllatnLan nim»4ll1f -- and his iAf1ueuce anc1
atandin, among tilt) member. oi
Qi~
industry.
I kn£r:.-v that you realize bow muc.n your effort. can nelp in
th~ liu&na6eQe1lt 04: our debt.
1 kllOal
tLlB.t
yO\A are &11 deeply
in
aelpin,'~
to further Ule
pro~re ••
of tbe Payroll s..1Dga Plan.
Already YOllr abiliti•• and your energi•• are r . .,.alble
tne suece..
0
f tile Plan in your c:.apaaiea.
taking to axtead
111d.ustrie..
t.
Now you are under-
your efforts throughout your reapectlva
Your acceptaDCE: of that r ••pona1b il1ty
~.n8Ct
••
1 think. al DlUch a. a1lJtbiDg, the qualiti.s tbat baY. brClU6ht
yO\l to the foretront of your induatrie. -- and tbe COlIC . . . for
economic
g~th
experience
and fi.cal aoundn•••
eon.t~y
~l.t
your bu.t••••
fosters.
there are few .are direct . . . n. by whiCh you, a.
tndlvi~l
citizens, can bolster our Mat ion •• financial poaltlon taaa by
promotiQ6 Savings Jkmda owneraoip on tne part of yOU" employe.. -and
OQ
the
pare of aaploy... of other cGlllP&ll1. . 1a your
through tn. cooperation of their executives.
~cry
- ~sssured s.vin~s unon which our debt manal~ement can rely, while
'-_
.1
•
the remainder of the debt is placed 10 ways that will help
avert the
dan:~er8
of deflation or inflation.
Row more than INery it is -1arportaot to obtain through
Sav1n,~8
Bonds the widest possible ownership of the public debt.
the Payroll Savin;;;a Plan has proved to be one of our b.at _ _a
of doing so.
It 1. the only method " r inv •• ting 1n loft4a
an installment basis.
Savln,~.
'or millions of American.,
tn.
OIl
'ayroll
Plan marka the difference between saving .yat ... tlcally
aDd not saving at all.
Each of you, by your leadership in one of America'. l.ding
-,·V
industri•• , i. uking • ~tantlal eontl"lbution to the growtb
and strength of our eeOtlOid)'.
Tou are addf.ng eonalderably to that
contribution by your initiative, your ~uldaftCe and your entbua1a-
-1/"
Our debt management policy will continue to maintain tbl.
aame kind of balance by trying to provide the liquidity we need
to nurture economic growth, and avoid the exce •• ive liquidity
that can be
80
fertile a ground for
~l.tion.
The Saving. Bond. progras -- which bring. this group
together here today -- i . vital to the succe.. of our debt
management policy.
For the Savings Bonda Program i . on. of
our most .ignificant mean. of placing the owner.hip of tb.
national debt in tne hands of gemaine aavera.
And becau.e the
average dollar investment in Savings Bonds remain. outstanding
aD.
for seven years, the Savings Bond. Program i . an effective ••
of assisting our efforts to improve the maturity atructure of our
debt.
rhe people who buy bonda buy th_ to save.
• a .. long-term investment.
1hey buy tit•
'nas they provide a baad-core of
-e pointed out th1a &lOrDing. we bave, over the . . at two yeara, IMDagecS
the debt without inflation.
At the .... time tbat we pva lenatlleaed tile ov.l'a11 . .turity
atructure of our debt, we bavemailltainedtlwcompetit1vepo.it1OD
of our anort-term rat. . in
ta.
intem&tioaal aaarlte&.
effectively held down tae lona-term rat •• eo
ADCl .. e have
~rtaDt
to our
Go.eatic ecooo.y -- to our corporat10D8, our mua1cipallti.a. and
we WIve
.l~
--etar)' acae.
varied ttl. proportion. of our debt flaaacad
1ft ealendar 1961 -- • year of recovery --
v.
1a
effect finaaced the utire debt iDcr. . .e through the Nak1D&
ON
ayatem..
l.
1 i 'L
In caleadar 19b2, however.)~~.-! _
-"" .. _
.... _
~__
:"perceat.f tM
--...... ·-·-·1
debt 1ncr.... w.a finaaced by enlarged Daak hold1a&a of
sovernment
securities.
In the me.ntila_, we
t!lU8t
live with teporary deficit. _ttl
tbe tax. progr. . make. it. full impact upon the
doing, we ahould
~.11
1D ao
8C0D08I1.
our experience with tbe tax eat of 1954.
By producing a surplus in the 8UCceeding budget year. it demGaF
strated that the economy
CAll
very quickly and §eDerousl,.
CC*q)enNte the Treaaury for an initial los..
W. 41eo ImDw tUt,
even in the short tuft, reductions, in a re.trictive tax
.,..C.
loa. more revenue in theory than tney do in faet.
This Administration. by it. fiscal pollel•• and . , ita
ti~ht
di.cipline on
~ltur"J
wlll . .ke wery .ffort
reduee even teaporary deficit. a. much a. po•• ihle.
eo
Ta.porary
deficits will be a small price to pay for th. more 1.at6Ds beaeflt.
lor need _yone fear that thi. Act.inletratloa .,111 allow
thea. deficits to brin;;:; inflation.
As Under Secretary . .ae
....
iederal daiicits. aine. it ra$sea reveaue. at tbe &Xpea •• of the
very growtn U.pOD which futu.re revenue. depend.
th. r..ut 1.
equally aa harmtul to the iaderal treaau.ry a. i.t 1e to the
eCOJlOG1.
The Dew tax program recognize. tllat a r1.. 1a Federall
tbat our only realistic path to a balanced bwlaet i8 an 8CODCay
at or near full productive employaeDt of all 1t. resource., both
human and material.
For the redueed tax rat •• the Pr••14eDt
will abortly propoae will nave a double
~ct:
genarace
of acoDGaic aotlvltJ.
DOt
only n.w and fuller
1-...
tn., vil1
but a broader and higber baa. of taxable iacoaea •• well.
new
pro~am
tba
in abort. will sustain in dynamic balallee both a
stronger EtCODCIIlY aDd a IDOre rU50aable ray.DUe 8Y8t_.
-.::J~ 'j'
Mtually been reduced.
Let _
PM~ 18 to paw the way for • ftIt• •
'.... _
o+-
also lUke it clear that . . ." . _ 1 of «a'
It, e Fez /1
~Cb
SIS' 7:"(' AI/
'-,fJ li'/
r (/ ('
I It
1/$
11./ ('
FI2E E.
eooMC,
~
A0 v(' V fl~ IIlf~. ud
-hdenlbudget deficits will . . . .hindu. ......e til.
vlYh us.
Wbetber we
~t
the tax progr_
or not, we face tbe
Pl'Ospect of budget deficits 1D the 1...u..ace future.
we
!!!.
enact it,
1M
aK \IDle ..
h.v. lNt little hope of ellat.aatiDl •
parade of budget deficits that thnaCeD te exteDcl fa i.ato cbe
future.
.~'.
mat __
-thai: .~ .....
s.,LJ t t,
a tax progr_~~tanttany
I..
Th~ b~SIWAtj I<S MINJA4/)'£/~~
~
~we ".~Jlenact .. MOIl . . poa.lb1e"
1
the Pre.ident will 8bortly pre_t ,
II.
~
j'"'o
it t C~,...t
.,~
/ r .•
inves~r.
wrlO
n~ed
;\n(: FBr':~L(:;\..118rl::;r. it w!.ll .:>~{t;fHItf
it
~~t,
th.e \.JIle:qployecl, by
~
help to tho..
ct"eat1n.~
new jobs.
It
/
1 s t i4 short, .--program to help all of us by advancing the
-
"
tax program \Ii th L~reclai~
and pru.dence.
&l2ettbll!
!A';'
) c':,
o~\ El
1\
~
~~Ye have careiullv ~tl!tf;ger.e~~!. it to ~8",,*
or
'_,
fHlf~y r~'WQ~Q!
IN ( ;; p/J'
..
e
IN
an i.ui:lat:ionary cleflcit~/
,
~
"I (/
tl
! ~ iA A {J (J It fA /I 'J I Ai ( ~, ,.:. ~ \ e
non-infl.at1.ane.ry 4ai' pi.r: that our econot!:!y can well absorb.
et\
to
r
Let:
hold
~ ;;.a.~~:'
it cleer tha.t woe neither aeek nor want
cO\t"ti. ~~endlturn;.j
~!vel"ywher€
we can.
As the President
rt. ~
-
..
~-
During the past two years. .'bOth peraonal f.ncome .ct corporate
profit. have reached record levels.
Aa these total, h8ft riND.
the IIIIIOUIlt consumed by taxes baa risen even lIOn.
r ••ult:
4S
W. all kDow the
The remaining percentage of private inco. availabl.
an investment still!lUlu8 to econota1c growth ia • trickle when
it ought to be a streen.
We need more in our economy than the cIIPacity te
our preaent rate, which doe. not keep pace wi tb the
demand. of our tiMe..
at
et'lOftIOU8
We . .at brlng productive perfOAence
far closer to produetlve potential.
of inveso.nt.
arw
We must raise the lewl
We must increase COI\8\BMr delJlllftd.
We have already taken steps to help the bualne.8
e.G . . . .lty
with the investment credit and liberalized tax trea~t of
depreciation.
The new program will now extend this help to the
wage eamer as well as the manager, the CODaumer .a well . . tM
other words, is an eve.ry'day t dellar-and-eeata fact. of lif••
function.
It ... _ . that OOne lNlearaen will sell more bonds,
car ..la~ I80re care.
It _ana that the beoefit. of • moD!
taog1bl. waya in the l1fe of ewry
~riean.
CoDeicier f_ •
___at just how thia will be. done.
e(\onoaJy to stl-alate itaelf.
It
eeeka,
in carefully ccauol1ed
.tag.... to enlarge tile flw of inveabaeDt into
enterpriae
American.
~
pmdac~1v.
.•king pro4ita more profit_le, and to bei.eIl
p
".
.J.
tba
'1.
. , •• •
~
.,
•
DneIlUe
loaa of
kDoIm . . feedback.
~ba
eua
it. .lf. ad
In t.Iaa ~t year of • tax cnK. for
1IutUDc:e. of tbe 81. . b
be ~wnded by the Prealdent, we
estimated tbat roagql, • quarter oA. the
reCOWtrecl through
eM. oft. .~d. wtaat ia
feedback.
ri ... to 60 per celt.
ft~_
10•• vill be
The ucodd year die pmportion
haatually. of
~_.
tJaa full .-unt
of tile cut vill be recowred •. In 1954, for\f.nae8D.ce. baa. wre
recluceci by $7. 4 billion, but with1D tw. , . . .
tax
ceeetpt:.
...-~--
~:~J
... -
,,/,,/
..
,
"--~
,/
J'
Preaident __t.,10Ded . . belq .~fectlve whan the
pnar- 1.
fullJ
\
r~l\der
of the old firat bracket would .. taed at 16 ,.r ceat.
1 voulcl like to empbuize
ODe
tbb, -- 1f tb1. , I » p ' . 18
enactecl . . Prea1deDt Keanecly propoM8 it, virtuall, • •If
individual, every f..t.ly ad every buiDe•• in tbe UGitecl Statal
will
p4IY
lower taxes .. a
~.ult.
Certa1aly than w111 be
refo1"1U. and they will be stpi£1.calt.
hiP-income taxpayers.
bo~b
cuts
anQ
refoJ:JU --
The,. will apply to
But tM . .t effect of the ProF- -w1~1
be ttf put ..,re dollars 1D t.ba
pockets of all taxpayers. and to imp.,..
t.ba bal_ce II. eta
\
- r.The detail. of the Pre.ldent'l propoeat. will . . . . . .
fortheom.ftI!.
today.
But
I am fIOt in • poaitlon to spell tbela out hera
r
would ltke to
'.u....cuS8
with yo. tMlr overall
purpose -- afteit t firat clarify a few of the point. rew.la4
in the President's speecb.
Firat of all, tba Calendar 1963 eut will MDUDt to about
$3 bl1110R. although, as ,the President aaid 1n hi. _a ....
em the State of the Union, It will equal ... aaaual rate of
$6 billion.
President Keanedy .,il1 uk that it be enacted ..
of July 1, 1963,
80
that 001)' half of that amount will actually
fall within calendar 1963.
There has al" beea
of the bottoar bracket.
ttOme
confusion
It will be S'pl1t
~r the
e~ly t
.,littl_.
with $1,000
in each bracket for .ingle taxoay@rs, and $2. GOa for married
taxpayers filin!!; jointly.
The 14 per cent rate
vblC~_~~
I
T?F.ASURY DEPAR'1VENT
86
Washington
FOR RELEASE
R.~.
NRNSPAPERS
WEDNESDAY, JAtrnARY 16 2 1963
RDWlU Br THE ~ DOUGLAI DUUW
DC.TAIlY rII ft1I TDASUU
AI TIlE nJB1Xll ImID D&IVE TBIAIUU-DUlltaI ... ' f
!II rrATLD-BlL!aI DA, W
• •I.IW, B. C.
JARUAR! 16, 1963. 1:00 P.M.
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in bl. State of tile 1JDl_ ......... tile
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progr-.
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~alpri.ata ,n~_ tile r.as...-:
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TREASURY DEPARTMENT
Washington
FOR RELEASE P.M. NEWSPAPERS
WEDNESDAY, JANUARY 16, 1963
REMARKS BY THE HONORABLE DOUGLAS DILLON
SECRETARY OF THE TREASURY
AT THE FREEDOM BOND DRIVE TREASURY-INDUSTRY CONFERENCE
THE STATLER-HILTON HOTEL, WASHINGTON, D. C.
JANUARY 16, 1963, 1:00 P.M.
Two days ago, in his State of the Union Message, the President
outlined a new tax program designed to release those forces in our
economy that can do most to quicken our economic growth.
The President said that tax reduction and revision is the
"most urgent task confronting the Congress in 1963" -- and with
good reason. For upon our economic strength and stability depend,
not only our own security and our ability to fulfill our people's
-most urgent needs, but the security and growth of the entire Free
World.
The details of the President's proposals will soon be forthcoming. I am not in a position to spell them out here today.
But I would like to discuss some aspects of the new program that
should be of particular interest to this audience.
We have constructed the new tax program with deliberation
and prudence. We have carefully phased it to avoid an inflationary
increase in the deficit as opposed to a non-inflationary and
temporary increase that our economy can well absorb.
Let me make it clear that we neither seek nor want needless
deficits. We are doing everything we can to hold down.expenditures
everywhere we can. As the President stated on Monday, excluding
only interest on the public debt, the new budget for non-defense and
non-space programs has actually been reduced.
Let me also make it clear that a major goal of our new tax
program is to pave the way for a future economy free of the
persistent large deficits we have experience in recent years.
D-724
- 2 -
Whether we enact the tax program or not, we face the prospect
of budget deficits in the immediate future.
But unless we do
enact it, we have but little hope of eliminating a parade of budget
deficits that threaten to extend far into the future.
The best
way to minimize that threat is to enact as soon as possible, a
tax program such as the President will shortly present to the
Congress.
Our present tax system cannot meet the problem of continuing
Federal deficits, since it raises revenues at the expense of the
very growth upon which future revenues depend.
The result is
equally as harmful to the Federal treasury as it is to the
economy. The new tax program recognizes that a rise in Federal
revenues depends upon increased economic growth.
It recognizes
that our only realistic path to a balanced budget is an economy at
or near full productive employment of all its resources, both
human and material. For the reduced tax rates the President will
shortly propose will have a double impact:
they will generate not
only new and fuller levels of economic activity, but a broader and
higher base of taxable incomes as well. The new program in short,
will sustain in dynamic balance both a stronger economy and a
more reasonable revenue system.
In the meantime, we must live with temporary deficits until
the tax program makes its full impact upon the economy.
In so
doing, we should recall our experience with the tax cut of 1954.
By producing a surplus in the succeeding budget year, it
demonstrated that the economy can very quickly and generously
compensate the Treasury for an initial loss. We also know that,
even in the short run, reductions, in a restrictive tax system
lose more revenue in theory than they do in fact.
This Administration, by its fiscal policies and by its tight
discipline on expenditures, will make every effort to reduce even
temporary deficits as much as possible. Temporary deficits will
be a small price to pay for the more lasting benefits of future
surpluses.
Nor need anyone fear that this Administration will allow these
deficits to bring inflation. As Under Secretary Robert Roosa
pointed out this morning, we have, over the past two years, managed
the debt without inflation.
At the same time that we have lengthened the overall
structure of our debt, we have maintained the competitive
of our short-term rates in the international market.
And
effectively held down the long-term rates so important to
maturity
position
we have
our
- 3 -
domestic economy -- to our corporations, our municipalities, and
to our home buyers:
We have also varied the proportions of our debt financed
through the banking system to fit the changing economic and
monetary scene. In calendar 1961 -- a year of recovery -- we in
effect financed the entire debt increase through the banking system.
In calendar 1962, however, only 12 percent of the debt increase was
financed by enlarged bank holdings of government securities.
Our debt management policy will continue to maintain this
same kind of balance by trying to provide the liquidity we need
to nurture economic growth, and avoid the excessive liquidity
than can be so fertile a ground for inflation.
The Savings Bonds program -- which brings this group
together here today -- is vital to the success of our debt management policy. For the Savings Bonds Program is one of our most
significant means of placing the ownership of the national debt
in the hands of genuine savers. And because the average dollar
investment in Savings Bonds remains outstanding for seven years,
the Savings Bonds Program is an effective means of assisting our
efforts to improve the maturity structure of our debt. The people
who buy bonds buy them to save. They buy them as a long-term
investment. Thus they provide a hard-core of assured ,savings upon
which our debt management can rely, while the remainder of the
debt is placed in ways that will help avert the dangers of deflation
or inflation.
Now more than ever it is important to obtain through Savings
Bonds the widest possible ownership of the public debt. The
Payroll Savings Plan has proved to be one of our best means of
doing so. It is the only method for investing in Bonds on an
installment basis. For millions of Americans, the Payroll
Savings plan marks the difference between saving systematically
and not saving at all.
Each of you, by your leadership in one of America's leading
industries, is making a substantial contribution to the growth
and strength of our economy. You are adding considerably to that
contribution by your initiative, your guidance and your enthusiasm
in helping to further the progress of the Payroll Savings Plan.
Already Y9ur abilities and your energies are responsible for the
success of the Plan in your companies. Now you are undertaking
to extend your efforts throughout your respective Industries.
Your acceptance of that responsibility reflects, I think, as much
as anything, the qualities that have brought you to the forefront
of your industries -- and the concern for economic growth and
fiscal soundness that your business experience constantly fosters.
- 4 There are few more direct means by which you, as individual
citizens, can bolster our Nation's financial position than by
promoting Savings Bonds ownership on the part of your employees -and on the part of employees of other companies in your industry
through the cooperation of their executives.
Earlier today, Mr. William Neal, National Director of
Treasury's Savings Bonds Division, outlined our Payroll Savings
Plan for the Freedom Bond Drive and the part that your Committee
can play in spearheading the enrollment of a million new Payroll
savers. During the past year, we tried Payroll Savings Campaigns
on an industry-wide basis in a number of fields.
They were
eminently successful.
Several things helped make them so -- the
spirit of teamwork and pride within the Industry, the availability
of such industry resources as trade associations and the trade
press. But, always, the determining factor was the chairman
himself -- and his influence and standing among the members of
his industry.
I know that you realize how much your efforts can help in
the management of our debt.
I know that you are all deeply
concerned with the soundness of our country's fiscal position,
as well as with its level of economic growth. The President's
tax program will help us make giant strides forward.
The Payroll
Savings Plan can help us maintain our balance as we move.
Your objectives in the forthcoming campaign will vary from
industry to industry.
So will the pattern of operation.
But
the over-riding goal will be the same:
to get as many companies
as possible in each of your industries to conduct energetic
person-to-person drives. We will, of course, be following your
progress closely.
At some convenient time late in the year I
hope we can again sit down together to evaluate the results.
Meanwhile, each of you knows best how to enlist the active support
of the top executives in your leading companies.
I am confident
that your efforts will be highly successful.
000
- 3 -
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
~
or other disposition of the bills, does not have any exemption, as such, and 10.1
from the sale or other disposition of Treasury bills does not have any special
trea.tment, 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 herea.fier 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 ta.xation 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 tnclude 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 actual.l1
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 (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 Reserve Bank or Branch.
- 2 -
decimals, e. g., 99.925.
Fractions
~
not be used.
It is urged that tenders
be made on the printed forms 8Jld 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 a.pplied for, unless the tenders are accompanied
by an express guaranty of payment by an incorporated bank or trust company.
Dmnediately a.fter the closing hour, tenders will be opened at the Federal
Reserve Banks and Branches, following which public a.nnouncement will be made by
the Treasury Department of the amount and price range of accepted bids.
Those
submitting tenders will be advised of the acceptance or rejection thereof.
The
secretary of the Treasury expressly reserves the right to accept or reject any
or all tenders, in whole or in part, and his action in any such respect shall be
final.
Subject to these reservations, noncompetitive tenders for $20.0 or
less for the additional bills dated
1ng until maturity date on
$100,000 or less for the
~
October~ 1962
April 2.963
182
~
)
, (
91
Xf.W
days remain-
) and noncompetitive tenders for
-day bills without stated price from any 'one
bidder will be accepted in fulJ. at the average price (in three decimals) of s.ccepted competitive bids for the respective issues.
Settlement for accepted ten-
ders in accordance with the bids must be mMe or completed at the Federal Reserve
•Banks on
January~
1963
, in cash or other immediately available funds or
in a like face amount of Treasury bills maturing ...w.J..
OO
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...ry....-.:-..;.~'T""'J"""9.....
6...
3_ _ •
Cash
TREASURY DEPARTMENT
Washington
January 16, 1963
FOR nlMEDIATE 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 $ 2,100,000,000 , or thereabouts, for
cash and in exchange for Trea.sury bills ma.turing
~
January 24, 1963 , in the amount
j6&)(
of $ 2 ,103~,000 , as follows:
91 -day bills (to maturity date) to be issued January ~1963
~
in the amount of $1,300,000,000 , or thereabouts, represent-
#)(
ing an additional amount of bills da.ted October~ 1962
and to mature
April
2~1963
amount of $ 700,2~00
, originally issued in the
,the additional and original bills
to be freely interchangeable.
, or thereabouts, to be dated
182 -day bills, for $ 800,009;290
~
~
January ~1963
, and to mature ~J~ul~Y.......;;;2.;;5"",,~1;,;;.9.;.6.;;.3_ _ __
~
~
The bills of both series will be issued on a discount basis under competitive
and noncompetitive bidding as hereinafter provided, and at maturity their face
amount will be payable without interest.
They will be issued in bea.rer 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.
Jan~l!
Tenders will not be received at the Treasury Department, Washington.
1963
Each tender
must be for an even multiple of $1,000, and in the case of competitive tenders tM
price offered must be expressed on the basis of 100, with not more than three
TREASURY DEPARTMENT
,m'H
January 16, 1963
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
$2,100,000,000, or thereabouts, for cash and in exchange for
Treasury bills maturing January 2l~, 1963,
in the amount of
$2,103,500,000, as follows:
91-day bills (to maturity date) to be issued
in the amount of $ 1,300,000,000, or thereabouts,
additional amount of bills dated October 25,1962,
mature April 25,1963,
originally issued in the
$700,279,000,
the additional and original bills
interchangeable.
January 24, 1963,
representing an
and to
amount of
to be freely
182-day bills, for $ 800,000,000,
or thereabouts, to be dated
January 24', 1963, and to mature July 25, 1963.
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 Pederal Reserve Banks and Br;H,)0hes
up to the closing hour, one-thirty p.m., Eastern Standard
time, Monday, January 21, 1963.
Tenders will not be
received at the irreasury De~artment, Washington. Each tender must
be for an even mul1:;iple 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
or trust company
0
D-725
- 2 Immediately after the closing hour, tenders will be opened at
the Federal Reserve Banks and Branches, following which public
announcement vIill be made by the Treasury Departnunent 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 $200,00n or less for the additional bills dated
October 25 1962, ()l~ays remaining until maturit¥ date on
Apri125,1963)
and noncompetitive tenders for $100,000
or less for the 182-day bills without stated price from anyone
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 Ban~on January 24, 1963,
in cash or other immediately available funds or in a like face
amount of Treasury bills maturing January 24,1963. Cash and
exchange tenders will receive equal treatment. Cash adjustments
vIill be made for differences between the par value of maturing
bills accept~d 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,
uncler 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
Hevenue 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 arrlount 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 (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 Reserve Bank or Branch.
000
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"II
THURSDAY, JANUARY 17,1963
D-726
nG.IMlMARr DAtA OH DJIORfS rca CORstJJ&ITIOlf 01 mnwmP'AC'fUHD LEAD .lRD ZINC CIWlGiUlL&
I! 1BUIDDfW. JIBOCI"IAUQII 10. 3257 l.f
01 SIPfiMBa 22. ~5I
GDIIIIRLT GDDf& IIIIID -
January 1 - March 31,
to tB OIJafU mAar.xSRI!D
1363
DIImItS - J~rau:lry 1 - Jllnu.ry II, I(;G3 (or as noted)
m:s
-,.- -- --- •
CountrT
of
ProduoUoQ
•
~L
Le&d.be~
ores,
U14 lI:S."ea
•
•
I
!TDL "2_____ _ _____
l'rEK m
m:K ' "
• Le~-tiill1OQ 01" -~.. l
I
• lud ill pip aDd ban, 1-.1
t
I
Z1ao 111 blooo, pip, or .l.&Da.
c!:lrl, I <irou, N"LU!lI34 laa.d, II'~
; Zino-bial"1ng or.S ot a.ll IdDds"
l led, antuoa!u. les.d, anU..
except pyrites oon~ng DO'\ , old Nld 1rOl"l1-.nn z1no, t1 ,
• lIIoc1&l sorap ba.d, typ. maW.
ov.,. .3~ ot dono
I oa.\:r to be "'ilIamlr44'tW"S~, uno
dro •• , U1t1 uoa 81d.:alDgII
I all &1103'8 01' OCIDblna.tlolU
J
I
____________
au.
,:QJartn13-lilcrta ________._____
~
rCU3.rtarly
r Dl.ttlabl .. Lesd
Im:>or-t.
~.~~.!
QJ.~ta.
1 O>.rthblt L,~i
Powds)
10,080,000
Australia
Bd&1~
10,000,000
..,.r.-- -of- ;Qo.a..l"tarl.7
!l:?OI"ta
(Pound.s)
23,680,000
&
Qlata.
Ou4;l..a.bla Z.!.n:
{Polinds
Ic~rh
IIttlorh
7, 2'-i7, 333
5,<MO,OOO
Coap
8alglwa aud
Luza~burg
(total)
BoU,rl&
Canada
5,00&0.000
3,407,047·
1),"0,000
tI,20o,-305·
..
ltalT
JleJ:1oo
"I'D
UD. So.
14,180,000
-
1\a&Osloria
All
crt...
.~Pl••
foNt.
(total)
'.560,000
,'.180,000
~.715,G:~2
".480,000
66.,480,000
5,1;0:2,620
5,513,664
8,5~2,20'"
'.320,000
'5.120.000
5,412,720
',760.000
•
-
15,7'O,CIOO
',080,000
6,01'11),000
17,8&0.000
17,S'-iO,000
·-'.porta liS of Janua.ry '''. 1963
Th. above country da.i;nction. ar. tho • • • pacified in Presidential Proela.ation No·-3257 of Sept •• ber 22,
oeuntrie. have b •• n chang.d.
mI _ _ _ _ . . _ _
7l,MO,QCJO
7O,4aG.0ClG
14,080,000
3,771,395·
7,520,000
,.6Oa,GOO
12.810,000
1&,1&0,000
~.a
15, no, 000
7,520,000
195a.
',aeo.OCIII
5,080.000
Since tnat date the n •• es of cert.;~
~~
~:.o- 1'1.
llfu.~un
c.
m.ItASZ
THURSDAY, JANUARY 17,1963
I'BELDIDURY DAtA
(l'f
D-72b
ll!PORl'S 1m CONSIDWfION OF mruANUFACTURED LEAD .IN'lJ ZINC CHARCZJ.BLS YO ~
BY fru:SD>Ell1LU. l'ROCL.l.YUIOH !ro.
~T ClDOfA. ~ -
January
(fJ ~ 22,
.\,;"
1355
ooons iS1'W.ISHJYJ
- March 31,1,)6)
- Janu~ry 1 j , 1':;63 (or as noted)
moats - J;:nu:lry
rn:u J11__
3257
322
ba3&
rrEH ' "
ITn! J:t'
bUllh~
l
I
a lud in pigs and bars, lo~'
I
•
Le&1.bo~ ONS, nU\) d:.15t, I dross, ",h,W!J3d laa.d, 1I:l~
Zlno-hi1arin.g ONS ot' all ldndg, s Zinc tn bloo~s, plgQ, or glaD.;
and ll:S.t"tea
l 183.:1, ant~on.hl lead, ant1~
s except Pj-rttBs oonta1n1n.; not s old 9.lld .-orn·-:lUt uno, f1 \
s ~0n1&l .Onl» loa.d, type! J:atlll. I
evil" 3~ or Un"
t onlJ to bo Ncll.UlUrdotura:1, dno
dross, and %100 .k1~lDg.
s
s all e1103"- Ol" oanblnatiolU
I
t
lecl.d nos.?f.
r
.!
:Q..mr-tar-l.1 ~ota:
lCll3.r'tar-l.1 ~Jt.a.
~~arl,y CUota
,Cl;art41"ly Cl.lot..l.
I Dutiable. Lo~
Im20l"ts I D'.Ithbh L B i
!b<l:-t~
,Du<;l~bla Z!.n=
D:oort1
By r~i,;:r.t
In:00!'"h
( Poun:is )
( P oun'i.s )
t Pound:! )
( Pcun:U )
s"
Cowrtry
of
Pro:tuotioa
ITO!
• Loa-bUllion or
or
10,080,000
.hurtnUl&
10,000,000
2),680,000
7,247,g31
5.440,000
Bdgl-.zl COO60
Bel g1 WI and
~:aburg (total)
Boltri.&
Cw.nad.s
5, CM 0, 000
3.407,047·
13.4-&0,000
d,20:),-305·
-
Ital.7
16, 160,OCO
nn.
u,~.ooo
So. J..Moa
-
Tugoslcna
1.11 ctbGr tttrelp
o~ri. . (~tal)
',560,000
~,715,;:1j2
36,880,000
5, <;():2,6?0
12.830,000
zoaz.m
01' CUSTO.cs
1)6.~80,00O
37, MO. 000
5,513,66lf
70.480.000
8,532,20lf
6,,20,000
'5,120,000
5,1t12,720
',760,000
14,000,000
-
15.760,000
3,771,395·
"oao,000
6,OHO,OOO
·.'rilporh oS of J~nuary 1'4, 1963
The ~bove cuuntry de.i;n:tion. are tho.e specified in Presidential Proclamation
countri •• have been ch~nged.··
~..uu::., DI TBZ
66.480,000
7,~?0,000
,.600,000
1!exioo
hJ"Q
15.,20.000
7,520,000
No.-3257
17,540,000
17,340,000
of Septe~ber 22,
195B.
6,DSO.ClCQ
6,080,000
Since that date the n ••• 3 of
certai~
I
I
I
I
I
I
TREASUIW DEPARTI-lENT
;·!o.shingto~, D. C.
Il-nful)IATE REI£ASE
D-727
THURSDAY, JANUARY 17,1963
The Bureau of Customs announced today preliminary fiQlres showing the
quantities of ',rheat and V[heat flour authorized to be entered, or withdrawn
from ~arehouse, for consumption under the import quotas established in the
President's proclamation of May 28, 1941, as modified by the President's
proclamation of April 13, 1942, for the 12 months commencing May 29, 1962,
as follows:
Wheat flour, semolina,
crushed or cracked
wheat, and similar
,{heat products
Wheat
Country
of
Origin
Imports
Established
Established
Imports
Quota
Quota
:May 29, 1962, :
: May 29, 1962,
:to Jan. 4, 1963:
: to Jan. 4, 1963
(Bushels)
(Bushels)
(Pounds)
(Pounds)
Canada
795,000
China
Hunf,ary
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
t.1exico
100
Panama
Uruguay
Poland and Danzig
S\veden
Yugoslavia
Nonvay
Canary Islands
Rumania
1,000
Guatemala
100
Brazil
100
Union of Soviet
Socialist Republics
100
Belgium
100
795,000
800,000
795,000
3,815,000
24,000
13,000
13,000
8,000
75,000
1,000
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
1,00()
1,000
1,000
1,000
1,000
3,815,000
4.000,000
3,816,068
168
900
TREASURY DEPARTHENT
HashinGton, D. C.
IMMEDIATE RELEASE
THURSDAY, JANUARY 17,1963
D-727
The Bureau of Customs announced today preliminary fi@lres showing the
quantities of wheat and \Iheat flour authorized to be entered, or withdrawn
from warehouse, for consumption under the import quotas established in the
President's proclamation of May 28, 1941, as modified by the President's
proclamation of April 13, 1942, for the 12 months commencing May 29, 1962,
as follows:
.
Wheat flour, semolina,
crushed or cracked
wheat, and similar
wheat products
Wheat
Country
of
Origin
Established :
Imports
Established :
Imports
Quota
Quota
:May 29, 1962,
: May 29, 1962, :
:to Jan. 4, 1963:
:to Jan. 4, 1963
(Pounds)
( Pounds)
(Bushels)
(Bushels)
Canada
795,000
China
Hungary
Hong Kong
Japan
United Kingdom
100
Australia
Germany
100
Syria
100
New Zealand
Chile
Netherlands
100
Argentina
2,000
Italy
100
Cuba
France
1,000
Greece
Mexico
100
Panama
Uruguay
Poland and Danzig
Sweden
Yugoslavia
Norway
Canary Islands
Rumania
1,000
Guatemala
100
Brazil
100
Union of Soviet
Socialist Republics
100
Belgium
100
795,000
800.000
795,000
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
4,000,000
3,816,068
168
900
TREASURY DEPARTHEl'JT
Hashington
DJ.1N)IAT~
RELEASE
THURSDAY, JANUARY 17,1963
D-728
The Bureau of Customs has announced the following preliminary figures
showing the :imports for conswnption from January 1, 1962, to December 31, 1962,
inclusive, of co~odities under quotas established pursuant to the Philippine
Trade Agreement Revision Act of 1955:
Corrnnodity
..
Established Annual
Quota Quantity
.
Unit
of
Quantity
·
··
Imports
as of
December 31. 1962
Buttons •••••••••
680,000
Cigars ••••••••••
160,000,000
Number
12,966,188
Coconut oil •••••
358,400,000
Pound
248,985,827
Cordage •••••••••
6,000,000
Pound
5,091,402
Tobacco •••••••••
5,200,000
Pound.
4,607,544
Gross
270,763
TREASURY DEPARTHElJT
Washington
IMMEDIATE RELEASE
THURSDAY, JANUARY 17,1963
D-728
The Bureau of Customs has announced the following preliminary figures
showing the imports for consumption from January 1, 1962, to December 31, 1962,
inclusive, of commodities under quotas established pursuant to the Philippine
Trade Agreement Revision Act of 1955:
Commodity
••
••
•
·
Established Annual
Quota Quantity
·•
·
·
Unit
of
Quantity
Gross
·••
·
·
Imports
as of
December 31.
196~
Buttons •••••••••
680,000
Cigars ••••••••••
160,000,000
Number
12,966,188
Coconut oil •••••
358,400,000
Pound
248,985,827
Cordage •••••••••
6,000,000
Pound
5,091,402
Tobacco •••••••••
5,200,000
Pound
4,607,544
270,763
,
,
)
,-+~. Lv
~-
comB WASTES
(10 polWls)
carroN CARD STRIPS made -trom cotton having-a etapleot less than 1-"3/16 inches in length, COMBER
WASTE, LAP WASTE, SLIVER WASTE, AND ROVING vIASTE, 'tiHETHER OR NOT MANUFACTURED OR OTHERAISE
ADVANCED rrl VALUE: Provided, however, that not more than .33-l/Jperc.ent of the quotas shall
be tilled b1 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, Germ,any, and Italy,
Country ot Origin
.
:
:
United Kingdom •• • • •
Established
TOTAL QUOTA
:
Total Imports
:
: Sept. 20, 1962, to:
: January 14,·19F,3
4,323,457
1,005,918
239,690
37,212
:
Established:
33-1/3% of :
Total Quota:
.1,44l,152
Canada • • • • • • • • •
France • • • • •
British India • • • • "
Nether~ands • • • • • • •
Switzerland ~ • • • • • •
239,690
227,420
69,627
68,240
Belgium • • • • • • • • •
Japan. •• • • • • • ••
.38,559
341,535
Cbina '. • • • • • • • • •
17,322
Egypt • • • • • • • • • •
8,135
Cuba • • ••
6,544
-
76,329
21.263
25,443
I. ..
••••••
Germ&n7 • • • • • • • • •
Italy • • •• • • • • • •
44,)88
5,482,509
1I Included.1n
75,807
Imports
II
Sept. 20, 19h2
to J an u a r y 14, 1 9 h 3
(WI),
4 '-I/-"
13,295
9,036
3 0 ,14()
11,234
22,747
14,796
12,853
-
7,088
1,333,296
1,599,886
913,743
total importe, 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.
D-729
.
")
4~L0
I
I
I
I
I
I
I
I
I
I
I
I
TREASURY DEPARTMENT
Hashington) D. C.
n~HEDIATE
RELEASE
D-729
TH!IRSDAY, JANUARY 17,1963
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 th~"t1 linters) (in pounds)
Cotton under 1-1/8 inches other than rough or harsh under 3/4"
Imports September 201~91)2_-_JaDuaD 14~ 191)3
Co~ntry
of Oricin
:-:. -YIlt 2.nd the Anglo:::.r::,rptinn Suda"t1 ....•...
~~(·Il.l
J
~'i
t
.................... .
i sh Ir.dia .......... .
...........•.....••
C~-:i!ln
~ ~C):i
co ................. .
Drnzi1 •.................
1fr:ion of Soviet
~;oci2.1ist Republics •••
ArGentina •.............•
:rlc..i ti .................••
Ecundor •...............•
1/ Other
th~"t1
Established Quota
783,816
247,952
2,003,483
1,370,791
8,883,259
618,723
475,124
5,203
237
9,333
Imports
782,857
17,17'«,
39,639
8,883,259
618,723
Established Quota
Country of Origin
Honduras
Paraguay •..•..........
Colombia •.............
Iraq .................•
British East Africa •..
Netherlands E. Indies .
Barbados .............•
YOther British H. Indies
Nigeria .............. .
2/Other British H. Africa
]lOther French Africa •••
Algeria and Tunisia •••
Barbados, Bermuda, Jamaica, Trinidad, and Tobago.
2/ Other than Gold Coast and Nigeria.
]/ Other than Algeria, Tunisia, and Madagascar.
Cotton 1-1/8" or more
Imports August 1, 1262 _- Sanuar~ _ L4.
~91>3
Established Quota (Global) - 45,656,420 Lbs.
Staple length
1-3/811 or more
1-5/32n or more and under
1-3/8" (Tanguis)
1_1/8" or more and under
1-3/8"
Imports
Allocation
39,590,778
39,590,778
~,500,OOO
181,360
.4,565,642
4,565,1',42
752
871
124
195
2,240
71,388
21,321
5,377
16,004
689
Imports
TREASURY DEPARTlvIENT
Washington, D. C.
Il,1HEDIATE RELEASE
D-729
THj1RSDAY, JANUARY 17,1963
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 th~~ linters) (in pounds)
Cotton under 1-1/8 inches other than rough or harsh under 3/4"
Imports September 20, 1962~- Jam,l~.r.Y 14, 1963
Co~ntry
of
Established
Ori~in
2,::ypt and the AngloSS'JPtia..'1 Suda71 ....••••
::-en_l ............. ,. .......
~
3:i tish India .........••
-.- .G::l!'la
,
.
•••••••••
~
•••
q
~
••••
co . ~ .. ~ ,. .. ~ .. ~ ..
a
•••
Jro.zil .......... ,. ......
a
...
.·:~):l
.
T)nion of Soviet
~ocialist Republics •••
/"uGcntina ............... .
il<:!.i t i
................... .
.scundor •..... ,. ...
s
••••••
~ota
783,816
247,952
2,003,483
1,370,791
8,883,259
618,723
475,124
5,203
237
9,333
Imports
Honduras
Paraguay
Colombia
782,857
17,178
39,639
8,883,259
618,723
Established Quota
Country of Origin
........... ..
Iraq ............
"
a,a
••••
British East Africa •..
Netherlands E. Indies .
Barbados •............•
YOther British VI. Indies
Nigeria •... ., ......... .
2/Other British VI. Africa
]lOther French Africa •••
Algeria and Tunisia •••
1/
Other thaIl Barbados, Bermuda, Jamaica, Trinidad, and Tobago.
2/ Other than Gold Coast and Nigeria.
]/ Other than Algeria, Tunisia, and Madagascar.
Cotton 1-1/8" or more
Imports August 11 1962 - Januarv 14. 1963
Establisbed Quota (Global) - 45,656,420 Lbs.
Staple Lengtb
1-3/8" or more
1-5/32" or more and under
1.-3/8" (Tanguis)
1.-1./8" or more and under
1-3/8"
Allocation
39,590,778
Imports
39,590,778
1,500,000
181,360
4,565,642
4,565,642
752
871
124
195
2,240
71,388
21,321
5,377
16,004
689
Ir.rports
--.2concH \'lASTES
'(In pounds)
COTTON CARD STRIPS made-from cotton having-a. etapleof less than 1-3/16 inches in length, COl$ER
WASTE, LAP WASTE, SLIVER WASTE, AND ROVING vIAS1'E, I'iHETIIER OR NOT MANUFACTURED OR OTHZIVlISE
ADVANCED IN VALUE: Provided, however, that not more than 33-l/Jpercent 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- l€lngth in the- case- of thE7 follo\ling countries: Uni ted Kingdom, France, Netherlands,
Switzerland, Belgium, Germany, and Italy;
Country of Origin
_____
:
:
:
Un! ~d Kingdom • • • • •
Canada. •• • • • • • • •
France • • • • • • • • •
British India • • • • • •
Nether~ands •• • • • • •
Switzerland .• • • • • • •
Belgium. ' • • • • • •• •• •_
Japan __ . ___ • •
China·_ •• • • • • • • •
Egypt • _ • • • • • • • •
Cuba. • • • • • • • • • •
G<lrmany _ • • • • • • • •
Italy. • • • • • • e . • •
11 Included.in total
Established
TOTAL QUOTA
Established
Imports
II
33-1/3% of: Sept. 20, 1962
:_ Total_Quota.: to January 14,19(-,3
Total Imports
: Sept. 20, 19)2, to:
: Januarv 14, L91)3
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
1,005,918
239,690
37,272
9,036
30,lM,
11 , 234
5,482,509
1,333,296
).,441,152
90(),4~H
75,807
13,295
22,747
14,796
12,853
--
25,443
71 088
1,599,886
913,743
imports,.co1umn 2.
Prepared in the Bureau of' CustoIll8.
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.
D-72C)
....._.4""
- 2 -
Commodity
·••
·••
:
Period and Quantity
Unit:
Importsas or
:
of
:
:Quantity :December 31. 12i
Absolute Quotas:
Butter substitutes, including
butter oil, containing 45%
or more butterfat ••• '., •••••••
Cotton products, except cotton
wastes, produced in any stage
preceding the spinning into
Calendar
Year 1962
1,200,000
Pound
yarn •••••••••••••••••••••••••
12 mos. from
Sept. 11, 1962
1,000
Pound
Peanuts, shelled, unshelled,
blanched, salted, prepared or
preserved (incl. roasted peanuts but not peanut butter) ...
12 mos. from
August 1, 1962
1,709,000
Pound
11
Imports through January 11, 1963
D-730
Quota Filled
...
TREASURY DEP ARTHENT
Hashington
THURSDAY, JANUARY 17,1963
D-730
The Bureau of Customs has announced preliminary figures on imports for consumption
of the fo11mdng commodities from the begirming of the respective quota periods
through December 31, 1962:
Cormnodity
··
Period &Jd
•
Qua~tity
: Unit:
Imports of:
as of
:
:Quantity:December 31a]
Tariff-Rate Quotas:
Cream, fresh or sour ••••••••••••••
Calendar Year
1,500,000
Gallon
148,887
~Vhole
Hilk, fresh or sour •••••••••
Calendar Year
3,000,000
Gallon
315
Cattle, 700 lbs. or more each
( 0 ther than dairy COl'lS) •••••••••
Oct. 1, 1962Dec. 31, 1962
120,000
Head
41,748
Cattle less than 200 lbs. each ••••
12 mos. from
April 1, 1962
200,000
Head
53,152
Fish, fresh or frozen, filleted,
etc., cod, haddock, hake, pollock, cusk, and rosefish ••••••••
Calendar Year
28,571,433
Pound
Quota Filled
Tuna fish •••••••••••••••••••••••••
Calendar Year
59,059,014
Pound
54,483,996
\lliite or Irish potatoes:
Certified seed ••••••••••••••••••
Other •••••••••••••••••••••••••••
12 mos. from
Sept. 15, 1962
114,000,000
36,000,000
Pound
Pound
32,050,984
12,483, 827
l'l all1u ts ..........•................
Calendar Year
5,000,000
Pound
2,830,452
Stainless steel table fl"",tware
(table knives, table forks,
table spoons) ••••••••••••••••••
Hov. 1, 1962Oct. 31, 1963
69,000,000
Pieces
11
Imports through January 11, 1963
TREASURY DEPARTlffiNT
\'1 ashington
l~iEDIATE
RELEASE
THURSDAY , JANUARY 17,1963
D-730
The Bureau of Customs has announced preliminary figures on imports for consumption
If the following corrunodi ties from the beginning of the respective quota periods
,hrough December 31, 1962:
·•••
·
Cormnodity
Period and Quantity
•
Imports
·• Unit
·
•
of
·:Quantity:December
· as of31,1962
ariff-Rate Quotas:
ream, fresh or sour ••••••••••••••
Calendar Year
1,500,000
Gallon
148,887
hole Milk, fresh or sour ...........
Calendar Year
3,000,000
Gallon
315
attIe, 700 lbs. or more each
(other than dairy cows) •••••••••
Oct. 1, 1962Dec. 31, 1962
120,000
Head
4].,748
attle less than 200 Ibs. each .....
12 mos. from
April 1, 1962
200,000
Head
53,152
ish, fresh or frozen, filleted,
etc., cod, haddock, hake, pollock, cusk, and rosefish ••••••••
Calendar Year
28,571,433
Pound
Quota Filled
una fish ••••••••••••••••••• e •
Calendar Year
59,059,014
Pound
54,483,996
114,000,000
36,000,000
Pound
Pound
32,050,984
12,483,82:7
e •••
hite or Irish potatoes:
Certified seed ••••••••••••••••••
Other •••••• e • • • • • • • • • • • • • • • • • • • •
12 mos. from
Sept. 15, 1962
~uts •••••••••••••••••••••••••••
Calendar Year
5,000,000
Pound
2,830,452
Nov. 1, 1962Oct. 31, 1963
69,000,000
Pieces
31,734,35111
t~ess
steel table fl~tware
(table knives table forks,
table spoons) ••••••••••••••••••
I
Imports through January 11, 1963
- 2 -
Cormnodity
·
·•
·
Period and Quantity
: Unit:
Imports :
of
:
as of
:Quantity :December 31, ~
Absolute Quotas:
Butter substitutes, including
butter oil, containing 45%
or more butterfat •••••••••••••
Cotton products, except cotton
wastes, produced in any stage
pre ceding the spinning into
Calendar
Year 1962
1,200,000
Pound
yarn •••••••••••••••••••••••••
12 mos. from
Sept. 11, 1962
1,000
Pound
Peanuts, shelled, unshelled,
blanched, salted, prepared or
preserved (incl. roasted peanuts but not peanut butter) •••
12 mos. from
August 1, 1962
1,709,000
Pound
11
Imports through January li, 1963
D-730
Quota Filled
ftD"'IT
lI[IPAIL1'JiaI
1ReIaf"DIt'.'
",..
Ie
a.
DllDlAB m "SI
THURSDAY, JANUARY 17,1963
D-731
fRGJMDI&RI' D&!" OK IJ4IOBfS fCl\ CORSUJIPfIOlI C1I mnwmPAC!U'JD WI 1RD ZINC CllAB.CZdLI fCI _
sr lIIaDmw.. JIBOCI O'ArIOJl
JO. 3257 I.;"
" SIPfIIIBa za. ~SI
CB&IIIILT CIJDf& IIIlGD - October
Count""
of
ProduoUoQ
_
Decemb~r 31, 1)62
~m
~m
~m
,• Lead &&111011 01" bas. biilU.. I
•
•
• lead 1D pi p aDd ban, 1.",,•
•
• Lea.o1.beui.q ore8, nus d:u't, I dr'osa, N"W!a3d 18Q.d, .~~
c Z1no-b;iU'1Dg ons ot all JdDds, I %!Do 1ll blooo, pip, OJ- ,lalta;
n\
I
u4 _ " . .
I led, antuoala1 lesd, anUI except pyrl tea oon~~ DOt
I old Nld 1POnl~
I !IIoal&! .~"'P lea.d, VPI mat4l. •
OTIP ,~ ot d.Do
I oal7 to be reillallUt&a'tw-.=l, uno
I
I all a.llQT8 01' oCIIDblnationa
I
dro •• , aDd. UI10 ald..:IIIIlap
_, ___
__ ~____ . _ lud_E1.~.;l.t'.
zi=,
of
: QJarta 1"l,i--Ci1ota
r Dutiable. LelLd
l~arr.1-Qi~ta
Poun::b)
Australia
1D,080,000
tmr"ol"'h: Oo..tthblt L''3.i
10,080,000
-- -
:Q.:artarl.7 Q.lCJt&
(Poun:1s}
23,680,000
D:?orta
,00~La.bla
- - - - ~~~~ . - -
23,680,000
a.1&1aA Coal"
BelglUli aDd
Un:::
lPoWlds
Ic~l"'h
-
Luzs~bul"1 (total)
SoUna
5,040,000
5.01f0,000
CUada
1),.&40,000
13,440,000
•
ltaq
Da.
so.
Al'Pl••
1\apsloria
All cr\MP roNi.
oou:nri•• (total)
1',1&0,000
16,160,000
14,110,000
14,880,000
-
'.5&0,000
6;560,000
1S,'2O,000
15,920,000
",480,000
66,480,000
5,440,000
5,1f3d,81f7
7,52Q,QQD
],520,000
,.,,840,000
31,31+0,000
,,~,ooo
",110,000
36,639,64)
7O,4eo-ooo
70,480,000
,-,20,000
6,320,000
12,810,000
12,8]2,]06
'5,120,000
27,835,1j]6
',760.000
3,757,201
-
1;'7CO.000
15,433,109
'-010,000
6,080,000
-..
17.8010,000
•
17,840,000
The above country de.isn~tion. ar. tho •• specified in Presidential Proela •• tion No.-~2S7 of Sept~.ber 22, 195a.
...."\r' •• have be." ehang.d •. -
• •IiI... _ twa _ _ _I R .
~or"t.
co
•
Menoo
PeN
XspD
- Dec._bE,. 31, 1'362
1IfDIII- October
~m
CllUflS ar A•
' .....CICID
1;,080,000
Since tnat date the na ••• of eert.in
Y~E;;Sfi~\:l
L :";;'{ikd;~
11.. e'd
L'.O'~:i~:::. ,,>.;,
ru ;:~j L\'lL
I?,;31~Lc:g
THURSDAY)
JA~WARY
17,1962
D-731
~ D.U'A OM IJlllORTS r-cq COllS\.iH??IO;! OJ 1J:Dlft)OiJr?l,G'fDi<_,:I} 18AD Am ZlhC C~lP'C:"J<N',,"~ '1'0 Yz{l<; @Cr1'15 x:sfW.,J.sm:t)
BY i'i1%S!DEm'lH. Ff:,)";&lJ:'2J.t:LJ ED,
~l' (!.J:l?A I0D:~l)
co
~o
~251
W SZHD:R21. ~2"
October
- Dl':cember 31, 1962
Octobc,r
- Dccemb"-r 31, 1962
1$93
_ _ _ _ _.-,.._ _ _ _---:I:::.1';:;;m;;:;....,21<.::;.:;;lw_._ _ _~•...",__-:7_~-I"i'~--2?2
J.
•
Count!")"
of
•
,
J>ro:hJaUoa
~~_ _~j.~~ _<~=
Lsa.d b.u.Li(;ll or ~.U4!.l1~~ :
• 1sad in 1"1 E7l end bal"'<l, 10 <\.11
Lea.-:i.bG~ ores, flua cba-t, z dr\:'Sl?, N'Jlal~3d loud p !l~:-~
Zina .. b"arin.g ~3 of all k1.w:J,
~ lt3."ea
: 1e2.:1, ent1.!loa.19J. laM, anH: except pyrites con.tatmno nat
r !!lonie.1 t:Ot'dj) had, typo ltata.l,
Wi'll' 3% of dn"
•
J
t~
:c:uart-3rly
f Dutiable.
~01;a
Lc~d
(P~)
10,080,000
.w.rlra.llc.
~lg1an
e,ll alloys 01'
J
J .
lll"td
~Clib1nat1ollJJ ~f
lo,oao,ooo
D:?o I"t 01
(Poun'i5)
2),6ao,ooo
CoogQ
Sel giwa and
:Q.;.artarl.7 Q..Icr..a.
,Ou-<;l.a.bla Un;:
~
5,040,000
5;040,000
13,44.0,000
13,440,000
..
I'bJ,y
1:-3000
PG1"Il
16,160,000
16,160,000
th:1. So. t.frloc.
l4.,~,OOO
14,880,000
-
Tugoslovi&
All crtMl" ror.lgn
c~rl ..
(total)
&,560,000
6,560,00)
15,~20JCOO
-
15,920,000
",480,000
66,480,000
cr
C\lSTQ~
s Zino tn bloc"s, p1&l1, OI" IILala,
s old Mod ;rorn·-Ju't 7.11:0, fit
t only to bo Nil4'.nuf,,-ctu.M:::I, uno
(~)
!J;:Mrta
5, 4M3, 000
5,IJ)d,alt7
7,520,000
7,520,000
)7,MO,OOO
3?,8IJO,000
,,600,000
,6,650,000
36,639,61,~
70,480,000
70,480,000
12,800,000
12,872,70G
'S)lW,OOO
27,835,476
",20,000
',760,000
6,320,000
3,757,201
eo
15.1~,OOO
'5,433,109
6,080,000
6,080,000
..
11,840,000
17,alto,OOO
The above cuontry de$i;n~ti~ns are those specified in Presidential Proclamation No.-~257 of Sept~~ber 22, 1958.
countries have been changed.·-
Pru:?.iru;:) ll1 nIZ ~
I
'~--tet"ly CUo"ta
~i~~t
~~burg (~O~)
BoltviA
~u:....::.- _ _
__________~.____________
- -.----.----fpol.Uld:!}·
23,680,000
_~
<!.Nu, and doa lIki:mloga
n~_----L--
:~ .. rly ~ota.
Im2oMS: D>..rthoh L~·d
...
a
6,030,000
1),080,000
Since that date the na~e5 of certai~
ST ATUTORY DEBT LIMITATION
Asof ___ ~m.ber
31,1962
Washington,
Jan~ 7
,1963
Section 21 of 5econd Liberty Bond Act, as amended, provide;; t~at the f~ce amount of obli$ation!t issued under authorit
of that Act, and the lace amount of obligations guaranteed as to punclpal and Interest by the tlnlted States (except lIuch lu.r~
an teed obligations as may be held by the Secretaty of the Treasury), "shall n<'t exceed in the a8$regate '285000000000
(Act of june 30, 1959; U.S.c. r title 31, sec. 757b), outstanding at anyone time. For purposes of thu section th'. cu'rreat redemption value of any obligation issued on a discount basis which is redeemable prior to maturity at the option of the holder
shall be con sidered as its face amount." "{he Act of july I, 1962 (P. L. 87-512 87th Congress) provides that the above limit••
tion shall be temporarily increased (1) during the period beginning on july I, 1962, and ending on March 31 1963 to
'308,000,000,000, (2) during the period beginning on April I, 1963, and ending on June 24, 1963, to '305000000 000 'ud
0) during the period beginning on june 25, 1963, and ending on June 30, 1963, to S300,OOO,OOO,OOO.
""
Th~ f<?ll?wi!lg table shows the face amount of obligations outstanding and the face amount which can still b. illued
under thiS limitatIOn:
Total face amount that may be outstanding at anyone time
$308, 000, 000,01
Outstanding Obligations issued under Second Liberty Bond Act, as amended
(ntere st-be ari ng :
Treasury bills _ _ _ _ ~ _ _ _ _ _ $48,250,341,000
Certificates of indebtedness
Treasury notes _ _ _ _ _ _ _ _ __
Bonds Treasury
·Savings (current redemption value) __
Depositary _ _ _ _ _ _ _ _ _ __
R. E. A. series _ _ _ _ _ _ _ _ __
Investment series _ _ _ _ _ _ __
?2, 710,419,000
5J,6791~67,OOO
$124,640,127,000
78,371,142,950
47,535,3 01,309
109,767,500
26,0)4,000
4,442,fi?7,OOO
130,484,872,759
Certificates of Indebtedness Foreign series _ _ _ _ _ _ _ _ __
Forf!?' n Ct:: ency ~ries
Tr-..
s.- or. l,urr. Ser1es ••
Specla Fun s Certificates of indebtedness _ _ __
Treasury notes _ _ _ _ _ _ _ __
Treasury bonds _ _ _ _ _ _ _ __
)60,000,000
47.904,975
250.794,037
6,477,794,000
fi,0)8,)41,000
30,9()9,454,OOO
Total interest-bearing _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
Matured, interest-ceased _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
Bearing no interest:
United States Savings Stamps _ _ __
Excess profits tax refund bonds _ _ __
Special notes of the United States:
Internat'l Monetary Fund series _ _ __
Internat'l Develop. Ass'n. series _ __
Inter-American Develop. Banle series _ _
Total _ _ _ _
Guaranteed obligations (not held by Treasury):
Interest-bearing:
Debentures: F. H. A. & DC Stad. Bds._
Matured, interest-ceased _ _ _ _ _ __
Grand total outstanding _ _ _ _ _ __
407,904.975
2y) , 794, 37
°
43,11-25,589,000
299,209,287,771
548,052,167
52,429,894
718,905
),012,OOO,()OO
150 •056.600
J25.000,OOO
511'1,515,600
1.10'7,800
).)41,10'5,399
30 3,098,445.337
517,623,400
Balance face amount of obligations issuable under above authority
Reconcilement with Statement of the public Debt _ _
D_e_c_,e_m_b_e_r--=3:..:1:;.,L"--=:;1~9;,,,;6,;,;2~
D_e_c_e_m_b_~_;._t_e3:.....-1.:.,_1_9:.....-6_2_
(Daily Statement of the United States Treasury, ___
Outstanding _
(Dete)
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-732
3(')3,470,080,4t
517,62),4<
)03,987,7 0),Bf
~?l,6)5,~
STATUTORY DEBT LIMITATION
As of _lli~m.ber 31, 1962
Washington,
---=J:....::a:::n.=..:~::1....l..7-'l,,...:1=...9<..C6::..3L...._
Section 21 of Second Liberty Bond Act, as amended, provides that the face amount of obi illations issued under authority
of that Act, and the face amount of obligations guaranteed as to principal and interest by the United States (except such guaraateed obligations as may be held by the Secretaty of the Treasury), .. shall not exceed in the a8$regate S28~ 000 000 000
(Act of June 30, 1959; U.S.C., title 31, sec. 757b), outstanding at anyone time. For purposes of thiS section the cu'rrent redemption value of any obligatlon issued on a discount basis which is redeemable prior to maturity at the option of the holder
shall be considered as its face amount." "{'he Act of July I, 1962 (P.L. 87-~12 87th Congress) provides that the above limitatioa shall be temporarily increased (l) during the period beginning on July I, 1962, and ending on March 31, 1963, to
H08,OOO,OOO,OOO! (2) du~in~ the period beginning on AP.ril I, 1963, and ending on June 24, 1963, to S30~,OOO,OOO,OOO, and
(3) dUling the penod beglOOlng on June 2S, 1963, and endlOg on June 30, 1963, to S300,OOO,OOO,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 anyone time
$308,000,000,000
outstanding Obligations issued under Second Liberty Bond Act, as amended
\ Interest-bearing:
Treasury bills ---------$48,250,341,000
Certificates of indebtedness _ _ _ __
22,710,419,000
Treasury notes _ _ _ _ _ _ _ _ __
52. 629 ,}67 t 000 $124,640,127,000
Bonds Treasury
·Savings (current redemption value) __
Depositary _ _ _ _ _ _ _ _ _ __
R. E. A. series _ _ _ _ _ _ _ __
Investment series _ _ _ _ _ __
Certificates of Indebtedness Foreign series _ _ _ _ _ _ _ _ __
CI:enc y ~ries
Tr-.Forci~n
pas. - or. l..urr. Serl.es ••
SpeCial Fun sCertificates ().f indebtedness _ _ __
Treasury notes _ _ _ _ _ _ _ __
Treasury bonds _ _ _ _ _ _ _ _ __
78,371 ,142.950
47.535,301,309
109,767,500
?6.034,000
4,442.627,000
360,000,000
47 • 20 t ..922
'
250,794,037
6,477,794,000
6,038,3h1,OOO
30,9 n9,454.000
Total interest-bearing _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
Matured, interest-ceased _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
Bearing no interest:
United States Savings Stamps _ _ __
Excess profits tax refund bonds _ _ __
Guaranteed obligations (not held by Treasury):
Interest-bearing:
Debentures: F. H. A. & DC Stad. Bds._
516,515,600
Matured, interest-ceased _ _ _ _ _ _ __
1,107,800
Grand total outstanding _ _ _ _ _ __
Balance face amount of obligations issuable under above authority
0
407,904,975
250,794,037
43. 11-25.589,000
299,209,287.771
548,052,167
52,42Q,894
718,905
Special notes of the United States:
Internat'l Monetary Fund series _ _ __
3,012.000,()()0
150,G56,600
Internat'l Develop. Ass'n. series _ __
)25.000,000
Inter-American Develop. Bank series _ _
Total ____________________________________
Reconcilement with Statement
130,484,872,759
' De b t
f t h e P ubl IC
3, )41,10'). 399
303,098,445,337
517. 62 2,400
December 31, 1962
(Date)..
6
December
)1, 19 2
_ _ _ _ _ _--=;.--.1_'--_ "--.....;....._
_
(Daily Statement of the United States Treasury, -------~-:...-..;....-
(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-732
3()1,470,080,489
517.(2),40()
303,987,703.889
371,635,152
303,611),068,737
LJa Kl~K A. :-t. !\~'"Sf'A I'RR8,
1'ue!d!l. JaD!!!7 22. 196).
Jamaal'7 21, 196)
rne 'j rei&8~r .:::ep·art.;wilt anno.;nceJ last eveni.n..~ that the t.endAan for two ••rt•• of
1 rea a ur... uills, one serlu8 t.;;> bt: an adJ1 tional iSlSue of t.he oil1. dated !)c:tobeJ' 2S,
and tile ot.l1er 3eriea to 0I.:t dated .Januarj 24, 1~3, vdoh were ottered on JanUU'J 16,
were ope lied at v>~ ederal.8scrve 3a.n<s on Januar" (1. re.ndere wre 1mlt.ed tor
Il,)00,0Y.) ,\~Jv, ~;" U';ereano'lte, of 91-liat billa ar~ for idOv,OOO,<Xh), or thereabou\l, of
lo2-day btl :.f1.
. ""-tails of ti.1e tv,:) seriee an a. follows:
1*.
.tA., .I?
COl"lP': :
..
.~
~
;
ytl-daj lreaaurJ bill•
;-iaturln\l April. 25, 196) _
. . fJProx.
I
·:.q\lI y •
182-day Treasury bUll
aturin;;
25. 196)
pprox. F.qUl, •
Julf
,71 ;:""1u.altate
lf1gh
Low
.f ,.271
2. j i4'
1'1.2(:,0
.\vera;S'e
9,.261
2.127'
2.9'23'
Annual :iat.e
·~8.518
18.4~)
9B.4~
11
2.9)1.
2.961;1
2.976' }/
')J percent ~)r I he amount of 9l-dAJ bUla)ld for Ht the low price was accepted
6'1 percent ,:\1' t.he QflA)Unt of 1,)2-dAJ uiile oid for lit t.he low price waa acOlpteci
ulatrlot
Applied for
3 o e t o n t )2,1-:,L,')OO
iorx
," >iajel:)!lia
!-iev
'::leveland
,'ic~D....,n.i
Atlanta
I~,.ica~o
13,::Ji-"JOO
2,5)8,000
1,(;~,61J,0{)()
~17,O/.2,OOO:
32, i-61,·JOO
l},d~~,OOO:
4J,273"JOO
15,tsjj,\w
30,S6·j ,J(;O
204,6:)6,'JUV
3J,'J',I), . .lJoj
21,))() ,uoo
132,624,000
27,led,OOO
ACOIPte4
•
6,202,000
6$1,585,000
4,079,000
1,1469,000
14,621,000
2,,38,000
7,169,000
111,n4,ooo
41,114,000
9,768,000
.h.;;tlApolie
2),2)),000
1),433,000
~an..s ~ty
41,JdS,~)
3u,12j,OOO
14,S56,~)O
.,allu
,jan trancieco
29,7):'; , (.1()O
72,&,0,000
1) ,46J,000
12,212,000
7,902,OC1J
I
54,699,000
,U,)Ol,?lt.,OOO!l
31,352,78),000
)$.579.000
t800,2)8,OOO ~
rO'rAL:3
II
39,545,voo
for
i
12,248,000
1,060,)/9,000
~ ,o79,0CJ0
43,171,000
A£~li.d
11,186,000
6,100,000
)t. Loui.
a/
b/
Accepted
3
)1,6)),000
~2,2j3'))'J,(xJO
)l,7 Jh,OOO
'
t
S,Q4S,ooo
14,556,000
includes i-26),68S,u)o nonCOMpetitive tenders accepted at tiM! average pnee of '9• •
ineludee 360, 140,(I~)O nonCOMpetitive tenders accept.ed at toe average price of 96 •••
~n a couoon iS~l.e of tfw same len~?l and tor t~le same I1.rount inv •• t.d, tba
trleee dll. """',.;fud :.)rcvide yii!Lis of 2.}9:~, fur ttXt 11-dal Dills, and ).06., tel' ~
1~2-d&y billa.
Lntereat rat:.:-. on b U16 are quoted in term-a of bank diec(".' 1d\b
the return reI a t ··d to t.le faoe ,1MO~mt of tt.i<!l tii 11s na,;rat)le at maturity rather \JIll
the amount inv~8ted snct their len:,tr. Ul actual m~ber of cW,~/. related to a ~
j;ear.~n contrast, .)'1e1d8 on certi.ficatt.;8, notes, and cooda are computed 1a MJWI
of interest 00 t :'-je &.~~i.:nt ! !weat.ed, ~nd relate the mL'!'lOer of daiS rea.ain1DC 18 •
intoreet ;-J8f""e t1 t veri;Jd 1.(' t'.e act';rd number of ;:iays in the ;>erlod, witn _1&JIDIIl
C:~~·~~'J:li.ll.n; If ;:,O~ VAn :::lIle C:'l.:n(~:1 T}€riod l:i involved.
"'una-
TREASURY DEPARTMENT
-41
,
t
J
¥ 9i
'Y €%
-
:t
WASHINGTON. D.C.
FOR RELEASE A. M. NBiSPAPERS,
Tuesday, January 22, 1963.
January 21, 1963
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 additiol~_ issue of the bills dated October 25, 1962,
and the other series to be dated January 24, 1963, \lhich were offered on January 16,
were opened at the Federal Reserve Banks on January 21. Tenders were invited for
$1,300,000,000, or thereabouts, of 91-day bills and for $800,000,000, or thereabouts, of
182 ..day bills. The details of the two series are as follous:
RANGE OF ACCEPl'ED
COMPETITIVE BIDS:
High
Low
Average
91-day Treasury bills
maturing April 25, 1963
Approx. Equiv.
Annual Rate
Price
99.271
2.884%
99.260
2.927%
99.261
2.923% !/
:
·
··
l82-day Treasury bills
maturing July 25 , 1963
Approx. Equiv •
Price
Annual Rate
98.51B
2.931%
2.981%
98.493
2.976% 1/
98.496
59 percent of the amount of 91-day bills bid for at the low price was accepted
69 percent of the amount of 1B2-day bills bidior at the low price was accepted
TOTAL TENDERS APPLIED FOR AND ACCEPl'ED BY }~DEfu\1. RESERVE DISTRICTS:
District
AcceEted
: AEElied For
AEElied For
Boston
12,248,000
$
32,168,000 $ 31,699,000
$
New York
1,060,399,000
1,696,613,000
917,042,,000
Philadelphia
9,079,000
32,561,000
19.1 854,000
Cleveland
43,171,000
40,273,000
39,545,000
Richmond
2,538,000
15,895,000
13,895,000
Atlanta
7,469,000
21,338,000
30,568,000
Chicago
117,924,000
204,656,000
132,624,000
st. Louis
11,788,000
27,18S~000
33,893,000
!1inneapolis
6,700,000
23,253,000
l3,433,OOO
Kansas City
14,556,000
41,085,000
34,125,000 •
Dallas
12,212,000
19 ,1.~69 ,000 •
29,735,000
San Francisco
•
54.z699 t OOO
72 z6 50 z000
31!704 l 0OQ
TarALS
$2,253,350,000
$1,301,916 000 ~' $1,352,783,000
·
·
·
j
Acce]2ted
$ 6,202,000
651,585,000
4,079,000
14,621,000
2,538,000
7,169,000
41.,174,000
9,788,000
5,045,000
14,556,000
7,902,000
35 z579 z000
$800,238,000
'EI
a/ Includes $263,685,000 noncompetitive tenders accepted at the average price of 99.261
~ Includes $60,740,000 noncompetitive tenders accepted at the average price of 98.496
!/ On a coupon issue of the same length and for the same amoWlt invested, the return on
these bills would provide yields of 2.99%, for the 9l-day bills, and 3.05%, for the
182-day bills. Interest rates on bills are quoted in tel~,,~s of b;-lnk discount ~{ith
the return related to the face amount of the bills payable at maturity rather th1n
the amount invested and their lenGth in actual n11[.1ber of chys relat~d to a 36U-d3.y
year. In contrast, yields on certific2.tes.1 notes, and bonris are computed in tcr:~3
of interest on the amount invested, and relate the number of days re2iainin:::; in an
int~rest payment period to the actual nWlber of days in the period, with semiannual
compounding i f more than one coupon period is involved.
D-733
TREASURY DEPARTMENT
January 21, 1963
FOR IMMEDIATE RELEASE
U.S.-PHILIPPINES SIGN EXTENSION
OF $25 MILLION EXCHANGE AGREEMENT
Secretary of the Treasury Douglas Dillon and Ambassador
Amelito Mutuc of the Republic of the Philippines today signed
an agreement extending until March 31, 1963, the $25 million
exchange agreement of June 19, 1962.
The exchange agreement is designed to assist the
Philippines in its continuing efforts to promote economic
stability and freedom in its trade and exchange system.
Exchange operations on the part of the Philippine authorities
will be for the purpose of maintaining an orderly foreign
exchange system.
The agreement with the U. S. Treasury supplements the
$40,400,000 stand-by arrangement with the International
Monetary Fund which became effective April 11, 1962.
000
D-734
OIA:R.G.Pelikan :pvs:I-21-63
TREASURY DEPARTMENT
S
,
PI
2
t 4
f
'E'
January 21, 1963
FOR IMMEDIATE RELEASE
U.S.-PHILIPPINES SIGN EXTENSION
OF $25 MILLION EXCHANGE AGREEMENT
secretary of the Treasury Douglas Dillon and Ambassador
Amelito Mutuc of the Republic of the Philippines today signed
an agreement extending until March 31, 1963, the $25 million
exchange agreement of June 19, 1962.
The exchange agreement is designed to assist the
Philippines in its continuing efforts to promote economic
stability and freedom in its trade and exchange system.
Exchange operations on the part of the Philippine authorities
will be for the purpose of maintaining an orderly foreign
exchange system.
The agreement with the U. S. Treasury supplements the
$40,400,000 stand-by arrangement with the International
Monetary Fund which became effective April 11, 1962.
000
D-734
TREASURY DEPARTMENT
January 22, 1963
FOR IMMEDIATE REIEASE
TREASURY DECISION ON TECHNICAL VANILLIN
UNDER THE ANTIDUMPING ACT
The Treasury Department has determined that technical
vanillin from Canada 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 1962
was approximatelY $340,000.
TREASURY DEPARTMENT
January 22, 1963
FOR IMMEDIATE REIEASE
TREASURY DECISION ON TECHNICAL VANILLIN
UNDER THE ANTIDUMPING ACT
The Treasur,y Department has determined that technical
vanillin from Canada 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 injur,y 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 1962
was approximatelY
$3~·0 ,000.
- 3 -
t.hc
t;:1
I(~
or other uLspor-Jtlon of Treasury billG does not have any special treatment, ns
r.ucll, nndcl' the Internal TIevcnuc Code of 1954.
ltOJ1CC,
'l'he bills are subject to estate, inhcr..
eift or other excise taxes, whether Federal or State, but are exempt from all
tu..·,w.t.:l.on nOl-T or herea.fter 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.
PUl'POr.;CG
For
of to..xation the runount of d:tscount at which Treasury bills are originally sold
by the Uni tcel GtateG is considered to be interest.
Under Sections 454 (b) and 1221 (5)
of the Internal Hevenue Code of 1954 the amount of discount at which bills issued here ..
UJ1dcl' nrc sold 'is not considered to accruc until such bills are sold, redeemed or otherwisc diopoGcd of, and such bills are excluded from consideration as capital assets.
J\.ccordlnely, the mmer 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, ,mether on original issue or on subsequent pruchase, and the amount
actually received either upon sale or redemption at maturity during the taxable year
for ,mich the return is nnde, as ordinary gain or
l~sG.
Treasury Department Circular No. 418 (current revision) and this notice, prescribe
the tenns of the Treasury bills and govern the conditions of their issue.
the circular may be obtained from any Federal Reserve Bank or Branch.
Copies of
- 2 -
Bankinr; institutions generally ma;,r suomi. t tenders for account of customers pro-
a the
names of the customers arc set forth in such tenders.
Others than bonldnG
ltutions will not be permitted to submit tenders except for their own B.CCOunt.
era will be received Hi thout dep08it. from incorporated banks and trust companies
from responsible and recognized dealers in investment securities.
Tenders from
rs must be accompanIed by pa:ymcnt of 2 percent of the face amount of Treasury bj.lls
ted for, unless the tenders are accompanied by an express guaranty of payment by an
rporated bank or trust company.
All bidders are required to agree not to purchase or to sell, or to make any
ements with respect to the purchase or sale or other disposition of any bills of
issue, until after one-thirty p.m., Eastern Standard. time,
WedneSd~JanUary 30, 1963.
DMlredlately after the closing hour, tenders will be opened at the Federal Reserve
s and Branches, follOwing which public announcement will be made by the Treasury
rtment of the amount and price range of accepted bids.
be advised of the acceptance or rejection thereof.
~ssly
Those submitting tenders
The Secretary of the Treasury
reserves the right to accept or reject any or all tenders, in ~ole or in part,
lis action in any such respect shall be final.
~titive tenders for $200,000
Subject to these reservations, non-
or less without stated price from anyone
(m'.iO
~r
lrill be accepted in full at the average price (in three decimals) of accepted
~titive bids.
Payment of accepted tenders at the prices offered must be made or
~ted at the Federal Reserve Baru~ in cash or other immediately available funds on
u~
6, 1963.
The income derived from Treasury bills, vlhether interest or gain from the sale
~her
disposition of the bills, does not he.ve any exemption, as such, and loss from
THEh,Sur:Y DEPAill'HENT
HL1.shinc ton
January 22, 1963
Fon r; 1: rrmIATE nELEASE
$1 BJLUON Bi JtTjlfE TAX BILLS
1118 TrcasUTJr Dcpartment, by this public notice, invites tenders for *110~~J~
or thcl'co.bouts, of
138
tn
-day Treasury bill::>, to be issued on a discount basis under
competitive 8l1d noncompetitive biddinG as hercinafter provided.
"ill bc dcsiGnated Tax Anticipation Series, they uill be dated
and they ,·rill nc.ture
June 24, 1963
'lbe bills of thiG Gerie
February 6, 1963
-----iiW~:..--;~--
They 1nll be accepted at face value in
...~=------
payment of income ond profits taxes duc on __
J_un_e_15....c,~1_9_6_3____ , and to the e:>..-tent thr
M
are not presented for this purpose the face amount of these bills will be payable Ttrithout interest at maturity.
1963
Taxpaycrs desirine to
e.pp~
these bills in payment of June lJ
m
, income w'id profits tn.xcs havc the privileGe of surrendering them to any
li'cdcl'r'.l Rcserve Banl\: or Brench or to the O.lfice of the TJ:'eo.SU1'cr of the United staten,
178. 811i n[;"(, on , not more th[1n fifteen do.ys before
June 1.5, 1963 , Dnd recei vine receipts
M
therefor Ghm-riIlG the facc OI'lount of the bills so surrendered.
,"-,ubcD.ttcd in lieu of the bills on 01'
bCj~orc
June 1.5, 1963
ffi
These receipts may be
,to the District DirectOl
0; Intern:::.l TIevenue for thc District in 1mich such taxes c.re payable.
The bills Hill be
jfj::>ued in bearer form only, end in denolluno.tions of :~1,000, Q5,000, $10,000, $50,000,
:~100, 000, ~>500, 000 Dnd ~~l, 000,000 (maturity value).
Tenders irill be rcceived e.t Fecle:ral Reserve Banlw Dnd Branches up to the cloGine;
hour, one-thirty p.m., Eastern StDndc,rd time,
WedneSda~uary 30. 196i. Tenders will
not be reccived at the Treo.sury Department, Uashington.
E[',ch tender r,ID.st be for an eVe!
r.rultiple of :)1,000, and in the case of corilpeti ti vc tenders thc price offered must be
C;~:l.'ec3cd 011(,110
bo,s.i.s of 100, lrith not more than three deCimals, e. g., 99.925.
Fractions m;:-y no~ be used.
I·~ is urGed th8,t tenders be made on the printed forms and
J~oT1ffirded in the ,"-,peeial envelopes '\1hich I'rill be supplied by Federal Reserve Banks or
Dranches on application therefor.
TREASURY DEPARTMENT
January 22, 1963
FOR IMMEDIATE RELEASE
TREASURY OFFERS $1 BILLION IN JUNE TAX BILLS
The Treasury Department, by this public notice, invites tenders
for $1,000,000,000, or thereabouts, of l38-day Treasury bills, to be
issued on a discount basis under competitive and noncompetitive
bidding as hereinafter provided. The bills of this series will be
designated Tax Anticipation Series, they will be dated February 6,
1963, and they will mature June 24, 1963. They will be accepted at
face value in payment of income and profits taxes due on June 15,
1963, and to the extent they are not presented for this purpose the
face amount of these bills will be payable without interest at maturity.
Taxpayers desiring to apply these bills in payment of June 15, 1963,
income and profits taxes have the privilege of surrendering them to any
Federal Reserve Bank or Branch or to the Office of the Treasurer of the
United States, Washington, not more than fifteen days before June 15,
1963, and receiving receipts therefor showing the face amount of the
bills so surrendered. These receipts may be submitted in lieu of the
bills on or before June 15, 1963, to the District Director of Internal
Revenue for the District in which such taxes are payable. The bills
will be issued in bearer form only, and in denominations of $1,000,
$5,000, $10,000, $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,
Wednesday, January 30, 1963. 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 l'rice
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.
D-735
- 2 -
Tenders from others mus t be accompanied by paymen t of 2 percent of the
face amount of Treasury bills applied for, unless the tenders are
accompanied by an express guaranty of payment by an incorporated bank
or trust company.
All bidders are required to agree not to purchase or to sell, or
to make any agreements with respect to the purchase or sale or other
disposition of any bills of this issue, until after one-thirty p.m.,
Eastern Standard time, Wednesday, January 30, 1963.
Immediately after the closing hour, tenders will be opened at the
Federal Reserve Banks and Branches, following which public announcemenl
will be made by the Treasury Department of the amount and price range
of accepted bids. Those' submitting tenders will be advised of the
acceptance or rejection thereof. The Secretary of the Treasury
expressly reserves the right to accept or reject any or all tenders, i:
whole or in part and his action in any such respect shall be final.
Subject to these reservations, non-competitive tenders for $200,000
or less without stated price from anyone bidder will be accepted in
full at the average price (in three decimals) of accepted competitive
bids. Payment of accepted tenders at the prices offered must be
made or completed at the Federal Reserve Bank in cash or other
immediately available funds on February 6, 1963.
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 Section:
454 (b) and 1221 (5) of the Internal Revenue Code of 1954 the amount o.
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 (current revision) and this
noti~e? prescribe. the terms of the Treasury bills and govern the
cond~t~ons of the~r issue.
Copies of the circular may be obtained fro
any Federal Reserve Bank or Branch.
000
- 3 -
r-.nrl c:i~ch:,nG'-:! tenders u1ll receive cqur:ll treatmcnt.
Cash adjustments will 'be made
for differcnce:> betHeen the p:1r value of maturing bills accepted in exchange and
the issue price of the new bills.
The income derived from TrcD..sury 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
tre[1tm-::nt, as such, under the Internal Revenue Code of 1954.
The bills are subject
to estn,te, inheritance, gif't 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 sta.te, or any of the possessions of the United states, or by any
lOC.3.1 to,xinl3 8uthority.
For purposes of to,'B,tion the amount of discount at which
Tre~sury
bills are originally sold by the United states is considered to be in-
tercst.
Under Scctions 454 (b) and 1221 (5) of the Internal Revenue Code of 1954
the amolmt 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 ca.pital a.ssets.
Accordingly, the owner
of Treasury bills (other th0n life insurance companies) issued hereunder need 1nclude in his income tax return only the difference between the price paid for such
bills, whether on originnl issue or on subsequent purchase, and the amount
act~y
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 (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 Reserve Bank or Branch.
- 2 ~lOlt'lClO
decimals, e. g., 99.925.
Fractions may not be used.
It is urged that tenders
be ms.d.e 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 gua.ra.nty of payment by 8ll incorporated bank or trust company.
Dmnediately after the closing hour, tenders will be opened at the Federal
Reserve Banks and Branches, following which public announcement will be made by
the Treasury Department of the amount and price range of accepted bids.
Those
submitting tenders will be advised of the acceptance or rejection thereof.
The
secretary of the Treasury expressly reserves the right to accept or reject any
or all tenders, in whole or in part, 8lld his action in any such respect shall be
final.
Subject to these reservations, noncompetitive tenders for
less for the additional bills dated
1ng until maturity date on
November 1, 1962
fiiJ
$ 200,000 or
, ( 91
fii*X
days remain-
l&)
) and noncompetitive tenders for
May 2, 1963
fEij
$10'0,000 or less for the
182
-day bills without stated price from any 'one
xtm
t5J
bidder will be accepted in fulJ. at the average price (in three decimals) of accepted competitive bids for the respective issues.
ders in accordance with the bids must be
Banks on
January 31, 1963
m~e
Settlement for accepted ten-
or completed at the Federal Reserve
, in eash or other immediately available funds or
fi3J
in a like face amount of Treasury bills maturing _J_a_n_u_a_r_Y"'2l":::3:::1~,_1_9_6_3_ _ •
~
Cash
TREASURY DEPARTMENT
Wa.shington
January 23, 1963
FOR ll1r-ffiDIATE RELEASE
XX}OOOOOOOOOO~JOOOOOOGOOG(~
TREASURY'S WEEKLY BILL OFFERING
The Treasury Department, by thi s public not ice , invites tenders for two series
of Treasury bills to the aggregate amount of $ 2,100,000,000 , or therea,bouts, for
W
cash and in exchange for Treasury bills me.turing
January 31, 1963
fif
of $ 2,101tii8,OOO , as follows:
91 -day bills (to maturity date) to be issued
~
in the amount of $
lz300~0,000
January 31, 1963
til
, or thereabouts, represent-
ing an additional amount of bills dated
and to mature
May
November 1, 1962
tu
, originally issued in the
2~963
amount of $ 700,787,000
, in the amount
,the additional and original bills
tfiij
to be freely interchangeable.
182 -day bills, for $
Ufi
800,000,000
January~ 1963
, or thereabouts, to be dated
lm
, and to mature
August ~1963
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 bea.rer 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, Janu.28, 1963
Tenders will not be received at the Treasury Department, Washington.
Each tender
must be for an even multiple of $1,000, and in the case of competitive tenders t~
price offered must be expressed on the basis of 100, with not more than three
·
TREASURY
DEPARTMENT
.-=4%5
» e
f
5
en 'C"
r.5 'e •
3 -tE' II*'
U5
January 23, 1963
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
$2,100,000,000,or thereabouts, for cash and In exchange for
Treasury bills maturing January 31,1963, in the amount of
$2,101,478,000, as follows:
91 -day bills (to maturity date) to be issued
in the amount of $ 1,300,000, 000, or thereabouts,
additional amount of bills dated November 1,1962,
mature May 2, 1963,
originally issued in the
$700,787,000,
the additional and original bills
interchangeable.
January 31,1963,
representing an
and to
amount of
to be freely
182 -day bills, for $800,000,000,
or thereabouts, to be dated
January 31,1963,
and to mature August 1, 1963.
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
(maturi ty value).
Tenders will be received at Ii'ederal Reserve Banks and Branches
up to the closing hour, one-thirty p.m., Eastern Standard
time, Monday, January 28, 1963.
Tenders will not be
received at the Treasury De~artment, vlashington. Each tender must
be for an even mu11;iple of $1,000, and in the case of competitive
tenders the price offered must be expressed on the basis of 100,
~ith 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
rorwarded 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
!ustomers provided the names of the customers are set forth in such
~enders.
Others than banking institutions will not be permitted to
3ubmit tenders except for their own account. Tenders will be received
flthout deposit from incorporated banks and trust companies and from
~sponsible and recognized dealers in investment securities.
Tenders
~rom others must be accompanied by payment of 2 percent of the face
~ount of Treasury bills applied for, unless the tenders are
lccompanied by an express guaranty of payment by an incorporated bank
.r trust company.
D-736
- 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 thereot. The Secretar,v or'
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 1, 1962 (91-days remaining until maturitr date on
May 2, 1963)
and noncompetitive tenders for ,100,000
or less for the 182-day bills without stated price from anyone
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 Bankson January 31, 1963,
in cash or other immediately available funds or in a like face
amount of Treasury bills maturing January 31,1963. 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 lii'e 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 (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 fl'Ol
any ~ederal Reserve Bank or Branch.
000
I
I
TREASURY DEPARTMENT
January 24,1963
FOR TI-ft.1EDIATE RElEASE
TREASURY DECISION ON NYWN YARN
UNDER THE ANTIDUMPING ACT
The Treasury Department has determined that nylon yarn
from vlest Germany is not being, nor likely to be, sold in
the United states at less than fair value within the meaning
of the Antidumping Act.
Notice of the determination will be
published in the Federal Register.
The dollar value of imports of the involved merchandise
from Hest Germany received from January 1, 1962, through
July 31, 1902, is approximately $130,000.
T-REASURY DEPARTMENT
January 24,1963
FOR IMMEDIATE REIEASE
TREASURY DECISION ON NYWN YARN
UNDER THE ANTIDUMPING Am!
The Treasury Department has determined that nylon yarn
from West Germany is not being, nor likely to be, sold in
the Un! ted states at less than fair value wi thin the meaning
of the Antidumping Act.
Notice of the determination will be
published in the Federal Register.
The dollar value of imports of the involved merchandise
from West Germany received from January 1, 1962, through
July 31, 1962, is approximately $130,000.
"
107' ,
1.
! De ~ ro..,SIU'.! ~.. partln.l\t oIilllllOlIDced last even1.rb? that t.ne t.endent tor two ..n .. of
IreaIJurJ lJll18, one a.ria. "'~ L>e an additional issue of t.be bUl8 c1atecl loy"- 1,
and too otnar "ripe to oe dated ,January )1, l)163,whlcn wna oftend OD J&D\aI.I"12).
were ooened at '-he ."'ederal ,~a~rve ~aill(8 on JlAOuarj 28. Tude,...n lDnted tor
':1 ,)O'J-,'.l.AJ ':",-0(.1, or tl'Mtrea rxmts, of -il-daJ b111s and for 3800.000,000, or tnereabol\e, "
Ib2-day oUl..lhe details of t.M two eerit:& are &s follows
o
,.
,
"'.
..... /"' ..;
•
Dills
.."urine ,.". 2, 190)
11~ rre~.urj
')I"
[~·'_v
s
:
A:>pl"Ox. (qui".
-ri oe
H. ?()7
:n.t!t;.O
.N. '63
. :i(..~ ~~
;JOW
wera.~~
4: cerc'!.\ll~
0,:
t:.e
:;~l.'"eeflt
(\1
t. ~>E.~
?7
T,~·I··"
1;L~':n.un
•
Annual dat.e
,. ~K>Ot
2.9'27'
?.n.7~
}j
trtoe
96.507
IpN'ox.
.
2.
9SJi
I
~8.4B9
2.98n
I
98.496
2. '172'
of tl-d.:.'y bUla :;1::1 for at t.he low prioe
'.
A.rlnual liate
va~
'!I
accepttd
DlOunt of 182-da.r bills bid for att!le low prioe was acOlptecl
,.:~'_
.::..ei·li.:~d:or
Lo'istric\'
':'.c,ston
:'lewt.,rt~
i):,Lla~iel.::;~i~
2J,J\J~,(xJ(.i
.ltccepted
s
,
lJ,)02,O(~J a
hi,Jl~,OO\j
872 ,001,000
lo,J12,())O :
J. ,4~; },19 I, ~}O
,,;leveland
3:),279,WV
iiicl:in 'D'::
,:. tJ:.tr.t.:i
~4, 714,000
37 ,~7S,OOJ
10,1/34,CKN
;'l,'J6l&,OJO
::l.,>,046,000
...1<1.04.:,0
.:t. .....'y~ie
19,0l4,O{Y,;
17),1)),ex),)
2:J,080,OOO
)ti,(llJ,I..l':I()
if:'t06~,(}.}o
"i.!. ,;a,)()l.l~
;\anu4u~ ..1 t.;.
1,,404,OOJ
>U, 20'], Odv
A2:J11.e4 'or
Ar;cepted
i
12,534,000
jjO,668,OOO
• 12,534,000
6.6~4,OOO
1,694.000
14,))8,000
I
23,6)6,000
I
I
ll,04S,OOO
I
I
I
127,6J,6,OOO
10,}82,000
6,243,000
11,310,000
)I ,$94,000
3O,10~,OOO I
),
7S1 ,000
620, }J8,OOO
8,8;,,000
),7;7,000
6S,6U6,OOO
6,482,000
S,74J,OOO
8,)10,000
8,59£&,000
.::>all ,'ri!o Ci8C~
77 ,~2J,OOO
?4,953,iXY,-' •
4),126,000 •• 43,128,9
i~I, .. :
?,J34JJ~ .• ,X~, 1,)00,0)6,000 !I $1,111,299,000
1800,079,000 t'
!lln,:}u.jes~23£- ,j«i,)\.i".) ,..onoo" ·lCtitive tenders accept4tc1 at t.he a._rag. price ot 99.26)
lIb/j :nc1. ·.llit-!t. :I.. ~!, ;~7 1 ;'>.,; :.Q.4Ci,), -etiti,,'! tenders aCC8?ted at. t.he a.era,. price ot
.;allaa
::I
16,6)1,000 a
:-:.. ,101,OO'J
96.""
for tne same amount inveet.ecl, the ntUI'D.
:.,. ~ c()I.I.;o;: iss.le 0':' ~, ,', 8a ...~ lerlt.~t.L and
t.:f't'~ _'11 ~l! 'A':~.~ :'H",).rLlC :/ields or 2. ·}tH, tor tl'Je :il-day bl1a, aDd J.06~, tor \III
1:'2~"J ;)~..:.l[,.
,rlter,.'!'}', ratt'ltl or! ;)1115 are quoted in tenu of baDk 41.COUDt v1\!a
tr,. rt'It.i~n M::..f".J k '.'~ :'o!i\.!\' al;/)\k,t of tr:e oi~13 ;:l8.1able at aat.uri.t.J' rather , ....
r lii:r.. :t;! I n ;.~t..;al n\W<:)8r of day-. rela\.ed to • )6O-dI1
oert \ r ~ catt:9, notea, and 00Dda are oa.p1lted in \l1'1li
of 1;-.-t.f'1~ 8t ':,r; :.,";!:' a::, ~'t . :~v~!al...ed, and relate t:ifj number ot daY8 ~iniI1i 18 II
intenst'·"", ,;{;:-:t. C'erl~'l 1.' '..ft" act '~l .:·.tfHJer of ja,'{8 ill the period, with ._1I~
tr.e
a';OU.:lt
".ar.
;';i{'i:'Bt.;c'..~ a~jr:
C. .• f'1
. I cOJ:tr.}.:Jt, . l~~l:ia
C{\C!;:Kill.")o:'L,l'.
:',"?
."IIi
",i,' . ':';"f;
C.')·l<~.
:;f:3rlod
iE
involved.
TREASURY
DEPARTMENT
me
*'
,
W9
dP4'
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dJh f
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9
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,.
~OR
RELEASE A. M. NEHSPAPERS,
:uesday, January 29, 1963.
January 28, 1963
RESULTS OF TREASURY'S WEEKLY BILL OFFERING
The Treasury Department announced last evening that the tenders for two series of
~reasury bills, one series to be an additional issue of the bills dated November 1, 1962,
md the other series to be dated January 31, 1963, which were offered on January 23,
rere opened at the Federal Reserve Banks on January 28. Tenders were invited for
a,)OO,OOO,OOO, or thereaoouts, of 91-day bills and for $800,000,000, or thereabouts, of
.82-day bills. The details of the two series are as follows:
lANGE OF ACCEPl'ED
:OMPETITIVE BIDS:
High
Low
Average
91-day Treasury bills
maturing May 2, 1963
Approx. Equiv.
Annual Rate
Price
99.267
2.900%
99.260
2.927%
2.917% 1/
99.263
s
:
:
I
:
:
:
182-day Treasury bills
maturing August 1, 1963
Approx. Equiv.
Price
Annual Rate
98.507
2.953%
98.489
2.989%
98.498
2.972% !/
47 percent of the amount of 91-day bills bid for at the low price was accepted
27 percent of the amount of 182-day bills bid for at the low price was accepted
OTAL TENDERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:
District
Applied For
Accepted
: Applied For
Boston
$ 23,302,000 $
13,302,000: $ 12,534,000
New York
1,489,199,000
872,001,000
930,668,000
Philadelphia
29,312,000
18,312,000 :
6,694,000
Cleveland
38,299,000
37,875,000 :
23,638,000
Richmond
24,774,000
18,184,000 :
11,045,000
Atlanta
21,064,000
19,034,000 :
3,757,000
Chicago
215,846,000
175,133,000 :
127,646,000
St. Louis
34,610,000
29,080,000 :
10,982,000
Minneapolis
22,669,000
15,404,000 :
6,243,000
Kansas City
34,209,000
30,109,000 :
11,370,000
Dallas
24,181,000
16,651,000 :
9,594,000
San Francisco
77,523,000
54,953,000 :
43,128,000
TOTALS
$2,034,988,000 $ 1,300,038,000 !/ $1,197,299,000
Accepted
$ 12,534,000
620,938,000
1,694,000
14,338,000
8,855,000
3,757,000
65,646,000
6,1+82,000
5,743,000
8,370,000
8,594,000
43,128,000
$800,079,000
£I
!Includes $232,960,000 noncompetitive tenders accepted at the average price of 99.263
I Includes $48,887,000 noncompetitive tenders accepted at the average price of 98.498
I On a coupon issue of the same length and for the same amount invested, the return on
these bills would provide yields of 2.98%, for the 9l-day bills, and 3.06%, for the
l82-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 tenn3
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.
0-737
FOR IMMEDIATE RELEASE
TREASURY DECISION ON PORTI.AlID CBMII'l
UNDER THE AMIDUMPIltG N.'J'f
The 'l'rea.aury Depa.rtaIzrt baa detera1lle4
Republic is be1ng, or is
l.1kel¥ to
~
,.u..I.
be, aold at le.. tl1aa
value wi'thin the mealling ot the AatidUIIIIIP1JI8 Ao*.
this merohUld1se which bave been rece1ftd were
II III ,
fa1r
SIa1___ a of
~\IN4",
sold b,y the firm ot Fabrics Dnadn 1 caaa.
Tariff CamRiss10n for an
ia.1'..1r7
determ1 DatiCll.
Notice of the determ11latiCID aDd of 'the re1'ez eao_ of tblt caM
to the Tariff CaDmi8Siou will be publ1ahec1 1D. t)ae J'e4eral ~.
'!he dollar value of import. received dur1D& tbe ,881 ~
vas approx1ma.tely $594,000.
cc:
Mr. Hendrick
Mr. Sette1
EJstowe:ejs 1-24-63
TREASURY DEPARTMENT
January 29,1963
FOR IMMEDIATE RElEASE
TREASURY DECISION ON PORTLAND CEMEWr
UNDER THE ANTIDUMPING ACT
The Treasury Department has determined that portland cement,
other than white, nonstaining portland cement from the Jominican
Republic is being, or is likely to be, sold at less than
value within the meaning of the Antidumping Act.
fa~r
Shipments of
this merchandise which have been received were manufactured and
sold by the firm of Fabrica Dominicana.
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 1962
was approximately $594 ,000.
TREASURY DEPARTMENT
January 29, 1963
FOR IMMEDIATE RELEASE
DISTRIBUTION OF 4% TREASURY BONDS OF 1988-93
SOLD AT COMPETITIVE BIDDING ON JANUARY 8, 1963
The Treasury Department today announced the initial distribution by
investor classes of the $250 million of 4% Treasury Bonds of 1988-93 that
were sold at competitive bidding on January 8, 1963. The successful bidder
was a syndicate headed by: C. J. Devine and Company, Salomon Bros. and
Hutzler, Bankers Trust Co., Chase Manhattan Bank, First National City Bank
of New York, Chemical Bank New York Trust Co., and the First National Bank
of Chicago, and 68 others.
The distribution is as follows:
Investor Class
Amount
(Millions of dollars)
Percent of
Total
Amount of
Bonds *
Number
of
Purchasers
Insurance companies - - - -
52
State and local pension
and retirement fUnds-
47
19
77
Commercial banks- - - - - -
47
19
159
Dealers and brokers -
39
16
124
Mutual savings banks- -
17
7
44
Indi vi duals , partnerships and
personal trust accounts -
10
4
105
Corporate pension funds - -
9
3
27
State and local government funds
other than pension and retirement
7
3
22
Corporations other than banks
and insurance companies -
5
2
16
17
7
48
All other Total - -
*
--------
250
Details do not add to totals due to rounding.
D-738
109
10~
731
TREASURY DEPARTMENT
January 29, 1963
FOR IMMEDIA TF~ RELEASE
DISTRIBUTION OF 4% TRE~SURY BONDS OF 1988-93
SOLD AT COMPETITIVE BIDDING ON JANUARY 8, 1963
The Treasury Department today announced the initial distribution by
investor classes of the $250 million of 4% Treasury Bonds of 1988-93 that
were sold at competitive biddi~g on January 8, 1963. The successful bidder
was a syndicate headed by: C. J. Devine and Company, Salomon Bros. and
Hutzler, Bankers Trust Co., Chase Manhattan Bank, First National City Bank
of New York, Chemical Bank Ne,., York Trust Co., and the First National Bank
of Chicago, and 68 others.
