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LIBRARY
ROOM 5025

JAN 7 - 19fi5

TREASURY DEPARTMENT

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L1BRARY
ROOM 5025

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TREI\SURY DEPARTMENT

LIBRARY
pnoM 50~O

JUN 1 5 1972
TREASURY D'EPARTMENT

United States Savings Bonds Issued and Redeemed ThrouGh Au~:ust 196h
(Dollar amounts in millions - rounded and will not necessari~- add to totals)
AmOWit-·-ADio-un·f
%Outstanding
ADlountIssued ];'/ Redeemed 1/ Outstanding 2/ of Amt.Issued

MATURED

12
il7

.24

1,564
6,935
1l,187
12,876
9,800
4,222
3,805
3,820
3,676
3,130
2,703
2,779
3,022
2,892
2,890
2,784
2,547
2,320
2,122
1,981
1,796
1,600
1,375
286
547

273
1,180
1,872
2,346
2,059
1,140
1,252
1,393
1,456
1,347
1,174
1,281
1,599
1,8U
1,958
1,867
1,824
1,909
1,834
1,958
2,156
2,202
2,838
1,639
-16

:14.86
14.54
14.33
15.41
17.27
21.26
24.76
26.72
28.37
30.09
30.28
31.55
34.61
38.51
40.39
40.14
41.73
45.14
46.36
49.71
54.55
57.92
67.36
85.14

133,070

92,718

40,352

30.32

Series H (1952 - Jan. 19$7) ;./ ••
H (Feb. 1957 - 1964) •••••

3,670
6,317

1,543
859

2,128
5,458

57.98
86.40

Total Series H ••••••••••••••••

9,987

2,402

7,586

75.96

Total Series E and H ••••••••••

143,057

95,120

47,938

33.51

Series J and K (1952 - 1957) ••••

3,717

2,2ll

9./ 1,506

40.52

34,395
97,331
131,726

129
49,444
49,573

.37
33.69
27.34

$ 5,003

$ 4,992

Unclassified ••••••••••••••••••

1,837
8,1:14
13,0£0
15,222
il,919
5,361
5,057
5,213
5,132
4,477
3,877
4,060
4,620
4,703
4,848
4,651
4,371
4,229
3,956
3,939
3,952
3,802
4,213
1,925
530

Total Series E ••••••••••••••••

~erics

A-1935 - D-1941 ••••••••••
Series F & G-1941 - 1952 ••••••••

UN¥.ATURED
Series E: 3/

19L! •••••••••••••••••••••
1942 •••••••••••••••••••••

19L3

•••••••••••••••••••••

194.4 •••••••••••••••••••••

19L5 •••••••••••••••••••••
19L6 •••••••••••••••••••••
19L7 •••••••••••••••••••••
1948 •••••••••••••••••••••
1949
1950 •••••••••••••••••••••
0 ••••••••••••••••••••

1951 •••••••••••••••••••••
1952 •••••••••••••••••••••
1953 •••••••••••••••••••••
1954 •••••••••••••••••••••
1955 •••••••••••••••••••••
1956 •••••••••••••••••••••
1957 •••••••••••••••••••••
1958 •••••••••••••••••••••

1959 •••••••••••••••••••••

1960 •••••••••••••••••••••
1961 •••••••••••••••••••••

1962 •••••••••••••••••••••

1963 •••••••••••••••••••••

1964 •••••••••••••••••••••

29,521

34,524
Total matured •••••••
All Series Total unmatured ..... 146,774
Grand Total ••••••••• 181,298
1/ Includes accrued discount.
~ Current redemption value.
At option of owner bonds may be held and
will earn interest for additional periods
after original maturity dates.
4/ Includes matured bonds which have not been
- presented for redemption.

29,403

BUREAU OF THE PUBLIC DEBT

.!Jo

United States Savings Bonds Issued and Redeemed Through August 1964
(Dollar amounts in millions - rounded and will not necessarily add to totals)
.......
- .
":C-Ou tstanding
Amount
Amount
ount
Issued 9IOIi
11 Redeemed !I Outs tanding 21 of Amt.Issued

_._

MATURED

$ 5,003
29,521

$ 4,992
29,403

Unclassified ••••••••••••••••••

1,837
8,111.
13,OW
15,222
ll,919
5,361
5,057
5,213
5,132
4,477
3,877
4,060
4,620
4,703
4,848
4,651
4,371
4,229
3,956
3,939
3,952
3,802
4,213
1,925
530

1,564
6,935
11,187
12,876
9,800
4,222
3,805
3,820
3,676
3,130
2,703
2,779
3,022
2,892
2,890
2,784
2,547
2,320
2,122
1,981
1,796
1,600
1,375
286
547

Total Series E ••••••••••••••••

133,070

92,718

Series H (1952 - Jan. 1957) II ••
H (Feb. 1957 - 1964) •••••

3,670
6,317

Total Series H ••••••••••••••••

Series A-1935 - D-1941

•• e • • • • • • •

Series F & G-1941 - 1952 ••••••••
lJN}IA TURED
Series E:

1941 • ., •••••
1942 •••• a ,

«1 • • • • • • • • • • • • •

•••••••••••••••

19L3 ••••••••••••••••••
19~

0 ••

............. e • • • • • • • •

19L5 .O .....
19L6 •••••••••••••••••••••
1947
1948 ••••.
19L9 o • • • • • e • • • • • • • • • • • • • •
i

•••••••••••••

8 ••••••••••••••••••••

G •••••••••••••••

1950

O.8 ••

•••••••••••••••

1951 e • • • • c •• e • • • • • • • • • • • •
1952 e • •
1953 •••••••••••••••••••••
9 •••• C ••••••••••••

1954

.o~~

1955 •••

.....

••••••••••

Q •••••••••

e •••••••

1956 •••••••••••••••••••••
1957 •••••••••••••••••••••
19$8 •••••••••••••••••••••
1959
1960
1961
1962
1963

••••••••••••• ~ •••••••
•••••••••••••••••••••
•••••••••••• ~ ••••••••
•••••••••••••••••••••
•••••••••••••••••••••

196h •••••••••••••••••••••

.--~

~.,---

12
117

273
1,180
1,872
2,346
2,059
1,140
1,252
1,393
1,456
1,347
1,174
1,281
1,599
1,811
1,958
1,867
1,824
1,909
1,834
1,958
2,156
2,202
2,838
1,639
-16
.

.24

14.86

14.54
14.33

15.4J.

I
I

17.27
21.26
24.76
26.72
28.37
30.09
30.28
31.55
34.61
38.51
40.39
40.14
41.73
45.14
46.36
49.71
54.55
57.92
67.36
85.14

40,352

30.32

1,543
859

2,128
5,458

57.98
86.40

9,987

2,402

7,586

75.96

Total Series E and H ••••••••••

l43,057

95,120

47,938

33.51

Series J and K (1952 - 1957) .~ ••

3,717

2,2ll

'E/ 1,506

40.52

34,395
97,331
131,726

129
49,444
49,573

.37
33.69
27.34

34,524
Total matured •••••••
146,774
All Series Total unmatured •••••
Grand Total ••••••••• 181,298
1/ Includes accrued discount.
~ Current redemption value.
~ At option of owner bonda may be held and
will earn interest for additional periods
after original maturity dates.
4/ Includes matured bonds which have not been
- presented for redemption~

BUREAU OF THE PUBLIC

D~T

FI)a ({ELUSE 1. M..r..w.SPAP~>tS,

ra.ad;l,

AU§!!! Y, 126L.

The i'reU1ll7 Department, announced lut, nen1.nc t.i;at the taders f.)r two serie. of
tnuur,y bill., <)ne aerie. t.o " Aft additl tnal i . . . ot t.i •• bUla tJ.i.f.(fd ::8.;' 7, 1164, and
\.I'. otJ,.. serie. t-o be dated Au~ 6, 1961., 1Ih1ob vent offend on Jill" 2j J WQI'e t) .necl
at, the FlMMral,-_rve Bank. em A~t). Te~ were lIlYl~ ttl'!' ~·.t, -; J, }'IU, J.JO, 01'
t.hereaboute, of )l-4&J bUla And tor t,9'OtJ,O,)O,J fl, OJ' the.....outa, ;).~ 1:"2-d.a.i (lilla.
'n. d4tt.a11a Of t~tfI two Eerie. are as fOUCNIII
A . ~,:"f;Tl
Ct}.ofPFT I'l'IVr i'F r~,
RAN;~;}~

High
Low

Ayera-.