The distribution is as follows:
Investor Class
/Uuount
(Millions of dollars)
Percent of
Total
Amount of
Bonds *
Number
of
Purchasers
Insurance companies
52
109
State and local pension
and retirement funds-
47
19
77
Commercial banks- - - - - -
47
19
159
Dealers and brokers
39
16
124
Mutual savings banks- - - -
17
7
44
Individuals, partnerships and
personal trust accounts -
10
4
105
27
Corporate pension funds - -
9
State and local government funds
other than pension and retirement
7
3
22
Corporations other than banks
and insurance companies -
J
,-
2
16
---
17
7
48
---
250
All other Total - -
*
-
Details do not add to totals due to rounding.
D-738
lO07~
731
.-,
I
\'#
TREASURY DEPARTMENT
January 30, 1963
FOR IMMEDIATE RELEASE
TREASURY DECISION ON CELU>PHANE
UNDER THE ANTIDUMPING ACT
The Treasury Department has determined that cellophane in
rolls or sheets from Canada, France, and the United Kingdom 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.
The dollar value of imports of the involved merchandise
received during 1962 was approximately $161,000 from Canada,
$297,000 from France, and $243,000 from the United Kingdom.
TREASURY DEPARTMENT
J anu.Jry 10) 1963
FOR IMMEDIATE REIEASE
TREASURY DECISION ON CELLOPHANE
UNDER THE ANTIDUMPING AC'r
The Treasury Department has determined that cellopnane in
rolls or sheets from Canada, France, and the United Kingdom 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.
The dollar value of imports of the involved merchandise
received durinG 1962 ioTas approximately $161,000 from Canada,
$297,000 from France, and $243,000 from the United Kingdom.
- 3 ~
~--
2.nn.
cxclnnr,'~
tenders will rccci ve cqual trco..tmcnt.
for differcnccG bctHccn the
p~r
Cash adjustments will be made
wlue of maturing bills accepted in exchange and
the issue price of the new bills.
The income deri vcd from TrcD..sury bills, whether interest or gain from the sale
or other disposition of the bills, does not have any exemption, as such, and loss
from t.he sale or other dlspor.;ltion of Trcnoury bills does not ha.ve any special
tref.1tmr:nt,
8')
ouch, under the Internal Revenue Code of 1954.
The bills are subject
to cstflJ.e, inheritance, gift or other excise taxes, whether Federal or state, but
a.re exempt from all taxation now or hereafter imposed on the principal or interest
thereof by any sta.te, or any of the posGessions of the United states, or by any
loc3l toxlnc; 8uthority.
For JJUrposes of tn," IJtion the runOlmt of discount at which
Trc:Jsury 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 discOIDlt at which bills issued hereunder a.re 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 a.ssets.
Accordingly, the owner
of Treasury bills (other thr:m life insurance companies) issued hereunder need include in his income tax return only the difference between the price paid for such
bills, whether on or1ginnl issue or on subsequent purchase, and the amount actwUly
received either upon sale or redemption at maturity during the taxable year for
which the return is made, as ordinary gain or loss.
Trea.sury Department Circula.r No. 418 (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 Reserve Bank or Branch.
- 2 -
-
~
dec:tma1s, 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 ot the customers a.re 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 and price range of accepted bids.
'!'hose
submitting tenders will be advised of the acceptance or rejection thereot.
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
f~.
Subject to these reserv.&tions, noncompetitive tenders for
less for the a.dd1tional bills dated
1ng
until maturity date on
$ 100,000 or less for the
(tDJ
November 8, 1962
May 9, 1963
, (
U4
91
$
:em
2~OO
or
days remain-
) and noncompetitive tenders for
tb4
182 -day bills without stated price from any 'one
¥i4
bidder will be accepted in full at the average price (in three decimals) of accepted competitive bids tor the respective issues.
settlement tor accepted ten-
dere in accordance with the bids must be mMe or completed at the Federal Reserve
Banks on
February 7, 1963
, in cash or other immediately available funds or
fDJ
in a. like face amount of Treasury bills maturing _F_e_b_ru_ary
......111'71..,,.-l_96_3_ _ •
tiXJ
Cash
TREASURY DEPARTMENT
Washington
January 30, 1963
FOR JJ.R-ffiDIATE RELEASE,
The Treasury Department, by this public notice, invites tenders for two series
of Treasury bills to the aggregate amount of $
21l00~01OOO
, or thereabouts, for
cash and in exchange for Treasury bills maturing Febru.a.r.v 7, 1963
of $2,101,425,000
91
tit
, as follows:
hi
ffi
, in the amount
-day bills (to maturity date) to be issued
in the amount of $
1,300~IOOO
Feb~7,
1963
,
, or thereabouts, represent-
ing an additional amount of bills dated November 8, 1962
and to mature
ffi
May 9iii963
amount of $ 702'ii:iOOO
,
, originally issued in the
,the additional and original bills
to be freely interchangeable.
182
fiB
-day bills, for $
Febru.~
800t~OO
, or thereabouts, to be dated
un
1963
, and to mature _..:.A.::ugu~=st':'ffii-r8~r=l:;:;9..:;6;:;.3_ _
The bills of both series will be issued on a discount basis under competitive
and noncompetitive bidding as hereinafter provided, and at maturity their face
amount will be payable without interest.
They will be issued in bearer fom 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,
ltbndey, Feb. . 4, 1963
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
TREASURY DEPARTMENT
=
FOR IMMED lATE 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
$ 2,100,000,000, or thereabouts, for cash and in exchange for
Treasury bills maturing February 7,1963,
in the amount of
$ 2,101,425,000, as follows:
91-day bills (to maturity date) to be issued February 7, 1963,
in the amount of $ 1,300,000,000, or thereabouts, representing an
additional amount of bills dated November 8,1962, and to
mature May 9, 1963,
originally issued in the amount of
$ 702,298,000, the additional and original bills to be freely
interchangeable.
182-day bills, for $800,000,000,
or thereabouts, to be dated
February 7, 1963, and to mature August 8, 1963.
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
(mat uri ty value).
Tenders will be received at I~ederal Reserve Banks and Branches
up to the closing hour, one-thirty p.m., Eastern Standard
time, Monday, February 4, 1963.
Tenders will not be
received at the Trl~asury De~artment, Washington. Each tender must
be for an even multiple or $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
or trust company.
D-739
- 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 tend~rs, 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 8, 1962, (91-days remaining until maturit~ date on
May 9 1963)
and noncompetitive tenders for ~OO,OOO
or less for the 182-day bills without stated price from anyone
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 Ban16 on February 7, 1963,
in cash or other immediately available funds or in a like face
amount of Treasury bills maturing February 7, 1963. Cash and
exchange tenders will receive equal treatment. Cash adjustments
vIill be made for differences between the par value of maturing
bills accepted 1n exchange and the issue pr1ce 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 1s made, as ordinary gain or loss.
Treasury Department C1rculqr No. 418 (current revision) and thiS
notice prescribe the terms of t~e Treasury bills and govern the
conditions of their issue. Cop~es of the circular may be obtained fr(
any Federal Reserve Bank or Branch
,
.
000
4G29
- 2 -
Federal Reserve Bank or Branch, or to the Office of the Treasurer of the United
States, and placed in the mail before midnight February 6, will be considered as
timely. The new securities will be delivered February 15, 1963. The new
certificates of indebtedness will be available only in bearer form. The new
bonds will be made available in registered as well as bearer form. All subscribers
requesting registered bonds will be required to furnish appropriate identifYing
numbers as required on tax returns and other documents submitted to the Internal
Revenue Service.
Interest on the 3-1/4% certificates of indebtedness will be paid on August
15, 1963, and February 15, 1964. Interest on the 3-3/4% Treasury Bonds of 1968
is payable semiannually on February 15 and August 15.
4ut.. 9
r
I l;
,- >
TREASURY DEPARTMENT
January 30, 1963
FOi\
J::MMBDIATE RELEASB
TREASURY ANNOUNCES $9.5 BILLION EXCHANGE AND
OUTLINES FUTURE FINANC DiG PLANS
In announcing today its plans for the refunding of $9.5 billion of securities maturing February 15, 1963, the Treasury said that this operation is to be
viewed as the first step in a probable three-phase program.
Subject to future market developments, the Treasury plans, upon completion
of the February 15 financing, to announce a "junior" advance refunding adapted
to the requir~ents of the market at that time. The Treasury is also considering
the employment for the second time of the newly developed technique for offering
long-term bonds at competitive bidding. Subject to market developments, it is
likely that the bidding for this offering of long-term bonds will occur during
the first half of April.
The holders of Treasury securities maturing February 15, aggregating $9,465
million, will have the right to exchange them for any of the follovnng securities:
A 3-1/4% Treasury certificate of indebtedness to be dated
February 15, 1963, and to mature February 15, 1964, at par; or
An additional amount of 3-3/4% Treasury bonds of 1968
originally issued April 18, 1962, maturing August 15, 1968,
at par, of which $1,258 million are now outstanding.
Cash subscriptions for the new securities \-rill not be received.
turing issues eligible for exchange are as follows:
The ma-
$5,719 million of 3-1/2% Treasury Certificates of Indebtedness
of Series A-1963, dated February 15, 1962,
;pl,487 million of 2-5/810 Treasury Notes of Series A-1963,
dated April 15, 1958, and
$2,259 million of 3-1/4% Treasu~J Notes of Series E-1963,
dated Nov~~ber 15, 1961.
Exchanges of the maturing 3-1/2% certificates and the 2-5/8% and 3-1/4%
:1otes Hill be made in a like face amount of the ne"l securities as of
Feb~ary 15.
Coupons dated February 15 on the maturing certificates and notes
should be detached and cashed ,.,-hen due.
:;:~or
The subscription boo}cs .-rill be open only on February 4 through February 6
the receipt of subscriptions. Subscriptions for any issue addressed to a
D-740
TREASURY DEPARTMENT
January 30, 1963
FOR IMMEDIATE RELEASE
TREASURY ANNOUNCES $9.5 BILLION EXCHANGE AND
OUTLINES FUTURE FINANCING PLANS
In announcing today its plans for the refunding of $9.5 billion of securities maturing February 15, 1963, the Treasury said that this operation is to be
viewed as the first step in a probable three-phase program.
Subject to future market developments, the Treasury plans, upon completion
of the February 15 financing, to announce a "junior" advance refunding adapted
to the requirements of the market at that time. The Treasury is also considering
the employment for the second time of the newly developed technique for offering
long-term bonds at competitive bidding. Subject to market developments, it is
likely that the bidding for this offering of long-term bonds will occur during
the first half of April.
The holders of Treasury securities maturing February 15, aggregating $9,465
million, will have the right to exchange them for any of the following securities:
A 3-1/4% Treasury certificate of indebtedness to be dated
February 15, 1963, and to mature February 15, 1964, at par; or
An additional amount of 3-3/4% Treasury bonds of 1968
originally issued April 18, 1962, maturing August 15, 1968,
at par, of which $1,258 million are now outstanding.
Cash subscriptions for the new securities will not be received.
turing issues eligible for exchange are as follows:
The ma-
$5,719 million of 3-1/2% Treasury Certificates of Indebtedness
of Series A-1963, dated February 15, 1962,
$1,487 million of 2-5/8% Treasury Notes of Series A-1963,
dated April 15, 1958, and
$2,259 million of 3-1/4% Treasury Notes of Series E-1963,
dated November 15, 1961.
Exchanges of the maturing 3-1/2% certificates and the 2-5/8% and 3-1/4%
notes will be made in a like face amount of the new securities as of
February 15. Coupons dated February 15 on the maturing certificates and notes
should be detached and cashed when due.
The subscription books will be open only on February 4 through February 6
for the receipt of subscriptions. Subscriptions for any issue addressed to a
D-740
- 2 Federal Reserve Bank or Branch, or to the Office of the Treasurer of the United
states, and placed in the mail before midnight February 6, will be considered as
timely. The new securities will be delivered February 15, 1963. The new
certificates of indebtedness will be available only in bearer form. The new
bonds will be made available in registered as well as bearer form. All subscribers
requesting registered bonds will be required to furnish appropriate identifying
numbers as required on tax returns and other documents submitted to the Internal
Revenue Service.
Interest on the 3-1/4% certificates of indebtedness will be paid on August
15, 1963, and February 15, 1964. Interest on the 3-3/4% Treasury Bonds of 1968
is payable semiannually on February 15 and August 15.
P)HtEI';:..A;i[ 1. ~. !6.'WS?1P£BS,
'Fbv!d!f. .!!I\\I!!'l
RESl'L'fs
)1.
')1"
.~ )0,
1963·
U6J
fReAJ';ny's $1 BIWON ll6-DlY tAl ""TICmnOi &ILL orraI.m
!he ~1'7 ~t ~ la8\ ....n1ng t.bat t.M ' ....re , . tl.ooo.OQQ,GII
or t.be~, ot Ta Ant,lo1paUora Seri.. 1~ TNUUI'1 1tl118 t4 .. dat •• ~I
1963, and to _t.ure ~ 24, 1963, lIIl'dAah .... ottand OIl
II, .... ep. . . . . . till
Fedlen1 ~ iJa.ryka OIl J.....ry )0.
J...,.,
l'be diet-aile 1)1 th1a 1M_ ...... tollllVtl.
fot&l applied tOIl" lot..al aooeptecl
-
~
.,000,S18,000
1,OOO,L.lh,OOO (1Do1wtM $42,068,000 ....... - •
~tltJ.Ye buU . . . a.epW Sa
tw.l at. tbe _ _ _ prJ.- ehGIa . . . .)
of aooept.eci ea.peUt.1ft bla.u
Pi&b
- 98.891
Lov
- 96.61)
- 9U.877
A~
(SC
p8I'CIeDt
at
u.
lquiftl8nt,,..te of cl18OO1Ut, .,.,....
ItIIQUDt
•
•
""
..
•
I.JlaOS·
."
"
•
I.""·
bid tor at. tn, low pr1ce . . . . . .p...)
to\al
AWlS."
9oet.<Jo.
New York
•
r_ ..
21 ,)70,000
2),bC1;,OOO
Cl~lancl
~18ODd
20,101,000
2,202,000
Atlanta
S\. IAu1a
Minn •• pella
Itanau Ct.ty
f'4,llu
San JrranailOO
•
•
II
ToW.
..-pW
1,6S2,6S9,OOO
Pt.l1adelph1a
Obioago
I"'. ,._
15,921,000
159,127,000
12,465,000
19,8)2,000
15,420,000
24,)00,000
88.699aOOO
N, 06l.,Sl8,0'l0
!I Ja a
cCNpOn 1M_ of t.ba . - lenctJ'. and for the • _ _ DUId.; 14.......... N t . e,
t.,he.. bUlJl would Jftride a 7i~ld of ).OC¥. InMreat.,...... Oft "'11........., •••.
~ or bank disoount tlith t.eA return Nlated tAt t.be rae. •• n..' of ..... IIU.II ",.
able at . .turlt.y ratJ-.r thaD the MtOQnt. trw.ated and t.ha1r ~ 18
,r dqa rel&t.u t.o a ~,.ar. L., cODWUt, y1el.de Oft ~. . . . _ . . . ~
banda an o·.-puted in t.nY or intereat. ~ the ...... iDYen.ct. ... NI_ . . _
bel" of t1qs ~ in an int.entat. ~..._ aArlod \0 the _tual .111 • ., .... II
U-.e period, vit.h ~ c.-AUIId1ng i t MOre t.hM ae eot&pOn ~ Sa 1& lI;yll
Ntrf" .".
TREASURY DEPARTMENT
January 30, 1963
[<'OR fLElliASE A.M. NElrISPAPERS,
rhursday, January 31, 1963.
RESULTS OF
T&<:ASl_:m" S :()1 BILLIon 138-DAY TAX Mn'ICIPATION BILL
C)Fll:;hn;~r
The Treasury Department announced last eveninc; that the t.ende:'s for .$1,000,000,000,
)r thereabouts, of Tax Anticipation Series 138-day Treasury bills to be dated February 6,
1963, and to mat1..u'e June 24, 1963, which were offered on January 22, were
Federal Reserve Banks on January 30.
The details of this issue are as
o~;ened
at the
follo~Ts:
Total applied for - $2,061,518,000
Total accepted
1,000,434,000
(includes 042,068,000 entered on a
noncompetitive basis and accepted in
full at the average price shovm below)
nant;e of accepted competitive bids:
High
Low
Average
- 98.891
- 98.873
- 98.877
Equivalent rate of discount approx. 2.893% per annum
2 .91~0% "
" "
"
"
"
"
2.929%
"
"
"
" "
" "
y
(58 percent of the amount bid for at th,; low price was accepted)
Federal Reserve
District
Boston
New York
Philadelphia
Clt!veland
Richmond
Atlant.a
Chicago
St. Louis
}'li nneapolis
KansB.s City
Dallas
San Francisco
TOTAL
!
Total
Applied For
$
27,370,000
1,652,659,000
23,4 05,000
20,101,000
2,202,000
15,927,000
159,127,000
12,485,000
19,832,000
15,h20,000
24,300,000
88,690,000
Total
Accepted
$ 18,530,000
823,825,000
1,4 05,000
4,101,000
2,202,000
12,927,000
68,977,000
6,485,000
7,572,000
4,920,000
9,040,000
40,450,000
$2,061,518,000
$1,000,434,000
On a coupon issue of the same lengtb and for the same amount invested, the return on
these bills woul~ provide a yield of 3.00%. 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 len§;tb in actual number
of days relE.ted 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 nurnbel' of days remaining in an interest payment period to the actual number of days in
the period, with senuannual compounding if more than one coupon feriod is involved.
D-741
- 23 -
balance in our international accounts -- that is a pledge that
we will conduct our affairs in a manner that will maintain our
recent record of price stability.
That is why it is essential that
we finance our deficit in a prudent way, with an eye toward the
future as well as the present.
That is why we need to maintain
a flexible monetary policy, alert to developments as they emerge.
And, above all, that is why it is so important that labor and
business alike, as the stimulus from our tax program takes hold,
continue to seek out more efficient methods of production and
display restraint in their wage bargaining and pricing decisions.
This process should be greatly facilitated by the new incentives
and the increases in after-tax incomes of individuals and business
enterprises alike which will be provided by our tax program.
It
is in this context of responsible citizen action within a framework
of effective public policy that tax reduction will be a boon to us
all.
- 22 -
mechanism can effectively substitute for the hard and continuing
task of steadily improving our own balance of payments.
The
"easy", obvious savings have already been made -- the hard core
of the deficit that remains will require the conscious effort
and understanding of all groups in the economy, as well as the
cooperation of our friends abroad who now find themselves in a
strong position.
In this connection, I was much interested in reading the
report of your own subcommittee, chaired by Congressman Reuss,
that recently made available a mass of valuable and provocative
material on the balance of payments and related monetary arrangements.
The emphasis in your own conclusions on the fundamental necessity
for working with our allies to achieve a more equitable sharing of
the burdens of defense and aid, with full recognition of the
increased capacity and economic strength of other industrialized
nations in recent years, seems to me entirely appropriate.
And
I also share your view that we can find no solution to our problems
by simply multiplying guarantees for dollars in the hands of
foreigners.
The Need for Price Stability
But there is one sort of "guarantee" that is vitally necessary
if we are to maintain the confidence of our friends abroad and
successfully achieve our twin goals of domestic expansion'and
- 21 -
arrangement -- making available in time of demonstrated need
a pool of up to $6 billion of convertible currencies -- was a
source of special gratification.
Moreover, we have now tested
in a wide variety of situations the usefulness of operations
for our own account in both the spot and forward foreign exchange
markets, of reciprocal currency agreements by the Federal Reserve
with the monetary authorities of other industrialized countries,
and of Treasury direct borrowing at short and medium term from
other countries in a strong payments position.
The effectiveness
of these arrangements, supplementing the resources of the IMF
itself, in meeting incipient strains of various kinds -- whether
directed against the dollar or other currencies -- was demonstrated
at the time of the stock market disturbances last spring, and
again during the Canadian exchange crisis and the Cuban situation.
Similarly, the new cooperative arrangements in the London gold
market have been helpful in dispelling a potentially speculative
atmosphere, and the price of gold in that market declined toward
the end of last year.
For much of January, the price has been
below $35.06, touching the lowest level since 1959.
No doubt there is room for further innovation and improvement
in these areas.
We are continuing to study these questions in
cooperation with other interested countries.
But no monetary
- 20 -
and the President has therefore proposed a sharp step-up in our
export expansion program.
Our long-term capital exports continue
to reflect the absence of effective alternatives abroad to our
own well developed capital markets, as well as the inadequate
investment opportunities at home.
And the burdens of aid and
defense must be more equitably shared.
Strengthening the International Payments System
We cannot take comfort in the thought that an "easy" solution
can be found in some new monetary arrangement that will shield
us from the necessity for taking corrective action.
Any effective
monetary arrangement necessarily presupposes, not balance every
year, but an ability and willingness to avoid large and continuing
deficits, as well as the full confidence of a group of willing
lenders.
We need a stable monetary system, resistant to the strains
and shocks that can quickly develop as a result of sudden and
massive flows of funds between countries, and capable of meeting
the needs of a growing world economy for international liquidity
and access to credit.
During the past year, we have made great
strides toward strengthening the existing system.
The prompt
ratification and implementation of the special IMF borrowing
- 19 Improvement developed in other directions as well.
Commercial
exports rose moderately, despite slower growth in Europe -- our
most
ra~idly
expanding export market.
The steady increase in
earnings on our overseas investment provided a factor of long-term
strength.
Short-term capital outflows, which had reached
exceptionally high levels in 1960 and 1961, declined, although
they still remain a major factor in our payments difficulties.
These outflows, including items not specifically recorded in our
balance of payments statistics, accounted for approximately 70%
of our total deficit as compared to about 80% in 1961.
Last year's deficit resulted in a gold loss of $890 million
as compared to $857 million in 1962.
Toward the end of last
year, and continuing into early 1963, ten weeks passed in which
there was no net decline in our gold stock.
This situation could
not be expected to continue in the face of our payments deficit,
and the gold outflow resumed in January.
Further moderate outflows
can be expected in the coming weeks and months.
The improvement in our balance of payments thus far is simply not
good enough if we are to maintain a strong dollar and fulfill
our basic commitments for aid and defense.
The hard job of
searching out and penetrating new foreign markets has only begun,
- 18 With merchandise imports rising by $1.6 billion last year, the
moderate progress recorded in reducing our deficit from the
$2~
billion of 1961 was possible only because the concerted
efforts to stem the dollar drains directly associated with
Government activities have begun to bear fruit.
Most importantly,
net military spending overseas declined by almost $600 million
(on the basis of incomplete data), reflecting offsetting purchases
of military goods and services by our allies.
The vigorous
efforts to economize on our own military spending overseas merely
served to hold the over-all total level while absorbing the costs
of larger forces and higher foreign price levels.
Prepayments
of loans by France, Italy and Sweden amounted to over $650
million, approximately comparable to our 1961 receipts from this
source.
A larger proportion of our aid to the less developed
countries was directly reflected in purchases in this country,
and fully three-quarters of this fiscal year's new AID commitments
will result in American exports in coming years.
Further savings in Government spending overseas are clearly
necessary.
I am confident that they will emerge as the new
Government-wide control system for international transactions,
established within the Bureau of the Budget, becomes fully effective
as an administrative device for budgeting our foreign exchange outlay
..
4~•
I
~-
;
- 17 posture in markets at home and abroad.
Our leadership in
research and its application to industrial products -- products
that account for a large portion of our total exports -- will
also be further bolstered.
To realize these potential benefits for our balance of
payments, it remains critically important that we maintain
price stability.
The wage and price guideposts reiterated in
the Report of the Council of Economic Advisers clearly set
forth the general standards by which price and wage decisions
may appropriately be evaluated from the standpoint of the public
interest.
The increases in take-home pay and profits implicit
in our tax program should make it easier for both sides to
accept wage settlements and to make pricing decisions
that
lie well within these guideposts, effectively supporting our
goal of price stability.
Balance of Payments Results
One of the disappointments of the past year has been the
relatively slow improvement in our balance of payments.
The
preliminary figures presently available, indicating that our
over-all deficit remained somewhat over $2 billion, demonstrate
conclusively that we must seek out and apply even more vigorously
measures specifically aimed at restoring lasting equilibrium in
our international accounts.
16
period when tight money has often sharply curtailed homebuilding
is another sign of the really unique character of this period.
Tax Policy and the Balance of Payments
The continuing need for striking an appropriate balance
between domestic and external considerations in the execution
of debt management and monetary policies. will not be fundamentally
changed by our tax proposals.
However, we have developed the
tax program so as to reduce the possibility of serious conflicts
arising.
For one thing, it will take on a good part of the
burden for encouraging expansion that is being borne by monetary
. policy, thereby easing the problems of the monetary authorities
should they one day find themselves compelled to deal more
vigorously with the balance of payments.
Equally important, the stimulus to domestic investment, the
new incentives for cost-cutting and modernization, the encouragement
for industrial research, and the higher profits implicit in the
tax program will support and reinforce our more specific efforts
to deal with the balance of payments problem.
Some capital that
is now inclined to seek employment abroad will find new
opportunities opening up in this country.
The productivity of
our industry should be reinforced, bettering our competitive
15
by other sectors of the economy.
I am confident that, as the
economy does reach its full potential, the tax rates we are
proposing will in fact generate revenues adequate to cover the
essential expenditures of Government
The course of interest rates in the months ahead will be
affected less by Treasury debt management decisions than by the
course of the economy itself, and by the policies of the Federal
Reserve in response to emerging developments both domestically
and in our balance of payments.
Whatever the future may bring in this respect, it is clear
that easy money and ample availability of credit has been a
major factor supporting the economy throughout this period of
expansion, and remains so today.
Seldom in our history
certainly not since World War II -- have most long-term interest
rates actually declined during a recovery period.
I was
interested to see recently a report that the larger New York banks
charged an average of 1/8 - 1/4% less per annum for new term
loans in 1962 than was the case a year earlier -- a striking
reflection of the downward pressures on the rate structure and
aggressiveness of banks in seeking out new borrowers, even while
the so-called prime rate remained unchanged.
The record volume
of mortgage financing in 1962 -- coming at a time in the expansion
14
flow from higher incomes.
The act of saving may itself be the
end product of a long sequence of prior spending decisions,
each of which will tend to add to the level of business activity
and the incomes of workers.
The taxpayer himself, when he devotes
part of his tax saving to purchases of goods or services, will
be only the first link in this chain of spending, income generation,
and saving that lies at the heart of the expansionary process.
Under these circumstances, it is quite possible and practicable
for the Government to absorb some of the new savings for its own
use, without bringing undesirable upward pressures on interest rates
or diverting funds from use in other investment channels.
As the economy reaches full employment, and potential savings
can be fully and productively employed in financing our expanding
prtvate economy, the situation becomes quite different.
Then, it
is quite true that wedging Government bonds into an already taut
capital market will raise interest rates and curtail private
spending.
And, in a potentially inflationary situation, that
might be appropriate.
Even more to the point, that would clearly
be a situation in which Government policies should be directed
toward budgetary balance and surplus, thereby restraining demand
and (through debt retirement) releasing funds for productive use
13
success provides every reason for further testing from time to
tLme as market conditions and our own objectives make that
desirable.
Financing the Transitional Deficit
It-is sometimes argued that, to the extent we tap savings
in financing the deficit, the desired stimulus from our tax
program will be offset -- that we will, in effect, take back with
one hand the money that we provide with the other.
This over-
simplified account of the financing process overlooks several
important considerations.
First of all, however
the deficit is
financed, it will leave untouched the spur to the economy from the
greater incentives for productive effort and new investment
brought on by tax rate reduction.
Equally important, there is
every reason to believe that, until we return closer to full
employment, the flow of longer-term investment funds generated
by rising levels of business activity will exceed the combined
borrowing requirements of individuals, businesses, and state and
local governments -- just as has been the case over the last
two years.
An increased volume of savings will not require decisions
to reduce spending by business or consumers, but rather will
12
While hard and fast mechanical rules cannot be set down
in advance, this guide implies a continuing need to tap 10ngerterm savings -- either directly, or through the complex of
savings institutions -- for a portion of the funds required to
finance our forthcoming deficit.
We are fortunate, in approaching
this task, that techniques have been developed that permit us to
raise funds in the intermediate and longer-term sectors of the
market with a minimum of disturbance to other borrowers.
I am
thinking partly of our advance refundings, which have now been
tested and found useful in six instances over the course of two
Administrations.
I am also thinking of our recent experience
in auctioning long-term bonds through competing syndicates of
security dealers -- an experiment that owes much to the continuing
interest and support of Senator Douglas.
I am happy to report
that our initial venture in selling $250 million of long-term
bonds by that means was highly successful in achieving a wide
distribution of the new securities, in this instance
at an
interest cost virtually equivalent to the prevailing yield for
comparable outstanding securities.
While it is still too soon
to permit a judgment concerning the ultimate role of this new
technique within our total debt management program, the initial
11
marketable debt -- symbolized by a
7~%
increase in its average
maturity -- without diverting funds from productive use elsewhere
in the economy.
In fact, most long-term interest rates drifted
down below their recession lows over the course of the year.
As we move ahead in financing the deficit, we will remain
alert to the need to maintain a debt structure that will not
contribute to inflationary pressures as full employment is
restored.
This will require distribution of the debt among the
various maturity areas and investor groups in a manner that avoids
excessive liquidity, either in the form of new money creation or
short-term Treasury securities.
Of course, at a time of unemployment and excess capacity
like the present, the use of short-term securities or commercial
bank financing is fully justified in appropriate amounts.
A growing
economy needs more money and other liquid assets, and short-term
Government issues may help to fill these needs.
The compelling
policy requirement -- and the guide that we have consistently
observed -- is to insure that the growth of liquidity instruments
of all kinds does not run ahead of the ability of the economy to
absorb them without inflation.
10
None of us can be happy with the temporary increase in the
deficit that our tax program implies for fiscal 1964 -- although
I should point out that the estimated net revenue loss of $2.7
billion is small when compared to the $9.2 deficit that we face in
any event as a consequence of the failure of our economy to achieve
reasonably full capacity operation.
The. phasing of the full
program over three years, but with enactment in a single package,
is designed to minimize the transitional deficit, before balance
can be restored, without delaying the impact on business incentives.
And I am confident that we will be able to manage a deficit of the
magnitude we foresee without endangering either our record of
price stability or our balance of payments position -- just as we
have successfully financed our deficits of the past two years.
We have been aided in that task by a rising flow of savings
that individuals and businesses have been willing to commit to
investment for a substantial period of time.
Almost all the
deficit in 1962 was financed outside the banking system.
Moreover,
the increase in outstanding Government securities maturing in more
than five years was substantially greater chan the total rise in
the public debt.
Under the circumstances, it was possible to
achieve this progress toward restructuring and funding the
- 9 -
here today.
Rather, I would like to consider the program in
the perspective of the over-all financial policy of this
Administration, for tax reduction -- however vital -- can be
only a part of a well-conceived financial program for the
mid-1960's.
Ultimately, one result of our proposed tax program will be
a higher level of Federal revenues than can reasonably be
expected if we continue to hold back our productive power
with a tax structure that saps initiative and drains off such
a large fraction of income that reasonably full employment
becomes an ever receding mirage.
The reason is very simple
revenues reflect not only the level of tax rates, but also
the level of incomes to which they are applied.
Our own
experience -- most recently following the 1954 tax reduction
shows that this kind of stimulus to an idling economy can
be the surest path to vigorous expansion and budgetary balance.
And the record of the past five years also demonstrates the,
futility of deferring action in the hope that some other
stimulus
the job.
always just beyond the visible horizon -- can do
- 8 -
means of expanding demand would clearly violate important
considerations of public policy.
Finally, consumers -- accounting
for two-thirds of our whole gross national product -- have
regularly been spending a normal share of their after-tax incomes.
Further increases in their outlays can be expected, but only as
we generate a rise in income and employment from other sources.
The Tax Program and Debt Management
We have at our command an instrument that will permit us
to cut through this impasse.
A broad consensus has developed
among leaders from all sectors of our economy that fresh
incentives for investment, for risk-taking, and for personal
effort -- supported by the release of additional purchasing
power through tax reduction -- offers a practicable means for
breaking through the sluggish performance of recent years to
achieve the difficult transition to sustained and self-reinforcing
prosperity.
This consensus is embodied in the program of tax
reduction and reform that the President presented to the Congress
last week, and that lies at the core of our economic and
financial policy.
I shall be testifying on that program in
detail before the House Ways and Means Committee next week,
and am not in a position to treat the specifics at length
- 7 -
of serious recession in the months ahead appears remote.
But,
in an economy with a growing labor force and steady increases
in worker productivity, we cannot be satisfied with stability
or creeping advance.
And the fact of the matter is that we
need, and could effectively utilize at a high level of employment,
much more investment than has been forthcoming.
Much of the difficulty lies in an absence of sufficiently
strong and assured markets -- markets more in line with our
potential capacity to produce.
After five years of inadequate
progress we cannot confidently sit back in the hopes that such
markets will appear spontaneously, without the encouragement
of fresh incentives and the release of new purchasing power.
Residential housing, for instance, had a good year in
1962 -- helped by the prevailing ease of mortgage credit.
But,
it would be unrealistic to expect, within the limits set by
family formation and current income levels, that that sector
can supply the further expansionary drive that is needed.
Government expenditures, at all levels, are also rising, but
not appreciably faster than current tax rates are draining
income from other sectors of the economy.
To permit expenditures
to rise further, in areas of less than compelling need, merely as a
- 6 -
reached as long ago as 1957.
below earlier peaks.
In real terms, spending is actually
We have been adding to our capital stock
at a rate of little more than 1-1/2% per year since 1957 -- well
below the amounts that are needed to support a vigorously growing
economy.
Moreover, businessmen, once the threat of a steel strike
was eliminated early last
year, have followed increasingly
cautious inventory policies, adding to stocks only where clearly
needed to support their current level of sales.
The explanation for these conservative business policies
is not hard to find.
With many industries faced for some time
with more capacity than they could effectively use, and with
profit margins under pressure over a period of years, businessmen
understandably have confined their investment spending largely
to those replacement and modernization projects offering clear
and prompt cost advantages.
With fast deliveries assured, and
with constantly improving methods of inventory control allowing
smaller inventories to serve a given level of demand, incentives
for adding to their volume have been weak.
These investment and inventory practices, rooted in the
experience of the past five years, are one reason why the danger
- 5 -
capital and attract funds from abroad.
Price stability is essential
both to broaden our export markets and to achieve balanced growth
at home.
The continuing challenge before us is to seek out and apply
that blend of practical policies that, taken together, promise
to support both our domestic and international objectives.
This
requires, first of all, a clear appraisal of existing trends
not just for recent months or the past year, but for a long
enough period to appreciate the underlying forces at work in
the economy.
It is in this longer perspective that the performance
of the past year, while gratifying in many respects, has demonstrated
the need for new approaches.
The Key Role of Investment
One fact that stands out in our recent experience has been
the sluggishness of business investment -- the kind of spending
that both generates current income and enlarges our productive
potential.
This is true in relation to both our earlier postwar
record and that of our aggressive foreign competitors.
To be
sure, business spending for plant and equipment rose by 9% in 1962.
But the gains slowed appreciably after the early months of
recovery and, in dollar volume, outlays barely surpassed levels
- 4 powerfully influences our trading partners, rich and poor alike,
and which is itself subject to strong competitive pressures
from
ab~oad.
Our growth -- or failure to grow, the efficiency
with which we produce, the climate for domestic investment, and
our success in achieving price stability all affect the flows
of goods and capital between nations.
And the strength and
stability of our currency concern every nation with a stake
in freely-flowing trade and a durable international payments
system, for side by side with gold itself, the dollar serves
the free world as its chief reserve and trading currency.
The continuing need to reconcile our domestic and internatioo,
objectives sometimes limits the kind and scope of specific action
that we can take in pursuit of one goal or the other.
But
fundamentally these goals need not be incompatible; indeed,
they can reinforce each other.
Faster growth at home and an
efficient industry, able to pour out the new products eagerly
sought in world markets, both depend upon a higher level of
domestic investment, incorporating the latest technology and
exploiting the fruits of new research.
A dynamic domestic
economy, alive with new and profitable investment opportunities,
is ultimately the only way -- consistent with our free market
system -- by which we can discourage excessive outflows of
- 3 -
Our difficulties are not those of crisis -- a sharp domestic
recession -- an unmanageable drain of international reserves -an early relapse into inflation.
Rather, the problem lies in a
gradual accumulation of deficiencies over a period of years, each
interacting with the other to retard our progress.
Slow growth
and less-than-capacity operations inevitably dull incentives to
invest, encourage inefficient "make work" practices, and lead to
pressures on unit costs and profit margins.
In this setting,
investment opportunities abroad, within the borders of our
rapidly growing foreign competitors, become magnets to American
capital, burdening our balance of payments today and diverting
potential new jobs and efficient productive facilities from our
shores.
And, in terms of the Federal budget, our underemployed
economy is not able to generate the revenues needed to cover the
costs of Government
even though increases in spending for
fiscal 1964 are being held to the essentials of national security,
space, and interest. payments.
The Link Between Our Domestic and Balance of Payments Goals
One lesson of the past five years is that our goals of
domestic growth and external balance cannot safely be separated.
We live in an open economy -- an economy whose performance
- 2 -
Nevertheless, our recovery since early 1961, reassuring
as it has been, has not achieved the kind of decisive transition
to dynamic, self-reinforcing growth that is well within our
means.
The past five years have left us with a residue of
unemployment that a recovery of only normal proportions cannot
eliminate.
Excess productive capacity and pressures on profits
continue to chill the incentives to invest and expand upon which
our economic vitality depends.
Not only has our progress at
home been limited, but also our ability to provide expanded
markets for other nations struggling to find the means for a
better life within a framework of individual freedom.
At the
same time, the deficit in our international payments has remained
uncomfortably large.
We want to increase our rate of economic growth and improve
our living standards because it is basic to our way of life.
We
are concerned that too many of our citizens are unemployed, that
others do not have a fair share of the national prosperity, that
there are depressed economic areas, that our economy is not growb
as fast as others.
We are not willing to accept these as inevitab
and we believe a combination of appropriate Government policies
private initiative, consistent with our political and economic
traditions, can help to ease these problems.
a~
1
TREASURY DEPARTMENT
Washington
~
,)
._v~
FOR RELEASE ON DELIVERY
STATEMENT OF THE HONORABLE DOUGLAS DILLON
SECRETARY OF THE TREASURY
Before the
JOINT ECONOMIC COMMITTEE
January 31, 1963
10:00 a.m.
Mr. Chairman and Members of the Joint Economic Qammittee:
The recent performance of the American economy has already
been reviewed in the Economic Message of the President and in
the Report and testimony of the Council of Economic Advisers.
The compelling and overriding theme of their remarks can be simply
sta ted.
The Need for Faster Growth
1962 was, against the background of recent experience, a
good year.
records.
Employment, output, and incomes all reached new
Almost two years after the last recession, the economy
appears free of those excesses and imbalances that in the past
have signaled a new downturn.
Virtual price stability has been
maintained throughout the expansion period.
And, despite the
substantially higher level of imports generated by rising business
activity, the pattern of increasingly large deficits in our balance
of payments that characterized the years 1958 - 1960 has been
reversed. ~
-,
~-)
-
:)
l
TREASURY DEPARTMENT
Washington
FOR RELEASE ON DELIVERY
STATEMENT OF THE HONORABLE DOUGLAS DILLON
SECRETARY OF THE TREASURY
BEFORE THE
JOINT ECONOMIC COMMITTEE
JANUARY 31,1963
10:00 A.M.
Mr. Chairman and Members of the Joint Economic Committee:
The recent performance of the American economy has already
been reviewed in the Economic Message of the President and in the
Report and testimony of the Council of Economic Advisers. The
compelling and overriding theme of their remarks can be simply
stated.
The Need for Faster Growth
1962 was, against the background of recent experience, a good
year. Employment, output, and incomes all reached n~w records.
Almost two years after the last recession, the economy appears free
of those excesses and imbalances that in the past have signaled a
new downturn. Virtual price stability has been maintained throughout
the expansion period. And, despite the substantially higher level
of imports generated by rising business activity, the pattern of
increasingly large deficits in our balance of payments that
characterized the years 1958 -- 1960 has been reversed.
Nevertheless, our recovery since early 1961, reassuring as it
has been, has not achieved the kind of decisive transition to
dynamic, self-reinforcing growth that is well within our means.
The past five years have left us with a residue of unemployment that
a recovery of only normal proportions cannot eliminate. Excess
productive capacity and pressures on profits continue to chill the
incentives to invest and expand upon which our economic vitality
depends. Not only has our progress at home been limited, but also
our ability to provide expanded markets for other nations struggling
to find the means for a better life within a framework of individual
freedom. At the same time, the deficit in our international payments
has remained uncomfortably large.
D-742
- 2 We want to increase our rate of economic growth and improve
our living standards because it is basic to our way of life. We
are concerned that too many of our citizens are unemployed, that
others do not have a fair share of the national prosperity, that
there are depressed economic areas, that our economy is not growing
as fast as others. We are not willing to accept these as inevitable
and we believe a combination of appropriate Government policies and
private initiative, consistent with our political and economic
traditions, can help to ease these problems.
Our difficulties are not those of crisis -- a sharp domestic
recession -- an unmanageable drain of international reserves -an early relapse into inflation. Rather, the problem lies in a
gradual accumulation of deficiencies over a period of years, each
interacting with the other to retard our progress. Slow growth
and less-than-capacity operations inevitably dull incentives to
invest, encourage inefficient "make work" practices, and lead to
pressures on unit costs and profit margins. In this setting,
investment opportunities abroad, within the borders of our rapidly
growing foreign competitors, become magnets to American capital,
burdening our balance of payments today and diverting potential
new jobs and efficient productive facilities from our shores. And,
in terms of the Federal budget, our underemployed economy is not
able to generate the revenues needed to cover the costs of
Government -- even though increases in spending for fiscal 1964 are
being held to the essentials of national security, space, and
interest payments.
The Link Between Our Domestic and Balance of Payments Goals
One lesson of the past five years is that our goals of domestic
growth and external balance cannot safely be separated. We live in
an open economy -- an economy whose performance powerfully influences
our trading partners, rich and poor alike, and which is itself
subject to strong competitive pressures from abroad. Our growth .or failure to grow, the efficiency with which we produce, the
climate for domestic investment, and our success in achieving price
stability all affect the flows of goods and capital between nations.
And the strength and stability of our currency concern every natioo
with a stake in freely-flowing trade and a durable international
payments system, for side by side with gold itself, the dollar
serves the free world as its chief reserve and trading currency.
- 3 -
The continuing need to reconcile our domestic and internationnl
objectives sometimes limits the kind and scope of specj fic actions
that we can take in pursuit of one goal or the other. But
fundamentally these goals need not be incompatible; indeed, they
can reinforce each other. Faster growth at home and an efficient
industry, able to pour out the new products eagerly sought in
world markets, both depend upon a higher level of domestic
investment, incorporating the latest technology and exploiting the
fruits of new research. A dynamic domestic economy, alive with
new and profitable investrllent opportunities, is ultimately the
only way -- consistent with our free market system -- by which we
can discourage excessive outflows of capital and attract funds
from abroad. Price stability is essential both to broaden our
export markets and to achieve balanced growth at home.
The continuing challenge before us is to seek out and ~rply
that blend of practical policies that, taken together, promlse
to support both our domestic and international objectives. This
requires, first of all, a clear appraisal of existing trends -- not
just for recent months or the past year, but for a long enough
period to appreciate the underlying forces at work in the economy.
It is in this longer perspective that the performance of the past
year, while gratifying in many respects, has demonstrated the need
for new approaches.
The Key Role of Investment
One fact that stands out in our recent experience has been the
sluggishness of business investment -- the kind of spending that
both generates current income and enlarges our productive potential.
This is true in relation to both our earlier postwar record and
that of our aggressive foreign competitors. To be sure, business
spending for plant and equipment rose by 9% in 1962. But the
gains slowed appreciably after the early months of recovery ~nd,
in dollar volume, outlays barely surpassed levels reached as
long ago as 1957. IIi. real terms, spending is actually helm.] L'ill"licr
peaks. We have been adding to our capital stock at a rate of little
more than 1-1/2% per year since 1957 -- well below the amounts
that are needed to support a vigorously growing eccnomy. Moreover,
businessmen; once the threat of a steel strike was elimi~ated early
last year, nave followed increasingly cautious inventory policies,
adding to stocks only where clearly needed to suppDrt their current
level of sales.
- 4 The explanation for these conservative business polici(~s
is not hard to find. With many industries faced for some time
with more capacity than they could effectively use, and with profit
margins under pressure over a period of years, businessmen
understandably have confined their investment spending largely to
those replacement and modernization projects offering clear and
prompt cos t advan tages . Wi th fas t de liveries assured, and \vi th
constantly improving methods of inventory control allowing smaller
inventories to serve a given level of demand, incentives for
adding to their volume have been weak.
These investment and inventory practices, rooted in the
experience of the past five years, are one reason why the danger
of serious recession in the months ahead appears remote. But,
in an economy with a growing labor force and steady increases in
worker productivity, we cannot be satisfied with stability or
creepihg advance. And the fact of the matter is that we need, and
could effectively utilize at a high level of employment, much more
investment than has been forthcoming.
Much of the difficulty lies in an absence of sufficiently
strong and assured markets -- markets more in line with our
potential capacity to produce. After five years of inadequate
progress we cannot confidently sit back in the hopes that such
markets will appear spontaneously, without the encouragement of
fresh incentives and the release of new purchasing power.
Residential housing, for instance, had a good year in 1962 -helped by the prevailing ease of mortgage credit. But, it would be
unrealistic to expect, within the limits set by family formation
and current income levels, that that sector can supply the further
expansionary drive that is needed. Government expenditures, at all
levels, are also rising, but not appreciably faster than current
tax rates are draining income from other sectors of the economy.
To permit expenditures to rise further, in areas of less than
compelling need, merely as a means of expanding demand would clearly
violate important considerations of public policy. Finally,
consumers -- accounting for two-thirds of our whole gross national
product -- have regularly been spending a normal share of their
after-tax incomes. Further increases in their outlays can be
expected, but only as we generate a rise in income and employment
from other sources.
- 5 The Tax Program and Debt Management
We have at our command an instrument that will permit us to
cut through this impasse. A broad consensus has developed among
leaders from all sectors of our economy that fresh incentives for
investment, for risk-taking, and for personal effort -- supported
by the release of additional purchasing power through tax
reduction. -- offers a practicable means for breaking through the
sluggish performance of recent years to achieve the difficult
transition to sustained and self-reinforcing prosperity. This
consensus is embodied in the program of tax reduction and reform
that the President presented to the Congress last week, and that
lies at the core of our economic and finane ial policy. I shall
be testifying on that program in detail before the House Ways and
Means Committee next week, and am not in a position to treat the
specifics at length here today. Rather, I would like to consider
the program in the perspective of the over-all financial policy
of this Administration, for tax reduction -- however vital -- can
be only a part of a well-conceived financial program for the
mid-1960's.
Ultimately, one result of our proposed tax program will be
a higher level of Federal revenues than can reasonably be
expected if we continue to hold back our productive power with a
tax structure that saps initiative and drains off such a large
fraction of income that reasonably full employment becomes an
ever receding mirage. The reason is very simple -- revenues reflect
not only the level of tax rates, but also the level of incomes to
which they are applied. Our own experience -- most recently
following the 1954 tax reduction -- shows that this kind of stimulus
to an idling econo~y can be the surest path to vigorous expansion
and budgetary balance. And the record of the past five years also
demonstrates the futility of deferring action in the hope that some
other stimulus -- always just beyond the visible horizon -- can do
the job.
None of us can be happy with the temporary increase in the
deficit that our tax program implies for fiscal 1964 -- although
I should point out that the estimated net revenue loss of $2.7
billion is small when compared to the $9.2 deficit that we face in
any event as a consequence of the failure of our economy to achieve
reasonably full capacity operation. The phasing of the full
program over three years, but with enactment in a single package,
is designed to minimize the transitional deficit, before balance
can be restored, without delaying the impact on business incentives.
And I am confident that we will be able to manage a deficit of the
magnitude we foresee without endangering either our record of price
stability or our balance of payments position -- just as we have
successfully financed our deficits of the past two years.
- 6 -
We have been aided in that task by a rising flow of savings
that individuals and businesses have been willing to commit to
investment for a substantial period of time. Almost all the
deficit in 1962 was financed outside the banking system. Moreover,
the increase in outstanding Government securities maturing in more
than five years was substantially greater than the total rise in
the public debt. Under the circumstances, it was possible to
achieve this progress toward restructuring and funding the
:narketable debt -- symbolized by a 7-1/2/0 increase in its average
maturity -- without diverting funds from productive use elsewhere
in the economy. In fact, most long-term interest rates drifted
down below their recession lows over the course of the year.
As we move ahead in financing the deficit, we will remain
alert to the need to maintain a debt structure that will not
contribute to inflationary pressures as full employment is restored.
This will require distribution of the debt among the various
maturity areas and investor groups in a manner that avoids excessive
liquidity, either in the form of new money creation or short-term
Treasury securities.
Of course, at a time of unemployment and excess capacity
like the present, the use of short-term securities or commercial
bank financing is fully justified in appropriate amounts. A growing
economy needs more money and other liquid assets, and short-term
Government issues may help to fill these needs. The compelling
policy requirement -- and the guide that we have consistently
observed -- is to insure that the growth of liquidity instruments
of all kinds does not run ahead of the ability of the economy to
absorb them without inflation.
While hard and fast mechanical rules cannot be set down
in advance, this guide implies a continuing need to tap longerterm savings -- either directly, or through the complex of
savings institutions -- for a portion of the funds required to
finance our forthcoming deficit. We are fortunate, in approaching
this task, that techniques have been developed that permit us to
raise funds in the intermediate and longer-term sectors of the
market with a minimum of disturbance to other borrowers. I am
thinking partly of our advance refundings, which have now been
tested and found useful in six instances over the course of two
Admi~is~rations.
I am also thinking of our recent experience in
auctlonlng long-term bonds through competing syndicates of
security dealers -- an experiment that owes much to the continuing
interest and support of Senator Douglas. I am happy to report
that our initial venture in selling $250 million of long-term
- 7 bonds by that means was highly successful in achieving ~ wiue
distribution of the new securities, in this instance at an
interest cost virtually equivalent to the prevailing yield for
comparable outstanding securities. While it is still too soon to
permit a judgment concerning the utlimate role of this new technique
within our total debt management program, the initial success
provides every reason for further testing from time to time as
market conditions and our own objectives make that desirable.
Financing the Transitional Deficit
It is sometimes argued that, to the extent we tap savings
in financing the deficit, the desired stimulus from our tax
program will be offset -- that we will,in effect, take back with
one hand the money that we provide with the other. This oversimplified account of the financing process overlooks several
important considerations. First of all, however the deficit is
financed, it will leave untouched the spur to the economy from the
greater incentives for productive effort and new investment brought
on by tax rate reduction. Equally important, there is every reason
to believe that, until we return closer to full employment, the
flow of longer-term investment funds generated by rising levels of
business activity will exceed the combined borrowing requirements
of individuals, businesses, and state and local governments -- just
as has been the case over the last two years.
An increased volume of savings will not require decisions
to reduce spending by business or consumers, but rather will
flow from higher incomes. The act of saving may itself be the
end product of a long sequence of prior spending decisions, each
of which will tend to add to the level of business activity and
the incomes of workers. The taxpayer himself, when he devotes
part of his tax saving to purchases of goods or services, will
be only the first link in this chain of spending, income generation,
and saving that lies at the heart of the expansionary process.
Under these circumstances, it is quite possible and practicable
for the Government to absorb some of the new savings for its own
use, without bringing undesirable upward pressures on interest
rates or diverting funds from use in other investment channels.
As the economy reaches full employment, and potential savings
can be fully and productively employed in financing our expanding
private economy, the situation becomes quite different. Then it
is quite true that wedging Government bonds into an already taut
capital market will raise interest rates and curtail private
spending. And, in a potentially inflationary situation, that might
- 8 be appropriate. Even more to the point, that would clearly be a
situation in which Government policies should be directed toward
budgetary balance and surplus, thereby restraining demand and
(through debt retirement) releasing funds for productive use by
other sectors of the economy. I am confident that, as the
economy does reach its full potential, the tax rates we are
proposing will in fact generate revenues adequate to cover the
essential expenditures of Government.
The course of interest rates in the months ahead will be
affected less by Treasury debt management decisions than by the
course of the economy itself, and by the policies of the Federal
Reserve in response to emerging developments both domestically
and in our balance of payments.
Whatever the future may bring in this respect, it is clear
that easy money and ample availability of credit has been a
major factor supporting the economy throughout this period of
expansion, and remains so today. Seldom in our history -certainly not since World War II -- have most long-term interest
rates actually declined during a recovery period. I was interested
to see recently a report that the larger New York banks charged
an"average of 1/8 - 1/4% less per annum for new term loans in 1962
than was the case a year earlier -- a striking reflection of the
downward pressures on the rate structure and aggressiveness of
banks in seeking out new borrowers, even while the so-called prime
rate remained unchanged. The record volume of mortgage financing
in 1962 -- coming at a time in the expans~on period when tight
money has often sharply curtailed homebuilding -- is another sign
of the really unique character of this period.
Tax Policy and the Balance of Payments
The continuing need for striking an appropriate balance
between domestic and external considerations in the execution of
debt management and monetary policies will not be fundamentally
changed by our tax proposals. However, we have developed the
tax program so as to reduce the possibility of serious conflicts
arising. For one thing, it will take on a good part of the burden
for encouraging expansion that is being borne by monetary policy,
thereby easing the problems of the monetary authorities should
they one day find themselves compelled to deal more vigorously
with the balance of payments.
- 9 -
Equally important, the stimulus to domestic investment, the
new incentives for cost-cutting and modernization, the encouragement
for industrial research, and the higher profits implicit in the
tax program will support and reinforce our more specific efforts
to deal with the balance of payments problem. Some capital that
is now inclined to seek employment abroad will find new
opportunities opening up in this country. The productivity of
our indus-try should be reinforced, bettering our competitive
posture in markets at home and abroad. Our leadership in research
and its application to industrial products -- products that
account for a large portion of our total exports -- will also be
further boIs tered.
To realize these potential benefits for our balance of
payments, it remains critically important that we maintain price
stability. The wage and price guideposts reiterated in the
Report of the Council of Economic Advisers clearly set forth the
general standards by which price and wage decisions may
appropriately be evaluated from the standpoint of the public
interest. The increases in take-home pay and profits implicit
in our tax program should make it easier for both sides to
accept wage settlements and to make pricing decisions that lie
well within these guideposts, effectively supporting our goal of
price s tabi 1 i ty.
Balance of Payments Results
One of the disappointments of the past year has been the
relatively slow improvement in our balance of payments. The
preliminary figures presently available, indicating that our overall deficit remained somewhat over $2 billion, demonstrate
conclusively that we must seek out and apply even more vigorously
measures specifically aimed at restoring lasting equilibrium in our
international accounts.
With merchandise imports r1s1ng by $1.6 billion last year, the
moderate progress recorded in reducing our deficit from the
$2-1/2 billion in 1961 was possible only because the concerted
efforts to stem the dollar drains directly associated with
Government activities have begun to bear fruit. Most importantly,
net military spending overseas declined by almost $600 million
(on the basis of incomplete data), reflecting offsetting purchases
of military goods and services by our allies. The vigorous
efforts to economize on our own military spending overseas merely
served to hold the over-all total level while absorbing the costs
- 10 of larger forces and higher foreign price levels. Prepayments of
loans by France, Italy and Sweden amounted to over $650 million,
approximately comparable to our 1961 receipts from this source.
A larger proportion of our aid to the less developed countries
was directly reflected in purchases in this country, and fully
three-quarters of this fiscal year's new AID commitments will
result in American exports in coming years.
Further savings in Government spending overseas are clearly
necessary. I am confident that they will emerge as the new
Government-wide control system for international transactions,
established within the Bureau of the Budget, becomes fully effective
as an administrative device for budgeting our foreign exchange
outlays.
Improvement developed in other directions as well. Commercial
exports rose moderately, despite slower growth in Europe -- our
most rapidly expanding export market. The steady increase in
earnings on our overseas investment provided a factor of long-term
strength. Short-term capital outflows, which had reached
exceptionally high levels in 1960 and 1961, declined, although
they still remain a major factor in our payments difficulties.
These outflows, including items not specifically recorded in our
balance of payments statistics, accounted for approximately 70%
of our total deficit as compared to about 80% in 1961.
Last year's deficit resulted in a gold loss of $890 million
as compared to $857 million in 1961. Toward the end of last
year, and continuing into early 1963, ten weeks passed in w~ich
there was no net decline in our gold stock. This situation could
not be expected to continue in the face of our payments deficit,
and the gold outflow resumed in January. Further moderate outflows
can be expected in the coming weeks and months.
The improvement in our balance of payments thus far is simply
not good enough if we are to maintain a strong dollar and fulfill
our basic commitments for aid and defense. The hard job of
searching out and penetrating new foreign markets has only begun
and the President has therefore proposed a sharp step-up in our
export expansion program. Our long-term capital exports continue
to reflect the absence of effective alternatives abroad to our own
well developed capital markets, as well as the inadequate investment
opportunities at home. And the burdens of aid and defense must be
more equitably shared.
- 11 If£~L'£~Il~ng the
International P,ayments System
He cannot take comfort in the thought that an "easy" solution
can :\.. found in some new monetary arrangement that will shield us
from the necessity for taking corrective action.
Any effective
monetary arrangement necessarily presupposes, not balance every
year, but an ability and willingness to avoid large and continuing
deficits; as well as the full confidence of a group of willing
lenders.
We need a stable monetary system, resistant to the strains
and shocks that can quickly develop as a result of sudden and
massive flows of funds between countries, and capable of meeting
the needs of a growing world economy for international liquidity
and access to credit. During the past year, we have made great
strides toward strengthening the existing system. The prompt
ratification and implementation of the special IMF borrowing
arrangement -- making available in time of demonstrated need
a pool of up to $6 billion of convertible currencies -- was a
source of special gratification. Moreover, we have now tested
in a wide variety of situations the usefulness of operations for
our own account in both the spot and forward foreign exchange
markets, of reciprocal currency agreements by the Federal Reserve
with the monetary authorities of other industrialized countries,
and of Treasury direct borrowing at short and medium term from
other countries in a strong payments position. The effectiveness
of these arrangements, supplementing the resources of the IMF
itself, in meeting incipient strains of various kinds -- whether
directed against the dollar or other currencies -- was demonstratpd
at the time of the stock market disturbances last spring, and again
during the Canadian exchange crisis and the Cuban situation.
Similarly, the new cooperative arrangements in the London gold
market have been helpful in dispelling a potentially speculative
atmosphere, and the price of gold in that market declined toward
the end of last year.
For much of January, the price has been
below $35.06, touching the lowest level since 1959.
No doubt there is room for further innovation and improvement
in these areas. We are continuing to study these questions in
cooperation with other interested countries.
But no monetary
mechanism can effectively substitute for the hard and continuing
task of steadily improving our own balance of payments. The
"easy") 0bvious savings have already been made -- the hard core
0f t~f de~~.c~t that remains will require the conscious effort and
·'J.!'~de~-s'::arLC:::C ng of all groups in the economy, as well as the
coq..l€:y.'r::lticn' af our friends abroad who now find themse 1ves in a
- 12 -
In this connection, I was much interested in reading the
report of your own subcommittee, chaired by Congressman Reuss,
that recently made available a mass of valuable and provocative
material on the balance of payments and related monetary arrangements.
The emphasis in your own conclusions on the fundamental necessity
for working with our allies to achieve a more equitable sharing of
the burdens of defense and aid, with full recognition of the
increased capacity and econo~ic strength of other industrialized
nations in recent years, seems to me entirely appropriate. And
I also share your view that we can find no solution to our problems
by simply multiplying guarantees for dollars in the hands of
foreigners.
The Need for Price Stability
But there is one sort of "guarantee" that is vitally necessary
if we are to ~aintain the confidence of our friends abroad and
successfully achieve our twin goals of domestic expansion and
balance in our international accounts -- that is a pledge that
we will conduct our affairs in a manner that will maintain our
recent record of price stability. That is why it is essential that
we. finance our deficit in a prudent way, with an eye toward the
future as well as the present. That is why we need to maintain a
flexible monetary policy, alert to developments as they emerge.
And, above all, that is why it is so important that labor and
business alike, as the stimulus from our tax program takes hold,
continue to seek out more efficient methods of production and
display restraint in their wage bargaining and pricing decisions.
This process should be greatly facilitated by the new incentives
and the increases in after-tax incomes of individuals and business
enterprises alike which will be provided by our tax program. It
is in this context of responsible citizen action within a framework
of effective public policy that tax reduction will be a boon to us
all.
000
Uni ted States Savings Bonds Issued and Redeemed Through January 31 , 1963
(Dollar amounts in millions - rounded and will not necessarily add to totals)
Amount
Amount
Amount
%<Alts~
Issued II Redeemed II Outstanding 2) of Amt.Isl
MATURED
Series A-1935 - D-1941 ••••••••••
Series F & G-1941 - 1950 ••••••••
UNMATURED ") /
Series E: .;v
....
$ 5,003
$4,989
$ 15
3t
28,512
28,297
215
:1.1
I-=====~====~=======F==~
................... ..
··...................
··...................
.
................... .
·................... .
.
···...................
................... .
................... .
·................... .
·................... .
·................... .
·................... .
·................... .
·................... .
·................... .
·................... .
·................... .
·................... .
·................... .
·................... .
·................... .
·................... .
·.......... ........ .
1,821
298
1,523
1941
16.36
6,742
1,302
8,043
1942
16.19
10.,836
2,106
12,942
1943
16.27
12,520
15,072
2,553
1944
16.94
2,210
9,588
11,799
1945
18.73
1,221
4,076
5,297
1946
23.05
3,649
1,337
4,986
1947
26.82
3,646
1,488
5,134
1948
28.98
1,556
3,492
5,04 8
1949
30.82
2,951
4,398
1,447
1950
32.90
2,532
1,277
3,809
1951
33.53
1,428
2,555
3,9 84
1952
35.84
1,828
2,694
4,522
1953
40.42
1,900
2,656
4,557
1954
41.69
2,711
2,011
4,722
1955
42.59
2,610
1,929
4,538
1956
42.51
1,917
4,258
2,341
1957
45.02
4,111
2,006
2,105
1958
48.80
1,894
3,839
1,946
50.69
1959
1,706
3,815
2,110
1960
55.31
3,820
62.38
1961
1,437
2,383
76.68
1962
3,194
744
2,449
1963
Unclassified ••••••••••••••••••
525
545
-20
r---------~----~~~------~--~~-----Total Series E •••••••••••••••• 124 234
85 .553
38 680
11.11
Series H (1952 - 1963).¥. •••••••• 1---":;.:;;:;:;t8~,8~2'-=171O.--+----:""1:....a,"'"8"""28'--+--~6,....::.9~9~9---lf---~79.....29~
Total Series E and H •..•••••••
Series F and G (1951 - 1952).....
Series J and K (1952 - 1957) ••••
133.061
87 382
1,006
687
3.691
1.948
45
tJ
67Cl~J1
319
31.71
1 743
J:l.l2..
r---~----~--------~----~~----~------
Total Series F, G, J and K • •• •
All Series
i
4.697
2 635
2 062
1.3.90..
F=====~~~~~~==~~=
Total matured ...... .
.69
33,515
33,285
230
Total unmatured ••••• 137.758
90.017
~
47,74~
Grand Total ••••••••• 171,274
28.01
J23,302
47,971
-
1I Includes accrued discount.
21
Current redemption value.
J/ At option of owner bonds may be held
tJ
CFFrCE OF FISCAL ASSI3rANT SECRETAII'
and
will earn interest for additional periods
after original maturity dates.
Includes matured bonds which have not been
presented for redemption.
United States Savings Bonds Issued and Redeemed Through January 31, 1963
(Dollar amounts in millions - rounded and will not necessarily add to totals)
-
Amount
Issued
1I
Amount
Redeemed
1I
Amount
% Outstanding
Outstanding ~ of Amt.Issued
lATURED
Series A-1935 - D-1941 ••••••••••
Series F & 0-1941 - 1950 ••••••••
[NMATURED 3.1
Series E:
1941 • ••••••••••••••••••••
1942 • ••••••••••••••••••••
1943 • ••••••••••••••••••••
1944 • ••••••••••••••••••••
1945 • ••••••••••••••••••••
1946 • ••••••••••••••••••••
1947 • ••••••••••••••••••••
1948 • ••••••••••••••••••••
1949
1950 • ••••••••••••••••••••
1951 • ••••••••••••••••••••
1952 • ••••••••••••••••••••
1953
1954
1955 • ••••••••••••••••••••
1956 • ••••••••••••••••••••
1957 • ••••••••••••••••••••
1958 • ••••••••••••••••••••
1959 • ••••••••••••••••••••
1960 • ••••••••••••••••••••
1961
1962 • ••••••••••••••••••••
1963 • ••••••••••••••••••••
·................... .
·................... .
·................... .
·................... .
$ 5,003
28,512
$4,989
28,297
1,821
8,043
12,942
15,072
11,799
5,297
4,986
5,134
5,048
4,398
3,809
3,984
4,522
4,557
4,722
4,538
4,258
4,111
3,839
3,815
3,820
3,194
1,523
6,742
10.,836
12,520
9,588
4,076
3,649
3,646
3,492
2,951
2,532
2,555
2,694
2,656
2,711
2,610
2,341
2,105
1,894
1,706
1,437
744
$
15
215
.30%
.75
r-=====~======~======~========
298
1,302
2,106
2,553
2,210
1,221
1,337
1,488
1,556
1,447
1,277
1,428
1,828
1,900
2,011
1,929
1,917
2,006
1,946
2,110
2,383
2,449
16.36
16.19
16.27
16.94
18.73
23.05
26.82
28.98
30.82
32.90
33.53
35.84
40.42
41.69
42.59
42.51
45.02
48.80
50.69
55.31
62.38
76.68
~c1assified •••••••••••••••••• ~~~52~5~~~~~54~5~~~~_-~2~0~~~~~~-~~
Total Series E ••••.•••.••••••• ~1~2~L2~:3~l,L~~~8~~5~,~5i5~i3~~~~38~6~80~~~~~1~11~_3~_
Series H (1952 - 1963).¥.........
8,827
1,828
6,999
79.29
~~~--~~~~~~+---~~~--~~--~~~--
Total Series E and H .•.•.•.•.•
Series F and G (1951 - 1952).....
Series J and
K
(1952 - 1957) ••••
Total Series F, G, J and K
All Series
1
••••
Total matured ...... .
Total tunnatured •••••
Grand Total •••••••••
133 061
87 ,382
45 679
1,006
687
3.691
1 948
1 743
L7
697
2 635
2 062
L 1 gO
33,515
137.758
171,274
33,285
90,017
123,302
230
47.742.
47,971
,69
34,66
28,01
!J
319
lL
33
31. 71
~~~----+-----~--4---~~~--~~~~~----
22
~~~~--~~~~~+-~~~~--~~~~~----
L
~====~==~==~======~====~==
( Includes accrued discount.
/ Current redemption value.
I At option of owner bonds may be held and
will earn interest for additional periods
after original maturity dates.
I Includes matured bonds which have not been
presented for redemption.
OFFICE OF FISCAL ASSIsrANT SECRETARY
TREASURY DEPARTMENT
FOR IMMEDIATE RELEASE
MERLYN N. TRUED NAMED DEPUTY
ASSISTANT SECRETARY OF THE TREASURY
Treasury Secretary Douglas Dillon today administered the oath of
office to Merlyn N. Trued as Deputy Assistant Secretary of the Treasu~.
tJ. t;- t- '-if {
Mr. Trued has been an ASSist~Vice President of the Federal
Reserve Bank of New YorI<. 19?ZIj~ at position to assume his new
duties with the Treasury Departme
on January 28th.
5f=.l'Jvc:;- t.u (T{~
Mr. Trued will aw ••~ Assistant Secretary John C. Bullitt in
carrying out the Departm nt's responsibilities in international financial
and monetary affairs.
-,
~~t ~
\'"
toM 7 rr ,;1:&) ,. ,.')
,
Mr. Trued joined the New York
Reserve Bank's Research
Department in 1954 and has hel
positions in the Public Information and Foreign Departments.
~ e on leave of absence from the
Bank, he served as a financial specialist with an advisory group to
~
J
m
0,.
the Government of Viet Nam. He has also serEed as II lecture« .. t:tJc ..
Economics at the University of Virginia and ~ taught at Rutgers
University, the City College of New York, and New York university.~e
joined the United States Navy in 1942 and was commissioned a Lieutenant
in the U. S. Marine Corps in 1943. Mr. Trued is now a Major in the
U. S. Marine Corps Reserve.
Mr. Trued attended public schools in Tribune, Kansas. He received
his M.A. degree in Foreign Affairs in 1951 from the University of
Virginia and his Ph.D degree in Economics in 1954. Mr. Trued, a member
of Phi Beta Kappa, is an honors graduate of the University of Oregon and
has received a number of fellowship awards.
Mr. Trued is the author of a number of published works, including
a monograph, Post-War Bilateral Payments Agreements, and an article
in the October 1957 Journal of Political Economy, "Interest Arbitrage,
Exchange Rates, and Gold and the Dollar Reserves."
Mr. Trued, 40, was born in Ceresco, Nebraska. He is married to
the former Josephine Schafer of Perry, Kansas. They have a son and a
~and maintain their residence in Ridgewood, New Jers~
)
-
/ d'~CY-,~I3/.
~- J ~(-\, Lt~ ( ':: '"
,-
-
~~
/1
~I
r- / . . , )
.,
'" 7fo I.-- '"'-.
.
"
--"~
//>.f~_~'\
TREASURY DEPARTMENT
r~(r
\\
WASHINGTON. D.C.
FOR IMMEDIATE RELEASE
'.
'. "\
i"
-~!,,/)
.,~~'
·
*
*
•
February 4, 1963
MERLYN N. TRUED NAMED DEPUTY
ASSISTANT SECRETARY OF THE TREASURY
Treasury Secretary Douglas Dillon today administered the oath oj
office to Merlyn N. Trued as Deputy Assistant Secretary of the Tn'<lsurv.
Mr. Trued has been an Assistant Vice President of the Federal
Reserve Bank of New York.
He left that position to assume his new
duties with the Treasury Department on January 28th.
Mr. Trued will serve with Assistant Secretary John C. Bullitt ill
carrying out the Department's responsibilities in international
financial and monetary affairs.
Mr. Trued joined the New York Federal Reserve Bank's Research
Department in 1954 and has held positions in the Public Information
and Foreign Departments. While on leave of absence from the Bank,
he served as a financial specialist with an advisory group to the
Government of Viet Nam.
He has also lectured on Economics at the
University of Virginia and taught at Rutgers University, the
CLty College of New York, and New York University.
He jointed the United States Navy in 1942 and was commissiorwd
a Lieutenant in the U. S. Marine Corps in 1943.
Mr. Trued is nll\v <I
Major in the U. S. Marine Corps Reserve.
Mr. Trued attended public schools in Tribune, Kansas.
He n'<-'(>I\,·,I
his M.A. degree in Foreign Affairs in 1951 from the University uf
Virginia and his Ph. D. degree in Economics in 1954. Mr. Trued, :l [I)('!II,I\
of Phi Beta Kappa, is an honors graduate of the University of Orc';)u,'
and has received a number of fellowship awards.
Mr. Trued is the author of a number of published works, in(..:ludifl;'
a monograph, Post-War Bilateral Payments Agreements, and an articl- 1,
the October 1957 Journal of Political Economy, "Interest Arbitr;j\J('
Exchange Rates, and Gold and the Dollar Reserves."
Mr. Trued, 40, was born in Ceresco) Nebraska.
H~ is ,I:"'r,(-(
the former Josephine Schafer of Perry, Kansas.
They bave ;1 ~;U:l
Michael, age 17, and a daughter Sally, age 13, andmaint:aiJ~ th"
residence in Ridgewood, New Jersey.
0-743
000
1
TREASURY DEPARTMENT
February 4, 1963
NOTE TO CORRESPONDENTS:
The attached tables are made available in response to
inquiries concerning the impact on taxpayers of the proposed
five per cent floor on itemized deductions.
Table I shows the combined effects of the floor on
itemized deductions and the proposed rate reductions on typical
iternizers in both 1964 and 1965. Some of the figures differ by
a few dollars from those contained in the examples which were
~upplied to accompany the President's Tax Messageo
The levels
of itemized deductions shown on Table I are based on analysis
of a larger sample of returns than the examples were o They
reflect actual average deductions in each income group.
Tables II, III, and IV show the "breakeven point" for
taxpayers who itemizeo All taxpayers who have itemizeG deductions
which do not exceed the amounts shown in the second column of
the tableswill find their taxes reduced after taking into
account both the five per cent floor and the proposed rate
reductions
0
As can be seen from the tables, the total deductions
would have to be much larger than the average before the effects
of the five per cent floor would completely wipe out the benefits
of the rate cut. Studies of sample returns indicate that only
a handful of taxpayers have deductions as large as these.
Table I
(Married, Two Dependents)
(With Average Itemized Deductions)
Annual
Income
50-3,000
),000
7,000
10,000
15,000
20,000
50,000
100,000
Present
Tax
0
$310
640
1,240
2,252
3,500
15,136
41,274
1964
Tax
Liability
0
279
574
1,125
2,059
3,208
13,998
37,936
Tax
1965
Percentage cut
Tax
:Reduction: when f'rogram
Liabi1ity:by lCj 6 5 :fu11y in effect
0
252
528
1,050
1,940
3,024
13,410
35,700
0
58
112
190
312
476
1,996
5,574
i',
18.7
17.5
15.3
13.9
13.6
13.2
13.5
;'( The typical itemizer in this income group has no tax
liability now and would continue to have none under the proposal.
Table 2
Maximum Itemized Deductions Of Taxable Indivicuals
Who Will Have Tax Savings After Taking Into
Account The Effects Of The Floor On Deductions
And The Tax Rate Reductions
(Single Individual Taxpayers)
Adjusted
gross
income
Maximum
itemized
deductions
Maximum itemized:Actual Average itemdeductions
:ized deductions for
as percent
income class as
of AGI
percent of AGI
68/0
$ 2,050
$ 3,000
3,816
76
5,000
5,500
79
7,000
7,900
79
10,000
77
11,525
15,000
74
14,800
20,000
72
18,067
25,000
69
34,567
50,000
71
70,600
100,000
Office of the Secretary of the Treasury
Office of Tax Analysis
13/0
20
20
20
20
19
16
17
21
Table 3
Maximum Itemized Deductions Of Taxable Individuals
Who Will Have Tax Savings After Taking Into
Account The Effects Of The Floor On Deductions
And The Tax Rate Reductions
(Married - No Dependents)
AGI
$ 3,000
5,000
7,000
10,000
15,000
20,000
25,000
50,000
1°°2°° 0
Maximum
itemized
deductions
$ 1,450
3,216
4,983
7,633
11,800
15,800
19,175
36,133
69 2 °86
Maximum itemized
deductions as
percent of AGI
Actual average itemized
deductions for income
class as percent of AGI
48%
64
71
76
79
79
77
72
69
23%
21
20
16
16
15
13
13
15
Office of the Secretary of the Treasury
Office of Tax Analysis
Table 4
Maximum Itemized Deductions Of Taxable Individuals
Who Will Have Tax Savings After Taking Into
Account The Effects Of The Floor On Deductions
And The Tax Rate Reductions
(Married taxpayers with two dependents)
AGI
Maximum
itemized
deductions
Maximum itemized
deductions as
percent of ACI
=
Actual average itemized
deductions for income
class as percent of AGI
$3,000 --------------Nontaxable under program--------------------40%
5,000 $ 2,015
21%
3,783
54
7,000
20
6,433
64
10,000
16
71
10,600
16
15,000
14,600
73
20,000
15
72
17,975
25,000
13
70
34,933
13
50,000
67,886
68
100,000
15
Office of the Secretary of the Treasury
Office of Tax Analysis
F'lit
.Uii;A,jr:;,A. ¥.. '~£"lfISPA7EHS,
beady, Febn?&l)'
,.....,. ...
1963
5. 196).
R.e:SULT3 OF TRUS'.1lJ'S WJlKLI BILL OP'P'f.r\lH.)
The l'naaur,y Depart.-Dt. annomaced ).ut, eftn1Dtt t.bat. t.hetendera tor t.vo eer1ee 01
t'rMauJ')' bille, one _r1ea to be an add1U..u, 1_...
\he billa dat.d N~ '. 1M
and the ot.her aeri.. t.o be dated PebNu7 T, l~), 1Ih1eh . . . . .ltr.red on .......,. lO, •
opened at t.he P'edanl Reeen. Bank. an htbrur7 4. TendeN . .re 1nrl tAd tor U,JC)O ~
or
or u.r.ab'IUU, Qr 91-day billa and tor $800,000,000, ar \beftabouta, ot 182-da¥ b1U;
tollowa.
'rhe det~U. of t.h8 t.wo aeries are ..
RANJ~"
182-da3 Treuury bUla
')~' Ar.CE~r(m
COMP'E"f I1'I VF;
Plt.ur1ng A~.l~••
n: 1.IS I
mce
Annual
PI.5oo
".L
Rtt.e
2.96-,.
,.005'
2.99S. )/
,6.Le1
8~)
J2 pel"Ceot. or t.he 8Z!lOWltot ~l-da,y billa bid tOl' at. t.be 10-" price va acoepw
40 percent of til~ emourat ot 182-day b1Ue bid. tor at. t.b~ low price wu aooep\ed
tOTAL T€N1E}t·, /,PPLtd1 POi{ AND lCCEPrtD BY FFJBHA.L azsavE
D1et..r1o\
Boat.on
lav York
Philadelphia
Cleveland
Richmond
At.lant.a
Cldoago
st..
Louis
K1nneapolla
,.,.•• C1ty
Dalla.
Applied. For
:$
26,917,000
1,318,099,000
28,18O.CXX)
)1,6bl,OOO
2),687,000
2S,4)2,OOO
].96,286,000
)2,)92,000
23.)70,000
12.S80,ooo
30.692,000
San 'l-anolaoo
8l..1S0,OOO
1'"1TALS
$1,91l,a!8,OOO
aI
b'/
AmP'"
$
16,nT,ooo
8Sl,OlP,OOO
1.6,980.000
31,64),000
11,.7,000
.,4)1,000
11&9,030,000
27,392,000
11,690,000
12,S80,OOO
26, au, 000
DI8'nrC1'~.
yPl1ed For
Acoep\ed
•
•
',{;lO,OOO
1,06),569,000
8,029,000
25,815,000
9,961,000
),029,000
22,87S,OOO
),961,cxxa
4,))1,000
4,311,OOO
SO.03S,ooo
1)1,03$,000
6,973,IJOO
6,995,000
18,18),000
10,?14,OOO
8O,?SO,OOO
~;a, 701,()~
'l,)OO,~.OOO!l $1,))9,016,000
,,110,000
6)4,969,000
$,47),000
S,69S,ooo
17,(6),000
9,61h,OOO
)1,2Ol,OOO
$800,016,000 W
Inoludea $2)),122,000 ftOIIC~\1. . \eftdaN acoept.ecl &\ tile averap priM ot ".II
lDcludea $52,418,000 ~Ut.1" teDliera eoeep\ed at, tM average pr1ee ot 91.1.16
a ooupon 1s8\18 of Ule s..a ~ and tor \be __ .....t inv6et.ed, t.be " ......
t.he. . billa would ~vv1de 11aldll 01 ).OU, tor tbe n~ billa, and 3.oe~, t. til
1~2-d&,y bUla. Interest ra.... on billa are quo~ in t.a"tIla or bnnk cl1. . . . . .U,. return related. t) tr'e lace U\O\B'at of \.he bUb pefabl$ ut mat.uri t l rat.Mr the uount inve.ted and their 1~ in aot.ual. nuMler of dals related to • ___
year. In cuntrut, y1elda .:m cel"~lt1oat.e.,
and bt)n(~fj are ccaputA4 1D c.ot interest on t.he 8~t im'e8t.ed, and relate t,M mabel- of ii.vI rlAltDl", ia.
lnt.erest payment period t.o the actual. . . . . of dqa 1a t.l~~
wi
a.a.poundi ~~ 1 f' sore than one coupon period 18 1IrIo1.....
!I ::.
notA.,
perlod,
tb." .,
TREASURY DEPARTMENT
=
IELEASE A. 1'1. NEHSPAPERS,
lay, February 5, 1963.
February 4, 1963
RESULTS OF TREASURY I S vJEEKLY BILL OFFERING
The Treasury Department announced last evening that the tenders for two series of
ury bills, one series to be an additional issue of the bills dated November 8, 1962,
he other series to be dated February 7, 1963, which were offered on January 30, were
d at the Federal Reserve Banks on February 4 •. Tenders were invited for $1,300,000,000,
ereabouts, of 9l-day bills and for $800,000,000, or there~bouts, of l82-day bills.
etails of the two series are as fol10'\ll5:
OF ACCEPTED
rIl'IVE BIDS:
~igh
Gow
~verage
~2
~O
91-day Treasury bills
maturing }lay 9.! 1963
Approx. Equiv.
Price
Annual Rate
99.266
2.904%
99.251
2.963%
99.255
2.946%
Y
:
·
·
182-day Treasury bills
maturing Au~st 8, 1963
Approx. J.:.quiv.
Price
Annual Rate
98.500
2.967;6
98.481
3.005%
98.486
2.995;'b
11
percent of the amount of 91-day bills bid for at the lOll price was accepted
percent of the amount of 182-day bills bid for at the low price was accepted
TENDERS APPLIED FOR AND ACCEPTED BY FEDEIfAL RESERVE DISrrRICTS:
.ct
rk
elphia
and
nd
a
:>
Ilis
)olis
City
Ulcisco
TOTALS
Applied For
$ 26,917,000
1,378,099,000
28,180,000
31,643,000
23,687,000
25,432,000
196,286,000
32,392,000
23,370,000
32,580,000
30 ,692,000
81 z750,000
$1,911,028,000
Applied For
Accepted
9,810,000
$ 16,917,000
$
1,063,569,000
851,019,000
8,029,000
16,980,000 •
25,875,000
31,643,000 •
9,961,000
21,647,000
4,331,000
24,432,000 •
131,035,000
149,030 ,000
6,973,000
27,392,000
6,995,000
21,690,000
18,183,000
32,580,000
,10,614,000
26,012,000
43z701z000
80,750,000
$1,300,092,000 ~ $1,339,076,000
·
·
·
·
·
·
Accepted
$ 5,810,000
63u,969,000
3,029,000
22,875,000
3,961,000
4,331,000
50,035,000
5,473,000
5,695,000
17,083,000
9,614,000
37,201 z000
$800,076,000
EI
.udes $233,122,000 noncompetitive tenders accepted at the average price of 99.255
~des $52,418,000 noncompetitive tenders accepted at the avera;e price of 96.4C6
. coupon issue of the same lenath
and for the same amount invested, the return on
o
ese bills would provide yields of 3.01%, for the 91-clay bills, and 3.0G/~' for the
2-day bills. Interest rates on bills are quoted in terms of b&nlc discount IIi th
e return related to the face amount of the bills payable at maturity rather than
e amount invested and their length in actual number of days related to a 360-day
are
in . l..erms
. In contrast , yields on certificates, notes, and bonds are computed
.,
l.rlterest on the amount invested, and relate the number of days rerr.alnln·~ In an
~erest pa;)1l1ent period to the actual number of days in the period, \-,1. tb ser.iannual
~ounding if more than one coupon period is involved.
4821
Table 4
Maximum Itemized Deductions Of Taxable Individuals
Who Will Have Tax Savings After Taking Into
Account The Effects Of The Floor On Deductions
And The Tax Rate Reductions
(Married taxpayers with two dependents)
AGI
-
$3,000
5,000
7,000
10,000
15,000
20,000
25,000
50,000
100,000
Maximum
itemized
deductions
Maximum itemized
deductions as
percent of AGI
Actual average itemiz;d
deductions for income
class as percent of AGI
--------------Nontaxable under program- - - - - -- -- - - ----- ____ .
$ 2,015
40%
21%
3,783
54
20
6,433
64
16
10,600
71
16
14,600
73
15
17,975
72
13
34,933
70
13
67,886
68
15
Office of the Secretary of the Treasury
Office of Tax Analysis
4821
Table 3
Maximum Itemized Deductions Of Taxable Individuals
Who Will Have Tax Savings After Taking Into
Account The Effects Of The Floor On Deductions
And The Tax Rate Reductions
(Married - No Dependents)
AGI
$ 3,000
5,000
7,000
10,000
15,000
20,000
25,000
50,000
100 2 000
Maximum
itemized
deductions
$ 1,450
3,216
4,983
7,633
11,800
15,800
19,175
36,133
69 2 °86
Maximum itemized
deductions as
percent of AGI
48%
64
71
76
79
79
77
72
69
Office of the Secretary of the Treasury
Office of Tax Analysis
average itemized
·· Actual
deductions for income
class
as percent of AGI
··
23%
21
20
16
16
15
13
13
15
Table 2
Maximum Itemized Deductions Of Taxable Individuals
Who Will Have Tax Savings After Taking Into
Account The Effects Of The Floor On Deductions
And The Tax Rate Reductions
(Single Individual Taxpayers)
Adjusted
gross
income
Maximum
itemized
deductions
Maximum itemized :Actua1 Average itemdeductions
: ized deductions for
as percent
income class as
of AGI
percent of AGI
68%
3,000
$ 2,050
76
3,816
5,000
79
5,500
7,000
7,900
79
10,000
11,525
77
15,000
14,800
74
20,000
72
25,000
18,067
50,000
34,567
69
70,600
100,000
71
Office of the Secretary of the Treasury
Office of Tax Analysis
$
23%
20
20
20
20
19
16
17
21
Table I
(Married, Two Dependents)
(With Average Itemized Deductions)
Annual
Income
$0-3,000
5,000
7,000
10,000
15,000
20,000
50,000
100,000
*
Present
Tax
0
$310
640
1,240
2,252
3,500
15,136
41,274
1964
Tax
Liability
0
279
574
1,125
2,059
3,208
13,998
37,936
1965
Tax
Percentag;Tax
:Reduction: when progra
Liabi1ity:by 1965 : fully in eff
0
252
528
1,050
1,940
3,024
13,410
35,700
0
58
112
190
312
476
1,996
5,574
,,\
18.7
17.5
15.3
13.9
13.6
13.2
13.5
The typical itemizer in this income group has no tax
liability now and would continue to have none under the proposal.
4821
TREASURY DEPARTMENT
t
February 4, 1963
NOTE TO CORRESPONDENTS:
The attached tables are made available in response to
inquiries concerning the impact on taxpayers of the proposed
five per cent floor on itemized deductions.
Table I shows the combined effects of the floor on
itemized deductions and the proposed rate reductions on typical
itemizers in both 1964 and 1965. Some of the figures differ by
a few dollars from those contained in the examples which were
~upplied to accompany the President's Tax Message.
The levels
of itemized deductions shown on Table I are based on analysis
of a larger sample of returns than the examples were. They
reflect actual average deductions in each income group.
Tables II, III, and IV show the "breakeven point" for
taxpayers who itemize o All taxpayers who have itemized deductions
which do not exceed the amounts shown in the second column of
the tableswill find their taxes reduced after taking into
account both the five per cent floor and the proposed rate
reductions
0
As can be seen from the tables, the total deductions
would have to be much larger than the average before the effects
of the five per cent floor would completely wipe out the benefits
of the rate cut. Studies of sample returns indicate that only
a handful of taxpayers have deductions as large as these.
TREASURY DEPARTMENT
tit
f 5 MJ:5SNW
him q g'!i ,'Y4W &9 § PdY
t
&
a&?TCT
February 4, 1963
NOTE TO CORRESPONDENTS:
The attached tables are made available in response to
inquiries concerning the impact on taxpayers of the proposed
five per cent floor on itemized deductions.
Table I shows the combined effects of the floor on
itemized deductions and the proposed rate reductions on typical
itemizers in both 1964 and 1965. Some of the figures differ by
a few dollars from those contained in the examples which were
~upplied to accompany the President's Tax Message o
The levels
of itemized deductions shown on Table I are based on analysis
of a larger sample of returns than the examples were o They
reflect actual average deductions in each income group.
Tables II, III, and IV show the IIbreakeven point" for
taxpayers who itemizeo All taxpayers who have itemizeu deductions
which do not exceed the amounts shown in the second column of
the tables will find their taxes reduced after taking into
account both the five per cent floor and the proposed rate
reductions o
As can be seen from the tables, the total deductions
would have to be much larger than the average before the effects
of the five per cent floor would completely wipe out the benefits
of the rate cut. Studies of sample returns indicate that only
a handful of taxpayers have deductions as large as these.
Table I
(Married, Two Dependents)
(With Average Itemized Deductions)
Annual
Income
50-3,000
5,000
7,000
10,000
15,000
20,000
50,000
100,000
Present
Tax
0
$310
640
1,240
2,252
3,500
15,136
41,274
1964
Tax
Liability
0
279
574
1,125
2,059
3,208
13,998
37,936
1965
Tax
Percentage cut
Tax
:Reduction: when rrogram
Liability:by 1965 :fully in effect
0
252
528
1,050
1,940
3,024
13,410
35,700
0
58
112
190
312
476
1,996
5,574
-'"18.7
17.5
15.3
13.9
13.6
13.2
13.5
The typical itemizer in this income group has no tax
liability now and would continue to have none under the proposal.
~',
Table 2
Maximum Itemized Deductions Of Taxable Individuals
Who Will Have Tax Savings After Taking Into
Account The Effects Of The Floor On Deductions
And The Tax Rate Reductions
(Single Individual Taxpayers)
Adjusted
gross
income
Maximum
itemized
deductions
Maximum itemized:Actua1 Average itemdeductions
:ized deductions for
as percent
income class as
of AGI
percent of ACI
68%
3,000
$ 2,050
3,816
76
5,000
5,500
79
7,000
7,900
79
10,000
11,525
77
15,000
74
14,800
20,000
18,067
72
25,000
34,567
69
50,000
70,600
71
100,000
Secretary
the
of
Treasury
Office of the
Office of Tax Analysis
$
L3%
20
20
20
20
19
16
17
21
Table 3
Maximum Itemized Deductions Of Taxable Individuals
Who Will Have Tax Savings After Taking Into
Account The Effects Of The Floor On Deductions
And The Tax Rate Reductions
(Married - No Dependents)
AGI
.
$ 3,000
5,000
7,000
10,000
15,000
20,000
25,000
50,000
100z000
Maximum
itemized
deductions
$ 1,450
3,216
4,983
7,633
11,800
15,800
19,175
36,133
69 z086
Maximum itemized
deductions as
percent of AGI
.Actua1 average itemized
deductions for income
class as percent of AGI
48%
64
71
76
79
79
77
72
69
23%
21
20
16
16
15
13
13
15
Office of the Secretary of the Treasury
Office of Tax Analysis
Table 4
Maximum Itemized Deductions Of Taxable Individuals
Who Will Have Tax Savings After Taking Into
Account The Effects Of The Floor On Deductions
And The Tax Rate Reductions
(Married taxpayers with two dependents)
·•••
AGI ••
·
Maximum
itemized
deductions
••
itemized
deductions as
2ercent of AQI
Max~um
Actual average itemiz;d
deductions for income
class as Eercent of AGI
$3,000· --------------Nontaxab1e under program- - - - _.- - _. -- - -- ___ ....
5,000 $ 2,015
40%
21%
7,000
3,783
54
20
10,000
6,433
64
16
15,000
10,600
71
16
20,000
14,600
73
15
25,000
17,975
72
13
50,000
34,933
70
13
67 2 886
68
100.1 000
15
Office of the Secretary of the Treasury
Office of Tax Analysis
.A~nS'V3~.i
·::>'0
'sz 'No.L£>NIHSV'M
3H.L .::iO
/~'V.L3~:>3S
,
3Hi. .::iO 3:>1.::i.::iO
')
February \ ' 1963
FOR IMMEDIATE RELEASE
ADDITIONAL DATA ON SOVIET TRADE
REQUESTED BY TREASURY
The Treasury Department today announced that it is conducting a survey of shipments of certain commodities to Soviet bloc
countries by foreign firms owned or controlled by Americans.
The survey concerns commodities not subject to present
Treasury Transaction Control Regulations.
These non-controlled
commodities are on the Department of Commerce's Positive List,
but are not identified on that list by the Commodity Code symbol
Information obtained through the survey will supply the
Treasury with data on the quantity, value and nature of such
shipments.
000
TREASURY DEPARTMENT
=
February 5, 1963
FOR IMMEDIATE RELEASE
ADDITIONAL DATA ON SOVIET TRADE
REQUESTED BY TREASURY
The Treasury Department today announced that it
is conducting a survey of shipments of certain
commodites to Soviet bloc countries by foreign firms
owned or controlled by Americans.
The survey concerns commodities not subject to
present Treasury Transaction Control Regulations.
These non-controlled commodities are on the Department
of Commerce's Positive List, but are not identified on
that Jist by the Conunodity Code symbol "A".
Those on
the "A" list are subject to the Treasury regulations.
Information obtained through the survey will
supply the Treasury with data on the quantity, value
and nature of such shipments.
000
D-745
- 2 -
reserves by foreign monetary authorities reduces the demand in
the money market for marketable securities and helps to fulfill
the U. S. responsibility as a key currency country while minimizing
strains on the balance of payments.
..co
_,----,
....' .I
~<
TREASURY DEPARTMENT
Washington
February 5,1963
FACT SHEET ON ISSUANCE OF LONGER-TERM
FOREIGN
SERIES NarES
The Treasury Daily Statement for January 31, 1963 shows
that during January two Treasury notes were issued in the foreign
series with maturities longer than one year.
One note, in the
amo'lIDt of $125 million with a l5-month maturity, was purchased by
Canada.
Another note, for $58 million with a 5-year maturity but
carrying earlier call provisions was purchased by Italy.
All
previous foreign series issues, which are non-marketable, had
been limited to three-month certificates of indebtedness.
The
interest rates on the foreign series securities have been equal
to or less than those prevailing in the United States market for
securities of comparable maturities.
These longer-term issues provide an additional investment
opportunity designed to meet the special needs of foreign monetary
authorities and enable them to diversify further that part of their
reserves which is held in dollars.
In part these longer-term
investments were also arranged to accommodate countries that have
contractual
p~ents
distant future.
obligations to the United States in the more
Although the issues are non-marketable, provision
may be made, as is provided in the case of the note purchased by
Canada, for their conversion at par into shorter-term obligations
of the United States if the foreign monetary authority judges this
necessary in order to provide greater liquidity.
The creation of
longer-term instruments particularly adapted to the holding of
(over)
TREASURY DEPARTMENT
Washington
February 5,1963
FACT SHEET ON ISSUANCE OF LONGER-TERM FOREIGN SiRIES NOTES
The Treasury Daily Statement for January 31, 1963 shows
that during January two Treasury notes were issued in the foreign
series with maturities longer than one year.
One note, in the
amount of $125 million with a 15-month maturity, was purchased by
Canada.
Another note, for $58 million with a 5-year maturity but
carrying earlier call provisions was purchased by Italy.
All
previous foreign series issues, which are non-marketable, had
been limited to three-month certificates of indebtedness o
The
interest rates on the foreign series securities have been equal
to or less than those prevailing in the United States market for
securities of comparable maturities o
These longer-term issues provide an additional investment
opportunity designed to meet the special needs of foreign monetary
authorities and enable them to diversify further that part of their
reserves which is held in dollars.
In part these longer-term
investments were also arranged to accommodate countries that have
contractual payments obligations to the United States in the more
distant future.
Although the issues are non-marketable, provision
may be made, as is provided in the case of the note purchased by
Canada, for their conversion at par into shorter-term obligations
of the United States if the foreign monetary authority judges this
necessary in order to provide greater liquidity.
The creation of
longer-term instruments particularly adapted to the holding of
(over)
- 2 -
reserves by foreign monetary authorities reduces the demand in
the money market for marketable securities and helps to fulfill
the U. S. responsibility as a key currency country while minjmizing
strains on the balance of payments.
TREASURY DEPARTMENT
Washington
February 5, 1963
FACT SHEET ON DEUTSCHE MARK AND SWISS FRANC BORROWINGS
The Treasury Daily Statement for January 31, 1963 shows that
the Treasury has issued two bonds denominated in Deutsche Marks of
15- and 18-month maturities, respectively, in the amotmt of 200 million
Deutsche Marks each -- the equivalent of about $50 million each.
borrowings were handled as
These
public debt operations, authorized under
the Second Liberty Bond Act, as amended, as were earlier borrowings from
Switzerland and Italy.
The availability of such securities for investment purposes by
foreign monetary authorities is of mutual advantage to the foreign
investor and the United States.
It affords countries, such as Germany,
that are currently, or have in the recent past been, substantial creditors
in international payments an investment opportunity for their surplus funds.
On the United States side, the foreign exchange resources thus obtained
may be used by the Treasury in current or future exchange operations.
A $30 million 16-month bond denominated in Swiss francs was
also issued during January bringing the total of such longer-term investments purchased by Switzerland to $80 million.
This additional trans-
action represents a continuation of the activities described in the
Treasury Press Release of October 23, 1962.
The interest rates on all foreign currency series securities
have been equal to or less than those prevailing in the United States
market for securities of comparable maturities.
TREASURY DEPARTMENT
Washingtun
Feb r u a r y '), 1 Y6 J
FACT SHEET ON DEUTSCHE MARK AND SWISS FRANC BORROWINGS
The Treasury Daily Statement for January 31, 1963 shows that
the Treasury has issued two bonds denominated in Deutsche Marks of
15- and l8-month maturities, respectively, in the amount of 200 million
Deutsche Marks each -- the equivalent of about $50 mi llion each.
borrowings were handled as
These
public debt operations, authorized under
the Second Liberty Bond Act, as amended, as were earlier borrowings from
Switzerland and Italy.
The availability of such securities for investment purposes by
foreign monetary authorities is of mutual advantage to the foreign
investor and the United States.
It affords countries, such as Germany,
that are currently, or have in the recent past been, substantial creditors
in international payments an investment opportunity for their surplus funds.
On the United States side, the foreign exchange resources thus obtained
may be used by the Treasury in current or future exchange operations.
A $30 mi llion 16-month bond denominated in Swiss francs was
also issued during January bringing the total of such longer-term investments purchased by Switzerland to $80 million.
This additional trans-
action represents a continuation of the activities described in the
Treasury Press Release of October 23, 1962.
The interest rates on all foreign currency series securities
have been equal to or less than those prevailing in the United States
market for securities of comparable maturities.
- 3 -
['_nel ey.ch:>n~'~ tenders will receive equ~ treatment.
Cash adjustments will be made
for differences bchlccn the p3.r value of ma..turing bills accepted in exchange and
the issne price of the new bills.
'l'hc income derived from Trco..sury bills, whether interest or gain from the sue
or other disposition of the bills, does not ha.ve any exemption, as such, and 10s8
from the "ale or other dispo::.dtion of Treasury bills does not have any special
trc[d,rr.r:nt,
~ '}
such, under the
Intcrno~
Revenue Code of 1954.
The bills are subject
to c;.t,r.Le, inheritance, gift or other excise taxes, whether Federal or state, but
a.re 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
loc31 t.oxinc; 8uthority.
For
purpo~es
of to.'·8.tion the amount of discount at which
Trc~sllry
bills are origin3l1y sold by the United states is considered to be in-
terc3t.
Under Sections 454 (b) and 1221 (5) of the Internal Revenue Code of 195~
the omolmt 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 considero.tion as ca.pital a.ssets.