Sxoep\l na one .....,. 01 $2C)j,OOO
'2 peroera or the .-oun\ 01 91....., billa bid tor a1;, t.be 1.. price loIaii 8C.'Clt>:wd
82 peJ"Oeft\ of \be SIIOWIt of 18J-dq bill. bid tor at V. 1.. rric~ "u aoct;' iJt..d
TO!ALfmlD if5 l.'Pl.. I' D r.)~i
ACCLftrVn til ft:,O£RlL RES '-!tV£ DlSTfU ct~ :

""1)

D18tnct.

i08ti'l

flew York

Ptdlarlllpbia

Cleftl.an4
ft1ehJaond

~tJ.anta
Cnl~~o

3\. Louia
Mlnne&p.llla
(anNa C1\;r

Dallu
San r''r&nc:i 800

TOf.A.LS

~41.d For

)],186,000

Aeoep1.e4

26;&1&,&50

I
I

1,S4t,SSl,OOO

810,lall,ooo

28,220,000
2),9)8,000

It,120,OOO
1)",.,000

18,098,000
IS, 2S2, 000

18),~,OOO
lk,~1,OOO

lS,SJ8,OOO

ft,6OI,OOO
Ul,S8t,OOO
26,7l1,0l'X)

lll,m, 000

lS,lit',ooo
)2,68',000
16,''',000
8l,!S}.OOO

S2,cm.161,OOO

81,200,211,000

21,109,000

31.969,000
25,218,000

~11ecl For

i),lTo,m

1,lOS,SS), :JjiJ

01.c~r..ta2
i,

6,q)4"jJQ

':'07 ,)}J,;)OO

e,,~,,);.)

:,47:.,(}}()

.3S,688" ,})

2),[ Lt- J!)()O

I
I

lO,lU" ...;,X)
11,1.»4, JYJ

h,111,;):)J
. ,)27,';)OJ

I
I
I

I
I

168,).,' h
)!,&ah:,.)\})

1,611,

lJ;}

9,~,J})

lO.lS7,

12'1,(-/","), )00

j:j,lh4.i});J
~,,137,;;OO

. "t6,iJ}Q
';), '11'1 ,'j,)I;

I'L
J ~)

'/6,171, 'jJ()

W Sl,lSO,887,'Xx)

::~),).-,41,:),)J

ue,7J.o,

)/. lnoladN $2.33,$42,000 nonoOMpet.1t.1:,. ~ uoep\ed _, t.he ••{;ra.~. price of ?9.Uo
IulwJee $SS,21',OOO nonooapeUt.1" teacI8n ....p. . . at. ~ aYer&;.e ~ric. (j( 1;t:i.186
~
oou,..,on 1Nue or \he . . . ~ ucl tor t.he _ _ - - ' t.avesl'~d, '.he l' '\um •
\be. b1l.b wOt.ll.d prorl_ ,-1alda of 3.SH, tor \.be 91...,. bill., and 3.71 . , tor t.be
18~ billa.
raterut. rat.ea an billa .... quo.... in ..~ or bank diuc;)unt. v1\b
t.he reWra related to') tohe taae aaoua\ ot \be b~ ~ at. l¥iat,rlt~; ratiHlr thaa
U..
inYNted and their ~ in act.ual n~'" of clq.ntl~ted t:) a )6:J-daJ
year. In cont.rut., yields an cer\1t1oate., notu, . . bond8 are CCl\'lfb~,~; in toe....
01 lrrten8t. on tn. -.otmt i.nveated, ad mat. tto. n...... ., da:.'15 n;wai·;l.ne in ..
inM"_' p.ll1rni, ~riod ~,,, t..be actual D.'Iaber ot . a 1D tM perioo, .. it-f! 3e~i-&rlDII1
oa.poundinl i t aore \han one couiY-Jn P4rl?d 18 1Jwol......