Accordingly, the owner
of Treasury bills (other thrJn life insurance companies) issued hereunder need 1nclude 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 actuallJ
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 (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 Reserve Bank or Branch.
- 2 ~xrJO
~1mals,
e. g., 99.925.
Fractions may not be used.
It is urged that tenders
ma.de on the printed forms and forwarded in the special envelopes which will
supplied by Federal Reserve Banks or Branches on application therefor.
Banking institutions generally may submit tenders for account of customers
)v1ded the names of the customers are set forth in such tenders.
others than
lk1ng institutions will not be pennitted to .submit tenders except for their
account.
1
Tenders will be received without deposit from incorporated banks
i trust companies and from responsible and recognized dealers in investment
~ur1t1e8.
Tenders from others must be accompanied by payment of 2 percent of
a face amount of Treasury bills applied for, unless the tenders are accompanied
an express guaranty of payment by an incorporated bank or trust company.
Dmnediately atter the clOSing hour, tenders will be opened at the Federal
serve Banks and Branches, following which public announcement will be made by
a Treasury Department of the amount and price range of accepted bids.
~tt1ng
~retary
Those
tenders will be advised of the acceptance or rejection thereof.
The
of the Treasury expressly reserves the right to accept or reject any
i l l tenders, in whole or in part, and his action in any such respect sha.l.l be
l8l. Subject to these reservations, noncompetitive tenders for $2.0 or
58
for the additional bills dated
November 15, 1962
, (
~
until maturity date on
.
o~o
or less for the
May 16, 1963
91
days remain-
flfa{
5<fddC)C
) and noncompetitive tenders for
~
182 .. day bills without stated price from any 'one
~
ider will be accepted in tull a.t the a.verage price (in three decimals) of ac~ed
~B
competitive bids tor the respective issues.
Settlement for accepted ten-
in accordance with the bids must be IDMe or completed at the Federal Reserve
lks on
February 14, 1963
~
, in eash or other immediately available funds or
a like face amount of Treasury bills maturing
Februa
W
'
1963
•
Cash
TREASURY DEPARTHENT
Washington
February 6, 1963
FOR INMEDIATE RELEASE
xx~~
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 $ 2,100,000,000 , or thereabouts, for
~
cash and in exchange for Treasury bills maturing February 14, 1963 ,in the amount
(#
of $2,100,282,000
91
W
,as follows:
-day bills (to maturity date) to be issued
February 14, 1963
X(&~
in the amount of $
1,300~,000
,
X{<if
, or thereabouts, represent-
ing an additional amount of bills dated
November 15, 1962
X@i1
and to mature
~my
, originally issued in the
16, 1963
{&J
amount of $
701~000
, the additional and original bills
to be freely interchangeable.
182
-day bills, for $ 800, 0?&800
X{dCi1
, or thereabouts, to be dated
xpaq
Fe bruar~ 1963
,and to mature
_A_U.;o;gu;...-.S_t_~r.5~1~9_6_3_ __
The bills of both series will be issued on a discount basis under competitive
and noncompetitive bidding as hereinafter provided, and at maturity their face
amount will be payable without interest.
They will be issued in bea.rer fOnD only,
and in denominations of $1,000, $5,000, $10,000, $50,000, $100,000, $500,000 and
$1,000,000 (maturity value).
Tenders vi1l be received at Federal Reserve Banks and Branches up to the
closing hour, one-thirty p.m., Eastern Standard time, Monday,
Feb~11,
Tenders vill not be received at the Treasury Department, Washington.
1963
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
TREASURY DEPARTMENT
FOR IMMEDIATE RELEASE
WASHINGTON. D.C.
February 6, 1963
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
$2,100,000,000, or thereabouts, for cash and in exchange for
Treasury bills maturing February 14,1963, in the amount of
$2,106,282,000, as follows:
91-day bills (to maturity date) to be issued February 14, 1963,
in the amount of $1,300,000,000, or thereabouts, representing an
additional amount of bills dated November 15,1962, and to
mature May 16, 1963,
originally issued in the amount of
$ 701,326,000, the additional and original bills to be freely
interchangeable.
182-day bills, for $ 800,000, 000,
or thereabouts, to be dated
February 14, 1963, and to mature August 15, 1963.
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
\'1ill be issued in bearer form only, and ill 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 I~ederal Reserve Banks and Branches
up to the closing hour, one-thirty p.m., Eastern Standard
time, Monday, February 11, 196~.
Tenders will not be
received at the Treasury Del?artment, Washington. Each tender must
be for an even multiple 01' $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
or trust company.
D-746
- 2 -
Immediately after the closing hour, tenders will be opened at
the Federal Reserve Banks and Branches, following \'lhich 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 15,1962, (91-days remaining until maturit¥ date on
May 16, 1963)
and noncompetitive tenders for ~100,OOO
or less for the 182-day bills without stated price from anyone
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 Bank30n February 14, 1963,
in cash or other immediately available funds or in a like face
amount of Treasury bills maturing February 14, 1963.Cash and
exchange tenders will receive equal treatment. Cash adjustments
~lill be madt~ for differences between the par value of maturing
bills accept~d in exchange and the issue price of the new bills.
The income derived from Treasury bills, whether interest or
gain from the sale or other dispOSition of the bills, does not have
any exemption, as such, and loss from the sale or other disposition
of Treasury bills does not have any speCial treatment, as such,
under the Internal Revenue Code of 1954. The bills are subject to
estate, inheritance, gift or other excise taxes, whether Federal or
State, but are exempt from all taxation now or hereafter imposed on
the principal or interest thereof by any State, or any of the
possessions of the United States, or by any local taxing authority.
For purposes of taxation the amount of discount at which Treasury
bills are originally sold by the United States is considered to be
interest. Under Sections 454 (b) and 1221 (5) of the Internal
Revenue Code of 1954 the amount of discount at which bills issued
hereunder are sold is not considered to accrue until such bills are
sold, redeemed or otherwise disposed of, and such bills are excluded
from consideration as capital assets. Accordingly, the owner of
Treasury bills (other than life insurance companies) issued hereunder
need include in his income tax return only the difference between
the price paid for such bills, whether on original issue or on
subsequent purchase, and the amount actually received either upon
sale or redemption at maturity during the taxable year for which the
return is made, as ordinary gain or loss.
Treasury Department Circular No. 418 (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 f~
any Federal Reserve Bank or Branch.
000
4D85
- 7 -
of the Free WorLd. The Treasury intends to adhere firmLy to our
policy of continuing to buy and to seLL goLd at $35 an ounce, and we
firmLy intend to oppose aU attempts, whether direct or indirect, to
change the $35 price for goLd. This has been our policy since L934.
It must cont inue to be our policy.
4D85
- 6 -
of the world's payments needs. Our payments problem is not to be considered lightly nor is it to be viewed as something that cannot be
corrected over a period of time. The same is true of our go ld loss,
since it is so closely tied to our payments problem. Nor should we
back away from our role as world banker. Our political, economic and
military position in the world makes our balance of payments problem
a difficult one, because in making military expenditures and in giving
aid, some dollars will continue to go abroad even though the amount that
is not s pent directly on U. S. goods and services is being constantly reduced. Our economic health is observed from abroad, and measures
taken to correct our balance -of -payments must be consistent with the
growth of our domestic economy. In formulating overaLL poliCies we
must, on the other hand, keep strongly in mind our balance-of-payments
problem.
One of the most important things to point out is the cooperation
in the monetary fie ld that is taking pLace between the U. S. and the other
countries of the Free World. The cooperation in this field today, in
which mutual problems are being discussed constantly, is a bright spot
in today's problem-plagued worLd.
ALL of these, then, are the reasons for the Treasury's position on
goLd. We must, as I have expLained, think of goLd as a monetary metal -not as a commOdity. We must think of the dollar not only as involved in
our domestic economy, but also as a reserve currency held by others as
a supplement to the world's gold supply. The doLLar has attained this
position internationally for a number of reasons. But one essential aspect
of maintaining confidence in the dollar and maintaining a strong and stable
international monetary system is to continue to stand ready to buy and
sell gold at the fixed price of $35 an ounce and to avoid any actions that
would encourage speculation for a higher price of goLd.
The Treasury is deeply interested in the health of the gold-mining
industry, just as we are interested in the well being of our other major
industries. However, we must think of gold from the standpoint of the
national interest as a who le, and not only in its re lation to one segment
of the economy. As I indicated earlier we cannot take side excursions
in gold that others wiLL interpret as a sign that we do not think the present
price for gold is correct. We cannot run the risk of disrupting the monetary system which is so vital to the United States economy and the economy
J
- 5 -
balance -of -payments deficit has been deve loped and much progress has
been made.
I might add, without going into too much detail, that several
easy but deceptive solutions to the balance of payments problem have
been put forth. The first of these is devaluation. Devaluation would
not only fail to he Ip our balance of payments, but it would destroy the
status of the dollar in international trade. United States devaluation
would undoubtedly be followed by devaluation in all other countries, thus
leaving the doLLar in the same relative position as before but with less
prestige. Because of devaluation, the do LLar would not be used as a
companion to gold in furnishing world liquidity. Once the value of the
doLLar is changed, the world is left without a major currency generally
acceptable as a supplement to gOld. Yet providing such a supplement is
vitaLLy important, as you can judge by the fact that foreign monetary
authorities now hold about $12 biLLion in short-termdoLLar assets, private
foreigners about $8 billion, and international institutions more than
$ 5 billion.
Another plan is to create a super world central bank with a new
monetary unit of account representing the deposit balances held at the
super bank. This would require all countries of the world to give up
their present reserves and accept the new monetary unit of account of
the super central bank. No matter how constituted, the credit standing
of the super world bank would, in the final analysis, depend upon the
credit structure of the countries involved and the same balance of payments
problem would confront each country under this system as under the
present one.
Another suggested Solution is one of free exchange rates. During
the postwar period we have striven through the International Monetary
Fund and through international monetary cooperation to deve lop a payments system based on stable exchange rates firmly Linked to gold. Free
exchange rates would introduce uncertainties and disruptions in exchange
transactions and would not be conducive to trade between countries,
which has grown so greatly since World War II under a system of basically
fixed eXChange rates among the major industrial countries.
The doLLar is sound both at home and abroad. It is the currency
on which other countries rely for a large amount, and in some cases, for
aU of their international payments. We are the banker for a large part
- 4 -
fixed price. This much is clear. But how. one might stiLL ask. can
a subsidy to us. a domestic problem. have anything to do with the dollar
as an international currency? Gold. one might add. is subsidized in
other countries and agriculture and other industries are subsidized in
this country.
The answer is that the monetary units of other countries do not
have the status of the doLLar. and other countries do not have the responsibility for maintaining a fixed re lationship between their currencies and
gold. Gold in the United States is a monetary metal and cannot be treated
as a commodity. as are products of other industries. or as gold is
treated in some countries. The usual reasons. therefore. for urging
gold subsidies in other countries or for urging subsidies to other industries
in this country are not applicable to gold in the United States. The gold
mining industry cannot be viewed simply as a case of a marginal or depressed industry seeking re tief from the normal compe LLing pressures
of economic change. An effort to assist a relatively few people to keep
or obtain jobs, no matter how desirable would instead of helping those
in the go ld industry run the grave risk of disrupting the monetary system
on which not only their own live Lihood but the Live lihood of aLL of us depends.
J
J
There must not be a second price for gold in the United States.
no matter how indirect. alongside the official price. Any price other
than the official price could be construed by our creditors - - those countries
that hold doLLar balances -- to mean that we had in some way made a judgment that the official price of gold is too low; that in some way. directly
or indirectly, we were on the way to revising our official price. This
could lead to speculation against our currency. Doubt must not exist.
We are the country that maintains the monetary role of gold and for that
reason we cannot treat gold as we would another commOdity or the goldmining industry as we might treat some other industry.
The position of the Treasury, therefore. which is, of course,
that of the President, is to maintain the fixed price of $35 an ounce for
go ld and to oppose any proposals that would lead anyone to be Lieve that we
did not think that the $35 price is the proper price for gold.
It is the balance in our international payments -- that is. the
balance between the total payments made by U. S. residents to foreigners
and the receipts of U. S. residents from foreigners - - which is the root
cause of our gold outflow. A comprehensive program to eliminate this
4~j85
- 3 -
predicted that there will continue to be an increase for many years to
come. As it now stands, based on 1961 figures, United States gold
production is only 4-1/2 per cent of Free World production.
Many have predicted that a subsidy would cause United States
gold production to increase enough within a few years to offset our decrease in gold stocks. In the past five years this decrease has amounted
to near ly 7 billion dollars. That is a lot of gold. As it is difficult to
predict production at some higher price, let's look and see what' happened
in the United States in 1934, when the price of gold was increased 69 per
cent. At a time when labor and supplies were at their cheapest, when
ore dumps and tailing piles that had been in existence for years were reworked, when the dredge really blossomed - - many gold-bearing streams
in the West that could be worked with a dredge were worked - - gold
production s tightly more than doubled. Recently, in commenting on one
of the proposed subsidy bills, the Department of the Interior indicated
that a 100 per cent subsidy would about double today's gold production.
Yet if such subsidy were given and we doubled our gold production it would
take this increase well over one hundred years to replace the decrease in
the gold stocks in the past five years.
A subsidy, in short, cannot solve the problem.
present a very real danger to our dollar.
And it would
Starting after World War L the dollar evolved as a key currency
of the world, and since World War II, the world has accepted the dollar
as a supplement to the gold supply in furnishing liquidity to the trade between the countries of the world. The dollar has become the kingpin, so
to speak, of international financial stability. This has been possible for
a number of reasons. But a fundamental aspect has been our policy of
buying and se lling gold at a fixed price to foreign governments, central
banks and, under certain conditions to international institutions, for the
settlement of international balances and for other legitimate monetary
purposes. We do not, I might note here, sell to foreign individuals. Also,
we sell gold for legitimate industrial, professional and artistic use in the
United States and, of course, we buy gold here. Other governments hold
the dollar because of our policy of buying and selling gold at a fixed price.
The dollar is the only currency that maintains this link between money
and gOld, and the monetary system of the entire Free World is hinged to
this interconvertibitity which we maintain between gold and dollars at a
- 2 -
that the metal content of the ore body is not inexhaustible, and it
eventuaLLy "peters out. "
The history of gold mining in the United States demonstrates that
this problem has played an important part in the gold mining industry.
We know that gold mining was once a flourishing industry in Virginia,
the Carolinas and Georgia. And anyone of us could relate, as if it were
yesterday, the story of the many once great mining areas here in the
West. You may recall that we have had mints for the coinage of gold in
Charlotte, N. C., and Dahlonega, Ga. Also, a mint for coining gold
and silver at Carson City, Nev. , and assay offices at Seattle, Helena,
Salt Lake City, Deadwood and Boise. These went out of existence years
ago because of the drying up of ore bodies, the cost of production and the
price of gOld. I do not believe anyone present would contend that these
mining areas should have been kept open through subsidy or a higher
price for gold - - that would have interfered with the monetary role of
gOld. Nor do I believe anyone would contend that today there should be
a subsidy large enough to reopen these fie lds. A U of us can agree, therefore, that our policy is clear and right when we apply it to these events
of the far distant past. But our perspective changes when it affects us
he re and now.
There is another problem, as we LL, that arises from the very
nature of mining. Many mines involve more than one metaL. And the
decrease in the price of one metal increases the importance of the revenue
from another. No doubt, some of the arguments today for a greater return from gold in by-product mining result from a decrease in the price
of another metaL. But I do not be Lieve we should blame go ld for an unprofitable situation when another metal is at fault.
These, then, are two problems caused, not by external circumstances, but by the character of mining itse If. This, of course. does not
change the larger picture, in which gold production in the United States
has been on the wane while Free World gold production has been waxing
strong. In the United States, production reached its peak in 1940, when
it amounted to 170 million doLLars. In 1961, U. S. production amounted
to only 55 miLLion doLLars. Free World gold production, on the other
hand, has increased from 738 million dollars after World War II to
1 billion 220 miLLion dollars in 196L. During the LO-year period 1951-196l,
Free World gold production increased 45 per cent. Preliminary figures
for 1962 indicate a further increase in Free World production and it is
TREASURY DEPARTMENT
Washington
FOR RELEASE UPON DELIVERY
REMARKS BY LELAND HOWARD
DIRECTOR, OFFICE OF DOMESTIC GOLD AND SILVER OPERATIONS
BEFORE THE SIXTY -SIXTH
NATIONAL WESTERN MINING CONFERENCE AND EXHIBITION
THE DENVER HILTON HOTEL, DENVER, COLORADO
THURSDAY, FEBRUARY 7, 1963, 4 P. M., M. S. T.
TREASURY'S GOLD POLICY
I we lcome this opportunity to talk to you because, for one thing
it gives me an opportunity to see so many friends I have known for so long
a time. I first visited Denver in 1934, shortly after joining the Bureau of
the Mint, and it has been my good fortune to come here several times a
year ever since.
J
I understand that your invitation was extended to me so that the
Treasury would have an opportunity to restate its position on·gold. In
response, I want to say that the Treasury's policy on gold has remained
the same since i934, when Congress passed the Gold Reserve Act. A 1though the technique of carrying out the poLicy under different Administrations may vary, the basic policy has been the same under both Democrats
and Republicans. Our basic policy has been - and remains - one of centralizing the gold reserves of the country in the hands of the Government
under the jurisdiction of the Treasury and maintaining a fixed price of
$35 an ounce for gOld.
Having worked in the gold and si lver fie ld during my entire Government career, I be lieve that I we II understand your problems. I know that
you, as producers, are interested in bringing out of the ground a ton of
material for which you can obtain a price, on the basis of the metal or
metals therein, that will offset your cost of mining the ton of material. I
know that because mining is an extractive industry, many things enter into
the picture in addition to the price you obtain for metals. One problem is
TREASURY DEPARTMENT
Washington
FOR RELEASE UPON DELIVERY
REMARKS BY LELAND HOWARD
DIRECTOR, OFFICE OF DOMESTIC GOLD AND SILVER OPERATIONS
BEFORE THE SIXTY -SIXTH
NATIONAL WESTERN MINING CONFERENCE AND EXHIBITION
THE DENVER HILTON HOTEL, DENVER, COLORADO
THURSDAY, FEBRUARY 7 .. 1963, 4 P. M., M. S. T.
TREASURY'S GOLD POLICY
I we lcome this opportunity to talk to you because, for one thing,
it gives me an opportunity to see so many friends I have known for so long
a time. I first visited Denver in 1934, shortly after joining the Bureau of
the Mint, and it has been my good fortune to come here several times a
year ever since.
I understand that your invitation was extended to me so that the
Treasury would have an opportunity to restate its position on gOld. In
response, I want to say that the Treasury's policy on gold has remained
the same since 1934, when Congress passed the Gold Reserve Act. A lthough the technique of carrying out the policy under different Administrations may vary, the basic policy has been the same under both Democrats
and Republicans. Our basic policy has been - and remains - one of centralizing the gold reserves of the country in the hands of the Government
under the jurisdiction of the Treasury and maintaining a fixed price of
$35 an ounce for gOld.
Having worked in the gold and silver field during my entire Government career, I believe that I well understand your problems. I know that
you, as producers, are interested in bringing out of the ground a ton of
material for which you can obtain a price, on the basis of the metal or
metals therein, that will offset your cost of mining the ton of material. I
know that because mining is an extractive industry, many things enter into
the picture in addition to the price you obtain for metals. One problem is
- 2 -
that the metal content of the ore body is not inexhaustible, and it
eventuaLLy "peters out. "
The history of gold mining in the United States demonstrates that
this problem has played an important part in the gold mining industry.
We know that gold mining was once a flourishing industry in Virginia,
the Carolinas and Georgia. And anyone of us couLd relate, as if it were
yesterday, the story of the many once great mining areas here in the
West. You may recall that we have had mints for the coinage of gold in
Charlotte, N. C., and Dahlonega, Ga. Also, a mint for coining gold
and silver at Carson City, Nev., and assay offices at Seattle, He lena,
Salt Lake City, Deadwood and Boise. These went out of existence years
ago because of the drying up of ore bodies, the cost of production and the
price of gOld. I do not believe anyone present would contend that these
mining areas should have been kept open through subsidy or a higher
price for gold - - that would have interfered with the monetary role of
gold. Nor do I believe anyone would contend that tOday there should be
a subsidy large enough to reopen these fie lds. A U of us can agree, therefore, that our policy is clear and right when we apply it to these events
of the far distant past. But our perspective changes when it affects us
he re and now.
There is another proble m, as we U, that arises from the very
nature of mining. Many mines involve more than one metaL. And the
decrease in the price of one metal increases the importance of the revenue
from another. No doubt, some of the arguments today for a greater return from gold in by-product mining result from a decrease in the price
of another metaL. But I do not believe we should blame gold for an unprofitable situation when another metal is at fault.
These, then, are two problems caused, not by external circumstances, but by the character of mining itse if. This, of course, does not
change the larger picture, in which gold production in the United States
has been on the wane while Free World gold production has been waxing
strong. In the United States, production reached its peak in 1940, when
it amounted to l70 million dollars. In 1961, U. S. production amounted
to only 55 million dollars. Free World gold production, on the other
hand, has increased from 738 million dollars after World War II to
1 biLLion 220 million do llars in 196 L. During the 10 -year period 195 1- 196 l,
Free World gold production increased 45 per cent. Preliminary figures
for 1962 indicate a further increase in Free World production and it is
- 3 -
predicted that there wiLL continue to be an increase for many years to
come. As it now stands, based on 1961 figures, United States go Id
production is only 4-l/2 per cent of Free World production.
Many have predicted that a subsidy would cause United States
gold production to increase enough within a few years to offset our decrease in gold stocks. In the past five years this decrease has amounted
to nearly 7 biLLion dollars. That is a lot of gOld. As it is difficult to
predict production at some higher price, let IS look and see what happened
in the United States in 1934, when the price of gold was increased 69 per
cent. At a time when labor and supplies were at their cheapest, when
ore dumps and tailing piles that had been in existence for years were reworked, when the dredge reaLLy blossomed - - many gold-bearing streams
in the West that could be worked with a dredge were worked - - gold
production s lightly more than doubled. Recently, in commenting on one
of the proposed subsidy bills, the Department of the Interior indicated
that a LOO per cent subsidy would about double todayls gold production.
Yet if such subsidy were given and we doubled our gold production it would
take this increase weLL over one hundred years to replace the decrease in
the gold stocks in the past five years.
A subsidy, in short, cannot solve the problem.
present a very real danger to our dollar.
And it would
Starting after World War 1, the doLLar eVOlved as a key currency
of the world, and since World War II, the world has accepted the dollar
as a supplement to the gold supply in furnishing liquidity to the trade between the countries of the world. The doLLar has become the kingpin, so
to speak, of international financial stability. This has been possible for
a number of reasons. But a fundamental aspect has been our poLicy of
buying and se lling gold at a fixed price to foreign governments, central
banks and, under certain conditions to international institutions, for the
settlement of international balances and for other Legitimate monetary
purposes. We do not, I might note here, sell to foreign individuals. A Iso,
we sell gold for legitimate industrial, professional and artistic use in the
United States and, of course we buy gold here. Other governments hold
the dollar because of our policy of buying and selling gold at a fixed price.
The dollar is the only currency that maintains this link between money
and gOLd, and the monetary system of the entire Free World is hinged to
this interconvertibi lity which we maintain between go Id and doLLars at a
J
- 4 -
fixed price. This much is clear. But how, one might still ask, can
a subsidy to us, a domestic problem, have anything to do with the dollar
as an international currency? Go Id, one might add, is subsidized in
other countries and agriculture and other industries are subsidized in
this country.
The answer is that the monetary units of other countries do not
have the status of the dollar, and other countries do not have the responsibility for maintaining a fixed re lationship between their currencies and
gold. Gold in the United States is a monetary metal and cannot be treated
as a commOdity, as are products of other industries, or as gold is
treated in some countries. The usual reasons, therefore, for urging
gold subsidies in other countries or for urging subsidies to other industries
in this country are not appLicable to gold in the United States. The gold
mining industry cannot be viewed simply as a case of a marginal or depressed industry seeking re lief from the normal compe LLing pressures
of economic change. An effort to assist a re lative ly few people to kee p
or obtain jobs, no matter how desirab le, would instead of he Iping those
in the go Id industry, run the grave risk of disrupting the monetary system
on which not only their own live lihood but the live lihood of all of us depends.
There must not be a second price for gold in the United States,
no matter how indirect, alongside the official price. Any price other
than the official price could be construed by our creditors -- those countries
that hold dollar balances - - to mean that we had in some way made a judgment that the official price of gold is too low; that in some way, directly
or indirectly, we were on the way to revising our official price. This
could lead to speculation against our currency. Doubt must not exist.
We are the country that maintains the monetary role of gold and for that
reason we cannot treat gold as we would another commodity or the gOldmining industry as we might treat some other industry.
The position of the Treasury, therefore, which is, of course,
that of the President, is to maintain the fixed price of $ 35 an ounce for
gold and to oppose any proposals that would lead anyone to believe that we
did not think that the $35 price is the proper price for gOLd.
It is the balance in our international payments - - that is, the
balance between the total payments made by U. S. residents to foreigners
and the receipts of U. S. residents from foreigners - - which is the root
cause of our gold outflow. A comprehensive program to eLiminate this
- 5 -
balance -of -payments deficit has been deve loped and much progress has
been made.
I might add, without going into too much detail, that several
easy but deceptive solutions to the balance of payments problem have
been put forth. The first of these is devaluation. Devaluation wouLd
not only fail to help our balance of payments, but it would destroy the
status of the dollar in international trade. United States devaluation
would undoubtedly be followed by devaluation in all other countries, thus
leaving the do llar in the same re lative position as before but with less
prestige. Because of devaluation, the dollar would not be used as a
companion to gold in furnishing world liquidity. Once the value of the
dollar is changed, the world is left without a major currency generally
acceptable as a supplement to gOld. Yet providing such a supplement is
vitally important, as you can judge by the fact that foreign monetary
authorities now hold about $12 billion in short-term dollar assets, private
foreigners about $8 billion, and international institutions more than
$5 billion.
Another plan is to create a super world central bank with a new
monetary unit of account representing the deposit balances held at the
super bank. This would require all countries of the world to give up
their present reserves and accept the new monetary unit of account of
the super central bank. No matter how constituted, the credit standing
of the super world bank would, in the final analysis, depend upon the
credit structure of the countries involved and the same balance of payments
problem would confront each country under this system as under the
present one.
Another suggested Solution is one of free exchange rates. During
the postwar period we have striven through the International Monetary
Fund and through international monetary cooperation to deve lop a payments system based on stable exchange rates firmly linked to gOld. Free
exchange rates would introduce uncertainties and disruptions in exchange
transactions and would not be conducive to trade between countries,
which has grown so greatly since World War II under a system of basically
fixed exchange rates among the major industrial countries.
The dollar is sound both at home and abroad. It is the currency
on which other countries rely for a large amount, and in some cases, for
all of their international payments. We are the banker for a large part
- 6 -
of the world's payments needs. Our payments problem is not to be considered lightly nor is it to be viewed as something that cannot be
corrected over a period of time. The same is true of our go ld loss,
since it is so closely tied to our payments problem. Nor should we
back away from our role as world banker. Our political., economic and
military position in the world makes our balance of payments problem
a difficult one, because in making military expenditures and in giving
aid, some dollars will continue to go abroad even though the amount that
is not s pent directly on U. S. goods and services is being constantly reduced. Our economic health is observed from abroad, and measures
taken to correct our balance -of -payments must be consistent with the
growth of our domestic economy. In formulating overall pOlicies we
must, on the other hand, keep strongly in mind our balance-of-payments
problem.
One of the most important things to point out is the cooperation
in the monetary fie ld that is taking place between the U. S. and the other
countries of the Free Wor ld. The cooperation in this fie ld today, in
which mutual problems are being discussed constantly, is a bright spot
in today's problem-plagued worl.d.
All of these, then, are the reasons for the Treasury's position on
gOld. We must, as I have explained, think of gold as a monetary metal -not as a commodity. We must think of the dollar not only as involved in
our domestic economy, but also as a reserve currency he ld by others as
a supplement to the world IS gold supply. The dollar has attained this
position internationally for a number of reasons. But one essential as pect
of maintaining confidence in the dollar and maintaining a strong and stable
international monetary system is to continue to stand ready to buy and
sell gold at the fixed price of $35 an ounce and to avoid any actions that
would encourage speculation for a higher price of gold.
The Treasury is deeply interested in the health of the gold-mining
industry, just as we are interested in the well being of our other major
industries. However. we must think of gold from the standpoint of the
national interest as a who le. and not only in its re Lation to one segment
of the economy. As I indicated earlier. we cannot take side excursions
in gold that others will interpret as a sign that we do not think the present
price for gold is correct. We cannot run the risk of disrupting the monetary system which is so vital to the United States economy and the economy
- 7 -
of the Free World. The Treasury intends to adhere firmly to our
policy of continuing to buy and to sell gold at $35 an ounce and we
firmly intend to oppose all attempts whether direct or indirect to
change the $35 price for gold. This has been our policy since 1934.
It must continue to be our policy.
J
J
J
roR I*EllIPTE RELE/\SE
wi.
Treasury o:N1c1al& indicated todny that they are h1gbq graUfte4
the results of tlle excha..'lge of'f'er1llG on vbich the books elD8e4 OQ J'eb~ 6.
Prel1minary t1Ql1.'6S shoW' that a.bout $9,234 million, or 91.~, ot ~
certificatea and notes natu.ring February 15 J 1963, aggrep.t1Dg .,465 a1l11a,
were e..~cht:ml~d for the two new 1ssues included in the owrcmt ache_ olferL'1C .·'1,bout $231 million., or 2. 4~., of tbe tiuoee matur1ng Issue. I
,. k
casl:l rederJption.
or
the $5,419 m1ll1on of ma~ gecurl.ties held outa14e tbe 1tdIa1 II·
...,., . . . . . . . 00.....
I
------
ELIGIBLE
FOR E!CClIAlWlE
-_.
-
Securit1.
3-1/~
cu..
2-S/wf, lIcJtea
3-1/4//' lfotea
i'ot&la
Mn.
"
&CGIMI'U,
tl81 .1 1 ' . , " I . ., . . . . . .
;5'.. I/'J
Ctta: 3-~Jif, iCiiIII.
!!! 2Ll§/M 4ue 8/l!l88
$5,719
1,481
$4.,696
2,259
1,Q§
$9,465
$6,183
6S1
$ 971
7"
-w.
••a7
1,_
?If
1.172
$2.'11
.,IM
13
be •• I.
---••
II
.....!!
till
Bauka
ao4 Oavt.
acCOUDts
$
1$
$10
2,862
=
=
TREASURY DEPARTMENT
February 8, 1963
FOR IMMEDIATE RELEASE
PRELIMINARY RESULTS OF TREASURY I S CURRENT EXCHANGE OFFERING
Treasury officials indicated today that they are highly gratified with
the results of the exchange offering on which the books closed on February 6.
Preliminary figures show that about $9,234 million, or 97.6%, of Treasury
certificates and notes maturing February 15, 1963, aggregating $9,465 million,
were exchanged for the two new issues included in the current exchange offering. About $231 million, or 2.4%, of the three maturing issues remain for
cash redemption.
Of the $5,479 million of maturing securities held outside the Federal Reserve Banks and Government accounts, $181 million, or 3.3%, were not exchanged.
Details of the exchange are as follows:
ELIGIBLE FOR EXCHANGE
(in millions)
EXCHANGED FOR
3-1/4% Ctfs.
3-3/4% Bonds
due 2/15/64
due 8/15/68
UNEXCHANGED
Securities
Amounts
3-1/2% Ctfs.
2-5/8% Notes
3-1/4% Notes
$5,719
1,487
2,259
$4,696
651
1,416
$
971
744
756
$5,667
1,395
2,172
$ 52
92
87
Totals
$9,465
$6,763
$2,471
$9,234
$231
$3,986
$3,921
$
15
$3,936
$ 50
5,479
2,842
2,456
5,298
181
$9,465
'$6,763
$2,471
$9,234
$231
Total
Amount
Subscribers
Federal Reserve Banks
and Govt.
accounts
All others
Totals
Final figures regarding the exchange will be announced after final reports
are received from the Federal Reserve Banks.
0-747
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Over 77 million ounces of silver were used for silver coinage
in 1962. rlore than 616 million silver coins were produced. From
this production approximately 62,000 silver coins have been
reserved for the annual trial. A representative sample will be exami
to make sure they are of the proper weight and fineness.
In making a half dollar with a standard weight of 192.9 grains ,
the allowable tolerance is 4 grains over- or under weight; on a
quarter, 3 grains and on a dime 1.5 grains. As to the silver-copper
alloy of the coins, the standard is th~ 900 parts out of a thousand
must be silver, though the Mint is given a tolerance of 6 parts,
either way.
The Mints in Denver and Philadelphia throughout the year send
samples of the coins into Washington where they are weighed and
assayed to make sure of their weight and silver content. The
Trial of the Coins is the official test by private citizens which
assures the public that its coins have been struck in accordance
with the law.
NOTE:
THE PRESS AND TELEVISION SERVICES WILL BE ADMITTED
TO THE PHILADELPHIA MINT, 16TH & SPRING GARDEN
STREETS AT 10:00 A.M. ON FEBRUARY 13.
000
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TREASURY DEPARTMENT
FOR IMMEDIATE RELEASE
MINT DIRECTOR ANNOUNCES ANNUAL
TRIAL OF THE COINS
Miss Eva Adams, Director of the United States Mint, will appear
at the Philadelphia Mint on February 13 before a special cornmissi~
named by the President yesterday for the Annual Trial of the Coins.
This historic ritual, dating back to the past century and a
half in the United States has its roots in thirteenth century
English law requiring an assize of the coins. In those early days
the trial took place only when a chest known as the pyx, stored in
Westminster Abbey, was filled.
Upon the recommendations of Alexander Hamilton legislation
was enacted by the United States in 1792 making mandatory a yearly
examination of the coins by persons not connected with the Mint.
The commissioners who will meet at Philadelphia next Wednesday
are:
Mr. George J. Boardman, of Pawtucket, Rhode Island
Mr. Selig S. Burrows, of Great Neck, New York
Mr. Matthew Hale, of Alexandria, Virginia
Dr. Warren C. Jones, of Forest, Mississippi
Mr. Maxwell J. Lieberman, of Philadelphia, Pennsylvania
Mr. Robert R. Poston, of Arlington, Virginia
Mr. A. G. Schemmer, of Albuquerque, New Mexico
Mr. Elston G. Bradfield, of Highland Park, Illinois
Mrs. Oscar Dodson, Grosse Pointe, Michigan
Mr. J. Madison Hunnicutt, Jr., of Nashville, Tennessee
Mr. Ray O. Lefman, of Kansas City, Missouri
Mr. Alvin G. McNish, of Chevy Chase, Maryland
Mr. Matthew H. Rothert, of Camden, Arkansas
Mr. Leonard W. Stark, of Chicago, Illinois
The Co~ission will be expected to complete its examination in
one day. Serving as an ex-officio member will be a scientist who
will bring with him weights, calibrated against the standard weights
the Bureau of Standards, for use in testing the coins. The Judge
of the District Court for the Eastern District of Pennsylvania, the
Canptroller of the Currency, and the Assayer of the United Sta~
Assay Office in New York will also assist.
D-748
(lIeU)
TREASURY DEPARTMENT
-•
FOR IMHEDIATE RELEASE
MINT DIRECTOR ANNOUNCES ANNUAL
TRIAL OF THE COINS
Miss Eva Adams, Director of the United States Mint, will appenr
at the Philadelphia Mint on February 13 before a special commission
named by the President yesterday for the Annual Trial of the Coins.
This historic ritual, dating back to the past century and a
half in the United States has its roots in thirteenth century
English law requiring an assize of the coins. In those early days
the trial took place only when aches t known as the pyx, s tared in
Westminster Abbey, was filled.
Upon the recommendations of Alexander Hamilton legislation
was enacted by the United States in 1792 making mandatory a yearly
examination of the coins by persons not connected with the Mint.
The commissioners who will meet at Philadelphia next Wednesday
are:
Mr. George J. Boardman, of Pawtucket, Rhode Island
Mr. Selig S. Burrows, of Great Neck, New York
Mr. Matthew Hale, of Alexandria, Virginia
Dr. Warren C. Jones, of Forest, Mississippi
Mr. Maxwell J. Lieberman, of Philadelphia, Pennsylvania
Mr. Robert R. Poston, of Arlington, Virginia
Mr. A. G. Schemmer, of Albuquerque, New Mexico
Mr. Elston G. Bradfield, of Highland Park, Illinois
Mrs. Oscar Dodson, Grosse Pointe, Michigan
Mr. J. Madison Hunnicutt, Jr., of Nashville, Tennessee
Mr. Ray O. Lefman, of Kansas City, Missouri
Mr. Alvin G. McNish, of Chevy Chase, Maryland
Mr. Matthew H. Rothert, of Camden, Arkansas
Mr. Leonard W. Stark, of Chicago, Illinois
The Co:nmission will be expected to complete its examination in
ooe day. Serving as an ex-officio member will be a scientist who
\vill bring with him weights, calibrated against the standard \veights in
the Bureau of Standards, for use in testing the coins. The Judge
of the District Court for the Eastern District of Pennsylvani<.l, the:
CO~ptroller of the Currency, and the Assayer of the United States
Assay Office in Ne\v York will also assist.
0-748
(I!Uill )
- 2 -
Over 77 million ounces of silver were used for silver COini.h'
in 1962. Hore than 616 million silver coins were produced. Fro:'~
this production approximately 62,000 silver coins have been
reserved for the annual trial. A representative sample 'vill be ex,!,
to make sure they are of the proper weight and fineness.
In making a half dollar with a standard weight of 192.9 grJins
the allowable tolerance is 4 grains over- or under weight; on a
quarter, 3 grains and on a dime 1.S grains. As to the silver-coppel
alloy of the coins, the standard is thct 900 parts out of a thousand
must be silver, though the Mint is given a tolerance of 6 parts,
either way.
The Mints in Denver and Philadelphia throughout the year send
samples of the coins into Washington where they are weighed and
assayed to make sure of their weight and silver content. The
Trial of the Coins is the official test by private citizens which
assures the public that. its coins have been struck in accordance
with the law.
NOTE:
THE PRESS AND TELEVISION SERVICES WILL BE ADMITTED
TO THE PHILADELPHIA MINT, 16TH & SPRING GARDEN
STREETS AT 10:00 A.M. ON FEBRUARY 13.
000
5L;,. r-'7,
- 7 Now consider a second family:
A married couple with two
children who have been living in a house for some time.
Its yearly
income is $15,000, its mortgage is now $16,000 on a $25,000 home,
and its mortgage interest is $877.
The total itemized deductions
of this family, if typical of the income group, amount to $2,400.
The five percent floor would lower its tax saving on deductions by
$158, but the rate reduction would increase this saving by $470.
Thus, the new tax program would mean for this family a total tax
saving of $312. This family is one of your very real prospects
for upgrading, and with its deductions already well over fifteen
percent of its income, its additional mortgage and tax expenses
for a larger home would be just as fully deductible as they are
now.
You can take the rate schedules we have published and construct
your own examples. The point will be clear:
For virtually every
taxpayer, the proposed rate cuts would far more than offset the
effect of the five percent floor.
I do not imagine anyone will
argue that the families I have cited -- or the many more like
them -- would be less likely prospects for newer and larger homes.
If the new tax program is enacted, they would constitute a real
and significant portion of a whole new market for housing.
In the excessive fixation upon the five percent floor and its
imaginary demons, too many have overlooked in the new tax program
an entire realm of promise for the housing industry -- the
realm of profits. Literally tens of thousands of our home-industry
concerns make less than $25,000 a year in taxable income. Those
which are incorporated would benefit, beginning the first of this
year, from the twenty seven percent reduction in the normal corporate
tax rate. And the many more unincorporated concerns would enjoy the
benefits, not only of the reduction in individual rates, but of the
income averaging provision of the new tax program.
In both the areas, therefore, of profit and demand the housing
industry has only the promise of gain and growth from the
President's tax proposals. Nor could it be otherwise.
For the
housing industry is at once one of America's most vibrant sources
and productive rc~ipients of growth.
In its details as well as in its purposes, the new tax program
\vill bear your scrutiny well. We may discover some legitimate
differences among us on detail.
But I do not think they will be
many or great.
And we cannot allow them to interfere with the major
objective.
For the President's tax program offers the impetus our
economy needs to restore the buoyancy and spring that alone will
allow it to approach the limits of its capacity.
000
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- 6 allowable, but that every single additional dollar of deductible
expense \vould "float" far above the five percent floor.
This
means that practically all families which presently itemize would
still be able to move into new and larger homes and deduct every
additional dollar in mortgage interest and real property taxes -just as they can today.
The situation might, of course, be somewhat different for the
man contemplating his first house. Here it is entirely possible to
construct cases in which someone with relatively small deductions
who uses the standard ten percent deduction, would find that, upon
purchase of a house, his deductions would not increase by an
equivalent amount.
But these cases must be placed in the
perspective of the overall proposed tax package:
The rate reductions,
which are themselves partly dependent upon the five percent floor,
would increase that taxpayer's take-home pay by substantially ~
than he could possibly lose as a result of the floor.
This would
be true regardless of what income bracket he falls into.
We can make all this clearer, I believe, by considering the
impact the new program would have upon two different families if it
were fully in effect:
First, the average family -- a young married couple with two
children -- about to purchase its first house.
Its income is
$7,800 a year and, typical of this income group, the house it is
considering is available with a $15,000, 25-year mortgage at
5-1/2 percent. Currently, this family takes the standard deduction,
since its deductible expenses are only six percent of its income.
The interest in the first year on its mortgage would be $818
and local real estate taxes would be $300. Together with the six
percent existing deduction, this would bring to $1,586 its total
deductions allowable under present law. The proposed five
percent floor would reduce by $67 this family's tax saving through
deductions.
But this sum would be far exceeded by the substantial
saving of $366 as a result of the rate reductions this family would
enjoy. The new tax program, in short, would mean for this typical
family considering taking on a typical home mortgage, a total tax
saving of $299.
Does anyone here tonight think that family would be less
likely to buy the house in question under the new program than
under exis ting la\v?
SLJ i'-'7
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- 5 The new tax program, in short, by increasing after-tax income
at every level, would not only bolster, but would broaden, the demand
for housing.
For all phases of the housing industry, this is the
salient fact in the President's tax program.
Some have expressed
fear, however, that the proposed five percent floor under itemized
deductions would somehow offset this prospect, and present a
threat to the industry.
I do not think it does, but let us consider this question
openly and frankly:
First, the five percent floor will recoup about twenty percent
of the revenue loss from the proposed rate reductions. These
reductions are designed -- not as a temporary stimulus to the
econo~y -- but as a permanent revision that will remain for years
to come, with long-term benefits to the economy. Rate reductions
of the size proposed could not prudently be suggested without the
revenue that would flow from the five percent floor under
deductions.
And the higher marginal rates that would be necessary
in the absence of the floor would adversely affect initiative,
risk taking and effort.
Second, it is the rare family today that does not find the
total of its s~ate income and sales taxes, its basic charitable
contributions, its medical deductions, or casualty losses very
considerably exceeding five percent of its income -- whether or not
it is a homeowning family.
In fact, the itemized deductions of the
average taxpayer amount to some 20 percent of his income.
Third, the floor would not become effective until January 1,
By that time, three-quarters of the proposed $11 billion in
individual rate reductions would also be in effect.
1964.
Fo~rth,
the overall advantages of the tax program far outweigh any disadvantages which might accrue from the five percent
floor.
The great majority of home owners today itemize deductions.
In the $5,000-$10,000 income group, for example, three-quarters of
those who itemize are home owners.
And the percentage is naturally
larger in the higher income groups. These home owners of today
are tomorrow's potential buyers of larger, higher-priced hOilles -the prime prospects for "trading up" upon which the health of the
housing industry depends.
There is no reason for concern that
the five percent floor would undermine this market, for the
average taxpayer who itemizes has deductions that amount to nearly
tlventy percent of his income. Under the proposed program he would
find, not only that the bulk of his present deductions would be
5L;,. r-'7.
- 4 industry is today inseparably linked with the prosperity of the
nation. No longer lS the availability of credit the only limiting
factor upon your ability to expand. Rather, it is the availability
of customers ready, willing, and able to upgrade their standard
of living, and the availability of jobs for the swelling surge of
younger people now crowding our schools and colleges.
The stimulus which would be provided by the proposed tax program
is fully capable of breaking the pattern of slow growth that has
retarded our economy over the past five years, of bringing our
economy to full employment within a reasonable time, and of helping
to provide the millions of new jobs that we need.
If we assume that
residential construction will retain no more than its present share
of our national production, then a reasonably full employment
economy in 1965 would produce a rise of several billion dollars in
annual home construction expenditures. This would put us well on
the path toward the goal of two million units per year projected
for 1970.
Let me now turn to the hard, specific facts of the direct impact
of the tax program on the potential home buyer:
By reducing the taxes of virtually everyone in the tax brackets
from $10,000 up by an average of thirteen percent, the new tax
program would dlrectly increase the disposable income of existing
homeowners and further whet their urge to find larger, more
convenient, or more comfortable homes. And by cutting the taxes
of those in the lower brackets even more sharply, the new tax
program can help overcome the IllOSt serious financial problem of the
new home buyer -- finding that combination of down payment and
mortgage loan that is within his capacity and within the guidelines
of prudent lenders.
Of course, no feasible tax proposal can by itself provide the
lump sum of cash that younger families need to meet the down payment.
But it can have -- and the proposed tax program would have -- a
direct and prompt impact upon the credit capability of many, many
families, making home ownership for the first time a more practical
proposition for some, and a larger mortgage possible for others.
All of you will, I am sure, agree that, along with job stability,
take-home pay is a key factor in any credit appraisal. The new tax
program would turn many a marginal prospect into a profitable
prospect as the rate reductions take effect and the withholding
rate drops from eighteen percent to 13.5 percent.
It would increase
disposable personal income by nine and a half billion dollars.
For a typical married taxpayer, with two dependents, a gross income
of $7,500, with Social Security, a pension or medical plan, and
)
other commitments eating into his take-home earnings, both his
- 3 -
We have thus paved the way for a permanent restructuring of
our tax system. The time for action is now. But before we act,
let us be clear about our purposes:
The President's new tax program offers to virtually every
American, and to every segment of our economy, heightened
incentives and new opportunities -- the promise of expanding
markets and the reality of higher profits -- as well as additional
rewards for hard work and for intelligent risk-taking. These are
the very core and fiber of our free enterprise system. By increasing
after-tax income and lowering marginal tax rates at every level, the
new program would release in our economy precisely those energies
and resources that it needs to translate productive possibility
into hard productive fact. Now, let us get down to specifics:
Here tonight are many of the leader.'~f one of~rica's,~~t
vital industries -- an industry whose well~being is essential'to
both the economic and social health of the nation. The ideal of
home ownership has long been a primary goal of our citizens,
and public policy has always supported that goal. In sheer
economic terms, residential, non-farm building in the last year
alone accounted for $24.8 billion, or four and a half percent,
of our Gross National Product. But even this is n~ adequate
yardstick. For the rise in housing expenditures since World,
War II has been a strong factor in our economic growth. And
a demand for housing also means a demand for lumber, steel, glass,
electric 4 1 and plumbing equipment, .and a large, and increasing
variety of other products.
The housing industry cannot help but benefit from President
Kennedy's new tax program.
First of all, the new program would nourish that vital incentivp
that cannot be't'educed to any calettlation of do:llars and cent. on a
family tax return -- the incentive of confidence. The purchase of
a house is the single, largest financial commitment the average
American ever undertakes. It is a long-term commitment that is
heavily influenced by his confidence in the future. Today, the
huge backlog of demand that fed the housing boom of the first
post-war decade is pretty well exhausted. The breadwinner's
decision to buy a house now turns, more than anything else, upon
his confidence in his job, in his prospect for uninterrupted and
higher income, and in the assurance of a thriving economy in which
he, too, can thrive. The prosperity of the housing
- 2 -
I join with you tonight in saluting "Fannie Mae fl •
Tonight I
also ask you to join me in examining the President's new tax
program and the ways it can strengthen the growth of the housing
industry.
Currently, our economy is reasonably prosperous.
But reasonable
prosperity does not provide jobs for our unemployed, or adequate
government revenues to meet our responsibilities at home and abroad.
None of us can fail to heed the fact that our performance for more
than five years has slipped well below the potential that is within
our grasp -- that, despite a rise of $83 over the past two years,
our real per capita disposable income has grown by only $132
since 1957 -- that four and three quarter million people are out
of work and another two million are on short work weeks -that profit margins have been under pressure -- and that, in the
past five years, business investment has averaged only nine percent
of our total output.
These are the facts that, for many months, have joined every
major segment of our economy in a consensus that a merely reasonable
prosperity is less than we require and less than we can accept.
The consensus is equally strong that a permanent reduction in tax
rates, providing both new incentives and increased purchasing power,
is by far the most potent and appropriate path to a full employment
economy. The prevailing opinion is that a tax cut of about $10
billion would be both safe and significant. Responsible experts
have insisted that rate reduction be accompanied by reforms in our
tax structure that would provide sufficient revenue to make rate
reduction possible and also improve tax equity. Many also believe
that rate reduction must be accompanied by a rigorous control of
expenditures.
The President's new budget and new tax program are in full
accord with the consensus I have just described.
The proposed budget for fiscal 1964 has rigorously held spending
increases for national security, space, and interest payments down
to the irreducible essentials.
The total of the expenditures for
all other programs has actually been kept below the level of fiscal
1963. And the initial and unavoidable adverse impact which the
President's proposed tax reduction and reform would have upon our
budget has been spaced out over a three year period. After that,
the program will actually increase government revenues.
The lower
tax rates can be expected to produce more revenue from a healthy
and expanding economy than our present repressive rate structure
can produce from an economy that is denied its full potential.
TREASURY DEPARTMENT
Washington
FOR RELEASE A.M. NEWSPAPERS
TUESDAY, FEBRUARY 12, 1963
REMARKS BY THE HONORABLE DOUGLAS DILLON
SECRETARY OF THE TREASURY
AT THE 25TH ANNIVERSARY INDUSTRY SALUTE
TO THE FEDERAL NATIONAL MORTGAGE ASSOCIATION
THE STATLER HILTON HOTEL, WASHINGTON, D.C.
MONDAY, FEBRUARY 11, 1963, 6:30 P.M.
Tonight we meet to honor an outstanding institution -- the
Federal National Mortgage Association -- which has, for twenty-five
years, supported the growth of the housing industry by helping to
assure a free flow of mortgage credit. As leaders of the housing
and home finance industry, you are very familiar with this record.
And you are understandably fond of "Fannie Mae." So am I.
For the Treasury Department is the sole holder of "Fannie Mae's"
nearly $159 million in preferred.stock. In her twenty-five years of
operation, she has turned over to the Treasury a $1/4 billion in .
cash from her earnings. And we have received more than $80 million
in the equivalent of corporate income taxes on her Secondary Market
Operations.
I need not relate here the long record of "Fannie Mae's"
accomplishments. The resources of "Fannie Mae" are impressive.
They allow "Fannie Mae", not only to carry out effectively its
Secondary Market Program, but to pioneer in providing better housing
for moderate income families and the elderly under special assistance
programs. At the present time, the profits from these programs
form a reserve against future losses and contingencies. If this
reserve is not needed, it will eventually be turned over to the
Treasury.
Throughout its life, "Fannie Mae" has been a cooperative
venture combining the best thought and effort of many in government
and industry, including members of our host organizations here
tonight. Its achievements also reflect the devotion of the capable
persons who work in "Fannie Mae", many of whom are also with us
tonight.
D-749
TKEASURY DEPARTMENT
Washington
FOR RELEASE A.M. NEWSPAPERS
T0ESDAV, FEBRUARY 12, 1963
REMARKS BY THE HONORABLE DOUGLAS DILLON
SECRETARY OF THE TREASURY
AT THE 25TH ANNIVERSARY INDUSTRY SALUTE
TO THE FEDERAL NATIONAL MORTGAGE ASSOCIATION
THE STATLER HILTON HOTEL, WASHINGTON, D.C.
MONDAY, FEBRUARY 11, 1963, 6:30 P.M.
Tonight we meet to honor an outstanding institution -- the
Federal National Mortgage Association -- which has, for twenty-five
years, supported the growth of the housing industry by helping to
assure a free flow of mortgage credit. As leaders of the housing
and home finance industry, you are very familiar with this record.
And you are unders tandab ly fond of "Fannie Mae." So am I.
For the Treasury Department is the sole holder of "Fannie Mae's"
nearly $159 million in preferred stock. In her twenty-five years of
operation, she has turned over to the Treasury a $1/4 billion in
cash from her earnings. And we have received more than $80 million
in the equivalent of corporate income taxes on her Secondary Market
Operations.
I need not relate here the long record of "Fannie Hac's"
accomplishments. The resources of "Fannie Mae" are impressive.
They allow "Fannie Mae", not only to carry out (,ffectively its
Secondary Market Program, but to pioneer in providing better housing
for moderate income families and the elderly under special assistance
programs. At the presen t time, the profi ts from these programs
form a reserve against future losses and contingencies. If this
reserve is not needed, it will eventually be turned over to the
Treasury.
Throughout its life, "Fannie Mae" has been a cooperative
venture combining the best thought and effort of many in government
and industry, including members of our host organizations here
tonight. Its achievements also reflect the devotion of the capable
persons who work in "Fannie Mae", many of whom are also wi th us
tonight.
D-749
- 2 I join Ivith you tonight in saluting "Fannie Mae".
Tonight I
also ask you to join me in examining the President's ne~ tax
program and the ways it can strengthen the growth of the housing
indus try.
Currently, our economy is reasonably prosperous. But reasonable
prosperity does not provide jobs for our unemployed, or adequate
government revenues to meet our responsibilities at home and abroad.
None of us can fail to heed the fact that our performance for more
than five years has slipped well below the potential that is within
our grasp -- that, despite a rise of $83 over the past two years,
our real per capita disposable income has grown by only $132
since 1957 -- that four and three quarter million people are out
of work and another two million are on short work weeks -that profit margins have been under pressure -- and that, in the
past five years, business investment has averaged only nine percent
of our tot a 1 ou tpu t .
These are the facts that, for many months, have joined every
major segment of our economy in a consensus that a merely rcasonClble
prosperity is less than we require and less than we can accept.
The consensus is equally strong that a permanent reduction in tax
rates, providing both new incentives and increased purchasing power,
is by far the most potent and appropriate path to a full employment
economy. The prevailing opinion is that a tax cut of about $10
billion would be both safe and significant. Responsible experts
have insisted that rate reduction be accompanied by reforms in our
tax structure that would provide sufficient revenue to make rate
reduction possible and also improve tax equity. Many also believe
that rate reduction must be accompanied by a rigorous control of
expendi tures .
The President's new budget and new tax program are in full
accord with the consensus I have just described.
The proposed budget for fiscal 1964 has rigorously held spending
increases for national security, space, and interest payments dmv'n
to the irreducible essentials. The total of the expenditures for
all other programs has actually been kept below the level of fiscal
1963. And the initial and unavoidable adverse impact which the
President's proposed tax reduction and refonn Ivould have upon our
budget has been spaced out over a three year period. After that,
the program will actually increase government revenues. The lower
tax rates can be expected to produce more revenue from a healthy
and expanding economy than our present repressive rate structure
can produce from an economy that is denied its full potential.
- 3 -
We have thus paved the way for a permanent restructuring of
our tax system. The time for action is now. But before vJe act,
let us be clL'ar about our purposC't:>:
The President's new tax program offers to vil-tually every
American, and to every segment of our economy, heightened
~centives and new opportunitiet:> -- the promise of cxpanding
markets and the reality of higher profits -- as well as additional
rewards for hard work and for intelligent risk-taking. These arc
the very core and fiber of our free enterprise systcm. j~)y increasing
after-tax income and lowering marginal tax rates at every level, the
new program would release in our economy precisely tb0se energies
and resources that it needs to translate productive possibility
into hard productive fact. Now, let us get down to specifics:
Here tonight are many of the leaders of one of America's most
vital industries -- an industry whose well-being is essential to
both the economic and social health of the nation. The ideal of
home ownership has long been a primary goal of our citizens,
and public policy has always supported that goal. In sheer
economic terms, residential, non-farm building in the last year
alone accounted for $24.8 billion, or four and a half percent,
of our Gross National Product. But even this is no adequate
yardstick. For the rise in housing expenditures since World
War I I has been a strong f ac tor in our ec onomic growth. And
a demand for housing also means a demand for lu~ber, steel, glass,
electrical and plumbing equipment, and a large and increasing
variety of other products.
The housing industry cannot help but benefit from President
Kennedy's new tax program.
First of all, the new program would nourish that vital incentive
that cannot be reduced to any calculation of dollars and cents on a
family tax return -- the incentive of confidence. The purchase of
a house is the single, largest financial commitment the average
American ever undertakes.
It is a long-term commitment that is
heavily influenced by this confidence in the future. Today, the
huge backlog of demand that fed the housing boom of the first
post-war decade is pretty well exhausted. The breadwinner's
decision to buy a house now turns, more than anything elsp, upon
his confidence in his job, in his prospect for uninterrupted and
higher income, and in the assurance of a thriving economy in which
he, too, can thrive. The prosperity of the housing
- 4 industry is today inseparably linked with the prosperity of the
nation. No longer i;:i the availability of credit the only limiting
factor upon your abi 1 i ty to expand. Rather, it is the ava i labi 1i tv
of customers ready, willing, and able to upgrade their standard
~
of Hving, and the availability of jobs for the swelling surge of
younger people now crowd ing our schools and colleges.
The stimulus which would be provided by the proposed tax program
is fully capable of breaking the pattern of slow growth that has
retarded our economy over the past five years, of bringing our
economy to full employment within a reasonable time, and of helping
to provide the millions of new jobs that we need. If we assume that
residential construction will retain no more than its present share
of our national production, then a reasonably full employment
economy in 1965 would produce a rise of several billion dollars in
annual home construction expenditures. This would put us well on
the path toward the goal of two million units per year projected
for 1970.
Let me now turn to the hard, specific facts of the direct impact
of the tax program on the potential home buyer:
By reducin~ the taxes of virtually everyone in the tax brackets
from $10,000 up by an average of thirteen percent, the new tax
program would dlrectly increase the disposable income of existing
homeowners and further whet their urge to find larger, more
convenient, or more comfortable homes. And by cutting the taxes
of those in the lower brackets even more sharply, the new tax
program can help overcome the Lost serious financial problem of the
new homebuyer -- finding that combination of down payment and
mortgage loan that is within his capacity and within the guidelines
of prudent lenders.
Of course, no feasible tax proposal can by itself provide the
lump sum of cash that younger families need to meet the down payment.
But it can have -- and the proposed tax program would have -- a
direct and prompt impact upon the credit capability of many, many
families, making home own~rship for the first time a more practical
proposition for some, and a larger mortgage possible for others.
All of you will, I am sure, agree that, along with job stability,
take-home pay is a key factor in any credit appraisal. The new tax
program would turn many a marginal prospect into a profitable
prospect as the rate reductions take effect and the withholding
rate drops from eighteen percent to 13.5 percent. It would increase
disposable personal income by nine and a half billion dollars.
Por a typical married taxpayer, with two dependents, a gross income
of $7,500, with Social Security, a pension or medical plan, and
Jther commitments eating into his take-home earnings, both his
~eeklv pay check 2~rl his annual after-tax income sho~ld rise by about
3- 3-1/2 percetI t.
- 5 -
The new tax program, in short, by in'~~asing after-tax income
at every level, would not only bolster, but would broaden, the demand
[or housing. For <111 !Jhdses of thL~ housing industry, this is the
salient fact in the President's tax program. Some have expressed
fear, however, that the proposed five percent floor under itemized
deductions would somehow offset this prospl~ct, and present Cl
threat to the indus try.
I do not think it does, but let us consider this question
openly and frankly:
first, the five percent floor will recoup about twenty percent
of the revenue loss from the proposed rate reductions. These
reductions are designed -- not as a temporary stimulus to the
econo~y -- but as a permanent revision that will remain for years
to come, with long-term henefits to the economy. Rate reductions
of the size proposed ~ould not prudently be suggested without the
revenue that would flow from the five percent floor under
deductions. And the higher marginal rates that would be necessary
in the absence of the floor would adversely affect initiative,
risk taking and effort.
Second, it is the rare family today that does not find the
total of its state income and sales taxes, its basic charitable
contributions, its medical deductions, or casualty losses very
considerably exceeding five percent of its income -- whether or not
it is a homeowning family.
In fact, the itemized deductions uf the
average taxpayer amount to some 20 percent of his income.
Third, the floor would not become effective until January 1,
1964. By that time, three-quarters of the pruposed $11 billion in
individual rate reductions would also be in effect.
FOJrth, the overall advantages of the t<1X program far outweigh any disadvantages which might accrue from the five percent
floor.
The great majority of home owners today itemize deductions.
In the $5,000-$10,000 income group, for example, three-quarters u[
those who itemize are home owners. And the percentage is naturcllly
larger in the higher income groups. These home ovmers of today
are tomorrow's potential buyers of larger, higher-priced ho:ncs -the prime prospects for "trading up" upon which the health of the
housing industry depends. There is no reason [or concern that
the five percent floor would undermine this market, for the
average taxpayer who itemizes has deductions that amount to nearly
twenty percen t of his inc ome . Under the proposed progrrtm he wou 1 d
find, not only that the bulk of his present deductions would be
- 6 -
allowable, but that every single additional dollar of deductible
expense would" float" far above the five percent floor. This
means that practically all families which presently itemize would
still be able to move into new and larger homes and deduct every
additional dollar in mortgage interest and real property taxes -just as they can today.
The situation might, of course, be somewhat different for the
man contemplating his first house. Here it is entirely possible to
construct cases in which someone with relatively small deductions
who uses the standard ten percen t deduc tion, would find that) upon
purchase of a house, his deductions would not increase by an
equivalent amount. But these cases must be placed in the
perspective of the overall proposed tax package: The rate reductions,
which are themselves partly dependent upon the five percent floor,
would increase that taxpayer's take-home pay by substantially more
than he could possibly lose as a result of the floor. This would
be true regardless of what income bracket he falls into.
We can make all this clearer, I believe, by considering the
impact the ne\V program would have upon two different families if it
were fully in effect:
First, the average family -- a young married couple with two
children -- about to purchase its first house. Its income is
$7,800 a year and, typical of this income group, the house it is
considering is available with a $15,000, 25-year mortgage at
5-1/2 percent. Currently, this family takes the standard deduction,
since its deductible expenses are only six percent of its income.
The interest in the first year on its mortgage would be $818
and local real estate taxes would be $300. Together with the six
percent existing deduction, this would bring to $1,586 its total
deductions allowable under present law. The proposed five
percent floor would reduce by $67 this family's tax saving through
deductions. But this sum would be far exceeded by the substantial
saving of $366 as a result of the rate reductions this family would
enjoy. The new tax program, in short, would mean for this typical
family considering taking on a typical home mortgage, a total tax
saving of $299.
Does anyone here tonight think that family would be less
likely to buy the house in question under the new program than
under existing law?
- 7 Now consider a second family: A married couple with two
children who have been living in a house for some time. Its yearly
income is $15,000, its mortgage is now $16,000 on a $25,000 horne,
and its mortgage interest is $877.80. The total itemized deductions
of this family, if typical of the income group, amount to $2,400.
The five percent floor would lower its tax saving on deductions by
$158, but the rate reduction would increase this saving by $470.
Thus, the new tax program would mean for this family a total tax
saving of $312. This family is one of your very real prospects
for upgrading, and with its deductions already well over fifteen
percent of its income, its additional mortgage and tax expenses
for a larger horne would be just as fully deductible as they are
now.
You can take the rate schedules we have published and construct
your own examples. The point will be clear: For virtually every
taxpayer, the proposed rate cuts would far more than offset the
effect of the five percent floor. I do not imagine anyone will
argue that the families I have cited -- or the many more like
them -- would be less likely prospects for newer and larger homes.
If the new tax program is enacted, they would constitute a real
and significant portion of a whole new market for housing.
In the excessive fixation upon the five percent floor and its
imaginary demons, too many have overlooked in the new tax program
an entire realm of promise for the housing industry -- the
realm of profits. Literally tens of thousands of our horne-industry
concerns make less than $25,000 a year in taxable income. Those
which are incorporated would benefit, beginning the first of this
year, from the twenty seven percent reduction in the normal corporate
tax rate. And the many more unincorporated concerns would enjoy the
benefits, not only of the reduction in individual rates, but of the
income averaging provision of the new tax program.
In both the areas, therefore, of profit and demand the housing
industry has only the promise of gain and growth from the
President's tax proposals. Nor could it be otherwise. For the
housing industry is at once one of America's most vibrant sources
and productive r~cipients of growth.
In its details as well as in its purposes, the new tax program
will bear your scrutiny well. We may discover some legitimate
differences among us on detail. But I do not think they will be
many or great. And we cannot allow them to interfere with the major
objective. For the President's tax program offers the impetus our
economy needs to restore the buoyancy and spring that alone will
allow it to approach the limits of its capacity.
000
TREASURY DEPARTMENT
February 12,1963
FOR IMMEDIATE RELEASE
TREASURY MARKET TRANSACTIONS IN JANUARY
During January 1963, 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 $80,730,000.00.
000
D-750
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TREASURY DEPARTMENT
'OR RELEASE A. M. NKlfSPAPERS,
February 11, 1963
I~sday, February 12, 1963.
RESULTS OF TREASURY'S WEEKLY BILL OFFERING
The Treasury Department announced last evening that the tenders for two series of
reasllr"J bills, one series to be an additional issue of the bills dated November 15,
962, and the other series to be dated February 14, 1963, which were offered on February 6,
ere opened at the Federal Reserve Banks on February 11. Tenders were inti ted for
1 300,000,000, or thereabouts, of 91-day bills and for $800,000,000, or thereabouts, of
52-day bills. The details of the two !eries are as follows:
ANGE OF ACCEPTED
OHPETITlVE BIDS:
High
Low
Average
91-day Treasury bills
maturing Mal 16, 1963
pprox. Equiv.
Price
Annual Rate
99.262
2.920%
99.255
2.947%
99.256
2.944%
11
••
182-day Treasury bills
maturing August 15, 1963
Approx. Equiv.
Price
Aruma! Rate
98.492
2.9133%
98.482
3.003%
98.486
2.995% 1/
89 percent of the amount of 91-day bills bid for at the low price was accepted
percent of the amount of 182-day bills bid for at the low price was accepted
41
:JTAL TENDERS APPLIED FOR AND ACCEPl'ED BY FEDERAL RESERVE DISTRICTS:
istrict
oston
ew York
biladelphia
leveland
Lehmond
Uanb
1icago
~. Louis
Lnneapolis
insas City
IUas
in FranCisco
TOTALS
Applied For
$ 24,156,000
1,795,849,000
31,353,000
30,105,000
21,080,000
34,855,000
239,422,000
49,359,000
21,495,000
46,645,000
30,ll6,OOO
102,228,000
$2,426,003,000
•• Applied For
Accepted
9,183,000
$ 14,056,000 • $
1,009
,ll2 ,000
884,579,000
9,055,000
15,560,000 •
23,157,000
29,395,000 :
7,879,000
16,687,000
8,286,000
29,535,000
106,478,000
144,408,000
9,347,000
42,995,000
:
7,813,000
14,654,000
14,969,000
34,958,000
9,993,000
20,016,000 ••
55 z106 z000
56,397,000 ·•
$1,303,240,000 ~/ $1,270,378,000
to
·
·
·
·
Accepted
$ >,It)J ,000
642,086,000
4,026,000
13,098,000
4,699,000
8,286,000
51,528,000
7,347,000
6,813,000
9,510,000
5,403,000
42z156z000
::P1300,135,000
'£/
Includes $269,860,000 noncompetitive tenders accepted at the average price of 99.256
Includes $58,873,000 noncompetitive tenders accepted at the average price of 98.486
On a coupon issue of the same length and for the same amount invested, the return on
th8ese bills would provide yields of 3~01%, for the 91-day bills, and 3.08~, for the
l 2-day bills. Interest rates on bills are quoted in terms of bank discount with
the return related to the face amollllt 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
~f interest on the amollllt invested, and relate the number of days remaining in an
nterest payment period to the actual number of days in the period, with semiannual
compounding if more than one coupon period is involved.
D-7S1
Savings Sands and coamoD .tock
two General
to
th...
pur~aaed ~,
"P'-1e. . . . . .r
aavlnas pIa •• , aDd eo.p••, st. .k ,ly..
~lectrlQ
employees a8 a sa."iDge lncenti.e.
~haD
More
lUO
co~aD1..
••ployee thrift pro.raas.
Savlng8 Plan in
lud~Btr1
include
a••
i...
BoD" 1n their
Since the adoption of the Pa7roll
for the purchaae 01 8ay18.8 Ioade,
the 'treasury bas encoura,ed co.paDi •• to lDGOrperate S• ."l_
Bonda 1n sucb
~ecretary
tbr1tt-inc~!nti.,.e
Dillon said:
plane.
"W1thoyt real ••.,,1n. . in the
bands of our industrial citizens we cannot aocomp118b
iDdustri~l
arowtb that
20th il1Clnag0I1lent and
h3V-e,
W~
have ~~t as
iu.lividu~l
~.
a goal for our nat10D.
employees at General Electric
th.rough theoir i·l'!ll)loye{;; :Javings Plans, provided ao
Oll ts t"1lI1 ing ~:xlallple
ot the type of savings and tbe nece •• arJ
inc\."ntivc for savings
vigorou~
th~t
W~
ue£·d if we are to 1lU\1ntaln a
... 1.1(t h0:;.ltily ()conomic climate in the years ahead.
...--.
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PO. I_DIAB RlLBAII
.nUL &1.lCJIII... , .3 T L
n Ie • •
$78,000,000 •• BAYI. . . . . .
..,......
,
1'_"" II"
......t.Ia. . . . .
Geaeral
Electric COIIpallJ aDd IU . . .lera.
, . ........
Stat. CIlalr.aa of tile 8&yl_ BcNad. Pza. . . . . . _
Secretary Dill. . to accept tile Tr. . ."I"J'.
Ia adClltloa to
uae
~,
o.sp.~t'-
to tale 150,000
...
_
dl.t ..1INtloa of ...., _ ..... , 1.3
Electric wl11 apportioD He,OOO _ara of GIL" • .,. 8. 9 3
8Iq)1o~.
g.,
nl'
.1••
'ftae paca.p U.tri'-tu. ....s •••(
TREASURY DEPARTMENT
February 11, 1Y63
FOR IMMED lATE RELEASE
GENERAL ELECTRIC EMPLOYEES TO RECEIVE
$73,000,000 IN SAVINGS BONDS
Treasury Secretary Douglas Dillon today congratulated the
General Electric Company and its employees for their outstanding
achievements in the field of savings.
The occasion was the announcement of the distribution next
month of 1-1/2 million Series E Savings Bonds worth $73 million
purchased by 150,000 employees.
John D. Lockton, Treasurer of General Electric and volunteer
State Chairman of the Savings Bonds Program for New York, and
Virgil B. Day, Vice President Employee Relations, met with
Secretary Dillon to accept the Treasury's congratulations on behalf
of the company and its employees.
In addition to the distribution of Savings Bonds, General
Electric will apportion 566,000 sharES of company common stock
to the 150,000 employees. The package distribution represents
Savings Bonds and common stock purchased by employees under two
General Electric savings plans, and company stock given to these
employees as a savings incentive.
More than 100 companies include Savings Bonds in their
employee thrift programs. Since the adoption of the Payroll
Savings Plan in industry for the purchase of Savings Bonds, the
Treasury has encouraged companies to incorporate Savings 13cmds
in such thrift-incentive plans.
Secretary Dillon said: "Without real savings in the hands
of our industrial citizens we cannot accomplish the industrial
growth that we have set as a goal for our nation.
Both r:lanagl~ment
and individual employees at General Electric have, Lhrough their
Employee Savings Plans, provided an outstanding 0xampl0 of the
type of savings and the necessary incentive for savings that we
need if we are to maintain a vigorous and healthy L'conolllic climatl'
in the years ahead.
D-752
- 2 "Our country can only be as strong anu secure as the strength
and resources of its free institutions. Yet, both the nation and
our institutions depend upon the strength of the people. General
Electric's plan and others like it are he lping keep the people
financially strong.
"Mr. Lockton, I want to express my thanks and appreciation
for your support of the Savings Bonds Program in your capac i ty
as State Chairman of New York -- a position you have held with
distinction since 1954. We depend upon such volunteers as you
for the success of our efforts to promote the sale of Savings
Bonds to all Americans."
000
- 3 -
and
c~~cl1rm~c
tenders viII receive cquD.l treatment.
Cash adjustments Will 'be made
for differences bctHccn the p3.r value of maturing bills accepted in exchange and
the iSGue price of the new bills.
'l'hc income derived from Treasury bills, whether interest or gain from the sal,
or ot,her disposition of the bills, does not have any exemption, as such, and
from the
(ia~e
trer.1t~lTl':nt, V~
1088
or other di(.pmdtion of Trcfloury bills does not have any special
ouch, under the Internal Revenue Code o:f 1954.
The bills are subjec'
to cr:tr.t:e, inheritance, girt or other excise taxes, whether Federal or state, but
o.re exempt from all taxa.tion now or herea.i'ter imposed on the principal or interest
thereof by any state, or any of the possessions o:f the United states, or by any
locn.l tv-xin6 (l.uthority.
For purpm.:;cs of' ta':·l1tion the amount of discount a.t which
Trc,sury bills are originally sold by the United states is considered to be interc::;t.
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 componies) issued hereunder need include in his income tax return only the dif:ference between the price paid for such
bills, whether on orlg1nnl issue or on subsequent purchase, and the amount actuall.:
received either upon sale or redemption at ma.turity during the taxable year for
which the return 1s made, as ordinary gain or loss.
Treasury Department Circular No. 418 (current revision) and this notice, prescribe the terms
or
the Treasury bills and govern the conditions of their.issue.
Copies of the circular may be obtained from any Federal Reserve Bank or Branch.
dec1m8ls, e. g., 99.925.
Fractions may not be used.
It is urged that tenders
be made on the printed foms 8Jld 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 a.re set forth in such tenders.
Others th8Jl
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 a.re accompanied
by an express gua.ra.nty of payment by an incorporated bank or trust company.
Immediately after the closing hour, tenders will be opened at the Federal
Reserve Banks and Branches, following which public announcement will be made by
the Treasury Department of the amount and price range of accepted bids.
Those
submitting tenders will be advised of the acceptance or rejection thereof.
The
secretary of the Treasury expressly reserves the right to accept or reject 8Jly
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
ins until maturity date on
$lO'WXO or less for the
November 23, 1962
May 23tJf63
182
, (
ttfiJ
91
tlil
tDJ
days remain-
) and noncompetitive tenders for
-day bills without stated price from anyone
~
bidder will be accepted in f'u.ll at the average price (in three decimals) of aceepted competitive bids for the respective issues.
Settlement for accepted ten-
ders in accordance with the bids must be m~;le or comp1et.ed at the Federal Reserv~
Banks on
February 21, 1963
, in cash or other immediately available funds or
fI2#
in a like face amount of Treasury billa maturing _F;;;,.e_b_ru_a_ry
...2.,.1.';..-.1_9_6_3_.
(tZ4
Cash
TREASURY DEPARTMENT
Washington
196~
February 13,
FOR D1MEDIATE 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 $ 2,100,000,000 , or thereabouts, for
~
cash and in exchange for Treasury bills maturing
of $ 2,099,970,000
.,
February 21, 1963, in the amount
, as follows:
Oi*
91 -day bills (to maturity date) to be issued February 21, 1963
~
in the amount of $1,300,000,000
~
, or thereabouts, represent-
fi6
ing an additional amount of bills dated
and to mature
November 23, 1962 ,
i156
, originally issued in the
May 23ii6963
amount of $ 799,.000
,
, the additional and original bills
to be freely interchangeable.
182 -day bills, for $ 800,
~
OOWOO
February 21, 1963
(i06
,or thereabouts, to be dated
,and to mature
August imo1963
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 18, 1963
(Xb6Q
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
TREASURY DEPARTMENT
~;z,;
j
w4
is ens:
fI
t!
"5
t Ii
tl4
=:S'hJi.f"S
BiMH
February 13,1963
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
$2,100,000,000, or thereabouts, for cash and in exchange for
Treasury bills maturing February 21,1963, in the amount of
~,099,970,000,
as follows:
91day bills (to maturity date) to be issued February 21,1963,
in the amount of $1,300,000,000, or thereabouts, representing an
additional amount of bills dated November 23,1962, and to
mature May 23,1963,
originally issued in the amount of
$799,994,000,
the additional and original bills to be freely
interchangeable.
182 -day bills, for $800,000,000,
or thereabouts, to be dated;
February 21,1963, and to mature August 22,1963.
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
(maturi ty value).
Tenders will 'be received at I~ederal Reserve Banks and Branc:ite.a
up to the closing hour, one-thirty p.m., Eastern Standard
time, Monday, February 18, 1963.
Tenders will not be
received at the Treasury De~artment, 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
or trust company.
0-753
- 2 Immediately after the closing hour, tenders will be opened at
the Federal Reserve Banks and Branches, following which public
aunouncement will be made by the Treasury Departmment of the amount
a~d 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 $20n,000 or less for the additional bills dated
November 23,1962 (91-days remaining until maturit¥ date on
May 23, 1963)
and noncompetitive tenders for !pl00 ,000
or less for the 182-day bills without stated price from anyone
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 Banks on February 21,1963,
in cash or other immediately available funds or in a like face
amount of Treasury bills maturing February 21,1963. 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 hereundeI
need include in his income tax return only the difference between
the price paid for such bills, whether on original lssueor 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 (current revision) and this
notice prescrib'~ the terms of the Treasury bills and govern the
conditions of their issue. Copies of the circular may be obtained fr
any Federal Reserve Bank or Branch.
000
-2-
-
Commodity
~'eriod
and '1usntity
tJnit
of
)uantitx :February 2, 19?3
_lute guotas:
-lutter
substitutes,
including
Calendar
butter oil, containing 45%
or more but terfat •••••••••••••.•• Year 1963
1,200,000
Pound
Quota Filled
12 mos. from
Yin ••.••..•. • ••••.••••.•...•.••• 3ei')t. 11, 1962
I,Ot)O
l'ound
644
'eanuts, shelled, unshelled,
blancbed, salted, prelJared or
12 mos. from
preae"ed (incl. roasted peanuts but not peanut butted •••••• August 1, 1962
1,709,oon
l?ound
1,050,013
:Otton products, except cotton
WlBtes, produced in any stage
preeeding the s?lnning into
1I
Imports through February 8, 1963
)·754
l'
l'
',INEDI.1TE ,lELG.\3E
I'RIDAY, FEBRUARY 15! 1963
-
D-754
i"l·nrt",· [·'1 !.:,1:'~·,,::·
ion of the follo ...!ing com'l1lldities (nn th(\. bel!,\l'\ning of the rl~s··J~ctive q'lota :1eriod~
hrough February 2, 1963:
The Bureau of CustoolS announced toclay !'rclin,inary fi.:','Jrr.".,
0,1
Imports
as of
:(Iuantity:~ebruary 2, 191)3
: Jnit
Commodity
ariff.Rate
r~,
of
l·eriod nnd '.1uantity
r~uotas:
fresh or sour •••.••••••••• Calendar Year
l\Iole }iilk, fresh or sour •..••••. Calendar Year
:attle, 700 Ibs. or more each
Jan. 1, 1963(other than dairy cows) ••••••••• :·larch 31, 1963
attle less than 200 Ibs. eacb ••.
12 mos. from
1, 1962
~"ril
1,500,010 Gallon
3, Olln t 'VYl
Ga 11 on
76,049
1
Head
13,R47
20f),O()1') Head
58,Of)2
12o,oon
ish, fresh or frozen, f i Heted,
etc., cod, haddock, hake, ,01lock, cus't, and rosefish •••••••• Calendar Year
24,R74,S71
::'ound
<:uota Filled
una fish ••••.••••••••••••••••••• Calendar Year
To be
annolJnced
found
l,R3",78R
bite or Irish !lotatoes:
Certified seed •••••••••••••••••• 12 mos. fro'n
Uther ••..• , ••••••••.•••••••••••• Se ,t. l.i, 19t;2
1/
114,OOO,O!)O
l~olJnd
37,270,237
36,OOr),Oao
i.1 ound
21,423,17";
alnuts. • . • . • • • • • • . • • • . • . • • • • . • .. Calendar Year
5, oon, (J()I)
l'o!Jnd
113,713
tainless steel tahle flat·..rare
(table '<nives, table for:<s,
Nov. 1, 1962table spoons) ••••••••••••••••.• uct. 31, 1963
69, 00:), 1):)0
~
ieces
I Im·)Qrts for conslJm;,tion at the C"plOta rate Are limited to 6,21R, 7lr~
irst three months of the calendar year.
19,1(,4,217
)()und~ during the
TREAS U;\ Y DEf:" ARTrtENT
Ivashington
U'IEDl;)1fE ;ZELEASE
D-754
gDAY, FEBRUARY 15,1963
The Bureau of Customs announced today preliminary figures on iml)orts for consum:1on of the following commod i ties from the beginning of the respective quota periods
trough February 2, 1963:
Imports
of
as of
:Quantity:February 2, 1963
: Unit
Commodity
~eriod
and Quantity
,riff-Rate Quotas:
'earn, fresh or sour ..•.......... Ca lendar Year
l,500,OOO
Gallon
76,049
tole Milk, fresh or sour. ..•.•.. Calendar Year
3.000,000
Gallon
1
ule, 700 1bs. or more each
Jan. 1, 1963other than dairy cows)......... ~1arch 31, 1963
120,000
Head
18,847
12 mos. from
ttle less than 200 Ibs. each ... April 1, 1962
200,000
Head
58,002
sh, fresh or frozen, filleted,
tc., cod, haddock, hake, polock, cusk, and rosefish ..•.•... Calendar Year
24,874,871
~ound
Quota Filled
na fish .....•..•....•.......... Calendar Year
To be
announced
~ound
1,836,788
114,000,000
36,000,000
Pound
Pound
37,270,237
21,423,177
lnuts .......... " ...........•.. Calendar Year
5,000,000
Pound
103,713
ainless steel table flat\.,rare
table knives, table forks,
Nov. 1, 1962table spoons) .................. Oct. 31, 1963
69,000,000
ite or Iri sh potatoes:
ertified seed .................. 12 mos. from
ther. .......................... Sept. 15, 1962
Pieces
39,364,217
Im,lorts for consumpt ion at the quota rate are 1 imi ted to 6,218,718 pounds during the
rst three months of the calendar year.
- 2-
Commodity
~eriod
and quantity
Unit
Imports
of
as of
Quantity :February 2, 196)
Absolute Quotas:
Butter substitutes, including
butter oil, containing 45%
Calendar
or more butterfat •..•..•••..•..•. Year 1963
1,200,000
Pound
Quota Filled
12 mos. from
yarn ............................ . 3ept. 11, 1962
1,000
Pound
644
shelled, unshelled,
blanched, salted, prepared or
preserved (incl. roasted pea12 mos. from
nuts but not peanut butter) ..... . August 1, 1962
1,709,000
Pound
1,050,013
Cotton products, except cotton
wastes, produced in any stage
preceding the spinning into
~eanuts,
1/ Imports through February 8, 1963
D-754
iashiqgton
IHi1t:DI,\Tt:
iC::LZ;;:::it~
FRIDAY, FEBRUARY 15,1963
D-755
The nureilU of Custo:'!s L'lS annollnced rLe f() 11 o\F! n;,; lre 1 .Llili nilr)' f i~~Ilt"PS
shOlving the illl lorls for COnS'lI') .·ti<m froll' January I, ]'1()3, Ll) !:-'ebrlarv :, 19C,3,
i:1clusive, of corrllll()cll~ies under 1'10 1.:tS established ::'It's'Jant to U:e 'hili ,,)L'1e
Trade r\greerner:t~evisi.()n ~.ct of lQS5:
1t
of
,uan t it v
lIn
Commodity
Buttons •............
Es tab 1 i shed ','I nUd 1
"'lOt;). .uantit-y
680, ()I)i)
Cross
Cigars ............. .
Coconut oil . . . . . . . . .
3 '')1-\ , 4!)'),
!)!)f)
()IJnc\
Cordage ............ .
6, O!),),
i)f)n
: Oil'ld
Tobacco . . . . . . . . . . . . .
) ,n':ort s
",,5 ,)f
Fehruary 2,
19r:J-~
TREASURY DEi' ARTNEN'f
t~ashington
IHMEOIATE RELEASE
FRIDAY, FEBRUARY 15,1963
D-755
The Bureau of Customs has announced the following I.preliminary figures
showing the imnorts for consumption from January 1, 1963. to February 2, 1963,
inclusive, of commodities under quotas established pursuant to the Philippine
Trade Agreement R.evision Act of 1955:
Unit
Commodity
Established Annual
Quota Quantity
of
Quantity
Imports
as of
February 2, 1963
Buttons •••••••••••••
680,000
Cigars ••••••••••••••
160,000,000
Number
Coconut oil •••••••••
358,400,000
Pound
40,427,262
Cordage .............
6,onO,Ooo
I'Qund
413,944
Tobacco .............
5,2 0 0,000
l?ound
556,0()O
Gross
)0,231
296,364
~-
carroN WAS'1'E3
'(Ia poWl4s)
·ot less than 1-:3/16' inches in length, COMBER
WASTE, LAP WASTE, SLIVER WASTE, AND ROVING WASTE, ~iHETHER OR NOT MANUFACTURED OR OTHERilISE
ADVANCED rrl VALUE: Provided, however, that not more than 33-1./3 percent o~ the quotas shall
be tilled b7 cotton wastes other than comber wastes made from cottons of 1-3/16 inches or more
in stapler length in the- case- of the- following countries: United Kingdom, France, Netherlands,
Switzerland, Belgium, Qe-~, and Italy,
COTTON CARD STRIPS made -from cotton having·a staple
Country
ot Origin
.
Established
: . TOTAL QUOTA
:
United Kingdom •• • • •
Canada • • • • • • • • •
France • • • • • •• ••
4,323,457
239,690
British India • • • • ••
69,627
68,240
44,388
38,559
341,535
17,322
8,l35
6,544
76,329
21.263
Nether~ands
• • • • • • •
Switzerland
~
• • • • • •
Bel.gium. • • • • • • • • •
Jap.an.. • •.• • • • • • • •
Cb.i.n.a -. • • • • • • • • •
Egypt • • • • • • • • • •
Cu"ba, • • •• • • • • • •
Ge~ • • • • • • • • •
Italy • • •• • • • • • •
227,4.20
5,482,509
1I Inc~udedin
-
:
Total Imports
:
: Sept. 20, 1962, to :
.
Pebruary
11, 1963 :
1,005,918
239,690
37,272
9,036
30,11.6
11,23L
Established
33-1/3% of:
Total Quota:
Imports
If
Sept. 20, 1962
to Februa:r:r li. l't61
.1,4.4l,152
9CO, L.,1/::'
75,807
13,295
22,747
14,796
12,853
25,443
7,088
1,333,296
1,599,886
91], '~4}
total. ~ortsJ ·column 2.
.Prepared in the Bureau ot·Customs.··.
COU.l1"'c: . ry d.e~;iz;na.tions listed in this preSs release are those specified in PresiJcnt,i2.l
?.r .')c::"a;:13tion ro. 2351 of :je-pte111ber 5, 1939. Since that date the nalnes of certain cOl..1.ntd.8s
'the
have been changed.
D-756
Washington~
D.
C.
I1"lHEDIATE RELEASE
FRIDAY, FEBRUARY 15,1963
D-756
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 th~l1 linters) (in pounds)
Cotton under 1-1/8 inches other than rough or harsh under 3/4"
Imports Septenber 20, 1962 - February 11, 1963
Country of Ori8in
Established Cuota
ane.. the AngloSs::,'"ptia::1 Sudal1 ....... .
Imports
?~~t
?2r1J
.'O'O'O
3~itish
C~.:.ina
~·~c):ico
'O
~
....
:>
....................
.
India .......... .
................
'O
................
.
.................................. .
:3razil ................. .
tIr..ion of Soviet
Socialist Republics •••
ArGentina •.............•
l1c::.i t i ...........
Ecuador ................•
'O
1/
....
'O
...............
.
783,816
247,952
2,003,483
1,370,791
8,883,259
618,723
475,124
5,203
237
9,333
782,857
17,178
79,288
8,883,259
618,723
Established
Country of Origin
Honduras .......•......
Paraguay ............. .
Colombia ............. .
Iraq ................. .
British East Africa •..
Netherlands E. Indies .
Barbados .............•
YOther British H. Indies
Nigeria •..............
2/Other British H. Africa
}lOther French Africa
Algeria and Tunisia •••
752
871
124
195
2,240
71,3 88
21,321
5,377
16,004
689
Other thaT). Barbados, Bennuda, Jamaica, Trinidad, and Tobago.
2/ Other than Gold Coast and Nigeria.
}/ Other than Algeria, Tunisia, and Madagascar.
Cotton 1-1/8" or more
Imports_ August 1, 1962 _""': February 11, 1963
Established Quota (Global) - 45,656,420 Lbs.
Staple Length
1-3/8" or more
1-5/32" or more and under
1-3/8" (Tanguis)
1-1/8" or more and under
11
1-3/8
Allocation
39,590,778
39,590,778
1,500,000
181, 3{)c)
4,565,642
Imports
I"
(r'
-r-,)O),
6'4 '). . .
~uota
Imports
TREASURY DEPARTlvIENT
Washington, D. C.
n:r,;EDIATE RELEASE
D-756
FRIDAY, FEBRUARY 15,1963
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 th~~ linters) (in pounds)
Cotton under 1-1/8 inches other than rough or harsh under 3/4"
Imports Septenber 20 ,~2§2 _- ~'ebruary 11, 1963
C8~ntry
2~-::rpt
of Oricin
ane. the Anglo....•••.
S~~tia~ Suda~
?eru . . . . . . . . . . . . . . . . . . . •
British Ir.dia .......... .
C::--~i!1U
"~ .C): leo
.
•••••••••••••••••••
•••.••.•.•••.•••••
.3ro.zi1 .................•
ll!:ion of Soviet
Socialist Republics •••
ArGentina
Hc.iti
Ecuador ................. .
Established
~ota
783,816
247,952
2,003,483
1,370,791
8,883,259
618,723
782,857
17,178
79,288
8,883,259
618,723
475,124
5,203
237
9,333
Established Quota
Country of Origin
Imports
Honduras
Paraguay
Colombia
Iraq ............ '0' • • • •
British East Africa ••.
Netherlands E. Indies •
Barbados .............•
YOther British H. Indies
Nigeria •.•............
2/Other British vI. Africa
lIother French Africa
Algeria and Tunisia •••
1/ Other tharl Barbados, Bermuda, Jamaica, Trinidad, and Tobago.
'21 Other than Gold Coast and Nigeria.
1/
Otr.er than Algeria, Tunisia, and Hadagascar.
Cotton ~-1/8" or more
Imports August 1, 1962 - February 11, 1963
Established Quota (Glob~) - 45,656,420 Lbs.
Stap~e
Length
~_3/8ii or more
~-5/32" or more
~ocation
39,590,778
~,500,OOO
181,360
!'-,565,642
4,565,642
and under
1-3/8" (Tanguis)
1-1/8" or more and under
1-3/8"
Imports
39,590,778
752
871
124
195
2,240
71,388
21,32~
5,377
16,004
689
Imports
~-
comB WAS'rES
"(ID po\W1s)
COTTON CARD STRIPS made -trom cotton haVing-.a. staple -ot less than 1-1/16 inches in length~ COlmER
WASTE, LAP iiASTE, SLIVER WASTE, AND ROVING ilASTE, '1.'HE'mER OR trOT !lAh1JFACTURED OR OTHEIriIIS'E
ADVANCED III VALUE: Provided, however, that not more than -33-1/3 'percent ot the quotas shall
be tilled bT cotton wastes other.than comber wastes made trom'cottons of 1-3/16 inches or more
in staple- length in th. case- of th& following countries: United K1ngdom~ France~ Netherlands~
Switzerland, Belgium, GermaJ:)J', and Ita17a
Country ot Origin
:
Establisbed
: ' TOTAL QUOTA
:
4,323,457
239,690
. 227,420
France • • • • • • • • •
British India .••••••
69,627
Nether~&Dds • • • • • ~ •
68,240
:
.
Total Imports
Establisbed:
Imports
33-1/3% of:
Total Quota.:
Sept. 20, 1962
to Februpry 11, J.963
United lingdom • • • • •
1,005,918
Canada • • • • • • • • •
239,690
37,272
9,0]6
]0,146
11,234
Switzerland ~ • • • • • •
Belgium.· • • • • • • • •
Japan. • • . • • • • • • • •
Ch:1Da· • • • • • • • • • •
EQPt • • • • • • • • • •
Cuba • • • •
• • • • • •
Germ&nT • • • • • • • ••
44,:;88
38,559
'341,535
.1,441,152
900,41t-a
75,807
13,295
-
22,747
14,796
12,853
--
17,322
8,13S
-..
6,S44
76,329
25,443
Ital7 • • • • • ••••••• . _ 21.263
',482,509
--'Z....088
1,333,296
1,599,886
913,743
1I Inc~uded.lD total imports, ·collJllUl 2 •
.Prepared in the Bur~&11 of· Customs.
The country designations '~isted in 'this press release are those specified in Presidential
Proc1a~tion No. 2351 of Septa~ber 5, 1939. Since that date the na~es of certain countries
have been changed.
D-756 .
II
:
: Sept. 20, 1962, to:
: Februar;r 11, 1963:
TRaStJRY DlPAJmar
lublDpa, D. C.
~llfl
BlLlASI
D-757
FRIDAY, FEBRUARY 15,1963
1BELI.MDURt DAT' ON IMPORtS !'a\ CONStJllPTIOlf or lDfUANUlI'AC'fUPID LEAD AND me CIWlCZASLI fO _
BY PUSID£lft'LU. PBOCL.UlA'l'IOli 110. 3257 or SEPfEllBEa 22, 1'58
ClJAl'lDLT CIDO!1 PERIOD • J ~nLl .. ry 1 - Mc;re n ;, I,
DII'01ltS • J
__ m:II "1___ _ _ ...
__ _
a
I
count 17
of'
I
Le~d·bearoiDg ONS,
I
and mattea
ProcluOUOD
•
au.
_ _
I
I
dzut, I
:
:~"arl.;1CilOta
Mia.b! .. Lead
Da:Jol"'t.
10,080,000
I); ~
I
L - .f'El..-u.:.r} _, 1-:03 " or
nDL 122
.. f
'J, II:):), 0..JO
Be1BlIUl CODgo
ITEH ' "
18ad lIS pip and ban, lead
I
•
droSl, Ndulllad leed, U:o&;I
23,610,000
- -----
1,,440,000
CMads.
7,:;'47 , 71!-l
-
-
ltaq
Mtxloo
p,1'II
Un.
so. AM ••
1~,.!7S,bt-7·
1.,saO,OOO
14,880,JOO
-
Tugoslona
All nh.1' tDnl.
o~~rl'l
',S'O,OOO
(total)
*lftll'orl& ,,& of FebrLlf>.ry
The aluve eountr)
CountripF. have
II,
-
",;'0,710·
",180,000
",.u~,OOO
D/i~.J ~82a
PN:P.uu:.D :III 'ftIZ IIIIIIUIAD .,. OUSft_
Yl,MO,OOO
7
J
< 20
.000
17,il9C,?~n
,,~.OOO
(:b,j28
70,·&80,000
?l',53I;,733
",20,000
12,810,000
~,571,132
'5,120,000
11;,105,046
',760,000
15,760,000
4,498,963·
',080,000
6,Ouo,OOO
are th=se s crified in Presidential
chbn9~d.
7,520,000
t ';: ~fi " J'JO
;:~~,
Procl.~&lion N~.
<'~3;),8
1,~()O.!.tC)5
•
11,140,000
17,840,uilO
1-163
desi3n~tion8
b~en
17.777- 15,,20,000
1'.160,000
5,440,000
•
3,lj~2,o30·
~,u
.
lPolUld..
•
5,040,000
lTEII ' "
I
eelglUII aDd
BoUvta
tell)
:
•
Lux911burg (total)
"1(.:
LelA biillloll 01" base DianIOD,
(poWidST -
l'0Uricls)
Aunralla
__
n~ '" r 1
ISTI.RLTSIiID
: Zlno-blal"iDs ONS of' all Idaeis,' ZlDo 1~ block., piSS, O~ .laDa;
led, anti.!loa.1s.l lead, anUI u:cept pyrit81l ooata1n1Di' aO't I old Nld 1r01'!l~ z1ao, n t
I :aoa1al .orap lead, we lIIa\&l, I
OV81' 3~ ot &iDo
r onl.T to b. NiIIaZU.ltaC'tw-.d, zino
drol', mel &1110 ald:.1Dp
a &11 allo," 01" OGlllbinaUoaa ot I
t
__J.u.d_D ••• ~.t.
I
It:a.lsrtal'ls cu.-ota
- - - - - :Qla.zOt3rols Q,tata
I Dt.1thblt L,d
D!l?ozota I Dut1a.bl. lin:
I=Dortl
I
_ _ _ _ _ _ ~___ __
I
n
Co
QDf1tAS
!257 of Se:'femter 22, 1'J5!!.
"010, OQQ
Since tka\
d~te
o,OVJ,uOO
the n~mes of c~rtain
tRnSUR!' DDAImlEft
kah1A~ D_ C_
~uti:
B&LEASJ:
D-757
FRIDAY, FEBRUARY 15,1963
fRE1.DaNARr DAU ON IYPORfS
rca
CO~ISOl!PTION 01 ml'..wro?AC'l'tm!D LEAD
BY iEU:SlDENTlAL PROCL.U!Al'ION NO. 3257 fa
QUAafERLT QOOfl PERIOD -
1}.1)
Jonunry I - March
rnu
I
Count l'1'
or
Pro:luot1on
a
LOIi.d.be~ring
,,1
ITe:M
:
z
:CUart"rl,y CllQta
: Dutlat>la. JAad
Pounds
lO,oao,ooo
Au a1; ralle.
,,2
a Lea.d bUI1ioD. or ba.sa bIOi 111 on,
a lead In pi ga and bQJ'lJ, lea.d
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TREASURY DEPARTMENT
Washington
FOR RELEASE ON DELIVERY
REMARKS OF THE HONORABLE HENRY H. FOWLER
UNDER SECRETARY OF THE TREASURY, AT THE
ANNUAL LUNCHEON OF l~E GIRARD TRUST CORN
EXCHANGE BANK, BELLEVUE-STRATFORD HOTEL,
PHILADELPHIA, PENNSYLVANIA, THURSDAY,
FEBRUARY 14,1963,1:00 P. M., EST.
THE PRESIDENT'S TftX AND EXPENDITURE CONTROL PROGRAM
KEY TO ECONOMIC POLICY IN THE SIXTIES
A gathering of distinguished bankers and businessmen is a
particularly appropriate place to discuss the leading question of
national financial policy facing the nation -- namely, whether,
in this period of slow growth, substantial budgetary deficits and
idle manpower and capacity, the Congress should adopt the essence
of the President's new economic program.
That program has two main elements: First, a substantial net
reduction in Federal taxes, through aneaningfu1 lowering, in several
stages, of the tax rates on capital gains and individual and
corporate income from "top to bottom" and; Second, as the tax cut
becomes fully effective and the economy expands in response, .the
allocation of a substantial part of the reSUlting revenue increases
toward eliminating the transitional deficit.
I shall have more to say of the general tendency to emphasize
the first prong and ignore the second, despite the fact that the
President in his State of the Union Message, his Budget Message
and ~is Tax Message consistently coupled his tax proposals with the
need for expenditure control.