•

.aun.

TREASURY DEPARTMENT

FOR RELEASE A. M. NEWSPAPERS,

Tuesday, August 4, 1964.

August 3,

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 addition&1. issue of the bills dated May 1, 1964, and
the other series to be dated August 6, 1964, which vere offered on July 29, were opened
at the Federal Reserve Banks on August 3. Tenders were invited for $1,200,000,000, or
thereabouts, of 91-day bills and for $900,000,000, or thereabouts, of 182-day bills.
The details of the two series are as follows:
RANGE OF ACCEPTED

182-c!ay Treasury bills
91-day Treasury bills
COMPETITIVE BIDS:
:
maturing February 4, 1965
maturing November 5, 1964
Approx. Equiv.
Approx. Equiv.
Price
Price
Annual. Rate
Annual Rate
High
98.192
99.122
3.576%
3.413%
Low
99.116
98.184
3.497%
3.592%
Average
99.118
98.186
3.488% !I
3.588% !I
a/ Excepting o~e tender of $200,000
'12 percent of the amount of 91-day bills bid for at the 10li price was accepted
82 percent of the amount of 182-~ bills bid for at the low price was accepted

··

TOTAL TENDERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:

District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
st. Louis
Minneapolis
Kansas City
Dallas
San Francisco
TOTAlS

'rf. Includes

ApElied For
$ 33,286,000
1,542,551,000
28,220,000
23,938,000

18,098,000

25,252,000
183,902,000
,34,047,000
2l,709,000
32,969,000
25,218,000
111,971,000
$2,081,161,000

Applied For
Acce;eted
$ 20,486,000
$ 13,210,000
810,411,000
1,30,.,,3,000
12,220,000
8,505,000
23,938,000
35,688,000
15,538,000 •
10,111,000
22,608,000
11,054,000
12l,582,000
188,324,000
26,711,OOO
32,844,000
15,149,000
7,637,000
32,689,000 •
9,004,000
16,938,000
10,157,000
81,951,000
li8,740,000
$1,200,221,000 ~ $1,750,887,000

AcceEted
$ 6,434,000
607,330,000
3,478,000
23,888,000
4,lll,000
8,027,000
120,850,000
30,~,000

5,137,000
8,986,000
5,917,000
76,179,000
$900,541, 000 ~

$233,542,000 nonco:npetitive tenders accepted a t the average price of 99.118
Sf. Includes $58,219,000 noncompetitive tenders accepted at the average price of 98.186
~ On a coupon issue of the same length and tor the same amount invested, the return on
these bills would provide yields of 3.,7%, for the 91-day bill., and 3.71%, for the
182-dq 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-dsy
year. In contrast, yields on certificates, notes, md bonds are ccmputed in terms
of interest on the amount invested, and relate the number of days remaj nj ng in an
interest payment period to the actual nUllber of days in the period, with semi-annual
compounding i f more than one coupon period is involved.
D-1301

- 3 -

and exchange tenders will receive equal treatment.

Cash adjustments will be made

for differences betveen 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 aale
or other disposition of the bills, does not have any exemption, as such, and losa
trom 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 My of the possessions of the United states, or by My
local taxing authority.

For purposes of taxation the amount of discount at which

!Teasury 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 ter.ms 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 and forwarded in the special envelopes which will

be supplied by Federal Reserve Banks or Eranches ·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 an incorporated bank or trust company.
Dmnediately after the closing hour, tenders will be opened at the Federal
Reserve Eanks 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 $

less for the additional bills dated
ing until maturity date on
$ lWO or less for the

May ~964

2VO

days remain-

November 12, 1964 ) and noncompetitive tenders for

182 -day bills without stated price from anyone

J6iir)

bidder will be accepted in :f'ull 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 made or completed at the Federal Reserve
Banks on