Indeed, the key element in the Administration's fiscal policy
for the years immediately ahead is a basic restructuring of our
tax system, a restructuring to be achieved mainly through the
single most important tax reform -- reduced rates -- and designed
to increase incentives to investment, risk-taking, creative effort
and initiative, and to release private purchasing power. But,
·there is full recognition that, if the tax program is to attain its
objective, it must be carried forward as a part of a sound and
D-758
- 2 -
consistent overall financial program
one that recognizes both
our internal and external needs -- that protects us against any
danger of new inflationary pressures.
Those in business and finance will bear a particularly heavy
responsibility during the months ahead of legislative response
to the President's new tax and expenditure program, lest the debate
be left to the partisans, the issues obscured by predetermined
prejudices, and a national consensus for positive constructive
action frustrated by minor differences in degree and emphasis.
Those in business and finance, perhaps more than the average
citizen, appreciate the critical importance of an appropriate
financial environment to rapid and sustainable economic growth.
You recognize the new competitive conditions of the 1960's at home
and overseas. And you appreciate the complexities and conflicting
factors that must be weighed and reconciled in drafting financial
programs for dynamic enterprises to produce rapid but soundlybased growth and therefore gains in long-run strength.
Further, you are in a position to know that a tax program
of the type proposed, with related expenditure control, must involve
far more than a political or private polling appraisal of whether
individuals would like their taxes cut at the cost of a debt
increase -- far more than a selfish scramble between classes of
taxpayers as to who will receive the lion's share of lower tax
liability.
The prime concern must be the design of a tax system and
related economic policies that are best for the country and
responsive to our current national needs -- full employment and
utilization of existing resources, a more rapid rate of economic
growth with increased and more efficient capacity and manpower, an
equilibrium in our balance of international payments, and a more
dynamic economy fully capable of discharging its responsibilities
in the Free World and meeting the needs of our citizens.
The tax program provides more adequate incentives to invest
and enlarged discretion in the use of consumer incomes, and thus
a needed and permanent stimulus to private purchasing power and
spending. By this means, it offers an opportunity to reduce the
war-imposed hobbles on economic growth implicit in the excessively
high scale of income tax rates, individual and corporate. This
has left us, despite our recent moderate expansion, with five
peacetime years of excessive unemployment, unused capacity, and
slack profits.
- 3 -
The tax program, with the related policies of expenditures,
debt management and monetary affairs, seeks to establish a
financial environment suitable for the Sixties, so that we can take
full advantage of the gathering forces for economic progress both
at home and abroad. And the tax program can be a key to resolving
the interlocking goals of domestic growth and external stability .
that are inseparable from one another in the open, competitive
environment in which we and our trading partners now live.
I am therefore glad to review with you the rationale of the
President's proposal.
I shall omit any discussion of the detailed form and substance
of various specific features of the President's tax program, believing
the fundamental threshold issue to be the fiscal one, namely,
whether or not the nation should adopt the main thrust of the
President's proposal or maintain the status quo.
I.
The Need for a Tax Program
In recent years it has become increasingly clear that our tax
system exerts too heavy a drag on private purchasing power,
profits, employment and incentives. This should come as no surprise
in view of the fact that the existing structure of high tax
rates -- repressive at every level and type of income -- was
fastened on the economy to hold back war and postwar inflation.
Designed to hold back consumer demand, initiative and investment,
it now checks growth. It discourages extra effort and risk. Many
of the "loopholes" or "breathing vents", depending upon the user,
distort the use of labor and capital, making individual and
corporate action unduly responsive to tax considerations rather
market opportunities. The resulting structure invites recurrent
recessions, depresses our Federal revenues, and contributes to
chronic budget deficits.
To be sure our recent moderate economic expansion, which has
continued through 1962 contrary to some fears, seems likely to
extend through 1963. Still, the fact that output and employment
have remained well below our potential for five years poses a
perplexing challenge to the American people. After 60 months of
unemployment in excess of five percent, save for one month, the new
year finds unemployment running at 5.8 percent. Although unemployment
has been significantly reduced from its beginning 1961 rate of 6.7
percent, there are still well in excess of four million people
unemployed on a seasonally adjusted basis. Output is running
- 4 $30 to $40 billion below its potential, despite the gratifying
recovery that has added more than $60 billion to the annual rate
of Gross National Product in the last two years.
Our growth rate of 2.7 percent from early 1955 to the present
compares unfavorably with regular rates in Western European
countries of 4, 5 and 6 percent, or our own earlier 4 percent trend
even though our rate from 1960 to 1962 of 3.6 percent has been
somewhat higher than the trend since 1955. Our economy could
easily generate $7 to $8 billion more profits at more adequate
rates of capacity use.
Our unfavorable balance of pa~nents for 1962 remained somewhat
in excess of $2 billion. While representing a considerable
improvement over the $3-1/2 to $4 billion annual imbalance that
characterized the years 1958-1960, this situation is still a
challenge that must be met if our shared responsibilities for
Free World security, development and a trade and payments system
based on a sound dollar are to be adequately discharged.
There have been deficits in the administrative budget in all
save one of the last five years, ranging down from the $12.4
billion deficit of 1959, resulting primarily from an unanticipated
recession, and the estimated $8.8 billion deficit in fiscal 1963,
resulting from a failure of the economy to approach its potential.
These are the facts that, for many months, have joined every
major segment of our economy in a consensus that a mild prosperity
is less than we require and less than we can accept. The consensus
is equally strong that a permanent lowering in tax rates involving
a substantial net tax reduction will provide both new incentives
and increased purchasing po~er, thereby opening a potent and
appropriate path to an increasing rate of economic activity.
The appropriateness of this particular approach to the creation
of a healthy financial and economic environment is highlighted by
two important and interrelated facts to which attention has been
directed by responsible business groups such as the u.s. Chamber
of Commerce and the Committee for Economic Development. The
Research and Policy Committee of the Committee for Economic
Development set forth these facts as follows in its December
statement of last year urging tax reduction and reform:
- 5 -
"1. Production and employment in the United States
could be higher than they are without serious risks of
inflation or other adverse consequences.
"2. Private investment in productive plant and
equipment is particularly low, in relation to total
production and to the amount of savings available to
finance such inves tment. . ."
Why was the tax program chosen as the appropriate tool under
the circumstances to meet the problem of slow growth that holds an
answer to so many facets of our economic and financial problem?
It was because the President concluded that the most direct
and significant kind of government action to aid economic growth
is to make possible an increase in private consumption and
investment demand by cutting the fetters which hold back private
spending. Grmvth itself could have been achieved by massive
increase in Federal spending well beyond the limits of the 1964
budget. But the President decided against that course because he
felt that "In today's setting private consumers, employers and
investors should be given a full opportunity first." He felt
that in today's circumstances it is desirable to seek expansion
through our free market processes by placing increased spending
power in the hands of private consumers and investors and offering
more incentive to private investment initiative.
There was another alternative -- the increased use of credit
and monetary tools in an attempt to provide still lower interest
rates and substantially increased supplies of money and credit.
But, as the President pointed out in his address to the Economic
Club of New York in December: "Our balance of payments situation
today places limits on our use of those tools for expansion." So
it was determined that the most effective policy was to expand .
demand and unleash investment incentives through a program of tax
reduction and reform, coupled with the most prudent possible policies
of government expenditure.
II.
The Nature of the Program -- Combining
Tax Reduction and Revision of an Obsolete
Tax Structure with Expenditure Control.
By now the outlines of the President's tax program are generally
familiar to all despite a rather vast amount of confusion on some
of its specific details. By way of tax relief the program provides
for the enactment this year, in a single comprehensive bill, of
- 6 a "top to bottom" reduc tion, in stages, of rates of tax on capital
gains, individual and corporate income. Revenue losses would also
result from structural changes designed primarily to rectify special
hardships from taxes on the very poor, the elderly, and small
business corporations having gross incomes of less than $25,000
per year.
The total revenue loss of these measures would be approximately
$14.4 billion, with the rate reductions costing $13.6 billion per
annum when fully effective, and the hardship rectification
approximately $790 million. Other structural changes -- broadening
the base of individual and corporate taxes and removing or limiting
certain special privileges -- would increase revenue, when fully
effective, by $4.1 billion, leaving a net revenue cost of the
entire program at $10.3 billion, which represents the maximum
revenue cost that the Treasury believes can be safely accepted.
Individual income tax rates would be cut in three stages, from
their present range of 20 to 91 percent to a more reasonable
range of 14 to 65 percent. Although these staged cuts would be
in three calendar years, they would become effective in the 18month period beginning July 1, 1963 through January 1, 1965 -- the
tenure of the present Congress.
In the first stage, beginning July 1, the program would reduce
individual liabilities at an annual rate of $6 billion through a
reduction in the basic withholding rate. Further rate reduction
would apply to 1964 and 1965 income with the withholding rate
dropping on July 1, 1964 to 13.5 percent as compared to the present
18 percent.
The structural changes in the individual income tax would
become effective on January 1, 1964. Contrary to some opinion,
the combined effect of structural reform and rate reduction would
be to reduce the personal tax liabilities of virtually all
individual taxpayers. If everyone who jumped to the conclusion
that the overall impact of the individual tax changes will cause
him to pay more taxes will figure out his projected liability under
the 1965 rate schedules with the proposed structural changes, this
confusion would never have arisen; because well over 99 percent of
all taxpayers will get reductions, most of them substantial, through
the enactment of the President's program.
- 7 For all groups of individual taxpayers combined the overall
reduction would be 18 percent. For the few exceptional cases who
may experience an increase in tax liability in anyone year -mostly those with deductions ranging upwards of 50 percent of
their gross income -- it should be remembered that they are not
likely to be in such a position year after year. The resulting tax
system with its substantially lower rate scale will give more
reward for effort. The effect of lower rates would be to increase
incentive and initiative to earn the marginal dollar by increased
effort and risk-taking; the market, rather than tax consequences,
would be the prime determinant of economic decisions; and the door"
to substantial increases in net disposable income after taxes -the final test -- will be opened more widely.
This cut in the individual tax load, amounting to about
$8 billion, can be expected to add directly to purchasing power
in consumer markets and savings for investment, with their
multiplier and accelerator effects. American consumers typically
spend a large percentage of their after tax (disposable) income,
whether incomes are rising or falling. Added to this direct effect
is a further increment to consumer income to be expected from
reductions in corporate taxes. Finally, there are important
indirect effects both in consumer and investment spending. This
is because the rising output and employment to meet new private /
demands generate new incomes which are in turn available to be
spent or saved and invested. The stimulus to consumer incentives
that is engendered by the tax cut thus cumulates throughout a broad
range of the economy, setting in motion forces of expansion that
otherwise remain inert. Moreover, the release of funds to
consumers will generate new incentives also for investment spending,
and production of new machines and the building of new factories,
offices, stores, and apartments will add further to consumer incomes
tn the same way as the production of consumer goods.
The second major goal of the tax program is to provide
additional direct incentives for productive investment that will
increase profit after taxes. The first step, already in effect,
is the 7 percent tax credit for business spending on major kinds
of equipment, passed last year, and the liberalization in Treasury
depreciation rules to reflect present day conditions. The second
step is to reduce corporate tax rates from 52 to 47 percent,
beginning in 1963, with a drop from 30 to 22 percent in the rate on
the first $25,000 of corporate income. In later stages, the
52 percent rate on corporate income over $25,000 would drop to
47 percent. The combined effect of these two stages represents
reductions in corporate tax liabilities of $4.5 billion a year.
- 8 The resulting increase in return on investment after taxes,
as well as lower individual rates on income earned by the
millions of self-employed and unincorporated businesses, should
bring many hitherto marginal investment opportunities into an
attractive range, particularly as increasing demand moves up volume
and opportunity. The pressure to assure maximum profits on increasing
volume by modernization of high cost plant or increasing or providing
new capacity will be felt.
The third part of the President's tax program would revise the
tax treatment of capital gains and losses. It is designed to
provide a freer and fuller flow of capital by increasing the
mobility of investment funds and the liquidity in capital markets,
as well as providing a higher net return from increased volume.
The percentage of long-term capital gains included in taxable income
of individuals would be reduced from the present 50 percent of the
gain to 30 percent, resulting in capital gains taxes ranging from
4.2 percent to a maximum of 19.5 percent, compared with an existing
range of 10 to 25 percent. The alternative rate for capital gains
of corporations would be reduced from the present 22 percent to
correspond to the proposed reduced corporate normal tax rate.
To further reduce the "lock in" problem that has resulted
from the present tax treatment and impeded the mobility and flow
of risk capital from static to more dynamic situations, the
program provides that the reduced capital gains rates be applied
to the hitherto tax free net gains accrued on assets at the time
of transfer at death or by gift, except for charitable gifts or
bequests. The capital gains package also includes recom~endations
for tightening the definition of capital gains. This is designed
to reverse the trend, inspired by war time increases in tax rates,
toward the progressive extension of capital gains treatment to a
variety of types of what are, in fact, ordinary income.
From the foregoing it will be clear that the central thrust
of this proposed tax program is the most thorough overhauling
in tax rates in more than 20 years, substantially reducing rates
that are levied on individual and corporate income and capital
gains at all levels.
Usually a discussion of the President's program moves from
this point into a detailed discussion of the individual structural
changes or reforms that are desi.gned to provide greater equity and
a broader tax base, to remove special privileges, to simplify tax
administration and compliance, and to release for more productive
- 9 endeavors the energies now devoted to avoiding taxes. Without in
any way derogating from the merits of these reform proposals on a
basis of fairness, equity and good tax theory, I would focus your
attention today on the purely fiscal aspects of the program which
are summed up in the question "Is it fiscally responsible?"
Many of us, and I would include myself in that group, would
have greatly preferred to push for a taK program involving
substantial net tax reduction, with its drain on the budget,against
the background of a balanced budget or a surplus, rather than the
very substantial budgetary deficits that are currently projected. .
So would the President, who stated in December:
"When I announced in April of 1961 that
this kind of comprehensive tax reform would
follow the bill enacted this year, I had
hoped to present it in the atmosphere of a
balanced budget."
But, as he pointed out, it has been necessary to augment
sharply our nuclear and conventional forces, step up our efforts
in space, and meet the cost of servicing a national debt that has
grown larger as a result of these imperatives. The failure of
the economy to approach its full potential has meant that revenues
did not keep pace with these increased needs.
A review of the salient facts will support the proposition that
the allocation of increased funds to the domestic civilian sector
of the budget has been only in line with the trend established by
the predecessor administration. Only in the field of defense,
space and interest has the current administration increased
expenditures beyond that previously established pattern.
The increase in administrative budget expenditures for the
first three fiscal years in this Administration (1961-1964)
amounts to $17.3 billion, of which $12.6 billion represents increases
in defense, space and interest while $4.7 billion represents
increases in all the remaining programs. In the last three years
of the preceding administration (1958-1961) there was a total
increase in administrative budget expenditures of $10.1 billion, of
which $5.3 billion went to defense, space and interest and $4.8
billion to remaining programs. Thus, the three-year increase of
$4.8 billion in the domestic civilian sector in 1958-61 exceeded
slightly the $4.7 billion of increase in that area in 1961-64.
- 10 -
. In his 1964 budget the President refused to either postpone
his tax program or cut into essential national security programs.
But he did aggressively exert expenditure control by reducing the
overall total outlays other than defense, space and interest
charges below their present levels -- despite the fact that such
expenditures had risen at an average annual rate of 7.5 percent
during the last nine years.
The hard fact of life is that if a tax program of substantial
rate reduction is put off until the nation is in a fiscal situation
of a balanced budget or a surplus, it may be a very long time. The
price will be a very substantial reduction in the defense and space
program which, together with interest, are responsible for $70
billion out of the estimated $98.8 billion in the 1964 budget.
To wait for a balanced budget to enact the President's tax
proposals might be costly and self-defeating. Continued slow
growth will not generate the revenue we need at current tax rates
or the new tax rate structure applied to a full employment economy.
Moreover, recession in 1963 or 1964 could produce a far larger
deficit without a tax cut than the estimated addition to the
deficit attributable to the tax program. In 1959, for example,
a planned surplus became a record deficit of $12.4 billion, largely
because of economic recession. As long as we have slack markets
for our goods and services and have large numbers of workers without
jobs the threat of sliding into an unanticipated recession remains.
The fiscal issue involved in the tax program is whether the
strengthening of the economy that is potential in that program
justifies the addition of $2.7 billion to an already projected
deficit of $9.2 billion that would otherwise exist for fiscal 1964
without the tax program. If the tax brake on our economy is not
,released, the chances are that the slack will remain, Federal
revenues will lag, and budget deficits will persist. But once the
tax brake is released, the base of taxable income, wages and
profits should grow -- and a temporary increase in the deficit could
eventually turn into a permanent increase of Federal revenues.
It is not the purpose of the tax program to create a deficit
but to increase investment, employment and the prospects for a
balanced budget. This is not pure theory, being supported by
recent experience. In our last major peacetime tax reduction, under
the 195.4 tax program, taxes were reduced by $7.4 billion, but by
fiscal year 1956 budget receipts had attained a level of $3.5 billion
more than had been realized in the year prior to the tax reduction.
- 11 -
We do not rush out to e~brace a continuing series of deficits
by reducing taxes. We accept the additional slice of deficits that
are a consequence of the tax program very reluctantly in the
conviction that this is the surest route to balanced budgets
consistent with national security. The program seeks to minimize
those tax induced deficits in at least three ways: first, phasing
or spacing out the rate cuts over three calendar years instead of
concentrating them in a single year; second, coupling the reductions
with selected structural changes which will broaden the tax base
and offset the revenue loss by $4.1 billion; third, offsetting the
loss of revenues at the outset by $1-1/2 billion a year, without
any change in tax liabilities, by shifting the tax payments of large
corporations to a more current time schedule. This combined
program should increase the rate of economic activity and, in time,
result, as in the 1954 tax program, in a feedback of the revenues
lost to a position of still higher Federal revenues.
The three stage approach to tax reduction in a single bill
in a single Congress has many fiscal advantages. The impact of
the reductions on revenue will be minimized and inflationary
pressures avoided; yet, business planners in particular may feel
the incentive that comes from foreknowledge of lower rates to come.
Revenue losses involved in the second and third stages may be
replenished somewhat by the increases or feedback resulting from
the firs t stage.
The fiscal advantage of the so-called structural reforms that
broaden the tax base and bring in revenue offsetting between onethird and one-quarter of the losses involved in rate reduction is
at least as important as their other merits in terms of equity or
tax policy.
But, the increased revenues that will flow from a stronger,
faster growing economy will not bring us to a balanced budget or
surplus unless the Executive and the Congress practice expenditure
control. The nondefense portions of the 1964 budget show the first
results of the Executive effort. But, of course, this, a one-year
effort, will not be enough. That is why the President, in his
Budget Message (page 11) stressed the matter of expenditure
control policy firmly and specifically. He rebutted any notion
that rising Federal revenues in the years ahead mean that Federal
outlays should rise in proportion to such revenue increases. He
established a practical doctrine of expenditure control, consistent
with other national requirements by asserting that, as the tax cut
becomes fully effective and the economy climbs toward full
employment, a substantial part of the revenue increases must go
toward eliminating the deficit.
- 12 -
A consideration of the defense picture shows this to be a
practical objective consistent with the national interest. The
substantial yearly increases in defense expenditures which have
characterized the past three years are bringing us to a new and
safer level of readiness. Barring an unexpected worsening in the
cold war, the future maintenance of this level should not require'
the same sort of annual increases that have marked recent budgets.
This should serve to make feasible the expenditure control phase
of the President's new economic program. But, here, as in all
other phases, the close cooperation and partnership of the Congress
will be required.
III.
The Relationship of the New Program
to an Overall Financial Plan.
Diagnosing the economic problem, taking into account the
relationship between domestic and international policy, choosing
the new tax and expenditure control program as the key policy
instrument appropriate to the problem, and reconciling the new
program with other areas of financial and economic policy will
illustrate the many complexities and conflicting factors involved
in the economy of the 1960's.
The principal task of economic policy, as established by
Congress in the Employment Act of 1946, may be distilled into the
single objective of promoting orderly and vigorous economic
growth, with full employment and price stability. Our problem
in this regard is not that of crisis, easily dramatized and impelling
immediate action. Rather it is an accumulation of short falls over
a period of years, interacting together to slow domestic progress
and hinder international payments balance.
Our problem brings home the close relationship between domestic
and international goals.
For example, slow growth dulls investment incentives, fosters
inefficient work spreading, maintains high unit costs, and presses
upon profit margins. In this setting, investment abroad in rapidly
growing economies attracts more American capital, and foreign
capital does not seek out opportunities for investment in the U.S.
Both elements burden our balance of payments. Meanwhile, at home,
the same sluggish economy fails to produce enough jobs to keep our
available labor resources usefully employed and enough revenue to
cover the cost of discharging the responsibilities that our national
government has undertaken on behalf of Free World security and the
welfare of our citizens.
- 13 The complex problem of slow grmvth has appeared to some to
lead to a conflict between economic objectives. It is argued that
if we seek more rapid growth at home, the resul~ing pressures on
costs and prices may increase and worsen the bulance of payments. In
the meanwhile, others argue that if we seek payments balance
through monetary means, this will stifle domestic growth. The
truth is that, bec3use domestic and international goals are today
necessarily linked together, we simply do not have a choice of
pursuing policies aimed only at one set of goals to the virtual
exclusion of the other. We must seek a mix of policies that will
achieve both together, or we may end up achieving neither.
Faster growth and payments balance need not be incompatible;
indeed, they can reinforce one another if a proper balance among
policy instruments is achieved. An efficient, expanding industry,
pouring out new products of increasing technological sophistication
eagerly sought in world mar 1cets, depends upon a higher level of
domestic investment, incorporating the latest technology and
exploiting the fruits of expanded civilian research. A domestic
economy alive with new and profitable investment opportunities is
ultimately the only way -- consistent with our free enterprise
system -- to slow down outflows of U. S. capital and attract funds
from abroad. But, in turn, vigorous growth mu s t be accompan ied by
monetary stability to avoid either the excesses of inflation that
undermine export markets or the waste of under-employment which
dries up domestic investment opportunities.
The next step after delineating the economic problem is to
give priority to a specific policy mix of fiscal and monetary
measures. Throughout the expansion from 1961 to the present,
monetary policy has remained easy, in contrast to earlier expansions.
Hmvever, to avoid conflict with balance of payments objectives,
reserves needed for bank credit expansion were provided in ways
designed to minimize the direct downward pressure on short-term
interest rates. Thus, monetary techniques such as reserve
requirement changes and debt management techniques of selling
short-term securities have been used extensively.
Yet monetary measures by themselves have not been sufficient
in the existing tax climate. The drag of the tax system served as
a useful device for restraining inflation in the buoyant early
postwar years and the Korean war period, but the margin of
unemployed manpower and industrial facilities now available is what
promises to allow some easing of the heavy tax bite without great
risk of price rises. That is why a broad consensus has emerged among
leaders from all sectors of the economy that a tax reduction seems
- 14 to offer the best hope of reaching through the difficult transition
to sustained and self-reinforcing prosperity without adding further
risk of price inflation or worsening the payments balance by
stimulus to short-term capital flows.
But this achievement requires an adequate coordination of the
new fiscal program with debt management, monetary policy, and
balance of payments policy, each ot which forms a vital environmental
factor in any overall financial plan.
The central problem of debt management in financing the deficit
which is a consequence of necessary expenditures, slow growth and
the tax program is to structure a debt that will avoid contributing
to inflationary pressures as the economy moves closer to full
employment. This means continuously achieving a proper balance
between, on the one hand, creating excessive amounts of new money
and short-term government securities and, on the other, so inadequate a supply of liquidity that expansion is stifled. Given the
present underemployment of labor and manufacturing capacity, and
given the present price stability, the use of commercial bank
financing or of short-term securities is justified in reasonable
amounts, because the economy requires more money and liquid assets
as it grows. On the other hand, it is equally important to avoid
a growth of liquidity that exceeds the ability of the economy to
absorb it at stable prices.
The debt management policy indicated above requires that we
make further efforts to tap long-term savings, either directly or
through the savings institutions. The techniques of advance
refunding, together with the promising experiment of competitive
bidding for long-term bonds through syndicates, which have been
worked out in the recent past, suggest that we can now raise funds
in the intermediate and long-term sectors of the market with a
minimum of disturbance to other borrowers. Refunding maturing issues
in advance of the maturity date, by offering new and longer term
securities to existing holders, directly taps the resources of the
satisfied government securities investo~.
The initial venture in
competitive bidding, involving $250 million of long-term bonds, was
Successful in achieving a wide distribution of the new securities
at an interest cost virtually equivalent to the prevailing yield
for comparable outstanding securities. While it is still too
Soon to judge its ultimate role, competitive bidding will be further
tested from time to time as market conditions and immediate
objectives indicate.
- 15 Overall, it is important to remember that the deficit we had
to finance over the last calendar year has given a real test of
our ability to finance it without inflation. And that deficit,
as you know, was placed entirely outside the commercial banks.
An important complexity of monetary policy associated with
the management of the debt is whether the deficit can be financed
importantly from savings without offsetting the effect of the tax
program itself -- in other words, as the question is sometimes
crudely put, whether we may not take back with one hand the money
we make available with the other. This is, of course, a restatement
of the position that there is no good time for the government to
sell long-term bonds -- not in a recession because it competes with
private investment and not in a boom because it is too expensive
and also shuts off further private inves tment.
This view, however, overlooks several important factors.
First, the method of financing the deficit does not affect the
spur to investment and consumer spending of the taK reduction.
Second, as long as resources remain underemployed, the flow of
savings is likely to exceed borrowing requirements of business and
individuals, not because investment and consumer spending will be
reduced, but because rising incomes will be generating new savings,
adding to the huge current volume. Under these circumstances, the
Government can tap some of the new savings without diverting funds
from other investment channels.
As the tax spur has worked its way through the economy and it
approaches full employment, then adding Government bonds to an
already heavily scheduled capital market might very well raise
interest rates and dampen the rate of increases in private investment
spending. Of course, in potentially inflationary situations, just
such a debt management policy might well be called for. Furthermore,
at such times budgetary policy appropriately directs itself towards
balance or surplus, restraining demand and making investment funds
available elsewhere in the economy. And the tax program has been
designed to yield a balanced budget as employment of men and
machines reaches higher levels. Thus, interest rate trends in the
months ahead are less likely to be affected by Treasury debt
management policy than by the course of the economy i~self, and
together the response of Federal Reserve policy to developments.
Indeed, one of the striking characteristics of the expansion
since 1961 is the major part which easy money and ample credit
availability have played in support of the economy. Not only have
long-term rates remained stable or actually declined in this
- 16 recovery period, contrary to typical cyclical behavior; in addition,
there has been a record volume of mortgage financing and sustained
individual construction during a cyclical period when credit
tightness has often sharply curtailed honebuilding. Thus, even
though it has been important to maintain short-term interest rates
reasonably close to levels in monetary centers abroad, monetary "
policy has made a valuable contribution to the support of the
domestic economy in the last year.
The principal potential conflict between balance of payments
and tax policy lies in the danger of inflationary pressures on
export prices. Recognizing such dangers, the tax program reflects
considerable planning to provide against their happening. For one
thing, with the major stimulus to investment and consumer spending
being borne by the tax program, monetary policy is left free to
deal with the balance of payments -- if that should prove necessary
with less concern for domestic repercussions. For another, the
t~ program deals directly with the crucial long-run
solution to
the payments imbalance, namely, the stimulus to domestic investment,
to cost cutting, to modernization, to more industrial research,
and to more efficient production and more effective pricing in
competition at home and abroad with foreign goods and services.
The stimulus to economic growth in the tax program also implies higher
profits which make the investment of capital in this country more
"attractive compared with competitive countries abroad. An~ finally,
the general movement towards fuller and more effective use of our
resources assures a net gain in productive efficiency which, through
competitive open trading, raises living standards among all the
trading countries.
Conclusion
The adoption in 1963 of the President's tax and expenditure
control program is the key to economic policy in the Sixties, for
these hard reasons:
- Unutilized resources of manpower and capacity,
resulting in slow economic growth -- our major economic
problem -- is the result of a tax drag.
- Under current balance of payments conditions,
tax and fiscal policy can be more effective than
monetary policy in providing fresh incentive and
continuing stimulus.
- 17 - The most direct and significant Federal action
to aid growth is to cut the fetters that hold back
private spending and investment, rather than resort
to massive increases in Federal expenditures.
- Debt management and monetary policy can avoid
inflation.
- The effective coordination of these policy
instruments on the domestic side is the best
contribution to resolving the balance of payments problem.
We must not make the mistake of focusing solely on the tax
program. It cannot be fully effective in helping us to achieve
our goals unless it is regarded as a part of a comprehensive
financial plan which also includes these elements:
- Financing the deficit without inflation
- Maintaining a flexible monetary policy
- Continuing efforts by both management and labor
to install more efficient methods of production and
to maintain judicious restraint in price and wage decisions.
- Finally, as the economy moves forward faster,
firm adherence to a policy of achieving balance or
surplus in the Federal budget, with private credit
assuming the liquidity and growth function.
The tax program alone cannot solve all of our economic problems
overnight. However, if its vast potential as a stimulus to the
economy is unleashed within the framework of such a comprehensive
financial plan as I have just outlined, we need have little fear
for the future. The President's tax program is the key to economic
growth and progress in the Sixties. It merits your careful
appraisal and, I hope, your support.
000
TREASURY DEPARTMENT
February 14, 1963
~DIATE
RELEASE
SUBSCRIPrION FIGURES FOR CURRENT EXCHANGE OFFERING
The results of the Treasury's current exchange offering of
./'4 certificates of indebtedness dated February 15, 1963, maturing February 15, 1964, and
'/4"p bonds (additional issue) dated April 18, 1962, maturing August 15, 1968,
. s~rized in the following tables.
Issues Eligible
for Exch e
Amount
Eligible
e
for Exc
./2~ etfs., A-1963
i/8~ Notes, A-1963
.f4~ Notes, E-1963
$5,719
1,487
2,259
$4,696
652
1,412
$ 971
743
756
$5,667
1,395
2,168
$ 52
$9,465
$6,760
$2,470
$9,230
$235
Total
Exchanied For
3-1/410
3-374~
Ctfs.
Bonds
In millions
Total
For Cash
Rede tion
92
91
Exchanges for 3-1/4% Certificates of Series A-1964
leral Reserve
strict
;ton
T York
.ladelphia
!veland
:hmond
Lanta
~cago
, wuis
meapolis
lsas City
lIas
1 Francisco
!asury
Total
D-759
3-1/2% etfs.
Series A-1963
$ 62,008,000
3,980,408,000
20,183,000
83,784,000
18,800,000
46,860,000
159,287,000
53,411,000
20,489,000
40,950,000
27,315,000
169,678,000
13,009,000
2-5/8% Notes
Series A-1963
$ 18,399,000
393,179,000
6,882,000
16,836,000
6,000,000
19,239,000
72,378,000
21,219,000
6,513,000
37,055,000
18,812,000
35,107,000
315,000
3-1/4% Notes
Series E-1963
$ 47,027,000
711,664,000
36,504,000
55,833,000
30,154,000
46,253,000
156,976,000
71,453,000
23,279,000
33,864,000
42,331,000
146,014,000
10,910,000
Total for
A-1964 Ctfs.
$ 127,434,000
5,085,251,000
63,569,000
156,453,000
54,954,000
112,352,000
388,641,000
146,083,000
50,281,000
111,869,000
88,458,000
350,799,000
24,234,000
$4,696,182,000
$651,934,000
$1,412,262,000
$6,760,378,000
- 2 -
Exchanges for 3-3!4~ Bonds of 1968
Federal Reserve
District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
Total
3-1/2r1p Ctfs.
Series A-1963
$ 25,416,000
527,077,000
38,250,000
71,279,000
11,413,000
31,844,000
87,216,000
36,586,000
19,360,000
13,886,000
18,013,000
87,573,000
2,990,000
2-5/8% Notes
Series A-1963
$ 8,187,000
411,279,000
17,573,000
17,996,000
3,553,000
20,454,000
111,137,000
17,605,000
11,604,000
14,683,000
19,934,000
89,388,000
35,000
3-1!4'f, Notes
Series E-1963
$ 38,080,000
367,242,000
21,199,000
49,122,000
7,585,000
23,265,000
141,156,000
32,262,000
13,595,000
29,165,000
9,533,000
23,252,000
260,000
Tota.l for
Bonds of 196
$ 71,683,0
$970,903,000
$743,428,000
$755,716,000
$2,470,047,0!
1,305,598,0
17 ,022,0
1$,397,0
22,551,0
75,563,0
339,509,0
86,453,0
14,559,0
57,7:54,0
47,480,0
200,213,Oi
3 ,285,Oi
STATUTORY DEBT LIMITATION
As of
Janu~ry
11. 1963
Washingfon,
Feb. 15,196,
~ecti()n 21 of ~.:cond liberty Bo~d A.ct, as amended, provide~ f~at the f~ce amount of obli~atio,:!'1 issued under.llthor.
the lace amount of obltgatlons guaranteed as to pnnclpal and Interest by tht; tInlted States (except lSuch a C)'
,1.-. ~c t:d obI it~.[', ons a S may be ~eld by tbe Secretary of th~ Treasury), .. sh!lll nN exceed In the ar.~re8Ilte '285,000,000;
(.. ,_; 0: J un(' -i, 19S5';' 'l.C.! title 31, sec. 7S7b), outsta~dln8. at !lny one ume. ~or purposc~ of this section tbe currelli Ito
d~c .cion v.,.~.e of any "_.1.3tlOn issued on a discount baslS which 15 redeemable prior to matutlty a~ the option of tbe bol_
:;: . be considered .:.r-. ItS face amount." ,be Act of July 1, 1962 (P,L. 87-'12 87th CODa ress ) provides chac tbe abote 1....
,,, .. sh:dl be tempNarily increased (1) during the period beginning on July 1, 1962, ana ending on March ~l 196) •
",;08,000,000,000, (2) du!in~ the period beginning on AP.ril I, 1963, and endiol on June 24, 1%3, to S305,OOO,OOO,ooo, ' .
0) Juung ch~ pef10d beginning on June 2~, 196~, and endmg on June 30, 1963. to UOO,OOO,OOO,OOO.
,
The following table shows the face amount of obligations outstandin, and the face amount which can .clU be 1....
under this limitRtion:
Total face amount that may be outstanding at anyone time
$)08,000.000
Outstandin~ Obligntions issued under Second Liberty Bond Act, aa amended
Interest-bearing:
Treasury bills _ _ _ _ _ _ _ _ _ $4R, 944,481,000
of ;:L.t Act, .• :od
Certificates of indebtedneaa - - - - Treasury notes _ _ _ _ _ _ _ _ __
Bonds Treasury _ _ _ _ _ _ _ _ _ _ __
'SavinRs (current redemption 9.lue) __
; .nited States Retirement Plan bonds_
Depositary _ _ _ _ _ _ _ _ _ __
R. E. A. series _ _ _ _ _ _ _ __
Investment series _ _ _ _ _ _ __
Certificates of Indebtedness Foreign series _ _ _ _ _ _ _ __
Foreign Currency series _ _ _ _ __
Treasury notes Foreign series _ _ _ _ _ _ _ __
22,710,419,000
53,696,502.000
$125.351,402,000
78,607, .551,450
47,741,517,355
1,950
108,179,500
26,364,000
4.409.896,000
130,893,510,255
285,000,000
47,904,975
1A3,000,000
Treasury bonds Foreign Currency series _ _ _ _ __
380.744.788
Special Funds Certificates ().f indebtedness _ _ __
6,201,388,000
Treasury notes _ _ _ _ _ _ _ __
5,480,938,000
Treasury bonds _ _ _ _ _ _ _ __
30,508.391,000
Total interest-bearing _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
Matured, interest-ceased _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
Bearing no interest:
United States Savings Stamps _ _ __
Excess profits tax refund bonds _ _ __
896, 649.7rlJ
42,190.717,000
299,332,279,018
390,196,173
52,197,077
?13,83Z
S?ecial notes of the United States :
Internae'l Monetary Fund series _ _ _ _
2t 995 , 000 , 000
Internat'l Develop. Ass'n. series _ _ _
150,956,600
Inter-American Develop. Bank series _____1;; ,2-.. ;:5;.J1''; 0;,.;O.;,;0;:.a.,.O~O~O
Total ______________________________
3.323,867.509
303,046,342',700
Guaranteed obligations (not held by Treasury):
Interest-bearing:
Debentures: F. H. A. '" DC Stad. Bds,_
526,034,700
Matured, interest-ceased ________
4.874.050
530.908.750
(;rand total outstanding ________________________________
JOJ.577•2i,
4,422,7 ::.w
Ba ... nce face amount of obligations issuable under above authority
Reconcilement witb Statement of the public Debt _~Jua~n
..ukUi!la...ry~_3,J..l....--'1.;:9Q6ol,J.1_(Dat~
(Daily Statement of tbe United States Treasury, _ _J;..a:;;;n=u:::a::ry~_3(.:.1::..a..-:lo.l.9..!::6:,..1,--_)
Ou(.;;tanding _
(Dat.)
Total gross public debt ______________________________
Guaranteed obligations noC owned by the Tre.aury -:-_ _ _ _ _ _ _ _ _ _ _ _ _ __
Total gross public debt and guaranteed obligations _'______________~-DeQuct - other outstanding public debt obliaations DOt subject to debt 1imitacioD _ _ _ __
STATUTORY DEBT L!~nTATION
As of
Janu~ry
11, 1963
WAshington,
Feb. 15 )196 3
Section 21 of Second Liberty Bo~d .A.: ct , as amended, provide;" t~:lt the fD:ce amount of obliS:ltionll issued under' authority
Luat A·ct, and the lace amount of obligations guaranteed as Co principal and Interest hy ch~ UnIted States (except liuc:h gUlIrI ' cd oblig~cions
as may be ~cld by the Secretary of th~ TreasLlry), "sh~1l nN exceed In the ilr.4regate.$28~,OOO.OOO,OOO
~of June)\) 1959;
title 31, sec. 757b), outstanding at anyone ume. For purposes of thIS section thll current retian VR1~e ~f any c.;.,.il.auon issued on a discount basis which is redeemable prior to maturity Ilt the option of the holder
iiJ.:I be considered ar; its face amount." 'the Aet of July 1, 1962 (P.L. 87-~12 87th Congress) provides thnt the above llmita.
I II' sh~lI
be temporarily increased (1) during the period beginning on July I, 1962, and ending on March, ;1, 1%3, co
~8 000,000,000, (2) du~in~ the period beginning on AP.ril 1, 1963, and ending on J11M 24, 1963, to BaS,aDO,DOO,DOO, and
»J~ting thl! penod begInning on June 2~, 1963, and ending on June 3D, 1963. to $300,000,000,000. .
.
The following table shows the face amount of obligations outstanding and thc face amount which can IItill bc·issued
nder this limitlltion :
'ocal face amount that may be outstanding at anyone time
outstanding·
Obliglltion~ lUlled under Second Liberty Bond Act, a8 amended
. Interest-bearing:
Treasury bills _ _ _ _ _ _ _ _
:2
r.s.c.,
$308,000,000,000
CerrificaICs of indebtedneu
Treasury notes _ _ _ _ _ _ _ __
Bonds Treasury _ _ _ _ _ _ _ _ _ __
.Savinlls (current redemption va1ue)_
l;nited Sutes Retirement Plan bonds_
Depositary _ _ _ _ _ _ _ _ __
R. E. A. series _ _ _ _ _ _ _ __
Investment series _ _ _ _ _ _ __
$4R , 944,481,000
22, 710,419,000
53.696,502.000
$125,3.51,402,000
78,607,551,450
47,741,517,3.55
1,9.50
. 10B,179,.500
26,)64,000
·4,409.896,000
1)0,893,.510,255
Certificates of Indebtedness·
Foreign series _ _ _ _ _ _ _ __
285,000,000
47,904,975
Foreign Currency series _ _ _ _ __
Treasury notes·
foreign'series _ _ _ _ _ _ _ __
Treasury bonds·
Foreign Currency series _ _ _ _ __
Special Funds Cettific:ates of indebtedness _ _ __
TreasLiry notes _ _ _ _ _ _ _ __
Treasury bonds _ _ _ _ _ _ _ __
Total
interest.be~ring
1R),OOO,OOO
380! 744,.7!3£l
. 6,201, 3B8, OeD
5,480,9)8,000
30,508,,91 oon
L
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
Matllred, interest-ceased _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
Bearing no interest:
United States Savings Sta~ps _ _ __
Excess profits tax refund bonds _ __
896,649.763
42.190,11Z..J)..QQ
299,332,279,018
390,196,173
52,197,077
713,832'
S?ccial notes of the United States:
Interna.t'l Monetary Fund series _ __
2,99.5,000,000
150,9.56,600
Inter-American Develop. Bank series _ _
125,000,000
Tot .. l _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
Internat'l Develop. Ass'n. series _ __
Guura?teed obligations (not held by Treasury):
Interest-bearing:
526,0)4,700
4.874.050
Debentures: F. H. A. & DC Stadt Bds._
Matured, interest-ceased _ _ _ _ _ __
Grand total outstanding _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
530,908.750
Balallce face amount of obligations issuable under above authority
Reconcilement with Statement of the public Debe
303.577,251,450
4,422,748,550
_..J.J~a:;;.n..loJu~a...ry/"J_.....3~1....--'1...9"-16""JoI-(Oat!.>
(Daily Statement of the United States Treasury, _........;J~a~n;.;.t;.;,la;;;.;;..ry"__...3:. : 1;.l.1,.", ";1:. 9'"6;: ;. . <.3__ )
?ulStAnding •
COale)
10ta18r0Sli public debt _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
GIIAranteed ob1isacions not owned by the Treasury _ _ _ _ _ _ _ _ _ _ _ _ __
303,417,167.304
53n,908,?50
Total grosa public debt and guaranteed obligations _._ _ _ _ _ _ _ _ _ _ _ _ __
~IICC • ochel Olltseanding pilblic debt obligations not subject to debe limAtaeioD _ _ _ __
303, .57?, 251 ,450
lOR
m.'.
MI. . '11' JI. J.MJ
A. II. _ _UDl,
126la
!I••••• MrM!llP.
IDULra or fll&8UU"
waw:u
IILL GI'UI.
.al . .,,, ••• 1u\ '-".'" tM\ ... , . . . . . , . t.wo ..ne. of
' - - . . tile MIl ...... Nov_ber 23. 1MI
. . . the . . . . ..tee \0 be daW
116), tlldtlt . . . til. . . en FebN&l7 i),
. . . .,.,.. . , \be " ' I N ....c ....... _ ........, II. I. 4. . . . . . ~t,ed lor
• • )00,000,000, .. UterI __M • .r .111' ... 11. . . ,.. . . .000.. . . . ther.&oa.&t.a,
.r 181-'", Wll •• tM - . . ,• . , tM wo ..s.. .... Nl •••
fta tJ • ..-J7 •
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.
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Ion
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_
aMr
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fQtALI
~
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~,611,OQO
!BaI.1.!!!
. ,JaJ.II6, 000
'.',U"ooo
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•
2.9SS:&
2.979:'
2.96~
r• •1-'1"
30.1)1,000
lI,JU.• 1..,•••
. . . . .000
1••7.~g"oao •
..
..,..000
».oca,ooo
•• 1,m,GOO
.,na,GOO
11,.......,.,OGO
17,"',000
S,Jlo,In.. . .OOO •
111,"',,.,61,,000
••d),aao •
6,...._
lO,m.ooo
~.oao •
A.76).OOO
.,,=.000
~71."
_'-"000
U. ,OOD •
,,",6 000
611·'"
u,m."
m,lla7,oao
......
.......
t
I
.,.,~,ooo
Obi. . .
ft. ~.
1• •-.
•
lm!ual
}/
ACCIPfID M . . . . . L . . .1 DUftIIIII
PlJIM , .
DlaWl.ft
IM\Ga
•
1.")/'
~_
IJII)
~..
'Ie Ii ...
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tarAL .,• • • UPL!U POR
•
•
1~!.1z!.9I!
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I
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• A,kt6,"-'-
~
113•• _",\1_ t . . . . . . . . .",. . . . _____
!OGe,2tecl
•
6,315,000
628,)69,000
2,611,000
19,16$,000
2,291,000
),S10,OOO
66,857,000
6,892,000
4,637,000
12,512,000
6,3)9,000
~.8~.OOO
$800,)96,000
!I
llJrice or 99.266
y OIl
I_I•••• 'S), 13.000 a ......U,,_ , .........." •• at. u. ...... Jrice at 98Ja9t
JI
• •___ s.._ at tbt _
. . , . \lie _
•• &at . . . . ._, the 1'ttt.arD •
~
2.m, ,.. * "
IM."I'
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t.be r.. _ ... ., U. _')1. '11.'1 • ., ....
..... b111I ...u PIWide )1.e1dI fI6
'If ...,,_, _ 3.06_, ttlt t.bI
112.., '1118.
rahe _ bill .......... Sa , . . ~ __ discount. "Ub
\be . .\Va
~
tty rat~ WI
\be _ I . ' ~ and their l • ..-tb 1a . .
112 . . . . . . . .
d too a J60ndII
,...-. Ia . .t.I'aIR, ;rt.eldt OIl ~_, . . . . . . . . . ,.. 'S . . ~tAd in \eot lat • ...n - tbe . . . . .
PI. f16", ~ 1ft.
!a. . . ., ~atr ~ \0 .... .nul
e.
e6
fa U. ~ with • ..,weal
._~ .. it . . . tha ~
I*"1eI I.e ... _ ....
,.J
=
s...w. .... ........
_II1II_
..a ••
TREASURY
DEPARTMENT
!2
*
,i
!,
,
.' ; *
.g
;?
i
i%
February 18, 1963
i'OR RELEASE A. 11. NmJSPAPERS,
~esday,
February 19, 1963.
RESULTS
OF TREASURY I S WEEKLY BILL OFFERING
The Treasury Department announced last evening that the tenders for two series of
easury bills, one series to be an additional. issue of the bills dated November 23, 1962,
.d the other series to be dated February 21, 1963, which were offered on February 13,
re opened at the Federal Reserve Banks on February 18. Tenders were inVited for
.,.300,000,000, or thereabouts, of 91-day bills and for $800,000,000, or thereabouts,
'182-day bills. The details of the two series are as follows:
NGE OF ACCEPTED
l~lPETITIVE
BIDS:
High
Low
Average
91-day Treasury bills
maturing May 23, 1963
Approx. Equiv •
Price
Annual Rate
99.270
99.264
99.266
2.888%
2.912%
2.905%
:
:
:
:
·•
Y ··•
182-day Treasury bills
maturing August 22, 1963
Approx. Equiv.
Price
Annual Rate
98.506
2.955%
98.494 2.979%
98.499
2.969%
aI
Y
a/ Excepting one tender of $514,000
77 percent of the amount of 91-day bills bid for at the low price was accepted
10 percent of the amount of 182-day bills bid for at the 10il price was accepted.
TAL TENDERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:
District
Boston
Nevi York
Philadelphia
Cleveland
Richmond
Ulanta
Chicago
St. Louis
f1inneapolis
Kansas City
Dallas
San Francisco
TOTALS
Applied For
$ 30,232,000
1,669,678,000
29,805,000
33,001,000
25,918,000
27,899,000
237,145,000
34,683,000
20,727,000
34,763,000
28,194,000
.171 2841,000
$2,343,886,000
Accepted
$ 19,772,000
795,547,000
14,553,000
31,872,000
11,860,000
21,838,000
171,255,000
28,183,090
13,882,000
29,463,000
19,864,000
142,172 2000
$1,300,261,000
·
···
·•
·•
·•
·•
·•
·••
Applied For
$ 12,315,000
1,214,285,000
7,617,000
29,365,000
7,991,000
5,510,000
118,757,000
8,842,000
6,682,000
••
16,172,000
9,249,000
•
·••
59,635,000
~
$1,496,420,000
Accepted
$ 6,315,000
628,369,000
2,617,000
19,165,000
2,291,000
5,510,000
66,857,000
6,892,000
4,637,000
12,572,000
6,339,000
38z8322000
$800,396,000
Y
Includes $249,159,000 noncompetitive tenders accepted at the average price of 99.266
Includes $53,813,000 noncompetitive tenders accepted at the average price of 98.499
On a coupon issue of the same length and for the same arrlount invested, the return on
these bills would provide yields of 2.97%, for the 91-day bills, and 3.06%, for the
182-day bills. Interest rates on bills are quoted in terms of bank discount with
tpe 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.
0-761
- 3 -
:1nn c~:.cll:>n~c tcnrlcrs viII receive cqu~~ trea.tment.
Cash adjustments will "be made
for diffcrcncca bctl1cen the p3.r "W.lue of mo.turing bills accepted in exchange and
the
i[i~ue
price of the
n~w
bills ..
The income derived from Trcv:Jury 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 r.;ale or other
trC[ltrrv.::nt,
D.')
dlf,po~dtion
of Trcnaury bills does not have any special
ouch, under the IntcTI1tll Revenue Code of' 1954.
The bills are subject
to cr;tf'.f:c, inherita.nce, gif't or other excise taxes, whether Federal or state, but
D.re exempt from all toy.ation noW' or herea.fter imposed on the principal or interest
thereof by any stnte, or any of the possessions of the United sta.tes, or by any
loc::ll to..xine ll.nthority..
For IJurpoaes of ta:'lltion the amount of discount at which
Trc:'Jsury bills are originally sold by the United states is considered to be intercst.
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 ca.pital a.ssets.
of Treasury bills (other
th~
Accordingly, the owner
life insur.ance companies) issued hereunder need in-
clude in his income tax return only the difference between the price pa.id for such
bills, vhether on original issue or on subsequent purchase, and the amount actwUly
received either upon sale or redemption at maturity during the taxable year for
which the return is
m~de,
as ordinary gain or loss.
Treasury Department Circula.r No. 418 (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 Reserve Bank or Branch. .
4ec:1mals, e. g., 99.925.
Fractions
~
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 a.pp11cation therefor.
Banking institutions generally may submit tenders for a.ccount of customers
provided the names ot the customers are set torth in such tenders.
others than
baDk1ng institutions will not be pennitted to submit tenders except for their
own account.
and
Tenders will be received without deposit trom incorpora.ted banks
trust companies and from responsible and recognized dea.lers in investment
securities. !!.'enders from others must be accompa.nied by payment of 2 percent of
the face amount ot Treasury bills applied for, unless the tenders are accompanied
by
an express gua.ra.nty of pa.yment by an incorpora.ted bank or trust company.
DDmediately atter the closing hour, tenders will be opened at the Federal
Reserve llanks and Branches, following which public announcement will be made by
the Treasury Depa.rt;ment 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 &1l tenders, in whole or in part, and his a.ction in any such respect sha.ll be
t1naJ..SubJect to these reservations, noncompetitive tenders for $ 200,000 or
Y¢tX)
less for the additional bills dated
ing until maturity date on
,
C... days
remain-
31, 1963
) and noncompetitive tenders for
~
.. day bills without stated price from anY'(j)ne
May
$100,000 or less for the 182
~
fiOf
November~, 1962
bidder will be accepted 1n full a.t the avera.ge price (in three dec1mals) of a.ccepl;ed competitive bids tor the respective issues.
Settlement for accepted ten-
ders in accordance with the bids must be msde or completed at the Federa.l Rese~
l3aDka on
February 28, 1963
Xftij
, in cash or other immediately available tunds or
in a like tace amount of Treasury bills maturing
Februay, 1963
• Cash
TREASURY DEPARTMENT
Washington
FOR D1rI£DIATE RELEASEjC
February 19, 1963
X;O;X;Q~~
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 $ 2,100$ ,000 , or thereabouts, for
cash and in exchange for Treasury bills maturing
of $
21100~7
92
~
Februa~8,
1963 , in the amount
,000 , as follows:
,
-day bills (to maturity date) to be issued February 28, 1963
5(EO
in the amount of
$1,30~~0,000
, or thereabouts, represent-
ing an additional amount of bills dated November 29, 1962
and to mature
~
May 31~963
amount of $ 800,.000
,
, originally issued in the
,the additional and original bills
to be freely interchangeable.
182
;~
-day bills, for $ 800,0.0
, or thereabouts, to be dated
Februa.,s' 1963 , and to mature
August .1963
•
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 25. 1963
(15)
Tenders will not be received at the Treasury Department, Washington.
E&ch tender
must be for an even multiple of $1,000, and in the case of competitive tenders t~
price offered must be expressed on the basis of 100 , with not more tha.n three
TREASURY DEPARTMENT
FOR IMMEDIATE RELEASE
~ebrua:ry
TREASURY'S WEEKLY BILL OFFERING
The Treasury Department, by this public notice, invites tenders
tor two series of Treasury bills to the aggregate amount of
$2,100,000,000, or thereabouts, for cash and in exchange for
Treasury bills maturing February 28,1963, in the amount of
$2,100,667,000 as follows:
92-day bills (to maturity date) to be issued February 28,1963,
in the amount of $1,300,000,000, or thereabouts, representing an
additional amount of bills dated November 29,1962, and to
mature May 31,1963,
originally issued in the amount of
$800,744,000,
the additional and original bills to be freely
interchangeable.
or thereabouts, to be dated
182-day bills, for $ 800,000,000,
February 28,1963, and to mature August 2~, 1963.
.
The bills of both series will be issued on a discount baiis 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, $lO,OOOc $50,000, $100,000, $500,000 and $1,000,.000
(matu~1 ty value J •
.
Tenders will be received at Federal Reserve Banks and Branches
up to the clo~ing hour, one-thirty p.m., Eastern Standard
time, Monday, February 25, 196~.
Tenders will not be
~ceived at the Treasury De~artment,· 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 tende.rs are
accompanied by an express guaranty of payment by an incorporated bank
or trust company.
0-762
- 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 29,1962, (92-days remaining until maturit¥ date on
May 31, 1963)
~nd noncompetitive tenders for ~ 100,000
or less for the 182-day bills without stated price from anyone
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 Ban~ on February 28, 1963,
in cash or other immediately available funds or in a like face
amount of Treasury bills maturing February 28,1963. Cash and
exchange tenders will receive equal treatment. Cash adjustments
will be made for differences between the par value of maturing
bills accept~d 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
ah~r 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
Sta.te, 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.
F'or purposes of taxation the amount of discount at Which Treasury
bills are originally sold by the United States is considered to be
intcr'~3t.
Under Sections 454 (b) and 1221 (5) of the Internal
Hcvenue 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
sub::Jcquent purchase, and the amount actually received either upon
nule or redemption at maturity during the taxable year for which the
return is made, as ordinary gain or loss.
Treasury Department Circular No. 418 (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 Reserve Bank or Branch.
000
:'J'~'s::mI~\
l'TO=mECOCHITIo~r
'; lcrt"'
2.
0:::
C~!\IN
'1'0 P/,RJ\CRAPH NO. 9
OR LOSS FOR
l<~DERAL
INCOME TJ\.,'{ PURPOSES
Dond is offered by the Treasury vi th a payment (other than the accrued interest
to the investor.
ntijust~cnt)
1.
IIssurne that:
(a)
The fair market value of the security offered by the Treasury on the date
the subscription is submitted is $99.00 (per $100 face value).
(b)
The payment to the subscriber (discount) on account of $100 issue price
is $.50.
(c)
The cost basis of the security surrendered by the subscriber is $99.75
(per $100 face value).
The surn of the fair market value of the security offered by the Treasury and
the payment to the subscriber is $99.00 + $.50 or $99.50. This is less than
the cost basis of the issue surrendered, therefore, no gain is recognized.
The new issue will be entered on the books of the subscriber at a cost basis
of $99.25, the cost basis of the issue surrendered less $.50. The gain or loss
bet"Teen this cost basis and the proceeds of a subsequent sale or redemption of
the new issue will be a capital gain or loss to all investors, except those to
vrhom the bonds are stock in trade. Under present law, if the combined time
that the security surrendered and the nei'; security received in exchange were
held exceeds 6 months, the capital gain or loss is long-term, otherwise it is
short-term.
2.
The ass1unptions are the same except that the cost basis on the books of the
subscriber, of the security surrendered is now $99.25 (per $100 face value)
instead of $99. 7;3 in example 1.
The sum of the fair market value of the ne"T security received in exchange by
tne subscriber plus the $.50 payment (discount) is again $99.50. This exceeds
the cost basis of the security surrendered by $.25. This excess is a recognized
gain reportable for the year in which the exchange takes place. The gain is a
capital Gain except to those to whom the bonds are stock in trade. Under present law, if the tine the security surrendered was held exceeds 6 months, the
capital gain is lon;;-term, otherwise it is short-term.
The se.'hscriber ',Till carry the nevl issue received in exchange at a cost basis
e~ual to the basis of the issue surrendered (:p99.25), less the payment ($.50),
plus the amQl.mt of the recognized gain ($.25), or ($99.25 - $.50 + $.25) $99.00.
0.
'l'he assurr:ptions are the same as in eX8.ffiple 1, except that the cost basis on the
books of the subscriber, of the security surrendered is $98.75 (per $100 face
v2lue) instead of $99.75 in example 1.
7~e
fai~
:nar!:.et value of the nel·l issue received in exchange by the
sut's(~Tibcr ~lus t~e ;).:~O ~ayment (dis~mmt) is still $99.50.
This exceeds the
-;.92.75 cost be.sis 'cy ~lore t~e.n $.50. Hmrever) the arnou..'1t of the gai~ report?b2.e for t~e yea,,:: o~ t:1e excha"1ge is ;3.50) since the amount of Gain recoznized
:~2.nnot excee:::' t:"e 2E.OIJI'.t of t~e 'PaYMent.
T)1e nature of t!1e recozni zed gain and
i~s t~'e2.t":e,,,:"::; ~_s t::.e sG.!:":e as in example 2.
SUr.1
of the
Irl Lei s ca:::;c,
OJ} ~lis boo~:s
3i.l.osc,:'ber "Till enter t~e !1e~iT sec1;.:':' ':¥ _____ . __,
the S2:;'e cost 'basis as the secud:.,· :':.",'C: ',c~e::,er:..
ti"..e
2t
: x ('hange
o
~)
.
"
~
I~'
Eli~ible
m
securities
3-1/2%
C/ls
8/15/63
2-1/2~
Bonds
8/15/63
3-1/8%
C/ls
11/15/63
3%
Bonds
2/15/64
3-1/2%
Ll'otes
11/15/65
3-5/8%
~rotes
2/15/66
3-3/8~
Bo[.(15
3%I
Bonds
8 / '1-~/'Ja
,~~
1l/15/ss
~
o
o
", ,
m
FOR THE NEll 4% BONDS OF FEBRUARY 15, 1980
~~
Payments on account of $100
issue price:
::l By subscriber ---- __________ _
(D
To subscriber --------------,'.)
ct
(J,
~-J
(D
$
$
$ -
.$ -
$ -
$ -
$
.$ 0.50
0.90
0.50
0.70
0.50
1.00
1.20
4.04%
4.04%
4.04%
4.03%
4.04%
4.04%
4.03%
4.03%
4.09
4.10
4.11
4.12
4.23
4.24
4.30
4.29
0.40
Approximate investment yield
g from exchange date (3/15/63)
to maturity of bonds offered
in exchanGe based on price
~ of securities eligible for
~. exchange !I ----------------~
o'
{))
Approximate m~n~um reinvestment rate for
the extension _
.-->
ro~!
period
__________________
(J)
~
CJ1
CD
o
s=;~~~~~---
~
1
Yield to no~taxab1e holder or before tax. Based or. mean of bid and aslced prices (adjusted for
of issue price) at noon on Feb~~ary 19, 1963.
Y
Rate for nontaxable holder or before tax.
)
,1
;'~
,
,
I~
;-)
10
l
,D
~ ~
For explanation see paragraph 12 above.
paj~ents
on
acco~~t
l..3.
I.:rrest:-:Je:lt rates on t:le new notes and bonds offered in exchange to holders of the eligible securities:
3-1/2%
e/ls
3li;ible securities
2-1/2%
Bonds
3-1/8%
8/15/63
8/15/63
G/ls
11/15 / 63
$0.50
$0.10
$0.30
3%
Bonds
2/15/6.1
$0.10
FOR THE NEVi 3-5/8% NOTES OF FEBRUARY 15, 1967
P~:~ent3 on account of ~100 issue price to subscriber -----------------------.~-p:r!:"Qxim3te investment yield from exchange date
(3/15/63) to matur:' ty of notes
offered in exchange based on price of securities eligiole for exclllinge ~ ---
Approximate minimum reinvestment rate for the extension period 2/ ------------
3.65%
3.65~
3.64~
3.63;~'
3.80
3.80
3.84
3.87
$1.10
$0.70
$0.90
$0.70
FOR THE NEH 3-7/8 BOllDS OF :;oVE:·JER 15, 1971
Payments on account of
:~lOO
issue price to subscriber ------ -- ---- --- -- -- - ----
.~pproximate investment :rield from exchanse date
(3/15/63) to maturity of bO:J.ds
offered in exchange based on price of securities eligible for exc~lanze .!I
3.97"/0
3.97~
3.96~
3.96~
4.05
4.06
4.08
4.11
3-1/2)
3-5/8%
3%
3-3/8%
notes
:'Totes
Bonds
Bonds
11/15/65
2/15/66
8/15/66
11/15/66
$1. 70
$ -
$0.90
Approximate minimum reinvestment rate for the extension period ~/ ------------
j
FOR .TRE NE'"d 3-7/8% BOlmS OF HOVE!BER 15, 1974
-h:nnents on account of $100 issue price to subscriber:
$1.50
r,.-:=;proximate investment yield from exchange date (3/15/63) to maturity of bonds
offered in exchange based on price of securities eligible for exchange ~/ --
3.98%
3.98~
3.97%
3.97~
Approximate minimum reinvestment rate for the extension period ~ ------------
4.24-
4.24
4.33
4.32
'oo~notes
appear
a~
end of
tab~e
on next page.
(r.ont.inllcd)
be JX1.:!AJ~_~~by subscribers
on 8ccount of
Nct amount
~J0.63
-accrued
- -intcrest
- -- ---to
-- - - - - -- ._------ ---- -P3.yable
fayablc
:
To be
to
To be
f';xt~n
~
subscriber
paid
subscriber
collected
of
on securitics:on sccurities
to
from
matur
to be
to be
subsubissued
exchanGed
scriber
scriber Yrs •.
Amounts_~o
On
Securities
to be
exchary~ed
A.ccount
of
purchase
price of
securi ties
to be
issued !I
I
~--
--
FOR THf:: ::;- 7/8:, BONDS OF 1974
.1/2~
note
'5/81) note
I
'0
bond
.3/8',~ bond
B-19G5
B-1966
1966
1966
$1.50
1. 70
0.90
~---
.pl.160221
.280:187
.232044
1.118785
fl"
,H - 0
• (, 144
- 00
1. ~~f\45'lO
;1)
$1.375691
0.695857
$
1. 2FH~),',O
1.2lH530
1.052486
0.734255
9
8
8
8
FOR TIm 4'(; BmmS OF' 1380
-1/2~'J
ctf. C-1963
-1/2% bond 1063
-1/810 ctf. D-19G3
bond 1964
10
-1/2)i note B-19G5
-5/81~ note B-1966
"<f
bond 1966
,0
-3/87) bond 1966
J Amounts
$0.90
0.50
0.70
0.50
1.00
1.20
(0.50)
0.40
$ .270718
.193370
1.035312
.232044
1.1G0221
.280387
.232044
1.110785
'r
'+'
.309392
.309392
.309392
.309392
.309392
.309392
.309:>92
.309::)92
$0.861326
0.383978
1.426520
0.422652
1.850829
1.170995
$
0.577348
1. 209393
16
16
16
16
14
14
13
13
payable by subscribers are included within parenthesis.
The following coupons should be attached to the securities in bearer fonn when they
surrendered:
Sccurities
,-1/2~ ctf. C-1963, 2-lJ2~~ bond 1963
,-1/8% ctf. D-19G3, 3-1/2% note B-19G5, 3-3/8% bond 1966
,% bond 1964, 3-5/8% note B-1966, 370 bond 1966
:0
Coupons to be attached
Aug. 15, 1963
May 15, 1963, and subseqlll
Aug. 15, 1963, and subseqt
Payment:
Payment for the new securities must be completed by March 15, 1963. The new securl'
will be delivered March 15, 1963. Hhere the table in the preceding paragraph shows
net amount to be collected from subscribers such amount should accompany the subser
tion. Hhere the table shows a net amount payable to subscribers the payment will b
made by the Treasury, if bearer securities are surrendered following their acceptan
and if registered securities are surrendered following discharge of registration in
accordance with the assignments on the securities.
5.
Limitation on amount of securities to be issued:
The amount of securities to be issued under this offering will be limited to the •
Terms and GOll,1 i ~ ions 0 I' the \dvancc He1\mdinc Offer
1.
Tb all holders of the folloving outstanding Treasury securities:
Description of securities
3-1/2~
2-1/2~
3-1/8~
3~
3-1/2~
3-5/B~
certificate C-1963
bond 1963
certificate D-1963
bond 1964
note B-1965
note B-1966
310
bond 1966
3-3/a~ bond 1966
2.
Remaining tem
to maturity
Yrs. - Mos.
Final maturity
date
Issue date
AUB· 15, 1963
AUG. 15, 1963
Aug. 15, 1962
15, 1954
15, 1962
14, 1958
15, 1962
May 15, 1962
Feb. 28, 1958
March 15, 1961
Dec.
Nov.
Feb.
Nov.
Amount
outstand1Dg
( in bilUOD!l
5
5
Nov. 15, 1963
B
Feb. 15, 1964
Nov. 15, 1965
11
2
2
3
Feb. 15, 1966
Aug. 15, 1966
Nov. 15, 1966
"5
$6.9
4.3
4.9
2.7
3.3
3.1
1.5
2.4
B
11
5
8
New securities to be iSGued (or additional amounts of outstanding issues):
AmOtUlt
Description at securities
3-5/B~
3-7/8~
3-7 /8~
410
note
bond
bond
bond
Issue date
outst:lnd1ng
lln billio:ls) Interest starts!! Interest payabll
of Feb. 15, 1967 March 15, 1963
.~1.2
or Nov. 15, 1971 May 15, 1962
of Nov. 15, 1974 Dec. 2, 1957
of Feb. 15, 1980 Jan. 23, 1959
1.2
1.5
.March
March
March
March
Feb. 15 & Aug. :
May 15 & Nov. 1:
May 15 & BoY. 1:
Feb. 15 & Aug. :
IS, 1963
15, 1963
15, 1963
15, 1963
Y
Interest on the securities surrendered stops on March 15, 1963.
3.
Terms
ot the exchange:
Exchanges will be made on the basis of equal face amounts, with payments to or by the
Treasury, and with adjustments of accrued interest to March 15, 1963, OD the securities
surrendered and on the additional issues of bonds (per $100 face amount), as indicated
below:
Amounts to be Eaid to or by subscribers
On accOlmt oJ.'
On
account
accrued interest to 3L15L63
Net amount
•• Payable
••
at
Payable
••
purchase
Extensia
to
To be
To
be
••
El
price ot
subscriber : subscriber
of
•
collected
paid •
Securities
securities on securities:on securities
maturitJ
••
from
to
••
to be
to be
to be
to be
subsub- ••
•
issued Y
exchanged
exchan~d
issued
scriber •• scriber Yrs.""s
·
3-1/2~
2-1/2~
3-1/8~
310
3-1/2~
2-1/2~
3-1/8~
3~
3-5 8~ NOTES OF SERIES B-1967
.270718
.770718
.193370
0.293370
1.035912
1.335912
.232044
0.332044
FUR THE
ctt.
bond
ctf.
bond
ctt.
bond
ctt.
bond
D-1963
1964
$0.50
0.10
0.30
0.10
C-1963
1963
D-1963
1964
$1.10
0.70
0.90
0.70
C-1963
1963
:rna
THE 3-7 8
.270718
.193370
1.035912
.232044
Footnote appears at end of table on next page.
3 •
3 •
3 •
3 •
BONDS OF 1971
1.284530
1.284530
1.284530
1.284530
$0.096188
$
0.391160
0.651382
0.352488
8
e
8 7 •
I
I
6.
Boo~\.s
open
fo~'
subscriptions for the ne\{ securities:
The boo];:s will be open for the receipt of subscriptions from ALL classes of subscribers
from J-·ionlLay, February 25, through Thursday, February 28. In addition, the books Will
also be open for the receipt of subscriptions from individuals through Friday, March 8.
For this purpose, inai viduals are defined as natural persons in their own right. Subscriptions placed in the mail by midnight of the respective closing dates, addressed
to any Federal Reserve Bank or Branch or the Treasurer, U. S., Vlashington 25, D. C.,
will be considered as timely. The use of registered mail is recommended for the security holders' protection in submitting securities to be exchanged.
If securities eligible for exchange are pledged with a State or Federal Government
agency or authority and such securities cannot or will not be released by such authority to the pledgor in time for use in making payment for the securities offered in
this exchange, the pledgor may, nevertheless, enter a subscription. Such subscriptions
should be accompanied by a letter signed by an authorized official of' the pledgor explaining the circumstances and, if the authority will not release the securities, a
request and authorization for the Federal Reserve Bank, or Branch, or the Treasurer of
the U. S. (according to where the subscription is directed) to deliver the new securities to the State or Federal authority in exchange for the old securities held by such
authority.
7.
Requirements applicable to subscriptions:
Subscriptions will be received at the Federal Reserve Banks and Branches and at the
Off'ice of the Treasurer of the United States, Washington 25, D. C. Banking institutions generally may submit subscriptions for account of customers.
8.
Denominations and other characteristics of new securities:
The notes will be issued in denominations of $1,000, $5,000, $10,000, $100,000,
$1,000,000, $100,000,000 and $500,000,000 in coupon and registered forms. The bonds
will be issued in denominations of $500, $1,000, $5,000, $10,000, $100,000 and
$1,000,000 in coupon and registered forms. All subscribers requesting registered securi ties ;.rill be required to furnish appropriate identif'ying numbers as required on
tax returns and other documents submitted to the Internal Revenue Service. The notes
and bonds will be acceptable to secure deposits of public moneys.
9.
Nonrecognition of gain or loss for Federal income tax purposes:
(a) General -- The Secretary of the Treasury has declared pursuant to section 1037(8)
of the Internal Revenue Code that no gain or loss shall be recognized for Federal income tax purposes solely on account of' the exchange of the securities; however, section
1031(b) of the Code requires recognition of any gain realized on the exchange to the
extent that money (other than interest) is received by the security holder in connection with the exchange as indicated in (b).
(b) I-mere the securities to be issued are of'fered by the Treasury with a payment ~
the investor -- If the fair market value
of the securities to be issued plus the
amount paid to the investor (discount) exceeds the cost basis to the investor of the
securities to be exchanged, such gain (but not to exceed the amount of the payment)
must be recognized and accounted for as gain for the taxable year of' exchange. He
will carr~/ the neH securities on his books at the same amount as he is now carrying
the old securities except that he 'viiI reduce the cost basis by the amount of the payment and increase it by the amount of the gain recognized. If the fair market value
of the ne~{ securities plus the amount of the payment does not exceed the cost basis of
the olci securities, the basis in the new securities will be the cost basis in the old
securities red'.lced by the 8I'lount of the payment.
!!
Tne mean o~ tGe bid and asked quotations on date subscriptions are submitted.
(c)
Where premium is paid by the subscriber -- If a premium is paid by the subscriber no gain or loss will be recognized; but his tax basis in the new securities will be his cost basis in the old securities increased by the amount of
the premium.
(d) Gain to the extent not recognized under (b) (or loss), if any, upon the old
securities surrendered in exchange will be taken into account upon the disposition or
redemption of the new securities. (See appendix to paragraph 9 attached.)
10.
Federal estate tax option on the 3-7/8% bonds of 1974 and 4~ bonds -- The 3-7/8~ bonds
of 1974 and 4% bonds of 1980 will be redeemable at par and accrued interest prior to
maturity for the purpose of using the proceeds in payment of Federal estate taxes but
only if they are owned by the decedent at the time of his death and thereupon constI:
tute part of his estate.
11.
Book value of new securities to banking institutions:
The Comptroller of the Currency, Board of Governors of the Federal Reserve System, and
the Federal Deposit Insurance Corporation have indicated to the Treasury that banks
under their supervision may place the new notes and bonds received in exchange on their
books at an amount not greater than the amount at which the eligible securities surrendered by them are carried on their books plus the amount of premium, if any, paid
on the new securities, or reduced by the amount of discount, if any, received by the
subscriber and increased by the amount of gain, if any, which will be recognized as
indicated in paragraph 9. They will so advise their examiners.
12.
Computation of
reiIl:y~stme~t
rate for the extension of maturity:
A holder of the outstanding eligible securities has the option of accepting the
Treasury's exchange offer or of holding them to maturity. Consequently, he can compare
the interest plus (or minus) any payment, other than the adjustment of accrued interest,
he will receive resulting from exchanging now with the total of the interest on the
eligible issues and what he might obtain by reinvesting the proceeds of the eligible
securities at maturity.
The income before tax for making the extension now through exchange will be the coupon
rates plus (or minus) any payment on the new issues. If a holder of the eligible securities does not make the exchange he would receive the coupon rates on the eligible
issues to their maturity and would have to reinvest at that time at a rate equal to that
indicated in paragraph 13 below for the remaining terms of the issues now offered, in
order to equal the return (including any payment) he would receive by accepting the exchange offer. For example, if the 3% bonds of 2/15/64 are exchanged for 3-7/8% bonds
of 11/15/71 the investor receives 3-7/8% interest for the entire eight years and eight
months plus $.70 (per $100 face value) immediately. If the exchange is not made, a
3% rate will be received until February 15, 1964, requiring reinvestment of the procee~
of the 3's of 1964 at that time at a rate of at least 4.11% for the remaining seven
years and nine months, all at compound interest, to average out to a 3-7/8% rate for
eight years and eight months plus the $.70 immediate payment. This minimum reinvestment
rate for the extension period is shown in the table under paragraph "13. The minimtUD
reinvestment rates for the other issues included in the exchange are also shown in the
table under paragraph 13.
!.I 'l'he mean or 1;ne
o~a.
ana. aSKea
qU01.C:U,.1.Ull1:;
uu ua .... t::
D"' ... O ... .L.A.,t" ..... ""'. . . . . . . . . . . . _
...... - - - . . . . " . .
c:....
TREASURY DEPARTMENT
FOR IMMEDIATE RELFASE
February 20, 1963
ADVANCE REFUNDING OFFER
The Treasury today announced that it will offer holders of $29.0 billion of out.
standing Treasury securities an opportunity to extend their holdings at higher yielda,
Of this total, $20.3 billion are held by the public.
The possibility of such an announcement was indicated on January 30 when it was
stated that the Treasury planned, upon completion of the February 15 financing, to
announce a program of advance refunding adapted to the requirements of the market at
that time.
The current offering combines a junior advance refunding with a "prere f'und1ng , "
that is, an advance refUnding of issues maturing within the next 12 months.
Holders of securities eligible for exchange have the option of exchanging them,
as of March 15, 1963, for four new issues as follows:
Secur1 ties eligible for exchange
Securi ties offered in exchal ge
and their maturity dates
and their maturity dates
•
Prerefunding
3-l/2f/o ctfs., C-1963
a/l5/63)
2/]$/67
a/15/63)
3-5/8% notes, B-1967 (new)
2-l/2f/o bonds, 1963
ll/lS/63)
3-7/ f1i, bonds, 1971 (addl. issue) 11/]$/71
3-l/~ ctfs. J D-1963
2/l5/64)
4%
bonds, 1980 (addl. issue) 2/)£)/80
~
bonds, 1964
3-1/2$ notes, B-1965
3-5/a% notes, B-1966
?f!,
bonds, 1966
3-3/8% bonds, 1966
"Junior" Advance Ref'undipe
11/lS/65)
2/lS/66)
3-7/8% bonds, 1974 (addl. issue) 11/]$/74
8/15/66)
4'/0
bonds, .1980 (addl. j.ssue) 2/)£)/80
ll/15/66)
The exchanges will be made on the basis of par for par with accrued interest
adjustments and cash payments to or payable by the subscribers which will approXimate~ equalize current market values among eligible issues having different coupons
and maturities, and provide an attractive exchange value for each of the issues
offered. The amount of the offering will be lim! ted to the amount of securities
accepted in exchange. Cash subscriptions are not invited.
The excbanges will not be treated as a sale and purchase for tax purposes; therefore, there will be no recognition of gain or loss for Federal income tax purposes
sole~ on account of the exchange of old for new securities.
Details are presented
in the following paragraph No.9.
The subscription books will be open beginning Monday, February 25, and will rema1X
open through Thursday, February 28, 1963, for all classes of subscribers. In additiOD,
individuals (natural persons in their Olm right) 'Will be alloved to subscribe tor a
further period through Friday, March 8, 1963.
The amounts of cash payments due to or by subscribers, including the amounts of
accrued interest adjustments, as well as other details relating to this advance refunding are as follows.
D-763
TREASURY DEPARTMENT
-
FOR JID1EDIATE RELEASE
February 20, 1963
ADVANCE REFUNDnG OFFER
The Treasury today announced that it will offer holders of $29.0 billion of outstanding Treasury securities an opportunity to extend their holdings at higher yields.
Of this total, $20.3 billion are held by the public.
The possibility of such an announcement was indicated on January 30 when it was
stated that the Treasury planned, upon completion of the February lS financing, to
announce a program of advance refunding adapted to the requirements of the market at
that time.
'l'he current offering combines a junior advance refunding with a "prerefunding,"
that is, an advance refunding of issues maturing wi thin the next 12 months.
Holders of securities eligible for exchange have the option of exchanging them,
as of March lSj 1963, for four new issues as follows:
Securities eligible for exchange
Securities offered in exchmge
and, their maturity dates
and their maturity dates
"
Prerefunding
3-1/2% etfs., C-1963
S/l5/63)
/
2/lS/67
2-1/2% bonds, 1963
S/l5/63)
3-5 8% notes, B-1967 (new)
1971
(addl.
issue)
1l/l5/71
3-l/Bi ctfs., D-1963 11/l5/63)
3-7/fJ/; bonds,
'!/p
bonds, 1964
2/l5/64)
4%
bonds, 1980 (addl. issue) 2/15/80
3-1/2%
3-5/8%
?f{o
3-3/8%
notes,
notes,
bonds,
bonds,
B-1965
B-1966
1966
1966
"Junior" Advance Refunding
11715765 )
2/lS/66)
3-7/8% bonds, 1974 (addl. issue) 11/15/74
8/l5/66)
4%
bonds, 1980 (addl. issue) 2/lS/80
11/lS/66)
Tne exchanges will be made on the basis of par for par with accrued interest
adjustments and cash payments to or payable by the subscribers which will approximately equalize current market values among eligible issues having different coupons
and maturities, and provide an attractive exchange value for each of the issues
offered. The amount of the offering will be limited to the amount of securities
accepted in exchange. Cash subscriptions are not invited.
The exchanges will not be treated as a sale and purchase for tax purposes; therefore, there will be no recognition of gain or loss for Federal income tax purposes
solely on account of the exchange of old for new securities. Details are presented
in the follm·ling paragraph No.9.
The subscription books will be open beginning Monday, February 25, and will remain
open throueh Thursday, February 28, 1963, for all classes of subscribers. In addition,
individuals (natural persons in their own right) will be allowed to subscribe for a
further period through Friday, March 8, 1963.
The nmoWlts of cash payments due to or by subscribers, including the amounts of
accrued interest adjustments, as vlell as other details relating to this advance refunding are as follOl/s.
D-763
TemlS flnd Concl:LtiollG of the ;\(lv:1nce Hel'unciinG Offer
1.
To all holders of the following outstanding Treasury securities:
Description of securities
3-1/2~
2-1/2~
3-1/S%
3~
3-1/2i
3-5/S%
3i
3-3/S%
2.
certificate C-1963
bond 1963
certificate D-1963
bond 1964
note B-1965
note B-1966
bond 1966
bond 1966
Final maturity
date
Issue date
Remaining term
to maturity
Yrs. - Mos.
Aue· 15, 1963
Aug. 15, 1962
Dec. 15, 1954
Nov. 15, 1962
Feb. 14, 1958
Nov. 15, 1962
May 15, 1952
Feb. 2S, 1958
March 15, 1961
Aug.
Nov.
Feb.
Nov.
Feb.
Aug.
Nov.
15,
15,
15,
15,
15,
15,
15,
1963
1963
1964
1965
1966
1966
1966
2
2
3
3
Amount
outstanding
( in billions)
5
5
8
11
8
11
5
8
$6.9
4.3
4.9
2.7
3.3
3.1
1.5
2.4
New securities to be iSGued (or additional amounts of outstanding issues):
Description of securities
3-5/0~
note
3-7/Scp bond
3-7/8% bond
4~
bond
of
of
of
of
Feb.
Nov.
Nov.
Feb.
15,
15,
15,
15,
1967
1971
1974
1980
Issue d9.te
Amount
outstnndinB
i!.n billio:1s) Interest starts'!! Interest payable
March 15, 1963
May 15, 1962
Dec. 2, 1957
Jan. 23, 1959
:$1.2
1.2
1.5
March 15, 1963
March 15, 1963
~tarch 15, 1963
March 15, 1963
g
Interes·t on the securities surrendered stops on March 15, 1963.
3.
Terms of the exchange:
Feb. 15 & Aug. 15
May 15 & Nov. 15
May 15 & Nov. 15
Feb. 15 & Aug. 15
Exchanges vill be made on the basis of equal face amounts, vith payments to or by the
Treasury, and with adjustments of accrued interest to March 15, 1963, on the securities
surrendered and on the additional issues of bonds (per $100 face amount), as indicated
below:
Amounts to be paid to or by subscribers
On
On account of
account
accrued interest to 3L1SL63
Net amount
of
Payable
Payable
purchase
Extenolon
to
To be
To be
Ex
price of
subscriber : subscriber
of
paid : collected
securities on securities:on securities
maturity
Securities
from
to
to be
to be
to be
to be
subsubexchanged
issued Y
exchanl3ed
issued
scriber Yrs.-Mos.
scriber
.
.
3-1/2% ctf. C-1963
2-1/2% bond 1963
3-1/0% ctf. D-1963
bond 1964
3i
:pO. 50
0.10
0.30
0.10
3-1/2~
$1.10
0.70
0.90
0.70
ctf.
2-1/2% bond
3-1/S~ ctf.
bond
3%
C-1963
1963
D-1963
1964
FUR THE 3-5 8% NOTES OF SERIES B-1967
.270718
.770718
.193370
0.293370
1.035912
1.335912
.232044
0.332044
FUR THE 3-7 8
.270718
.193370
1.035912
.232044
Footnote appears at end of table on next page.
BONDS OF 1971
1.284530
$0.086188
1.284530
1.284530
0.651382
1.284530
:p
3
3
:3
3
:p
0.391160
B
8
B
7
0.352486
- 66
- 03
-
-- 33
- 09
-
3.
(Continued)
Securities
to be
exchanged
Amounts to be pni~~or by subscribers
On
on account of
account
Net amount
~~ed _.~nt~rest_t_,?~~~§3
_._----of
Payable
Payable
:
purchase
to
To
be
Extension
To be
Ex
price of
subscriber
subscriber
paid
collected
of
securities on securities:on securities
to
from
maturity
to be
to be
to be
subsubissued !/
exchanGed
issued
scriber
scriber
Yrs.-Mos.
---FO~__T![E
3-1/2% note
3-5/8~ note
bond
3~~
3-3/8% bond
3-1/2.~~
2-1/2%
3-1/8%
3~
3-1/2%
3-5/87~
3%
3-3/8%
B-1965
B-1966
1966
1966
ctf. C-1963
bond 1963
ctf. D-1963
bond 1964
note B-1965
note B-1966
bond 1966
bond 1966
17 Amounts
$1.50
1. 70
0.90
$0.90
0.50
0.70
0.50
1.00
1.20
(0.50)
0.40
3-7/0% BONDS OF 1974
:f[.284530
$1.375691
.200387
1.2045~O
0.695857
.232044
1.2134530
1.118785
1.284530
0.734255
~1.1G0221
FOR THE 4% BONDS OF 1980
.309392
.193370
.309392
1.035312
.309392
.232044
.309392
1.160221
.309392
.280387
.309392
.232044
.309392
1.118785
.309392
$ .270710
*
$0.861326
0.383978
1.426520
0.422652
1.850829
1.170995
$
1.052486
8
$
0.577348
1.209393
9
8
8
16
16
16
16
14
14
13
13
-
-
--
payable by subscribers are included within parenthesis.
The following coupons should be attached to the securities in bearer form when they are
surrendered:
Securities
3-1/2% ctf. C-1963, 2-1/2% bond 1963
3-1/8% ctf. D-1963, 3-1/2% note B-1965, 3-3/0% bond 1966
3% bond 1964, 3-5/810 note B-1966, 3% bond 19G6
Coupons to be attached
Aug. 15, 1963
May 15, 1963, and subsequent
Aug. 15, 1963, and subsequent
4.' Payment:
Payment for the new securities must be completed by March 15, 1963. The new securities
be delivered March 15, 1963. Where the table in the preceding paragraph shows a
net amount to be collected from subscribers such amount should accompany the subscription. Where the table shows a net amount payable to subscribers the payment will be
made by the Treasury, if bearer securities are surrendered following their acceptance,
and if registered securities are surrendered following discharge of registration in
accordance with the assignments on the securities.
~11
5. Limitation on amount of securities to be issued:
The amount of securities to be issued under this offering will be limited to the amount
of the eligible securities tendered in exchange and accepted.
0
9
3
0
6
6
3
0
3
0
6
3
6.
Books open for subscriptions for the new securities:
The books will be open for the receipt of subscriptions from ~ classes of subscriber
from Nonday February 25, through Thursday, February 28. In addition, the books will
also be ope~ for the receipt of subscriptions from individuals through Friday, March 8
For this purpose, individuals are defined as natural persons in ~heir own right. Subscriptions placed in the mail by midnight of the respective clos~ng dates, addressed
to any Federal Reserve Bank or Branch or the Treasurer, U. S., ~1ashington 25, D. C.,
vill be considered as timely. The use of registered mail is rec,ommended for the security holders' protection in submitting securities to be exchange 0 ,
If securities eligible for exchange are pledged with a State or Federal Government
agency or authority and such securities cannot or vill not be released by such authority to the pledgor in time for use in making payment ror the securities orrered in
this exchange, the pledgor may, nevertheless, enter a subscription. Such subscription
should be accompanied by a letter signed by an authorized orricia1 of the pledgor explaining the circmnstances and, if the authority will not release the securities, a
request and authorization for the Federal Reserve Bank, or Branch, or the Treasurer of
the U. S. (according to where the subscription is directed) to deliver the new securities to the State or Federal authority in exchange for the old securities held by such
authority.
7.
Requirements applicable to subscriptions:
Subscriptions will be received at the Federal Reserve Banks and Branches and at the
Office or the Treasurer or the United States, Washington 25, D. C. Banking institutions generally may submit subscriptions ror account of customers.
8.
Denominations and other characteristics ot new securities:
The notes will be issued in denominations or $1,000, $5,000, $10,000, $100,000,
$1,000,000, $100,000,000 and $500,000,000 in coupon and registered torms. T.he bonds
will be issued in denominations of $500, $1,000, $5,000, $10,000, $100,000 and
$1,000,000 in coupon and registered forms. All subscribers requesting registered securities will be required to furnish appropriate identifying numbers as required on
tax returns and other documents submitted to the Internal Revenue Service. The notes
and bonds will be acceptable to secure deposits of public moneys.
9.
Nonrecognition of gain or loss for Federal income tax purposes:
(a) General -- The Secretary of the Treasury has declared pursuant to section 1031(a)
of' the Internal Revenue Code that no gain or loss shall be recognized for Federal income tax purposes solely on account of the exchange ot the securities; however, sect100
l03l(b) of the Code requires recognition of any gain realized on the exchange to the
extent that money (other than interest) is received by the security holder in connection with the exchange as indicated in (b).
(b) . \'lhere the securities to be issued are oi'f'ered by the Treasury with a payment to
the 1nves~or -- If the fair market value ~7 of the securities to be issued plus the
amount pa1d to the investor (discount) exceeds the cost basis to the investor otthe
securities to be exchanged, such gain (but not to exceed the amount ot the payment)
must be reCOGnized and accounted for as gain for the taxable year or exe'lange. He
will carr"J th7 new securities on his books at the same amount as he is now carrying
the Old. securl ties. except that he '-rill reduce the cost basis by the amount of the pay_
ment and increase 1t by the amount of the gain recognized
If the fair market value
~~ th~dncw securities plus the amount of the payment does·not exceed the cost basis of
eo,· securities, the basis in the new securities will be the cost basis in'the old
securltie~ !-=.9:,:~ed ~~ ~he_ amount of the payment.
!!
The mean of the bid and asked quotations on date subscriptions are submitted.
(c) Where premium is paid by the subscriber -- If a premium is paid by the subscriber no gain or loss will be recognized; but his tax basis in the new securities will be his cost basis in the old securities increased by the amount of
the premium.
(d) Gain to the extent not recognized under (b) (or loss), if any, upon the old
securities surrendered in exchange will be taken into account upon the disposition or
redemption of the new securities. (See appendix to paragraph 9 attached.)
10. Federal estate tax option on the 3-7/8% bonds of 1974 and 4% bonds -- The 3-7/8% bonds
of 1974 and 4% bonds of 1980 will be redeemable at par and accrued interest prior to
maturity for the purpose of using the proceeds in payment of Federal estate taxes but
only if they are owned by the decedent at the time of his death and thereupon constitute part of his estate.
11. Book value of new securities to banking institutions:
The Comptroller of the Currency, Board of Governors of the Federal Reserve System, and
the Federal Deposit Insurance Corporation have indicated to the Treasury that banks
under their supervision may place the new notes and bonds received in exchange on their
books at an amount not greater than the amount at which the eligible securities surrendered by them are carried on their books plus the amount of premium, if any, paid
on the new securities, or reduced by the amount of discount, if any, received by the
subscriber and increased by the amount of gain, if any, which will be recognized as
indicated in paragraph 9. They will so advise their examiners.
12. Computation of reinvestment rate for the extension of maturity:
A holder of the outstanding eligible securities has the option of accepting the
Treasury's exchange offer or of holding them to maturity. Consequently, he can compare
the interest plus (or minus) any payment, other than the adjustment of accrued interest,
he will receive resulting from exchanging now with the total of the interest on the
eligible issues and what he might obtain by reinvesting the proceeds of the eligible
securities at maturity.
The income before tax for making the extension now through exchange will be the coupon
rates plus (or minus) any payment on the new issues. If a holder of the eligible securities does not make the exchange he would receive the coupon rates on the eligible
issues to their maturity and would have to reinvest at that time at a rate equal to that
indicated in paragraph 13 below for the remaining terms of the issues now offered, in
order to equal the return (including any payment) he would receive by accepting the exchange offer. For example, if the 3% bonds of 2/15/64 are exchanged for 3-7/8% bonds
of 11/15/71 the investor receives 3-7/8% interest for the entire eight years and eight
months plus $.70 (per $100 face value) immediately. If the exchange is not made, a
3% rate will be received until February 15, 1964, requiring reinvestment of the proceeds
of the 3's of 1964 at that time at a rate of at least 4.11% for the remaining seven
years and nine months, all at compound interest, to average out to a 3-7/8% rate for
eight years and eight months plus the $.70 immediate payment. This minimum reinvestment
rate for the extension period is shown in the table under paragraph 13. The minimum
reinvestment rates for the other issues included in the exchange are also shown in the
table under paragraph 13.
1::'[';;3:::-,:;::.1; :oates 0::1 <;::e nev notes and bonds offered in exchange to nolders of the eligible sec'.lrities:
3~
2-1/2%
8/15/63
Bonds
8/15/53
1:../15/63
2[15/6-1
$0.50
$0.10
$0.30
$0.10
ells
~i~i~l~
- 1/'0;0
. . -1
.J-
3-1/2%
securities
ells
Bonis
FOa T:E LBII 3-5 lac;, .LrOTES OF ,io'.E3RUAHY 15, 1967
::1::::e!lt3
:):1.
:".,
~~.,+..:>
....
~ .•......
'J ........
~ '"'_
.J:·!'ereLi i:l
:l.:::count of
.~100
issue price to subscriber ------------------------
;.., ang.
~ -=
~~..."e (3/15 I ".::-)
_e ,............J ..-1... e ld f rom exc .•
.... .;) t 0 ....
...a t·u_"'''t·
- .J ot~ no t es
on price of securities eligi'cle i'or exc:la:1.ge 1.1 ---
• , ••.
.,..,,-...,
~l.
J ~_ . . .
~:c:::-~::l:1.~e on-sed
;"P.:J::·0:.:i.::3-::C :li~i:::'..!.':l rei:!'lestment rate for the extension period. ~/ ------------
3.65~
3.65~
3.64~
3.63·~
3.80
3.80
3.84
3.87
$1.10
$0.70
$0.90
$0.70
FOR THE N~{ 3-7/8 BOIIDS OF :;C'.·:;3~ 15, 1971
FJ.~,,::ents
on a:::co'.mt of ·3l::JJ issue price to s'loscrioer ------------------------
;n're-t-e'"'+ ''''''''.I.':i __.s.
"'ro- .::>v~'-"
,- ;~-, +0
.... a ...... "~;
... •· o-~""
_. . . _... _.... =-.::> ·..:I~te (~:1
';;,_;:)/0.;),
w
......
---wJ
offered i::l e:·::~13n.se cased on p::-ice of sec'.l=ities elisi~::'e f'Jr e:c;:.3.~'::=
--~" .... v-!-.., ... e
,,,_,~,,,.,,,,,,.,,,,,-.~_,,,,
. . 6.
.;,
'L..
...L ....
,''''''_
.1 ••.,;_
~
CO-"oolS
__
±i
,:"!=~~'oxi.::;ate :-::.1ni.r.lu.'ll reinvesment rate for the exte:lsion peri'Jd 2.1 ------------
3.97~
3.97~
3.96~
3.96%
4.05
4.06
4.08
4.11
..
notes
""-O/~~J
3-1/2~
11/15/-35
3·~
3-3/8.~
2/1..5/03
Ecr.d.s
a/15/36
~l/15/'3.)
$1. 70
$ -
$0.90
4;,
-
.'",,4
.- ..... es
.io
Eon:is
-
~ .J..o...L:I
m-.r.:o "T"::'I'T
3 7 I'8<of(~ Br-- ".,..
··OV
......
r.:t~ 11.~..
"".t_';
""":
"I
.:...iooo.or..:.....
~, 197,4
~
FC 1,\
~
r3.:,"::ents on account of $100 issue price to subscriber:
$1.50
:\?~:"40y.i.":.ate ir:.vest:nent ~rield from eX::~:lnge date (3/15/63) to r.:at:lrity of G·:)r:.ds·
offered. in exchange based on price
::J~
sec'.lrities e1isio1e for excl::l!lge
1:/
~pprox~ate ~inicum reinvest~ent rate for the extension period ~I -----------.",;"r:ut.eS
al=~~a!'
a't end of' table on next paGe.
3.98~
3.98~
3.97~
3.97: J
4.24'
4.24
4.33
4 • .32
J
3-1/2,%
e/ls
aL1SL63
Eligible securities
2-1/2~
Bonds
a115 16 3
3-1/a%
e/ls
3'%
Bonds
llL1SL63
2L15L64
3-1/2%
Notes
llL15iGS
3-S/acj,
Notes
2L1Si66
3~
Bonds
a/l::l5o
3-3/a1o
Bonds
llL1SL6o
FOR THE NE\l 4% BONDS OF FEBRUARY 15, 1980
Payments on account of $100
issue price:
By subscriber --------------To subscriber --------------investment yield
from exchange date (3/15;63)
to maturity of bonds offered
in exchange based on price
of securities eligible for
exchange !/ -----------------
:$
$
-
-
0.50
1.00
'"v 1.20
4.04;1,
4.03,%
4.04'fo
4.04%
4.03;"
4.03%
4.11
4.12
4.23
4.24
4.30
4.29
$
-
0.90
0.50
0.70
4.04~
4.04;i
4.09
4.10
.$
$ -
$
$0.50
0.40
ApproxL~ate
Approximate ~inimum reinvestment rate for the extension
period ~ -------------------
£I
Yield to noctaxable holder or before tax. Based or. mean of' bid and aslced prices (adjusted for
of issue price) at noon on Feb~xary 19, 1963.
~
Rate for nontaxable holier or before tax.
For explanation see paragraph 12 above.
pa~-:-:~:1ts
on
::;~,:cu::t
APPENDIX TO PARAGRAPH NO. 9
NONRECOONITION OF GAIN OR LOSS R>R FEDERAL INCOME TAX PURPOSES
Where a bond is offered by the Treasury with a payment (other than the accrued interest
adjustment) to the investor.
'
Examples:' ,
1. Assume that:
(a) The fair market value of the security offered by the Treasury on the date
the subscription is submitted is $99.00 (per $100 face value).
(b) The payment to the subscriber (discount) on account of $100 issue price
is $.50.
(c) The cost basis of the security surrendered by the subscriber 1s $99.75
(per $100 face value).
.
The sum of the fair market value of the security offered by 'the Treasury and
the payment to the subscriber is $99.00 + $.50 or $99.50. This is less than
the cost basis of the issue surrendered, therefore, no gain is recognized.
The new issue will be entered on the books of the subscriber at a cost basis
of $99.25, the cost basis of, the issue surrendered less $.50. The gain or loss
between this cost basis and the proceeds of a subsequent sale or redemption of
the new issue will be a capital gain or loss to all investors, except those to
whom the bonds are stock in trade. Under present law, if the combined time
that the security surrendered and the new security received in exchange were
held exceeds 6 months, the capital gain or loss is long·term, otherwise it is
short-term.
2. The assumptions are the same except that the cost basis on' the· books of the
subscriber, of the security surrendered is now $99.25 (per $100 face value)
instead of $99.75 in example 1.
The sum of the fair market value of the new security received in exchange by
the subscriber plus the $.50 payment (discount) is again $99.50. This exceeds
the cost basis of the security surrendered by $.25. This excess is a recognized
gain reportable for the year in which the exchange takes place. The gain is a.
capi tal gain except to those to whom the bonds are stock in trade. Under present law, if the time the security surrendered was held exceeds 6 months, the
capital gain is long-term, otherwise it. is short-term.
The subscriber will carry the new issue received in exchange at a cost basis
equal to the basis of the issue surrendered. ($99.25), less the payment ($.50),
plus the amount of the recognized gain ($.25), or ($99.25 - $.50 • $.25) $99.00.
3. The assumptions are the same as in example 1, except that the cost basis on the
books of the subscriber, of the security surrendered is $98.75 (per $100 face
value) instead of $99.75 in example 1.
The sum of the fair market value of the new issue received in exchange by the
subscriber plus the $.50 payment (discount) is still $99.50. This exceeds the
$98.75 cost basis by more than $.50. However, the amount of the gain reportable for the year of the exchange is $.50, since the amount of gain recognized
cannot exceed the amount of the payment. The nature of the recocnized gain and
its treatment is the same as in example 2.
In this case, the subscriber will enter the new security received in
on his books at the same cost basis as the security surrendered.
exc~~ge
TREASURY DEPARTMENT
Washington
February 20, 1963
A BRIEF DESCRIPTION OF THE
TREASURY'S ADVANCE REFUNDING OFFER
In its financing announcement on Wednesday, the
Treasury continued its established practice of providing
attractive opportunities for holders of Government securities
to renew their investments well in advance of the maturity of
their specific holdings.
In what is called the "pre-refunding" part of this
offering, the Treasury is giving holders of certain securities
which mature within the next year an opportunity of exchanging
their securities now at attractive interest rates for other
securities of approximately 4, 9 and 17 years in maturity_
The coupon yield on the securities maturing within the next
year which are eligible for this offering vary from 2-1/2%
to 3-1/2%.