August

~1964

, in cash or other immediately available funds or

in a like face amount of Treasury bills maturing

Augus~

1964

•

Cash

TREASURY DEPARTMENT
Washington
August 5, 19M

FOR IMMEDIATE RELEASE,

XXXXXUXXXXXXXXf

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! 100.0 •000 , or thereabouts, tor
cash and in exchange for Treasury bills maturing

August 13, 1964

,in the amount

(E9

of $ 2,10ltij4,000 , as tollows:
91 -day bills (to maturity date) to be issued

Iii

in the amount of $ 1, 200

amount ot $

0 '000 , or thereabouts, represent-

ing an additional amount of bills dated
and to mature

.August 13 ,1964

-----=:.-..-(iiO=r'---

May

lib

1964

November 12, 1964 , originally issued in the

900,~000L

' the ,additional and original bills

~an additional $100,086,000 was issued

to be freely interchangeable.
182 -day bills, for $ 900,000,000

July 29, 1964)

,or thereabouts, to be dated

ftff
Augusttiit 1964

, and to mature February(~ 1965

•

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,

tmJ

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

TREASURY DEPARTMENT

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 August 13, 1964, in the amount of
$2,101,434,000, as follows:
91-dav bills (to maturity date) to be issued August 13, 1964,
in the amount of $1,200,000,000, or thereabouts, representing an
additional amount of bills dated May 14, 1964, and to mature
November 12, 1964, originally issued in the amount of $900,452,000,
(an additional $100,086,000 was issued July 29, 1964), the additional
and original bills to be freely interchangeable.
l82-day bills, for $ 900,000,000,
or thereabouts, to be dated
August 13, 1964, and to mature February 11, 1965.
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 Daylight Saving
time, Monday, August 10, 1964.
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.
D - 1302

- 2 -

Irmnediately aftp.( r,he c:lo;~JrjJ; hour, tenders will be opened at
the Federal Reserve Banks and Branches, followinFZ; which public
announcement will be mnde by tt1.e r:l'reasury Departinent of the amount
and price range of accepted bid?, 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 pa~c, and his action in any such respect
shall be final. Subject to these reservations, noncompetitive
tenders for $200,000 or less for the additional bills dated
May 14, 1964,
(91 days remaining until maturit¥ date on
November 12, 1964) and noncompetitive tenders for, 100,000
or lesa 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 August 13, 1964,
in cash or other immediately available funds or in a like face
amount of Treasury bills maturingAugust 13, 1964. Cash and
exchange tenders will receive equal treatment. Cash adjustments
will be made for differences between the par value of maturing
bills accepted in exchange and the issue price of the new bills.
The income derived from Treasury bills, whether interest or
gain from the sale or other disposition of the bills, does not have
any exemption, as such, and loss from the sale or other disposition
of Treasury bills does not have any special treatment, as such,
under the Internal Revenue Code of 1954. The bills are subject to
estate, inheritance, gift or other excise taxes, whether Federal or
State, but are exempt from all taxation now or hereafter imposed on
the principal or interest thereof by any State, or any of the
possessions of the United States, or by any local taxing authority.
For purposes of taxation the amount of discount at which Treasury
bills are originally sold by the United States is considered to be
interest. Under Sections 454 (b) and 1221 (5) of the Internal
Revenue Code of 1954 the amount of discount at which bills issued
hereunder are sold is not considered to accrue until such bills are
sold, redeemed or otherwise disposed of, and such bills are excluded
from consideration as capital assets. Accordingly, the owner of
Treasury bills (other than life insurance companies) issued hereunder
need include in his income tax return only the difference between
the price paid for such bills, whether on original issue or on
subsequent purchase, and the amount actually received either upon
sale or redemption at maturity during the taxable year for which the
return is made, as ordinary gain or loss.
Treasury Department Circular No. 418 (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

TREASURY DEPARTMENT

FOR IMMEDIATE RELEASE

August 5, 1964

RESULTS OF TREASURY'S CASH OFFERING OF 3- 7/ ~ NOTES

Reports received fram the Federal Reserve Banks show that subscriptions
total about $14,818 million for the offering of $4.0 billion, or thereabouts,
of 3-7/8 percent Treasury Notes of Series C-1966, due February 15, 1966.

The total

amount of subscriptions accepted is about $4,032 million.
The Treasury will allot in full, as provided in the offering circular,
about $1,949 million of subSCriptions fran States, political subdivisions or
instrumentalities thereof, public penSion and retirement and other public funds,
international organizations in which the United States holds membership, foreign
central banks and foreign States, Government lDvestment Accounts, and the Federal Reserve Banks, where the subscriber made the required certification of
ownership of securities maturing on August 15, 1964.
On subscriptions received subject to allotment, the Treasury will allot in

full subscriptions up to $100,000 and other subscriptions will be subject to a
15

percent allotment with a minimum allotment of $100,000 per subscription.

Reports received thus far fram the Federal Reserve Banks show that subscriptions subject to allotment total about $7,546 million fran cOIlDllercial banks
for their own account and $5,323 million from all others.
Details by Federal Reserve Districts as to subscriptions and allotments
will be announced when final reports are received from the Federal Reserve Banks.
000

D-1303

- 3 -

he advanced to the position of Assistant Chief Disbursing Officer
in 1947, becoming Chief in 1954.

In 1962 Treasury Secretary

Douglas Dillon conferred upon Mr. Cannon the Department's Exceptional
Service Award in recognition of his outstanding leadership and
service in behalf of the Treasury.

- 2 -

Under Mr. Cannon's leadership, the Division of Disbursement
has pioneered in industry techniques in the discharge of its
duties.

Most of the work in preparing the checks is now done by

electronic equipment Which has resulted in greater efficiency and
lower costs.

During the past ten years the workload of the

Division has increased 76 percent, yet this work is now being
done by

if 2-

percent fewer individuals.

In dollar terms, today's

annual disbursing costs would be almost $6 million morei!nan

~under the methods existing at the time Mr. Cannon took charge.

Mr. Cannon's early government employment included positions
in the Post Office Department, the Department of Agriculture and
Department of Interior.

In 1935 he was appointed Disbursing Officer

in charge of the Treasury's Disbursement Office in Atlanta, Georgia.

r;{/ {
~

I 7' 1./ 0,

years later, in i94i, he joined the central office staff

in washington of the Chief Disbursing Officer of the Treasury where

AU[n1st

1, 1964

Th"~] ATF ~LEASF.

Friday, August 7, 1964

TREASURY DEPARTMENT'S CHIEF
DISBURSING OFFICER RETIRES
Mr. Julian F. Cannon, Chief Disbursing Officer of the
U. S. Treasury Department's Bureau of Accounts, will retire August 31
after more than 41 years of service for the United States Government.
He has been in his present position since July 1954.
Over the last ten years, it is estimated that almost three
billion government checks, made out to Federal employees, and for
.social Security/amfJveterans annuitants and tax refunds along with
the thousands of other individuals and companies doing business with
the government, have been issued under Mr. Cannon's direction.
As Chief Disbursing Officer and head of the Division of
Disbursement, Mr. Cannon has been responsible for disbursing funds
for virtually all civilian executive departments and agencies.

D-

TREASURY DEPARTMENT

IMMEDIATE RELEASE
FRIDAY, AUGUST 7, 1964
TREASURY DEPARTMENT'S CHIEF
DISBURSING OFFICER RETIRES
Mr. Julian F. Cannon, Chief Disbursing Officer of the
Treasury Department, will retire August 31 after more than 41
years of service for the United States Government. He has been
in his present position since July 1954.
Over the last ten years, it is estimated that almost three
billion government checks, made out to Federal employees, and for
Social Security annuitants, veterans and tax refunds along with the
thousands of other individuals and companies doing business with
the government, have been issued under Mr. Cannon's direction.
As Chief Disbursing Officer and head of the Division of Disbursement, Mr. Cannon has been responsible for disbursing funds
for virtually all civilian executive departments and agencies.
Under Mr. Cannon's leadership, the Division of Disbursement
has pioneered in industry techniques in the discharge of its duties.
Most of the work in preparing the checks is now done by electronic
equipment which has resulted in greater efficiency and lower costs.
During the past ten years the workload of the Division has increased
76 percent, yet this work is now being done by 42 percent fewer
individuals. In dollar terms, today's annual disbursing costs would
be almost $6 million more under the methods existing at the time Mr.
Cannon took charge.