The coupon yields on the new securities being made
available in exchange are, respectively, 3-5/8%, 3-7/8%, and
4%.
A second part of the Treasury's offering is extended
to holders of certain securities which mature in approximately
three years
These holders are being given an opportunity to
exchange their holdings now for bonds' that mature in approximately
twelve years or in seventeen years.
The issues eligible for
use in this exchange now bear coupons ranging from 3% to 3-5/8%;
they will be exchangeable into bonds that bear coupons of
3-7/8% and 4%.
o
Institutional investors will have an opportunity to
subscribe for this exchange from Monday, February 25 through
Thursday, February 28; individuals will be permitted to subscribe
during a two-week period beginning February 25 and ending Friday,
March 8_
Because there are differences in the current market
quotations for the various issues which are eligible for these
exchanges, the Treasury will, in most cases, make a small adjustment payment to subscribers on the effective date of the
exchange, that is, March 15.
The supplemental payments which
2
will be made to most subscribers by the Treasury are summarized
in an attached table. At the time of payment, a further adjustment will also be made to give effect to any interest that
has accrued on the outstanding bonds and the bonds offered in
exchange, and the effect of this upon the final payment is also
summarized in the table, which shows the net payment due to or
from the subscriber for all possible combinations of issues in
this extensive offering.
The result of these various payments to or from the
subscribers is to improve somewhat the effective yield obtainable
by subscribers over that implied by the simple difference between
coupons.
The differences in the amounts of payment reflect the
need to place all subscribers for a given new offering on a
roughly comparable footing.
A second table attached summarizes the approximate yields
that investors will wish to take into account in appraising
the attractiveness of this offering.
These yields may be
computed in two different ways, both of which are shown in an
One computation indicates the actual inaccompanying table.
vestment yield, after giving effect to the supplementary cash
payments, from March 15, 1963 to the final maturity date of
whichever issue is selected by the investor.
For example,
holders of the 2-1/2% bonds of August 1963, who take advantage
of the ""pre-refunding" opportunity to acquire the 4% bonds of
February 1980, will have a yield over the 16 years and 11 months
to the ultimate maturity of their holding of 4.04%.
An alternative calculation might be to assume that the
investor continues to receive his 2-1/2% interest until August 15,
1963, and that the actual increase in yield from holding the 4%
bond over the period up to that time is, instead, applied to what
is called the extension period; that is, the period from
On this alternative
August 15, 1963 out through February 1980.
basis of computation, the imputed "reinvestment rate" for the
extension period would be 4.10%.
In general, as the second table shows, both the investment
yields and the imputed reinvestment rates for all possible
combinations included in this exchange offering are significantly
more attractive than would be suggested by a simple comparison
between the two coupons involved in the case of each possible
exchange.
Attachments
Approx:Gn&.te
investment
yield :from
Approximate
reinvestment
3/15/63 to
extension
maturity
period
y
rate f'or
51
Prerefundings:
3-5/8~ Note, Feb. 15, ~967 •••••
3-7/8% Bond, Nov. 15, 1971 •••••
4~ Bond, Feb. 15, 1980 ••.••••..
3.65%
3·97
4.04
3.80%
15, 1963 •.•••
3-5/8% Note, Feb. 15, 1967 ••.•.
3-7/8% Bond, Nov. 15, 1971 •••..
4% Bond, Feb. 15, 1980 •.•.••..•
3.65
3·97
4.04
3.80
Nov. 15, 1963 •••••
3-5/8% Note, Feb. 15, 1967 •••••
3-7/8~ Bond, l~v. 15, 1971 •••••
4~ Bond, Feb. 15, 1980 •••••••••
3.64
3.96
3.84
4.08
4.U
3·% Bond, Feb. 15, 1964 •••••••.•
3-5/8% Note, Feb. 15, 1967 •••• •
3-7/8% Bond, Nov. 15, 1971 •••••
4% Bond, Feb. 15, 1980 •..•....•
3.63
3.96
3.87
4.11
4.12
3-1/2% Note, Nov. 15, 1965 •.•••
3-7/8%Bond, Nov. 15, 1974 •••..
4% Bond, Feb. 15, 1980 •.•.••..•
3.98
h.04
4.23
3-5/8~~ Note, Feb.
15, 1966 •••••
3-7/8% Pond, Nov. 15, 1974 •.••.
4~ Bond, Feb. 15, 1980 ..••....•
3.98
4.0!:
4.24
4.24
3% Bond, Aug. 15, 1966 •••••..••
3-7/8% Bond, Nov. 15, 1974 •••..
4i Bond, Feb. 15, 1980 ••••.••.•
3·97
4.03
4.33
h.30
i~v.
3-7/8 %Bond, Nov. 15, 1974 •••••
4% Bond, Feb. 15, 1980 •••••••••
3·97
4.03
4.32
4.29
3-1/2% C.!., Aug. 15, 1963 •.•••
2-1/2% Bond,
3-1/8%
c.r.,
A\~.
4. ()l~
4.03
4.05
4.09
4.06
4.10
"Junior" Refundings:
3-3/8% Bond,
15, 1966 ••.••
Office of-the Secretary of the Treasury
Office of Debt Ana.lysis
4.21+
FebrUary 20 J 1963
!I
Yields to nontaxable holders or befo~e tax on issues offered in exchange based on prices of
securi ties eliGible for exchange. Prices are the mean 01' bid and ask quotations (adjusted
1'01' payments on account of issue price) at noon on February 19, 1963.
sf
Rate for nontaxable holders or be1'ore tax.
----_._---_. . . . . . . . . - ...
-.'."'
..........
_------._ _----------..
ADVA~\'C~ nr:FUi\'DIi',JG
i~~~i\SUtIY D~[~l\flTr~1~NT
u.s.
Ofo'FERS TO
During lhe period of Fel" IhUy
"
to lR, 1963*
ISS1fl~
S(-,C'llI
iIi.
~:~
--_._, ..
__ ....
3·5/8% Treasury
3·7/8% Treasury
3·7/8% Treasury
4'
Treasury
(,;~IIC
With
of
.. _... dlltes
. ..- .. ---
Mar 15. P16~
May 15, 1962
Notes, Series R··1967
Bonds of 1971J Additional
Bonds of 1974 Issues
Bonds of 1980
Dec. 2, 1951
Jan. 23. 1959
~1C\~~ui Iy
feb. 15, 1967
Nov. 15, 1971
Nov. 15, 1974
Feb. IS, 1980
IN EXCHANGE FOR
Outstanding Treasury securities as Ret forth in the following tAble.
EXOIANGES TO BE MADE ON TilE BASIS OF
Par for· par in multiples of Sl,OOO for the new notes and in muhiples of $500
for the new bonds with interest adjustments as of March 15, 19fH. Bnd cash
l!Byments due from (indicated by parentheses) or pAyable to subscribers per
,100 face am,mot
._..as- ....follows:
..
-_
BYSUBSC"R"iiE'R
SECURITIES TO BE EXCHANGED
AND MATURITY DATES
-
AMOUNTS TO BE PAID TOOR
0 N ACeQUNTo'j:-ACe RUED INTEREST
ON AC.
AMOUNT
COUNT OF
_ TO
•. ' __3/111/63
'."'" _ _ _ _ _ _. NET
TO BE
PAID
PURCHASE
PAY ABLE
PAYASL.E
TO SUB.
PRICE OF
TO SUB·
BY SUB.
SCRIBER OR
SECURI TIE.! SCRIB
ER
ON
SCRIBER
ON
BY
TO BE
SECUR I TIES SECURITIES SUBSCRIBER
ISSUED
TO BE
TO BE
ISSUED
~~CH ANGED
--
FOR 3·~L8% ~j)T~lJ)£JER!;.UU~.§J
3-1/2% Ctfs., C.1963
2·112% Bonds 1963
3-118% Cth., 0- 1963
Bonds 1964
3%
8/15/63
8/15/63
11115/63
2/15/64
--.--.
$ 0.50
$0.270718 $
0.19 3370
1.035912
0.23 2044
$ 1.10
$0.270718 $1.284530 $ 0.086188
0.l9 3370 1.284530 (0.391160)
1.03 5912 1.284530 0.651382
0.232044 1.284530 (0.352486)
$ 1.50
1.70
0.90
$1.160221 $1.284530 $ 1.375691 .
0.280387 1.284530 0.695857
0.232044 1.284530 (1.052486)
1.118785 1.284530 0.734255
S0.90
0.50
0.70
0.50
1.00
1.20
(0.50)
0.40
$0.270718 $0.309392 $ 0.861326
0.19 3370 0.309392 0.383978
1.035912 0.309392 1.426520
0.232044 0.309392 0.422652
1.160221 0.309392 1.850829
0.280387 0.309392 1.170995
0.232044 0.309392 (0.577348)
1.11 8785 0.309392 1.209393
0.10
0.30
0.10
$ 0.770718
0.293370
1.335912
0.332044
FOR 3-1/8% BON.QS OF 197J
3-1/2%
2-1/2%
3-1/8%
3%
Ctfs., C.1963
Bonds 1963
Ctfs., D-1963
Bonds 1964
8/15/63
8/15/63
11/15/63
2/15/64
EOR 3·1/8% ~Q~~.S Of 1974
3-1/2% Notes, B.1965 11115/65
3-5/8% Notes, B·1966
Bonds 1966
3%
3-3/8% Bonds 1966
EQ.R 4~J!QNJlS OF
3-1/2%
2·1/2%
3-1/8%
3%
3-1/2%
3-5/8%
3%
3-3/8%
2/15/66
8/15/66
11/15/66
0.70
0.90
0.70
-
l~@
Ctfs., C·1963
8/15/63
8/15/63
Bonds 1963
Ctfs., 0.1963 11/15/63
Bonds 1964
2/15/64
Notes, 8· 1965 11/15/65
Notes, B.1966 2/15/66
8/15/66
Bonds 1966
11/15/66
Bonds 1966
ALL SUBSCRIPTIONS ACCEPTED WILL BE ALLOTTED IN FULL.
FULL INFORMATION CONCERNING TERMS OF THE EXCHANGE OFFERINGS AND TERMS OF NEW SECURITIES MAY BE OBTAINED FROM MOST
COMMERCIAL BANKS, FEDERAL RESERVE BANKS AND BRANCHES, OR
THE TREASURER OF THE UNITED STAlES, WASHINGTON 25, D.C.
------------------_ _-- ._---.•..•..
*Subscrip.tions from ALL classes t1f subscribers will be rccl'il'cd from Monday, February
2$ through Thursday, Februarr 28, 1963. /n addirion, subscription., may be /JU1i.
miited by individuals through f'riday, March 8, 1963. For ,his purpose, iiulividuals
or!' defined as natural person., in their own right.
Su bsrri1,tions placl'd in the mail bymidnil:htofthere.~pl.cli ..fl r.lo.,jng deltes., addressed
.1"\ ~·,.dl'r(J1 R",H!TlJfl 8n"~: or R",nrh IIr I" tla,. T,,.o.,u,,.r of ,h,. Unitl'd States,
l'II.~h:''';'()n 25, fl. C., ",ill be 'lCCt'I"f',l, 1"he use Qf r.·gi.Her,'d mail i.~ recommend~d
(or tht: I'rote£'tion of security holder.,.
.---.------ .. - . .
.. ---. -,~
....;;:,;..
.... --::,::::::::::::;::~'...:..'
..
'(I
;,:;;:.
--
_-
Mr. and Mrs. Stewart reside at 9322 E. Parkhill Drive,
Bethesda, Maryland.
They have a daughter, Betty Jo, 11, and
two sons, John Davis, 24, and Walter Mason, 22.
The latter is
at present stationed in Hawaii with the U. S. Marine Corps.
- 2 Mr. Stewart, a member of the American delegation to the
Administrative Radio Conference at Geneva in 1959, was primarily
Regu1ation~
responsible for the substance of the International Radio
which ~subs.e.q.uet:l~l~ made possib~e the world-wide expansion of the
.' 1..V ,'" ':
' < /; ,." '1( C. J,.M~M~L';
.,1
! {c.:.., ,"~. If
;,"1( ,. ~\..-c;.I,/'1~
/ ___ '
, . ,I
, I ' ) " r !? "
Loran-C. syste~ for both 1JI military and civilian use.' He Has iiiJil
I'
.
. I ".J..
I
~"-r~""!""f,~ H·,l
i.[t...(!{.i'~,".CI.'/ "l;l.~·t"
I
,
-;·~,.,t
i
'('v :
I',
•
I
/
i ;:-1« ~/
ma:r,r aided GOOperat:±ng countries w solve'.(.,~ornplex and difficult
"",":
problems concerning the, frequency allocations necessary for the
has coordinated the efforts of all
success of the, program)
~. >r~ tu", ~tI
countries to expand the Loran-C network" thus
.
{
Hillt~ing
J:,t);
..i;
•..
r
,'. ).
A",
I
great credit
~~. {.(tf\{
I~
to the )Coast Guard, to the United States, and to himsel~
Mr. Stewart has been associated with various other projects
of importance to the Coast Guard and has served as a -me31: 1,,,1 "allR
member of Treasury Te lecommunications Advisory Co:mni ttee.
.
~'!
~
,.
A'
\~~~~~:/ ,-"_-':C'.=~ .. ~.---="~'F':: 7'~:~:' .... ',:',-' "
_ _ --
.:.'
>
;".,(-
.•
,;1'7
I.
I,""""",
Mr., Sbt"~rr~siee¥ .aE=-~:3- ~. -~'--~riL"t:::U;~df
-.\
~
.
"\
\.
....
.. ,,", "Fr': .. 'r-"':---
SECRETARY DILLON
CO~FERS EXCEPTIONAL SERVICE AWARD
UPON JOE L. STEWART
Treasury Secretary Douglas Dillon today conferred an
y 7/'r;
I
J
.~_~ /C._lj) :;t.j~:t-/
Exceptional Service Award upon, Chief of
Frequency Management Branch for outstanding achievement
.)
r , l / '-t./}.;.
~...
during 19 years of service \vith that Btl:'re8:tt.
~ >-,
, j
.(4r>/"
I
~
,
~
with the Coast Guard
/ ' Mr. Stewart is the firs t ci vilian/ to 1>" 1>"""£89 "'~~.,:h
//
/.
aw a rd. UCE1 ztilMi
.~
In a tribute to Mr. Stewart, Secre tary Dillon said:
19-year career in the Coast Guard has been exemplary.
"His
He has
demonstrated a capacity for outstanding service and has participated in many projects of great importance to the Coast Guard.
He is wisely recognized as an expert in the field of communication
TREASURY DEPARTMENT
!
FOR IMMEDIATE RELEASE
SECRETARY DILLON CONFERS EXCEPTIONAL
SERVICE AWARD UPON JOE L. STEWART
Treasury Secretary Douglas Dillon today conferred an
Exceptional Service Award upon Joe L. Stewart, Chief of the United
States Coast Guard's Frequency Management Branch, for outstanding
achievement during 19 years of service with that organization.
In a tribute to Mr. Stewart, Secretary Dillon said: "His
19-year career in the Coast Guard has been exemplary. He has
demonstrated a capacity for outstanding service and has participated
in many projects of great importance to the Coast Guard. He is
widely recognized as an expert in the field of communications."
Mr. Stewart is the first civilian with the Coast Guard to
receive this award.
Mr. Stewart, a member of the American delegation" to the
Administrative Radio Conference at Geneva in 1959, was primarily
responsible for the substance of the International Radio Regulations
which made possible the world-wide expansion of the Loran-C
navigational system for both military and civilian use.
In citing the importance of his work, the Secretary explained
that Mr. Stewart has aided countries cooperating with the United
States in solving complex and difficult problems concerning the
radio frequency allocations necessary for the success of the Loran
program, and has coordinated the efforts of all countries to expand
the Loran-C network. This has brought great credit to the U.S.
Coast Guard, to the United States, and to himself, Secretary
Dillon said.
Mr. Stewart has been associated with various other projects
of importance to the Coast Guard and has served as a member of
Treasury Telecommunications Advisory Committee.
Mr. and Mrs. Stewart reside
Bethesda, Maryland. They have a
sons, John Davis, 24, and Walter
present stationed in Hawaii with
at 9322 East Parkhill Drive,
daughter, Betty Jo, 11, and two
Mason, 22. The latter is at
the U. S. Marine Corps.
000
D-764
TREASURY DEPARTMENT
:;'::U:.AS1f.\~ D~i~ISICl;
OJ:
GA5IJ·:EJ.{J~ YAi.~'
UlJIBJ D·E AI!'I'IDU1·;PIUG AClj.l
r':"h~
':.·rea.s·....ry "Dapartment bas d.eteJ."'ldined that cashmere yarn
froe Italy is not beinz, nor
li~~ely
to be, sold in the United
Stute.& at less thall fair value ,·:1tllln the .neanill£; of the Antid'~~p~n:
.:\..·t.
Hotic~
of the dt;tcrminution 'rill be published in
the Ii'.. doral JCGistel·.
s''he dollar vo.lue of imports of the involved merchandise
l·cceived froll. July I,
... t.",,,
{........
-~
';11:;,,,\
'-,i~" .
",""""'''"V_
V
1961,
through June 30,
1962,
was approxi-
TREASURY DEPARTMENT
FOR IMMEDIATE RELEASE
TREASURY DECISIOn ON CASHMERE YARN
UNDER TEE ANTIDUMPING ACT
The Treasury Department has determined that cashmere yarn
from Italy 1s not being, nor likely to be, sold in the United
States at
l~ss
dumping Act.
than fair value within the meaning of the AntiNotice of the determination will be published in
the Federal Register.
The dollar value of imports of the involved merchandise
received from July 1,
mately $150,000.
1961,
through June 30,
1962,
was approxi-
TREASURY DEPARTMENT
February 25,1963
FOR IHt.ll!:DIATE RELEASE
WITHHOLDING OF APPRAISEMENT ON
TITANIUM DIOXIDE
The Treasury Department is instructing customs field officers
to withhold appraisement of titanium dioxide from France 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 Connnission, "\·rhich "rould consider whether American Industry
was being injured.
Both dumping price and injury must be shown to
justif,y a finding of dumping under the law.
The complaint in this case was received on October 11, 1962.
The dollar value of imports received during 1962 was approximately
4;1,400,000.
TREASURY DEPARTMENT
February 25,1963
FOi1 nU·lliDIA1':C lli:I.£I\SE
m' APPJAISl(;HEl'JT ON
TITAIJIIJ:: DIOXIDE .
IHTBJIOLDIEG
The 'J:reasury DepartI11ent is instructin,z customs field officers
to 'Vrithhold appraisement cf titanium. dioxide from Frc.nee pendinG
0.
determination as to i-ihether this merchandise is beill8 sold in the
United states at less than fair value.
IJotice to this effect is
being published in the Federal ReGister.
Under the AntidumpinG Act, deter,nination of salcs in the United
States at less than fair value i-Iould require reference of the case to
the Tariff Connnission, ,·[hieh liQuId consider vThether American Industry
I-las being in.jured.
Both du.:,r,rpinc; pricc and injury must be sh01·m to
just ify a finding of duml')inc; under the lml.
11112 complaint in thi::; case \tas received on October ll, 1962.
The dollar valu~ of imports re~eived d'Llrinc; 1962 \las 8.ppl~oxil1lately
$1,11-00 ,000 •
rOR BLEAS" A. II •• E.~~PA.Pfo:U,
T!!!cIaz,
r.bn!17
rMftaI7 IS, 196)
26 , 196],
BILL ornJIID
fbi 'I......, DepUt_at. aDDD_ _ d 1u\ ""'IIC \Ut, UIe M . . . . for two elnes of
TnaRI7 bt.lla, . . . ...,... \e be an a4d1'loMl 1 ••• .,
bUle ..ted )ioyember 29,
1fN, &ad the ot.ber MJi.. . to be dateel ,......, la, 1"3, willa . . . offereJ on r.b...
.... opeoed at. t.M
a.••ne . . . . ell r.-..r;r 2S. ! • •ar. wre invited tor
11,)00,000,000, or \be. . . . . . ., of f2-4a7 t.Wa ... ,., Il00,000,000, or thenaboutl,
182-cIaJ bUl.. !be _\au. of t.be , _ .....s.. aft . .
a>rglJLTS OF tllAStJRl'S WIIlLI
t_
,.deNl
IA~.: 0' ACCEPTED
1.
.
Ia,.
,.....7 bMn17 Id.ll.I
-'!£1Dc lIafpf'
cacmr"lV., BIDSI
....
M..
~ld
~.
Pd.
•• ".m
iI.SlO
•
".sa)
2.1701 }/
6, pe..... of \lie _ a ' ot ,,-day bUll
, ,....... et t _ _.....f 111"'7 1tUl.
!reasury bUll
~UlU9t
1~
t
:We
2.1".
I.IIIS
99.161
".161
TEIU)~~ lPPL1J1o~D
•
,-s]
".116
rotAL
'.11__
111..-,
_,us..
•
29.
Approx. Eq y.
Af'nual rlate
H,lO~06O
1,"",Tn ,GOO
2$,111,000
21,61.',000
a,M' ,000
tor at. tJIe low price va. accepted
tor at. t.a. lMr price wall accepW
.,\e<i
•
A•
11,101,000
m,Jall,ooo
AppUed ,..
• 10,)4;;000
lS,t'n,OOO
m,"',oGO
7,)01,000
n,6I&',ooo
lO,WIa,ooo
22,0)6,000
.. ~.ooo
lh,662 ,000
2'.S16,ooo
1811.376,000
127,lah6,oOO
)Ia,lS9,ooo
20,;61,000
)2,121,000
2',159,000
l',07S,OOO
)2,121,000
66.111.000
6h.4h7 ,000
27,S1l,ooo
10,76),000
7,811.000
Acoep\ed
i
lO,J!49,OOO·
571,9b),OOO
2,)01,000
)o,u64,OOO
uS,n,.GOO
7,812,000
4,168,000
67,0)9,0(»
1~lS,OOO
7,1),000
S,ua,ooo
',6)1,000
8,S",ooo
78,771.000
TOTALS
11"S6~~,ooo
t1,)oo,lkl,OOO!l 11,207,SI"OOO
a/ lDoladea 1212,661,000 IIIDDI.,et.lt.l" w ....n •• aepMd . , \he _ . .age
JI
2.922~ }/
'0& AID AOCUl!D Bt nmuw. IIIS!afE DlltllC!l.
pa!1ed ~r.
!I
2.908'
2. 9J~'
),968,000
9,5)8,000
7,S99,000
77,6)1,QOO
~800,15),QOO
price ot 9~ ••
IDelude. 11&6,200,000 " 1 __'1'1" \allen
at. \be ...,.ge pr1~ of 96.S2J
OIl • 001lP011 18_ of , - lnat.h aDd tor t _ _ ' 5 ' - ' laweted, the r.tuna.
\he. .
wlllcl PI'OYide n,.l.cla ot 2.9l1, t •• t.be PI...,. bWe, and J.01', tor \II
bUla. xat.eat nt.e. OIl bUll an 4pOted 1a ' - - ot bank discount. with
tobe . .t.va nlat.ed \0 to_ t ... IIIowR ot ,be blUe paJ'Mle at Mturity rather tJIU
tJaa . .81\ lafte\ed aDd t.hair leac'b la aet.al ••• ow of . , . ftlated to • )6O-dI1
,.ar. 18 ooai.raa\, Tiele - ..rt1tlatee, - ' 0 , aM tIIlDd.a .... computed in t,.,..
of lJat,....n OIl t.he uo-.t; 1Dn.t.ed, Ud Nlat.e ,be a.bw of dill!; reu1niDg 1.11 aD
1DMl'eat. pe"..n period to u. aet.1IA1 . . . . . fd cIq8 1n ~ period, wittl 8.-1aDD11
e0ap01lDd1Jl& 11' . n t.baD 0_ 001lp01l period 1. lD90lYed.
...,te4
taw..
lea..,
RE:S'JLTS OF TREASURY'S WEEKLY BILL OFF:<:RING
The Treasury Department unnolIDced last evening tha.t the tende!',~ f ,')~. two series of
,'reasury bills, on6 series to be an additional issue of the bills dJ;l(,en r,Y")vember 29,
.962, a,nd the ot.her series to be dated February 28, 1963, which were (Ii ':'ed on February 19.1
jere opened at. tile Federal 11eserve Banks on February 25.. Tenders W6Y'e ;';ited for
~1,300,OOO"OOO, or thereabouts, of 92~day bills and for $800,000,000, (c,hereabouts, of
.B2-day billsu The dE:tails of the t'l-lO series are as follows:
u\NGE OF ACCEPTEr)
>?-'~1ay Treasury bl11.s
:
182--day Tr.:.easury bills
~OMPETITIVE BIDS:
~.=_..J!ta'~l.l.I'i~&. 1993
: ~_~tl,~Ll:~~~.. 29,;; }9?3 _
Approx. Equiv.. :
Appl'ox" Equiv.
Pri.ce
Annual Rate
!
Pri ce
.a..rmual Rate
....
2:833%
: -9~'~' ~-2:9<J8%99,,'(?6
High
Low
99.262
2.1:88%
98.5JJ.l
2.939%
~-....,.,..--
--:...,.,"'-~
Average
2.870%
!I
:
98~523
2.922%
Y
69 percent of the &..mount of 92-day bills bid for at the 10\;( price was accepted
6 percent of the am.ou.nt of 182-day bills bid for at the lew price was accepted
rOTAL TEND&l.S APPLIED FOP. AN,!] ACCEPTED BY FEDERAL RESERVE DrS'l'HlCTS:
~FO!_
'Astrict
30stOn
22,101,,000
~ew York
Philadelphia
Cleveland
itichmond
\tlanta
1 :I' 48'~ 711 , 000
~,.
25,271,000
21;,649,000
14,662)000
23,536,000
IB4,J76 ,000
34,159,,000
20,561,000
32}121,OOO
~hicago
?t.
Louis
~eapolis
~sas City
Dallas
pan Francisco
2'(,573,000
66
.377 000
.~ _,~~_:.J.~_.
TOTALS
$1 ~ 956 :' 09? ,000
10.
Acce£!,ed
$
~
•
12 1 101,000
921 [,411,000 :
!pElied F?r
$
J.O,349,000
921,983,000
ACEe;eted
$ 10 9 349,600
7,.301,000
571,943,000
2,)01,000
30,464,000
30~464,ooo
7,812,000
22,036,000
4,168,000
127,446,000 :
llS,919,OOO
29,159,000
.5,4J8!,OOO
19,075,000 ••
7,135,000
32,121,000
9,638,000
20,763,000
8J SJ9 , 000
~_~4l447 1.000 • _...1§., 777 ! OOQ
$1,300,141,000 ~ ,$1,207,52),000
7.,812,000
4,168,000
67 .. 039 s 000
j " :968,000
15 ~271,OOO
21:649,000
14,662,000
··•
·
7~135,ooo
·
9,538,,000
7,599,000
7728n~
0
$800 ;t 153) 000
E./
Includes $212.,661,000 rwneompetttive tenders accepted at. the average price of 99.267
Includes $46,200,000 fb.:'ncompetitive tenders accepted at the average price of 98.523
On a coupon issue of tJ).'3 same length and for' ';~he same arnount. invested, the r~tur:n on
these bills would y-)}:':-)~r.~de yields of 2 .. 93%~ .1:'(,I" the 92-·day bj~ls, and 3 C'~-7;~ for the
182-day bills
lrI1r,"::'~2St. rates on bills :;i.!."_ nuot1!d in term~3 of bank discount with
the return relat\?:Ci '<; "t,h0 face am01..U1.t ,;:,f ";/,';:' ~)il1s payab12 a~', \;J.aturity rather than
the amount. inVet3t~r1 dtlC their leng+ h :Ln ,", ,~::;;,.l. Kl)J.Jr\ber' .::if. ciaY5 :related to a ,360=day
year. In ct'ntl'<~,;:.;t. :/J.,;:d.d.ro en cer'Gl,.f'i(;<:J,\,c', :~t;:'s.i RUe. lY;;;ins are l:ompu:i:,ec. in. tA~rms
of interest on t.h:;:: ::'ii:: uli;, i:avestc:d ~ ~11d. ·C.: •• ;:,:~~ t,h~; nUi.il[;<,~ of d,9YS reminj.ng i.: an
interest pa~mle'~"!.~.""..
to- the 8.0t-uaI '::l:~'c'j; '..)1" ri.:::',',c:. ],'.£J ,." .• ~ p·er~'od ",,·t}1 sp,..··;~'1"1n,·tal
J
):!I,
compounding if Jli,)f..,;('b;,,""; (me coupon r.;,:;.>:; r<'.'3 involved"
0
~~
)-765
.l~~,.I'
"_~
~,.,
~
<...0'44,_,.
-.
;}".1.
0-
__
J.,).~..-_",~_
\..
TREASURY DEPARTMENT
February 25, 1963
FOR n'[;·1EDIATE RELEASE
EXTENSION OF SUBSCRIPTION PRIVILEGES
FOR TRUSTEES IN TREASURY ADVANCE REFUNDING
C2rtain banking and other institutions have informed the Treasury
that they will not be able to complete all of the detailed requirements necessary to file their subscriptions in the current advance
refunding offer by February 28, 1963.
in custody for trustees
They explain that they hold
(or are trustees for, in their own right)
large amounts of securities eligible for exchange in the offer.
In many cases it is necessary for holders of the issues eligible
for exchange to obtain signatures of trustees or to await decisions
by meetings of trustees or committees before the exchange can be
consurmnated.
In
vie~v
of this situation, the Treasury will permit trustees to
file with Federal Reserve Banks or Branches, or the Treasurer of
the United States, or place in the mail before midnight February 28,
1963, a letter of intent stating that they propose to enter or are
considering
sub~ission
of exchange subscriptions and giving the
reasons which account for their inability to complete their subscriptions by that date.
In such cases the subscribers will have until
the close of busin2ss March 8, 1963, to co~plete their subscriptions.
D-766
TREASURY DEPARTMENT
February 25, 1963
FOR IMl1EDIATE RELEASE
EXTENSION OF SUBSCRIPTION PRIVILEGES
FOR TRUSTEES IN TREASURY ADVANCE REFUNDING
Certain banking and other insti tutions have informed the Treasury
that they will not be able to complete all of the detailed requirements necessary to file their subscriptions in the current advance
refunding offer by February 28, 1963.
in custody for trustees
They explain that they hold
(or are trustees for, in their own right)
large amounts of securities eligible for exchange in the offer.
In many cases it is necessary for holders of the issues eligible
for exchange to obtain signatures of trustees or to await decisions
by meetings of trustees or cOlruuittees before the exchange can be
consummated.
In view of this situation, the Treasury will permit trustees to
file with Federal Reserve Banks or Branches, or the Treasurer of
the United States, or place in the mail before midnight February 28,
1963, a letter of intent stating that they propose to enter or are
considering submission of exchange subscriptions and giving the
reasons which account for their inability to complete their subscriptions by that date.
In such cases the subscribers will have until
the close of business March 8, 1963, to complete their subscriptions.
D-766
- 5 -
quantitatively in terms of savings in money or manpower, but which
materially contributed to Treasury's ability to provide more
effective service and better products at lower costs and to
furt~
improve its internal operations.
" ...
Management is everybodyts business, ..• It is hoped that
this report will further stimulate thinking and planning,
material for interchange of ideas, and give recognition to
accomplishment."
provi~
- 4 A number of procedural improvements also produced savings
during the 1962 fiscal year.
For example, a
,
."
..
'.It
"
~.~?i7ral chan~e
~~ ,1, '~:
in
rep~rting
corporation tax remittances will
save the Government about $1 million annually in interest payment~
Other matters covered in the report are analyses of Treasury
missions, workloads, and organization; records and paperwork
simplification; and improvements in financial, peremr&i and
property management.
Ji
'freiiS::Q:Py Secretary Douglas Dillorl
.~
"The success of
Treasury's ~anagement improvement program is largely due to the
aggressive leadership and support provided by you and your
.) .1
principal staff members . • •
A. Eo Weatherbee, Administrative Assistant Secretary, who
A/
r(
,
I
~:/...
annually makes th2 report~ said in a forewOrd:
"
There were
\
also many additional achievements that cannot be measured
- 3 -
installing electronic typing calculators on a nation-wide basis
for use in preparing office audit
r~ports,
previously prepared
manually, and by updating computer billing equipment in area
service
e rS
cent~.
__ Approximately $1 million additional will result from updatiI
1'1
the electronic syste;n used in the Parkersburg, West Virginia, affic
to process record5 of Series E Savings Bonds, and
fro~
further
extensions of electronic data processing systems and other
improvements to check writing operations .
. Many of tho: year's improvements
service to the
L03
Angeles
ge~eral
public.
Internatio~al
w~re
designed to improve
A new Customs entry office at the
Airport will enable importers to file
entry forms, pay duty, and receive delivery of merchandise at the
airport without visiting
th~ dow~tow~
customhouse.
The resulting
rescheduling of tours of duty by Customs officers will save
- 2 -
For examp le, agreements for cooperative exchange of tax infonnatic
were negotiated by the Internal Revenue Service with seven
G.d.di tic
states, bringing to 13 the number of states with which agreements
of this sort are In effect.
These are agreements in the area of
,
"1
tax enforcement which make possible~information and assistance
': \
;:. i
contributing
•
~ \..., t '
t ,. ;
to~tax
enforcement.
-) ,~
,
A significant part of,monetary savings came from continued
conversion of Treasury manual processes to machine methods and
~~l" e~~wtrl) e :
I
updating electronic eOl1ioment. li'nstances of this -sort -in the'
recent repo:t includeJ]
- . - An electronic console equipped with an illuminated map shov;
the location of all docked ships and patrols at Customs Enforcem2nt Officer Headquarters in New York.
Dispatcher calls are
recorded on reusable magnetic tapes which make hand logging
unnecessary.
TREASURY M~AGEMENT REPORT CITES
VALUE OF EMPLOYEE SUGGESTIONS
Savings resulting from
manage~ent
improvements within the
Treasury D2partment during the last fiscal year amounted to
"'-('AC
~~,..It-I.:,~
$12.7 million, according to the Treasury's
_ l
~
manage men t
improvement report made public today.
The improvements consisted principally of better use of
manpower and equipment, and in modernization of work techniques.
About $1.7 million of the total savings carne as a direct
result of employee suggestions, one of which alone accounted for
/..-
a
e
SaVing~
$667,000.
It involved using certain computer and
automatic techniques to replace hand processing in the preparation
of tax audit reports.
The report, \vhich takes the form of a 27 -page pamphlet,
entitled "Progress in Management Improvement", emphasized the
}
improvement of coordination and cooperation among Treasury bureaus
and \vith other
()~
Departments and other levels of government.
TREASURY DEPARTMENT
-•
February 26, 1963
-FOR
IMMEDIATE RELEASE
TREASURY MANAGEMENT REPORT
CITES VALUE OF EMPLOYEE SUGGESTIONS
Annual savings resulting from management improvements within
the Treasury Department during the las t fiscal year amounted to
$12.7 million, according to the Treasury's yearly management
improvement report made public tOday.
The improvements consisted principally of better use of manpower
and equipment, and in modernization of work techniques.
About $1.7 miilion of the total savings came as a direct result
of employee suggestions, one of which alone accounted for a saving
of $667,000. It involved using certain computer and automatic
techniques to replace hand processing in the preparation of tax
audit reports.
The report, which takes the form of a 27-page pamphlet,
entitled, "Progress in Management Improvement", emphas ized the
improvement of coordination and cooperation among Treasury
bureaus and with other Departments and other levels of government.
ror example, agreements for cooperative exchange of tax information
~ere negotiated b'Y the Internal Revenue Service with seven states,
bringing to 13 the number of states with which agrEements of
this sort are in effect. These are agreements which make possible
axchange of information and assistance contributing to better
tax enforcemen t .
A significant part of the monetary savings came from continued
of Treasury manual processes to machine methods and
lpdating electronic equipment. For example:
~onversion
-- An electronic console equipped with an illuminated
map shows the location of all docked ships and patrols at
Customs Enforcement Officer Headquarters in New York.
Dispatcher calls are recorded on re-usable magnetic tapes
which make hand logging unnecessary.
0-767
- 2 -
-- The Internal Revenue Service will save almost
$1 million by installing electronic typing calculators
on a nation-wide basis for use in preparing office
audi t reports, previous ly prepared manua lly, and by
updating computer bi 11 ing equ i pment in areCl service
cen ters.
-- Approximately $1 million additional savings will
result from updating the electronic system used in the
Parkersburg, West Virginia, office to process records
of Series E Savings Bonds, and from further extensions
of electronic data processing systems and other improvements to check writing operations.
Many of the year's improvements were designed to improve service
to the general public, A new Customs entry office at the Los Angeles
International Airport will enable importers to file entry forms,
pay duty, and receive delivery of merchandise at the airport without
visiting the downtown customhouse. The resulting rescheduling of
tours of duty by Customs officers will save $50,000 a year to
airlines in overtime charges.
.
A number of procedural improvements also produced savings
during the 1962 fiscal year. For example, a change in procedure
to minimize delays in reporting corporation tax remittances will
save the Government about $1 million annually in interest payments.
Other matters covered in the report are analyses of Treasury
missions, workloads, and organizations; records and paperwork
simplification; and improvements in financial, personnel and
proper ty managemen t .
Secretary Douglas Dillon told heads of Treasury bureaus:
liThe success of Treasury's management improvement program is large ly
due to the aggressive leadership and support provided by you and
your principal staff members .. ,"
A. E. Weatherbee, Administrative Assistant Secretary, who
annually makes the report to the Secretary said in a foreword:
It ••• There were also many additional achievements that cannot be
measured quantitatively in terms of savings in money or manpower,
but which materially contributed to Treasury's ability to provide
more effective service and better products at lower costs and to
further improve its internal operations.
" ..• Management is everybody's business, ... It is hoped that thi!
report will further stimulate thinking and planning, provide material
for interchange of ideas, and give recognition to accompl ishment."
000
TREASURY DEPARTMENT
Washington
FOR RELEASE ON DELIVERY
REMARKS OF THE HONORABLE HENRY H. FOWLER,
UNDER SECRETARY OF THE TREASURY, AT THE
FEDERAL TAX CONFERENCE OF THE ARKANSAS
STATE CHAMBER OF COMMERCE AND THE
ASSOCIATED INDUSTRIES OF ARKANSAS, INC.,
HOTEL MARION, LITTLE ROCK, ARKANSAS,
WEDNESDAY, FEBRUARY 27, 1963, 12:15 P.M.
CST
THE PRESIDENT'S TAX AND EXPENDITURE CONTROL PROGRAM
KEY TO ECONOMIC POLICY IN THE SIXTIES
This Federal Tax Conference of the Arkansas State Chamber of
Commerce and the Associated Industries of Arkansas is a particularly
appropriate place to discuss the leading issue of the day -whether the Congress should substantially revise our Federal tax
sys tern in 1963.
For the country is fortunate in having a representative of this
area as Chairman of the Ways and Means Committee of the House of
Representatives, the body given the Constitutional authority to
originate revenue legislation. In Wilbur Mills there is a happy
conjunction of unexcelled abilities, knowledge, experience in the
field of tax legislation with the highest responsibility and
dedication to sound principles of public finance.
He and his colleagues are now examining the recent proposals
by President Kennedy which may mark a turning point in the State
of the Union and provide the key to economic policy in the Sixties.
After at least five years of slow growth, substantial budgetary
deficits, idle manpower and capacity, inadequate demand and
investment and a serious imbalance in our international payments -the question presented is are we to stimulate demand and lighten
the repressive weight of Federal taxation and high tax rates on our
economy or maintain the status quo.
The President's program has two prongs: First, the prompt
enactment of a revenue law providing a substantial net reduction of
Federal taxes, through a meaningful adjustment downward of tax riltes,
from top to bottom, on individual and corporate income, and;
- 2 -
Second, the adoption and firm adherence by the Executive and
Legislative branches to the new principle of expenditure control
that, as the tax cut becomes effective and the economy expands in
response, a substantial part of the revenue increases must go toward
eliminating budgetary deficits.
The key element in the Administration's fiscal policy for the
years immediately ahead is a basic restructuring of our tax system,
a restructuring to be achieved mainly through the single most
important tax reform -- reduced rates -- and designed to increase
incentives to investment, risk-taking, creative effort and initiative
and to release private purchasing power.
But, there is full
recognition that, if the tax program is to attain its objective, it
must be carried forward as a part of a sound and consistent overall
financial program -- one that recognizes both our internal and
external needs -- that protects us against any danger of new
inflationary pressures. An important component of such a program
now conjoined to the debt management and monetary policies of the
Treasury and the Federal Reserve Board, is the clear expenditure
policy enunciated by the President -- increases in total Federal
expenditures should be held to a rate substantially below the rate
of increase- in revenues. This pol icy will require the maintenance
of a stringent budgetary climate in an expanding economy.
The tax program, with the related policies of expenditure
control, debt management, and monetary affairs, seeks to establish
a financial environment suitable for the Sixties, so that we can
take full advantage of the gathering forces for economic progress
both at ho~e and abroad.
And the tax program can be a key to
resolving the interlocking goals of domestic growth and external
stability that are inseparable from one another in the open,
competitive environment in which we and our trading partners now
live.
There is very general agreement throughout the country and,
even, among foreign observers in central banks and ministries of
finance that our economy is in need of a stimulus to demand. There
is also very general agreement that the long-term economic health
and growth of the nation would be served by a revised tax structure
featuring a lower scale of rates. However, many, in the United
States particularly, question whether the adoption of any tax
:eduction program in the year 1963 would be fiscally responsible
~n the context of the current and projected budgetary deficits.
- 3 -
A great deal of the hue and cry that accompanies any major
revenue legislation will not reflect the underlying economic
issues; it will be little more than a selfish scramble between
classes of taxpayers as to who will receive the lion's share of
lower tax liability. But, perhaps, the overriding consideration at
this juncture of our national life goes beyond individual equity
and is concerned with the design of a tax system and related
economic policies that are best for the country and responsive to
our current national needs -- full employment and utilizatioh of
existing resources, a more rapid rate of economic growth with
increased and more efficient capacity and manpower, an equilibrium
in our balance of international payments, price stability, a
breakaway from a persistent pattern of budget deficits, and a more
dynamic economy fully capable of discharging its responsibilities
in the Free World and meeting the needs of our citizens.
Those who are concerned with this overriding economic question
are beginning to react to the President's proposals and their
reaction does not follow any surprising pattern.
There have been loud cries from some that the tax reduction
proposed is, "too little and too late", and that the increased scale
of.Federal expenditures projected in the 1964 budget falls far
short of meeting national needs both in defense ahd Federal
services at home. This group is little concerned with the magnitude
of any ensuing budget deficits or their impact on the financial
climate and confidence in our fiscal affairs, at home or abroad.
On the other hand, there are those who would abandon any tax
program this year and concentrate all energies on the annual effort
to reduce the total spending under the proposed budget.
There are still others who would reduce taxes only after the
annual appropriation process is completed and then in amounts
roughly equal to the amounts carved out of the President's budget.
I doubt that there are many here who advocate greatly increased
deficits. Experience has taught me that those who will accept no
tax reduction until the budget is balanced are not open to
persuasion. Hence, these comments are addressed to those who would
like to see the economy grow faster and believe that reduced taxes
and tax rates would contribute to that end but are concerned with
the fiscal responsibility of the programs proposed or adopted.
_. 4 -
Indeed, th~ fundamental threshold issue is the fiscal one -whether the tax revision program if adopted in association with
related policies of expenditure control, debt management and monetary
affairs, provides a better financial framework to cope with the
economic problems of the 1960's than the patterns of the last
decade.
Accordingly, I wi 11 attempt to review with you the rationale
of the President's proposal in terms of fiscal responsibility,
omitting any discussion of the detail, form and substance of the
specific features of the tax program.
I.
The Fiscal Need for the Tax Program.
In recent years it has become increasingly clear that our tax
system exerts too heavy a drag on private purchasing power,
profits, employment and incentives. This should come as no surprise
in view of the fact that the existing structure of high tax rates -repressive at every level and type of income -- was fastened on the
econ:::>my to hold back \-Jar and postwar inflation. Designed to hold
back consu~er demand, initiative and investment, it now checks
growth. It discourages extra effort and risk. Many of the
"loopholes" or "breathing vents", depending upon the user, distort
the use of labor and capital, making individual and corporate action
unduly responsive to tax considerations rather than market
opportunities. The resulting structure invites recurrent recessions,
depresses our Federal revenues, and contributes to chronic budget
deficits.
Recent recoveries have fallen into a pattern of failing to
reach a satisfactory rate of utilization of resources and economic
growth, much less sustain the desired pace over appreciable
periods. This has not been true of the modern contemporary economies
of Western Europe and Japan. Indeed, unlike those economies, before
reaching satisfactory levels of growth, our expansions tend to
lapse into another recession leaving behind an ever increasing
residue of unemployment, lagging growth rates, and mounting national
debt.
To be sure our recent moderate economic expansion, which has
continued through 1962 contrary to some fears, seems likely to
extend through 1963. Still, the fact that output and employment
have remained well below our potential for five years poses a
perplexing challEnge to the American people.
- 5 -
After 60 months of unemployment in excess of five percent,
save for one month, the new year finds unE:~mployment running at
5.8 percent. Although unemployment has been significantly reduced
from its beginning 1961 rate of 6.7 percent, there are still well
in excess of four million people unemployed on a seasonally adjusted
basis.
And yet, despite the fact that one and one-half million new
jobs have been created in the past two years, a total of 26 million
young people aged 14 to 24 will enter the labor force in the decade
of the Sixties, a net increase in this age group of 6 million.
Jobs must be found for them in addition to the millions whose
current activities became obsolete because of automation or
technological progress.
Output is running $30 to $40 billion below its potential,
despite the gratifying recovery that has added more than $60 billion
to the annual rate of Gross National Product in the last two years.
Our econo:ny could easily generate $7 to $8 billion more pr.ofits at
more adequate rates of capacity use.
Our growth rate of 2.7 percent from early 1955 to the present
compares unfavorably with regular rates in Western European
countries of 4, 5 and 6 percent, or our own earlier 4 percent trend,
even though our rate from 1960 to 1962 has been somewhat higher than
the trend since 1955.
These differences in percentages sound insignificant, bu.t their
cumulative consequences are tremendous. A sustained rate of growth
at 4 percent instead of 3 percent would mean that the economy would
produce over the next ten years as a whole, in today's prices, almost
$400 billion more of goods and services, with all that this would
mean to family inco~es, wages, profits, and governmental revenues.
Our unfavorable balance of payments for 1962 remained somewhat
in excess of $2 billion. While representing a considerable
improvement over the $3-1/2 to $4 billion annual imbalance that
characterized the years 1958-1960, this situation is still a
challenge that must be met if our shared responsibilities for
Free World security, development and a trade and payments system
based on a sound dollar are to be adequately discharged.
There have been deficits in the administrative budget in all
save one of the last five years, ranging down from the $12.4
billion deficit of 1959, resulting primarily from an unanticipated
recession, and the estimated $8.8 billion deficit in fiscal 1963,
resulting from a failure of the economy to approach its potential.
- 6 -
In the past sixteen years four recessions have arrested growth
in the U. S. economy -- in a period when the economies of other
major industrial countries in the West have moved steadily ahead
with only an occasional pause. Approximately fourteen quarterly
periods, or nearly 22 percent of the total, have been periods of
recession. The economy has spent a total of seven years (out of
the sixteen) regaining previous peaks of industrial production.
These are some of the facts that have joined every major
segment of our economy in a consensus that a mild prosperity is
less than we require and less than we can accept. The consensus
is equally strong that a permanent lowering in tax rates involving
a substantial net tax reduction will provide both new incentives
and increased purchasing power, thereby opening a potent and
appropriate path to an increasing rate of economic activity.
Why was the tax program chosen as the most appropriate tool
under the circumstances to meet the problem of slow growth that
holds an answer to so many facets of our economic and financial
problem?
It was. because the President concluded that the most direct
and significant kind of government action to aid economic growth
is to make possible an increase in private consumption and investment
demand by cutting the fetters which hold back private spending.
Growth itself could have been achieved by a massive increase
in Federal spending well beyond the limits of the 1964 budget.
But the President decided against that course because he felt that
"In today's setting private consumers, employers and investors
should be given a full opportunity first." He felt that in today's
circumstances it is desirable to seek expansion through our free
market processes by placing increased spending power in the hands
of private consumers and investors and offering more incentive to
private investment initiative.
There was another alternative -- the increased use of credit
and monetary tools in an attempt to provide still lower interest
rates and substantially increased supplies of money and credit.
But, as the President pointed out in his address to the Economic
Club of New York in December: "Our balance of payments situation
today places limits on our use of those tools for expansion,"
So it was determined that the most desirable and feasible polie:
to meet the problem of slow growth was to expand demand and unleash
investment incentives through a program whose main thrust is net
tax reduction through meaningful tax rate reductions coupled with t
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- 7 -
II.
Some Fiscal Aspects of the Tax Program
By now the outlines of the President's tax program are generally
familiar to all despite a rather vast amount of confusion on some
of its specific details. The main feature of the program is the
enactment this year, in a single comprehensive bill, of a "top to
bottom" reduc tion, in stages, of rates of tax on capi tal gains,
individual and corporate income. Several structural changes are
designed to rectify special hardships from taxes on the very poor,
the elderly, and small business corporations having gross incomes
of less than $25,000 per year.
Individual income tax rates would be cut in three stages, from
their present range of 20 to 91 percent to a range of 14 to 65
percent. Although these staged cuts would be in three calendar
years, they would become effective in the l8-month period beginning
July 1, 1963 through January 1, 1965 -- the tenure of the present
Congress.
The structural changes in the individual income tax would
become eff~ctive on January 1, 1964. Contrary to some opinion, the
combined effect of structural reform and rate reduction would be to
reduce substantially the personal tax liabilities of taxpayers in
all income brackets. Well over 99 percent of all taxpayers will
get reductions, most of them substantial, through the enactment of
the President's program.
For all groups of individual taxpayers combined the overall
reduction would be 18 percent. For the few exceptional cases who
may experience an increase in tax liability in anyone year -mostly those with tax deductions in excess of 50 percent of their
gross income -- it should be remembered that they are not likely to
be in such a position year after year. The resulting tax system
with its substantially lower rate scale will give more reward for
effort. The effect of lower top rates for each taxpayer would be
to increase effort and risk-taking; the market, rather than tax
consequences, would be the prime determinant of economic decisions;
and the door to substantial increases in net disposable income
after taxes -- the final test -- will be opened more widely.
The resulting cut in the individual tax load, amounting to over
$8 billion, can be expected to add directly to purchasing power in
consumer markets and savings for investment, with their m'lltiplier
and accelerator effects. Added to this direct effect is a further
increment to consumer income to be expected from reductions in
corporate taxes. Finally, there are important indirect effects on
- 8 -
demand from increased consumer and investment spending. This is
because the rising output and employment to meet new private demands
generate new incomes which are in turn available to be spent or
saved and invested. The stimulus to consumer expenditures that is
engendered by the tax cut thus cumulates throughout a broad range
of the economy, setting in motion forces of expansion that otherwise
remain inert. Moreover, the release of f~nds to consumers will
generate new incentives also for investment spending, and production
of new machines and the building of new factories, offices, stores,
and aparm1ents will add further to consumer incomes in the same way
as the production of consumer goods.
The second major goal of the tax program is to provide
additional direct incentives for productive investment that will
increase profit after taxes. The first step, already in effect, is
the 7 percent tax credit for business spending on major kinds of
equipment, passed last year, and the liberalization in Treasury
depreciation rules to reflect present day conditions. The second
step is to reduce corporate tax rates from 52 to 47 percent,
beginning in 1963, with a drop fro~m 30 to 22 percent in the rate on
the first $25,000 of corporate income. The combined effect of these
two steps ~epresents reductions in corporate tax liabilities of
$4.5 billion a year.
Both the investment tax credit passed last year and the proposed
new tax program are especially designed, from a structural standpoint,
to aid small business. Under this year's proposal) in the case of
corporations, for example, those with taxable incomes of $25,000 or le~
would receive immediate tax cuts of 26.7 p2rcent. For sale proprietorships and partnerships, the proposed cuts in individual tax rates
would give similarly advantageous treatment to smaller unincorporated
enterprises, thus providing incentive for increased investment both
in and by small business.
The resulting increase in return on investment after taxes, as
Nell as lower individual rates on incone earned by the millions of
self-employed and unincorporated businesses, should bring many
1itherto marginal investment opportunities into an attractive range,
)articu~arly as increasi?g dem~nd moves up volume and opportunity.
~here w~ll be the added ~ncent~ve to assure maximum profits on
Lncreas~ng volume by modernization of high cost plant or increasing
lr providing new capacity.
- 9 The third part of the President's tax program would revise the
t~ treatment of capital gains and losses.
It is designed to
provide a freer and fuller flow of capital by increasing the mobility
of investment funds and the liquidity in capital markets, as well as
providing a higher net return from increased volume. The percentage
of long-term capital gains included in taxable income of individuals
would be reduced from the present 50 percent of the gain to 30
percent, resulting in capital gains taxes rangi.ng from 4.2 percent
to a maximum of 19.5 percent, compared with an existing range of
10 to 25 percent. The alternative rate for capital gains of
corporations would be reduced from the present 22 percent to
correspond to the proposed reduced corporate normal tax rate.
In surrrrnary, the central thrust of the proposed tax program is
the substantial reduction in rates on individual and corporate income
and capital gains at all levels -- reversing a trend of over thirty
years which has wi tnessed rates moving upward in war and in peace.
The total revenue loss of these tax losing measures would be
approximately $14.4 billion, with the rate reduction cost.i.ng $13.6
billion per annum when fully effective in 1965, and the hardship
rectificati.on approximate ly $790 mill ion. Other s true tural
changes -- broadening the base of taxation, eliminating or lessening
of certain special privileges -- would regain approximately $4.1
billion of the revenue cost of the reduction, leaving a net revenue
cost of the entire program at $10.3 billion per year.
Perhaps the best evidence of the fiscal responsibility inherent
in this program is the way it is designed· to achieve its ultimate
objective of net tax reduction and reduced rates from top to bottom
with the minimum impact on revenues and resulting deficits in any
given year.
There are at least three built-in features to the tax progran
designed to make it fiscally responsible: first, phasing or spacing
O'Jt the rate cuts over three calendar years instead of concentrating
them in a single year; second, coupling the substantial rate
reductions with selected structural changes which will broaden the
tax base and offset the revenue loss by $4.1 billion; third,
offsetting the loss of revenues at the outset by $1-1/2 billion a
year, without any change in tax liabilities, by shifting the tax
payments of large corporations to a more current time schedule.
This combined program should incr-ease the rate of economic
activity and, in time, result, as in the 1954 tax program, in a
feedback of the revenues lost to a position of still higher Federal
revenues.
- 10 The three stage approach to tax reduction in a single bill in
a single Congress has many fiscal advantages. The impact of the
reductions on revenue will be minimized and inflationary pressures
avoided; yet, business planners in particular may feel the incentive
that comes from foreknowledge of lower rates to come. Revenue
losses involved in the second and third stages may be replenished
somewhat by the increases or feedback resulting from the first stage.
The fiscal advantage of the so-called structural reforms that
broaden the tax base and bring in revenue offsetting between onethird and one-quarter of the losses involved in rate reduction is
at least as important as their other merits in terms of equity or
tax policy.
III.
Toward Fiscal Balance -- Coupling Tax
Reduction with Expenditure Control
The primary reservation of those who favor tax reduction as a
stimulus to the economy or the removal of an impediment to growth,
but insist on "fiscal responsibility", is that it would add to an
already projected budget deficit in fiscal 1964, following existing
deficits in all but one of the last five years.
It is estimated that the President's tax proposals will add
$?7 billion to a projected $9.2 billion deficit for fiscal 1964
without the tax program. This takes into account the feedback in
additional revenues resulting from the first phase of tax reduction
and the offset of the initial speed-up in corporate tax collection.
Estimates for subsequent years depend upon how quickly the tax
program and the private expansionary forces bring a more rapid rate
of economic growth.
Many of us, and I would certainly include myself in that group,
would have greatly preferred to push for a tax program reducing
rates involving substantial net tax reduction, with its drain on the
budget, against the background of a balanced budget or a surplus,
rather than the very substantial budgetary deficit.
So would the President, who stated in December:
"When I announced in April of 1961 that this
kind of comprehensive tax reform would follow the
bill enacted this year, I had hoped to present it
in the atmosphere of a balanced budget."
- 11 -
But, as he pointed out, it has been necessary -- for our
national security -- to augment sharply our nuclear and conventional
armed forces, step up our efforts in space, and meet the cost of
servicing a national debt that has grown larger as a result of these
imperatives. The failure of the economy to approach its full
potential has meant that revenues did not keep pace with these
increased needs -- defense, space and interest on the debt -- which
have accounted for nearly 73 percent of the total expenditure
increases which have occurred in this Administration.
Only in the field of defense, space and interest has the
current administration increased expenditures substantially beyond
the previously established pattern.
The increase in administrative budget expenditures for the
three fiscal years 1961-1964 amounts to $17.3 billion, of which
$12.6 billion represents increases in defense, space and interest
while $4.7 billion represents increases in all the remaining
programs. In the three fiscal years preceding (1958-1961),
eliminating in fiscal 1961 all increases attributable to this
Administration, there was a total increase in administrative budget
expenditures of $8.0 billion, of which $4.3 billion went to defense,
space and interest and $3.7 billion to remaining programs. Thus,
the three-year increase of $4.7 billion in the domestic civilian
sector in 1961-64 exceeded that of the 1958-61 increase attributable
to the prior administration by less than $1 billion.
The hard fact of life in this era of the cold war and continued
threat of Communist aggression -- which, who can minimize after
Cuba, India, Vietnam, Laos and Berlin -- is that the price of going
forward this year with tax reduction in the context of a balanced
budget will be a very substantial reduction in the defense and
space programs. Those programs, together with interest, are
responsible for $70 billion out of the estimated $98.8 billion in
the 1964 budget which has a $11.9 billion deficit.
But if a tax program of substantial rate reduction to spur
growth is put off until the nation has a balanced budget or a
surplus, it may be a very long time.
At best, if the tax brake on our econo~y is not released, the
chances are the slack will remain, Federal revenues will lag, and
budget deficits will persist. Continued slow growth will not
generate the revenue needed at current tax rates.
- 12 -
Indeed, t l ) vait Lln- d bciL1nced budget t:o enact the Prcsidl:nt's
tax proposzds might cc costlv Cind self--clcfe<3ting in tenns of
deficits dnd fiscal responsibility. A recession in 196), ur 1964,
or 1965 could produce a far larger deficit, '\vi.thout 3. tax cut, th'ln
any estimated addition attributable to the tax program. Tn 1959,
for example, a planned surplus became a record deficit of $12.4
billion, largely because of economic recession. As long as the
nation has slack markets for goods and services, large numbers of
workers without jobs, and idle capacity ove~hanging and curbing
investment, the threat of sliding into an unanticipated recession
remains.
A phased tax reduction p:;:'ogram, involving net tax reduction
and rate cuts over a three-year period, is as good an insurance
policy against recession as the nation could take out, entering
as we are a period of ever greater cyclical risk with an expansion
of nearly two years behind us.
Moreover, given an accompanying policy of expenditure control,
the tax program would seem to be tl. . e most fiscally responsible
course to fo 11m·, . For, onct2 the: tax br ake-: is re leased, the base of
taxable income, wages and profits should gro\;J at an even faster
rate than before -- and revenues should soon substantially surpass
their pretax cut level, or eventualJy the level they would have
reached on a slOl.17 grov7tn pattern, or even sooner, the level they woulc
reach in event of an intervening recession.
Certai_nly it is not tl1!? purpose of tb2 tz-:x program to create
a deficlt -- but ;:() inCr(~:13:':C' ~_r1\T(::~t"",~(>:-:t, demand, entpJoyrllent, and
the prospects for a b<1-~il~--k0d '_)J;igct. Th~s is rlOt pure theory, as
some assert.
In Ollr last majc:c pe'1Ccri1.11e [ax reduction) under the
1954 tax progrmn, taxes were red~ced $7.4 billion, but by the
fiscal year 1956 budget reccipt~ had artained a level of $3.5 billioo
more than had heen realized in the year prior to the tax re~uction.
prug:::.-am, ~v'hich inchldes d
substantial net tax red:Jction, tbe Treasury does not rush oue to
embrace a ccntin\lir.~ ~~E:ries !)~ rlefic}Js. '. .7e accept the additional
slice of deficits that are a consequence of c0e tax program very
reluctantly -- in the convictior:l that this program is the course
best design2d to prOTI1Dte a c.;ntirtued steudy, and increased rate
of economic advance aT,-(: [he :-:l.~':Csl route to ba.lanced budgets and
surpluses consL~(ent \,<th nat LYClCl]_ security ay-~d leadership in space.
By advocating
d
tax
rcvis~Dn
i
- 13 It is because the Presid~nt, while refusing to postpone his
tax program or cut into essential national security and space
programs, has coupled a policy of expenditure control to his tax
program, and that policy is feasible ,practicable and consistent
with the national interest -- and the Director of the Budget and
his staff are executing that policy with the cooperation of the
appropriate Executive heads. And it appears that the members of
Congress are generally willing to cooperate in that endeavor.
Certainly the increased revenues that will flow from a stronger
faster, growing economy will not bring balanced budgets or surpluses
unless both the Executive and the Congress practice expenditure
control.
That is why the President directed that in his 1964
administrative budget the overall total of proposed outlavs for
programs other than defense, space and interest charges be less than
ilie 1963 levels. This is quite a feat in practicing economy, in
view of the fact that this sector of the budget had risen at an
nerage annual rate of 7.5 percent during the last nine ye~rs. It
is highlighted by the fact that increasing costs and population have
caused Stat~ and local expenditures to increase at an annual rate
of.9 percent in recent years and further increases are projected.
But a one-year effort is not enough.
The need for a continuing, practical approach to expenditure
control, consistent with national needs, caused the President, in
his Budget Hessage, to provide a basic policy instruction which
will guide the Budget Bureau and the agencies of government in the
development of future expenditure plans. He said:
" . . . the prospect of expanding economic
activity and rising Federal revenues in the
years ahead does not mean that Federal outlays
should rise in proportion to such revenue
increases .. As the tax cut becomes fully
effective and the economy climbs tOvJards full
employment, a substantial part of the revenue
increases must go toward eliminating the
transitional deficit."
This policy will require the maintenance of a stringent budgetary
climate.
- 14 It is not the function of the Treasury Department to propose
the government's budget, that being the responsibility of the
President himself, with the aid of the Bureau of the Budget. However ,
the important interlock between the tax program and expenditure
control suggests that those concerned with the fiscal responsibility
of the tax program will wish to appraise the 1964 budget and the
outlook for future expenditures.
They will be properly interested in new obligational quthority,
the character of the budgeting for defense and space for fiscal
1964 which, together with interest, accounted for $4.5 billion of
increase -- the total increase -- in the administrative bu.dget over
1963 levels, and future prospects for a lesser rate of increases
in expenditures than that which has characterized recent years.
In the budget process last year reductions of about $6 billion
were made in the formal requests of the agencies for new obligational
authority.
This amounted to an $8 billion reduction from their
earlier estimates, which had been made before they took a second
look to screen o~t all but what each agency head thought were the
most compelling proposals.
In part, it was possible to accomplish
these reduc.tions by providing the agencies in Juge and .July with
target figures and insisting that they set the relative priorities
of their various proposals when such proposals exceeded the targets.
The cuts, which in the judgment of experienced analysts were heavy
and restrictive, were accomplished through stretch outs, reductions,
eliminations and cut-backs in nearly all agencies of the government.
Although proposed defense outlays in fiscal 1964 are some
$2.4 billion above outlays in 1963, many billions of dollars in
proposed programs were eliminated because che President and the
Secretary of Defense were convinced that their benefits in terms of
a stronger defense did not warrant their costs. Moreover,
additional billions were saved by the searching for economies in
existing programs and procurement practices. National security in
the modern world cannot be bought cheaply and it is too precious to
risk by a bargain basement approach or by an arbitrary budget
ceiling.
Nevertheless, military spending has no immunity to
searching examination as to needs, costs and alternatives.
Improvements in the Defense Department supply and logistics program, alone,
will result in savings of $3-1/2 billion in 1965, an amount that will
pay the entire cost of the President's legislative program to this
Congress.
Inventory reforms, impro'Jements in maintenance procedures,
elimination of unneeded activities and the closing of unnecessary
installations yielded a 1964 budget saving of about three quarters
of a billion dollars, so that the rise in defense effectiveness is
much greater than the increase in expenditures.
- 15 Our national commitment to be able to use the space environment
at least as well as any other nation has resulted in rapidly rising
outlays for space programs in recent years. Even so, space
expenditures in 1964 carry the mark of a tight budget, and while
sufficient funds were provided to support the schedule of a lunar landing this decade, substantial reductions were made in other proposals
advanced by the Space Agency. Moreover, at the President's direction
a detailed and coordinated review of the space programs of NASA,
the Department of Defense, and AEC has been carried out, laying the
basis for coordinating our space effort, eliminating duplications,
and achieving economies of operation.
1964 expenditures for programs other than defense, space and
interest, have been held slightly below 1963. This result was not
achieved by an across-the-board, "standstill" order. Such an order
would have been the very negation of the budgetary process. Instead,
the 1964 budget responds to the challenge of the unresolved problems
of the 1960's and makes room for some new and expanded programs,
where the need is most urgent, by providing for reductions elsewhere.
This balance emphasizes the President's determina.tion to minimize
the impact of his tax proposal on the size of the deficit and at the
same time to expand moderately and selectively those activities
which are most essential to the progress and well being of the nation.
The increases in various programs, which have particular importance
for the achievement of a healthy, growing economy -- education,
scientific research, and manpower retraining, for example -- together
with the tax proposals, form part of the overall program to invigorate
our national life and promote economic growth. Other expenditure
increases arise from program commitments made in earlier years, such
as the urban renewal program. In still other cases, the increases
directly result from our rising population and increasing standard
of living.
A consideration of the outlook for future expenditures shows
the President's policy of holding the rise in total expenditures
to a rate substantially below the rate of increase in revenues to be
a practical objective consistent with the national interest. While
we should expect increases in expenditures for some government
programs in the years ahead -- mechanical projections of expenditures
are unrealistic since they take no account of some of the specific
factors which influence the trend of expenditures. To achieve
expenditure control, however, will require a continuing reexamination
and justification of all expenditure programs.
- 16 Barring an unexpected worsening of the cold war situation, there
should be a declining trend in the rate of increase of expenditures
for national defense and space which, together with interest, have
accounted for nearly 73 percent of the total expenditure increases
under this Administration.
There are important reasons to expect that there will be a
slow-down in the rise of defense expenditures. We are reaching a
new plateau of readiness in both our strategic and limited war
capability. While expenditures will continue to rise in some
areas, such as research, these increases will be balanced by
reduction in other areas and by other savings.
The result will be
a sharply increased defense effectiveness per dollar of outlay.
While another sharp increase in space expenditures will occur
in 1965, this increase will be less than 1964.
Interest payments
can also be expected to rise somewhat as a result of the transitory
deficits on our way to a balanced budget.
Foreign economic
assistance expenditures are under intensive study. While it would
be premature to speculate on the likely trend of these expenditures,
several countries have already passed the critical stage in their
progression to self-sustaining growth and should soon be able to
move ahead without further aid.
Expenditures in other areas -- broadly the "domestic"
sector -- will be affected by a large number of pluses and minuses.
It will be a clear responsibility to find enough minuses to offset
the pluses resulting from the need to carry out, at an effective
level, programs essential to the nation's progress and well-being.
The funds needed to finance these programs sho~ld be found in
large part through four major types of savings:
(1)
The substitution of private for public credit.
(2)
Reduction in expenditure in existing programs
whose relative urgency has diminished with
changing times and pertinence.
(3)
The extension of the principle of user charges.
(4)
Intensive emphasis on efficiency and cost
reductions throughout the government.
A word should be added concerning the first two types of
savings.
- 17 The 1964 budget reflects economies in the use of Federal funds
through the substitution of private for public credit in the FHA,
new rural hous ing, and Export- Import Bank programs, and further
economies of this nature should be realized in the years immediately
ahead. All new proposals for Federal credit aids will be examined
in the light of the guidelines laid down in the Report of the
Committee on Federal Credit Programs, and, as the occasion develops,
existing programs will also be reviewed in the light of these same
guidelines.
While a program clearly does not become obsolete just because
it is old, there are undoubtedly many activities in the budget
which are not now contributing as much to the nation's progress as
when they were begun. Eve.cy pjr~gram should be reappraised
regularly to determine whether its scale of operation, or its
existence, can currently be jus';"ified by a comparison of costs with
present or future benefits. The Federal Government has a compelling
responsibility to the nation to assure that the money is being
spent where it is most needed, and, in the light of that obligation,
there will be an intensified reappraisal of ongoing programs in the
years ahea(\.
With the close cooperation of the President and the Congress
in holding down expenditures, barring an unexpected worsening in
the cold war, the tax program and the related program of expenditure
control are feasible and consistent with the national interest.
IV.
The Compatibility of the New Fiscal
Program to Other Policies in Our
Overall Financial Plan.
A final test of the fiscal responsibility of the new tax program
and related expenditure control is its compatibility and coordination
with our balance of payments policy, monetary policy and debt
management -- each of which forms a vital environmental factor in an
overall financial plan.
Throughout the expansion from 1961 to the present, monetary
policy has remained easy, in contrast to earlier expansions.
However, to avoid conflict with balance of payments objectives,
reserves needed for bank credit expansion were provided in ways
designed to minimize the direct downward pressure on short-·term
interest rates. Thus, monetary techniques such as reserve
requirement changes and debt management techniques of selling shortterm securities have been used extensively.
- 18 Yet monetary measures by themselves have not been sufficient
in the existing tax climate.
The drag of the tax system served as
a useful device for restraining inflation in the buoyant early
postwar years and the Korean war period, but the margin of unemployed
manpower and industrial facilities now available is what promises
to allow some easing of the heavy tax bite without great risk of
price rises. That is why a broad consensus has emerged among
leaders from all sectors of the economy that a tax prograrn seems
to offer the best hope of reaching through the difficult transition
to sustained and self-reinforcing prosperity without adding further
risk of price inflation or worsening the payments balance by
stimulus to short-term capital flows.
Faster growth through an expansive tax policy and payments
balance need not be incompatible; indeed, they can reinforce one
another.
For one thing, with the major stimulus to investment and
consumer spending being borne by the tax program, monetary policy
is left free to deal with the balance of payments -- if that
should prove necessary -- with less concern for domestic
repercussions.
For another, the tax program deals directly with
the crucial long-run solution to the payments imbalance, namely,
the stimulus to domestic investment, to cost cutting, to
modernization, to more industrial research, and to more efficient
production and more effective pricing in competition at home and
abroad with foreign goods and services. The stimulus to economic
growth in the tax program also implies higher profits which make
the investment of capital in this country more attractive compared
with competitive countries abroad.
And) finally, the general
movement towards fuller and more effective use of our resources
assures a net gain in productive efficiency.
The central problem of debt management in financing the
deficit which is a consequence of necessary expenditures, slow
growth and the tax program is to structure a debt that will avoid
contributing to inflationary pressures as the economy moves closer
to full employment. This means continuously achieving a proper
balance between, on the one hand, creating excessive amounts of new
money and short-term government securities and, on the other, so
inadequate a supply of liquidity that expansion is stifled. Given
the present underemployment of labor and manufacturing capacity,
and given the present price stability, the use of co~mercial bank
financing or of short-term securities is justified in reasonable
amounts, because the economy requires more money and liquid assets
:s it grows.
On the other hand, it is equally important to avoid
~ growth of liquidity that exceeds the ability of the economy
to absorb it at stable prices.
- 19 The debt management policy indicated above requires that we
make further efforts to tap long-term savings, either directly or
through the savings institutions. The techniques of advance
refunding, together with the promising experiment of competitive
bidding for long-term bonds through syndicates, which have been
worked out in the recent past, suggest that we can now raise
funds in the intermediate and long-term sectors of the market with
a minimum of disturbance to other borrowers.
Overall, it is important to remember that the deficit we had
to finance over the last calendar year has given a real test of our
ability to finance it without inflation. And that deficit, as you
know, was placed entirely outside the commercial banks.
Finally, associated as it is with a practical and feasible
expenditure control program, the President's tax reduction program
will stimulate our economy in an atmosphere of fiscal discipline.
This combination is designed to give the central banks and
finance ministries the continuing confidence in the dollar that is
vital Eo the maintenance of the Free World trade and payments system.
Conclusion
The President's new program meets every realistic test of
fiscal responsibility in that:
-- it provides a fiscal stimulus to demand by
substantial net tax reduction and reducing an
impediment to long-term growth by meaningful rate
reduction;
-- it constitutes the best available insurance
against a recession in a period of increasing cyclical
risk when a recession might produce a relatively
unmanageable deficit;
-- it is designed to keep the budget deficits
within manageable proportions by spacing out the rate
cuts over three calendar years, broadening the tax
base, and offsetting the loss of revenues by
accelerated collections from large corporations;
-- it is designed to reduce budget deficits when
the economy is advancing by including a policy of
expenditure control that is feasible, practical and
consistent with the national interest;
- 20-
it is the course of fiscal balance designed
to promote a continued, steady, and increased rate of
economic advance and the surest route to balanced
budgets and surpluses, consistent with national
security and space requirements, and
-- it is a fiscal program compatible with balance
of payments, debt management and monetary policies.
Meeting these tests of fiscal responsibility, the President's
program should be enacted in 1963 for these hard reasons:
-- Unutilized resources of manpower and capacity,
resulting in slow economic growth -- our major economic
problem -- is the result of a tax drag.
Under current balance of payments conditions,
tax and fiscal policy can be more effective than
monetary policy in providing fresh incentive and
continuing stimulus.
-- The most direct and significant Federal action
to aid growth is to cut the fetters that hold back
private spending and investment, rather than resort to
massive increases in Federal expenditures.
Debt management and monetary policy can avoid
inflation.
-- The effective coordination of these policy
instruments on the domestic side is the best
contribution to resolving the balance of payments problem.
The President's tax and expenditure control program is the key
to economic growth and progress in the Sixties -- it is the course
most consistent with fiscal responsibility and the national interest.
Its adoption is the most urgent task confronting the Congress in 1963
000
STATEMENT OF THE HONORABLE DOUGLAS DILLON
SECRETARY OF THE TREASURY
BEFORE THE
HOUSE WAYS .AND MEANS COMMITTEE
ON THE
DEBT LIMIT
WEDNESDAY, FEBRUARY 27, 1963
10: 00 A.M. , EST
The President in his Budget Message last January
requested legislation which would extend the present
$308 billion temporary debt limit through the remainder
of the current fiscal year.
approval of this legislation.
I am here today to urge
It is absolutely essential
for the sound management of Government finances during
the final quarter of the fiscal year.
The existing law provides that the temporary debt
limit will drop from the present level of $308 billion to
$305 billion beginning April 1, 1963 and from $305 billion
to $300 billion beginning June 25, 1963.
The debt limit
will revert to the permanent level of $285 billion on
July 1, 1963.
The graduated reductions scheduled for the debt
limit in fiscal 1963 were designed to conform closely to
the seasonal borrowing requirements of the Government under
D-768
2
the assumption of a balanced budget.
This fact was
specifically recognized and clearly set forth in last
year's report of this Committee (dated June 7, 1962) on
the bill to temporarily increase the public debt limit,
which reads as follows:
(p.2)
"Your committee has concluded that the series
of debt limitations provided under this bill
for the various periods of the year will be
adequate to provide for the expected seasonal
variation in expenditures and receipts, but
would not give sufficient flexibility should
a deficit be incurred in the fiscal year 1963.
In this latter eventuality, your committee
believes that it will be appropriate later in
the fiscal year 1963 to again review the
statutory debt limitation.
Thus this 'step
approach' to the debt limitation, with the two
reductions in the latter part of the fiscal
year, is designed to provide for seasonal needs,
without providing so much leeway that it can
subsequently be used to cover deficit financing.n!1
A subsequent section of this same report reads as
follows:
(p.4)
Your committee concluded, however,
that, in any case, it was desirable to base
the statutory debt limitation for 1963 upon
the assumption that the budget would be balanced
in that year.
Should this eventuality not
occur, it concluded it would be desirable for
Congress to have a further opportunity to review
the statutory debt limitation when it is apparent
that conditions have changed."
rt _ _ _ _
11 Report No. 1789, 87th Congress, 2nd Session.
3
The position expressed in the Report of this
committee with respect to the graduated reductions in
the debt limit established for fiscal 1963 coincided
precisely with my views as set forth in a statement
before the Senate Finance Committee on June 26, 1962,
which reads as follows:
"This graduated debt limit is acceptable
to the Treasury, provided that it is
understood that the debt ceilings in the
House bill were carefully tailored to meet
the Treasury's seasonal financial requirements under the assumption of a balanced
budget.
The graduated reductions established in the House bill would not be
adequate if we were to run a deficit of
any substantial size in fiscal 1963. tt] )
My purpose in relating this background history of
the presently scheduled reductions in the temporary debt
limit is to emphasize the single, most significant fact
in this hearing:
that when these graduated reductions
from the $308 billion level were originally established,
it was universally agreed that they would not be feasible
if we were to run a deficit of any substantial size in
fiscal 1963.
Hearing before the Committee on Finance, U.S. Senate,
87th Congress, 2nd Sessio~ on H.R. 11990, June 26, 1962.
4
The balanced budget assumption upon which these
debt limit "step-downs" were based has, I regret to say,
not been realized.
As you all know, we are expecting
a sizable deficit in fiscal 1963, an administrative
budget deficit which was estimated in the President's
Budget Message last month at $8.8 billion.
This deficit
was largely produced by the failure of the economy to
attain the levels of economic activity which had been
assumed when the President's Budget Message was presented
in January 1962.
Instead of the assumed gross national
product of $570 billion in 1962, the actual figure came
to only $554 billion.
As a consequence of this
slower-than-expected rate of economic expansion, we now
expect fiscal 1963 revenues to be $4.8 billion lower than
we had projected in January 1962.
Various, partially
offsetting refinements in our estimates, resulting from
new and more up-to-date data, have reduced the revenue
estimate by another $600 million.
Finally, administrative
changes in the depreciation provisions of the Revenue Code
and the effects of the Revenue Act of 1962 have led to a
5
further reduction of $2.1 billion in our revenue estimate.
In sum, revenues are now estimated to be $7.5 billion
lower than the January 1962 budget projection upon which
the present temporary debt limit provisions were tailored.
Estimates for fiscal year 1963 expenditures have
also increased over last year's estimate.
The increase
is $1.8 billion over the figure in the January 1962 Budget
Message.
At the time of last year's debt ceiling hearings,
additional proposals had been made involving an amount
approximately offsetting the small surplus estimated in
the January 1962 Budget Document.
The largest of these -
for the accelerated Public Works Program - was subsequently
enacted and is estimated to require expenditures of
$300 million in fiscal year 1963.
The other expenditure
increases, however, were not foreseen at the time of last
year's hearings.
The largest unexpected increases are:
a rise of $895 million in expenditures on agriculture (over
$400 million of which is attributable to the fact that the
President's agricultural proposals were not enacted), and
a $541 million increase in the cost of the postal service
6
(stemming primarily from the fact that postal rate
increases were effective January 7, 1963 rather than
July 1, 1962, as proposed).
These items, together with
smaller increases and decreases in other programs, produced
the estimated rise of $1.8 billion in total expenditures
over the January 1962 estimatese
In short, the combined effect of a substantial
reduction in revenues and a moderate increase in expenditures has led to the current estimate of an $8.8 billion
deficit rather than the even balance upon which the
present temporary debt limit legislation was based.
Last June, at the time of the debt limit hearings,
with much evidence at hand that the rate of economic expansion was slowing down, it was apparent that the gross
national product projection upon which we had based our
revenue estimates was much less likely to be realized than
we had thought in January.
However, we did not have, at
that time, an adequate basis for revising either the
revenue or the expenditure estimates presented in the
Budget Message.
In the light of all of the uncertainties,
7
both with respect to the future course of the economy and
with respect to the future actions of the Congress, it
was judged best to proceed with the request for a fiscal
1963 debt limit based on the assumption of a balanced
budget, a judgment with which this committee specifically
concurred.
Since it is now abundantly clear that a substantial
deficit will be incurred in fiscal 1963, the scheduled
reductions in the temporary debt limit cannot be permitted
to occur.
The bills are corning in;
they must be paid.
An attached table clearly demonstrates that a
$308 billion debt limit is the absolute, rock-bottom
minimum needed to finance the operations of the Federal
Government from now through June 30,
1963~
This table
was constructed on the basis of the same two assumptions
used in last year's debt limit hearings:
an operating
cash balance of $4 billion and an allowance for flexibility
and contingencies of $3 billion.
The table shows that a
$308 billion debt limit will not, in fact, provide us with
8
anywhere near this margin for flexibility and contingencies
during the remainder of fiscal 1963.
In mid-June, the
margin under a $308 billion debt limit will shrink to an
extremely narrow $800 million.
However, since we are
nearing the end of the fiscal year, both revenues and expenditures are unlikely to vary substantially from current
estimates, so we can afford to run the risk of what would
otherwise be an unacceptably narrow margin.
It is for
this very simple and very compelling reason that I
earnestly recommend the prompt approval by this committee
of legislation extending the present $308 billion temporary
debt limit through the remainder of this fiscal year.
FISCAL YEAR 1963
ACTUAL OPERATING CASH BALANCE AND PUBLIC DEBT SUBJECT TO LIMITATION
JUNE 30. 1962 - FEBRUARY 15. 1963
ESTIMATED PUBLIC DEBT BASED ON CONSTANT OPERATING CASH BALANCE OF
~~.O BILLION (EXCLUDING FREE GOLD)
FEBRUARY 2B. 1963 - JUNE 30, 1963
Based on
,
Operating Cash
Balance (excluding free gold)
126~
Budget Document
(In billions)
Public Debt
Subject to
Limitation
Allowance to Provide Flexibility
in Financing and
for Contingencies
Total Public
Debt
Limitation
Required
ACTUAL
~
June 30
July 15
July 31
August 15
August J1
September 15
September 30
October 15
October 31
November 15
November 30
December 15
December 31
$9.4
$29B.2
6.4
5.5
6.2
7.7
5.3
B.3
7.B
5.7
5.0
6.3
3.5
6.7
29B.3
297.9
299.7
301.9
301.B
299.6
302.9
302.2
304.7
305.5
303.9
303.6
4.4
4.5
4.4
304.2
J03.6
304.1
4.0
4.0
4.0
4.0
4.0
4.0
4.0
4.0
4.0
302.5
J05.1
300.5
304.2
30J.4
303.7
304.4
307.2
302.5
W
January 15
January 31
~ebruary 15
~STIMATED
lebruary 28
[arch 15
larch 31
.pril 15
~ril
30
ray 15
:8.y 31
une 15
une 30
$3.0
3.0
3.0
3.0
J.O
3.0
3.0
3.0
3.0
$J05.5
JOB.1
303.5
307.2
J06.4
306.7
J07.4
310.2
305.5
Ac~ua~
ana eSGlmaGed monthly budget receipts and expenditures and resulting
end-o£-month debt levels, based on 1964 Budget Document.
(In millions o~ dollars)
Net receipts of
trust and
clearing
accounts
Surplus
and
C+)
other
or defi- transaccit (-)
tions
Budget receipts and
expenditures
Net
Expendireceipts tures
1/
1/
Financing means
Decrease
in oper- Increase Operating
in
ating Debt
cash
debt
cash
subTotal
subject
to
balbal- ject to
to
ances limitabe fi- ances
2/
limit
2/
tion
nanced
Balance on
June .30 J 1962 ........................................................................................................
-II
..
..
..
..
..
..
..
Actual
1962 - July ...•........
August ....•...•.
September .•.•..•
October .....•...
November •..•.•••
December .••••••.
3.6
7.1
10.0
3.0
7.0
8.4
7.3
8.5
7.3
8.5
8.1
7.6
-3.7
-1.4
+2.7
-5.5
-1.1
+.8
+.1
-.4
+.2
+.3
-1.6
+1.5
3.6
1.8
-2.9
5.2
2.7
-2.3
3.9
-2.2
-.6
2.6
-.6
-.4
1963 - January ..•••••••
5.5
8.0
-2.5
+.3
2.2
2.2
7.5
9.3
5.0
7.4
11. 7
6.9
7.7
7.5
7.8
9.1
+.6 +1.6
-2.5
-.4
+2.6
+.4
-.4
-.6
-.7
-.6
-2.0
2.9
1.0
-1.9
-8.8
-.9
9.7
..
..
..
..
..
..
..
..
..
-.3
4.0
-2.3
2.6
3.3
-1.9
..
..
....
9 .. 4
298.2
5.5
7.7
8.3
5.7
6.3
6.7
297.9
301.9
299.6
302.2
305.5
303.6
4.5
303.6
4.0
4.0
4.0
4.0
4.0
302.5
300.5
303.4
304.4
302.5
Allowance
for
flexibility
and
continf1encies
Total
debt
limitatior
required
3/
Estim:lted
February ........
11arch ......................
April ......................
May .............
JUI1e
.... '...................
Fiscal year 1963 ......... 85.5
94.3
Office of the Secretary of the Treasury
Office of Debt Analysis
1/
g;
11
-1.1
-2.0
2.9
1.0
~ ____ -1.9
.5
5.4
3.0
3.0
3.0
3.0
3.0
4.3
Totals based on 1964 Budget Document.
Monthly spread for February through June estimated by Treasury.
Excluding free gold.
At the mid-month points in March and June the requirements are $308.1 billion and $310.2 billion respectively.
305.5
303.5
306.4
307.4
305.5
- 3 -
t:'.nn.
ey-ch:>n~~
tenders will receive equti treatment.
Cash adjustments will be made
for difference's bchlccn the p:tr value of ma.turing bills accepted in exchange and
the issue price of the new bills.
The income derivcd from Trco..:mry bills, whether interest or gain from the sa.:
or other dispos:l.tion of the bills, does not have any exemption, as such, and
from the
G~le
1088
or other dinpo0ition of Trcnsury bills does not have any special
trcrd;m(.::nt, as such, under the Int8rnnl Revenue Code of 1954_
The bills are subjec
to c"tp.Le, inhcritnnce, gift or other excise taxes, whether Federal or state, but
are exr;rnpt from all t8}:e.tion now or hereafter imposed on the principal or interest
thereof by !3!ly state, or any of the possessions of the United states, or by any
lOC:1.1 toxinG 81lthority.
For purpoocs of ta.' lJ.tion the runount of discount at which
Trc~sury
bills are originally sold by the United states is considered to be
in~
terc::;t.
Under Sections 454 (b) and 1221 (5) of the Internal Revenue Code of 1954
the 8molmt of discount at which bills issued hereunder are sold is not considered
to accrue until such bills are Gold, redeemed or otherwise disposed of, and such
bills B.re excluded from consideration as capital assets.
Accordingly, the owner
of Treasury bills (other th'Jn life insurance companies) issued hereunder need include in his income tax return only the difference between the price paid for such
bills, whether on originn.l issue or on subsequent purchase, and the amount actuall
received either upon sale or reder'lption at ma.turity during the taxable year for
which the return is made, as ordinary gain or loss.
Treasury Department Circular rIo. 418 (current revision) and thiB notice, prescribe the terms of the Treasury bills and govern the conditions of their.issue.
Copies of the circular may be obtained from any Federal Reserve Bank or Branch.
- 2 -
~
-
lec:lm8ls, e. g., 99.925.
Fractions ~ not be used.
It is urged that tenders
lie
made on the printed forms and forwarded in the special envelopes which will
lie
supplied by Federal. Reserve Banks or Branches on application therefor.
~ing
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
~WD
account.
Tenders will be received without deposit from incorporated banks
md 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 gua.ra.nty of payment by an incorporated bank or trust company.
Dmnediately after the closing hour, tenders will be opened at the Federal
Reserve Banks and Branches, following which public a.nnouncement will be made by
the 'l'rea.sury Department of the amount and price range of accepted bids.
Those
8ubrlttlng tenders will be advised of the acceptance or rejection thereof.
The
secretary of the Treasury expressly reserves the right to accept or reject any
2.0
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 $
less for the additional bills dated
1ng until maturity date on
Decemb~ 1962
June 6 _ 3
, ( 91
2(;a;8f
or
days remain-
) and noncompetitive tenders for
$100,000 or less for the 182 -day bills without stated price from anyone
liO§X
~
bidder will be accepted in full at the average price (in three decimals) of ac~epted
competitive bids for the respective issues.
Settlement for accepted ten-
iers in accordance with the bids must be mnil.e or complet.ed at the Federal Reserv~
Banks on
March 7, 1963
---5(fi9~----
, in eash or other immediately available funds or
Ln a like face amount of Treasury bills maturing ___M_ar_ch-r.:::7-::'r-1_9_6_3_ _ •
~
Cash
TREASURY DEPARTMENT
Wa.shington
February 27, 1963
FOR ll1MEDIATE RELEASE
TREASURY! S WEEKLY BILL OFFERING
The Treasury Department, by this public notice, invites tenders for two sert
of Treasury bills to the aggregate amount of $ 21100~01000
cash and in exchange for Treasury bills maturing
I
or thereabouts, f~
March 7~963
, in the
amol
of $ 2zl00til7z000, as follows:
91
W
-day bills (to maturity date) to be issued
March 7, 1963
00
in the amount of $ 1,300,000,000 , or thereabouts, represent-
~
ing an additional amount of bills dated
and to mature
amount of $
ffl
W
,
, originally issued in the
June 6, 1963
800,~000
December 6, 1962
,the additional and original bills
to be freely interchangeable.
182 -day bills, for $
ffrJ
March 7, 1963
~
800,000,000
f&J
,or thereabouts, to be dated
, and to mature
SePtembe~
1963
The bills of both series will be issued on a discount basis under compeUtiv
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, Marc~ 1963
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 tb
price offered must be expressed on the basis of 100, with not more than three
TREASURY DEPARTMENT
FOR IMMEDIATE RELEASE
Fe~ruary
27,
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
$2,100,000,000, or thereabouts, for cash and in exchange f'or
Treasury bills maturing March 7, 1963, . in the amount of
$2,100,747,000, as follows:
91-day bills (to maturity date) to be issued
1n the amount of $1,300,000,000, or thereabouts,
additional amount of bills dated December 6,1962,
mature June 6~ 1963,
originally issued in the
$800,865,000, the additional and original bills
1nterc hange a b Ie •
.
March 7, 1963,
representing an
and to
amount of
to be freely
or thereabouts, to be dated
182-day bills, for $ 800 ,000 ,000,
and to mature Septembe~ 5,1963.
March 7,1963,
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 l~ederal Reserve Banks and Branches
up to the closing hour, one-thirty p.m., Eastern Standard
time, Monday, March 4, 1963..
Tenders will not be
received at the Trl~asury De~artment,· 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,
~ith not more than three decimals, e. g., 99.925.
Fractions may not
De used. It is urged that tenders be made on the printed forms and
rorwarded 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
provided the names of the customers are set forth 1n such
~enders. Others than banking institutions will not be permitted to .
submit tenders except for their own account. Tenders will be received
'1thout deposit from incorporated banks and trust companies and from
Nsponsible and recognized dealers in investment securities. Tenders
~rom others mus.t be accompanied by payment of 2 percent of the face
ll!1ount of Treasury bills applied for, unless the tende.rs are
~companied by an express guaranty of payment by an incorporated bank
II' trust company.
~ustomers
D-769
- 2 Immediately after the closing hour, tenders will be opened at
the Federal Reserve Banks and Branches, following whic~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
December 6, 1962, (91-days remaining until maturit¥ date on
June 6 1963)
and noncompetitive tenders for ::;>100,000
or less for the 182-day bills without stated price from anyone
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 1n accordance with the bids must be
made or completed at the Federal Reserve Ban~on March 7,1963,
in cash or other immediately available funds or 1n a like face
amount of Treasury bills maturing March 7, 1963.
Cash and
exchange tenders will receive equal treatment. Cash adjustments
will be made for differences between the par value of maturing
bills accept~d 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 hereunde
need include in his income tax return only the difference between
the price paid for such bills, whether on original issue or on
subsequent purchase, and the amount actually received either 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 (current revision) and thi:
notice prescribe the terms of the Treasury bills and govern the
condi tions of their issue. Copies of the circular may be obtained f:
any Federal Reserve Bank or Branch.
000
- 38 -
this or that person gets in 1963, or in 1964 or in 1965.
The total is a revision of our income tax which will enable
us to achieve, as far as it lies within the power and effect
of the tax system, the strong and growing economy which is
vital to the kind of America we all desire.
- 37 reduction to 47 percent, and eliminatioo of hard.hip
the poor and the aged --
a
tor
thua 8ignificaatly l •••eatlll
the effeet on the economy and on Incentiveaj Or it
~t
be reshaped by increasing the C08t and budgetary impact of
the program, or by some coabination of these approaches.
Naturally, it is not necessary to enact all the changes
exactly as proposed.
max~um
But a measure designed to provide the
effect on the economy through rate reductions and to
do so in a manner most consonant with appropriate fiscal
responsibility \.;rould involve some structural changes of one
sort or another.
These are decisions which must and will be made in
Congress. The Committee on Ways and Means has commenced its
consideration of the tax program.
It will shape a tax bill
that takes account of the helpful crlticism8 and 8uggestiona
w~ich
the legislative process produces.
The Treasury Depart-
ment will fully cooperate in this process.
In the process of moving forward with a tax program so
vitally needed, we must not let all of the detailed bits and
pieces inevitable in tax legislation obscure the objective.
~ve
the
are seeking to accomplish.
bit~ ar.d t)ieces,
,
1 1 k~
pOOi<etooo
.
~.v-"
~
The total is far more than
tar more than how each of our individual
- <11:rected,
far more than how much tax reduct10D
- 36 -
into the efforts that commenced with the Revenue Act of 1962
to achieve the tax revision which the earli.r .tudi•• of the
Congress delineated as vitally necessary.
As
the President has firmly and consistently atated, the
core and central theme of the tax program are the large reductions in all the tax rates -- reductions that remove the
restraints now imposed by the tax 8ystem on the economy and
on incentives for private initiative.
The cost of thes.
reductions, plus the elLmination of hardship. which the rate
reductions cannot reach, comes to over $14 billion.
The
revenue gained from structural changes, important in themselves as contributing to equity and economic growth, and
from increased mobility through capital gains revisions,
will bring that cost down to $10.3 billion.
A further struc-
tural change, the acceleration of corporate payments, reduces
this figure to a budgetary cost, before feedback, of $8.8
billion.
The structural changes thus bring the rate reduc-
tions within a budgetary cost that is clearly fiscally
responsible.
If these structural changes are to be sub-
stantially altered, the over-all
p~ogram
would, therefore,
have to be reshaped by significantly limiting the rate reductions -- so that we would not achieve an individual rate scale
running from 14 percent to 65 percent, a corporate rate
- 35 that the alternative course would not be without its set
of assumptions and expectations.
Indeed, in the light of
the history of our business cycles, without tax action the
/1._ '2 (..;L
.,J.-':'..< ,. ,-
risks become far greater of a •••••• '-8 coming and of its
lasting longer and cutting deeper.
Such a recession would
increase the deficit far more than the program, without
affording even any hope of improvement or offset.
reduet ions inV'Ol ved mud t· .a'~ 'nr. very"'"'t... t
file tax
gelier.te-~ .4til-
tional revenue to .o.ffaat.. thei r .. cQat.._ .__
Conclusion
The tax program is responsive to two main requirementso
First, it responds to the imperative need for the large
reductions in individual, corporate and capital gain rates
required now to enable the economy to reach ite full potential
for output and growth, while at the same time permitting these
rate reductions to be achieved in a fiscally responsible
manner compatible with the deficit condition of the Budget.
Second, it responds to the long-felt need for a revision of
the income tax structure that would scale down the rate.,
broaden the tax base,
el~inate
serioue hardship"
unjustifiable abuses and preferences.
and end
The program thu. fit.
- 34 -
permit the economy rapidly to move to new heiihtl.
At the ••
higher levels of Iross national product, the reeultin&
revenuea even under reduced rates will be in excel. of our
present revenues.
The difference, of course, is that the
resulting dynamic economy will be able to maintain these
higher revenues, whereas our present sluggish economy finds
the tax structure an impediment to growth.
Sut revenues are only one side of the budget.
The other
requirement is firm control over expenditure policy.
The
President and the Budget Uirector have made these matters
clear:
one, civilian expenditures will be firmly controlled,
and in the 1964 Budget have been reduced; two, defense and
space expenditures should begin to level off; and third, as
the tax reduction becomes fully effective, and the economy
moves upward, a part of the revenue increases
el~inating
IllUSt
go to
the deficit.
Under this combination of revenue increases and a budgetary policy of firm expenditure control, we can move on to
a balanced budget and full employment.
To be sure, certain
assumptions and expectations respecting the economic reaponae
to the tax program underlie this belief.
But we mu.t remember
- 33 -
accelerate, care must be taken that the co.te of tax reduction are handled in a fiscally re8ponsible manner to keep
the transitional deficit within prudent bounds.
The tax
program meets this requirement, one additional to the .ubstantive issues of tax revision, in three way.:
on., the
rate reductions are staged over three years, commencing in
1963, with the structural changes starting essentially in
1964; two, appropriate structural chang•• keep the over-all
revenue cost of the rate reductions within a prudent figure
of $10.3 billion; three, another structural change -- the
proposal to accelerate under a five-year transition the payments of estimated tax of the larger corporations _. will
improve the budget picture by about $1.5 billion so that the
budgetary cost of the program 1s an over-all $8.8 billion
before any feedback.
A
third aspect of our present situation is that we mu.t
end our unplanneddeficits and move on to a budget balance at
a high level of employment.
As far as the tax program i .
concerned, this means an effeet on the economy that will
produce sufficient revenues for this purpose.
It 1. believed
that the large rate reductions and the effects of the entire
program on consumer spending and investment incentives will
- 32 -
We believe that when all the changes are con.idered,
and their effects weighed as carefully
8S
possible, the
over-all result/is a distribution that bears a close relationship to th~ present pattern except where relief for the
ext'remes of low income hardship or old age are involved.
It is at this point that we must consider the final
dimension of the tax program, that of its relationship to
the current economic climate.
Three aspects stand out:
!
I,
One, we are faced with an economy while sluggish is still
moving slowly upward.
This means that the program need not
be geared to a shot-in-the-arm approach to ward off an
immediate recession threat.
Instead, the tax program can
be responsive to the insistent demands for a basie tax
revision that will make a lasting contribution to eeonomic
growth and lessen the risk of recurring recessions.
It also
means that while tax reduction is an imperative, there is
legislative time to work out this year, with effective and
expeditious action,
8
properly constructed bill.
Secondly, we are faced with a deficit for fiscal 1964
that, apart from the tax program, would be $9.2 billion.
While this deficit is the direct consequence of an eeoftOwy
moving at a slow rate, which the tax program is intended to
- 31 These then are the main details of the tax program.
We
believe the program is a balanced one, treating all levels
of income and all types of taxpayers as fairly as posaible.
It i8 difficult to obtain any precise measure or index of
the distribution of its benefits.
Some may point to the
percentage change in tax liability at each income level,
and show that the highest percentages of reduction ar. in
the bottom~d'the lowest at the top.
Whether one likes or
dislikes this result, we must remember it fails to reflect
the proportion of total tax liabilities paid at each level.
Some may point to the percentage increase in after-tax
incomes, and show that the highest percentage is at the top.
Whether one likes or dislikes this result, it does fail to
reflect the impact of the present rate scales which, under
almost any program, would produce such an after-tax effect.
in any
Moreover,/~ allocation of the benefits, it is necessary
to remember that the corporate rate changes and the capital
gain changes will yield large benefits to the middle and
upper income groups, first through the increase in dividends
consequent upon higher corporate after-tax profits and second
through lower capital gain rates combined with increased
mobility of capital.
iits.