Mr. Cannon's early government employment included positions in
the Post Office Department, the Department of Agriculture and Department of Interior. In 1935 he was appointed Disbursing Officer in
charge of the Treasury's Disbursement Office in Atlanta, Georgia.
Five years later, in 1940, he joined the central office staff
in Washington of the Chief Disbursing Officer of the Treasury where
he advanced to the position of Assistant Chief Disbursing Officer in
1947, becoming Chief in 1954. In 1962 Treasury Secretary Douglas
Dillon conferred upon Mr. Cannon the Department's Exceptional Service
Award in recognition of his outstanding leadership and service in
behalf of the Treasury.
D-1304

000

- 2 -

areas for production.
Other proj ects compatible 'with short-term measures called for
by tt.;;; stabilization program of th~ ~~-::l:l:r!ic ..::.n Government are being

studied..

These proj ects will bE; L . l~T ::;r~(:d as the studies are completed

and in coordination

~11

the stabili .:,J.:dor~ effort.

At the same time, United

St~tes tcchr.ical assistance is bein;; incrcasGd to com.plement current and

future cevelopment programs in tha Dominican Republic.
The stabilization effort will be reflected principally in greater
austerity affecting virtually all the Don1inican people.

sacrifices pave the way for

achievi~J

As such internal

ne\v financial stability, United States

and other external funds can help support DOIT.dnican investment for developmente That investment will in the long run form. the basis of sound economic
growth and steady improvement in the standard of living and well being of all

Dominicans.
The U. S. agreements with the Donunican Republic supplement the
resources available to the Dominican Republic under a $25 million stand-by
arrangc~nent

announced by the International l'vlonetary Fund on August 5, 1964.

The exchange agreement with the U. S. Treasury is effective for a one
year period.
~::e~J..:.,;,;~ic

It, like the AID loan, is designed to assist the Dominican

in its efforts to promote economic stability and freedom in its trade

2.nd exchange system and to restore full convertibility of the peso.
JSBradshaw:fls - 8/6/64

Clearance: R. Eo Lippincott - CAR (draft)
~\lIr. Costanzo - Treasury (draft)

Also announced by the
U. S. Bmbassy in
S~~,j Domingo

~j/.'
"

)

~'~!( ~~

---_

/ZLV 1/ ~f-'("/
1

,. :'"

(f~_Lr~fL'

The United States today announced that it is concluding a $10 .. 259, 000
program of assistance for the Doluinican Republic. This includes a $6,250,000
exchange agreement with the U. So Treasury and a $4 .. 000. 000 loan from the
Agency for International Development.
The assistance is being made in support of the financial stabilization
program being undertaken by the DOlninicaa Government to provide a sound
..'oundation for economic and social development of the country.
In addition .. the Embassy and the Dominican Government are currently
reviewing various proj ects which will further the program of the Dominican
Government to achieve for the Dominican people .. under the Alliance for
Progress, the long range goals of the Charter of Punta del Este.
Among projects under study are those aimed at

~reased

and more

varied agricultural production; accelerated agrarian settlement; broadened
and improved educational opportur!ities for the people at large; promotion
of private industry, particularly in the processing and distribution of
2.C:;.... icultural