It is difficult to quantify the•• bene-
- 30 -
affect the real estate shelter, sal.s of oil and
oth.~
natural
resource interests, and certain aale. of cattle and fara aSleta.
Three, changes affecting ordinary income
it~
now tr.. ted
41
capital gains, designed to rever •• this characteriaatioD where
appropriate -- these changes affect such itema a. employee
stock options, lump-sum distributions under penaion and profitsharing plans, the sale of patents, the cutting or .ale of
timber, and the sale of life estates.
Some of these provisions
either came into or remained in the law as an offset to the
With. reduction in tho•• rate. to
high marginal top rates.
65 percent and lower, for this reason alone these provisions
are no longer justifiable.
The direct revenue effect of all the chang.. i8 a gain
of $100 million, assuming the present character and volume
of transactions.
However, the increased turnover of a •••ts
resulting from the unlocking of asset holdings, together with
the net effects on transactions of the other changes, is
expected to yield an additional $650 million.
The Tax Program and The Currant Economic Climate
~e tax program thus repr.sents a 8i~lcaDt ~ r~i·
sion in response
f
i , (,
td the
long-acknowledged ahd now imper.~ive
n;
,:teed for impzl.".· lt in the incOJOe tax
struecure.
- 29 The benefits to taxpayers and the economy of the new
low rates on capital gains turn a180 on one other Dac....ry
change, that of a re-examination of tha definitton of capital
gains.
If something called a capital gain is to b. included
to the extent of only 30 percent of the gain -- as compared
to a 100 percent inclusion for wages, salaries, buaines.
profits, interest, dividends, and so on -- it becomes imperative that the present eligibility rules defining capital gaiDa
be considerably tightened.
It is in this are., even under
the present capital gain rates, that the suggestions for
reforms to end the special preferences resulting from ordinary income items being classified as capital gain have been
perhaps the most insistent.
With capital gain rat •• beiDI
reduced by 22 percent to 58 percent, the existing definitional
rules would involve intolerable special preference. and
inequities.
The tax program therefore propo.es a number of
definitional changes which can be grouped into three categories:
One, the proposal that the holding period be extended
from six months to a year.
Two, changes affecting the inter-
relationship of ordinary deductions and capital gain, d.. lped
to extend the approach of the 1962 Act under whlah thae part
of the gain on the sale of an asset that repr•••ta prior
deductions (vQuld be treated as
ordinarv inc~ -- t-h~A.
dianae.
- 28 -
under present rules to hold an appreciated a •• et until d.. th
so that the gain will escape tax.
The tax program would end
this lock-in effect by treating as a taxable capital gain any
gain present in assets transferred at death.
The advanta..
in capital mobility, with consequent benefits to increased
initiative and risk-taking, would be highly beneficial to
economic growth.
The revenue gain involved would offset the
cost of the lowered capital gain rates and make those rates
possible.
The result is an integrated treatment of capital
gains and losses that should have a large positive effect on
increasing investment and capital formation.
Necessarily the proposal to tax gains transferred at
death -- which will affect annually only about three percent
of decedents -- muat be implemented by technical rules de.iiRed
to
pe~it
as fair and as practical an application of thi8
approach as is possible -- such as the exemption of the sain
on a residence and on personal or household effecta, the
exemption of gains passing to a wife along the line. of the
present estate tax marital deduction, a blanket $15,000 exaaption of gain to eliminate smell estates, an exemption of
transfers to charity, an averaging device, proviaiona to ... e
the time of payment of the tax, a transition period before the
new rule is to become fully effective. and
80
on.
- 27 -
running from 4.2 percent to 19.5 percent. This is far lower
than the present range of 10 percent at $2,000 of taxable
income to 25 percent at about $32,000 and higher on a joint
return.
The proposed rate at $32,000 of taxable income would
only be 12 percent.
The combination of reducing the SO per-
cent inclusion to 30 percent, and then reducing the basic
rate scale, thus involves reductions in capital gains tax
ranging from 58 percent for first bracket taxpayers to 52
percent for taxpayers at $32,000, 40 percent at $52,000,
30 percent at $100,000, on down to 22 percent for top bracket
taxpayers.
The benefits would be concentrated mainly in the
middle and upper income groups.
Nearly 50 percent of present
capital gains are realized by persons with incomes between
$10,000 and $100,000, and these gains represent three percent
of adjusted gross income at $10,000 and about 20 percent at
$100,000.
A complementary provision would extend the present
five-year carryover of capital losses to an unlimited carryover (revenue cost of $20 million).
The corporate capital
gain rate would be reduced from 25 percent to 22 percent.
A significant obstacle to the mobility of capital today,
and one which "locks in" many an investor, is the inducement
26 -
The Nature of the proposed Revieiotl -- The Capital Gain Cbange.
The final set of recommendations in the tax proaram relate.
to the area of capital gains atld losses.
This ar.. haa alway.
involved complex tax i.sues, since it ia nece.aary to give
proper weight to a number of factors that do not all work in
the same direction -- the fact that capital gaine accrue over
time and arise from a variety of economic cau.es; the importance
of encouraging private risk-taking and initiative; the isport.nce
of maintaining the flow and mobility of capital, and the need
to maintain on equity grounds an appropriate relationship to
the taxation of other types of profit and income.
Our pre••nt
system, for individuals, is to include only 50 percent of
capital gains, limit the taxation of the gain to a maximum
rate of 25 percent, and permit the gain represented by appreciation accumulated until death to escape income taxation
entirely.
The tax program proposes several basic chang.s, whos.
primary objective is to achieve increased mobility of capital
and encourage private risk-taking.
First, it would reduce the
present 50 percent inclusion ratio to only 30 percent of the
gain.
with a proposed baSic rate seala running fro. 14 percent
to 65 percent, capital gains would thus be taxed at a scale
- 25 J
, i.I.'
~I ~
_____
4
I·.
_
These two structural changes are thusl........ly llDked
to the new corporate rate structure.
Of the remain!",
structural changes t one that costa revenue ($50 million) would
permit the current expensing of equipment used in research
and development activities. with the objective of encouraging
the expansion of private civilian research.
A chaD&e that
would gain revenue (about $250 million. of which $10 million
comes from individuals) involves improvements in the taxation
of natural resource activities designed to carry out the
purposes behind the existing depletion policies.
In sum. these corporate structural chang••• few in
number, involve revenue costs of $100 million and aain. of
$360 million.
They reduce the $2.63 billion of corporate
rate reduction to about $2.3 billion.
Here also a balance
is preserved, with the change. proposed being either nec •• sitated by the new rate structure or designed to meet particular
problems in the corporate area.
A further 8i&nificant .truc-
tural change -- the acceleration in the current corporate tax
payment of larger corporations -- would yield $l.S billion in
annual budget receipts 1n the next five year. but would not
increase tax liabilities.
- 24 -
enterprises and activities which are conducted with multiple
corporate structures could obtain this "small busine•• " tax
benefit many times over if each corporation in the structure
were taxed at only 22 percent on its first $25,000 of ineome.
It is obvious that a rational application of a tax policy
designed to assist small business require. aggregation of
corporations under common ownership before the $25,000 t.at
is applied.
This is so whether the multiple corporatiOfts
serve genuine business purposes or are simply tax motivated.
It may be observed that eligibility for the other non-tax
small business benefits accordAd by the Congre.s i . determined
on such a consolidated basis.
The tax program, in order to make po.sible the reduction
of the small business rate to 22 percent, thua propos.s only
a single surtax exemption for multiple corporation enterprl.es,
the change to be phased over five years.
$120 million.
The revenue gain il
At the same time, in further application of
this policy of neutralizing the tax effect of multiple corporate structures, it is proposed that the two percent additional
tax on consolidated returns be eliminated and that intercorporate dividends between affiliated corporationa not be
taxed.
The revenue cost is $50 million.
- 23 -
14 percent to 65 percent and the $740 million of changes
needed to eliminate hardships that cannot be reached by rate
reduction.
They represent reforms responsive to the persiatent
urgings that our tax structure be altered to keep the tax baa.
from constantly narrowing and to
el~nate
unfair preference ••
They involve no departures from basic income tax concepta and
no complications of technical implementation.
They clearly
do not broaden the individual tax base .s much as some have
urged.
At the same time, they represent significant improve-
ments in the tax structure.
Together with the changes designed
to eliminate hardships, they contribute to a balanced program
of revision in the tax structure.
Corporate StructU4al Changes.--The structural changes in
the corporate tax are few in number.
Two are associated with
the reduction of the normal tax on the first $25,000 of corporate income from 30 percent to 22 percent.
The normal tax
concept represents a policy designed to aaaiat "s_11 bualne.I"
and the reduction in this rate -- a 27 percent reduction -will strengthen that assistance.
It i. important that thi.
tax benefit -- and the consequent revenue 10.8 -- be confined
to what are truly small businesses.
However, we find that
- 22 ..
"double taxation" by 10 percent for everyone.
'nl. oth."
proposal related to the rates is a tightening of the personal
holding company rules, to end the escape. from individual
taxation now available through the usa of the.e device. to
shelter investment income or income from personal effort••
The other revenue gaining changes would elimioate
undesirable or inequitable preference. that now exist and
improve existing rules.
These involve elimination of the
sick"pay exclusion; the taxation to the employee of the
value of the economic benefit of employer-provided group
term life insurance above a minimum figure, in keepiag with
the present tax treatment of other forms of employer-provided
insurance; the institution of a four percent floor under
casualty losses comparable to that under medical expen••s,
and the elimination of the unlimited charitable deduction.
In sum, the revenue-raising structural change. ift the
individual area -- seven in number .. - involve about $3 bil11oD,
of which $2.3 billion is concentrated in the five perceat
~4~
floor and ~700 million in the remaining items. Th.y .....
~ ( ),. ~
po •• :lble---.- fro.-tite--.c;;Kerfp.'''' -HI iiaea2 , .
,
i
e
I
- the
'
$11.7 billion revenue involved in a rate scale running from
- 21 -
1960 only five percent of the rerorna under $5,000 reported
dividends, which dividends amounted to one percent of the
total adjusted gross income on these returns; thes. returns
accounted for 14 percent of dividends reported.
Returns
over $20,000 accounted for 60 percent of the dividend., and
almost all returns reported some dividends; these dividends
represent 10 percent of adjuated grosa income at $20,000,
20 percent at $50,000 and 40 percent above $200,000.
It i8 appropriate to eliminate this epecial preference
for dividends, which has achieved no u.eful ecOtloaic purpo •• ,
at a time when the individual rate scale ia belftS lowered aad
the corporate rate also reduced.
The incentivea for iave.t-
ment and risk-taking which theae lower rate. provide would
be far more significant in their impact
the dividend credit and exclusion.
Oft
the ecODOmf than
Moreover, the S-point
proposed reduction in the corporate rate will give more
relief from "double taxation" than does the four percent cr..lt
for incomes up to $186,000.
The credit reduce. "doubl. taxa-
tion" by amOl.mts ranging from 4.3 percent for taxpayen in
k'
J,
v:..:·u- '-, ~~.
the first bracket to 10.4 percent in the top braeket.
The
I'""
five-point reduction in the corporate tax rate would reduee
- 20 -
The five percent floor, while keeping the ••• ential
policies underlying the deductions for personal expens •• ,
also contributes to a rate scale more conducive to personal
incentives and economic well being.
The basic point ta to
preserve and strengthen all of the incentives that are
important -- both those involved in the deductions for
personal expenses and those involved in lower marginal tax
rates -- and the combination of the five percent floor and
the lower rate scale it permits achieves this result.
The remaining individual revenue-rai.ing changes rai.e
about $700 million -- an amount equal to the revenue-losing
"
;
t'. {
i
(t'
~ot1Ds.
Two of the changes are associated with reductions
in the rates, especially the top rat •• , and would remove
preferences or escapes not justifiable under lowered top rates.
The proposal to eliminate the dividend credit and axcluaion
would alone recover $460 million in tax revenue.
Nearly 80
percent of the benefits of these provision. presently goe.
to taxpayers over $10,000, and over 50 percent to tho •• over
$20,000.
Even
as to the exclusion only 15 percent of ita
benefits goa. to persons under $5,000, with 60 percent of
the benefits to those over $10,000.
ThiS, of cour•• , is
merely a reflection of the concentration of corporate ownership and dividends in middle and upper income groups.
In
- 19 the level of income -- for years it has been about 2 percent
of national personal income despite changes in tax rates and
structure.
The tax program will not only increase the after-
tax incomes of individuals but through its effect on the
economy will greatly increase national personal income.
A
rise in that income from the present $440 billion to $525
billion -- which could be achieved under the tax program -would alone increase charitable giving from its present
$8.8 billion to $10.5 billion.
The five percent floor is thus not only in keeping with
the policies behind the standard deduction, but it alao
expresses those policies in a manner that permits a larger
tax rate reduction than would otherwise be p088ible.
rev@nue gain from the floor 18 $2.3 billion.
The
If this $2.3
billion were not thus available, then the rate scale would
have to be raised, primarily in the middle and upper brackets
if the revenue involved were to be distributed in the .ame
fashion as reflected by the floor.
This would mean top
bracket marginal tax rates would be scaled to 75 percent and
not 65 percent.
- 18 could be given to this viewpoint by combining a floor on
itemized deductions with some comparable reduction la the
standard deduction.
The combination of the five percent floor and rate
reduction will leave itemizers with significant tax reductiona.
Further, the five percent floor will not reduce the
incentives that the deductions for personal expense. .eek to
encourage, such as home ownership or charitable contributions.
Itemized expenses today average about 20 percent of adjusted
~-' income,
so that moat of present expenses and. of course,
all new expenses are above the floor.
Those, for example, who
have expressed fears over reduced charitable or educational
giving should be relieved of their worries when they study
the facts.
Clearly for most itemdzers the present DOn-
discretionary expenses of State taxes, mortgage tnt.r..t, and
medical expenses are obviously above a S percent floor.
Volun-
tary charitable contributions, therefor., would be fully
deductible.
Moreover, despite the foreboding. of acme of
these institutions in 1944 when the standard deductioa
wa.
adopted -- and 80 percent of taxpayers were shifted to that
method -- charitable giving was not adversely affected. Finally,
the volume of charitable giving appears to depend primarily on
- 17 the objectives can be achieved by continuing the standard
deduction of 10 percent and adopting a five percent floor
under itemized deductions.
gain revenue.
This policy would, of course,
Since it would be adopted to keep the base
from narrowing and thereby keeping or forcing tax rat.. up,
it is appropriate that the revenue gained b. devoted to •
lowering of the rate8.
The policies behind the standard deduction -- aimplification and a balanced allowance to all taxpayers of the
average of personal expenses -- today in the light of the
great increase in personal expenses would thus appear to
require either a rise in the standard deduction or a floor
under itemized deductions. The expre8sion of that policy
through an increase in the standard deduction would contribute
to further narrowing of the tax baae and would nec ••• itate
higher rates.
An expression of that policy in the flve p.~
cent floor will broaden the tax baa. and permit a far larger
reduction in marginal tax rates.
Some may f •• 1 that the con-
tinuation,_fhrough the use of a floor, of this polic7 of
achieving some balance in the recognition of per.onal expaa. ••
raises
problem~
especially in thoae brackets where the 1t--'ler.
and non-itemizers are both significantly repreaeoted.
Ixpr..'~
- 16 -
27 percent of adjusted gross income.
The standard deduction represents a Congressional
policy of eliminating distinctions between itemization and
non-itemization of expenses at the level of average expenses
for taxpayers with incomes below $10,000.
Underlying thi8
policy was a desire for simplification and a willingne8s to
recognize that some of the rental expenses of the renter
reflected personal expense akin to those of the home owoer.
In view of the increase in these personal expenses relative
to gross income, it is obvious that if we were today adopting
the policy of the standard deduction for the first time, the
appropriate figure would be about 15
pe~cent
percent t with a limit perhaps of $1,500.
inatead of 10
But in the meantime
we have seen tlla t the narrowing of the tax base repreaented
by the rise in personal expenses is a factor in keeping
marginal rates at an excessively high level.
A standard
deduction at 15 percent would also have a baae-narrowtng
effect and mean a loss of revenue.
The intent behind the
standard deduction, however, can be as well expressed through
a different mechanism, that of placing a floor under itemized
deductions.
Instead then of a standard deduction of 15 perc_t.
- 15 a considerable growth in the average amount of these personal
expenses, as a result of rising income level. t rising coats,
and changing babits.
In 1944, about 35 million returns uaed
the standard deduction and only 8 million used ic. .iaed
deductions; in 1962 the figures were 26 million and 25 million
respectively.
In 1944, the standard deduction repreaented
63 percent of the total of all deductions for these personal
expenses; in 1962 this figure bad dropped to 13 percent.
In
1944 the itemized and standard deductions combined repre.ented
about 10 percent of adjusted gross income; in 1962 they represented about 15 percent.
to $12-1/2 billion.
The standard deduction now comes
The itemized deductions come to $41 bil-
lion, used by taxpayers with an adjusted gross income of
$217 billion, or about 20 percent.
In 1944, the ite.i.ed
deductions amounted to only $4.6 billion, used by e&xpayers
with $32.5 billion adjusted gross income, or about 14 percent.
This is the key figure, for it indicates the persiatent narrowing of the tax base that has occurred in postwar year. a. a
result of the large increase in amount of itemized deducti. . -from 14 percent to 20 percent of the adjusted groaa incaa. of
the returns involved.
Parenthetically, by contraat the total
of personal exemptions has dropped from about 40 percent to
- 14 whose objections are directed to the present rate scales.
More-
over, these changes have a considerable bearing on the economic
scene in terms of labor mobility and allocation of individual
skills.
This group of reforms or structural changes thus con-
tributes significantly to the insistent urgings for improvement
in the tax structure.
Individual Structural Changes that Gain Revenue.--The
remaining individual structural changes involve revenue gains.
The most significant from a revenue standpoint is the proposed
floor on deductions for personal expenses -- interest, charitable contributions, State and local taxes,medical expenses.
casualty losses.
Under this proposal only the total of those
expenses above five percent of adjusted gross income would be
deductible.
A
consideration of this proposal in its proper
perspective requires that we go back to the'origin and effect
of the standard deduction.
The Congress in 1944 adopted our
present standard deduction of 10 percent of adjusted gross
income uf to a $1,000 maximum as a device to simplify the tax
law.
3ince the 10 percent figure chosen was somewhat above
the average of those expenses then being itemized as
deducti~,
the policy also eliminated any distinctions between 1tem1zer.
and non-itemizers among taxpayers below or around the average
level.
- 13 continues to work for the same employer and for a person
who changes his employer.
The remaining individual structural changes that lose
revenue smooth out or extend existing provisions respecting
certain expenditures.
One change would expand the benefitl
of the child care provision (revenue cost $20 billion);
another would apply the 30 percent ltmdtation uniformly to
all publicly-supported charities, thereby replacing the
present distinctions between a 20 percent and a 30 percent
limitation for these charities (revenue cost nominal); and
a third would clarify and simplify the medical expense deduction (revenue cost nominal).
In sum, this group of reforms, which in total involve
a revenue cost of $740 million, will thus meet some of the
persistent and well-founded complaints regarding the hardships reSUlting today, not from the present rate scale but
from the operation of the tax structure even under a reasonable rate scale.
They deal with specific unfairne.se.
requiring specific reforms for their cure.
important to the persons affected, in
te~
It i. just ••
of fairness under
an income tax, that their problems be met as it i. to tho ••
- 12 -
While fluctuating incomes may be more characteristic of
people in certain occupations, such as authors, artists,
actors, athl'e'tel:r -, ranchers, fishermen, farmers, architects,
and individual business proprietorshipf,i.t obviously _y be
experienced in many other situations.
111e combination of
graduated tax rates and an i.rregular pattern of income
produces more tax today over a period of years than does a
stable income pattern.
'nle tax program mee'ts this hardship
by a uniform averaging formula applicable to all, under
which income is, in effect, averaged over a five-year period
whenever the current year's income is significantly higher
than the average of the preceding four years.
The revenue
cost is about $40 million.
A fourth structural change, involving a revenue co.t of
$50 million, is aimed at meeting the hardship experienced by
persons who muat incur moving expenses for themael... and
their families as a cODsequence of • change in employment.
The burden can often be severe and its impact. apart from
hardship, can be such
on labor mobility.
8S
to place an undesirable r •• triction
'nte tax program proposes a deduction for
these moving expenses. both for a transferred perioD who
- 11 -
depending on source of income, are too great to tolerate -a tax of zero for a $3,000 income from interest and rent,
but a tax of $300 if wages are the only source of income.
And again the credit is unneeded in the upper levela.
The tax program proposes to substitute for all
this •
flat $300 credit against tax for each person over aie 65.
Recognition of the present social security exclusion i.
taken account of in the proposal.
This is dona by reducing
the credit by an amount based on one-half of social ••curity
benefits times the taxpayer's bracket or marginal
tax
rate.
This procedure reflects the fact that both the employee and
employer contribute equally to the benefits.
The cost of
this change is $320 million, one-half of which goes to person•
J ,.j?
below the $5,000 income level and the: balance to tho •• with
./ i • ..",
f.
incomes between dill $5,000 and $10,000.
This change would
thus continue the present policy that age 18 a factor justifying tax relief, and then provide a mechanism which both
grants that relief in a fair and simple way and conlin.. it
to the income levels where it is needed most.
A
third structural change under the individual
~
tax also meets a hardship which rate reduction cannot .olve -that faced by the person with fluctuating yearly income.
- 10 equivalent of an exemption increa.e of a. mucb a. $233 for
a single persons, of as much as $133 for each .pouae of the
married couple, and of as much a. $83 for each _mber of the
family of four.
About 1.5 million peraou would become
DOD-
taxable by this proposal.
In short, the minimum standard deduction
prop~1
uaes
the deduction factor of the tax computation a. a technique
to achieve a fair adjustment of the tax burd... at the lowe.t
levels of income, in preference to the more traditional, Jat
wastefully expensive technique, of raiSing exemptioa••
Another bardship that tax rate reduction alODe cawnot
meet is the present complex and discriminatory treatlMnt of
the aged.
Fresent law embodies an extra $600 exe.ption --
which at higher income levels is unneeded aad
tw••
rev....
waste -- and a complicated retirement income credit d.. lsaed
to give pensioners and thole receiving iave.tmeDt tacoma •
tax reduction somewhat comparable to the exclusion of _cial
security benefita from income.
Its effect 1. Co diaort.1aate
against all thoae over 65 who receive earned income -- about
three out of every four taxpayers over 65.
The coa.aequeac
unfairness.s among the aged in the income level. below .10,000,
- 9 reductions alone obviously cannot meet this problem.
Yet
the solution of raising exemptions by $100 would mean a
revenue loss of $2.5 billion under proposed rates and
r~
3 million taxpayers from the rolls; an increase of $200 in
exemptions means a revenue loss of almost $5 billion and
removal of 6-1/2 million taxpayers.
This exemption approach
is wasteful of revenue, since its effects reach beyond the
lower levels where the particular relief is needed, and 18
often over-generous where family size is large.
Of the $2.5
billion of revenue that would be lost through a $100 incr... e
in exemptions, only 20 percent or $550 million would go to
the group below $5,000.
As a more appropriate solution the program proposes a
minimum standard deduction of $300 for a single person and
an additional $100 for a spouse and for each dependent.
AI
a consequence, single persons below $900, married persona
below $1600, and married persons with two dependents below
$3000 cease to be taxable -- as compared with the $667, $1333.
and $2666 levels of today.
The revenue
1088
1s only $310
million, concentrated almost entirely in the group below $S,ooO.
Yet this approach achieves in the lowest income range the
- 8 investment incentives to stimulate ua to 1 0 on to a hiaher
level of capital formation and economic Irawth.
Th. rate
reductions pull back the entire rate structure -- individual
and corporate, from top to bottom.
The Na£We of the PrORgted Revision -
Th'
S~ructur.l
gaaps••
The major reform in the tax program i8 thus the lar.e recluct:
in tax rates.
These reductions ara complemented by -- and th.ir
revenue cost partially offset by -- a number of proposed .tructur.
changes.
These structural changes are not all in
some involve revenue loa.es and
80me
ODe
direotion •.
revenue gains. same aff.ct
corporations and some individuals, same are directlJ associated
with changes in the rate structure and some are required by the
objectives of eliminating hardships, unfairnes., and wjUltlfi.d
preferences.
Indiyidua l Strwrtural Change. that Lou &aytPM.--Oa the
individual side, a number of structural chana•• are propoMd to
remove particular hardships and unfalrneaaea that rate
tion by itself will not rectify.
~.duc·
Thus, at the 10lffer eacI of
the scale, tne insistence by many that exemptiona be rat...
has been prompted by the realization that an income tax reaching a •. low as $667 for single perlons and $1,333 for married
couples tax•• persona in the area of real poverty.
late
- 7 -
of corporation tax liabiliti•• was removed throuah the
combined effect of the inv•• tment credit aad adainiltr.tlv.
revision of the depreciation rule..
The r ••ultina total
would mean that over-all corporate tax liabilities would b.
_,~ .;~. ~ A~:/t~
reduced by nearly 20 percent.
{
These reductions would thus achieve a
s .. l~ loweri..
of the individual and corporate rate structures.
Itl tel'llll
of increased incentives, of increased private r.lourc..
available for consumer spending and capital invelt.eDt. of
a significant lessening of the weight of the tax ',Item oa
all private enterprise and activity, of the t.petua 81vea
to cost-cutting and improvements in productive efficiency,
the new rates represent the moat significant of the refor.l
of the tax system that the program embodies.
They are a
direct and effective re.ponae to the need for looleniDa the
present tax restraints on the economy.
They recogaiae that
the achievement of a greater level of ecoaoadc recovery aad
more rapid growth cannot rest either on increaaed coaau.er
spending alone or on increased incentivel and aaviaga for
investment alone.
Both are vitally needed -- eon81a8r d_1lCl
to press on existing and future capacity to bring ua to full
~lloyment
and lead to a higher level of investment; the
- 6 -
24 percent, of 43 percent for the $25,000 men would be
34 percent.
The 50 percent marginal rate now reached at
$32,000 would be reached at $52,000.
The 60 percent _rginal
rate now reached at $52,000 would not be reached until
$140,000.
These large reductions in the marginal tax rate. --
the rates on added dollars of income -- show the aignlflcaftt
increase in incentives inherent in the program.
The resulting rate scale means a reduction of $11 billion
in individual income tax liabilities.
On the corporate side our present rates are 30 percent
on the first $25,000 of income and 52 percent on the r_iDder.
The proposed tax rates would be 22 percent on the firat
$ 25 ,000 and 47 percent on the be lance.
The 22 percent rat.
for 8mall business -- a rate which would apply to 80 percent
of all taxpaying corporations -- i8 a reduction of 27 percent.
It means a significant lift for a larse 8egment of Aa.rican
enterprise.
The 47 percent rate is • 10 percent reduction,
80 that the reduction for the corporations above $2',000
rana"
in between -- it is 16 percent for a $50,000 corporatioa, 12
percent for a $100,000 corporation.
The over-all reduction
in corporate tax liabilities is $2.6 billion.
Thi. reduction
i8 about the same as that obtained in 1962, when over $2 bi11Ue
- 5 -
of economic activity.
Our task is to secure the full uti-
lization of those resources.
The most effective way to
achieve that full utilization is to revise the tax system.
Tax revision, by removing the present tax restraints on the
private sector, will enable it to provide the force and
initiative so necessary to economic vitality.
Tax revis10n --
for long acknowledged as a desirable thing to do -- is now
of paramount economic importance.
The Nature of the Propo,sed Revision - The Rate Reductions
In full recognition of the
tmper.tiy~
~
~
of tax revision,
.~
the President's tax program recouaen6_•• iVe reductions 1n
the rate scale and significant structural changes.
Combined
these mean, in full operation, a reduction of $10.3 billion
in tax liabilities -- about 15 percent of our present individual
and corporate tax liabilities.
Let us start with the major
The
reform of the tax structure, the reduction in tax rate..
present indivinual rates run from 20 percent in the bottoa
bracket of $2,000 - $4,000 for a married couple -- to 91 perc.t
at the top.
President Kennedy's tax program would start the
tax scale at 14 percent on the first $1,000 - $2,000 for a
married couple -- and rise to a max:ha. of 65 percent.
The
intermediate rates are all pulled down -- the present maraua1
rate of 30 cercent for the $15.000 married man would be
- 4 resources in men and capital are capable of producing.
The overwhelming weight of
econo~c
analysis indicates
that the income tax structure presses too heavily on die
economy.
Its especially high individual income tax rates,
starting at 20 percent, sweep too much out of priv,ate hand.
in relation to our GNP, so that consumer demand i. kept
throttled down in periods of recovery.
The rate structure,
rising to 91 percent, means high marginal tax rates that deter
incentive, risk-taking, and personal effort. thereby l •••ening
the contribution that private initiative is able to IIIIlke.
The
corporate tax rate, at 52 percent, unduly It.!ts the profitability of corporate investment and pre.ents corporate ..aal.-mt
with the fact that the shareholders are the lesser and the
Government the greater partner in the enterprise. they plde.
Added to all this i. the waste arising from the diatortiDnl
induced by the special preferences -- the uneconomic allocation
of resources, the talents and time lost in the pursuit of tax
schemes, the reaentments created by the gro.s unfairne•••••
We thus come to thea. conclusions -- the America we .at
and the America we must have to meet our international obliptions and hazards can be obtained only by • more productiv.
economy.
We posseS8 the resources required for a higher 1.-1
- 3 -
significant first step in revision of the tax structure waa
thus accomplished.
1963 - The Case
------_._--
for Tax Revision Becomes Imperative
The year 1963, however, brought a new dimension to the
situation.
The tax revision that all had agreed vas Ofte of
our desirable domestic goals came to be recognized as an
imperative to our economic health.
~ie
have seen four recessions since the end of World War II.
We have seen unplanned deficits resulting from a failure of
the economy to achieve levels of operation coosiatent with
its potential in terms of capital, manpower, and productivity.
The gap between our potential and our actual perforaance -now about $40 billion in term8 of lost gro8s national product
per year -- is evident in unused industrial capacity, hlp
unemployment, and a lagging rate of capital form.tion.
~.
result we are running the risk of reces8iona that could cut
deeper and last longer, followed by shorter recoverie••
Furthermore, the America we all want -- with full ..,lo,.ent,
\~ith
more and better schools, health faCilities, and publlc
services, with urban redevelopment on a faster and larger .ea1.,
with better living standards for all -- will come about far
more quickly through an economy yielding us all that our
- 2 It is hardly surprising, then, that criticism of our
tax system became more insistent as the postwar period
lengthened.
The Congress took account of 8uch criticism
in 1955 and 1959, when, under the leadership of Chairm.n
~~ilbur
Mills of Arkansas, noteworthy studie8 of our tax
system were made.
Considerable testimony from professional
experts was compiled in these studies, not merely on the
criticisms themselves, but on the possible lines of improvement which might be taken.
That was the situation when President Kennedy took office.
He immediately set tax revision as one of the major domestic
goals of his Administration.
He made his views claar in hi.
first tax message to the Congress, in April of 1961.
1ft that
message he urged the adoption of an investment tax credit a.
a stimulus to spur investment and accelerate growth, propo.ed
a series of specific tax reforms, and ordered a Treasury study
of additional, broader changes in the income tax strueture.
The Congress responded with the Revenue Aet of 1962, CODtaining both the investment tax credit and significant refora
provisions in almost all of the areas recommended by the
President -- in all nearly a billion dollars of tax reform to
roughly match the revenue lost by the investment credit.
A
TPEASURY DEPA T
~T
Washington
FOF RFUASF A. V. \)FWSPAPF.RS
~.11~fch I, 1963
Rl1-1A8J,-S rlY STANLEY S. SURREY I
,\~)313TANT 3ECRl!.l'ARY OF THE TREASURY
n2f0R~
THE JURISTIC SOCIETY OF PHILADELPHIA
PHIlADELPHIA, PENNSYLVANIA
FEBRUARY
7/
28, 1963
O(!r-}*f..
Efr
THE TAX PROGRAM IN PERSPECTIVE
The Background - Widespread Criticism of the Tax Structure
Throughout the postwar period there has been increasing
recognition that the Federal income tax structure deserved
revision.
It has been criticized on the ground that its high
rates are a heritage of war and postwar inflationary pressure.
and that these rates dull initiative, destroy incentives, and
inhibit risk-taking.
There have also been charges that our tax law contains
special preferences, which discriminate without justification
among taxpayers and contribute
to
gross unfairness.
The_DY
exclusions and deductions have been blamed for unduly aarrowing the tax base, contributing to the need for high rates.
The tax system has been blamed for sbowing favoritism to
80me
industries and transactions, and distorting the allocation of
resources in the economy as well as interfering with the free
play of market forces.
As a result of all this, the energie.
and talents of many people
including a great number of
highly skilled executives and profesaional people -- have beeD
taken up devising intricate scheme. to*-ke . . .i .... advantage
of opportunities for tax reduction.
TREASURY DEPARDlENT
Washington
FOR RELEASE A.M. NEWSPAPERS
FRIDAY, MARCH 1, 1963
REMARKS BY STANLEY S. SURREY,
. ASS ISTANT SECRETARY OF TIlE TREASURY
BEFORE THE JURISTIC SOCIETY OF PHILADELPHIA
PHILADELPHIA, PENNSYLVANIA
FEBRUARY 28, 1963, 7:00 P.M., EST
THE TAX PROGRAM IN PERSPECTIVE
The Background -- Widespread Criticism of the Tax Structure
Throughout the PQstwar period there has been increasing
recognition that the Federal income tax structure deserved revision.
It has been criticized on the ground that its high rates are a
heritage of war and postwar inflationary pressure, and that these
rates dull initiative, destroy incentives, and inhibit risk-taking.
There have also been charges that our tax law contains
special preferences, which discriminate without justification
among taxpayers and contribute to gross unfairness. The many
exclusions and deductions have been blamed for unduly narrowing
the tax base, contributing to the need for high rates. The tax
system has been blamed for showing favoritism to some industries
and transactions, and distorting the allocation of resources in the
economy as well as interfering with the free play of market forces.
As a result of all this, the energies and talents of many people
including a great number of highly skilled executives and
professional people -- have been taken up devising intricate
schemes to take maximum advantage of opportunities for tax reduction.
It is hardly surprising, then, that criticism of our tax
sys tern became more ins is ten t as the pos twar period lengthened.
The Congress took account of such criticism in 1955 and 1959, when,
under the leadership of Chairman Wilbur Mills of Arkansas,
noteworthy studies of our tax system were made. Considerable
testimony from professional experts was compiled in these studies,
not merely on the criticisms themselves, but on the possible lines
of improvement which might be taken.
D-770
- 2 -
That was the situation when President Kennedy took office.
He innnediately set tax revision as one of the major domestic goals
of his Administration. He made his views clear in his first tax
message to the Congress, in April of 1961. In that message he
urged the adoption of an investment tax credit as a stimulus to
spur investment and accelerate growth, proposed a series of
specific tax re forms, and ordered a Treasury study of add i tional,
broader changes in the income tax structure.
The Congress responded with the Revenue Act of 1962, containing
both the investment tax credit and significant reform provisions
in almost all of the areas recommended by the President -- in all
nearly a billion dollars of tax reform to roughly match the
revenue lost by the investment credit. A significant first step
in revision of the tax structure was thus accomplished.
1963 -- The Case for Tax Revision Becomes Imperative
The year 1963, however, brought a new dimension to the
situation. The tax revision that all had agreed was one of our
desirable domestic goals came to be recognized as an imperative
to our economic health.
We have seen four recessions since the end of World War II.
We have seen unplanned deficits resulting from a failure of the
economy to achieve levels of operation consistent with its
potential in terms of capital, manpmver, and productivity. The
gap between our potential and our actual performance -- now about
$40 billion in terms of lost gross national product per year -is evident in unused industrial capacity, high unemployment, and
a lagging rate of capital formation. As a result we are running
the risk of recessions that could cut deeper and last longer, followed
by shorter recoveries. Furthermore, the America we all want
with full employment, with 'TIore and better schools, heal th
facilities, and public services, with urba~ redevelopment on a
faster and larger scale, with better living standards for all -will come about far more quickly through an economy yielding US all
that our resources in men and capital are capable of producing.
The overwhelming weight of economic analysis indicates that
the income tax structure presses too heavily on the economy. Its
especially high individual income tax rates, starting at 20 percent,
sweep too much out of private hands in relation to our G~P, so
that consumer demand is kept throttled dmvn in periods of recovery.
- 3 -
The rate structure, rising to 91 percent, means high marginal tax
rates that deter incentive, risk-taking, and personal effort,
thereby lessening the contribution that private initiative is able
to make. The corporate tax rate, at 52 percent, unduly limits the
profitability of corporate investment and presents corporate
management with the fact that the shareholders are the lesser and
the Government the greater partner in the enterprises they guide.
Added to all this is the waste arising from the distortions
induced by the special preferences -- the uneconomic allocation
of resources, the talents and time lost in the pursuit of tax
schemes, the resentments created by the gross unfairnesses.
We thus corne to these conclusions -- the America we want and
the America we m~st have to meet our international obligations and
hazards can be obtained only by a more productive economy. We
possess the resources required for a higher level of economic
activity. Our task is to secure the full utilization of those
resources. The most effective way to achieve that full utilization
is to revise the tax system. Tax revision, by removing the present
tax restraints on the private sector, will enable it to provide the
force and initiative so necessary to economic vitality. Tax
revision -- for long acknowledged as a desirable thing to do -- is
now of paramount economic importance.
The Nature of the Proposed Revision
The Rate Reductions
In full recognition of the imperative of tax revision, the
President's tax program recommends large reductions in the rate
scale and significant structural changes. Combined these mean, in
full operation, a reduction of $10.3 bil1io~ in tax liabilities
about 15 percent of our present individual and corporate tax
liabilities. Let us start with the major reform of the tax
structure, the reduction in tax rates. The present individual
rates run from 20 percent in the bottom bracket of $2,000 $4,000 for a married couple -- to 91 percent at the top. President
Kennedy's tax program would start the tax scale at 14 percent on
the first $1,000 - $2,000 for a married couple -- and rise to a
maximum of 65 percent. The intermediate rates are all pulled
down -- the present marginal rate of 30 percent for the $15,000
married man would be 24 percent, of 43 percent for the $25,000
man would be 34 percent. The 50 percent mgrginal rate now reached
at $32,000 would be reached at $52,000. The 60 percent marginal
rate now reached at $52,000 would not be reached until $140,000.
These large reductions in the marginal tax rates -- the rates on
added dollars of income -- show the significant increase in
incentives inherent in the program.
- 4 The resulting rate scale means a reduction of $11 billion in
individual income tax liabilities.
On the corporate side our present rates are 30 percent on
the first $25,000 of income and 52 percent on the remainder.
The proposed tax rates would be 22 percent on the first $25,000
and 47 percent on the balance~ The 22 percent rate for small
business -- a rate which would apply to 80 percent of all taxpaying
corporations -- is a reduction of 27 percent. It means a significant
lift for a large segment of American enterprise. The 47 percent
rate is a 10 percent reduction, so that the reduction for the
corporations above $25,000 ranges in between -- it is 16 percent
for a $50,000 corporation, 12 percent for a $100,000 corporation.
The over-all reduction in corporate tax liabilities is $2.6
billion. This reduction is about the same as that obtained in
1962, when over $2 billion of corporation tax liabilities was
removed through the combined effect of the investment credit and
administrative revision of the depreciation rules. The resulting
total would mean that over-all corporate tax liabilities would be
reduced by nearly 20 percent.
These reductions would thus achieve a sizable lowering of
the individual and corporate rate structures. In terms of
increased incentives, of increased private resources available
for consumer spending and capital investment, of a significant
lessening of the weight of the tax system on all private enterprise
and activity, of the impetus given to cost-cutting and improvements
in productive efficiency, the new rates represent the most
significant of the reforms of the tax system that the program
embodies. They are a direct and effective response to the need for
loosening the present tax restraints on the economy. They
recognize that the achievement of a greater level of economic
recovery and more rapid growth cannot rest either on increased
consumer spending alone or on increased incentives and savings for
investment alone. Both are vitally needed -- consumer demand to
press on existing and future capacity to bring us to full
employment and lead to a higher level of investment; the investment
incentives to stimulate us to go on to a higher level of capital
formation and economic growth. The rate reductions pull back the
entire rate structure -- individual and corporate, from top to
bottom.
The Nature of the Proposed Revision -- The Structural Changes
The major reform in the tax program is thus the large reduction
in tax rates. These reductions are complemented by -- and their
revenue cost partially offset by -- a number of proposed structur0l
changes. These structural changes are not all in one direction --
- 5 -
some involve revenue losses and some revenue gains, some affect
corporations and some individuals, some are directly associated
with changes in the rate structure and some are required by the
objectives of eliminating hardships, unfairness, and unjustified
pre ference s .
Individual Structural Changes that Lose Revenue. -- On the
individual side, a number of structural changes are proposed to
remove particular hardships and unfairnesses that rate reduction
by itself will not rectify. Thus, at the lower end of the scale,
the insistence by many that exemptions be raised has been prompted
by the realization that an income tax reaching as low as $667 for
single persons and $1,333 for married couples taxes persons in the
area of real poverty. Rate reductions alone obviously cannot
meet this problem. Yet the solution of raising exemptions by
$100 would mean a revenue loss of $2.5 billion under proposed rates
and remove 3 million taxpayers from the rolls; an increase of $200
in exemptions means a revenue loss of almost $5 billion and
removal of 6-1/2 million taxpayers. This exemption approach
is wasteful of revenue, since its effects reach beyond the lower
levels where the particular relief is needed, and is often overgenerous where family size is large. Of the $2.5 billion of
revenue that would be lost through a $100 increase in exemptions,
only 20 percent or $550 million would go to the group below $5,000.
As a more appropriate solution the program proposes a
mlnlmum standard deduction of $300 for a single person and an
additional $100 for a spouse and for each dependent. As a consequence
single persons below $900, married persons below $1600, and married
persons with two dependents below $3000 cease to be taxable -- as
compared with $667, $1333, and $2666 levels of today. The revenue
loss is only $310 million, concentrated almost entirely in the
group below $5,000. Yet this approach achieves in the lowest
income range the equivalent of an exemption increase of as much
as $233 for a single persons, of as much as $133 for each spouse
of the married couple, and of as much as $83 for each member of
the family of four. About 1.5 million persons would become nontaxable by this proposal.
In short, the minimum standard deduction proposal uses the
deduction factor of the tax computation as a technique to achieve
a fair adjustment of the tax burdens at the lowest levels of
income, in preference to the more traditional, yet wastefully
expensive technique, of raising exemptions.
- 6 Another hardship that tax rate reduction alone cannot
m2et is the present complex and discriminatory treatment of the
aged. Present. law embodies an extra $600 exemption -- which at
higher income levels is unneeded and thus a revenue waste -and a complicated retirement income credit designed to give
pensioners and those receiving investment income a tax reduction
somewhat comparable to the exclusion of social security benefits
from income. Its effect is to discriminate against all those
over 65 who receive earned income -- about three out of every four
taxpayers over 65. The consequent unfairnesses among the aged in
the income levels below $10,000, depending on source of income,
are too great to tolerate -- a tax of zero for a $3,000 income
from interest and rent, but a tax of $300 if wages are the only
source of income. And again the credit is unneeded in the upper
levels.
The tax program proposes to substitute for all this a flat
$300 credit against tax for each person over age 65. Recognition
of the present social security exclusion is taken account of in
the proposal. This is done by reducing the credit by an amount
based on one-half of social security benefits times the taxpayer's
bracket or marginal tax rate. This procedure reflects the fact
that both the employee and employer contribute equally to the
benefits. The cost of this change is $320 million, one-half of
which goes to persons below the $5,000 income level and most of
the balance to those with incomes between $5,000 and $10,000.
This change would thus continue the present policy that age is a
factor justifying tax relief, and then provide a mechanism which
both grants that relief in a fair and simple way and confines it
to the income levels where it is needed most.
A third structural change under the individual income tax
also meets a hardship which rate reduction cannot solve -- that
faced by the person with fluctuating yearly income. While
fluctuating incomes may be more characteristic of people in
certain occupations, such as authors, artists, actors, athletes,
ranchers, fisherman, farmers, architects, and individual business
proprietorships, it obviously may be experienced in many other
situations. The combination of graduated tax rates and an irregular
pattern of income produces more tax today over a period of years
than does a stable income pattern. The tax program meets this
hardship by a uniform averaging formula applicable to all, under
which income is, in effect, averaged over a five-year period
whenever the current year's income is significantly higher than the
average of the preceding four years. The revenue cost is about
$40 million.
- 7 A fourth structural change, involving a revenue cost of
$50 million, is aimed at meeting the hardship experienced by persons
who must incur moving expenses for themselves and their families
as a consequence of a change in employmen t. The burden can
often be severe and its impact, apart from hardship, can be such
as to place an undesirable restriction on labor mobility. The
tax program proposes a deduction for these moving expenses, both
for a transferred person who2on tinues to work for the same
employer and for a person who changes his employer.
The remaining individual structural changes that lose revenue
smooth out or extend existing provisions respecting certain
expenditures. One change would expand the benefits of the child
care provision (revenue cost $20 billion); another would apply the
30 percent limitation uniformly to all publicly-supported
charities, thereby replacing the present distinctions between a
20 percent and a 30 percent limitation for these charities
(revenue cost nominal); and a third would clarify and simplify
the medical expense deduction (revenue cost nominal).
In sum, this group of reforms, which in total involve a
revenue cost of $740 million, will thus meet some of the persistent
and well-founded compL:Iints regarding the hardships resulting to:lay,
not from the present rate scale but from the operation of the tax
structure even under a reasonable rate scale. They deal with
specific unfairnesses requiring specific reforms for their cure.
It is just as important to the persons affected, in terms of
fairness under an income tax, that their problems be met as it is
to those whose objections are directed to the present rate scales.
Moreover, these changes have a considerable bearing on the
economic scene in tenns of labor mobility and allocation of
individual skills. This group of reforms or structural changes
thus contributes significantly to the insistent urgings for improvement in the tax structure.
Individual Structural Changes that Gain Revenue. -- The
remaining individual structural changes involve revenue gains.
The most significant from a revenue standpoint is the proposed
floor on deductions for personal expenses -- interest, charitable
contributions, State and local taxes, medical expenses, casualty
losses. Under this proposal only thl' total of those expenses
above five percent of adjust~ed gross income \vould be deductibll'.
A consideration of this proposal in its proper perspective requires
that we go back to the origin and effect of the standard deduction.
The Congress in 194!+ adopted our present standard deduction of
10 percent of ndjusted gross income up to a $1,000 tn(lximum as a
deVice to simplify the tax 1<1\v. Since the 10 p~)rceI1t figure
- 8 chosen was somelvhat above the avcrclge of those expenses then being
itemized as deductions, the policy also eliminated any distinctions
between i temizers and 11 on - i tcmizers among taxpayers be low or
around the average level.
Since 1944 there has been a considerable growth in the average
amount of these personal expenses, as a result of rising income
levels, rising costs, and changing habits. In 1944, about 35
million returns used the standard deduction and only 8 million
used itemized deductions; in 1962 the figures were 26 million and
25 million respectively.
In 1944, the standard deduction represented
63 percent of the total of all deductions for these personal
expenses; in 1962 this figure had dropped to 23 percent. In 1944
the itemized and standard deductions combined represented about
10 percen t 0 f adj us ted gros s income; in 1962 they represen ted
about 15 percent. The standard deduction now comes to $12-1/2
billion. The itEmized deductions come to $41 billion, used by
taxpayers with an adjusted gross income of $217 billion, or about
20 percent. In 1944, the itemized dcduc t ions amounted to on ly
$4.6 billion, used by taxpayers with $32.5 billion adjusted gross
income, or about 14 percent. This is the key figure, for it
indicates the persistent narrowing of the tax base that has occurred
in postwar years as a result of the large increase in amount of
itemized deductions -- from 14 percent to 20 percent of the adjusted
gross income of the returns involved. Parenthetically, by contrast
the total of personal exemptions has dropped from about 40 percent
to 27 percent of adjus ted gross income.
The standard deduction represents a Congressional policy of
eliminating distinctions between itemization and non-itemization
of expenses at the level of average expenses for taxpayers with
incomes below $10,000. Underlying this policy was a desire for
simplification and a willingness to recognize that some of the
rental expenses of th2 renter reflected personal expense akin to
those of the home owner. In view of the increase in these
personal expenses relative to gross incrnne, it is obvious that if
we were today adopting the policy of the standard deduction for
the first time, the appropriate figure would be about 15 percent
~stead of 10 percent, with a limit perhaps of $1,500.
But in the
meantime we have seen that the narrmving of the tax base represented
by the rise in personal expenses is a factor in keeping marginal
rates at an excessively high level. A standard deduction at
15 percent would niso have a base-narrowing effect and mean a loss
of revenue. The intt}[lt lwhind the 0tandard deduction, hmvever,
can be as well cxprl'ssc,d thl-uugh ;j dLfferent ITlc'chanism, that of
plaCing a floor under jLemit','d cli·rluctions.
Instead then of a
- 9 standard deduction of 15 percent, the objectives can be achieved
by continuing the standard deduction of 10 percent and adopting
a five percent floor under itemized deductions. This pol icy would,
of course, ga in revenue.
Since it \Vou lcl be adop ted to keep the
base from narrowing and thereby keeping or forcing tax rates up,
it is appropriate that the revenue gained be devoted to a
lowering of the rates.
The policies behind the standard deduction -- simplification
and a balanced allowance to all taxpayers of the average of
personal expenses -- today in the light of the great increase in
personal expenses would thus appear to require either a rise in
the standard deduc t ion or a floor under itemized deduc t ions.
The expression of that policy through an increase in the standard
deduction would contribute to further narrowing of the tax base
~d would necessitate higher rates.
An expression of that policy
in the fivE' percent floor will broaden the tax base and permit a
far larger reduction in marginal tax rates. Some may feel that
the continuation, through the usc of a floor, of this policy of
achieving some balance in the recognition of personal expenses
raises problems, especially in those br.Jckets where the itemizers
and non-itemizers are both significantly represented.
Expression
could be given to this vie\vpoint by combining a floor on itemized
deduc tions wi th some compar ab Ie rccluc t ion in the standard deduc t ion.
The cOlnbination of the five percent floor ann rate reduction
will leave itemizers with significant tax reductions.
Further,
the five percent floor will not reduce the incentives that the
deductions for personal expenses seck to encourage, such as home
mmership or charitable contributions.
Itemized expenses today
~erage about 20 percent of adjusted gross income, so that most of
present expenses and, of course, all new expenses are above the
floor. Those, for example, who have expressed fears over rcduccd
charitable or educational giving should be relieved of their
Ivorries when they study the facts.
Clearly for most itcmizers the
present non-discretionary expenses of State taxes, mortgage intercst,
and medical expenses are obvious ly above a 5 percen t floor.
Voluntary charitable contributions, therefore, would be fu] 1y
deductible. Moreover, despite the forebodings of some of these
institutions in 1944 \vhen the standard deduction YhlS ;1dopted -- ilnd
80 percent of taxpayer~ \v2re shifted to that method -'- chari tahle
giving was not adverse ly affected.
Finally, the volume o[
charitable giving appears to depend primnrily on
the lC'vc:l oL
~ncolllC -- for years it has been about 2 percent of n;ltionnl pel"son:il
inCome despite changes in tax rates and structure.
The' Lnx prl);'.Lllll
Ivill not only incr(~dse the aftc:r-tax inCOillCS of illdividu:tl;; IJlIL
through its effect on the economy \vill greatly incre(lsc lluljol1dl
- 10 personal income. A rise in that income from the present $440
billion to $525 billion -- which could be achi~ved under the tux
program
would alone incr2ase charitable giving from its
present $8.8 billion to $10.5 billion.
1h2 five percent floor is thus not only in keeping with the
policies behind the standard deduction, but it also expresses
those policies in a manner that permits a larger tax rate
reduction than would otherwise be poss ible. The revenue gain
from the floor is $2.3 billion. If this $2.3 billion were not thus
available, then the rate scale would have to be raised, primarily
in the middle and upp?r brackets if the revenue involved were to
be distributed in the same fashion as reflected by the floor.
This would mean top bracket marginal tax rates would be scaled to
75 percent and not 65 percent.
The five percent floor, while keeping the essential policies
underlying the deductions for personal expenses, also 20ntributes
to a rate scale more conducive to personal incentives and economic
well being. The basic point is to preserve and strengthen all of
the incentives that are important -- both those involved in the
deductions for personal expenses and those involved in lower
marginal tax rates -- and the combination of the five percent
floor and the lower rate scale it permits achieves this result.
Thc remaining individual revenue-raising changes raise about
$700 million -- an amount equal to the revenue-losing changes.
~o of the changes are associated with reductions in the rates,
cspe~ially the top rates, and would remove preferences or escapes
not justifiable under lowered top rates. The proposal to
eliminate the dividend credit dnd exclusion would alone recover
$460 million in tax revenue. Nearly 80 percent of the benefits
of these provisions presently goes to taxpayers over $10,000, and
over 50 percent to those over $20,000. Even as to the exclusion
only 15 percent of its benefits goes to persons under $5,000, with
60 pcrcent of the benefits to those over $10,000. This, of course,
is mcrely a reflection of th2 concentration of corporate mvnership
:llld dividends inmiddle and upper income groups.
In 1960 only fivt:
Pl'[ccn t () f the re turns under $5,000 repor ted dividends, "vh i ch
d ivi c!cnds amOlln ted to one percen t 0 f the tota 1 adj us ted gros s
Lncoille on these returns; these returns accounted for 14 \wrcent
of dividends reported.
Returns over $20,000 accounted for CO
percont of the dividends, and ;1]most all returns reported S()[Jl'_'
dividends; these dividends represent 10 pt'rCcllt of adjusted f~l-()~~:}
j[lCOllle ~lt $20,000, 20 pc:ccent ,Jt $50,000 nnd 40 pel-cent nlwvc
~200 ,000.
- 11 -
It is appropriate to eliminate this speciRl. nrc[erence for
dividends, which has achieved no useful economic purpose, at
a time when the individual rate scale is being low~red and the
corporate rate also reduced. The incentives [o~ investment and
risk-taking which these lower rates provide would be far more
significant in their impact on the economy than the dividend credit
and exclusion. Moreover, the 5-point proposed reduction in the
corporate rate will give more relief from "double taxation" than
does the four percent credit for incomes up to $186,000. The
credit reduces "double taxation" by amoun ts ranging from 4.3
percent for taxpayers in the first bracket to 10.4 percent in the
proposed top bracket. The five-point reduction in the corporate
tax rate would reduce "double taxation" by 10 percent for everyone.
The other proposal related to the rates is a tightening of the
personal holding company rules, to end the escapes from individual
taxation now available thro~gh the use of these devices to shelter
investment income or income from personal efforts.
The other revenue gaining changes would eliminate undesirable
or inequitable preferences that now exist and improve existing
rules. These involve elimination of the sick-pay exclusion; the
taxation to the employee of the value of the economic benefit of
employer-provided group tenn life insurance above a minimum
figure, in keeping with the present tax treatment of other forms
of employer-provided insurance; the ins titution of a four percent
floor under casualty losses comp1rable to that under medical
expenses, and the elimination of the unlimited charitable deduction.
In sum, the revenue-raising structural changes in the
individual area -- seven in number -- involve about $3 billion,
of which $2.3 billion is concentrated in the five percent floor
and $700 million in the remaining items. They offset to this
extent the $11.7 billion revenue loss involved in a rate scale
running from 14 percent to 65 p~rcent and the $740 million of
changes needed to eliminate hardships that cannot be reached by
rate reduction. They represent reforms responsive to the
persistent urgings that our tax structure be altered to keep the
tax base from constantly narroNing and to eliminate unfair
preferences. They involve no departures from basic income tax
concepts and no complications of technical implemen tation. They
clearly do not broaden the individual tax base as much as some
have urged. At the same time, they represent significant improvements in the tax structure. Together with the changes designed
to eliminate hardships, they con tribu te to a balanced program
of revis ion in the tax s truc tu re .
- 12 -
Corporate Structural Changc:s. -- Th~ structural changes in
the corporate tax are fe\v in number. 1\vo Llre associated with
the reduction of the normal tax on the first $25,000 of
corporate income from 30 percent to 22 p2rcent. The normal tax
concept represen ts a pol icy des igned to ass is t "small bus ines s"
and th= reduction in this rate -- a 27 percent reduction -will strengthen that assistance. It is important that this tax
benefit -- and the consequent revenue loss -- be confined to
what are truly small businesses. However, we find that
enterprises and activities which are conducted with multiple
corporate structures could obtain this "small business" tax benefit
many times over if each corporation in the structure were taxed at
only 22 percent on its first $25,000 of income. It is obvious
that a rational application of a tax policy designed to assist
small business requires aggregation of corporations under common
ownership before the $25,000 test is applied. This is so whether
the multiple corporations serve genuine business purposes or are
simply tax motivated. It may be observed that eligibility for
the other non-tax small business benefits accorded by the
Congress is determined on such a consolidated basis.
The tax program, in order to make possible the reduction
of th2 small business rate to 22 percent, thus proposes only a
single surtax exemption for multiple corporation enterprises,
the ch~nge to be phased over five years. The revenue gain is
$120 million. At the same time, in further application of this
policy of neutralizing the tax effect of multiple corporate
structures, it is proposed that the two percent additional tax
on consolidated returns be eliminated and that intercorporate
dividends between affiliated corporations not be taxes. The
revenue cos t is $50 mi 11 ion.
These two structural changes are thus directly linked to
ilie new corporate rate structure. Of the remaining structural
changes, one that costs revenue ($50 million) would pennit the
current expensing of equipment used in research and development
activities, with the objective of encouraging the expansion of
private civilian research. A change that would gain revenue
(about $250 million, of which $10 million comes from individuals)
involves improvements in the taxation of natural resource
activities designed to carry out the purposes behind th2 existing
depletion policies.
In sunl, these corporate structural changes, few in number,
involve revenue costs of $100 million and gains of $360 million. They
reduce the $2.63 billion of corporate rate reduction to about $2.3
billion. Here also a balance is preserved, with the changes proposed
being either necessitated by the new rate structure or designed to
mec t par ticu lar prob lems in the corporate area. A fur ther s ignif ic an t
structural change -- the acceleration in the current corporntl~ t:,l~
- 13 payment of larger corporations
would yi~ld $1.5 billion in annual
budget receipts in the next five years but would not increase tax
liabili ties.
The Nature of the Proposed Revision -- The Capital Gain Changes
The final set of reco~endations in the tax program relates to
the area of capital gains and losses. This area has always involved
complex tax issues, since it is necessary to give proper weight to a
number of factors that do not all work in the same direction -the fa~t that capital gains accrue over time and arise from a
variety of economic causes; the importance of enco'Jraging private
risk-taking and initiative; the importance of maintaining the flow
and mobility of capital, and the need to maintain on equity grounds
an appropriate relationship to the taxation of other types of
profit and income. Our present system, for individuals, is to
include only 50 percent of capital gains, limit the taxation of
the gain to a maximum rate of 25 percent, and pertnit the gain represented by appreciation accumulated until death to escape income
taxation entirely.
The tax program proposes several basic changes, whose primary
objective is to achieve increased mobility of capital and encourage
private risk-taking. First, it would reduce the present 50 percent
inclusion ratio to only 30 percent of the gain. With a proposed
basic rate scale running from 14 percent to 65 percent, capital
gains would thus be taxed at a scale running from 4.2 percent to
19.5 percent. This is far lower than the present range of 10 percent
at $2,000 of taxable income to 25 percent at about $32,000 and higher
on a joint return. The proposed rate at $32,000 of taxable income
would only be 12 percent. The combination of reducing the
50 percent inclusion to 30 percent, and then reducing the basic
rate scale, thus involves reductions in capital gains tax ranging
from 58 percent for first bracket taxpayers to 52 percent for
taxpayers at $32,000, 40 percent at $52,000, 30 percent at $100,000,
on down to 22 percent for top bracket taxpayers. The benefits
would be concentrated mainly in the middle and upper income groups.
Nearly 50 percent of present capital gains are realized by persons
with incomes between $10,000 and $100,000, and these gains
represent three percent of adjusted gross income at $10,000 and
about 20 percent at $100,000. A camp leffit::ntary provision would
extend the present five-year carryover of capital losses to an
unlimited carryover (revenue cos t of $20 mi ilion). The corporate
capital gain rate would be reduced from 25 percent to 22 percent.
A significant obstacle to the mobility of capital today, an~
one which "locks in" many an investor, is the inducement under
present rules to hold an appreciated asset until death so that the
gain will escape tax. The tax progra~ would end this lock-in
effect by treating as a taxable capital gain any gain present in
assets transferred at death. The' advant~Jge jn cilpital In:Jbility,
- 14 with consequent benefits to increased initiative and risk-taking,
would be highly beneficial to economic growth. Th.2 reV2nue gain
involved would offset the cost of the lowered capital gain rates
and make those rates possible. The result is an integrated treatment of capital gains and losses that should have a large positive
effect on increasing investment and capital formation.
Necessarily the proposal to tax gains transferred at death -which will affect annually only about three percent of decedents -must be implemented by technical rules designed to permit as fair
and as practical an application of this a?proach as is possible -such as the exem?tion of the gain on a residence and on personal
or household effects, the exemption of gains passing to a wife along
th2 lines of the present estate tax marital deduction, a blanket
$15,000 exemption of gain to eliminate small estates, an exemption
of transfers to charity, an averaging device, provisions to ease the
time of payment of the tax, a transition period before the new
rule is to b.2co:ne fully effective, and so on.
The benefits to taxpayers and the economy of the new low rates
on capital gains turn also on one other necessary change, that of
a re-examination of th2 definition of capital gains. If something
called a capital gain is to be included to the extent of only
30 percent of the gain -- as compared to a 100 percent inclusion
for wages, salaries, bJsiness profits, interest, dividends, and
so on -- it becomes imperative that the present eligibility rules
defining capital gains be considerably tightened. It is in this
area, even under the present capital gain rates, that the
suggestions for reforms to end the special preferences resulting
from ordinary income items being classified as capital gain have been
perhaps the most insistent. With capital gain rates being reduced
by 22 percent to 58 p2rcent, the existing definitional rules would
involve intolerable special preferences and inequities. The tax
program therefore proposes a number of definitional changes which
can be grouped into three categories: On2, th2 proposal that the
holding period be extended from six months to a year. Two,
changes affecting the interrelationship of ordinary deductions
and capital gain, designed to extend the approach of the 1962 Act
under which that part of the gain on the sale of an asset that
~presents prior deductions would be treated as ordinary income -these chal1ges affect the real estate shelter, sales of oil and
other natural resource interests, and certain sales of cattle and
farm assets. Three, changes affecting ordinary income items now
treated as capital gains, designed to reverse this characterization
where appropriate -- these changes affect such items as employee
stock options, lump-sum distributions under pension Clnd profitsharing plans, the sale of patents, the cutting or sole of timber,
- 15 ":: p
~)
vV·--"
and the sale of life estates. Some of these prov~s~ons either came
into or remained in the law as an offset to the high marginal top
rates. With a reduction in those rates to 65 percent and lower,
for this reason alone these provisions are no longer justifiable.
The direct revenue effect of all the changes is a gain of
$100 million, assuming the present character and volume of transactions. However, the increased turnover of assets resulting from
the unlocking of asset holdings, together with the net effects on
transactions of the other changes, is expected to yield an
additional $650 million.
These then are the main details of the tax program. We believe
the program is a balanced one, treating all levels of income and
all types of taxpayers as fairly as possible. It is difficult to
obtain any precise measure or index of the distribution of its
benefits. Some may point to the percentage change in tax liability
at each income level, and show that the highest percentages of
reduction are in the bottom and the lowest at the top. Whether
one likes or dislikes this result, we must remember it fails to
reflect the proportion of total tax liabilities paid at each level.
Some may point to the percentage increase in after-tax incomes,
and show that the highest percentage is at the top. Whether one
likes or dislikes this result, it does fail to reflect the impact
of the present rate scales which, under almost any program, would
produce such an after-tax effect. Moreover, in any allocation of
the benefits, it is necessary to remember that the corporate rate
changes and the capital gain changes will yield large benefits to the
middle and upper income groups, first through the increase in dividends
consequent upon higher corporate after-tax profits and second
through lower capital gain rates combined with increased mobility
of capital. It is difficult to quantify these benefits.
We believe that when all the changes are considered, and
their effects weighed as carefully as possible, the over-all result
is a distribution that bears a close relationship to the present
pattern except where relief for the extremes of low income hardship or old age are involved.
It is at this point that we must consider the final dimension
of the tax program, that of its relationship to the current economic
climate. Three aspects stand out: One, we are faced with an
economy which while sluggish is still moving slowly upward. This
means that the program need not be geared to a shot-in-the-arm
approach to ward off an immediate recession threat. Instead, the
- 16 tax program can be responsive to the insistent demands for a basic
tax revision that will make a lasting contribution to economic
growth and lessen the risk of recurring recessions. It also
means that while tax reduction is an imperative, there is legislative time to \1ork out this year, with effective and expeditious
action, a properly constructed bill.
Secondly, we are faced with a deficit for fiscal 1964 that,
apart from the tax program, would be $9.2 billion. While this
deficit is the direct consequence of an economy moving at a s 10\17
rate, which the tax program is intended to accelerate, care must be
taken that the costs of tax reduction are handled in a fiscally
responsible manner to keep the transitional deficit within prudent
bounds. The tax program meets this requirement, one additional to
the substantive issues of tax revision, in three ways: one, the
rate reductions are staged over three years, corrnnencing in 1963,
with the structural changes starting essentially in 1964; two,
appropriate structural changes keep the over-all revenue cost of
the rate reductions within a prudent figure of $10.3 billion;
three, another structural change -- the proposal' to accelerate
under a five-year transition the payments of estimate tax of the
larger corporations -- will improve the budget picture by about
$1.5 billion so that the budgetary cost of the program is an
over-all $8.8 billion before any feedback.
A third aspect of our present situation is that we must end
our unplanned deficits and move on to a budget balance at a high
level of employment. As far as the tax progra~ is concerned, this
means an effect on the economy that will produce sufficient revenues
for this purpose. It is believed that the large rate reductions
and the effects of the entire program on consumer spending and
investment incentives will permit the economy rapidly to move to
new heights. At these higher levels of gross national product,
the resulting revenues even under reduced rates will be in excess
of our present revenues. The difference, of course, is that the
resulting dynamic economy will be able to maintain these higher
revenues, whereas our present sluggish economy finds the tax
structure an impediment to growth.
But revenues are only one side of the budget. The other
requirement is firm control over expenditure policy. The
President and the Budget Director have made these matters clear:
one, civilian expenditures will be firmly controlled, and in the
1964 Budget have been reduced; two, defense and space expenditures
should begin to level off; and third, as the tax reduction becomes
- 17 fully effective, and the economy moves upward, a part of the revenue
increases must go to eliminating the deficit.
Under this combination of revenue increases and a budgetary
policy of firm expenditure control, w'c; can move on to a balanced
budget and full employment. To be sure, certain assumptions and
expectations respecting the economic response to the tax program
underlie this belief. But we must remember that the alternative
course would not be without its set of assumptions and expectations. Indeed, in the light of the history of our business cycles,
without tax action the risks become far greater of a recession
coming and of its lasting lo~ger and cutting deeper. Such a
recession would increase the deficit far more than the program,
without affording even any hope of improvement or offset.
Conclusion
The tax program is responsive to two main requirements. First,
it responds to the imperative need for the large reductions in
individual, corporate and capital gain rates required now to enable
the economy to reach its full potential for output and growth,
while at the Slli~e time permitting these rate reductions to be
achieved in a fiscally responsible manner co,npatible with the
deficit condition of the Budget. Second, it responds to the longfelt need for a revision of the income tax structure that would
scale down the rates, broaden the tax base, eliminate serious
hardships, and end unjustifiable ab~ses and preferences. The program thus fits into the efforts that commenced with the Revenue
Act of 1962 to achieve the tax revision which the earlier studies
of the Congress delineated as vitally necessary.
As the President has firmly and co~sistently stated, the core
and central theme of the tax program are the large reductions in
all the tax rates -- reductions that remove the restraints now
imposed by the tax system o~ the economy and on incentives for
private initiative. The cost of these reductions, plus the elimination of hardships which the rate reductions cannot reach comes
to over $14 billion. The revenue gained from structural changes,
important in themselves as contributing to equity and economic
growth, and from increased mobility through capital gains revisions,
will bring that cost down to $10.3 billion. A further structural
change, the acceleration of corporate payments, reduces this figure
to a budgetary cost, before feedback, of $8.8 billion. The
structural changes thus bring the rate reductions within a budgetary
cost that is clearly fiscally responsible. If these structural
changes are to be substantially altered, the over-all program
- 18 would, therefore, have to be reshaped by significantly limiting
the rate reductions -- so that we would not achieve an individual
rate scale running from 14 percent to 65 percent, a corporate rate
reduction to 47 percent, and elimination of hardship for the poor
and the aged -- thus significantly lessening the effect on the
economy and on incentives; or it must be reshaped by increasing the
cost and budgetary impact of the program, or by some combination of
these approaches. Naturally, it is not necessary to enact all the
changes exactly as proposed. But a measure designed to provide
the maximum effect on the economy through rate reductions and to
do so in a manner most consonant with appropriate fiscal responsibility would involve some structural changes of one sort or another.
These are decisions which must and will be made in Co~gress.
The Committee on Ways and Means has commenced its consideration of
the tax progran. It will shape a tax bill that takes account of
the helpful criticisms and suggestions which the legislative process
produces. The Treasury Department will fully cooperate in this
process.
In the process of moving forward with a tax program so vitally
needed, we must not let all of the detailed bits and pieces inevitable in tax legislation obscure the objectives we are seeking to
accomplish. The total is far more than the bits and pieces, far
more than how each of our individual pocketbooks is affected, far
more than how much tax reduction this or that person gets in 1963,
or in 1964 or in 1965. The total is a revision of our income tax·
which will enable us to achieve, as far as it lies within the power
and effect of the tax system, the strong and growing economy which
is vital to the kind of America we all desire.
000
Uni ted States S'iVingS Bonds Issued and Redt'emed Through February 28, 19E
(Dollar amounts in millions - rounded and will not necessarily add to total
Amount
Issued
J.I
Amount
Redeemed
Amount
% Outst
II Out stand ing ZJ of Amt.
~,~/\.TU~)2:D
Series A-1935 - D-1941 •..•••••••
Series F & G-1941 - 1950 ••••.•••
$ 5,003
$ 4,989
28,512
28,311
14
201
1,822
8,046
12,947
15,081
11,802
5,300
4,989
5,138
5,052
4,4 0 2
3,812
3,991
4,527
4,563
4,728
4,544
4,264
4,117
3,845
3,822
3,827
3,483
10
1,526
6,758
10,855
12,539
9,605
4,085
3,659
3,657
3,504
2,962
2,543
2,575
2,707
2,665
2,720
2,619
2,350
2,116
1,905
1,720
1,461
851
-
296
1,288
2,092
2,542
2,198
1,215
1,331
1,481
1,548
1,440
1,269
1,415
1,819
1,898
2,008
1,925
1,914
2,001
1,940
2,101
2,365
2,632
10
$
-
.(
"
.1
UN/.ATURED
Series E: JJ
1941
1942 ·
1943
1944
1945 ·
1946
1947
1948
1949 ·
1950
1951
1952
1953
---- -- --- ---- 1954
1955 - -- -- 1956
-1957
1958
1959
1960 • • __ • _ •••• *' •• _ •• __ •••
1961
-1962
1963
-- --
·................... .
................... .
·................... .
·................... .
................... .
·................... .
·................... .
·................... .
................... .
·................... .
· ................... .
· ................... .
·...
. . .
..... ..... ...
·. ................ .
_ ••••••••• e _ •••••••••
·................... .
·... ............ ..
· ..... .. ........ .
Unclassified ..•..••..•..•.•••.
16.~
16.(
16.1
16.E
18.E
22.S
26.6
28.8
30.6
32.7
33.2
35.4
40.1
41.6
42.4
42.3
44.8
48.6
50.4
54.9
61.8
1
75.5'
100.01
~__~60~1~-4____~5~1~9__+-______~8~2~__~--___
-
Total Se rie s E •••••••••••••••• I-l_2...;.4~,_71_4.:.-...-4__8_5...:.,_9_0_2__+-____
38_,:...8_1_2____~-3-1-.1.
Series H (1952 - 1963).+:........
Total Series E and H ..........
8 897
8~
7018
7Cl.2
87,751
45,859
34.3.
1
~~~~~~~~~--r---~~~--~--~
133,611
F=~==~==~====~==~====P===~
Se rie s F and G (1951 - 1952) ••••• 1-_1~0;.:;:0~6_+-__7!..;!.1~0:...-4-y
_ _ _2'_'~9~16:...____ir--_2:...o~9-.k
Series J and K (1952 - 1957) ••••
Total Series F, G, J and K • • • •
3 692
1 955
1 737
47 0'
~-'~~~~~~~--~--~~~--~--~
4.699
2 665
2 033
4~21
F===~==~~F===~=*~~
~Total matured ••••••.
33,515
215
33,300
All Series Total unmatured .•••• 138.309
90.416
47,893
Grand Total .••.••••. 171,825
123,716
48,108
11 Includes accrued discount.
21 Current redemption value.
OFFICE OF FISCAL ASSIsrANT SECRET,
11 At option of owner bonds may be held and
will earn interest for additional periods
after original maturity dates.
kI Includes matured bonds which have not been
presented for redemption.
0(;\ I ~
~
1_)
United States Savings Bonds Issued and Redeemed Through Februa~y 28, 1963
-
(Dollar amounts in millions - rounded and will not necessarily add to totals)
Amount
Issued
TURED
mm
Series E:
11
·................... .
·................... .
1941
1942
1943 • e • • • • " • • • • • • • • • • • • • •
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956 • ••••••••••••••••••••
1957
1958
1959
1960
1961
1962 • e • • • • • • • • • • • • • • • • • • •
1963
•
•
0
••••••••••••••••••
·................... .
•
•
&
Ii
Q
••••••••••••••••
·................... .
.... ••....••.•...
·................... .
··...................
................... ..
·................... .
·................... .
··...................
..
...................
··...................
................... ..
·................... .
• • e
8
• • • • • It • • • • • • • • • • •
~.~G
•
•• 0
•
~
•
e •••••••••••••••
••••• 0
•••••••••••••
J./
Amount
Redeemed
$ 5,003
28,512
$ 4,989
28,311
1,822
8,046
12,947
15,081
11,802
5,300
4,989
5,138
5,052
4,402
3,812
3,991
4,527
4,563
4,728
4,544
4,264
4,117
3,845
3,822
3,827
3,483
10
1,526
6,758
10,855
12,539
9,605
4,085
3,659
3,657
3,504
2,962
2,543
2,575
2,707
2,665
2,720
2,619
2,350
2,116
1,905
1,720
1,461
851
-
Amount
% Outstanding
II Outstanding £.J of
$
Amt. Issued
.28%
14
201
.70
296
1,288
2,092
2,542
2,198
1,215
1,331
1,481
1,548
1,440
1,269
1,415
1,819
1,898
2,008
1,925
1,914
2,001
1,940
2,101
2,365
2,632
10
16.25
16.01
16.16
16.86
18.62
22.92
26.68
28.82
30.64
32.71
33.29
35.45
40.18
41.60
42.47
42.36
44.89
48.60
50.46
54.97
61.80
75.57
100.00
Unclass ified .••••••••••.•••••. J.l-_-..:::.6o;;.;1=---+_ _...;;.51:;.9.::..-._+_----8,;;.;2~-+_----_ __
Total Serie s E •••••••••••••••• I-l.-;2..;,4~,,.;.;71;;...4.:.....-+__8_5~,_90_2_ _+_---.;.3-8.;.,_81_2_ _+__.;..3_1-.1_2_Series H (1952 - 1963>.:¥.........
8 8q7
1 8L..9
7 0L..8
7q ~~
~~~~--+--~~~~--~~~-+--~~----
Total Series E and H ••••••••••
Series F and G (1951 - 1952).....
133,611
87,751
1 006
710
It.!
45,859
34.32
296
29L..2
~~~~--+-----~~~------~~--+---~~~---
Series J and K (1952 - 1957) •••• 1--_"",3,.&..::
.6::..::)9;.;.,2_~-..;;1~95~5;.....~----o:l;;.a-L..:.73''''"7.:..--+_......:L..;t.J7~0''--'5-Total Series F, G, J and K
•••• ~=4~69~9==~===2=6=65==~===2==0~3U==~===L..~-i~26====
~ Total matured •••••••
All Series Total unmatured •••••
Grand Total •••••••••
33,515
138.309
171,825
J./ Includes accrued discount.
2J Current redemption value.
'J/ At option of owner bonds may be held
33,300
90.416
123,716
215
47.893
48 ,108
.64
34.63
28.00
OFFICE OF FISCAL ASSISTANT SECRETARY
and
will earn interest for additional periods
after original maturity dates.
~ Includes matured bonds which have not been
presented for redemption.
- 37 -
~.
~
a '~I
V
-
balance between rate reduction through net tax
reduction and accompanying structural base broadeniDI
reforms; it balances incentives to investment with
stimulus to demand.
Whatever the variants in degree and ••phasiB, I
would hope that all those with responsibilities in tbis
are~,
public or private, would never lose sight of tbe
common objective -- a modification in the calendar year
1963 of our tax laws along the general lines propos.d.
o
0
000
- 36 -
a combination of net tax reduction and base broadening
reforms.
Those who believe that only incentives to investment
are needed and that incre.ised consumer demand to utilize
idle capacity and manpower is unimportant will contend
with those to whom a single sharp stimulus of consumer
demand through tax reduction for the lower brackets 1s
all that is necessary to solve our problem of slow growth.
The President's program falls between these two extreme.
being designed to combine both incentives to investment
wi th
tlle stimulus to consumer demand.
In conclusion, may I suggest that the President's
progr~m
is a balanced program on all of these issues where
there are differences of degree and emphasis:
bal~nced
It 1s
in its timing; it has fiscal balance; it has
- 3S Those who wish a substantially increased acale of
Federal domestic expenditures in the 1964 fiscal year
will contend with those who would abandon any tax program until the budget is balanced.
The President's
progrcl.m falls between these two extremes to move forward
OD
the priority job of tax revision -- within the bounds of
fiscal discipline -- against the background of a bud,et
in which government spending on all but defense, space
and interest in the
fisc~l
year 1964 is reduced and a
policy of allocating a substantial part of revenue
increases towaras eliminating budgetary deficits.
Those who would confine tax revision to rate reduction
made possible by base broadening will contend with tho••
who would limit rate reduction to the a.ouAt that ean be
bought by net revenue losses.
would seek the
md.xilUum
The President's prolraa
rate reduction available through
- 33 -
April 1961.
~nd
Those most knowledgeable about our tax syste.
its role in our economy -- in the Congress, in busineal
management and finance, in labor le.ldership. in the law
4nd accounting, and in the academic world -- have urged the
en~ctment
of a program which, in the words of the President
Tax Message of April 1961, would be: "Aimed a.t providing a
broader and more uniform tax base, together with an
appropriate r.l.te structure. • ." which would put us "toward
the goal of a higher rate of economic gl'owth, a I80re
equi table t-.1X structure, .lnd a simpllel" tax l.1w."
Now the moment of truth is here and proposals generally
responsive to these objectives have been submitted by the
President to the Congress.
As is .l.lways the case with tax legislation, the season
of hearings before the committee charged by the lower
Ho~'
- 32 -
Conclusion
During the past five years it has beao•• increasingl,
cle4r that our present tax structure -- characteri.ed by
high levels of rates of income -- repressive at .very
level and type of income
fastened on the ecoDO.y to
restrain war and postwar inflation -- designed to hold back
consumer demand, initiative and invest.ent -- now checks
growth, invites recurrent recessions, depresses our Federal
revenues and contributes to chronic budget deficits.
At the year's beginning there was a clear consensUS -which had crystalized during the preceding seven .onths
following the slackening of expansion in early 1962 -- that
the nation required major tax revision in 1963 -- a
conclusion implicit in the studies of the Rouae Way. and
Means Committee incorporated in the Tax Revision Coapendiu.
of 1959 and adopted in the President's first Tax Messale in
- 31 -
evidence
th~t
stimulating of conau.er
de.~Dd
wl11 Dot
result ln inflation and is evidence that stlmulatiDI
consumer demand ls entirely in order.
- 30 -
But the estimates of excess capacity ob'ai •••
from interviews with businessmen or from a careful
an~lysls
of historical develop.ents are Dot without
meaning.
We have evidence that excess capacity i8
widespread throughout the manufacturing sector of the
economy, so
th~t
this sector was operating at only
83 percent of capacity in September, 1962.
with the
~verage
m~nufacturing
When compared
preferred operating rate for all
industries -- which is variously said to
be 90 and 94 percent -- this 83 percent operating rate
a considerable amount of excess capacity --
indic~tes
enough so that errors of measurement cannot be made to
disappear.
The
f~ct
that we have this excess capacity -- last
September only three of fifteen manufacturing industries
were within five points of their preferred rates -- 18
- 29 -
for old projects or new capacity tor new products more
inviting.
For a tax cut whicb only adds to saving will
not produce the early intensificatioQ of investment that
is so
vit~lly
needed if an economy is to grow.
There are 80me who argue we are in a full employment
situation and have been since rougbly the beginning of
This argument is based on a contention that tbere
1962.
is no unemployment of capital, no excess capacity in
manufacturing and other industries.
What is being argued is that the econo.lc recovery
of 1961-62 slowed down so draaatically in 1982 because
the econoay exhausted its industrial capacity -- ran out
of capital -- and so could increase output only slowly.
The diagnosis is incorrect.
today.
Tbere is excess capacity
How mucb no one really koows tor who can •• , down
to the last .achine bow .uch there aigbt be in the entire
economy?
-
28 -
consumer must be increased to utilize present product!ve
capacity fully
80
that additions to productive
capacity will be worthwhile.
Of course, if the econoaic situation were different
if all of our economy's resources were fully ••ployed __
strengthening of consumer demand would not b. i.portaDt
to investment.
But we do not have a full ••ploymeot economy, and
those who argue on the assuaptioD that we have are
mistaken.
There 1s room for a two-fold attack
problem of getting higher levels of investment.
00
the
Corporate
and individual iDcome tax laws c.n and sbould be changed to
make investment more profitable.
And individual income
tax laws should be changed in such a way that consumer
de.~nd
is strengthened, thereby making utilization of
existing capacity more profitable aDd additional capacity
- 27 -
48sure maxiaua profits or increaslng yolw.e b, .odernlzatiol
of blgb cost plant or increaalng De. capaclt, will be telt.
Tbe etfect of a lower scale of corporate and individual
tax rates plus lower rates on capital galna wlll be
increasing incentlve and initiative to earn tbe aarginal
dollar by increasing investment and risk-taking.
The
market rather than tax consequences wlll tend to beco..
more of a prime determining factor ot economic decision.
Tbe Administration realized that if the United Stat••
is to grow more rapidly in the future as it surely mnat,
investment will have to proceed at a taster pace.
ADd the
Adainistration also recognizes that if invest.ent is to
grow, the tax environment in wbich investors live will
have to be more favorable.
But to
encour~ge
Tbat is what we are striving for.
investment, strengthening of eonsU81r
demand also is required.
Tbe purchasing power of the
- 26 -
rate.)
This reduction of fifteen pointa i. a reduction
of about thirty percent relative to the pre•• nt tax
rate of 52 percent.
Another
w~y
to look at the effect of the 1962 prolraa
coupled with this year's proposals i& to note that the
improve_ent in profitability of new invest.ent resulting
fro. the 1962 program is estiaated at 20 percent.
The
five point reduction proposed by the President adds an
additional ten percent subject to the reservation expressed
above, to bring the total iaprove. . nt in after-tax
profitability to close to thirty percent.
The resulting increase in return on busine•• lnveat.eDt
after taxes fro. the 1962 action and the proposed prograa
should bring aany hitherto marginal invest.ent opportunities
into an
~ttractive
range, particularly as increaslna dea&Dd
.aves up volume and opportunity.
Also, the pressure to
- 25 -
benefits in the lower individual rate .cales aftectina
upw,lrds
of four million self-employed and uniocorporated
businesses.
George Terborgh pointed out in his study "lfe"
Investment Incentives", publisbed by MAPI,
th~t
last
year's depreciation reform and invest . .nt credit together
provided the equivalent of a tax rate reduction on iocome
from new invest.ent of ten percentage pOints.
Adding the
five percentage point reduction in tbe corporate tax rate
contained in the President'. tax program brings the total
reduction with respect to income from new investment in
machinery and equipment to approximately fift.en percentage
points.
(It is approximately fifteen percent because "ith the
lower tax
r~te
the more liberal depreciation provides a
somewhat smaller tax saving than waS true under a 52 percent
- 24 -
The cut in the indiYidual tax load a.ount. to
about $8.7 billion, witb $5.5 billion IOlnK to the
taxpayers earning under $10,000 a year.
bulk of the consumers, and
a~st
Tbese are the
all of their tax cut
can be expected to directly eDter the .pendin. streaa
with its multiplier aDd accelerator effects.
AaericaD
consuaers traditionally spend a large percenta•• (92 to
94 percent) of their after-tax or disposable inco...
CorporatiOns will beDefit from rate reductioD by
$2.4 billion at current levels of profit.
Add tbis to
the $2.1 billion reduction in tax liabilities that
corporatiOns received last year as a result of depreciation
reform and the investment tax credit, and you .et a total
tax relief for corporations of nearly $4.5 billioD.
Thi.
would amount to a reduction in corporate tax liabilities of
nearly eigbteen percent.
In addition there are busiA•••
- 23 -
It is estimated that the spe.d-up wheD fully
effective, will cost corporatioD8 about $10 to $15
million annually.
Many compaDies DOW set .. ide lunda
to pay their taxes as they earn tbe inco.. on whicb the
taxes are du.; aDd typicall, corporatioos then iov•• t
these funds io ioter.st-bearing securitie. or io bank
accounts that pay ioterest.
Wbat these corporations
will lose b, the speed-up in tax pa,. .Dt. is just the
interest
00
the funds they now set aaide for tax payments.
If all the tax proposals are adopted there obviously
will be less need for individuals to seek capital ,aiDS
treataeDt of ordinary income, primarily because of the
across-the-board reduction in iDdividual rates to a 14-65
percent range, a reduction of 29 perceDt io the higbe.t
bracket, accompanied b, appropriate reductions io the
aiddle
~nd
low iDCO" ranges.
- 22 -
result in greater efficiency,
~n
increased
flow of new and improved products and an
improvement in our balance of payments
position.
So that some of the revenue losses implicit in the
provisions I have outlined can be offset, while the proposed level of tax liability is unaffected, the President
also has proposed a speeding up of corporate tax payments.
There is provision, though, for a gradual transition from
present arrangements to an arrangement under which
corporations will be on a fully current tax basis, just
as individual
taxp~yers
are right now.
This speeding up
of corporate tax payments will impose only a small tax
burden on corporations, although it will mean a
gr.~t
to the fisCJl feasibility of the corporate program.
deal
- 21 -
3.
There is a proposal to eliainate
the present two percent tax OD consolidated
net income of
~ffiliated
corporate groups
filing consolidated returns plus a plan to
repeal the present tax on intercorporate
dividends -- of dividends which do not go
outside particular fam1lies of corporatioDs.
4.
A significant provision would allow
corporations to treat expenditures for machinery
and equipment used directly and
specific~lly
for research and development as current
expenses.
Such a change from present treat-
ment should provide a measure of greatly
needed encouragement to civilian research
and development which 1s badly needed in
m~uy
sectors of the economy and should
- 20 -
2.
The program contains a provision
providinl immediate and substantial benefit
to the 450,000 saall corporations in the
United States with earnings of less than
$25,000 per year.
For 1963, the present
noraal tax of 30 percent, applicable to
the first $25,000 of taxable corporate
income, would drop to 22 percent.
Thus,
an i . .ediate tax reduction of al.ast 27
percent would be provided s . . ll corporatioD8 -- those corporations that generally
have least ready access to capital . . rkets
and are consequently most dependent on
intern~J
generated funds tor the financing
of their investment projects.
- 19 -
Finally, and of signal iaportaace is the balance in
the tax program betw.en de. .nd and iny •• taent at all
levels of effort and output.
Th. tax prograa offers
additional direct iaceatiYe. to investors aDd makes it
possible for consu.ers to buy acre of the goods and
services produced by Aaericaa buaine••••••
It ignores aeither buyer nor iaye.tor, and that is
as it should be.
But before going into furtber discussion of the
investor-deaand factor, I would llke to auaaarize
80. .
of the main feature. in tbe prograa applying to busine•• :
1.
The program reduce. corporate inco.e
tax rates fro. tbe pr.sent 52 percent to 47
perc.nt, a ,2.4 billion cut which amounts to
an increase 1n after-tax .arnings of corporatlons of just over 10 percent.
- 18 -
To limit the tax prosraa to tbe scale of rate
reduction acbievable throuih Det tax reduction
(approxiaately $9 billion) and forelG the
opport~ait1
to achieve aD additioDal $4.6 billioD iD deeper rate
reductions is to accept a secoDd best re.ult iD the .oat
important tax refora -- a lower rate structure.
To forego the opportunity provided
by
rate reduction
to acbieve other structural reforms to proaote equity,
eliminate special preference DO longer coapatiable with
rate reduction, and &ake the aarket rather than the tax
system the
alloc~tor
of resources and effort 18 to 10•• tb.
most practicable opportunity of a decade for acbieving tb.
other reforms.
These are soa. of the reaaoas wby a balanc.,
tax revision prograa of reduct10n and refora is worth tb.
extra effort involved.
- 17 reduce special privileges, thereby broadeniDg tbe baa.
of taxable income
of
~ll
~nd
increasing revenue.
Tbe net re.ult
these changes will be an increase in revenue. of
approximately $3.3 billion.
These increased re.eDue. will
offset a portion of the $13.6 billion cost of the rate
reforms, And it is our cODvlction that the $10.3 billioD
balance is the .aximum revenue cost tbat can safely be
accepted.
Therefore, failure to raise reveDue througb
structural reform will necessarily require aD upward
revision of the reco. .ended rate structure.
Such hilh rates would be unfortunate siDce there
seems to be a broad measure of agreement that the
individual rate structure that we have proposed i. what
is required to spur economic growth.
r~tes
Bigher .argi .. l
decrease iDcentives for effort and risk-taking, aDd
thus would not be
48
effective in solving the overall probJ
- 16 -
The President's progra. attacks this proble. u8ing
two approaches.
We recommend lowering the rates,
~nd
because that will eliminate or minimize the need tor the
special tax preferences, we seek to remove 80me of them.
The ultimate goal of
.1.
sound tax policy in the ecoDo_lc
environment of the Sixties should be to reach the lowest
scale of rates feasible and to divest the tax syste. of
provisions th..tt misallocate resources, result in
unnecessary hardship, give unfair advantage to a particular
group or groups and unnecessarily complicate an already
complicated situation.
A number of changes -- minimum standard deduction -child care --\ged provisions -- are designed specifically
to rectify hardship.
totaling $790 m1llion.
They will result in revenue 108ses
Other" reforms Yi11 eliminate or
- 15 -
balanced budeeta and surpluses cOD.l.teat wltb .atloaal
security and leadershlp in apace.
Third in the list of balancini feature. 1. tax
reductioD and reform.
There 18 geAeral alr....at aaOGi
tho.. who study our tax syste. that tbe level of rate. 1.
too high. up and down the scale fr«* "top to bot tea,"
individual aDd corporate.
It is because of the oneroue
91 percent individual top and the 52 perceat corporate
maxi.ua that loopholes, tax preferenc.s aDd special
privileges were written into law or pre-exi.tlne proyieiOD.
increasingly utilized to evade the tax baae.
- 14 -
soon substantially surpass their pre-tax cut level, or
eventually the level they would have reached OD a slow
gro~h
pattern, or even soooer, the level they would reach
in event of an interveDiD, reces8ioD.
If, for example, we should slide iDto another
recession, pulliD' annual OKP down by as little as three
percent, the deficit would iDcrease twic. as auch.
ID
other words, the deficit, without a tax cut would then
be
far higher than the projected deficit we face with a
tax cut.
Ne accept the additional slice of deficits
that are a consequence of the tax prOiraa very reluctantl, •
in the cODviction that this program is the cour. . beat
designed to pra.ote a continued, steady and incr....d
rate of economic advance and the Burest route to
- 13 -
This choice of a phased rat. reductloa prQKraa alOD,
with recommending reforaa desllned to off..t about a
quarter of the coat of rate reductioos, sbould ..rye clearl,
to rebut any assuaptioo that the tax reductiOil prOKraa
was ai. .d at enlarging tbe budget or prolODllag deficit
financing.
The fiscal advantage of iocludinl the so-called
structural reforaa i8 at le... t aa i.portant aa tbeir other
. .rita io ter. . of equity and tax policy.
Glven the accoapanying policy ot expenditure control
de.cribed, aDd the teatures of fiscal balance incorporated
in the tax prograa i teelf, the enact_nt of the tax procr ..
this year would se.. to be the most fiscally balanced
course to follow.
For, once tbe tax brake i& rel....d,
the base of taxable income, wages and profits should IrOl
at an even faster rate than before -- and revenue • •hould
- 12 -
(3)
The extension of
(4)
Intenslve eapbaais
~.
aD
principle of u.er char....
efiielenc, aDd coat
reductions tbrougbout the govera.ent.
With the cloae cooperatiOD of the President and the
Congress in holding down expenditure., bar riD. an UDexpected
wor. .niAK in the cold war, the tax program and the related
prograa of expenditure control are feasible and cODai.tent
with the natiaaal intereat.
To effect addi tiOGal fill<:a1 ba.laDee, apart froaa
expendi ture control, the tax proKraa i taelf i. deai._d
to alniaize the budgetary impact of re . .Due loa....
A
three-year approach wa. aapped out to avoid aa overl, abarp
drop in budgetary receipt. for fiacal 1964-65 aDd to keep
the temporary increase in the deficit at a level which i8
aaDageable and cOlllpatlble with stabilit,.
- 11 -
are wader intensive stud)'.
to speculate
OD
While it would be pNMtur.
the likely trend of th. . . expenditures,
.... ral countries already bav. pa...d the critical atac.
in their progression to . . If-su8taining arowtb and should
sooo be able to .ove abead witbout furtber a1d.
Expendi tures ia otber areas -- broadly the "doaestic"
sector -- 9ill be affected b)' a large nu.ber of plu..s
aDd ainuse..
It will be a clear respon.ibility to tind
enougb .iau... to offset the pluae. resulting traa the
need to carry out, at aD effective lev.l, prograas ....ntial
to the
D& tiOD' s
prosres. and well-being.
The fUDda needed
to finance these progr..... sbould be found in large part
through tour _jor types of aavings:
(1)
The 8ubatitutioo of private for public credit.
(2)
Reductioo in expenditure in exiating prograaa
wbose relative urgency has diainiahed with changing time.
and
pertinence.
- 10 -
expenditures to a rate substantially below tbe rate of
incre... in revenues to be a practical objective cODsiatent
with the national interest.
There are iaportant rea.ODS to expect there will
be
a slow-da.n in the rise of defense expenditures.
W.
are reaching a new plateau of readiness in both our
strategic and ltalted war capability.
While expenditures
will cootinue to rise in same areas, such aa reaaarch,
the.. increasea will be balanced by reductioo 1n other
areas and by other savings.
The result w111 be a abarp11
increased defense effectivene.s per dollar of outla,.
'bile another sharp increase in apace expead1turea
will occur in 1965, this increase will be leas than 1964.
Interest payments can also be expected to r1. . sa.ewbat
as a result of the tranSitory deficits
balanced budget.
QD
our
wa,
to a
Foreign eCODOBic ass1staDC8 expenditure.
- 9 -
basement approach or by aD arbitrary budget ce1l1ac.
Nevertheless, military spending baa no i . .UD1t, to "&rebiDI
exaaination as to n.eds, costs and alternatives.
Improvements in the Defense Depart. .nt supply aDd
logistics program, alone, will result in sayin.. of
$3-1/2 billion in 1965, an
~oUDt
that will
pa,
the
entire cost of the President's legislative prograa in
Congress.
Inventory reforas, iaprove. .nts 1n . .int.DaDCe
procedures, elimination of unneeded actiyiti•• and the
closing of unnecessary installatiODa yielded a 1964 budlet
saving of about three-quarters of a billion dollars,
80
that the rise in defense effectiYenesa 1s aucb greater
than the increase in expenditures.
A consideration of the outlook for future expenditureshows the President's policy ot bolding the ri . . in total
- 8 -
Expenditures for prograas other thaD deten. . , space
and interest have been held slightly below last year by
taking what was .oat urgent and reducinK or eliminating
.bat was not -- the fourth ti. . this has occurred in
fitteen years -- against a backgroUDd in which the average
increase in tbis sector of the budget has been 7.5 percent
per aDDua for the last nine years.
Although propoeed defens. outlay. in fiscal 1964 are
8aae $2.4 billion above outlays for 1963, aany billions
of dollars in proposed prosraaa were elia1nated becau..
the President and the Secretary of Defenae were cODvinced
that their benefits in ter. . of a stronger deten.. d1d
not warrant their cost ••
Rational security in the aodern world cannot be
bought cheaply, and it is too precioua to risk by a barlaiD
- 7 coatiDue, and indeed iDten.if, our effort
to iDClude in our fiacal prograa oal, tbOlie
expenditure. which .eet strict criteria 01
fulfilliDg i.portant national Deeds. tt
Thia Adaioiatratioo had boped to seek a tax reductioo
in tu a taoepbere of a balaaced budget.
But it ....
oecesaary, because of national . .curi ty, to augmeDt sharpl),
our nuclear aDd ar.ed forces, s'tap up our efforts iD apace,
and _ t the costa of servicing a national debt that has
grown larger aa a result of those imperatives.
ThiB bud,eta
big three accounts for ,70 billion of tbe $88.8 billioa
budget aDd their increased Deed. have acCOUDted for
nearly 73 percent of the total expenditure increases
occurring io this Adainistratioo.
- 6 -
In answering a question last .0n4&y,
be
reaffir.ed
his judgment that "what we need i8 the bill tht. year"
and that "the best bill that can be gotten ie the ODe we
recommended. "
As for fiscal balance, the President haa aade it
perfectly clear that the prospect of expanding econoaic
activity and rising Pederal revenuee in tbe future
does not mean that Pederal outlay. sbould rise in
to such revenue increaaes.
proportl~
He said in his Budget hS8ap:
., As the tax cut becomes fully effect! ve
and the economy climbs toward full employment,
a substantial part of the revenue increases
must go toward eliminating the transitional
deficit.
Although it will be necessary to
increase certain expenditures, we shall
- 5 -
recession, and effects of such a recession would be far
more severe if no tax program is enacted this year.
We do not want a hasty, unbalanced tax out because
what is required is to make a real beginning on a per.anent
restructuring of our tax system to lighten the repressive
weight of Federal taxation and high tax rates on our
economy.
A "quickie" tax cut would not give us this
permanent restructuring.
The President in his State of the Union Message gave
a full first priority to tax reduction and reform this ,ear.
In his Tax Message he recommended not a "quickie" tax
cut but a program for a full scale and permanent
restructuring of our income tax system, featuring rate
reduction through net tax reduction and base broadening
reforms.
The President said then, "this program is
designed to achieve broad acceptance and prompt enact.en t . "
- 4 -
Fourth, it balances incentives to investment with
stimulus to demand.
Timing is essential.
To delay, to do nothing would
)
lead at best to continued slow growth, to continued bieb
unemployment, to
~
continued underemployaent of botb . .n
and machines, to
in~dequate
demand and investment and to
continued substantial budgetary deficits or unaet national
needs.
At worst, to delay or do nothing might increase
the risk of recession.
This Administration is not saying a recession i8
imminent, but we cannot overlook the fact that we are in
a period of cyclical danger.
secretary Dillon declared last week he did not see
a recession in 1963 or any time in the future.
But the
Secretary added, "chances would be greater" for future
- 3 -
ali the President hilllSelf has said, "to expand de.aDd
among both investors and cODsuaers, to boost the ecODa.J.
in both the short-run and the long-run, and to achieve
in time both a balanced full-employment econaay and a
balanced .Federa.l Budget."
The prograJD is ba.lanced in at leallt four aaaJor r •• pectl:
First, it 1s balanced in its timing:
It is not a
., quickie" or one-shot tax cut and it does not delay until
the indefinite future necessary repairs of the tax .,at...
Second, it has fiscal balance:
This Adlainiatratioa
has proposed adding $2.7 billion for the tax cut -- within
the bounds of safe budgeting -- to a budget in which
government spending on all but defense, space aDd iDterest
on the debt is curtailed.
Third, it is balanced between across-the-board rate
reduction for individuals and corporations on the ODe
hand, and necessa.ry structural reform on the other.
- 2 -
The President'. program is desigoed to deal p08itlvel,
with this probl...
It is coocerned with creat1DK a taa
.yste. that 1s re.poos1ve to our current national requ1rementa, that utilizes all existinK resource., that leads
to full eaployaent and increased growth, that provides
revenues for balaoced budgets and surpluses, aDd an
equilibrium in our balance of internat10nal payaeDts
in an atmosphere of greater incentive, equity between
taxpayers, with aarket allocation being tbe Kovernor
rather than tax cODsideratl0D8.
Tbe role of this tax proposal is to unleaah the
expansionary forces that reDder the ecooomy fully capable
of discharging its responsibilities at baae and throughout
the Free World.
This is the principle on which the President's tas
program was formulated.
It is a balaoced prograa, designed
aEMARKS OF THE HONORABLA HENRY H. FOWLER,
UNDER SECRETAltY OF THE TREASURY t IDFORB
THE 13TH ANNUAL MIDYEArl. CONFERENCE, TAX
EUCUTIVE8 IHSTITUTB, INC., IlAYJ'LOD&
HOTEL, flASHINGTON, D.C., SUNDAY, MARCH 3,
1963, 7:30 P.M.
(EST)
The President has proposed a caaprehe•• ive procraa
of rate reduction and refora to impro•• 'he tax .Y.'••
and make it an integral par' of a souDd aDd caa.1.te.t
fiscal prograa that recogDizes both our iD,.rDal aDd
external needs.
As tax executives, you know our pr. . .at tax .'ructure
is full of discourage.eDts, distortiona, caaplexit1•• ,
and inequities.
It ia not dOing the job required of it.
The American ecouaay since 1957 haa beeD 8luKSiah
because total demand has been sluggisb aDd capital
investment inadequate.IVe are DOt prod\101ag eacb fe..,.
at least 30 billions of dollars of wealth that we have the
labor and resources to produce.
TREASURY DEPARTMENT
Washington
FOR RELEASE ON DELIVERY
REMARKS OF THE HONORABLE HENRY H. FOWLER,
UNDER SECRETARY OF THE TREASURY, BEFORE
THE 13TH ANNUAL MIDYEAR CONFERENCE, TAX
EXECUTIVES INSTITUTE, INC., MAYFLOWER
HOTEL, WASHINGTON, D. C., SUNDAY, MARCH 3,
1963, 7: 30 P.M. (EST)
The President has proposed a comprehensive program of rate
reduction and reform to improve the tax system and make it an
integral part of a sound and consistent fiscal program that
recognizes both our internal and external needs.
As tax executives, you know our present tax structure is full
. of discouragements, distortions, complexities, and inequities. It
is not doing the job required of it.
The American economy since 1957 has been sluggish because
total demand has been sluggish and capital investment inadequate.
We are not producing each year at least 30 billions of dollars of
wealth that we have the labor and resources to produce.
The President's program is designed to deal positively with
this problem. It is concerned with creating a tax system that is
responsive to our current national requirements, that utilizes all
existing resources, that leads to full employment and increased
growth, that provides revenues for balanced budgets and surpluses,
and an equilibrium in our balance of international payments in an
atmosphere of greater incentive, equity between taxpayers, with
market allocation being the governor rather than tax considerations.
The role of this tax proposal is to unleash the expansionary
forces that render the economy fully capable of discharging its
responsibilities at horne and throughout the Free World.
This is the principle on which the President's tax program
was formulated. It is a balanced program, designed as the President
himself has said, "to expand demand among both investors and
consumers, to boost the economy, in both the short-run and the
long-run, and to achieve in time both a balanced full-employment
economy and a balanced Federal Budget."
D-771
- 2 -
The program is balanced in at least four major respects:
First, it is balanced in its timing: It is not a "quickie"
or one-shot tax cut and it does not delay until the indefinite
future necessary repairs of the tax system.
Second, it has fiscal balance: This Administration has
proposed adding $2.7 billion for the tax cut -- within the bounds
of safe budgeting -- to a budget in which government spending on
all but defense, space and interest on the debt is curtailed.
Third, it is balanced between across-the-board rate reduction
for individuals and corporations on the one hand, and necessary
structural reform on the other.
Fourth, it balances incentives to investment with stimulus
to demand.
Timing is essential~ To delay, to do nothing, would lead at
best to continued slow growth, to continued high unemployment, to
a continued underemployment of both men and machines, to inadequate
demand and investment and to continued substantial budgetary
deficits or unmet national needs. At worst, to delay or do
nothing might increase the risk of recession.
This Administration is not saying a recession is imminent,
but we cannot overlook the fact that we are in a period of cyclical
danger.
Secretary Dillon declared last week he did not see a recession
in 1963 or any time in the future. But the Secretary added,
"chances would be greater" for future recession, and effects of
such a recession would be far more severe if no tax program is
enacted this year.
We do not want a hasty, unbalanced tax cut because what is
required is to make a real beginning on a permanent restructuring
of our tax system to lighten the repressive weight of Federal
taxation and high tax rates on our economy. A "quickie" tax cut
would not give us this permanent restructuring.
The President in his State of the Union Message gave a full
first priority to tax reduction and reform this year. In his Tax
Message he recommended not a "quickie" tax cut but a program for a
full scale and permanent restructuring of our income tax system,
featuring rate reduction through net tax reduction and base broadening
reforms. The President said then, "this program is designed to
achieve broad acceptance and prompt enactment."
- 3 -
In answering a question last Monday, he reaffirmed his judgment
that "what we need is the bill this year" and that "the best bill
that can be gotten is the one we recommended."
As for fiscal balance, the President has made it perfectly
clear that the prospect of expanding economic activity and rising
Federal revenues in the future does not mean that Federal outlays
should rise in proportion to such revenue increases. He said in
his Budget Message:
"As the tax cut becomes fully effective and
the economy climbs toward full employment, a
substantial part of the revenue increases must
go toward eliminating the transitional deficit.
Although it will be necessary to increase certain
expenditures, we shall continue, and indeed
intensify our effort to include in our fiscal
program only those expenditures which meet strict
criteria of fulfilling important national needs."
This Administration had hoped to seek a tax reduction in the
atmosphere of a balanced budget. But it was necessary, because
of national security, to augment sharply our nuclear and armed
forces, step up our efforts in space, and meet the costs of
servicing a national debt that has grown larger as a result of
those imperatives. This budgetary big three accounts for $70
billion of the $98.8 billion budget and their increased needs have
accounted for nearly 73 percent of the total expenditure increases
occurring in this Administration.
Expenditures for programs other than defense, space and
interest have been held slightly below last year by taking what
was most urgent and reducing or eliminating what was not -- the
fourth time this has occurred in fifteen years -- against a background in which the average increase in this sector of the budget
has been 7.5 percent per annum for the last nine years.
Although proposed defense outlays in fiscal 1964 are some
$2.4 billion above outlays for 1963, many billions of dollars in
proposed programs were eliminated because the President and the
Secretary of Defense were convinced that their benefits in terms
of a stronger defense did not warrant their costs.
National security in the modern world cannot be bought cheaply,
and it is too precious to risk by a bargain basement approach or by
an arbitrary budget ceiling. Nevertheless, military spending has
no immunity to searching examination as to needs, costs and
alternatives. Improvements in the Defense Department supply and
- 4 logistics program, alone, will result in savings of $3-1/2 billion
in 1965, an amount that will pay the entire cost of the President's
legislative program in Congress. Inventory reforms, improvements
in maintenance procedures, elimination of unneeded activities and
the closing of unnecessary installations yielded a 1964 budget
saving of about three-quarters of a billion dollars, so that the
rise in defense effectiveness is much greater than the increase
in expenditures.
A consideration of the outlook for future expenditures shows
the President's policy of holding the rise in total expenditures
to a rate substantially below the rate of increase in revenues to
be a practical objective consistent with the national interest.
There are important reasons to expect there will be a slowdown in the rise of defense expenditures. We are reaching a new
plateau of readiness in both our strategic and limited war
capability. While expenditures will continue to rise in some
areas, such as research, these increases will be balanced by
reduction in other areas and by other savings. The result will
be a sharply increased defense effectiveness per dollar of outlay.
While another sharp increase in space expenditures will occur
in 1965, this increase will be less than 1964. Interest payments
can also be expected to rise somewhat as a result of the transitory
deficits on our way to a balanced budget. Foreign economic
assistance expenditures are under intensive study. While it would
be premature to speculate on the likely trend of these expenditures,
several countries already have passed the critical stage in their
progression to self-sustaining growth and should soon be able to
move ahead without further aid.
Expenditures in other areas -- broadly the "domestic" sector -will be affected by a large number of pluses and minuses. It will
be a clear responsibility to find enough minuses to offset the
pluses resulting from the need to carry out, at an effective
level, programs essential to the nation's progress and well-being.
The funds needed to finance these programs should be found in
large part through four major types of savings:
(1)
credit.
The substitution of private for public
(2) Reduction in expenditure in existing
programs whose relative urgency has diminished with
changing times and pertinence.
- 5 -
(3)
charges.
The extension of the principle of user
(4) Intensive emphasis on efficiency and
cost reductions throughout the government.
With the close cooperation of the President and the Congress
in holding down expenditures, barring an unexpected worsening in
the cold war, the tax program and the re lated program of
expenditure control are feasible and consistent with the national
interes t.
To effect additional fiscal balance, apart from expenditure
control, the tax program itself is designed to minimize the
budgetary impact of revenue losses. A three-year approach was
mapped out to avoid an overly sharp drop in budgetary receipts for
fiscal 1964-65 and to keep the temporary increase in the deficit
at a level which is manageable and compatible with stability.
This choice of a phased rate reduction program along with
recommending reforms designed to offset about a quarter of the
cost of rate reductions, should serve clearly to rebut any
assumption that the tax reduction program was aimed at enlarging
the budget or prolonging deficit financing.
The fiscal advantage of including the so-called structural
reforms is at least as important as their other merits in terms
of equity and tax policy.
Given the accompanying policy of expenditure control described,
and the features of fiscal balance incorporated in the tax program
itself, the enactment of the tax program this year would seem to be
the most fiscally balanced course to foilow. For, once the tax
brake is released, the base of taxable income, wages and profits
should grow at an even faster rate than before -- and revenues should
soon substantially surpass their pre-tax cut level, or eventually
the level they would have reached on a slow growth pattern, or
even sooner, the level they would reach in event of an intervening
recess ion.
If, for example, we should slide into another recession,
pulling annual GNP down by as little as three percent, the deficit
would increase twice as much. In other words, the deficit,
without a tax cut would then be far higher than the projected
deficit we face with a tax cut. We accept the additional slice
of deficits that are a consequence of the tax program very
reluctantly -- in the conviction that this program is the course
- 6 -
best designed to promote a continued, steady and increased rate of
economic advance and the surest route to balanced budgets and
surpluses consistent with national security and leadership in space.
Third in the list of balancing features is tax reduction and
reform. There is general agreement among those who study our tax
system that the level of rates is too high, up and down the scale
from "top to bottom," individual and corporate. It is because
of the onerous 91 percent individual top and the 52 percent
corporate maximum that loopholes, tax preferences and special
privileges were written into law or pre-existing provisions
increasingly utilized to evade the tax base.
The President's program attacks this problem using two
approaches. We recommend ~owering the rates, and because that
will eliminate or minimize the need for the special tax preferences,
we seek to remove some of them. The ultimate goal of a sound tax
policy in the economic environment of the Sixties should be to
reach the lowest scale of rates feasible and to divest the tax
system of provisions that misallocate resources, result in
unnecessary hardship, give unfair advantage to a particular group
or groups and unnecessarily complicate an already complicated
situation.
A number of changes -- m1n1mum standard deduction -- child
care -- aged provisions -- are designed specifically to rectify
hardship. They will resul t in revenue losses totaling $790 million.
Other reforms will eliminate or reduce special privileges, thereby
broadening the base of taxable income and increasing revenue. The
net result of all these changes will be an increase in revenues of
approximately $3.3 billion. These increased revenues will offset
a portion of the $13.6 billion cost of the rate reforms, and it
is our conviction that the $10.3 billion balance is the maximum
revenue cost that can safely be accepted. Therefore, failure to
raise revenue through structural reform will necessarily require
an upward revision of the recommended rate structure.
Such high rates would be unfortunate since there seems to be
a broad measure of agreement that the individual rate structure
that we have proposed is what is required to spur economic growth.
Higher marginal rates decrease incentives for effort and risktaking, and thus would not be as effective in solving the overall
problem.
- 7 To limit the tax program to the scale of rate reduction
achievable through net tax reduction (approximately $9 billion)
and forego the opportunity to achieve an additional $4.6 billion
in deeper rate reductions is to accept a second best result in
the most important tax reform -- a lower rate structure.
To forego the opportunity provided by rate reduction to
achieve other structural reforms to promote equity, eliminate
special preference no longer compatiable with rate reduction, and
make the market rather than the tax system the allocator of
resources and effort is to lose the most practicable opportunity
of a decade for achieving the other reforms. These are some of
the reasons why a balanced tax revision program of reduction and
reform is worth the extra effort involved.
Finally, and of signal importance is the balance in the tax
program between demand and investment at all levels of effort
and output. The tax program offers additional direct incentives
to investors and makes it possible for consumers to buy more of
the goods and services produced by American businessmen.
It ignores neither buyer nor investor, and that is as it
should be.
But before going into further discussion of the investordemand factor, I would like to summarize some of the main features
in the program applying to business:
1. The program reduces corporate income
tax rates from the present 52 percent to 47
percent, a $2.4 billion cut which amounts to
an increase in after-tax earnings of corporations
of just over 10 percent.
2. The program contains a prov1s10n providing
immediate and substantial benefit to the 450,000
small corporations in the United States with
earnings of less than $25,000 per year. For 1963,
the present normal tax of 30 percent, applicable
to the first $25,000 of taxable corporate income,
would drop to 22 percent. Thus, an immediate tax
reduction of almost 27 percent would be provided
small corporations -- those corporations that
generally have least ready access to capital
markets and are consequently most dependent on
internally generated funds for the financing of
their investment projects.
- 8 -
3. There is a proposal to eliminate the present
two percent tax on consolidated net income of
affiliated corporate groups filing consolidated
returns plus a plan to repeal the present tax on
intercorporate dividends -- of dividends which do not
go outside particular families of corporations.
4. A significant provision would allow
corporations to treat expenditures for machinery
and equipment used directly and specifically
for research and development as current expenses.
Such a change from present treatment should provide
a measure of greatly needed encouragement to
civilian research and development which is badly
needed in many sectors of the economy and should
result in greater efficiency, an increased flow
of new and improved products and an improvement in
our balance of payments position.
So that some of the revenue losses implicit in the provisions
I have outlined can be offset, while the proposed level of tax
liability is unaffected, the President also has proposed a speeding
up of corporate tax payments. There is provision, though, for a
gradual transition from present arrangements to an arrangement
under which corporations will be ·on a fully current tax basis, just
as individual taxpayers are right now. This speeding up of
corporate tax payments will impose only a small tax burden on
corporations, although it will mean a great deal to the fiscal
feasibility of the corporate program.
It is estimated that the speed-up when fully effective, will
cost corporations about $10 to $15 million annually. Many companies
now set aside funds to pay their taxes as they earn the income
on which the taxes are due; and typically corporations then invest
these funds in interest-bearing securities or in bank accounts
that pay interest. What these corporations will lose by the
speed-up in tax payments is just the interest on the funds they now
set aside for tax payments.
If all the tax proposals are adopted there obviously will be
less need for individuals to seek capital gains treatment of
ordinary income, primarily because of the across-the-board
reduction in individual rates to a 14-65 percent range, a reduction
of 29 percent in the highest bracket, accompanied by appropriate
reductions in the middle and low income ranges.
- 9 -
The cut in the individual tax load amounts to about $8.7
billion, with $5.5 billion going to the taxpayers earning under
$10,000 a year. These are the bulk of the consumers, and almost
all of their tax cut can be expected to directly enter the
spending stream with its multiplier and accelerator effects.
American consumers traditionally spend a large percentage (92 to
94 percent) of their after-tax or disposable income.
Corporations will benefit from rate reduction by $2.4 billion
at current levels of profit. Add this to the $2.1 billion
reduction in tax liabilities that corporations received last year
as a result of depreciation reform and the investment tax credit,
and you get a total tax relief for corporations of nearly $4.5
billion. This would amount to a reduction in corporate tax
liabilities of nearly eighteen percent. In addition there are
business benefits in the lower individual rate scales affecting
upwards of four million self-employed and unincorporated businesses.
George Terborgh pointed out in his study "New Investment
Incentives", published by MAPI, that last year's depreciation
reform and investment credit together provided the equivalent of
a tax rate reduction on income from new investment of ten
'percentage points. Adding the five percentage point reduction
in the corporate tax rate contained in the President's tax
program brings the total reduction with respect to income from
new investment in machinery and equipment to approximately
fifteen percentage points.
(It is approximately fifteen percent because with the
lower tax rate the more liberal depreciation provides a somewhat
smaller tax saving than was true under a 52 percent rate.) This
reduction of fifteen points is a reduction of about thirty percent
relative to the present tax rate of 52 percent.
Another way to look at the effect of the 1962 program
coupled with this year's proposals is to note that the improvement
in profitability of new investment resulting from the 1962
program is estimated at 20 percent. The five point reduction
proposed by the President adds an additional ten percent subject
to the reservation expressed above, to bring the total improvement
in after-tax profitability to close to thirty percent.
The reSUlting increase in return on business investment after
taxes from the 1962 action and the proposed program should bring
many hitherto marginal investment opportunities into an attractive
range, particularly as increasing demand moves up volume and
- 10 -
opportunity. Also, the pressure to assure maximum profits or
increasing volume by modernization of high cost plant or increasing
new capacity will be felt.
The effect of a lower scale of corporate and individual tax
rates plus lower rates on capital gains will be increasing
incentive and initiative to earn the marginal dollar by increasing
investment and risk-taking. The market rather than tax consequences
will tend to become more of a prime determining factor of economic
decision.
The Administration realized that if the United States is
to grow more rapidly in the future as it surely must, investment
will have to proceed at a faster pace. And the Administration also
recognizes that if investment is to grow, the tax environment in
which investors live will have to be more favorable. That is what
we are striving for.
But to encourage investment, strengthening of consumer demand
also is required. The purchasing power of the consumer must be
increased to utilize present productive capacity fully so that
additions to productive capacity will be worthwhile.
Of course, if the economic situation were different -- if all
of our economy's resources were fully employed -- strengthening of
consumer demand would not be important to investment.
But we do not have a full employment economy, and those who
argue on the assumption that we have are mistaken. There is
room for a two-fold attack on the problem of getting higher
levels of investment. Corporate and individual income tax laws
can and should be changed to make investment more profitable.
And individual income tax laws should be changed in such a way
that consumer demand is strengthened, thereby making utilization
of existing cap~y more profitable and additional capacity for
old projects or new capacity for new products more inviting. For
a tax cut which only adds to saving will not produce the early
intensification of investment that is so vitally needed if an
economy is to grow.
There are some who argue we are in a full employment situation
and have been since roughly the beginning of 1962. This argument
is based on a contention that there is no unemployment of capital,
no excess capacity in manufacturing and other industries.
What is being argued is that the economic recovery of 1961-62
slowed down so dramatically in 1962 because the economy exhausted
its industrial capacity -- ran out of capital -- and so could
increase output only slowly.
- 11 The diagnosis is incorrect. There is excess capacity today.
How much no one really knows for who can say down to the last
machine how much there might be in the entire economy?
But the estimates of excess capacity obtained from interviews
with businessmen or from a careful analysis of historical developments are not without meaning. We have evidence that excess
capacity is widespread throughout the manufacturing sector of the
economy, so that this sector was operating at only 83 percent of
capacity in September, 1962. When compared with the average
preferred operating rate for all manufacturing industries -- which
is variously said to be 90 and 94 percent -- this 83 percent
operating rate indicates a considerable amount of excess capacity
enough so that errors of measurement cannot be made to disappear.
The fact that we have this excess capacity -- last September
only three of fifteen manufacturing industries were within five
points of their preferred rates -- is evidence that stimulating
of consumer demand will not result in inflation and is evidence
that stimulating consumer demand is entirely in order.
Conclusion
During the past five years it has become increasingly clear
that our present tax structure -- characterized by high levels of
rates of income -- repressive at every level and type of income -fastened on the economy to restrain war and postwar inflation -designed to hold back consumer demand, initiative and investment
now checks growth, invites recurrent recessions, depresses our
Federal revenues and contributes to chronic budget deficits.
At the year's beginning there was a clear consensus -- which
had crysta1ized during the preceding seven months following the
slackening of expansion in early 1962 -- that the nation required
major tax revision in 1963 -- a conclusion implicit in the studies
of the House Ways and Means Coinrnittee incorporated in the Tax
Revision Compendium of 1959 and adopted in the President's first
Tax Message in April 1961. Those most knowledgeable about our
tax system arid its role in our economy -- in the Congress, in
business management and finance, in labor leadership, in the law
and accounting, and in the academic world -- have urged the
enactment of a program which, in the words of the President's
Tax Message of April 1961, would be: "Aimed at providing a
broader and more uniform tax base, together with an appropriate
rate structure • . • " which would put us "toward the goal of a
higher rate of economic growth, a more equitable tax structure, and
a simpler tax law."
- 12 -
Now the moment of truth is here and proposals generally
responsive to these objectives have been submitted by the President
to the Congress.
As is always the case with tax legislation, the season of
hearings before the committee charged by the lower House, which
is the body with Constitutional authority to originate revenue
legislation, is hearing the anticipated differences of those in
the private sector with the President's proposals.
I submit these
differences are and will be largely differences in degree and
emphasis.
Those who wish a "quickie" or "one-shot" tax cut enacted
immediately with permanent restructuring put off will contend
with those who feel that an attempt should be made to solve all
t~ problems at once by the substitution of new systems of
t~ation or even more sweeping structural changes than those
proposed. The President's program falls between these two
extremes, being designed\'to achieve the best bill of tax reduction
and reform that can be enacted this year.
Those who wish a substantially increased scale of Federal
domestic expenditures in the 1964 fiscal year will contend with
those who would abandon any tax program until the budget is
balanced. The President's program falls between these two
extremes to move forward on the priority job of tax revision
within the bounds of fiscal discipline -- against the background of
a budget in which government spending on all but defense, space
and interest in the fiscal year 1964 is reduced and a policy of
allocating a substantial part of revenue increases towards eliminating
budgetary deficits.
Those who would confine tax revision to rate reduction made
possible by base broadening will contend with those who would limit
rate reduction to the amount that can be bought by net revenue
losses. The President's program would seek the maximum rate
reduction available through a combination of net tax reduction and
base broadening reforms.
Those who believe that only incentives to investment are needed
and that increased consumer demand to utilize idle capacity and
manpower is unimportant will contend with those to whom a single
sharp stimulus of consumer demand through tax reduction for the
lower brac~ets is all that is necessary to solve our problem of
slow growth. The President's program falls between these
~o extremes being designed to combine both incentives to investment
with the stimulus to consumer demand.
- 13 -
441
In conclusion, may I suggest that the President's program is
a balanced program on all of these issues where there are
differences of degree and emphasis: It is balanced in its timing;
it has fiscal balance, it has balance between rate reduction
through net tax reduction and accompanying structural base broadening
reforms; it balances incentives to investment with stimulus to
demand.
Whatever the variants in degree and emphasis, I would hope
that all those with responsibilities in this area, public or
private, would never lose sight of the common objective -- a
modification in the calendar year 1963 of our tax laws along the
general lines proposed.
000
;;"0
- J;1'""-
O~
For ricber
industry --
a8
poorer,
~. p.rfo~.
of the COD8tructiea
of all our ioduatry aDd all our people -- 1.
indissolubly 'Wfldd.d. to tbe perfcmaanee of our ecOD.,.
ADd_
Well our economy perfonu in tbe year. abea4 depeeda OIl bow fa
\l!e today can look bJYond our parochial aDd conf11ctlDa ••1fint~rests
to the
President's tax
lar~er
?ro~ram
. . If-intereat common CO u. all
1. will
de.1~Ded
to ••rve.
~t
the
•
1."lD~ 8C0D0my.
It va. . .t d_iae4 • • • • • adr_li. to bel,
ur. cope [.'lOre readily with any difficult!•• in
road sbea:.t2.
tbe
~d1at.
It was designed for one purpoa. aad. oae purpo..
Qt:'nt> /
~i~n8J-- to
litt our ecOl\OlDy onto another plane -- • p1ao__
waicn it can move ion8rd more con.latent.ly and .ore rapidly 1a
the future than it: has been able to in tbe pa.t.
'ftl1a 1. tIae _
Kin<! ok economy tnatwoula 61ve ua more job., more . . la.,
ineou::~
-- ace more c:oD.atruct1on -. not only for Mxt
the next
to cgmt;.
C\'PO
....
Y"I'~ m
years, but for many year. and per-hap, for . . . . . . .
/1
/'
-.-lS -
If one takes part of that $J btl I ! . otfHt ..,.
some tasbion.
one must run the risk of a sreatft' budsetary t.paet 111Mb me
consequent fears of inflation that th1. _y ...11 rai•• ill _
qtLtrterl.
Or one haa another altentat!". -- ODe caD wIllttle
away at tite rat •• the.aelvea, thtt. bluating the
overall thl'Uat
ot the pro,r;r- by weakealng it. most e •••Clal part.
My point
an,~
1., 10 abort, that the reform. are all ......tt.l
lntelr~ted
part of the entire
pro~.
Afl1 .ftent to
1""".
them -- in purt or entirely -- 1. bound to have & price of itl
own.
nlOS~
who orpose the
of -principle
OT
re~orm.,
whether they do
80 OIl
,nuad
beeaua. tho•• reforms lfl)Uld iDterfere 1f1tb tba
benefits they woulc otherwise receive from the rate reductl. . ,
should refleet upon the alteraatives before they
•• lve. irreparably.
c~t
1bey _auld look beyoou what the
meanl in terrua ot dollars and cents tax cute.
tb...
proP"M
-naey aboal. JArek
- 17 -
largest possible rate cuts within the limits of fiscal
responsibility is to combine them with b. . a-broadening tax
reforMS.
I do Dot . .an to aUII.at that the CODer••• • ~t accept tke
rafor.. in exactly toe size and abape propo.ed by Pre.ide.t
Kennedy.
for the
As the President himself has Doted, this is a aatter
Congress to decide.
Wh.·~t
I do lIlean is tha.t every .uurl
woich whittles away at those reforms must be compeosated for in
- 16 -
. . aure you, are an essential part of the overall proaraa •
••• ryone agr ••• that the tax prograa .uat include, ..
ita .oat important element, SUbstantial tax reduction and
rate reduction.
But not everyone realize. that the propoeed
refor. . are vital -- not only in ter. . of equity, hardsbip
r.li.f and ecoDoaic growth -- but to tbe very acbi .....~t
of larger rate reductions than would be fiscally r.aponaibl.
without th...
With the refor. . it i8 pos8ible to obtain rat.
cuts of $13.6 billion, together with additional help for the
poor and aged which bring this
fi~ure
well over $14 billion,
at an overall cost of only $8.8 billion.
The reforms --
including the gradual transition to a more current tax pay...t
basia for corporations -- Will, in other words, off.et more
t~
$5 billion -- .ell over a third -- of the budgetary i.pact of
the most important part of the program, the rate reductions
and hardship relief.
The ouly way, therefore, to achieve tb.
- l~ -
pro.perity and lower e.ploy.ent, would les.eD
~be
local and .tate budget. fro. welfare and relief
pre•• ure OD
co.~..
leaYiDa
.are .oney available for other n•• ds.
The point, I think, ia 4bundantly clear:
aCODo.,
w~ich
In the expaaded
the President's tax prograa ia fully capable of
generating, the construction industry c ••not belp but
~b~lve.
But let •• .ake it equally clear that the propo.ed tax proar"
tbat oaD provide this st1.ulua is a prograa of tax
well as rate reduction.
refo~. . .
Nor should anyoDe d.ceive bi ... lf lato
believing that, without any of the propo.ed refor•• , the tax
program would be aa effect1ve as I bave described 1t.
The
Pre.ident hi . .elf has eaphaaized that of all the refor.s t.e
large.t and the moat iaportant is rate reduction 1t•• lf.
fbi_,
however, should not be interpreted to suggeat 'bat the retor..
are merely soaething added to the program as
with no i.portance in and of the... lv...
aD
after-tbouca t
The refor. . , I caa
- 14 -
rate..
This aust be of more than pa•• iDI i8pOrt&DC. to ,ou
ln vlew of the increasing resistance to ri ••• in .tat. and
local tax rate. and bond lssues for conatructioD purpo....
Wlthin a few years, the proposed tax prograa will 11ft
our Gr08S National Product substantiall, over what it would
otherwi.e be.
Assuming tbatthis additional growth would
amount to '50 billion per annUB, then this would . .au aD
increa8e of 8 percent, or $3.5 billion, in tax r.v.nue.
collected by states and local unit. at pr•• ent effectt ••
rate..
The State of Michigan, for instance, would reali ••
$2.5 billion as its proportionate share of the GNP increa.e.
or
should the induced increase in GMP reacb only a rae,. .f
,30 billion, then this would sean an incr.... of oyer 5 perce•• ,
or $2 billion, in state and local tax revenue.
Michigan'.
proportionate share would be $1.5 billioD.
ADd
throUK~out
the country the reduction in Federal taxe.,
a~on.
with
lrea~.r
- 13 Industry i8, of cours., not the on11 or .... tbe lar... t
aarket for the construction industry.
But I think it i. quite
clear that in your other aark.ts . . .ell a a1ail .... proc.a would
occur.
In li62, for example, atate and local governaent.
financed $11.3 billion, or
activity.
a~at
oae.fifth, of all co•• tractlo1
Yet aaoy atate and local Ko.eraaent uBits b.ye fouad
it increaslally difficult to finance, DOt oaly maay De. and
Deeded proJecta, but ne.ded expan.ioD8 of pre.ent project ••
Me. sohools, ne. urban renewal de.elop.eata, greater aatchiDI
funda for highways, new roada. and aany otber pro.r. . . .uffer
becau.e atate and local iovernaenta siaply caRnot fiad the
revenue. necessary to aupport thea.
The econoaic expansion .e antiCipate . . a re.ult of
t~.
President'. tax program offers a genuine opportunity for
a bealtby iocr.aae in atate and local re.enu. . to f1a ••ce
needed public construction without ratai •• state aad loGal
~
/ v--- 1M'~~t~
shoulLi they do no more tlu\n retain their pr•• eat
perceuta:;.e
01
tot.:,! 1 output, to rise by rou~ly aroUDd $2-3 b11111
ovor tne present
~21.2
'Dillion.
invest~ent a~v.phcr~ res~or~
aut should .. Dew and
bl'tlk
co au.iDea. conatructLon tbe
proporti()ll 01 totMl output it bela
.i.Q
ml6ht expect expeadlturea to ri . . by
Certainly in a period of
"1'.
the
..r.
ace.le~ated
l.&~. F1f~1...
til. . .
thaa t:wi-c. daat •
I
at,
econaal0 growth. wll1l
suL: tcient tv c:onc(!n.tret.e its 1nvE.stment 1n new equlpcaeDt .1. . .
i'or incre46e<.i cemand for present ?rOollcts t and tile iocr...eeI
proritiioillty 01
~xPdndin;
present: capital inveabMnt for ailC-
in,.) 6 00ds .Uul proceaaes, "'ouid creata a hi6111y favorable ac.o..
phare for new produce. and proce. . . . aad tile . . . pi_c....... I
"reduce them.
- 11 -
investment demand can multiply throughout the ecoDom1, •• ttl ..
in motion forces of expansion that would otherwi •• reaaia i ••rt.
In this
proc~ss,
the incentive. for productive iave.t. .at would
be heightened througb enlarged d ••and and through reduc.d
corporate tax rat •• which will increase after-tax profit..
ADd
the production of new aaehines and the buildiag of new factori .. ,
offic •• , store. ana apart.ent. would further inore. .e GOa8u..r
incomes in the saae way as would the expanded
p~oductioA
of
consumer goods.
No industry as large as the construction industry . . . Yital
and as closely linked to the country's economic well-being,
CaD
afford to ignore these very real implications of the Pre.ideat'.
tax program.
In the four quarters ending in tbe last quarter of
1962, our rat. of economic growth was only 2.7 percent --
with our entire postwar average of 3.4 percent.
CO~~
It 1. 1114 we
were .erely to return to this postwar average -- aDd we full,
expect to do better than that -- than by the end of
that
ye~r
we could expect business construction expenditure.,
./
- .a Second, tne President' 8 tax proar- off. . . . . . . realt.
to virtually every Aae.ricAD, .ad to .,ery ......' of CMI&balgbtened incentiv.s aDd Dew opportualti.. -
_m ....
the prc.l. . ef
peet of addltlODlll rewarda for bard work aad fOJ:' iatellJ.&" a.II
taklll6 -- all the b_fit8, 1n ebort, of _ _ _ . , tauat t.a fnI
to move and tbrive on its own tab.rent
power.
Ttlird, toe more than $:.> billion reductioa 1&\ the lDcllri.dual
tax burden ant. the $1.3 billion reduction in tbe corporate &IS
burden would 1.mmedlately boost both purcUalag power ira . . . . . .
mark.ets and tile
:tenerate new
invested.
.avi~. aDd
incOlS~s
T1US
iDc_tiv..
fo~
1mr••t:.MDt.
-rlbich, in turn, can be c:oe.-ed
'Da...
.1" ......
the. &timulu8 of a t~x cut to botb COIl. . . . . . . .
- 9 -
of economic decisions -- and would open .ar. widely the door
to substantial increase. in net disposable ioco•• after tax•••
As tbe President bas well said in his Tax Me •• ace:
"This will restore an idea that haa helped
_ake our country great -- that a person who devot ••
bi • • ffort. to increasing bi. 1 DCO. . , tbereby
adding to tbe Hation'. incoae and wealth, sbould
be able to retain a reasonable sbare of tbe re.ults."
Tbe President's
taxes paid.
progr~
will also, of course, reduce actual
If tbe program were enacted exactly as 1t 1. toda, •
with botb the proposed rate reductions and the refor. . -- .e11
over 99 percent of all taxpayers would enjoy a reductioD, .oat
of tbe. a 8ubstantial reduction, in taxes.
- 8 -
a8 in the human sena8, no man is
~n
ialaud -- and there 1. ob-
viously not one of ua personally and not one of our 1nduatr1..
that will not prosper from an expanding aconoa,.
Let me touch here briefly upon just three 8.1ient tacta
about the Preaident's tax prograa tbat have too often been
either oDBcured or ignored in the .any and rather ma.siva al..
understandings ot various detail. in the prograa.
First, even .ore important than the actual tax saviag8 for
given individual in a ,iven year from the Pre.ident's tax
I
pr~
ia the substantial overall effect of the 10werinK of tax rate••
More than aimply reducing tax liabilitie., the subataatiall,
~
rate ecale offered by the tax prograa has the larger effeo. of
greatly increasing the rewarda for effort.
The sizeable re4ucU
of 20-30 percent in the top rates in every inco.e bracket woul.
crease effort and risk-taking -- would .aka the market.
r4ther than tax consequences, the prime determinant
1
-.-6 to ecoD<Jmic ,;rOWt.tl tnat
do
notnln,~,
tuture.
will.
~inder
hav~
ilindered us in the pa.t, ADd, if ..
us witn
even~X'eater
ta.
c:on.equeDCe 1a
'Ine Preaident'. propu.e<i tax pro&". . "ffut . . . . .
opportualty to r..ove vbat ev.ry . . jor _ _eat of . . . . . . ..,
will
a~ree
baa been one of our flOat formidable obatael •• to InII
a repreaaive tax structure which restricts muen too tl&htl,
~.
rewards for investlUent and wei3ha heavily on f!!fIery incOli. 1...1
and in every are4 of: our ecoDODiY.
Let us not
los~ or
diminish t.riG very real opport\l1l1t1 '*i*
tae President's
pro~ram
preaenc& by creatin& obstacl•• of our
GWIl -- by £0C\le~ OIl ODe or two deui.l. whidl off'" . . . . .
lo.1a~
pro~r~
aight of the IOUndD... 81 d IlUbataDl;ial proId.. . .f tIM
as a whole, or by for~ctti~ that, in lta major d~S.
and in the stimulus it ot fers to tile ecODQaly. the Pr•• lcSeat' • •
~ro,;rorc W1.11 ';reatly benefit all of us.
In the ecoaa.1c a . . .11
- ~ihlC:lie are aome clrcas in which our slow
aas
Ulcant ~u:ner dimix*h~<! opportunitiea
l.nuu~tt'y
ecooo.lc
~rowth
race
Lor tne coaatructloa
or 0pPQrtunitiea tnat kl&ve tailed to mater1al1.&e.
naa our eccnowy oVer tae pa.t iive of six
y~ar~
..t
been operatl.. a&
closer to capacity le:vel. -- t\a.d it uot Deen nandicapped . , wartime tax ra tea t u t were expr ••• ly deaigned to bold back.
d~nd,
COD. . .
initiative and investment -- had it been able, laat.u,
to Qojoy ,;reater incentives for .;;rowth, nad con8\llDer d18poaaa.ll
income and Lnve.tment fundS
depended
them
l~al
WO\.L.ld
o••u
l.ceater. Gad ec0D0l1l1c dee181oa.
on tax conaeGuftlcell- and more on a.arket factor •••
LUore iactori.as
more school., anJ
wor~
(la"ie
t;.een o\Jilt, and . . . boapltal. . .
roads, a.nd klOr. daata.
fte caamoc recovu loa, opport:w:aiti...
...t..
call -- ... WI
rouat -- sE:ize every present opportunity to rtaOVe the obaucl••
re.tj'''tl.~ con.truction dee11aed froIa
4.2 peree.t of total _ .
put 1D the lat. P'ifti. . to 3.8 perceat in 1962 -- _ _ ~ . . .
the •• and
.~ll.r
figur •• , it
o.co........e.kab17
c1. .r tb.t
the c:onatruetion Indu.try baa 1ft fact aufferecl a 10•••f
lrowtb 1n one of it.
pn... ..net..
In the arM of
to p1n-poiDt one epeeific cODatructioa . .net:
~rowth
,.t-eta
-lMc.n •
-- tb. "en.1
per y.ar in. our .tock of bu.1D... structur.. declta.l
tre. 1.7 perc:eat in the 1947-S7 period to .4 perceat ill tile ltS7·
"'r,cVe L
, [t _
period.
A.~~ gooda-,roduciag ••pent of tile ..... ".
IUJlUfaeture is of eour•• hlghl,. .n.iei•• to
cea.as••
la - - . . -
have .itRe.sed ill very recellt yur. baa c.aeed. DOt 0Dl,
laaIiIII
iAve.e._t in plants for ~ood. aDd proe ••••• a l r ' " ta tJae . . .
but an wen &rNt.r lag in plaat iJrto••bDftt
proce.aea.
tor . . pre . . . . . .
- 4 Our stunted &rowth over the past five years bas affected
tbe construction industry directly and substantially -- deprlYlq
it of many potential opportunities, and reducina .any of ita
actual sources, of growth -- even though the con8tructlon lDd.. ~
haa r . . i_ted recessioDS better than
80" otb.~
iDdu.tri ...
So . . of your choice markets, both actual and potential hay,
suffered from tbe general slowdown in economic irowtb.
business and construction as one example.
Take
When you note that
total business fixed investment declined from an average of
10.3 percent of our total output in the late Fifti •• to only
8.6 percent in 1962; and that private non- residential
- 3 -
most other segments of our economy, you have done .el1.
But ..
much as you have done, we need much more; and as .ell a. you
h,,,
done, you have not done as well as you might bave had our rat. of
economic growth been grea tar and had we been spared the reo...1_
that have visited us with increasing frequency in recent y.ar ••
Our growth rate of 2.7 percent from early 1955 to the
present compares unfavorably with regular rates 1n Western
I~~,
countries of 4, 5 and 6 percent, or our own earlier" perc••t trt.
even though our rate from 1960 to 1962 has been somewhat higher
than the trend since 1955.
These differences in percentage. Bound 1nBign1f1cant, but
their cumulative consequences are tremendous.
A sustained rat.
of growth at 4 percent instead of 3 percent would •• an that tb.
economy would produce over the next ten years as a whol., i.
today's prices, almost $400 billion more of goods
with all that this would meau to family incomes,
ana governmental revenues.
~nd
•• rvic•• ,
w~ge8,
profitt,
- 2 -
amount was in private construction and nearly ,18 billion 1.
public construction.
Equally striking 1s the fact that coatra.,
construction laat year involved roughly 5 perceat of tbe t.tal
••ploya.nt in all non-farm establish.ents -- wbich waa
gr.at.r employ.ent, for
.~aapl.,
t"-'kl~
than in the automobile aad
ot~.r
transportation equipm.nt industri ••.
But .ven tbes. figures -- remarkable as they are -- ar. ao
ad.quat. m.asure of bow .uch you bave done to h.lp m.et
of our .o.t crucial economic and buaan n.eda.
80 . . .,
You build the
roads •• travel on, our apart.ent buildings, our hospitals, the
schools our childr.n learn in, the plants that hous. our
a& ••1u-
turing .igbt, the broad range of public works that are ••••ntla1
to a .odern soci.ty.
~rica
Th.se you build -- and upon th •• all
builds.
No one can deny that in the past five years of retarded
eeoDoaic growth you bave dODe .uch and that, in coaparlsoD
w1t~
REMARKS O}O' THE HOHOUBLE DDY H. J'OWLKR,
UNDER SECRETARY OF ~ TREASURY, AT TBK
ANNlJAL CONVENTION OF nil: ASSOCI Ann GDDAL
CONTRACTORS OF AIIDICA, 'I'D MAICAlfA BOTm.,
NEW YORK CITY, NEW YORK, MONDAY, MARCH ...
1963, 3:45 P.M., EST
I welcome this opportunity to speak to you -- the leader.
of one of America's largest and most vital induatri . . -- about
a subject which concerns all of you as d •• ply as it coaceraa
all America -- the President's tax program as a sti.ulua to
the growth of the economy in general and of the constructloa
industry in particular.
The bald statistics alone descrlbe eloquently and co,.atl,
not only how large a share of America's
.CODO~C
atrenctb r ..l . .
in the construction industry, but how inseparably linked . . . .11
i& the growth of the construction industry with the overall
of the ecoDomy.
~
Last year, for exaaple, total con8truction
accounted for .are than $61 billion, or more than 10 perce.t.
of our Gross National Product.
More than $43 billion of tkl.
TREASURY DEPARTMENT
Washington
FOR RELEASE ON DELIVERY
REMARKS OF THE HONORABLE HENRY H. FOWLER,
UNDER SECRETARY OF THE TREASURY, AT THE
ANNUAL CONVENTION OF THE ASSOCIATED GENERAL
CONTRACTORS OF AMERICA, THE AMERICANA HOTEL,
NEW YORK, NEW YORK, MONDAY, MARCH 4,1963,
3:45 P.M., EST
I welcome this opportunity to speak to you -- the leaders
of one of America's largest and most vital industries -- about a
subject which concerns all of you as deeply as it concerns all
America -- the President's tax program as a stimulus to the
growth of the economy in general and of the construction industry
in particular.
The bald statistics alone describe eloquently and cogently
not only how large a share of America's economic strength resides
in the construction industry, but how inseparably linked as well
is the growth of the construction industry with the overall growth
of the economy. Last year, for example, total construction
accounted for more than $61 billion, or more than 10 percent, of
our Gross National Product. More than $43 billion of this amount
was in private construction and nearly $18 billion in public
construction. Equally striking is the fact that contract
construction last year involved roughly 5 percent of the total
employment in all non-farm establishments -- which was two-thirds
greater employment, for example, than in the automobile and other
transportation equipment industries.
But even these figures -- remarkable as they are -- are no
adequate measure of how much you have done to help meet so many
of our most crucial economic and human needs. You build the
roads we travel on, our apartment buildings, our hospitals, the
schools our children learn in, the plants that house our
manufacturing might, the broad range of public works that are
essential to a modern society. These you build -- and upon them
all America builds.
No one can deny that in the past five years of retarded
economic growth you have done much and that, in comparison with
most other segments of our economy, you have done well. But as
much as you have done, we need much more; and as well as you have
done, you have not done as well as you might have had our rate of
D-772
- 2 -
economic growth been greater and had we been spared the recessions
that have visited us with increasing frequency in recent years.
Our growth rate of 2.7 percent from early 1955 to the present
compares unfavorably with regular rates in Western European
countries of 4, 5 and 6 percent, or our own earlier 4 percent trend I
even though our rate from 1960 to 1962 has been somewhat higher
than the trend since 1955.
These differences in percentages sound insignificant, but
their cumulative consequences are tremendous. A sustained rate
of growth at 4 percent instead of 3 percent would mean that the
economy would produce over the next ten years as a whole, in
today's prices, almost $400 billion more of goods and services,
with all that this would mean to family incomes, wages, profits,
and governmental revenues.
Our stunted growth over the past five years has affected
the construction industry directly and substantially -- depriving
it of many potential opportunities, and reducing many of its
actual sources, of growth -- even though the construction industry
has resisted recessions better than some other indus.tries.
Some of your choice markets, both actual and potential have
suffered from the general slowdown in economic growth. Take
business and construction as one example. When you note that
total business fixed investment declined from an average of
10.3 percent of our total output in the late Fifties to only
8.6 percent in 1962; and that private non-residential construction
declined from 4.2 percent of total output in the late Fifties
to 3.8 percent in 1962 -- when you note these and similar
figures, it becomes unmistakably clear that the construction
industry has in fact suffered a loss of potential growth in one
of its prime markets. In the area of manufacture -- to pin-point
one specific construction market -- the average growth per year
in our stock of business structures declined from 1.7 percent in
the 1947-57 period to .4 percent in the 1957-62 period. As a
major goods-producing segment of the economy, manufacture is of
course highly sensitive to changes in consumer demand. And the
constrained growth in consumer demand which we have witnessed in
very recent years has caused, not only lagging investment in plants
for goods and processes already in the market, but an even greater
lag in plant investment for new products and processes.
These are some areas in which our slow economic growth rate
has meant either diminished opportunities for the construction
industry or opportunities that have failed to materialize. But
had our economy over the past five or six years been operating at
- 3 closer to capacity levels -- had it not been handicapped by wartime
tax rates that were expressly designed to hold back consumer demand,
initiative and investment -- had it been able, instead, to enjoy
greater incentives for growth, had consumer disposable income
and investment funds been greater, had economic decisions depended
less on tax consequences and more on market factors -- then
would more factories have been built, and more hospitals and more
schools, and more roads, and more dams.
We cannot recover lost opportunities. But we can -- and we
must -- seize every present opportunity to remove the obstacles
to economic growth that have hindered us in the past, and, if we
do nothing, will hinder us with even greater consequence in the
future. The President's proposed tax program offers us such an
opportunity to remove what every major segment of our economy
will agree has been one of our most formidable obstacles to
growth -- a repressive tax structure which restricts much too
tightly the rewards for investment and weighs heavily on every
income level and in every area of our economy.
Let us not lose or diminish the very real opportunity which
the President's program presents by creating obstacles of our
own -- by focusing on one or two details which offend us and
losing sight of the soundness and substantial promise of the
program as a whole, or by forgetting that, in its major dimensions
and in the stimulus it offers to the economy, the President's tax
program will greatly benefit all of us. In the economic as well
as in the human sense, no man is an island -- and there is
obviously not one of us personally and not one of our industries
that will not prosper from an expanding economy.
Let me touch here briefly upon just three salient facts
about the President's tax program that have too often been either
obscured or ignored in the many and rather massive misunderstandings
of various details in the program.
First, even more important than the actual tax savings for a
given individual is a given year from the President's tax proposals
is the substantial overall effect of the lowering of tax rates.
More than simply reducing tax liabilities, the substantially lower
rate scale offered by the tax program has the larger effect of
greatly increasing the rewards for effort. The sizable reduction
of 20-30 percent in the top rates in every income bracket would
increase effort and risk-taking -- would make the market, rather
than tax consequences, the prime determinant of economic decisions
- 4 and would open more widely the door to substantial increases in
net disposable income after taxes. As the President has well said
in his Tax Message:
"This will restore an idea that has helped
make our country great -- that a person who
devotes his efforts to increasing his income,
thereby adding to the Nation's income and wealth,
should be able to retain a reasonable share of
the results."
The President's program will also, of course, reduce
taxes paid. If the program were enacted exactly as it is
with both the proposed rate reductions and the reforms -over 99 percent of all taxpayers would enjoy a reduction,
of them a substantial reduction, in taxes.
actual
today
well
most
Second, the President's tax program offers, as a result,
to virtually every American, and to every segment of our economy,
heightened incentives and new opportunities -- the promise of
expanding markets and the reality of higher profits -- the prospect
of additional rewards for hard work and for intelligent risktaking -- all the benefits, in short, of an economy that is free
to move and thrive on its own inherent power.
Third, the more than $8 billion reduction in the individual
tax burden and the $2.3 billion reduction in the corporate tax
burden would immediately boost both purchasing power in consumer
markets and the savings and incentives for investment. These
increases, in turn, have readily discernable implications. For
as output and employment rise to meet new private demand they
generate new incomes which, in turn, can be consumed or saved and
invested. Thus the stimulus of a tax cut to both consumer and
investment demand can multiply throughout the economy, setting
in motion forces of expansion that would otherwise remain inert.
In this process, the incentives for productive investment would
be heightened through enlarged demand and through reduced
corporate tax rates which will increase after-tax profits. And
the production of new machines and the building of new factories,
offices, stores and apartments would further increase consumer
incomes in the same way as would the expanded production of
consumer goods.
- 5 -
No industry as large as the construction industr~, as vital
and as closely linked to the country's economic well-being, can
afford to ignore these very real implications of the President's
tax program. In the four quarters ending in the las t quarter of
1962, our rate of economic growth was only 2.7 percent -- compared
with our entire postwar average of 3.4 percent. If in 1964 we
were merely to return to this postwar average -- and we fully
expect to do better than that -- then by the end of that year
we conld expect business construction expenditures, should they
do no more than retain their present percentage of total output,
to rise by roughly around $2-3 billion over the present $21.2
billion. But should a new and more brisk investment atmosphere
restore to business construction the proportion of total output
it held in the late Fifties, then we might expect expenditures
to rise by more than twice that amount.
Certainly in a period of accelerated economic growth, which
the tax program is designed to foster, industry will not find it
sufficient to concentrate its investment in new equipment alone.
For increased demand for pre~ products, and the increased
profitability of expanding present capital investment for existing
goods and processes, would create a highly favorable atmosphere
for new products and processes and the new plants needed to
produce them.
Industry is, of course, not the only or even the largest
market for the construction industry. But I think it is quite
clear that in your other markets as well a similar process would
occur. In 1962, for example, state and local governments
financed $11.3 billion, or almost one-fifth, of all construction
activity. Yet many state and local government units have found
it increasingly difficult to finance, not only many new and
needed projects, but needed expansions of present projects.
New schools, new urban renewal developments, greater matching
funds for highways, new roads, and many other programs suffer
because state and local governments simply cannot find the revenues
necessary to support them.
The economic expansion we anticipate as a result of the
President's tax program offers a genuine opportunity for a healthy
increase in state and local revenues to finance needed public
construction without raising state and local tax rates. This must
be of more than passing importance to you in view of the increasing
resistance to rises in state and local tax rates and bond issues
for construction purposes.
- 6 -
Within a few years, the proposed tax program will lift
our Gross National Product substantially over what it would otherwise be. Assuming that this additional growth would amount to
$50 billion per annum, then this would mean an increase of
8 percent, or $3.5 billion, in tax revenues collected by states
and local units at present effective rates.
The State of
Michigan, for ins~ance, would realize $2.5 billion as its proportionat
share of the GNP increase. Or should the induced increase in GNP
reach only a range of $30 billion, then this would mean an increase
of over 5 percent, or $2 billion, in state and local tax revenue.
Michigan's proportionate share would be $1.5 billion. And
throughout the country the reduction in Federal taxes, along with
greater prosperity and lower unemployment, would lessen the pressure
on local and state budgets from welfare and relief costs, leaving
more money available for other needs.
The point, I think, is abundantly clear:
In the expanded
economy which the President's tax program is fully capable of
generating, the construction industry cannot help but thrive.
But let me make it equally clear that the proposed tax program
that can provide this stimulus is a program of tax reform as
well as rate reduction. Nor should anyone deceive himself into
believing that, without any of the proposed reforms, the tax
program would be as effective as I have described it. The
President himself has emphasized that of all the reforms the
largest and the most important is rate reduction itself. This,
however, should not be interpreted to suggest that the reforms are
merely something added to the program as an after-thought with no
importance in and of themselves. The reforms, I can assure you,
are an essential part of the overall program.
Everyone agrees that the tax program must include, as
its most important element, substantial tax reduction and rate
reduction.
But not everyone realizes that the proposed reforms
are vital -- not only in terms of equity, hardship relief and
economic growth -- but to the very achievement of larger rate
reductions than would be fiscally responsible without them. With
the reforms it is possible to obtain rate cuts of $13.6 billion,
together with additional help for the poor and aged which bring
this figure well over $14 billion, at an overall cost of only
$8.8 billion. The reforms -- including the gradual transition
to a more current tax payment basis for corporations -- will, in
other \vords, offset more than $5 billion -- well over a third -of the budgetary impact of the most important part of the program,
the rate reductions and hardship relief.
The only way, therefore,
to achieve the largest possible rate cuts within the limits of
fiscal responsibility is to combine them with base-broadening tax
reforms.
- 7 I do not mean to suggest that the Congress must accept the
reforms in exactly the size and shape proposed by President
Kennedy. As the President himself has noted, this is a matter
for the Congress to decide. What I do mean is that every measure
which whittles away at those reforms must be compensated for in
some fashion. If one takes part of that $5 billion offset away,
one must run the risk of a greater budgetary impact with the
consequent fears of inflation that this may well raise in some
quarters. Or one has another alternative -- one can whittle
away at the rates themselves, thus blunting the overall thrust
of the program by weakening its mos t essential part.
My point is, in short, that the reforms are an essential
and integrated part of the entire program. Any effort to remove
them -- in part or entirely -- is bound to have a price of its
own. Those who oppose the reforms, whether they do so on grounds
of principle or because those reforms would interfere with the
benefits they would otherwise receive from the rate reductions,
should reflect upon the ?lternatives before they commit themselves irreparably. They would look beyond what the program means
in terms of dollars and cents tax cuts. They should look beyond
what the program would put in their pocketbook this year, next
year, or 1965. If there is one thought I would like to leave
with you today it is that you and, indeed, anyone seriously
concerned wi th the economic we lfare of this Nation should look very
carefully at the tax program in the light of that welfare.
This program was not devised as a quick shot in the arm for
a lagging economy. It was not devised as mere adrenalin to help
us cope more readily with any difficulties in the immediate
road ahead. It was designed for one purpose and one purpose alone
to lift our economy onto another plane -- a plane on which it
can move forward more consistently and more rapidly in the
future than it has been able to in the past. This is the only
kind of economy that would give us more jobs, more sales, more
income -- and more construction -- not only for next year or for
the next two years, but for many years and perhaps for even decades
to come.
For richer or poorer, the performance of the construction
industry -- as of all our industry and all our people -- is
indissolubly wedded to the performance of our economy. And how
well our economy performs in the years ahead depends on how far
we tOday can look beyond our parochial and conflicting selfinterests to the larger self-interest common to us all that the
PreSident's tax program is well designed to serve.
000
fOit rlELF.ASK A. M. t.r:WSP4 Pl,U) ,
Tuesday. Maroh 5, 1-16).
March
4, 1SJ61
RtSl.,'LTS or" Ta'~AsuaI' S WEILY BILL OrrllUm
The 'Ireasury Je;:>art."llent aMou:tced 1&81. evening that the teadere tor t.wo MI"1 •••f
'INa.ury billll, one series to be an additional 1.sue of the bUll dated De. . . .r 6, l_
and the other eerie. to be dat.ed ftl8reh 7, 176), which were oftend OD 'ebnarr 27, ....
opened at the ;'ederal J.lerYe da!!u on Karch 4. TeDden were inrlted tor 11,)00,000,.
or thereabouts, of :H-dal billa and for $800.000 ,000, or tlMreabout.., ot 182..-,. btlll
'1 ne detaU .. of the two aerie. are as follows.
91-day Trealury billa
maturin6 June 6, 1963
:tU:if .J' AG~F'l U)
C ~ P-'-lL'll VI 81161
Approx. e:.qul....
Pr1. ce
ti1gh
99.274
9J.264
~
Avera~e
Annual Rate
!I
Y9.266
2.672'
2.j12t
2.897~
!I
•
182-dq r""'1Il7 bw..
ut.ur1!& S!J)teaber S. 1~
I
ipproa.. ,
I
Price
t
•:
98.521
98.Sl0
I
98.SlS
!I 8xcept~
Aonw .iate
1.924'
1.t47J
1.')8' Y
one tender of 11,050,000
42 percent of the amvunt of 9l-da,i cllis oid ior at the loy price was acOtpted
77 peroent. ot the MOlIDt of 182-day billa bid for at the 1_ prloe . . alOept.1d
TO'l'AL 'li<:liirEttS AtJt-i..l -D
Jiatr1ct
BoltoD
FO~
AND ACC£Pt'ED 8f nJllilAL ,r::SZttR DraT.rarS.
Applied for
t
25,203,000
Acoept.ed
•
lS,OOO,OOO
I
Applied For
• •
16,040,000
1.428,949,000
890,709,000.
1.147,~,OOO
Philadelphia
37.810,000
22,810,000.
Cleveland
23,771,000
13,784,000
9,681,000
1,208,000
2,008,000
;,;79,000
l)S,llQ,OOO
Dallae
J~,5~j),OOO
30,L3~,OOO
2),771,0'JO
I
11.7Hu.'JOO
I
20,796.000
I
156,916,000
2
21,572,000 I
17.8)9.000.
34,263,000
I
22,854,000 I
san firancilco
67 ,571,000
61,9911.~
I
&1,979,913.000
$1,300.305.000
New York
!Uot..oad
Atlanta
~cago
St. Loui.
Minneapolis
Kans •• City
totALS
2l,d~,ooo
243.776,000
28,9)2.000
19,20~.OOO
.21
7,722,000
6,67;,000
18,143.000
8,71),000
42,)$0,000
il,L.06.59S,ooo
Aooept!cl.
• 6.040,000
6W),270,c»o
.,681,000
7,208,_
1,008,000
S,S79,aoo
63,674,001
S,722,~
.,S6Q,0CI
u,9ta~,011
$,48),011
lSall2,oot
1800,lQb,(X)O
".1
!I Include. i2JO,~.~j() noncvmpetitlve tendera accept~ at the ayerag. pri..ol
i! Include. $49,lu4,OUO noncOlIlpetitive tendera accepted at the averace priOi of 98.SI
!I On a coupon iesue of the same length and for the .... UiOlIDt ~. .te4, t . ret.. .
these bills vc-uld ?roY1de .J1elds of 2.96', for tbe 91-dal' bWa, aDd 1.02', ter'
102-day bUla. Intereat rate. on billa are quoted in te,.. ot ban& ~ wi..
the return related to t.he lace UOUDt ot the billa payable at Mtvttl ...,.r ,.
the UIOUDt lnv.ated and their length 1D actual n~eJ' of day. related fro • )60-41
yur. IT. contralt J yielda on certttioate. note •• aDd bonc:t. are ~ 18 , .
of interest on the aount invest.ed, aDd r.!ate the DlaDer ot daTI ~1D1Ia& 11.
1Atereat payment period to the aat.ual nuaber ot cia,.. iD tbe period, 1I1\b .Iat'·
compounding U· ;1ore than one coupon period i8 inYolyed.
TREASURY DEPARTMENT
OR RELEASE A. M. NEWSPAPERS,
~sdaY, March .5, 1963.
RESULTS OF TREASURY'S WEEKLY BILL OFFERING
The Treasury Department announced last evening that the tenders for two series of
reasury bills, one series to be an additional issue of the bills dated December 6, 1962,
nd the other series to be dated March 7, 1963, which were offered on February 27, were
pened at the Federal Reserve Banks on March 4. Tenders were invited for $1,300,000,000,
rthereabouts, of 91-day bills and for $800,000,000, or thereabouts, of 182-day bills.
be details of the two series are as follows:
182-day Treasury bills
ANGE OF ACCEPl'ED
91-day Treasury bills
maturing September .5, 1963
:
OMPETITlVE BIDS:
maturing June 6, 1963
Approx. Equiv.
Approx. Equiv. :
Price
Aruma1 Rate
Price
Annual Rate
z
:
High
99.274 a/
2.872%
98 • .522
2.924%
Low
99.264 2.912%
98.510
2.947%
Average
99.268
2.897% 1/
98.515
2.938% ~
Excepting one tender of $1,050,000
42 percent of the amount of 91-day bills bid for at the low price was accepted
77 percent of the amount of 182-day bills bid for at the low price was accepted
!I
aTAL TENDERS APPLIED FOR AND ACCEPl'ED BY FEDERAL RESERVE DISTRIGrSa
~.trict
paton
811 York
bUade1phia
leveland
lchmond
Uanta
licago
Louis
Umeapolis
IDS&S City
Lllas
~n Francisco
i.
TOTALS
Applied For
25,203,000
1,428,949,000
37,810,000
23,771,000
13,784,000
21,896,000
243,776,000
28,932,000
19,209,000
38,583,000
30,434,000
67 z571,!OOO
AcceEted
$ 15,000,000
890,709,000
22,810,000
23,771,000
11,784,000
20,796,000
156,916,000
21,572,000
17,839,000
34,263,000
22,854,000
61,2991.z000
$1,979,918,000
$1,300,305,000
r
:
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:
31
AEE1ied For
16,040,000
1,147,342,000
9,681,000
7,208,000
2,008,000
.5,579,000
13.5,134,000
7,722,000
6,67.5,000
18,143,000
8, n3,000
•
42 z350 zo00
$1,406,595,000
AcceEted
$ 6,040,000
648,270,000
4,681,000
7,208,000
2,008,000
5,579,000
63,674,000
5,722,000
4,560,000
11,949,000
.5,483,000
35,2130.z000
$800,304,000
Y
Includes $230,341,000 noncompetitive tenders accepted at the average price of 99.268
Includes $49,184,000 noncompetitive tenders accepted at the average price of 98.515
On a coupon issue of the same length and for the same amount invested, the return on
tgese bU1s would provide yields of 2.96%, for the 91-clay bills, and 3.02%, for the
I 2-day bU1s. Interest rates on bills are quoted in tems 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
refar. In contrast, yields on certificates notes, and bonds are computed in terms
o interest on the amount invested, and rei ate the number of days remaining in an
interest pa}Dlent period to the actual number of days in the period, with semiannual
COmpounding i f more than one coupon period is involved.
773
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TREASURY DEPARTMENT
March 4, 1963
FOR IMMEDIATE RELEASE
WITIlliOLDING OF APPRAISEMENT ON
12 -OUNCE LUNCHEON MEAT
The Treasury Department is instructing customs field officers
to withhold appraisement of 12-ounce luncheon meat produced by
Horsens Bacon and Canning Factory and by Hafnia Konserves A/S from
Denmark 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 complaint in this case was received on July 19, 1962.
The
dollar value of imports of all l2-ounce luncheon meat from Denmark
received during 1962 was approximately $1,548,000.
TREASURY DEPARTMENT
=
March 4, 1963
FOR ll>1MEDIATE RELEASE
WITHHOLDnm OF APPRAISEMENT ON
l2-0UNCE LUNCHEON MEAT
The Treasury Department is instructing customs field officers
to withhold appraisement of l2-ounce luncheon meat produced by
Horsens Bacon and Canning Factory and by Hafnia Konserves
Als
from
Denmark pending a determination as to whether this merchandise is
being sold in the United Stutes 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 complaint in this case was received on July 19, 1962.
The
dollar value of imports of all l2-ounce luncheon meat from Denmark
received during 1962 was approximately $1,548,000.
TREASURY DEPARTMENT
March 4, 1963
FOR U1l>1EDIATE REIEASE
TREASURY DECISION ON TRACTOR PARTS
UNDER TEE ANTIDUMPING ACT
The Treasury Department has determined that lUldercarriage parts
and integral parts thereof, for cravTler-type tractors from Italy are
not being, nor likely to be, sold in the United States at less than
fair value within the meaning of the Antidumping Act.
Notice of
the determination will be published in the Federal Register.
Appraising officers are being instructed to proceed with the
appraisement of the merchandise from Italy without regard to any
question of dumping.
The dollar value of imports of the inVOlved merchandise received
during 1962 was approximately $421,000.
TREASURY DEPARTMENT
March 4, 1963
FOR nn,1EDIATE RELEASE
TREASURY DECISION ON TRACTOR PARTS
UNDER THE AHTIDUNPUrG ACT
The Treasury Department has determined that undercarriage parts
and integral parts thereof, for cravTler-type tractors from Italy are
not being, nor likely to be, sold in the United States at less than
fair value within the meaning of the Antidumping Act.
Notice of
the determination will be published in the Federal Register.
Appraising officers are being instructed to proceed with the
appraisement of the merchandise from Italy without regard to any
question of dumping.
The dollar value of imports of the involved merchandise received
during 1962 was approximately $421,000.
-3As part of this regional move, Internal Revenue will maintain
seven Automatic Data Processing Service Centers instead of nine
as originally contemplated.
Secretary Dillon said most of the changes will be affected
gradually and will be timed in the various districts according
to local circumstances.
Internal Revenue expects, by this
means, to handle most of the personnel cut-backs through normal
attrition and transfers.
-END-
-2These districts will receive expert assistance in field
operations from specialists in nearby larger offices.
The
offices affected by this revision in operating procedures are:
Aberdeen, S. D.; Fargo, N. D.; Helena, Mont.; Boise, Idaho;
Cheyenne, Wyo.; Anchorage, Alaska; Reno, Nev.; Wilmington, Del.;
Burlington, Vt.; Augusta, Maine; Portsmouth, N. H., and Providence,
R. I.
Next January 1, operations of four other districts, located
in states with more than one Internal Revenue district, will be
merged with nearby districts in the same state.
Large field
offices, however, will be maintained in cities affected by this
change.
These four districts are:
Syracuse, NoY., merged into
the Buffalo, N.Y. district; Camden, N. J., into Newark, N. J.;
Kansas City into St. Louis, Mo., and Scranton, Pa., to be divided
between Pittsburgh and Philadelphia.
Secretary Dillon explained that these changes in 16 District
Offices in turn will make it possible for Internal Revenue to
reduce its present nine Regional Offices to seven.
The New York
City and Boston Regions will be merged with the new headquarters
at Boston.
The present Omaha region will be merged with the
Chicago Region, with headquarters in Chicago.
As a result of
these mergers, certain regional boundaries will be adjusted.
FOR RELEASE
l!
,
lv, ~ . "'/12
_.l
v
Noon m...
.LUes day ,
March 5, 1963
Treasury Secretary Douglas Dillon today announced a series
of administrative changes in the field organization of the
Internal Revenue Service designed to save an estimated $5 million
a year.
Mr. Dillon emphasized that taxpayers will not in any way
be inconvenienced by these changes in the organizational structure
of the Service.
Taxpayers will continue to file their tax
returns with their local district directors and receive all
services now provided by Internal Revenue.
The changes were proposed by Commissioner of Internal
Revenue Mortimer M. Caplin in response to President Kennedy's
call upon all federal agencies to achieve "lean, fit, efficient"
organizations.
They are part of Internal Revenue's continuing program to
improve its organization and its operations so as to provide
maximum service at the least possible cost.
Last fall the Service
effected savings of nearly $2 million as an initial step in this
program.
Plans for administrative changes announced today involve
modifying the organization of 12 districts by eliminating certain
overhead
activities.
(More)
TREASURY DEPARTMENT_r
FOR RELEASE AT 12 NOON
TUESDAY, MARCH 5, 1963
CHANGES IN INTERNAL REVENUE SERVICE
TO SAVE AN ESTIMATED $5 MILLION A YEAR
AD~INISTRATIVE
Treasury Secretary Douglas Dillon today announced a series
of administrative changes in the field organization of the
Internal Revenue Service des igned to save an es timated $5 million
a year.
Mr. Dillon emphasized that taxpayers will not in any way be
inconvenienced by these shanges in the organizational structure
of the Service. Taxpayers will continue to file their tax
returns with their local district directors and receive all services
now provided by Internal Revenue.
The changes were proposed by Commissioner of Internal Revenue
Mortimer M. Caplin in response to President Kennedy's call upon
all federal agencies to achieve "lean, fit, efficient" organizations.
They are part of Internal Revenue's continuing program to
improve its organization and its operations so as to provide
maximum service at the least possible cost. Last fall the Service
effected savings of nearly $2 million as an initial step in this
program.
Plans for administrative changes announced today involve
modifying the organization of 12 districts by eliminating certain
overhead activities.
These districts will receive expert assistance in field
operations from specialists in nearby larger offices. The
offices affected by this revision in operating procedures are:
Aberdeen, S. D.; Fargo, N.D.; Helena, Mont.; Boise, Idaho;
Cheyenne, Wyoming; Anchorage, Alaska; Reno, Nev.; Wilmington, Del.;
Burlington, Vt.; Augusta, Maine, Portsmouth, N.H., and Providence,
R.1.
Next January 1, operations of four other districts, located
in states with more than one Internal Revenue district, will be
merged with nearby districts in the same state. Large field
offices, however, will be maintained in cities affected by this
0-774
- 2 -
change. These four districts are: Syracuse, N.Y., merged into
the Buffalo, N.Y. district; Camden, N.J., into Newark, N.J.;
Kansas City into St. Louis, Mo., and Scranton, Pa., to be
divided between Pittsburgh and Philadelphia.
Secretary Dillon explained that these changes in 16 District
Offices in turn will make it possible for Internal Revenue to
reduce its present nine Regional Offices to seven. The New York
City and Boston Regions will be merged with the new headquarters
at Boston. The present Omaha region will be merged with the
Chicago Region, with headquarters in Chicago. As a result of
these mergers, certain regional boundaries will be adjusted.
As part of this regional move, Internal Revenue will maintain
seven Automatic Data Processing Service Centers instead of nine
as originally contemplated.
Secretary Dillon said most of the changes will be affected
gradually and will be timed in the various districts according
to local circumstances. Internal Revenue expects, by this
means, to handle most of the personnel cut-backs through normal
attrition and transfers.
000
FOR IMMEDUTE RF.I&SE
".arch 5, 196)
PRELDiDAllY
~ULTS
01 TWSUHl'S lJ)'AICI UPUIDDO
TreasurJ Secretary Dillon said today that he is h1gb~ «ratitied
the result.s or the Treasury' 8 latest advance ret'unding, wbicb Yin
rive r_uoh ~An.ter rlexibility ('or debt managea'CIII'lt during tbe coaiD, lMr.
.... H.b
Reports received rr~ the Federal Reserve Banks sbow that about
a7,P50 million of subscriptions ha•• been reoeived to date ror the tour
issues ir.eluded in the refundlr.g. The exchal'.lies amount to 2?i ot tbe
~29.0 billion eligible ~or exol~g. L~d 3~ of ths 120.3 billion pabllolJheld. As a result, the debt was lengthened considerab17J the anra,.
maturity of the marketable public debt ...... increased b.r approximatel1
three months to a level ot tive ye.rs and one .onth, the hieb.st 8inc.
SeptElD_ber 195~. The debt v.aturing ",lth1rl one year has be_ reduced bJ
atcut $6 billion by this operation.
Subscriptions (1n ~11ion8 ot dollars) are as rollev8'
3-5/A.
Note ..
Subscriber
,/15/67
Govt. Accounts
.
19.~
4,227,7
Ot.hers
Totals
$4,24,7.5
3-7/810
80nds
1971_
•
29.6
4"
)-7/81Bonds
Bonds
1974
1980
,
151.9
1.459,9
663,'
'1,4R~.6
'1,015.4
Total
• m.2 •
12).9
325.2
7.5 24 ,4
'1,09~.1
$7,R49.6
The books reJr:sin open until Fr1day, J.'.arch A, ('or the receipt or tubE'cript.iors rrolt indi vtdua 15, and trOll trustee. \rho entered b7 f.bruary ~
let,t.ers or intent, to subscribe to the nev issues.
TREASURY DEPARTMENT
FOR IMMEDIATE RELEASE
March 5, 1963
PRELIMINARY RESULTS OF TREASURY'S ADVANCE REFUNDING
Treasury Secretar,y Dillon said today that he is highly gratified
with the results of the Treasury's latest advance refunding, ~hich will
give much greater flexibility for debt management during the coming year.
Reports received from the Federal Reserve Banks sho~ that about
$7,850 million of subscriptions have been received to date for the four
issues included in the refunding. The exchanges amount to 27% of the
$29.0 billion eligible for exchange and 37% of the $20.3 billion publiclyheld. As a result, the debt was lengthened considerably; the average
maturity of the marketable publio debt was increased qy approximately
three months to a level of five years and one month, the highest since
September 1958. The debt maturing within one year has been reduced by
about $6 billion by this operation.
Subscriptions (in millions of dollars) are as follows:
3-7/8%
Bonds
1974
4%
Bonds
1980
29.6
$ 151.9
$ 123.9
4,227.7
1,459.0
863.5
974.2
7,524.4
$4,247.5
$1,488.6
$1,015.4
$1,098.1
$7,849.6
Subscriber
3-5/8%
Notes
2/15/67
Govt. Accounts
$
Others
Totals
3-7/8%
Bonds
1971
19.8 $
Total
$
325.2
The books remain open. until Friday, March 8, for the receipt of subscriptions from individuals, and from trustees who entered by February 28
letters or intent, to subscribe to the new issues.
D-775
FACT SHEET ON DEUTSCHE MARK BORROWINGS
-(Fer Release ~fa~eh 5-, 1963'
The Treasury Daily Statement for February 28, 1963
shows that the Treasury
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issued two bonds on
February 14 denominated in Deutsche marks of 21- and 24month maturities, respectively, in the amount of 200
million Deutsche marks each--the equivalent of about $50
million each.
These borrowings were handled as public
debt operations, authorized under the Second Liberty
Bond Act, as amended, as were earlier borrowings from
Germany and Switzerland and Italy.
The transactions in February, together with similar
borrowings of Deutsche marks
effe~d
in January, bring
total borrowings from Germany tolfOO million Deutsche
marks.
The bonds issued in January were described in the
Treasury Fact Sheet of February 5, 1963.
~I
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TREASURY DEPARTMENT
March 5, 1963
IMMEDIATE RELEASE
FACT SHEET ON DEUTSCHE MARK BORROWINGS
The Treasury Daily Statement for February 28, 1963 shows
that the Treasury issued two bonds on February 14 denominated
in Deutsche marks of 21- and 24- month maturities, respectively,
in the amount of 200 million Deutsche marks each -- the
equivalent of about $50 million each.
These borrowings were
handled as public debt operations, authorized under the
Second Liberty Bond Act, as amended, as were earlier borrowings
from Germany, and Switzerland and Italy.
The transactions in February, together with similar
borrowings of Deutsche marks effected in January, bring total
borrowings from Germany to 800 million Deutsche marks.
The
bonds issued in January were described in the Treasury Fact
Sheet of February 5, 1963.
000
D-776
- 3 -
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 Trco..sury bills, whether interest or gain from the sale
or other disposition of the bills, does not have any exemption, as such, and losl
from the sale or other disposition of Treasury bills does not have any special
treo.tm':!nt, 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 1nclude 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 actua.1lJ
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 Circula.r No. 418 (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 obta.ined from any Federal Reserve Bank or Branch.
- 2 -
decimalS, e. g., 99.925.
Fr&ctions 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 a.re set forth in such tenders.
Others than
barlking 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 a.re accompanied
by
an express guaranty of payment by an incorporated bank or trust company.
Dmnedi8,tely after the closing hour, tenders will be opened at the Federal
Reserve Banks and Branches, following which public a.nnouncement will be made by
the 'l'rea.sury Department of the amount and price range of accepted bids.
Those
submitting tenders will be advised of the acceptance or rejection thereof.
The
secretary of the Treasury expressly reserves the right to accept or reject any
or all tenders, in whole or in part, and his action in any such respect shall be
tinal.SubJect to these reservations, noncompetitive tenders for $ 20.00 or
less for the additional bills dated
December 13, 1962
,(
QaXlX)
1ng until maturity date on
June l3~963
91
days remain-
(lQiK)
) and noncompetitive tenders for
$100,000 or less for the
l82 .. day bills without sta.ted price from any 'one
(.
(dlO
bidder will be accepted in f'ull at the average price (in three decimals) of a.ceepted competitive bids for the respective issues.
Settlement for accepted ten-
ders in accordance with the bids must be mMe or completed at the Federal Reserve
Banks on
March 14, 1963
, in cash or other immediately available funds or
(B9
in a like face amount of Treasury bills maturing
March 14, 1963
lmO
•
Cash
TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
March 6, 196:3
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 $ 2,100,000,000 , or thereabouts, for
QaQ
cash and in exchange for Trea.sury bills ma.turing
March 14, 196:3 , in the amount
Q39
of $ 2,101,425,000 , as follows:
6iX)
91 -day bills (to maturity date) to be issued
656
March 14.60096:3
in the amount of $1,:300,000,000 , or thereabouts, represent-
600
ing an additional amount of bills dated December 1:3, 1962
and to mature
June 1&;0 196:3
amount of $ 800 , 9~000
ceo
, originally issued in the
,the additional and original bills
to be freely interchangeable.
182 -day bills, for $ 800, o0w,0o
, or thereabouts, to be dated
0d)d)0
March 146J)6:3
, and to mature
September 12, 196:3
0di6
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, March 11, 1963
QCii)
Tenders will not be received at the Treasury Department, Washington.
Each tender
must be for an even multiple of $1,000, and in the case of competitive tenders t~
price offered must be expressed on the basis of 100, with not more than three
TREASURY DEPARTMENT
M~rch
FOR LMMEDIATE RELEASE
6, 1963
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
$2,100,000,000, or thereabouts, for cash and in exchange for
Treasury bills maturing March 14, 1963,
in the amount of
$2,101,425,000, as follows:
91-day bills (to maturity date) to be issued March 14, 1963,
in the amount of $1,300,000,000, or thereabouts, representing an
additional amount of bills dated December 13, 1962, and to
mature June 13, 1963,
originally issued in the amount of
~00,996,000,
the additional and original bills to be freely
interchangeable.
182-day bills, for $800,000,000
or thereabouts, to be dated
14, 1963,
and to mature September 12, 1963.
March
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 ih denominations of $1,000,
$5,000, $10,000, $50,000, $100,000, $500,000 and $1,000,,000
(maturi ty value).
.
Tenders will be received at I~ederal Reserve Banks and Branches
up to the cloSing hour, one-thirty p.m., Eastern Standard
time, Monday, March 11, 1963. ,
Tenders will not be
received at the Trt3asury DeJ?artment, 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
or trust company.
D-777
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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 0:
all tenders, in whole or in part, and his action in any such respeot
shall be final. Subject to these reservations, noncompetitive
tenders for $200,000 or less for the additional bills dated
December 13, 1962 (91-days remaining until maturit¥ date on
June 13, 1963)
and noncompetitive tenders for ~lOO,OOO
or less for the 182-day bills without stated price from anyone
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 Bankson March 14, 1963,
in cash or other immediately available funds or in a like face
amount of Treasury bills maturing March 14, 1963.
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 disposit1on
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 author1ty.
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 b1lls aN
sold, redeemed or otherwise disposed of, and such billa are exclude
from consideration as capital assets. Acoordingly, the owner of
Treasury bills (other than life insurance companies) issued hereund
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 whicn th
return is made, as ordinary gain or loss.
Treasury Department Circular No. 418 (current revision) and th
notice prescribe the terms of ,the Treasury bills and govern the
conditions of their issue. Copies of the circular may be obtained
any Federal Reserve Bank or Branch.
000
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st~~e;~~;::~.~~
AIVenvironment of
debt management p01icies{
Th~'~'specia1
responsibility of business
,
~is to make extra efforts -- consistent with its own long-run
interest -- to develop foreign markets and sources of foreign
finance, to exercise appropriate restraint in ~~wage
~argaini~ and
g~l /U
t)
t-t t 4 rv ~\
pricing decisions, and -- 0,o!J1east -- to
~
A
~~~
contribute to (ihJ process of serious discussion and debate &..p~]
,~c. A It.J Ii
K
NI; IJ6(. Ii
which intelligent public policy~ust res~ Over the past 10
~
years these monetary conferences sponsored by the American
Bankers Association have provided a forum for just such
discussion, and I am especially grateful to have had this
~ t ~ c " 5' _S'
U' 1'7 t J.
opportunity to €xplai~ our thinking {€o7you today.
A
/1
- 23 ourselves to do just that.
But to defer the tax program to some
balance can somehow be achieved with present tax rates -- when it
o
is
t~se
very rates that stifle the growth we need -- seems to me
to be self-defeating, and to carry grave risks both for domestic
expansion and the balance of payments.
There are simply no easy solutions to our multiple problems
at home and abroad.
The challenge, for both Government and
7h'er.~
Pyv/,J.tl11>
business, is to appraise GRem~realistically, and ~~ ~ 4
together in a spirit of partnership
th::~-==I fully -
consistent with our traditions of free markets and free enterprise.
The special role of Government, beyond intensive efforts to
economize in its own overseas spending, must be to provideGf]
~~
f!..rameworI5 in which private enterprise can find
~
to invest at home
and to seek ou
Ri~htrll lid
export markets.
~i,;
2
incentives
mj
.,
Q -.
';... v_
- 22 Our defense establishment is now approaching the new level
of readiness set by the Administration, and Secretary McNamara has
expressed his confidence that the upward spending trend will taper
&. t
L-- v f-J A I~
off after fiscal 1964.
(v6 ((4 L /.)
A
fne furthej sizable
()i-CJ r'A,. 7/ c.."v
If our €gon7 timetable is to be met,
"
; (is..-,,
K
--~u-g. probably smaller -- increase in spending
,,~~
A
for space will be necessary in fiscal 1965, but the prospect here
also is for a levelling trend thereafter.
This will substantially
ease our budgetary task, but we recognize that it will not
relieve us from the need for continuous rigorous screening of
domestic civilian programs.
~
compelling case can be made
~~ ~
for increased spending for
e;'r..;.&eyt.
certai?fPrOgra~s,
some of them new,
that are vital to the national interest, but it is our job to find
the savings in other areas that will make these programs possible
S' t '"( B '/
within the confines 0Ilour target of budgetary balance.
f\
In
undertaking our program of tax reduction we have committed
- 21 -
I f\J 11! 4 1l.I4 7/(.jff.4
Nevertheless, a realistic appraisal of the [acts of life)
5 ( ,. v 1\ ·'i l;;j~i.;
~ this era of cold wa~ has compelled a further increase in ~
1\
spending for defense.
And our program to put a man on the moon
in this decade required an increase of $1.8 billion in space
expenditures.
MtJ ne"
These items, together with interest costs, account
7 /-tA
!U
for €ve~70 percent of our entire budget, and for all of the
"
~pending for civilian programs,c:~"
increase in fiscal 1964.
II
balan3 is scheduled to decline.
In a longer perspective, it
is worth noting that, of the total increase of $17.3 billion in
f
~~~ for civilian programs.
In the three preceding fiscal years --
excluding temporary unemployment compensation and all the other
anti-recession expenditures
~
:::::~ this Administration
1
r
during the closing months of fiscal 1961 -- the rise in civilian
........
7
k
~
tlyt,. y 17Lj
spending w~bi11ion, or almost as large.
f<§ sa
&.
.tirt~ ''- ff ~
- 20 balance and surplus, thereby releasing savings for productive use
by other sectors of the economy.
£~fA 'ft (J
The President has repeatedly &ledge~ that,
AF-lt. I~
€i tl1 t'i3
enac tment
1\
'l
of the tax program a substantial portion of the increased revenues
)
that can be expected in the years ahead will be devoted to
reducing and eliminating the budgetary deficit.
This policy is
an integral and essential part of our financial and tax program.
In recognition of the need to accompany tax reduction with
rigorous expenditure control, several billions of dollars were
cut from estimates developed only a few months ago.
Programs
that in other circumstances might have been expanded were cut
back or deferred, efforts to achieve economies -- including
--
those within the Defense Department -- were intensified.~
~~~ are proceeding vigorously with efforts
for public credit wherever feasible.
to substitute private
- 19 As I look ahead, I see no reason to believe that we cannot
rr> V-
continue Qller the
without
~ 0 hi
e
c~~g
~
/1/11
e
,ears to finance
~h (..
LqJ..gel.'y
~
deficitl1 from savings,
b~"l1i/h 'I
~
strong upward pressures on market rates, for there is
today a vast flow of funds through our financial institutions
seeking longer-term commitments.
Of course, as investment
1ctivity increases in response to the stimulus of tax reductions,
O-~
private credit demands will also
,f sIt, .1 '" C
"Why
The..
~ng-s
Tc.1f "-C!'i"Ah-f
wi
available supply of
:::J tIt'; i (. ,I; 7 ht's. / s tJ J1 (.. 0+ T Jt t!.. I' ""~"~y
~4h he.
expand,~the
ht-hrlu, Tc,
oe-more fu=tty" aosorT5ea.
c,.uJ,' JH<
,,:.:cI:!..S::::=_!!.l..L:!-.ti'1,uT'~ lIIe.iMv$
~erest
~ .... u ... '
rates may
r~se THA
,(;
in response to market forces -- even though savings, too, can
'r
..............-,.............. ---" . - . ~.
.,It t.J
'-'If
....
tvJteJ,.,
----------,..j ,
~J1t, wi th the economy approach~
.,.-'
expected to rise with incomes.
_.,.
1"4
~- ~
~--
y ,d~II").e ~II"
more closely the limits of its capacity, we will need toAguard
e~Fef~l~against
potential inflationary pressures.
-r{-{t\~/
I can aS$ure you we have no intention of retreating at that
'"
point to etcessive monetization of debt to meet our financing
needs.
A
Even more to the point, the higher revenues generated
by economic expansion would be directed toward
aChieVing~dget~
't.;.t:~1
/Wf>JfTlt
debt will be S y~~ ,
II
- 18 -
~,,,,
(3.dmittedl~ ;ome
% longer than at the end of
observers have felt that we have been over-
zealous in our desire to maintain a debt structure that will avoid
the danger of excessive liquidity and a future inflationary problem.
But this view, in my judgment, underrates ~ the continued
availability
h1e.w
of~savings
in amounts more than adequate to meet the
current borrowing requirements of business, individuals, and state
and local governments,
tfI!I'l
the essential need to forestall any
rebirth of inflation as the stimulus from the tax program takes hole
Moreover, the techniques available to us -- and especially the
device of advance refundings -- have enabled us to attract
funds with a minimum of market disturbance.
that
~~e~im~ opportun~s
41be
L.
E<I
Iy
~
~p~:
of the market[: lthoug
in r
~
to ~O/ndS
at comp
i~ew s~
;/
I
".:)/'
,-
c
,
a¥0unts"invol
\,
approach the volume of advance
refundi~~
i
lon~en
- 17 finance this deficit in a way that will not give rise to renewed
inflationary
pressures~
the years
ahe~
as we move closer to
full employment and reasonably full capacity operations.
This is
what we have done in financing the deficits of the past two
years -- and what we mean to do in the future.
Our latest figures on the distribution of the public debt,
those for January 31st, show that the entire increase in ahc
~~~w~b~J~;Ga. .e~t over
the preceding 12
months~s
financed outside the
~'J.J,'~~
banking sys tern - - an increase of $1.8 in F'ederal Reserve holdings
being fully offset by an equivalent decrease in commercial bank
holdings.
Furthermore, the increase in the outstanding marketable
debt maturing in five years or more was larger than the total
deficit.
This policy of working persistently toward a~esirabl~
hatu.hltd
19As-pyn debt structure can be symbolized in a short-hand way by
the fact that on March
~
l~ng
into account the results of our
current advance refunding, the average maturity of the marketable
- 16 tax reduction.
Our unsatisfactory growth of recent years, the
sluggishness of our invesbment, the pressures on profits, our
idle capacity and manpower
..)
expand with more vigor
~d
~an
the failure of revenues to
all be traced in good part to
u~
J
the restraining effects of a tax
f:ra of war and inflation than
structure~o~uited to~n~
§ today' s
'1
needs.
I am firmly
convinced -- along with a broa ~ross-, sec, tion of the business
\ Pe"1? A
'1';:/-1<:'
connnunity -- that to continue §.y longe~ with the present tax
'v S I .S'"7~':
f(/'/ v'it~
structure would not be Ithe course o'"':Fl true fiscal responsibility.
~
I'\'~
C
c
We have arranged the phasing of the proposed tax reductions
c~.
over three fiscal year~-..Iconsistent with earlier proposals by
business groups
budgetary
-~
defici~
in a mannerhhat will minimize the transitional
In fiscal
19~~f cours~ the
great bulk of
~. . . .
the anticipated $12 billion defici
~~.a:;t:::::1:ZtI'1srwould
face us in
0
.,-,-.'~~-
~
~.G ~~he tax program,
A- IV I,) iff'·~ 11.1 (; c.c;,,~~"T,
anyeven~:;iticalneed~
A
- 15 -
~
.1:)
• ~
',_,
I
'.. I
many of our European friends have urged upon us, and has
~eiterated
by many of our own financial
bee~
peoP1~t ~~eciseIYJ
}~)..fJd!!!}J~~
'.(i:;!;:7'[t'h-g balance of payments situation fEEat faces us over the yearti
f\
t=ahe~~h~offers
one of the most telling arguments in favor of
TI-I u 5
a tax policy designed to stimulate the economy and f!..o "t~giVe
greater freedom to those who bear the heavy responsibility of
administering monetary policy.
I do not pretend that the t at program alone can meet all of
our problems at home or abroad, or that it entails no risks.
That would be nonsense,
~iscal
policy is not a tool to be used
BttItJABL{;.- Ie.;
wi th abandon.
We would much prefer to have presen~our tax
A
program within the context of a balanced budget, and we had hoped
to do so.
But
€. has become apparent th~ we cannot afford to
wait -- and~ha~the prospect of budgetary balance in the years
ahead will be enhanced rather than reduced by soundly conceived
- 14 the usefulness of these arrangements in meeting potential or
~
actual pressures on the dollar
I~ H
and~~currencies
Pc... 'f
f:o'P t:
~
A
'Y-A f'-f
has now
nL E )
been~peated~ demonstrated --, at the time of the stock market
SpO~r0~~
break, the Canadian crisis, and last fall's Cuban~ituatio;~
I
1\
ready
reserv~ during this critical
r-:
period,~~
sort of assurance that can be provided
~flexible
monetary policies, alert to possible strains on the dollar and
free to respond promptly in time of need.
Gours~
The difficulty
tOdaY~Of~
is that in the absence of expansionary fiscal or tax policy.)
a sharp and substantial tightening of credit could present real
risks to the domestic economy.
fBu~
./.~U,i1
as the President has emphasized
?'
on several occasions, and specifically in his Tax Message, "a nation
operating closer to capacity will be freer to use monetary tools
to protect its international accounts, should events so require."
- ,13 -
1A/~7
maintain sound defenses :Lor the)dollar. 6bi~ is why ~ve have
A
worked so steadily, in full cooperation with our friends abroad,
to test and develop a wide variety of techniques designed to
head off speculative dis~ances in the gold and exchange
e X C-. ~ ·~.lS
markets and to absorb temporarily
~
((.I".,
supplies of dollars
passing into the hands of foreigners.
we fully recognize that these devices are not substitutes
for balance of payments
equilibriu~
indeed, their success
UP61U
ultimately depends~n1confidence in our ability and willingness
"A
~
to deal \vith . . fundamental balshc
~
payments problem.
But
they are an important bulwark for the international payments
t=r?ti:system upon which all nations depend, and which ultimately rests
UP~~
~
(?~the free interchange of gold and dollars.
Moreover,
- 12 -
and development to be charged off as a current expense will directly
support this objective.
But far more important is the basic encourage
C A IV 6
!.ment ~tax rate reductions to investment and growth, so that our
(fJ
t...
industry can be better equipped to pour out in ever-increasing volume
the new products the world wants.
Thus, there are sound reasons
f~~~the
~
will, as it becomes fully effective, reinforce th
i~
tax program
fundamental
longer-run factors that are moving our payments position toward equili
brium.
But I would not want to lull anyone into a false sense of
confidence over the immediate outlook
~
~e
sound medicines of more
profitable investment at home, stable prices, and a dynamic industry
\U (Tf"
penetrating new e~~port markets can ':vork their cure only ~v;fJ time.
The immediate prospect, as nearly as anyone can judge, is
for another year of deficit in 1963, and for further aold losses.
FfA.t..c
WITh Th"SI;J-v"J;>:':~ /Ti">, f.'//:jtJ.y ,i.rjlr-;--Tflh7 Th{i.1 U/e ~e.r1~(.I"j,~ oC/y ~H()Y7.s To
ruluc.e. f",YTJ.,e~ The. '/;'C,I;,> ;~t..;T~7":c, ()ur- ;"ve..VJ1Hff;lrf1;-(;l"'Qht~ CI//~l'.St!A!I. fl(J,fti
~~___l!!~e_t.
-4 7 Th,
:
our immediate prob lems, T,ve need
~;'U t 1/ h1
t-u-:-~
r/-
1tt ...
'i....
T J, e..
In JltI 0"'-
f?,;'ht~H<e
o'f o(,/' HlYIJ,-frt/4 ,"HO
-, Ii'-;
.a.TT"'4.c.1;",c",,,,tTlllei'
J11'" e
- 11 -
The more rapid growth fostered by tax reduction will, to be sure,
'
(t
ill~
generate further increases in our import
TI-l.A 1
To the extent this
BY
".
results in higher foreign exchange earnings f!0~ the ~e5~j develop~q
countries, we can expect
exports as well.
li response in
L4~6~
1
terms off highei) demands for our
1\
But more directly, the tax program can also help
to sharpen the competitive position of our industries in world markets
ON
[The dynamic cutting edge
~~! gur export effort must be concentrated [n]
new and sophisticated manufactured goods, for it
A.
i~~e tAa~ car
•
compQti~ivQ
'-:T
aaQ~ere that
t\;$ ~ t ... b=77d
-if~
advantage lis.
but it is alsoS:z€
~~ur
A..
greatest strides.
A'e~ave
c=
I, (j j
)
have made their
'"T
no choice but
/-\"(
~M.J~UL -uvJ:rk ~~
export markets are strOngestl
~mpetitors
foreign
-4
~
redouble our efforts to
"'"
remain ~0 the very forefront of technological progress ~ to e:-:plor!1
)/~yJ
.,
Ghe frontiers of knowledge, ~apPly')(our scientific abilities to
A
(J V
t'\
. \
!&
industrial products and processes, and ~~incorpora;1Cour new technolo
c:.I,.j ..,
Pr c:.. _;) I f)''.~...
['j J.. ('"
in new investment.
I
S'
\
The proposal to permit equipment used in research
"
- 10 -
analysis, it is the American businessman who must make the sale - and
~
I
should add that alert banks can play
I"/J~~
~
-.;:5e s::t.
role as catalysts.
~
~
r program of tax,~eduction and reform was ! slgned • 'help ~
,
~~
reinforce and support these various developments that are contributing
,-qZ-..~
(;:E ~r__ /
to longer-run balance of payments improvement. \,It will provide new in
I
centives for investment and intelligent risk-taking - increasing profi
directly through lower tax rates, and indirectly through enlarged dome
tic markets and the establishment of a better atmosphere for growth.
This is the best way - and ultimately the only way
consistent with
our free market system - to encourage the productive employment of Arne
capital at home, and to attract more foreign investment to our shores.
f:::--)
of dir
t:!!!:..e f'ote
enlarged domestic spending for plant and equipment will help to employ
~~
the_II til supply of
i~~~f
sav~ggreSSIVely
seeking longer-run investme
A-n~pn ..y - a;#~:;i:g~;~:rlexcessive
.. -
~ dr~up
those savings
throug~~~:~it
volume abroad.
contraction would
An att
~~ .
.
impeding domestic expansion.
The far more constructive route toward t
same objective is to bring about the sort of conditions in which these
savings can be fully and productively utilized at hom~nd in which in
creases in interest rates are a reflection of
of investment opportunities.
~improved
profitabilit
- 9 -
A few years ago, there was much talk of a deterioration of the
international competitive po9tion of the United States.
Today, that
DI r-1 I IV 15k /Ie) G
talk is @:sappearinR --_ and for good reason.
(}J
t-111- i'
'fIre 01B:~RQl:tS 8,uill~
I
~~~, F-7/~.
Our share of ,~_ exports of manufactured goods} theE marked: ~e ff2~
has come to rut end, and Ott_
21 Pill5g00t eugr
since 1959.
5~e has been essentially stable, ......
~t
the same time, how'ever, we must
PiC
recognize -- as our alert competitors ~arne~ long ago -- that our
A
competitive position depends on more than price alone.
Knowledge of
S l-A f'1 r:r . . .
markets andN'i11ingness to €eac'§ them out, product design, sales and
r'\
servicing
•
Recognizing the key role of
,
IS
commercial exports, the government ~s placed stress
~ improving and
",.
strengthening the facilities of the Export-Import Bank, as well as~
I
~
the export programs of the Department of
C~~.Q~
... •
~
.
l;., 1n
DU
Ist
th
ea
- 8 -
period of time, but over the years ahead the result will be a healthy
)
freedom from dependence on the New York market, with a consequent
L e- 5 5 ~
(V
11\.)(;.
~ KJA If1..1
[ightenin'!! of one ~rdexg on our balance of payments.
I·'
"
G
Other factors of basic, long-run stren{h
became
more~learl~apparent during 196/.
iiB~es~~I.a~l~E~I§~!~E~~!:£?~~~~""
For instance, the flow of
earnings from our $60 billion of private foreign investment rose by
#. () n.. r -I}-r- i! yo
almost 10% to a new record
o~
tinue mounting in the years ahead.
billion -- a figure that
Wil~~
Even more important, for it under-
lies our whole international trading position, has been the~elaggme
e~~sustained stability in the prices of our industrial goods
and materials.
Unit wage costs have not risen since 1961, and the
index of \vholesale prices has now been virtually unchanged for five
years.
In contrast, pronounced upward cost pressures have developed
in most industrialized countries in Europe, squeezing profits and
*'Z "
bringing price pressures of the sort that ~cam3 all too familiar in
- 7 It has been gratifying to us that during the past year a number
of European countries have begun to re-examine their capital market
/~~
mechanisms, recognizing their own internal need eoadsbzactlmore
Or
efficient meansi2~mobilizing and distributing savings to support
"
further rapid growth.
Italy has made particular progress in develop-
ing and strengthening its capital
and has also found it possib
mar~ets
011' r,4
7e Iff ef(.
to open them to a few international institutions as well as ~ permU:
)
T6
freer portfolio investment abroad by its own residents.
Itj,
a
'- ~
,\;"'0\ _. - - . . -. ...Ii!-'7'''"---
,~ eS Led, too, ~ see
~.
......
_ _ _-
of greater interest on the part of
...........~ '<JiJI'(;.!
American commercial and investment
process of
where
I have~ee~
.-..
IJ!'j _~'1';.1
banke~ part;::~i;;"this
strength~g European capital markets. ~f~iS an area
~efforts
to provide better service to your customers
£~
ff.)
operating abroad by assisting them ~ rais~ local capital and credit
t-
f
l~'
can also have important benefits both flo~lthe host country and the
)
1\
United States.
Dramatic results cannot be expected within a limited
- 6 -
~~£.
high and clearly indicated an area
w~e~rt~r
Outflows of longer-term private capital,
progress is required.
approximating~-1/2
billion, continued in undiminished volume, although the composition
shifted somewhat as direct investment fell off moderately while the
total of new foreign bond issues on the New York market rose.
In dis-
cussing this problem at Rome last year -- when the anomalous pattern
tJ.} / 7 /'-'r
of borrowers in 'western European countries [nJstrong payments position
f\
seeking
larg~
amounts of long-term funds in the United States was
already becoming clear -- I suggested that much of the difficulty
stemmed from the absence in Europe of an efficient, fully effective
capital market mechanism, freely open to potential foreign borrowers
and capable of absorbing new issues in the required volume.
;0T~ L. t> -f~/G 14'"
t(~-~
that roughly
~
The fact
of
~~tatioIls_ i!'..J'l~ork
last year
Q.JM.!~ I ~..;t" Jtt«, ~.Jtw~)
were taken up by foreign buyers -- in
~
instances located in
~
same country as the borrower -- provides further
analysis.
- 5 -
the course (}f-t~.
~~,
~- Paeea outflowSof short-term capital also contributed to ~
)
/
.~~~V
_
Z!3LL Is
improvement-1agtrF~
t
~V~$~~
larger than we had
expect~~of
it was submerged among
~4i
unreco.rde~ tr~sa~tions t
r
However, the outflowb ••• itaI8
it(, i
~
,
S .. b
~II hai&aaee_ C pUjIUht:!t SLbU ~
)!
~A..c'~·4'7 ,:.y- c.~~~:r~ f~g 5¥.?I
~ise cause and the source of thes~;tflows"'GheJ!llebe~ difffNdt
..-:jI7
90 pi' "p'pt.
lj2 3D)
/
Certainly, our effort to maintain a structure of short-
term rates in the American market that would reduce the incentive to
shift funds abroad in search of higher interest returns -- an effort
that was greatly facilitated by downward rate adjustments in some
important European markets -- appeared to be reasotnably successful,
and the upward trend of trade financing and foreign bank loans tapere
off.
However, the total of short-term and unfrecorded outflows, plac
M0 (l t TI-l 4 /tJ
at ~ve~~l/2 billion in preliminary reports. rp~2in~d uncomfortably
K
- 4 of American military goods and services, while simultaneously strengtl
,- tk
~17
raj
mt1~ defense~. ~~ i~ c.4l"~,
The vigorous efforts of
the~fe~s;IDepartment~ to
economize in it
own foreign exchange outlays were unfortunately offset by rising loca:
costs and the full year impact of the "Berlin buildup" on the size of
our forces based in Europe.
Moreover, the usual long interval betwee:
foreign aid commitments and actual spending obscured the progress tha
has been made in supplying a larger share of American assistance to t'
developing countries in the form of American goods and services.
However, on the basis of current policies and directives, there i
a clear prospect of further savings in these two areas in the years a
For example, more than three quarters of AID commitments during this
fiscal year will be directly reflected in purchases in this country,
o"-
that
R~'
~~7-
percentage~Sed
still
. ~? %A~higher~~agreement
with It
provides for the purchase of American-produced military equipment in
amount in excess of the foreign exchange costs of maintaining our fOI
~//6J. .
~ ~
~~ L~ e~ Z;;:/'~~ ~ ~ ~
in that country.eftis yem- ..
A'-._
~~-
I
-
- 3 -
Exports also rose substantially during the first part of the year, but
then tapered off, reflecting the slower growth of our export markets
in Europe and Japan.
~
The Canadian tariff surcharges, together with
adjustments in its exchange rate, also had a measurable adverse
th"-1ft~
~ ~-~ ~
effectJ\during the latter part of the year -.DRenu1t
gli!
f-
D
;
rr~~<~5/
(ZK .~.
.
p
7&J our fla"rgest
As a result, our commercial trade surplus
(which excludes aid-financed shipments) declined by about $1.2 billior
from the exceptionally favorable 1961 figure.
still larger at $2 billion
~
~
While this
surplu~
was
than that of any other nation, its declinE
last year offset almost all of the improvement in our other accounts.
A major source of improvement during 1962 reflected our persistem
efforts to curtail the outflow of dollars stemming from our commitmen1
for defense and aid.
Taken together, the net balance of
payments dr,
from these two programs was reduced by more than $700 million.
Much
of this improvement stemmed from implementation of the cooperative
logistics agreements with West Germany, providing for increased purd
- 2 -
C:...A l'v PL A Y A I-/A J 0
~
pCJ L~
iN
7 #4..,..
control,~ll contribute to the achievement ~f balance of payment!l
J IV. p1foulckeAlr.
~qUilibr~m~ It will also free the hands
I~
H l:.fl (~a lV
of~~monetary authorities
to deal more vigorously with any contingencies that may arisei\ thus
reinforcing our already strong defenses against pressures on the
dollar during the difficult period until balance is fully restored.
"'8-l:owing in the process of
improv~enLse
~~/:S~~/
GlJieent ;n 19&1.
We ended
~
~ ,~I'''halance of payments deficit'~2.2 billion,.::em
b
!
the smallest annual deficit since 1957 and only a little more than
~
half the total two years ago.
But, measured against the $2.4 billion
deficit of 1961, progress was limited, and the gold outflow continued
at close to $900 million.
;Y1r~
- However,
it must be remembered that during 1962 we absorbed the
full impact of the rebound of imports from the abnormally low,
recession-induced levels of 1961.
~n
As
a full{ expected response
t~
l:,!'
business recover)(at home imports increased
~ SI~1 billign
or 121.
DRAFT
REMARKS . BY THE HONORABLE DOUGLAS DILLON'
SECRETARY OF THE TREASURY
AT TIlE TENTH ANNUAL MONETARY CONFERENCE OF THE
AMERICAN BANKERS ASSOCIATION
PRINCETON, N.J., THURSDAY, MARCH 7,1963 12:3
".J
f
OUR- UNFINISHED TASK OF IMPROVING THE U. S. BALANCE
OF PAYMENTS
A year ago, in Rome, I reviewed with you our balance ot
~
payments problem and the measures W~ing to deal w1th it.
~f£~'5.-?
Today, I a' !3~ppraise the record of the past twelve months in the
perspective of the hard tasks still before us, and d1scuss the
contributions which can be made to equilibrium in our 1nternat1onal
accounts by the President's tax proposals •
.'Jn1.le last year's progress toward our goal of over-all balance
_r
was disappointing, we~i~continUj(to move ahead, and the groundwork
FVR1(~,n
Q..
for ~tur~ improvement/was laid.
"
I am convinced that tax reduction 1
prudently financed and accompanied by persistent and firm expenditure
TREASURY DEPARTMENT
Washington
FOR RELEASE P.M. NEWSPAPERS
THURSDAY, MARCH 7, 1963
REMARKS BY THE HONORABLE DOUGLAS DILLON
SECRETARY OF THE TREASURY
AT
THE TENTH ANNUAL MONETARY CONFERENCE OF
THE AMERICAN BANKERS ASSOCIATION
PRINCETON, NEW JERSEY
THURSDAY, MARCH 7, 1963, 12:30 P.M., EST
OUR UNFINISHED TASK OF IMPROVING
THE U. S. BALANCE OF PAYMENTS
A year ago, in Rome, I reviewed with you our balance of
payments problem and the measures we were taking to deal with it.
Today, I would like to appraise the record of the past twelve
months in the perspective of the hard tasks still before us, and
discuss the contributions which can be made to equilibrium in our
international accounts by the President's tax proposals.
While last year's progress toward our goal of over-all balance
was disappointing, we continued to move ahead, and the groundwork
for further improvement was laid. I am convinced that tax
reduction, prudently financed and accompanied by persistent and
firm expenditure control, can playa major role in that improvement.
It will also free the hands of American monetary authorities to
deal more vigorously with any contingencies that may arise -- thus
reinforcing our already strong de fenses agains t pressures on the
dollar during the difficult period until balance is fully restored.
Last year's overall balance of payments deficit amounted to
$2.2 billion -- the smallest annual deficit since 1957, and only
a little more than half the total two years ago. But, measured
against the $2.4 billion deficit of 1961, progress was limited, and
the gold outflow continued at close to $900 million.
However, it must be remembered that during 1962 we absorbed the
full impact of the rebound of imports from the abnormally low,
recession-induced levels of 1961. As business recovered at home,
imports increased by $1.7 billion, or 12 percent. Exports also
rose substantially during the first part of the year, but then
tapered off, reflecting the slower growth of our export markets
in Europe and Japan. The Canadian tariff surchanges, together with
adjustments in the Canadian exchange rate, also had a measurable
I
D-778
- 2 -
adverse effect on exports during the latter part of the year since
Canada is our single, largest foreign market. As a result, our
commercial trade surplus (which excludes aid-financed shipments)
declined by about $1.2 billion from the exceptionally favorable
1961 figure. While this surplus, at $2 billion, was still larger
than that of any other nation, its decline last year offset almost
all of the improvement in our other accounts.
A major source of improvement during 1962 reflected our
persistent efforts to curtail the outflow of dollars stemming from
our commitments for defense and aid. Taken together, the net
balance of payments drain from these two programs was reduced by
more than $700 million. Much of this improvement stemmed from
implementation of the cooperative logistics agreements with
West Germany, providing for increased purchases of American military
goods and services, while simultaneously strengthening the defense
capabilities of both countries.
The vigorous efforts' of the Department of Defense to economize
in its own foreign exchange outlays were unfortunately offset by
rising local costs and the full year impact of the "Berlin buildup"
on the size of our forces based in Europe. Moreover, the usual
long interval between foreign aid commitments and actual spending
obscured the progress that has been made in supplying a larger
share of American assistance to the developing countries in the
form of American goods and services.
However, on the basis of current policies and directives, there
is a clear prospect of further savings in these two areas in the
years ahead. For example, more than three quarters of AID
commitments during this fiscal year will be directly reflected in
purchases in this country, and that percentage is being raised still
higher. A new agreement with Italy provides for the purchase of
American-produced military equipment in an amount in excess of the
foreign exchange costs of maintaining our forces in that country
during 1963. And the Defense Department is continuing to reduce
its foreign exchange outlays.
Smaller outflows of short-term capital also contributed to
last year's improvement. However, the outflow was larger than
we had expected. Much of it was submerged among unrecorded
transactions making it difficult to pinpoint the precise cause and
the source of these outflows. Certainly, our effort to maintain
a structure of short-term rates in the American market that would
reduce the incentive to shift funds abroad in search of higher
interest returns -- an effort that was greatly facilitated by
downward rate adjustments in some important European markets -appeared to be re650nably successful, and the upward trend of
- 3 trade financing and foreign bank loans tapered off. However, the
total of short-term and unrecorded outflows, placed at more than
$1-1/2 billion in preliminary reports, remained uncomfortably high
and clearly indicated an are2 where much further progress is
required.
Outflows of longer-term private capital, approximating $2-1/2
billion, continued in undiminished volume, although the composition
shifted somewhat as direct investment fell off moderately while the
total of new foreign bond issues on the New York market rose. In
discussing this problem at Rome last year -- when the anomalous
pattern of borrowers in Western European countries with strong
payments positions seeking large amounts of long-term funds in the
United States was already becoming clear -- I sU8gested that much
of the difficulty stemmed from the absence in Europe of an
efficient, fully effective capital market mechanism, freely open
to potential foreign borrowers and capable of absorbing new issues
in the required volume. The fact that roughly 45 percent of the
total official European, Australian, and New Zealand flotations in
New York last year were taken up by foreign buyers -- in some
instances located in the same country as the borrower -- provides
further confirmation of this analys is.
It has been gratifying to us that during the past year a number
of European countries have begun to re-examine their capital market
mechanisms, recognizing their own internal need for more efficient
means of mobilizing and distributing savings to support further
rapid growth. Italy has made particular progress in developing and
strengthening its capital markets and has also found it possible
to open them to a few international institutions, as well as to
initiate measures to free portfolio investment abroad by its own
residents. I have also been glad to see signs of greater interest
on the part of American commercial and investment bankers in
participating in this process of strengthening European capital
markets. That is an area where efforts to provide better service
to your customers operating abroad by assisting them to raise
local capital and credit can also have important benefits, both
for the host country and the United States. Dramatic results
cannot be expected within a limited period of time, but over the
years ahead, the result will be a healthy freedom from dependence
on the New York market, with a consequent lessening of one drain on
OUr balance of payments.
Other factors of basic, long-run strength became more apparent
during 1962. For instance, the flow of earnings from our $60
billion of private foreign investment rose by almost 10 percent to
a new record of more than $3.5 billion -- a figure that will
- 4 continue mounting in the years ahead. Even more important, for it
underlies our whole international trading position, has been the
sustained stability in the prices of our industrial goods and
materials. Unit wage costs have not risen since 1961, and the
index of wholesale prices has now been virtually unchanged for five
years. In contrast, pronounced upward cost pressures have developed
in most industrialized countries in Europe, squeezing profits and
bringing price pressures of the sort that have been all too familiar
in this country.
A few years ago, there was much talk of a deterioration of the
international competitive position of the United States. Today,
that talk is diminishing -- and for good reason. Our share of
world exports of manufactured goods, after dec1ing substantially
during the fifties, has been essentially stable since 1959.
At the same time, however, we must recognize -- as our alert
competitors did long ago -- that our competitive position depends
on more than price alone. Knowledge of markets and willingness to
search them out, product design, sales and servicing facilities,
and export credit facilities are all vitally important. Recognizing
the key role of commercial exports, the government is improving and
strengthening the facilities of the Export-Import Bank, as well as
the export programs of the Department of Commerce. But, in the last
analysis, it is the American businessman who must make the sale
and I should add that alert banks can play an important role as
cata1ys ts .
Now let us see how our program of tax rate reduction and reform
can help to reinforce and support these various developments that
are contributing to longer-run balance of payments improvement.
First of all it will provide new incentives for investment and
intelligent risk-taking -- increasing profits directly through lower
tax rates, and indirectly through enlarged domestic markets and the
establishment of a better atmosphere for growth. This is the best
way -- and ultimately the only way consistent with our free market
system -- to encourage the productive employment of American
capital at home, and to attract more foreign investment to our
shores.
It is clear that enlarged domestic spending for plant and
equipment will help to employ the abundant supply of savings that
today is aggressively seeking longer-run investment -- and at
times seeping out in excessive volume abroad. An attempt to dry
- 5 -
up those savings through severe credit contraction would run a
serious risk of impeding domestic expansion. The far more
constructive route toward the same objective is to bring about the
sort of conditions in which these savings can be fully and
productively utilized at home -- and in which increases in jnterest
rates are a reflection of the improved profitability of investment
opportunities.
The more rapid growth fostered by tax reduction will, to be sure,
generate further increases in our imports. To the extent that this
results in higher foreign exchange earnings by the developing
countries, we can expect larger demands for our exports as well.
But more directly, the tax program can also help to sharpen the
competitive position of our industries in world markets. Our
export effort must be concentrated on new and sophisticated
manufactured goods, for it is there that export markets are
strongest, and there that the needed expansion in our foreign
sales must be centered -- but it is also there that our foreign
competitors have made their greatest strides. We must redouble
our efforts to remain at the very forefront of technological
progress by applying our scientific abilities to industrial products
and processes, and incorporating our new technology in new investment.
The President's proposal to permit equipment used in research and
development to be charged off as a current expense will directly
support this objective. But far more important is the basic
encouragement tax rate reductions can give to investment and growth,
so that our industry can be better equipped to pour out in everincreasing volume the new products the world wants.
Thus, there are sound reasons for believing that the tax program
will, as it becomes fully effective, reinforce the fundamental
longer-run factors that are moving our payments position toward
equilibrium. But I would not want to lull anyone into a false
sense of confidence over the immediate outlook. The sound
medicines of more profitable investment at home, stable prices,
and a dynamic industry penetrating new export markets can work
their cure only with time.
The immediate prospect, as nearly as anyone can judge, is
for another year of deficit in 1963, and for further gold losses.
Faced with this prospect, it is vitally important that we redouble
our efforts to reduce further the drains related to our government
programs overseas, and to achieve the kind of performance of our
market economy that will bring higher exports and move attractive
investment opportunities at home. At the same time, to meet our
immediate problems, we need to maintain sound defenses for the
- 6 dollar. That is why we have worked so steadily, in full cooperation
with our friends abroad, to test and develop a wide variety of
techniques designed to head off speculativ~ distrubances in the
gold and exchange markets and to absorb telllporarily excessive
supplies of dollars passing into the hands of foreigners.
We fully recognize that these devices are not substitutes
for balance of payments equilibrium.
Indeed, their success
ultimately depends upon confidence in our ability and willingness
to deal with our fundamental payments problem. But they are an
important bulwark for the international payments system upon which
all free nations depend, and which ultimately rests upon the free
interchange of gold and dollars. Moreover, the usefulness of these
arrangements in meeting potential or actual pressures on the
dollar and on other currencies has now been amply demonstrated -for example, at the time of the stock market break, the Canadian
crisis, and last fall's Cuban showdown.
But, during this critical period, we also need flexible
monetary policies, alert to possible strains on the dollar and
free to respond promptly in time of need.
The difficulty today
is that in the absence of expansionary fiscal or tax policy, a
sh~and substantial tightening of credit could present real
risks to the domestic economy.
But, as the President has
emphasized on several occasions, and specifically in his Tax Message,
"a nation operating closer to capacity will be freer to use monetary
tools to protect its international accounts, should events so
require."
In short our immediate balance of payments situation
offers one of the most telling arguments in favor of a tax policy
designed to stimulate the economy and thus give greater freedom
to those who bear the heavy responsibility of administering
monetary policy.
I do not pretend that the tax program alone can meet all of
our problems at home or abroad, or that it entails no risks.
That would be nonsense.
Fiscal policy is not a tool to be used
with abandon. We would much prefer to have been able to present
our tax program within the context of a balanced budget, and we had
hoped to do so.
But we cannot afford to wait -- and the prospect
of budgetary balance in the years ahead will be enhanced, rather
than reduced, by soundly conceived tax reduction.
Our unsatisfactory
growth of recent years, the sluggishness of our investment, the
pressures on profits, our idle capacity and manpower, and the
failure of revenues to expand with more vigor, can all be traced
in good part to the restraining effects of a tax structure unsuited
to tOday's needs.
I am firmly convinced -- along with a broad
- 7 cross-section of the business community -- that to continue operating
with the present tax structure would not be consistent with true
fiscal respons ibility.
We have arranged the phasing of the proposed tax reductions
over three fiscal years in a manner, consistent with earlier
proposals by business groups, that will minimize the transitional
budgetary deficits. In fiscal 1964, the great bulk of the
anticipated $12 billion deficit would face us in any event, and has
no connection with the tax program. The critical need is to
finance this deficit in a way that will not give rise to renewed
inflationary pressures as we move closer to full employment and
reasonably full capacity operations. This is what we have done
in financing the deficits of the past two years -- and what we
mean to do in the future.
Our latest figures on the distribution of the public debt,
those for January 31st, show that the entire increase over the
preceding 12 months was financed outside the banking system -- an
increase of $1.8 billion in Federal Reserve holdings being fully
offset by an equivalent decrease in commercial bank holdings.
Furthermore, the increase in the outstanding marketable debt
maturing in five years or more was larger than the total deficit.
This policy of working persistently toward a balanced debt
structure can be symbolized in a short-hand way by the fact that
on March 15, after taking into account the results of our current
advance refunding, the average maturity of the marketable debt
will be 5 years and I month, 11 percent longer than at the end of
1960, and the longest since the fall of 1958.
Some observers have felt that we have been over-zealous
in our desire to maintain a debt structure that will avoid the
danger of excessive liquidity and a future inflationary problem.
But this view, in my judgment, underrates the continued
availability of new savings in amounts more than adequate to meet
the current borrowing requirements of business, individuals, and
state and local governments, as well as the essential need to forestall
any rebirth of inflation as the stimulus from the tax program takes
hold. Moreover, the techniques available to us -- and especially
the device of advance refundings -- have enabled us to attract
longer-term funds with a minimum of market disturbance.
As I look ahead, I see no reason to believe that we cannot
Continue for some time to finance the deficit largely from savings,
without bringing strong upward pressures on market rates, for there
is today a vast flow of funds through our financial institutions
seeking longer-term commitments. Of course, as investment
- 8 -
activity increases in response to the stimulus of tax reductions,
private credit demands will also expand, and the available
supply of savings will be more fully absorbed. As I have
suggested, this is one of the primary reasons why the tax program
can be helpful to our balance of payments. We must also recognize
that under these conditions, interest rates may rise in response
to market forces -- even though savings, too, can be expected to
rise with incomes.
I can assure you that we have no intention of retreating at
that point to excessive monetization of debt to meet our financing
needs. When the economy approaches more closely the limits of
its capacity, we will need to redouble our guard against potential
inflationary pressures. Even more to the point, the higher
revenues generated by economic expansion would be directed toward
achieving budgetary balance and surplus, thereby releasing savings
for productive use by other sectors of the economy.
The President has repeatedly stated that, after enactment
of the tax program, a substantial portion of the increased revenues
that can be expected in the years ahead will be devoted to
reducing and eliminating the budgetary deficit. This policy is
an integral and essential part of our financial and tax program.
In recognition of the need to accompany tax reduction with
rigorous expenditure control, several billions of dollars were
cut from estimates developed only a few months ago. Programs
that in other circumstances might have been expanded were cut
back or deferred. Efforts to achieve economies -- including
those within the Defense Department -- were intensified. And
we are proceeding vigorously with efforts to substitute private
for public credit wherever feasible.
Nevertheless, a realistic appraisal of the international
situation has compelled a further increase in our spending for
defense. And our program to put a man on the moon in this
decade required an increase of $1.8 billion in space expenditures.
These items, together with interest costs, account for more than
70 percent of our entire budget, and for all of the increase in
fiscal 1964. Total spending for civilian programs is scheduled
to dec line. In a longer perspec ti ve, it is worth noting that,
of the total increase of $17.3 billion in administrative budget
expenditures over the three fiscal years from 1961 to 1964,
$12.6 billion is for defense, space and interest on the public
debt, while not much more than a quarter, or $4.7 billion, is for
civilian programs. In the three preceding fiscal years -- excluding
- 9 temporary unemployment compensation and all the other antirecession expenditures incurred by this Administration during the
closing months of fiscal 1961 -- the rise in civilian spending
was over $4 billion, or almost as large.
Our defense establishment is now approaching the new level
of readiness set by the Administration, and Secretary McNamara has
expressed his confidence that the upward spending trend will taper
off after fiscal 1964. If our lunar exploration timetable is
to be met, another sizable -- but probably smaller -- increase in
spending for space will be necessary in fiscal 1965, but the
prospect here also is for a levelling trend thereafter. This will
substantially ease our budgetary task, but we recognize that it
will not relieve us from the need for continuous rigorous screening
of domestic civilian programs.
A compelling case can be made for increased spending for certain
of these civilian programs, some of them new, that are vital to
the national interest, but it is our job to find the savings in
other areas that will make these programs possible within the
confines set by our target of budgetary balance. In undertaking
our program of tax reduction we have committed ourselves to do
just that. But to defer the tax program to some indefinite future
point in the hope that budgetary balance can somehow be achieved
with present tax rates -- when it is those very rates that stifle
the growth we need -- seems to me to be self-defeating, and to
carry grave risks both for domestic expansion and the balance of
payments.
There are simply no easy solutions to our multiple problems
at home and abroad. The challenge, for both Government and
business, is to appraise these problems realistically, and to seek
together in a spirit of partnership the kinds of answers that are
fully consistent with our traditions of free markets and free
enterprise. The special role of Government, beyond intensive
efforts to economize in its own overseas spending, must be to
provide an environment of monetary stability, responsible budgetary
and debt management policies and freedom from oppressive taxation
in which private enterprise can find renewed incentives to invest
at home and to seek out profitable export markets. The special
responsibility of business is to make extra efforts -- consistent
with its own long-run interest -- to develop foreign markets and
sources of foreign finance, to exercise appropriate restraint in
wage and pricing decisions, and -- by no means least -- to
contribute to a process of serious discussion and debate from
which intelligent public POlicy can emerge. Over the past 10 years
these monetary conferences sponsored by the American Bankers
AssOCiation have provided a forum for just such discussion, and
I am es~ially grateful to have had this opportunity to discuss
OUr thinking wi th you today.
000
MANAGEMeNT $URVEY OF THl: iUREAU OF CUSTOMS
to BE ~iXbE In
nit
tftXSORf btiPXifilENT
Narda 6. 1963
FOR IMMeDIATE RfLEASC
Assistant
Se~retary
of tbe Treasury J . .es A. Reed and COa.!slioaer
of CustO&$ Philip Nichols, Jr., today announeed the designatiaa of a
study Itroup,
roanage.aent
of seven Treasury and Custou offici&lI. to ......
COllpostld
surv~y
of the imronu of
(ultoaS.
The ,roup will Nyi." _41
evaluattl the authorities, lDiniO'Os, organization. activities, aad
~anDgement
practices and probleMS of the Bureau.
This Is the first over-
all survey of cu.toas operations since the comprebensive study .... by
t·1c:Unsey I11\d COtllpany ilt 1948.
si~tlifiunt C:UStOfU
All
It-Jashingtoo and in tho fielu,
DepartNunt
~ld
other
activities (,oth at h••dquarter. 1a
i"cludin~
(~vornmontal
relatioushlpswlth the Treasury
agencies, will be studied.
The Study Croup will tJe headed by~ JalDOs H. Stover. Actina Director,
Office of
~~ar.e.8nt
and Or~anilation, Offic:e of the Adaialstrative
Assistant Secretary of the Treasury.
desi~Qat.d
. :~ tl (t tt' /I. tf~' v
1\
.,~.
as f4>llowJ:
An Advisory
J?U~
ColNilissioner
I
t~1chOls
(Cha
u.;.;.f~'LP--""
Bureau of the 8ud£,ot; Executive Directo
Irons, Civil Service
(fl. f!J
COlf;lJJlission; Administrativd Assistant Socreta~;n.atherbe.; Assistant
t -PvtA,.c:.4.
I"
COIlll'issioner of CustOftS "Strubinger; and, Deputy Assistant Secretary
(t ,I\( i
P. .
/ -)tiendrick. of the Treasury ilepartaent.
nib Co_ittee will review aad aclYise
on the study phm. lIajot" probleas durin; the study, ad final drafts of
.ajor proposals.
nle
ta~et
date for cOllpletion of the survey is Dec:e.oer IS, 1963.
TREASURY DEPARTMENT
=
March 6, 1963
FOR IMMEDIATE RELEASE
MANAGEMENT SURVEY OF THE BUREAU OF CUSTOMS
TO BE MADE BY THE TREASURY DEPARTMENT
Assistant Secretary of the Treasury James A. Reed and
Commissioner of Customs Philip Nichols, Jr., today announced the
designation of a study group, composed of seven Treasury and
Customs officials, to make a management survey of the Bureau of
Customs. The group will review and evaluate the authorities,
missions~ organization, activities, and management practices and
problems of the Bureau. This is the first over-all survey of
customs operations since the comprehensive study made by
McKinsey and Company in 1948.
All significant customs activities both at headquarters in
Washington and in the field, including relationships with the
Treasury Department and other Governmental agencies, will be
studied.
The Study Group will be headed by James H. Stover, Acting
Director, Office of Management and Organization, Office of the
Administrative Assistant Secretary of the Treasury. An Advisory
Committee has been designated as follows: Commissioner Philip
Nichols (Chairman), Executive Assistant William D. Carey, Bureau
of the Budget; Executive Director Warren B. Irons, Civil Service
Commission; Administrative Assistant Secretary A. E. Weatherbee;
Assistant Commissioner of Customs David B. Strubinger; and,
Deputy Assistant Secretary James P. Hendrick of the Treasury
Department. This Committee will review and advise on the study
plan, major problems during the study, and final drafts of major
proposals.
The target date for completion of the survey is December 15,
1963.
000
0-779
5556
UNITED STATES NET MONETARY GOLD TRANSACTIONS WIrn
FOREIGN COUNTRIES AND INTERNATIONAL INSTITUTIONS
January 1, 1962
(In
Dece~ber
31, 1962
~i11ions
of dollars at $35 per fine troy ounce)
Negative figures represent net sales by the
United States; positive figures, net urchases
------------------~~F~i~r~s-~t~~~~S~e~c~o~n~d~~~T~h~i~r~d~~~ Fourth
Calendar
Quarter
~rter
~rter
Quarter
Year
1962
1962
1962
1962
1962
Countr
Argentina
Austria
Belgium
Brazil
Burma
Cambodia
Canada
Colombia
Congo Republic
Costa Rica
Denrr,ark
Ecuador
Egypt
France
Greece
Iceland
Israel
kuwait
Lebanon
+25.0
-39.4
-28.0
-.8
+60.0
-16.9
-35.0
-56.3
-30.0
-.8
-.8
-5.0
-6.0
+59.5
-10.0
-1.7
+190.0
*
*
*
*
Tunisia
Turkey
United Kingdom
Yugoslavia
All Other
Total
+27.5
-.5
+15.0
-3.2
-.3
-45.0
-4.0
-5.0
-10.0
-.4
-.3
-.4
-97.5
-15.0
-213.~
-102.8
*
*
-10.5
-12.5
-21.0
-.6
-47.1
-59.0
-1.9
-20.0
+61.6
-1.1
+35.0
-.6
Peru
Saudi Arabia
Son,a1ia
Spain
Surinam
Switzerland
Syria
+10.5
+4.6
*
-12.6
-.1
-45.0
-.1
-20.0
+2.5
+50.0
-.1
-.5
+85.0
-142.5
-63.0
+57.1
-20.9
-1.7
+190.0
+37.9
+4.6
-.5
+15.0
-3.2
-1.2
-459.1
-19.1
-5.1
-10.0
-12.5
-32.1
-.6
-12.6
-1.9
-146.1
+2.5
+101.6
-1.3
-.5
-1.1
-.8
-63.7
-.4
-.1
+8.0
-.4
-1.4
-1.1
-387.0
-1.5
-2.9
-101.8
-433.7
-6.4
-832.9
-181.3
-.3
-.5
-150.0
-.4
-291.0
Figures rray not add to totals because of rounding.
*Less than $50,000
March 7, 1963
FOR TIMMEDIATE RELEASE
March 7, 1963
FOR IMMEDIATE RELEASE
TREASURY DEPARTMENT
March 7, 1963
FOR IMMEDIATE RELEASE
UNITED STATES FOREIGN GOLD TRANSACTIONS
FOR FOURTH QUARTER OF 1962
During the fourth quarter of 1962, the net sale
of n;onetary gold by the Uni ted States amounted to $6.4
million.
The first three quarters showed net sales of
$291.0 rr.illion, $101.8 million and $433.7 million,
respectively.
These transactions brought to $832.9 million the
net sale of monetary gold for the year as a whole.
The Treasury's quarterly report, made public today,
summarizes rr,onetary gold transactions with foreign governrr,ents, central banks and international insti tutions for
Calendar 1962 by quarters (table on reverse side).
In addition to these net monetary sales of $832.9
rr,illion worth of gold to foreign enti ties, the U.S. had
net dOIT.estic sales of $57 IT,illion worth of gold for
industrial, professional and artistic uses.
Thus, the
total decrease in U.S. gold stock during Calendar 1962
was $890 million.
000
D-7S0
TREASURY DEPARTMENT
=
March 7, 1963
FOR IMMEDIATE RELEASE
UNITED STATES FOREIGN GOLD TRANSACTIONS
FOR FOURTH QUARTER OF 1962
During the fourth quarter of 1962, the net sale
of monetary gold by the United States amounted to $6.4
million.
The first three quarters showed net sales of
$291.0 million, $101.8 million and $433.7 million,
respectively.
These transactions brought to $832.9 million the
net sale of monetary gold for the year as a whole.
The Treasury's quarterly report, made public today,
summarizes monetary gold transactions with foreign governments, central banks and international institutions for
Calendar 1962 by quarters (table on reverse side).
In addition to these net monetary sales of $832.9
million worth of gold to foreign entities, the U.S. had
net domestic sales of $57 million worth of gold for
industrial, professional and artistic uses.
Thus, the
total decrease in U.S. gold stock during Calendar 1964
wa$ $890 million.
000
1)-780
UNITED STATES NET MONETARY GOLD TRANSACTIONS WITH
FOREIGN COUNTRIES AND INTERNATIONAL INSTITUTIONS
January 1, 1962
Countr
(In millions of dollars at $35 per fine troy ounce)
Negative figures represent net sales by the
United States· ositive fi urea net urchases
First
Second
Third
Fourth
Calendar
Quarter
Year
Quarter
Quarter
~rter
1962
1962
1962
1962
1962
Argentina
Austria
Belgium
Brazil
Burma
Cambodia
Canada
Colombia
Congo Republic
Costa Rica
Denmark
Ecuador
Egypt
France
Greece
Iceland
Israel
Kuwait
Lebanon
+25.0
-39.4
-28.0
-.8
+60.0
-16.9
-35.0
Tunisia
Turkey
United Kingdom
Yugoslavia
All Other
Total
+85.0
-56.3
-30.0
-.8
-.8
-6.0
+59.5
-10.0
-1.7
+190.0
*
*
*
*
-142.5
-63.0
-5.0
+10.5
+57.1
-20.9
+:l7.5
-1.7
+190.0
+37.9
-.5
+4.6
-.5
+4.6
+15.0
-3.2
-.3
-.4
-.3
-.4
+15.0
-3.2
-1.2
-45.0
-4.0
-97.5
-15.0
-:l13.~
-102.8
-459.1
-5.0
-10.0
*
-19.1
*
*
-12.5
-.6
-10.5
Peru
Saudi Arabia
Sorr,alia
Spain
Surinam
Switzerland
Syria
December 31, 1962
-21..0
-.6
-12.6
-5.1
-10.0
-12.5
-32.1
-.6
-12.6
-47.1
-59.0
+61.6
-1.1
+35.0
-.1
-1.9
-20.0
-45.0
-.1
-1.9
-20.0
+2.5
+50.0
-.1
-.5
-1.1
-181.3
-.3
-150.0
-.5
-.8
-291.0
-101.8
-.4
-146.1
+2.5
+101.6
-1.3
-.5
-1.1
-63.7
-.4
-.1
-433.7
Figures rray not add to totals because of rounding.
*Less than $50,000
+8.0
-.4
-1.4
-387.0
-1.5
-2.9
-6.4
-832.9
March 7, 1963
FOR IMMEDIATE RIl.EASE
Secret;r,.ry of the
that he
W~iS
giving
Tr.;.~aury
c~r.ful
[.bout "ropo8ed cruJngea in
Douglss Dillon announced today
c011aider3tion to prote.t. rec.eived
trkt()rgani~<1t1on
of tJ.&. fielel structure
of the Intern')l Revenu. Service designed to increaae tta
efficiency {:nd .cocOlll)' of oper<!ttion.
He pointed out th8.t none of the cheng•• are
acuduled
to become effective before JalluAry 1, 1904, which w111 glv.
full opportunity to review ell aspects of the ra.;.tter in the
li~ht
ui these protest.
No :lnrpleiaertting ;.. ction Hill be
completion of sllch ::; review.
t;;"~n
pendina the
TREASURY DEPARTMENT
March 7, 1963
FOR IMMEDIATE RELEASE
Treasury Secretary Douglas Dillon announced today that
he was giving careful consideration to protests received
about proposed changes in the organization of the field
structure of the Internal Revenue
Servic~
designed to
increase its efficiency and economy of operation.
He pointed out that none of the changes are scheduled
to become effective before January 1, 1964, which will give
full opportunity to review all aspects of the matter in the
light of these protests.
No implementing action will be taken pending the completion
of such a review.
000
D-781
TREASURY DEPARTMENT
FOR RELEASE A.M. NEWSPAPERS
FRIDAY, MARCH 8, 1963
TREASURY DEPARTMENT APPROVES RECOMMENDATIONS
OF TASK FORCE ON CUSTOMS CLEARANCE OF BAGGAGE
Treasury Secretary Douglas Dillon
tod~
approved a report favorin,
adoption of the majority of recommendations made last year by a Task
Force of private citizens appointed to study procedures and techniques
used by the Bureau of Customs in the inspection of passengers and thei
baggage arriving in U. S. ports.
The recommendations for suggested changes were originally drafted
by the five-man citizens' group, headed by Joseph J. O'Connell, a form
Treasury General Counsel, which made its 70-page report public in February 1962.
Other members of the Task Force were Wilburt H. Ziehl,
Dr. Ivan C. Belknap, Dr. Richard S. Rosenbloom and Robert V. Breen.
Secretary Dillon later named an eleven-man Steering COmmittee hea
by Assistant Secretary James A. Reed to study the Task Force recommend
tions, and, as appropriate, to put them into effect.
Some of the
recommendations were accepted and put into effect shortly after the
Steering Committee began its study.
Of the 32 recommendations
contained in the Task Force Report, the Steering Committee recommended
the adoption of 20, rejection of 6, and the adoption in part of 6 of
the recommendations.
In addition, the Steering Committee considered two other matters
which it felt were consistent with the Task Force Report, and which
appear as recommendations 33 and 34.
The full text of the Report is attached.
TREASURY DEPARTMENT
FOR RELEASE A.M. NEWSPAPERS
FRIDAY, MARCH 8, 1963
TREASURY DEPARTMENT APPROVES RECOK~NDATIONS
OF TASK FORCE ON CUSTOMS CLEARANCE OF BAGGAGE
Treasury Secretary Douglas Dillon
tod~
approved a report favoring
adoption of the majority of recommendations made last year by a Task
Force of private citizens appointed to study procedures and techniques
used by the Bureau of Customs in the inspection of passengers and their
baggage arriving in U. S. ports.
The recommendations for suggested changes were originally drafted
by the five-man ci tizens' group, headod by Joseph J .. 0' Connell, a former
Treasury General Counsel, which made its 70-page report public in Febmary 1962.
Other members of the Task Force were Wilburt H. Ziehl,
Dr. Ivan C. Belknap, Dr. Richard S. Rosenbloom and Robert V. Breen.
Secretary Dillon later named an eleven-man Steering COmmittee headed
by Assistant Secretary James A. Reed to study the Task Force recommendations, and, as appropriate, to put them into effect.
Some of the
recommendations were accepted and put into effect shortly after the
Steering Committee began its study.
Of the 32 recommendations
contained in the Task Force Report, the Steering Committee recommended
the adoption of 20, rejection of 6, and the adoption in part of 6 of
the recommendations.
In addition, the Steering Committee considered two other matters
which it felt were consistent with the Task Force Report, and which
appear as recommendations 33 and 34.
The full text of the Report is attached.
P-EPORT TO THE SECRETARY
OF THE TP.EASURY
STEERING
CO~f'U:l*tEE
ON
CUSTO~
PROCEDURES
Janu&l"1 31, 196,3
Steerinp Corronittee :!embers
Office of the Secretary of the Treasurr
James
A. E.
James
Dixon
A. Reed, Assistant Secretary (Chairman)
\'leatherbee J Administrative Assistant Secretary
P. Hendrick, Deputy Assistant Secretary (Executive Secretary)
Donnelley, Assistant to the Secretary
Bureau of Customs
Philip Nichols, Jr., Commissioner
David B. Strubinger, Assistant Commissioner
Joseph J. Burton, Deputy Collector of Custo~s, New York (Idlewild)
Office of the General Counsel t Treasury Department
Robert G. Knieht, General Counsel
G d'Andelot Belin, General Counsel
Customs Employee Representative
John J. )'·fu.rphy, President, National Customs Service Association
Department of Commerce
Voit Gilmore, Director, U. S. Travel Service
INTRODUCTION
The steering Committee on Customs Procedures has considered caretull1 each of the recommendations contained in the Task Force Report.
There follows, for each Task Forca recommendation a repetition ot the
recommendation, the conclusion of the Steering Co~ttee, an account ot
the action taken to implement the recommendation or, where appropriate,
a discussion of the reasons for modifYing or not adopting the recommendation.
TASK FORCE RECOHMENDATION NO.1 - That an Information Office be
established within the Bureau of Customs.t headed by and staffed with
professionals in the field of public relations and intormation e
steer£ng Committee Conclusion
That the recommendation should be adopted.
Action Taken to Implement
An information and publication office has been established
in the Bureau of Customs, headed by a public information officer
with the title of Special Assistant to the Commissioner. To date,
the public information officer has made personal visitft to many
of the larger Customs districts throughout the United States to
meet the principal field officers and their staffs and to discuss
with them the proposed information programs. Recommendations and
comment have been solicited from Customs personnel and travel
agencies on the effectiveness and utility of certain Customs publications and on proposed chanees in their editorial format and
content.
TASK FORCE RECOHl·rENDATION NO.2 - That an attempt be made to reach
the potential traveler by pamphlets, newspaper releases, speeches, form
letters, posters, signs, films, displ~s, radio and television public
service announcements, travel books and folders, and many other such
media and channels.
steering Committee Conclusion
That the recommendation should be adopted.
Action Taken to Implement
The function of lIinformation aide II has been assigned to an
employee in the office of each of the principal Customs field
offices. The information aides are to collect and disseminate
news about Customs operations.
- 2 -
A system of speeding distribution of news releases at the
Bureau level has been established utilizing special mailing
lists and the facilities of the Office of Information of the
Treasury Department. Under this system a number of non-technical
news releases have been issued and widely published.
The public information officer has arranged important
speaking engagements for the Commissioner of Customs in addition to appearances by the Commissioner on radio and television.
Plans are being made to encourage wider and more numerous speaking engagements through the public information officer. A
"background for speakersll brochure is being compiled. Consideration is being given to the production of a dooumentary film and
television and radio tapes for nation-wide usee
TASK FORCE RECOHMENDATION NO.3 - That the Information Offioe
study and evaluate the forms and literature presently in use by the
Bureau in order to bring about simplification and clarification e
steering Committee Conclusion
That the recommendation should be adopted.
Action Taken to Implement
All handouts and other publications in use by the Bureau
are being studied by the public information officer and his
staff with the object of revising their format, content, and
increasing their circulation. For example, as soon as funds
are available, the Bureau of Customs house organ "Customs
Todayll will be printed at the Government Printing Office and
will be completely revised as to format and content.
TASK FORCE RECOMMENDATION NO.4 - That aircraft and ship personnel as well as travel agents be given training and training materials
to indoctrinate their people in Customs procedure and law.
steering Committee Conclusion
That the recommendation should be adopted.
Aotion Taken to
L~plement
The United states
have cooperated in the
contains basic Customs
tributed to the travel
Travel Service and the Bureau of Customs
editing of a book of travel facts which
information and which will be widely disindustr.{.
- 3 The information officer and the management staff of the
Bureau will prepare other materials for distribution as soon as
possible.
Orientation courses for personnel in the travel industry
will be arranged, possibly in cooperation with the United states
Travel Service and the other inspecting agencies e
TASK FORCE RECOHMENDATION NO.5 - That a Customs officer, where
practicable, meet travelers as they enter the ,Customs area to extend
friendly greetings, answer questions, and assist in expediting the
flow of passengers.
Steering Committee Conclusion
That this recommendation should be adopted, in part.
Action Taken to 'Implement
The United States Travel Service plans to employ, on a trial
basis, a corps of hostesses to work in all Federal inspectional
areas where passengers arrive.
The Secretary of Commerce has proposed such an arrangement,
and the Treasury Department has agreed to it in principle. further discussions on budGetary and other questions are being held
in the Interdepartmental Committee of Inspecting Agencies.
Discussion
It will be apparent that further action on Task Force recommendation
Ho. 5 should await the outcome of the interdepartmental discussion on the
combined hostess corps.
TASK FORCE RECO!'1!1ENDATION NO.6 - That Customs must go beyond its
present methods of seLecting irispectors and develop suitability standards
and techniques to'insure the selection of personnel well suited to its
needs.
steering Conmrl.ttee Conclusion
That the recommendation should be adopted.
Action Taken to Implement
The Bureau of Customs is considering the adoption of standardized interviews to eliminate from consideration persons
- 4otherwise eligible for appointment from Civil Service rebisters
who have non-suitable personal characteristics.
The Bureau of Customs has improved selection procedures for
candidates from within the Bureau by establishine effective supervisory evaluation forms to measure inter-personal relationships;
by placing greater emphasis on the educa.tion of those eivins ratin,;s
to others so that they understand the importance of adequate evaluationsj by using standardized interviews, and by usinG an advisory
selection board at the Port of Nell York.
The Bureau will explore, \-rith the assistance of the Civil
Service Commission and management conSUltants, the use of other
perfo~nance evaluation tools should the above steps not prove
sufficiently effective.
TASK FORCE RECO:1)'·fEIIDATION NO.7 - That additional training be given
new inspectors and that refresher courses oriented to chaneed and chang~
conditions be given at reGular intervals to all inspectors.
staering Committee Conclusion
That the
reco~nendation
should be adopted.
Action Taken to Implement
The Bureau of Customs is establishinc a Customs Academy at
New York. 'fhe Customs Academy "rill provide a four-week
pre-assignment course for new Customs inspectors and a one-week
refresher course every four years for experienced inspector
personnel.
The existinc twelve-week course for Customs examiners and the
five-week course for Customs enforcement officers will also be conducted at the Customs Academy.
Funds for the establishment of the Acade~v have been included
in the Bureau's budGet estimates for Fiscal Year 1964. Acceleration
of the traininG provided in 1964 is expected in 1965.
The Dureau has appointed a 'fask Force within the Bureau to plan
the content of the pre-assi~nment and refresher courses for inspectors and will select three well-qualified Customs inspectors to write
the courses under the supervision of the Employee Development Unit.
TASE FORCE P.ECOI II rENDATIOlJ NO.8 - That super·visor selection and training practices be improved, perhaps us~ the conference-participation type
of instruction.
- 5 steering Committee Conclusion
That the recommendation should be adopted.
Action Taken to Implement
The Bureau of Customs is evaluating the effectiveness of a
pilot selection procedure installed at New York. Based on the
results of this evaluation, those practices proven effective will
be extended to other districts.
All supervisory inspectors who attend the refresher course at
the Customs Academ1 will receive instruction on the responsibilities
of a supervisor, with emphasis on the supervisor's responsibilities
to his inspectors.
TASK FORCE F.ECOHf-$NDATION NO.9 - That emphasis be placed on
systematically building a well-balanced force well trained in the principal languages encountered at each port. Retention, promotion and
supervisor selection should be contingent on attaining proficiency in
foreign languages needed at the respective ports.
steering Committee Conclusion
That the recommendation should be adopted.
Action
T/~ken
to Implement
The Bureau of Customs will compile and administer locally.
standard written and oral 1&nG-uage examinations at appropriate
ports. Passing marks will be based on a minimum ability to conduct, in the foreign l&nGuace, basic Customs business.
The Bureau will require baggage inspectors at specified ports
to complete language courses prescribed by the Collector and will
require newly appointed inspectors ·to complete a course and pass
a standard e~~ation prescribed by the Bureau. Consideration is
being given to the use of pre-entry language aptitude tests for
prospective inspector trainees.
The Bureau will issue a policy statement en90uraging Collectors,
where possible, to fill inspector vacancies with persons who have
passed the standard language examination for the port to which they
will be assigned.
The Bureau will require individual collectors, subject to
guidelines and approval by the Bureau, to set up training programs
for helping inspectors to meet rainimum language requirements.
- 6 -
TASK FORCE RECO:11tENDATION NO. 10 - That, consistent with improved
selection methods and a well-trained force, additional responsibility
and discretion be given individual inspectors in the examination of
passengers and their baggage.
#
steering Committee Conclusion
That the recommendation should be adopted.
Action Taken to Implement
The objective of this recommendation will be achieved by
implementation of the other recommendations directed towards
improvements in personnel administration and training.
TASK FORCE RECO~~1ENDATION NO. 11 - That the several Customs employee
associations be encouraged to participate in traininc activities geared to
increasing the knowledge and stature of the inspection forces of Customs.
steering Committee Conclusion
That the recommendation should be adopted.
Action Taken to Implement
The employee associations will serve in an advisory capacity
on a continuing basis to :nake comments and recommendations affecting
training needs, the content of courses, and evaluation of the training program.
They will assist the Bureau in the promotion of training
prograrns.
They will continue to sponsor after-hours training and arrangements for qualified speakers on subjects related to Customs work.
The Bureau will assist them in this training effort as appropriate.
TASK FORCE RECO:f,iEUDATION NO. 12 - That p fnll ranGe of awards,
including medals, certificates, presentation u:ementos, "dthin-grade promotions and public recoGnition be employed to reward employees for
outstanding performance. Awards should be based on the inspector's total
effectiveness rather than on any single aspect of the job.
SteerUy~ Co~aittee
Conclusion
That the recommendation should be adopted.
- 7 Action Taken to Implement
The Bureau of Customs is reviewf.ng the Incentive Awards
Program to determine the specific impediments in certain field
areas affectinc the successful operation of the pro£ram and will
t&<e appropriate action on the basis of its. findings.
The ~reau will encourage all principal field officers to make
a stronger effort to obtain publicity, including coverage in newspapers, on television and radio, when awards are given.
The ~lreau has issued a letter to all field offices reemphasizing the importance of considering overall effectiveness
when determining whether or not an employee should be recommended
for a performance award.
TASl~ FORCE nECO:nlElJDATI~N NO. 1.3 - That sanctions be effectively·
applied to employees who do not measure up to the full requirements
or the job.
Steering Committee Conclusion
That the recomraendation should be adopted.
Action Taken to Implement
The Bureau of Customs 'iLll issue instructions to all collectors to remove from baegage exa~ation·assignment any inspector
who does not neet the personal and technical requirements for the
task, unless it appears that the deficiencies of the inspector can
be overcome throuch traininz, counselinC and other measures.
The Bureau is reviewing field administration of the penalty
guidelines for ~proper conduct. If the results of this review
warrant, the cuidelines published in the Custons Personnel ifanual
will be amended.
The Bureau is consider~ the adoption of a ratinG sheet to
be used in connection with promotions from the trainee to the
journeyman ~rade. The new sheet will contain the necessary elements to rate performance, technical and otherwise, at the
conclusion of the trainee period, and will establish criteria for
ratinG and promotion.
In the proposed trainine proGram for supervisors, the Bureau
will emphasize their responsibilit:T to encourage effective performance, provide counsel on job deficiencies, \dthhold reco:n.'1lendations
for promotion ir. cases where inspectors do not measure up to the
- 8 -
full requirements of the job, remove such inspc,ctors whenever
possible, from passenger operations and, as a last r~sort, recommend appropriate disciplinary action.
TASK FORCE RECOmm:NDATIO!J :-JO. 14 - That the Bureau of Customs
prepare a code of minimum standards for passenger facilities for all
terminals in which it operates. All facilities should be evaluated
on the basis of this code.
Steerine Committee Conclusion
That the recommendation should be adopted.
Action Taken to Implement
The Bureau of Customs has prepared a code of minimum standards for ~l airport terminals and these facilities are
evaluated on the basis of these standards. The standards include
specifications for self-claim baggage counters, supermarket baggaGe
examination ,counters, space for passenger and baggage flow, work
space and office space.
Standard specifications have also been developed for border
inspection stations. These standards are the result of. the joint
efforts of Customs and the Iriunigration and l!aturalization Service
(and other inspection agencies when they are concerned) to provide facilities which will best meet the needs of the travelinl
public and the inspection a~encies. They are followed by the
General Services Administration in the design and construction
of the larger border stations.
No specific standards have been developed for vessel passenger and bagba6e inspection facilities on piers. However, a
very active study is being conducted with the City of New York
and its consulting engineers, EBASCO, on the i.llprovement of the
New York piers. The study, now in the planning staGe, would
adopt the supermarket bacgaee examination procedure nOli used at
airports. r~y technical and procedural problems are inherent
in such a proposal. If adequate solutions can be found, standards
based on these solutions will be developed for future use.
TASK FOP.CE !"',ECO:r;1EIIDATION 1-10. 15 - That efforts be made to inprove
exist inti facilities; si.~ple expedients such as fresh paint, confortable
chairs, counters for ba~Gage inspection, usable toilets, visible and
intelligible signs, and better mana~ement practices would help.
steerinG COlIunittee Conclusion
That the recoffiQendation should be adopted.
- 9 -
Action Taken to Implement
Continuing efforts are being made by Customs field offices to
improve existing facilities through personal interviews with their
owners.
L'11.provements to facilities owned or leased by the government
has been the subject of many communications to the General Services
Administration, and several proposals are now pending with that
agency.
~'lith regard to the New Yorl: piers, a Special Com.'1littee on
Improvements to the New York Piers, lUore fully referred to under
Recommendation 18, has prepared a report containing twenty-two
recommendat1')ns for immediate improvements to the five piers at
,~ich the majority of passenGer vessels arrive.
These recommendations are based on many of the items listed by the Task Force
in its reco~~endations, and the Committee is pledGed to a continuing effort to im~lement them.
The Bureau of Customs ''lill intensify its efforts to improve
existing facilities throueh Customs instructions to its field offices,
direct correspondence between the Commissioner of Customs and the
responsible parties where local efforts fail, and by any other means
calculated to obtain the desired results.
TASK FORCE RECO:~J!EIIDATION NO. 16 - That careful attention be tiven
Customs to exerting its influence to improve the techniques of desi0n
for new facilities.
by
steerinp Committee Conclusion
That the recommendation should be adopted.
Action Taken to ImplelUent
The improvement of techniques of desien is foremost in all Bureau
of Customs neo:otiations for new facilities. Every effort is !nade to
incorporate the latest mechanical devices, modern passenger and baggage
handling techniques, the latest structural and en0ineer~ desiGns, and
to provide for passen~er co~ort in the Customs area.
Customs' interest is not limited to the standards for Customs
facilities. It includes other passencer facilities as well. For
example, at international airports the location of the Customs
facility in relation to surface transportation, connectinG fliC hts
and other passenL-er services are all matters in which Customs brines
- 10 its influence to bear. The inadequacies of so;rle exlstin..; tacilities are constantl~r used IlS e::a!:1!)les, an~ this is ~r3dua.llj' causi~
airport operators to. ad,>pt llodern ~oncel1ts \rlth respect to lnsp~ct.ion
facilittes.
TASK FOrrCL r..ECo: ::::C!:D;\TIOI: jJJ. 17 - That visitl)rt.~ c.')"dn~ to fleet
travelers an arrival be excluded f'ror.l Custo.ns areas of air ter:il.in3l.s
and stea'nship piers.
steerin..1 Co:n;-:littee Conclusion
That the recar.1!'J.endation should oe adapted.
Action Taken to. !l:lulement
.
:Iith the exception of the ]'!cw Yorlc piers ll visitors are not
perraitted in the ins!,ection area of vessel ar air terndnals"
unless a valid emer,:ency case warrants a de~arture frail} this
policy,
The Special Canmittee all Irilprove;lents to. the Hew York
piers has recaln;]ended that visitors be e:ccluded from the
Customs e~~ar,\inatian area 0: the ;:>io1'5 it studied. The
Committee "till cantinue its efforts t? illlple:nent tilis
recoT!l!!l.endation.
TASl~ FORC3 R3C:')':: £:W.\TI!X) lJJ. 18 - That a ...;rou? e;:rerienced in
passenGer -=>reration3 in 1:e\,1 York investi:.;ate a.lternative "lethous of
handlinG passen..:;er arrivals and prOI)ose an inproved syster,t. Those
selected should be free of ~rejudicos and motivated to search ilaa.::;inat:iJrely for new approaches. The Federal l]overn;-;1ent should take the
leadership in creatin.,:; the Group. T~1e .=roup should include hi:;h level
representatives of. the Federal Government, the carriers" the Department
of Harine and Aviation" and several qualified "outsiders."
That the recomrnendati'1n sh')uld l)e ado'Pted.
The EEASCO stud~r re~erred to ear'.~_er in this rE)'I') 0 rt. l-Io'll1
provide a 1.on,:,: te!'lll S'Jl.ut.ion to the New ?ork pier prnhle'l'l.
7:1e
Bureal1 of CllstO'llS wi.ll continue consulta.ti.on ,·rith EBASCO on the
handling of passen:er arri_va1.s (m the praposei ne,., piers.
- 11 -
The Chairman of the Steerin0 C07~~ttee has established a
Special Committee on Improvements to the New York Piers (mentioned
above), with hi.msel! as Chairman, Admiral John :!. dill, President,
American Export Lines as one member, and Leo Ge Brown, COmmissioner,
New York Department of ~~ine and Aviation, as the other.
In implementing the recommendations contained in its report,
it is anticipated that the Conunittee will \'rork with the New York
Chamber of Commerce, the i'lest Side Association, and other qualified groups.
Only the adoption of the EBASCO or a si:nilar study, and
implementation thereof, will provide a thoroughGoing solution. If
such a course of action is adopted, the Bureau of Customs and the
Treasury Department will support it.
TASK FORCE RECOi·Il-iENDATIOIl NO. 19 - That the Bureau of Customs
develop a central staff to give technical support to local activities.
Steerinc Committee Conclusion
That the recommendation should not be adopted.
Discussion
The Bureau of Customs has a staff of customs technicians and
a professional e~ineer to assist in the planninci and desisn of
passenger and bag3aGe clearance facilities. This staff and similar personnel of the General Services Administration, the Immigration and Naturalization Service and other a~encies concerned
have given the necessa~r technical support to local activities;
not only in the construction of border stations, but also in the
deSign of sp~ce layouts for other facilities.
In addition, technical services have been provided by the
consultants, engineers and architects en3a~ed in constructing an
airport or pier facility l."lhere free space will be provided for
Customs use. Advice is readily available to Customs field offices
and plans of new facilities developed locally are reviewed for
final approval in ~·lashi116ton. The Steerinz Committee believes
that the present Bureau of Customs staff is adequate.
TASK FORCE PECOrr:!ENDATI()N NO. 20 - That the mandatory written
baggage declaration be eliminated. (As an absolute minimum written
- 12 declarations should not be required where the value ot items acquired
abroad is less than the allowable exemption)e
steering Committee Conclusion
That the recommendation should be adopted, insofar as it proves
practicable to do so.
Action Taken to Implement
The Bureau of Customs has been conducting a series of tests
in order to detennine whether or not an oral declaration can be
adopted and the written declaration eliminated.
To date, tests have been conducted at the pre-clearance ports
ot Nassau and Bermuda and at the VJ.ami International Airport. The
results were satisfactory, and the man~ator.Y written declaration
has been elimin~~ed at those places e
A test is underw~ at Honolulu. So far this test has demonstrated unexpected difficulties which are not yet resolved.
The Bureau plans to conduct a full-scale test at the Port of
New York as soon as possible. Elimination of the written baggage
declaration on a nation-wide basis will depend on the results of
this test.
Discussion
It will be seen that the Steering Committee was, for practical reasons, unable to take a firm and final position on this
recommendation.
TASK FORCE RECOHI1ENDATION NO. 21 - That legislation be obtained to
change the valuation basis of imports in passenger baggage to the price
paid.
Steering Committee Conclusion
That the recommendation should be modified.
Action Tru{en to Implement
An account is given under recommendation 23.
TASK FORCE RECOHHENDATION NO. 22 - That the "to follow" privUege
be elim:Uiated.
- 13 'steering Committee Conclusion
That the recommendation should be adopted e
Action Taken to Implement
The Bureau of Customs is preparing the necessary legislation.
TASK FORCE RECOlfENDATION NO. 23 - That legislation be obtained
authorizing a flat rate of duty for items imported in passengers'
baggage.
Steering Committee Conclusion
That the recommendation should be moditied e
Action Taken to Implement
i
The Bureau of Customs is studying the feasibility of employing
a standard discount or discounts from the usual foreign retail price
for use in normal circumstances in the appraisement of articles
brought in by travelers for their personal use. Among the matters
being studied are the amount or amounts of the discounts and how
to specify the articles, if any, which should be excluded from the
procedure.
Discussion
In making recommendations 21 and 23 the Task Force stated that
"Applying the many separate and complex rates of the Tariff Act to
passengers t baggage is very time consuming, requires training and
experience of a high technical order, is not warranted, and cannot
be calculated by the average traveler."
The objectives of the recommendations are to eliminate "red
tape" in the baggage examination, and to provide the traveler with
advance knowledge of the value, for Customs purposes, of the article he is planning to purchase.
Any system of dual rates where the same merchandise pays a
different duty depending on how it arrives would seem a fertile
source of confusion and complaint, and it might have tUlforeseen
economic effects. These same problems apply to a dual valuation
system. Adoption of the Task Force recommendations as stated
would discriminate against the traveler in comparison with the
conunercial importer. It would be impossible, because of the
great variation in rates of duty on typical tourist articles, to
arrive at an equitable flat rate which would not discriminate
between travelers.
- ll~ Adoption of recormnendatirm 21 J.S stated l'lithout the adol)tion of
"recominendation 23 "'Quld subject the traveler to a hi,,;her rat~ of duty
than he is now required to pa;,{, nnd, as stated above, would ?lace him
in an unfavorable position vis-a-v1s the co~~ercial L~porter.
Public announcement of the fact that a standard discount is
used, in addition to the amount thereof will, 1..11 the opinion of t~e
Steering COllmlittee, reduce confusion and should ach:i.eve many (If the
objectives of Task Force reco~.1endations 21 a.nd 23 without the
oomplications of le~islative action.
TASK FORCE REC07frr::ImA'l'I:)N N0. 24 - That lezislation be obtained
authorizinG a ~200 exemption for returning residents, in lieu of the
present $100 exemption, which Vlould be r:)as')nab1e if enacted in com~
bination with the chan[ () to "price paid" valuation at a "flat rate ll
of duty and the elL-:dnation -:>f the articles "to follo",," privileSe,
which are proposed in J:ecornr~end~.tions· 21, 22, and 23 above.
steerin; C:Oi1lln.i.ttee Conclusion
That the recom';lendD.til)n should be rejected.
Action Taken to Lnplement
The Dureau of CustO~:lS is preparin.:; le.::;isL:.I.tion to continue the
present ~'lOO exemption for an additional t ...l-:> years.
Discussion
The basic reason for reducing the passen-:;er' s exeraption to
$100 was that this action l<{as required for balance of payrnents reasons. E.;·dstin£ balance of payments circLLT.stances are such as to
indicate that the exemption should be continued at tho ;)100 level.
Such minor au.ninistrative advanta.;;es as would accrue fro:!':. raisin.;
the exemption-to ::;200 are insufficient to override the basic reason
for continuin,s the exe:nption as i t presently exists.
In view of the conclusions relatin.:;; to r:ecor:unendations 21, 22,
and 23 above, no further corilment is required with respect to the
proposal that those Eecol:1Tilendations and LeCOr1:ilendation 24 be enacted
in combination.
TASK FOnCE [tEC,): L!E?JDATI0II NO. 25 - That ler~isl.ltion be obtc.:tned to
authorize the :i.r.lposition of a stl'!I.'11ary penalty for the inportation of prohibited (or controlled) fruit, flowers, plant material, or meat or mea.t
products which are not declared orally or in l'lritin~.
- 15 ;Jteerin;: Corx,littcc Conclusion
The Departuent of A;:;riculture has Ul1del' cor.sideration le'"'islation lmich ,-till accoLlplish the purpose of this recoTl::lendat.i~n.
Pend~ the outco:-:tC of this le:.:;islation the steerin,:; Gorj'mrlttee
could not reach a conclusion.
'tASK FORCE HECCC2£;mA'l'IOlJ ~JO. 2'') - That as ~han;;;es in laws and
policies are effected, :)rocedures be reviewed and developed which ''lill
reduce the papeI"\'!ork load or~ the 5Jlspec tors to a mi111·llun.
steorirk.. COl'llnittee C:mclusion
That the recor;1:!1endation SilOUld be adopted.
Action Taken to ]]Ilnlanent
.
The Buret:.u of Gusto:.lG is conductin::; a continual reyie,,! of
bagJa.;e inspect:i;on procedures in orde!' to reduce papen·fOrk.
TJ\3K FORCE illiCO!·~::I!DA'l'I\);'J EO. '?7 - 'that a more positive and continuous role be exercised by the Jurcau of Custor:,lS in '.:A.shin.;ton on
passencer bassa2;e operations t.hrouc;h the aPiJointn!ent of a Deputy
COnl!nissioner for Travel :)perat ions.
TASK FO;~C:S l~GO' 216iIDA'1'IOi! :JO. Z3 - That public information and
educa.tion activities relat'j~ to travel operations be tu1der t~1c Deputy
ComlJl.i.ssioner for Travel ~;pera.tions.
TASl~ FOnCE PECer·::: Elm/tTIO:! !JO. 29 - T~1at the nei'T Deputy Cor,1nifjsioner
be able to com:aand necessary staff services relatin,:: to passel1[;er baJ:r~a.ze
operations, such as those for personnel selection, trainin.s activities,
procedures revision and develo;?laent, tecjmical advice, and field appraisn.ls.
TASI~ FOR~E P.EC~):!j 'Et;I)ATIO!: E0. 30 - That the ne~v Deputy CO!,1Jllssioner
identify field co:-:tponent8 cOT1pler:~entar;'/ to :\jashin:.::t~n staff, l-rhich are
necessar-.r to Get the job done.
TA3I~ FORCE r~'::;OT ~ :;1'rrL\TIO!~ !~O. 31 - J.'hat because there i3 a special
need for coordinatin·· nec;-.anis;-Ls in ba'-a: e operations, ::'ot~l in ~;ashin~;ton
and in the field, th~ no.v Depl.lt:l CO::1J".is~i~r.er Hork out appropriate roles
and Uses for 8UC:1 coordinatin:..::; ;~lechanis'ls.
Steerin~ CO~IJ.'T,itte>3
Conclusion
That Task Force recor:rl:endations 27-31 should. not be adopted.
Discussion
The 3ureau of Customs has, at present, seven Depu.ty Commissioners
reportin,:; to the Comm.issioner and the .\ssistant COilu·lissioner. To add
an eishth ~Iould be poor ::lanac;e:-:tent practice because too.na.n;:! officers
\.,rQuld be reportinc directly to one ;ua:.1. and his assist.3.nt, thus
creat~ a bott1enecl::.
The ne\'I Information ,)i'ficer should 't'lOrk in all fields of Customs
activity and should not he linlited to travel operations. He should
not, therefore, report throu.:.;h a.. Travel Operations Office.
AllY chances in the orGanization plan fOl' Customs should be made
only after a Burve~~ of all its activities and should, in cenera1, be
directed tOl'lards ~llakin::; the whole ol:':~anization )l1.ore simple rather
than more conple:{.
It is not possible to separate travel operations fr9ffi other
Customs operations to a sufficient de:€ree that such a centralization
of responsibility is desirable.
Therefore, the steerinG COHlInittee concluded that
27-31 should not be
reco~n;:1endations
ado~ted.
TASK FORCE P..EC~:rr.tENDATI()E no. 32 - Officers of the four services Customs, Imrrrl..::;ration, Public Health and Acricu.lture - should be authorized
to perform the services of the sister a;:,:encies in joint preli.:ninary
screeninG operations. Coordin3.ted supervis2.on of the officers of the
several services would, of course, also 1)0 required.
3toerin Co:;tr;littee Conclusion
________
b'__
,
That the recoJIunend.ation ShOl11d be adopted.
Action
Ta~(en
to Llp1e:nept
AGreement has been reached a;non::; the f0Ul' services to desi':.:nate
officers of each Service to perfor:~ the functions of tbe other a~ener
in joint prelilninary screeninc o~erations. ImI'le!aentin;.,; instruction::;
have been issued to the field offices of all a -eneies on t!1a :~ex.i.can
border.
~
- 17 1s a result or a sal've,)~ it has been founu t;1u.~ it 'oI'/i1l not :.)/3
DOssihle to carr:r on joint !3creen~ of y>edestd.ans at Zl !'ns., ',mtil
a. '~lO,OOO renovation or facilities is cn.rried .')ut. This ;nattp-r ..is
no''l under consideration b~· the l'our a,::encies concern3d and O.S SOO~1
as a solutiol1 to the !,inanc'tal prob),em is f":)Und the recol:li""lenda.t~. on
will be fully i::lpl~:.,ented.
F.E~O:·~/lENDATII)l~
the
NO. 33 - 'l'hat inspectors exa.lline tho
passen~ers,
not
ba.~Za;;e.
Steerin£; Cexcunittee Conclusion
That this reco:amendat:!.on could not be adopt.ed at this t1Jle.
Action Taken to !rllplo::lent
This item was added in the li~ht of the Task Force Leport conclusion (page 64) that CIlsto;ns ;ilust croate::;ood ,-:ill for the Unit.e~l
states, and this CoIl onl;;' be done lf :tnspoctors exa.-ninc· tho passen[er
rather than his ba..:;;;n::;e.
The Dl'itish G'..lsto;ns inspector questions thA ~assen~er \'lith a
view to determininG i:1 h:'5 o. . m j,uad \'l:lQther or r.)~. t11€l passencer is
a suspic;io'.ls character. If the deterrlinatiol1 isr.e::;n.tive, the passen..:er may be allol;~~d co !"")l'oceed -.rlthout an;;." ba,c;:~a.:.;e e:=:a:llination.
If, hO\{ever, the inspector decides in the course of his
ql~estionin.:; that f~l.j.'ther inspection is neceDsar~r, the passon:.:;er is
asked to mak~ a ;n'itt€ln declarat:i..on D.ml his 1.:'~.:::u:..:e is :..;i'..ren a ve:.~~'
careful e:~'lination. 'i'l1e Eritish consider t.heir custO:;l~ e~=:<l.;linc"
tion to be a ver:r serious nattar fro!" the st['.nd[.':):l.."!t of 'oalance of
payments ~ their custo;as collect not onl,/ i"lport Jutie s, but .:1.1so
purchase taxes on articles ::"_::'·~;:.<'3.Ged: 5.oroad.
rhe SteerinG COr:L:J1..ittee noted thE. . t ther.J are cultural differences
lihich would '}'lake the application 0:: this syotc','l ver-J difficult in this
country. Trainin,-, for this 3.pproach is not ,;ret on t:1e hori::;on, anJ
better selection of inspectors lvoulll be req'.tirod.
:lost :":~rportantly, sol.~:1~ as the De l)art.lent 01 ;\erbulturc
insists upon 100 ~ercent exa:l!~ nation of liassenSern' bag~.:l.:::~ such n.
system could not be 1nstalled.
- 113 -
For these reasons the Steerin[; Comru.ttee has recommended only
that the Bureau of Customs contjnue to explore the possibility of a
less than 100 percent e~~nation which would be satisfactory to the
Department of Agriculture. If a solution is found, the Bureau will
re-evaluate its training efforts and methods of selection of employees
in relation to the requirements of such a system.
RECOIE1ENDA'rION NO, 34 - That leeislation be introduced which uould
exempt the tourist from some of the provisions of the Trademark Law.
steering Committee Conclusion
That the recommendation should be adopted.
Action Taken to Irrmlement
.
The Treasury Department has introduced legislation which "''Quld
accomplish tne desired result from time to time, but it has failed
to pass the Congress.
Legislation \'1hich would exempt from the provisions of the
Trademark Lal'l articles Hhich aCCOl1pa.n~r the traveler and which are
for his personal use will be included by the Bureau of Custo~s in
its legislative proposals for subnission by the Treasury Department
to the SOth Concress.
Should this le;::;islation ar.:;a.in fail to pass, the Bureau will
attempt to obtain the aGreement of trademark owners to standardization and liberalization of the allm. . ances the~r c::;rant to travelers.
Discussion
This rectmll'nendation 'I..1e.S added because the application of the
Trademark Law to passencers' bas.::;aC;e has been the subject of so
many complaints, and because it is consistent with the cnnclusion,
found on pase 68 of the report of the ':'2.sk Force that "Inspectors
should be freed of miscellaneous duties and papenrork to the
.;reatest extent possible so that t.hey CM concentrate on the exa!unation of the traveler,lf
- 3 ~
t.he sate or other dlspor.itlon of Treasury bills does not have any special treatment
f,uch, uruier the Internal Revenue Code of 1954.
,
The bills are subject to estate, int
l.tance, gift or other excise taxes, whether Federal or State, but are exempt from al
to.xat.ion nOl" or hereafter imposed on the principal or interest thereof by any State
any of tge possessions of the United States, or by any local taxing authority.
For
purpOGCS of taxation the amount of dj_ scount 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 hE
wlder are sold ts not considered to accrue until such bills are sold, redeemed or ot
wise disposed of, and such bills are excluded from consideration as capital assets.
Accordinely, the Olmer of Treasury bills (other than life insurance companies) iSSUE
hcrcW1der need include in his income tax return only -the difference between the pric
paid for such bills, 1A1ether on original issue or on subsequent pruchase, and the M
actually received either upon sale or redemption at maturity during the taxable ye81
for which the return is nmde, as ordinary gain or lass.
Treasury Department Circular No. 418 (current revision) and this notice,presc)
the tenns of the Treasury bills and govern the conditions of their issue.
the circu...lar may be obtained from any Federal Reserve Bank or Branch.
Copies 01
:d1ibit l-!
-
TREJ\GUF.Y DEPAR"rI,ID:NT
HashinGton
IR
IilDWIATE RELEASE,
(1)
The Treasury Department, by this public noti.ce, invites tenders for
d·
'f'--'T::.--r--_ _ _ ,
(2 )
thereabouts, of _.,...,....,,---day TreaS'lll'Y bills, to be issued on n discount basis under
(~)
mpetitive 8J1d noncompetitive biddinG as hereinafter provided.
11 be des:i.gnated Ta."C AnticIpation Series, they i·rill be dated
d they lrlll nature _ _ _ _-.---.--_ _ _ __
(5 )
'lbe bills of this series
------~(~4)~-------
They ivill be accepted at face value in
yment of income and prof1 ts: taxes due on _ _ _ _~~-----, and to the extent they
(6)
e not presented for this purpose the face amount of these bills vTi11 be payable vri tht interest at maturity.
---,
Taxpayers desirine to 9.PPly these bills in payment of
---(,..",,7.....) -
incomG fu"1d profi ts taxes have the 1'1'1vilege of surrendering them to any
ierD.l Reserve Banl{. or Drench or to the Ol'fice of the
lhincton, not more th8n fifteen
do~rs
Tl'easu~('er
of the United states,
before _____- - - - , ond receivine receipts
(8)
!refor
Ghm'ri~
the face :mount of the bilJ_8 so 8Ul'rendered.
1r.U,tted in lieu of the bills on or bc;l'ore
These receipts may be
, to the District Director
Internal Revenue 1'or the District in 1lhich such ta.'Ces o.re payable.
:ued in bearer form only, end in denominations of :~l, 000,
The bills Hill be
Q5, 000, $10,000, $50,000,
10,000, ~;500,OOO and $1,000,000 (maturity value).
Tenders irill be received o.t FecleTal Reserve Brullw and DrMches up to the closine
Tenders will
r, one-thirty p.m., Eastern Standv,rd time, ------,~-r------(10 )
be received nt the Treasury Department, Hashington. Eneh tender r.mst be for 'en even
tiplc of :~l>OOO, and in the case of competitive tenders the price offered nrust be
l'ee3cd on the bo,si s of 100, ",i tIl not more than three decimals, e. g., 99.925.
~tionl3 nmy not be used.
It is urged tha.t tenders be made on the printed forms and
flarded in the special envelopes "Thich lr.i..ll be supplied by Federal Reserve Banks or
3Ches
on
application therefor.
- 2 -
B:mlcinr; institutions Generally mny submi.t tenders for account of customers pro-
vlded the nomes of the customers are set forth in such tenders.
Others than banking
insti tutions will not be permitted to submit tenders except for their own 8.CCount.
'renders will be received
\n thout
depoei t, from incorporated banks and trust companies
nnd 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 bil
applied for, unless the tenders are accompanied by an express guaranty of payment by
incorporated bank or trust company.
All bidders are required to agree not to purchase or to sell, or to make any
aereements 'With respect to the purchase or sale or other disposition of any bills of
a441t10D&l.
thiJissue, until after one-thirty p.m., Eastern Standard, time, !burIMIa7, JIINIa 16, •
lm
IlIlmediately after the closing hour, tenders will be opened at the Federal Resen
Banks and Branches, following which public announcement will be made by the Treasury
Department of the amount and price -range of accepted bids.
'rill be advised of the acceptance or rejection thereof.
Those submitting tenders
The Secretary of the Treasur
expressly reserves the right to accept or reject any or all tenders, in whole or
and his action in any such respect shall be final.
competitive tenders for
$ 200,000
in~
Subject to these reservations,
no
or less without stated price from any one
fu)l
bidder "rill be accepted in full at the average price (in three decimals) of accepted
competi tive bids.
Payment of accepted tenders at the prtces offered must be made or
completed at the Federal Reserve Barut in cash or other immediately available funds
=
March 22, l.963.
The income derived from Treasury bills, vmether interest or gain from the sale
or other disposition of the bills, does not have any exemption, as such, and loss ~
TR~URY D~ARTMEIfi'
iolashington
March 7,
196~
TR2ASURY OFF"ZRS ADDITIONAL ,~1.5 BILLION IN JUNE TAX BILLS
The Treasury Department, by this public notice, invites tender. for $1,500,000,00
or thereabouts, of 94-day Treasury bills ( to maturity date), to be i ••ued Mareh 22, U
on a discount basis under competitive and noncompetitive bidding .a hereinafter
~~
The billa of thi8 series will be de.ignated Tax Anticipation Series and repreHllt an
additional amount of bills dated February 6, 1963, to mature June 24, 196~, or1ISM'~
issued in the amount of $1,000,684,000.
interchangeable.
The additional and original billa will be trt
They will be accepted at face value in payment of income and prot1'-
taxes due on June 15, 1963, and to the extent they are not presented for thta purJO.
the
rae. amount of these bills
will be payable without interest at maturity.
1'uJa1tt
de.iring to apply these bills in payment of June 15, 1963, income and pont. taRt III
the privilege of surrendering them to any Federal Reserve :Bank or Branch or to the
Office of the Treasurer of the United states, Washington, not more than fifteen dayI
before June 15, 1963, lUlU receiving receipts therefor showing the face IIIIOWlt of the
bills so surrendered.
These receipts may be submitted in lieu of the billa on or 'bite
JWle 15, 1963, to the Diatrict Director of Internal Revenue for the District in which
scwh taxes are payable.
to:
\J..iJ
The bills will be issued in bearer form only, and in deDCa1Dl
of ~l,OOO, $5,000, $10,000, $50,000, $100,000, $500,000 and $1,000,000 (_tur1\J
value) •
Tenders will be received at Federal Reserve Banks and Branches up to the
llOur, one-thirty p.m., Eastern Standard time, Thursday, March 14, 1963.
not be received at the Treasury Department, Washington.
clo.1DI
Tendert v1ll
Each tender must be tor
aD
even multiple of $1,000, and in the case of campetiti ve tenders the price otteredbe expressed on the baSis of 100, with not more than three decimal., e. g., 99.925.
Fractions rna::r not be used.
It is urged that tenders be made on the printed fol'lll u4
forwarded in the special envelopes Which will be supplied by Federal Reserve BanD or
Branches on application
the~for.
TREASURY DEPARTMENT
=
March 7, 1963
FOR IMMEDIATE RELEASE
TREASURY OFFERS ADDITIONAL
$1.5 BILLION IN JUNE TAX BILLS
The Treasury Department, by this public notice, invites tenders
for $1,500,000,000, or thereabouts, of 94-day Treasury bills (to
maturity date), to be issued March 22,1963, on a discount basis under
competitive and noncompetitive bidding as hereinafter provided. The
bills of this series will be designated Tax Anticipation Series and
represent an additional amount of bills dated February 6, 1963, to
mature June 24, 1963, originally issued in the amount of $1,000,684,000.
The additional and original bills will be freely interchangeable.
They will be accepted at face value in payment of income and profits
taxes due on June 15, 1963, and to the extent they are not presented
for this purpose the face amount of these bills will be payable
without interest at maturity. Taxpayers desiring to apply these
bills in payment of June 15, 1963, income and profits taxes have the
privilege of surrendering them to any Federal Reserve Bank or Branch
or to the Office of the Treasurer of the United States, Washington,
not more than fifteen days before June 15, 1963, and receiving
receipts therefor showing the face amount of the bills so surrendered.
These receipts may be submitted in lieu of the bills on or before
June 15, 1963, to the District Director of Internal Revenue for the
District in which such taxes are payable. The bills will be issued
in bearer form only, and in denominations of $1,000, $5,000, $10,000,
$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,
Thursday, March 14, 1963. 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
0-782
(over)
- 2 and from responsible and recognized dealers in investment securities.
Tenders from others must be accompanied by payment of 2 percent of
the face amount of Treasury bills applied for, unless the tenders
are accompanied by an express guaranty of payment by an incorporated
bank or trust company.
All bidders are required to agree not to purchase or to sell, or
to make any agreements with respect to the purchase or sale or other
disposition of any bills of this additional issue, until after
one-thirty p.m., Eastern Standard time, Thursday, March 14,1963.
Immediately after the closing hour, tenders will be opened at
the Federal Reserve Banks and Branches, following which public
announcement will be made by the Treasury Department of the amount and
price range of accepted bids. Those submitting tenders will be
advised of the acceptance or rejection thereof. The Secretary of the
Treasury expressly reserves the right to accept or reject any or all
tenders, in whole or in part, and his action in any such respect
shall be final. Subject to these reservations, noncompetitive
tenders for $200,000 or less without stated price from anyone bidder
will be accepted in full at the average price (in three decimals) of
accepted competitive bids. Payment of accepted tenders at the prices
offered must be made or completed at the Federal Reserve Bank in cash
or other immediately available funds on March 22, 1963.
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 (otherthan life insurance companies) issued hereunder need include in his
incpme 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 (current revision) and t~is
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.
000
March 7, 1963
subscriptions received as o'f Wednesday, March 6, tor excbaDp tor the
DeW
HC\U'1t1.
off'ered in tile De})&1"taeut' a lat.at ref'Un41Ag otter, toanber V1th toM1 a.ow.atl el1c1bl1
:\:'or exchange aDd reaa1n1Dg outstaDdiDg.
Th1a 1DtomatioD (iA cl110aa ot dollara) 11 U
£oilov8:
3-'578~
~URrnES
1'0
,
BE ISSUED
3-7781$
3-7/§lI;
Notes
Bonda
Bonct.
Amount.
2L15L67
1971
1974
C-1.963
$ 6,851
$
2-1/2:1- Bcm4.s of' 1963
4,317
2,279
3-1/~
4,856
2,700
ELIGIBLE FOO EXCBAM;E
Securities
.j-1/21> etfa.,
Ct'fa., 0.1963
J~~ Bonda 0'(
1964
.J
-~
Bond.
1980
!cM.l
c"'.
17
$1,88'
$ S,lI
521
.7
2,847
1,61
205
90
2
1t7
.,SI
839
199
25
1,063
1/~
139
190
329
I,.
957
$
690
;
$
'S-I/PfI., Nates, B-L965
3,285
3-S/arj. Notes, B-lil66
3,11'
313
go
753
2,11
3;~ BaDds of
1,484
24:2
209
4a1
1,11
5-3/8~ Bonds of 1966
2, •.58
3n
_._.
2tl
582
.-LI
'l'ota18
~,045
$1,965
$l,lZl
.7,1SI
tZl,ai
1966
4
$4, 280
01,500
These f'1s\.u'ee ret'lect an 1nereue ot .$ 117 m1lUClil
by
the 1'reuury
OIl
_roll
rrc.
to the new i.sues.
the IIUlMIcr1ptaaa .......
s.
1be booU reaain opea \.1Dt11 Friday I March 8,
iuJ.iy1duals, and
OWl"
tor the reoe1)7t ot
aubecr1~J,oM
t.-
trustee. Who entereu by February E8 ~ra ot 1Dtea\, to ~
TREASURY DEPARTMENT
)R IMMEDIATE RELEASE
March 7, 1963
SUPPLEMENTAL REPORT OF SUBSCRIPfIONS FOR LATEST ADVANCE REFUNDING
The Treasury Department today announced a breakdown of the securities included in
lbscriptions received as of Wednesday, March 6, for exchange for the new securities
.ffered in the Department I s latest refunding offer, together with total amounts eligible
)r exchange and remaining outstanding.
This infonnation (in millions of dollars) is as
)llows:
Amounts
3-5/8%
Notes
2/15/67
SECURITIES TO BE ISSUED
3-7/8%
3-7/8%
4%
Bonds
Bonds
Bonds
1971
1974
1980
$
ELIGIBLE FOR EXCHANGE
Securities
Total
Total
unexchanged
17
$1,664
$ 5,187
-1/2%
etfs., C-1963
$ 6,851
$ 957
-1/2%
Bonds of 1963
4,317
2,279
521
47
2,847
1,470
-1/8%
etfs., D-1963
4,856
205
90
2
297
4,559
~ Bonds of 1964
2,700
839
199
25
1,063
1,637
.1/2%
Notes, B-1965
3,285
139
190
329
2,9t)6
·5/8%
Notes, B-1966
3,114
313
420
733
2,381
, Bonds of 1966
1,484
242
209
451
1,033
·3/8%
Bonds of 1966
2,438
371
211
582
11 O~JG
Totals
$29,045
$1,065
$1,121
$7,966
$21,079
$4,280
690
$1,500
$
$
These figures reflect an increase of $117 million over the subscriptions annowlced
the Treasury on March 5.
'fhe books remain open until Friday, t-1a.rch 8, for the receipt of subscriptionu frolll
ldlVldUtlls, and from trustees who entered by February 28 letters of intent, to flulit><:l'ibe
) the new issues.
D-Nn
POll DlClDIAD m..Aa
TUASURY DBCISICII (II Tl'TAlIIUM DIOXJDI
tJNl)D TO AJft'Il)tI(PDG Aft
The Treasury Depart.ment baa det.erm1necl that t.ltanl.
dioxide from the tkl1ted Xingdom 1s not being, nor l1kel), to
be, 80ld in the Uni'ted itates at 1 ••• than
the meaning of the Antidumping An.
tair ftJ.ue rith1n
Iotioe of the 4eter-
mina tton wUl be publiahed in the Federal Jleg1ater.
Appraising off1cers are being instructed to proeee4 with
the appra1saaent of thi8 mereband1e8 from the Unltecl K1nc*a
without regard to any queat10n of dumping.
Th. dollar value of imports of tne involved meroban41 ••
received tram October 1, 1961, through Septa&ber ~,
vas approx1matel.y ~50,OOO.
cc :
Mr. Hendrick
1962,
TREASURY DEPARTMENT
March 8, 1963
FOR IMMEDIATE RELEASE
DECISION ON TIT/~IUM DIOXIDE
UNDER THE ANTIDUt-1PING ACT
T~\SURY
The Treasury Department has determined that titanium
dioxide from the United Kingdom 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 deter-
mination will be published in the Federal Register.
Appraising officers are being instructed to proceed with
the appraisement of this merchandise from the United Kingdom
without regard to any
~uestion
of dumping.
The dollar value of imports of the involved merchandise
received from October 1, 1961, through September 30, 1962)
was approximately $250,000.
- 19 certificates in circulation are, as is well known, a sound and timetested form of currency; they are required to be backed by 100 per
cent collateral, of which 25 per cent is in gold.
We shall continue
to have this sound and highly satisfactory for.m of currency, the
Federal Reserve note, but instead of having approximately $30 billion
in Federal Reserve notes and $2 billion in silver certificates, we
shall eventually have the entire amount in Federal Reserve notes.
- 18 to all.
It provides a sui table means for the Government to obta1l1
its silver requirements for coinage J the item in this bill which is
of primary importance.
It permits silver, from the point of view of
the producers, to rise to the level of its monetary value of
$l.29-pl~
per ounce, if market forces carry it that high, without interference
from Goverrunent sales to the public at a lower price.
It will pre-
sumably create an effective ceiling of approximately $1.29 an ounce
by the provision that silver certificates shall be redeemable for
silver dollars or the equivalent in bullion, which should assure
the silver users that the price will not rise much beyond its present
market for a long time to come.
It repeals the 50 per cent silver
transfer tax prospectively and retains it only to protect against
certain possible windfalls and to cover the special case of the
"necessary inventory" processors.
It does not in any way debase or
weaken the currency of the United states for this basiC reason:
The Federal Reserve notes which will ultimately replace the
sll~
- 17 di~~erent
option were not permitted to hold inventories
o~
bullion
r;!
through;rprice rise without beine subject to the tax.
Finally, our bill has a provision in subparagraph (c)
Section 4 to make it clear that the silver
apply to the purchase and sale
into
a~ter
the date
o~
o~
enactment.
silver
trans~er tax
~utures
o~
a
~tures
trading
o~
does not
contracts entered
The bill provides that there
shall no longer be any liability on the part
the contract.
o~
o~
the
trans~eree o~
This provision will make possible the establishment
market in silver similar to those available
~or
the
interests in other commodities, and we believe will con-
In ~ting this silver bill, we in the Treasury have been
reminded once again that there are many interests involved in silver,/
most
o~ the~
apparently
co~licting.
We believe this bill is
~air
- 16 Essentially, the tax is being repealed.
It will remain opera-
tive only for a short period of time, to be applied to a few transitional cases arising out of sales of silver bullion interests which
were created prior to enactment of this bill.
Subparagraph (2) of Section 4 is a special provision which is
required in order to apply the basic theory of the tax repeal to a
few processors who adopted the so-called "necessary inventory"
method of accounting for their sales of silver bullion.
I shall not
deal with this provision in detail at this time, but the reason for
it is to apply the tax to an amount of silver bullion equal to that
which these processors held at the time when they adopted the "necessary inventory" method, which was generally back in 1934 at the time
when the tax was enacted.
The tax will be levied on sales of bullion
equal to those amounts which'ke:e
k
to hold in their
par~~C~lar ~~:=::e:~
"'~~~~jJ.':'~t1 : _~r~/
invento~ su::t::,~_price : ; t e r
the:J
/ ....
// accounting option adopted by them/while other processors using a
i
~---'"'.. ~-
}
- 15 for coinage which will prevent the occurrence of such situations.
The Treasury plans to continue the use of silver in the coinage
system, but it is essential that this be accomplished by making it
.-Ik~/
possi ble to use the silver standing ie
,
3
eli 8f all silver certifi-
catest~~~/~The Silver Transfer Tax
The basic theory of the provisions in Section 4 of the Administration's bill is that the 50 per cent tax on transfers of interests
in silver bullion should be repealed prospectively.
That is, persons
producing silver bullion after the date of enactment or acquiring it
thereafter for full consideration should not be liable for the tax;
however, those producing or acquiring interests in silver bullion
prior to the date of enactment should remain subject to this tax on
profits resulting from sales thereof.
This will prevent the possi-
bility that anyone who held silver bullion over the years when ~
Government action was increasing the price could realize a "windfall"
profit simply by waiting for repeal.
I
is not authorized, the Treasu1Y
will soon be in
being forced into the /
?
~#~~~_
market to buy silver for its coinage needs,
~
$J.
.
,-o.~
~~
&:".
~he p
;
/
of silver up to its monetary value of $l.29-plus per ounce a d beyond.
At this point it would become profitable for the public t
$1 silver certificates, to obtain the silver standing
~
~
.J ~j,
.'
,-/'
turn in
hind them.
/.
'...,~
./J"
,
~•• C~ ~ ..." c~ <J:'~~ ._~
At a price of $1.38 per ounce for silver, which in this situation .~.~
'7~
1
e...~.
ld not be long in coming, the public would find it profitable to
melt down half dollars, quarters, and dimes for their silver content"
~~~~~.
WJ\~
must have an adequate supply of $1 bills which
turned in for their silver value.
Obviously the public
;iija1i ..It..,. ..
lie
AnCYit must have a
co~stantly
supply of subsidiary coins which are not apt
to be melted
.I
down for their silver value.
.,.,
.~-
~
not allow such a situation to develop.
~i§n:»,y
~
This legislatiQh provides for the most
I
appropriate and practical way to assure a silver supply available
j
~
~
- 13 community, through the commercial banks, will obtain Federal
Reserve notes in the same manner as other Federal Reserve notes are
obtained today.
There are only $2 billion in silver certificates
in circulation, whereas there are over $30 billion of Federal
Reserve notes.
There is no problem involved in substituting one
for the other.
The retirement of silver certificates and their subsequent
replacement with Federal Reserve notes will require the use of gold
as a reserve back of these notes.
However, the 25 per cent gold
J'f J 2
J 4.
reserve needed for this purpose should not ex.cee~ million
~~~
annually.
~
All demand for $2 bills, which is very small, ~ be met by
the issuance of United States notes, just as it is at the present
time.
- 12 -
that can be used for coinage.
Of this amount, over 1 billion
410_ _
5
300 million ounces stand in back of the $1 silver certificates.
,I»<7~ c.l';~ ~Ah.,
4·
Outside of ~demption of silver certificates by the public,
the only other demand for silver from Treasury stocks, other than
coinage, would be silver needed by other Government agencies.
We
have 30 million ounces of free silver which can be used for this
purpose without retiring silver certificates.
This should be suffi-
cient to satisfy the demands of other Government agencies, particularly the defense establishment for the manufacture of certain
equipment, for the next few years.
In view of the fact that silver certificates are a circulating
medium, it must be assumed that over the long run Federal Reserve
notes will have to be issued in their place.up,. Lab!
c~~,c
~ DOt
~
a
:-- ;:'>~f
74&,Ys
s
1.
tI
'3.--.
7ft ·J.~~~,~e./~"
transaction to ~e aQ~14shed by the ~eaotirY.
If,
~~
because of retirement of silver certificates, Federal Reserve notes
are required to carry on the business of the country, the business
;',* ';_.
used $5 silver certificate is turned in, it is
~
~
retired thus freeing the silver behind it for use in coinage.
never an additional $5 bill is needed in the currency, it is
called for by the banking system from the Federal Reserve and a
new $5 Federal Reserve note is issued.
However, at present, the
Federal Reserve Banks are not authorized to issue $1 notes and,
therefore, there is no such replacement available if $1 silver
certificates were to be retired.
Thus, it is vitally important
that Congress authorize the issuance of $1 Federal Reserve notes
so as to provide in an orderly way for handling of our future
-;xR~~ ~ a-I #/ #--iz&6
IiIi •
be
I
uts •
The withdrawal of silver certificates and the use of silver
back of them for coinage will be gradual.
We estimate that not over
$105 million of silver certificates a year will need to be redeemed
in order to obtain the silVer needed for coinage.
Today, we have
over 1,600,000,000 ounces of silver back of silver certificates
- 10 -
is no longer operative because the market price is at present
$1.2~.
J-x-fod':~~~~~_~~
The provision permitting sales by the Treasury under this Act is ngt"/ ~
.-'
operative because the free stocks of silver in
th:
\~~/~
Treasury are -~
almost exhausted, and the President has stopped sales.
6t <r/1I!:
~iS
(;1
legislation proposes to repeal the Silver PUrchase Act of
June 19, 1934, and the Acts of July 6, 1939, and July 31, 1946.
This will
~
the Treasury fram purchasing or selling silver,
except that if the market price reaches $l.29-plus, we will have to
honor our legal obligation to redeem in silver any silver certificates presented for redemption.
us;:=:; ,;:
Since November 29, 1961, we have been
ef the
~
-" ZJ&--$-~..-s.c--Q()c:a~~ /
~~~~~~~~~an~d~$~l~O-S~'i~l~v:e:r~c:e:rt;if;;'i~c~a~t~e
coinage of subsidiary COins,
;."a Ii ; is
Will ~I 8 utau
-)
increasing each year,
requirement~
(--- ---)
partly at least as a result of the
ey-growing use of vending
----
~
- 9 silver, plus that purchased as newly mined, comprised only
15.7 per
cent of our gold and silver monetary stocks by early 1942.
Unlike the Acts relating to newly-mined domestic silver, the
Silver Purchase Act of 1934 did not make purchases mandatory but
provided that they should be made only at such times as the Secretary of the Treasury found them to be in the public interest.
Since 1942, no Secretary of the Treasury has deemed it to be in
the public interest to purchase foreign or secondary silver under
this Act.
Today, silver is at a point where
~
curre~r~d~on
is not
sufficient to meet current coinage and industrial demands.
Silver Purchase Act is not operative
~,,.,.~;., ~~ 4f'"e;
be~;usf!' no
'"
purchased under that Act except from other Go
agencies
since 1942.
~-
The July 31 ,
_1-946:
Act, which provides for the mandatory pur-
- 8 were tendered to the Mints, it had to be purchased.
Under these
various Proclamations and the two Acts referred to, 884 million
/1t~--</o/ .71~~.,f_
fine
oun~~ic
silver were purchased, at a value of
$704 million.
The purchase of foreign and secondary silver was effected
under the authority of the Silver Purchase Act of 1934.
The Silver
Purchase Act had for its main purpose the purchase of silver until
that metal should comprise one-four~h o~ t~e_ total gO/l~.z.~~~l%~v~r.A".,t/~1
~
monetary stocks.
Over 2 billion
__
~;fr~ ~ f _~~=~'e::}~
oun~re
purchased under this
Act by the beginning of 1942 at a cost of slightly
-/I / .
~illion.
Moreover, by Executive Order of August 9, 1934, silver was nationalized -- that is, everyone who had silver of at least a certain
fineness in his possession, with certain exceptions, was required
to turn it into the Treasury at a fixed price.
113 million ounces
were turned in under the nationalization order.
Yet all of this
- 1 History Since 1933
shall not attempt to cover the spectacular history of silver
I
prior to 1933.
I
need not tell you that it has been a very contro-
versial subject both from the point of view of monetary theory and
because of the diverse interests of important groups interested in
silver.
Since 1933, laws relating to silver have been of two types,
namely, those relating to newly-mined domestic silver and those
relating to foreign and secondary silver.
Commencing with a Presidential Proclamation on December 21,
C'.£---;.~L~'--t. ~r: .£5
1933, there
.
haS'~~thority ~ purchase
silverf~~~ ,N~ewly-mined
newly-mined domestic
V----O:"J
domestic silver"'" purchased
ry~tH.f
--- - - - - - ,c
under variouS}Proclamations at varying prices from December 31,
i£~-C~~£.~
1933, to 1939 and thereafte~IPursuant to the Act of July 6, 1939,
and subsequently the Act of July 31, 1946.
All the Proclamations
and laws relating to the purchase of newly-mined domestic silver
have been mandatory; that is, if silver meeting the requirements
~<O~....z--~
~ _
_ )',7'.
,~
--.-~
6 -
)~ "".
r&s])l~
market
the purchase acts are inoperative, and indeed
The silverware, jewelry,
and related industries have had to cope as best they could with
these increased costs.
greatly affected.
~
Other industrial and defense users haveAbeen
The legislation we have proposed will presumably
,
.- N/.
~?~,,,,,,"""_.._~~<!'{""'J' ,.""
,~
-,-
~l'/4
-favorable fo~~
.
~;fi:~h;;~ .,.,:sJe=~;,~~'=#.-.-r... 7;!r"S~::e:~'1
result in stabilizing the market price at
~.. '
C
';?'
,~~~~du~ce, ~s.~,_;~ ~~~__~_im~~£l 1 ~F5L~S1
./y,,~P(;"
@FedFRASER