products; and expansion of the road network to open up new

TREASURY DEPARTMENT
FOR RELEASE A. M. NEWSPAPERS,
Tuesday, August 11, 1964

August 10, 1964

The United States today announced that it is concluding a
$10,250,000 program of assistance for the Dominican Republic. This
includes a $6,250,000 exchange agreement with the U. S. Treasury and
a $4,000,000 loan from the Agency for International Development.
The assistance is being made in support of the financial
stabilization program being undertaken by the Dominican Government to
provide a sound foundation for economic and social development of the
country.
In addition, the Embassy and the Dominican Government are currently
reviewing various projects which will further the program of the
Dominican Government to achieve for the Dominican people, under the
Alliance for Progress, the long range goals of the Charter of Punta
del Este.
Among projects under study are those aimed at increased and more
varied agricultural production; accelerated agrarian settlement;
broadened and improved educational opportunities for the people at
large; promotion of private industry, particularly in the processing
and distribution of agricultural products; and expansion of the road
network to open up new areas for production.
Other projects compatible with short-term measures called for by
the stabilization program of the Dominican Government are being
studied. These projects will be implemented as the studies are completed and in coordination with the stabilization effort. At the same
time, United States technical assistance is being increased to complement
current and future development programs in the Dominican Republic.
The stabilization effort will be reflected principally in greater
austerity affecting virtually all the Dominican people. As such
internal sacrifices pave the way for achieving new financial stability,
United States and other external funds can help support Dominican
investment for development. That investment will in the long run form
the basis of sound economic growth and steady improvement in the
standard of living and well being of all Dominicans.
The U. S. agreements with the Dominican Republic supplement the
resources available to the Dominican Republic under a $25 million
(OVER)

- 2 -

stand-by arrangment announced by the International Monetary Fund on
August 5, 1964.
The exchange agreement with the U. S. Treasury is effective for
a one year period. It, like the AID loan, is designed to assist the
Dominican Republic in its efforts to promote economic stability and
freedom in its trade and exchange system and to restore full convertibility of the peso.
000

FJ ~ CAl. St RVl'~; E

OFFICE OF
FISCAL lIS ST. SECRE TAln

1964 AUG 5

4M 9 52
I

1REASUf1Y O,EPART:MENl

TREASURY DEPARTMENT

August 10, 1964

FOR IMMEDIATE REIEASE
TREASURY MARKET TRANSACTIONS IN JULY

During July 1964, 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 $28,679,000.00.

000

D-13 05

TREASURY DEPARTMENT

Aurust 10, 1961!

FOR IHMEDIATE REIEASE
TREASURY MARKET TRANSACTIONS IN JULY

During July

1964, market transactions in

direct and guaranteed securities of the government for Treasury investment and other accounts
resulted irl net purchases by the Treas ury Department of

~28,679,OOO.OO.

000

FOR

r~;A::.E

A.. Y. ?i7 ...'SPA?:',iS,

tueadq•. Auzuat 11, 1964.

Th. TreUUl"'Y :epartaent announced lot eventnl t.bat tJ:Ma ........ tor

we ....s. "

rr.uU!'7 b 111, ~,_ aeriee to be an additional. 1. . . of the bU~ claiM -.r 14, ~ ...
Ule other aeri•• to be dat.d AuitUR 13, 1964, which were oft.... d . . b&U' S, ........
at t.he t'ederal tieHrt'e danlw on AU¥.,1IR 10. Tendera . . . 1.rrY1W t . I1I~UO,OOO,oao. •
t.henabout.a, of 91-daj billa and for S900,;)XJ,OOJ, or ~abcNta. of lIZ..., bUla.
The details of t.he two series are u follows,
J(l,?j'1E JF
C);1~p·

A(~C1;'F"l"·.D

rn'IV,::

~TrlS,

H11&h
I,ov
Avera.:;e

aI ~xceptlng one tender ~r $)OO,aooJ b/ Except-1ft ::me t.eDder or $200,()':)()
f9 percent or t.he aount ot }l-day bUla bicl tor at \be 1. . prioe . . . . ." ••
Sh ~roent 0' the aaount 01 182-day bUla bid tor at \be 1. . priee . . . . ..,...
MAL 1ENnFRS

APr'U~;~n

~r10t,

§OriOii
New YOI'k
PhUadelphia
Cln.laDd

ACC:'P1~~D

AepUed 1m

4),489,000

1,4B7, 775,000

JJ,l,65,i)')O
2S,tJ.87,{XX)

l1ob11oftd

14,)98,000

A\1anta

:37,7:;4, "::;0
174, 729,JI}.)

Cb1M&o
5\. Lou1a
MiDnHpo118
bMu G1t.J

~l..

Sail 'ftnCUcO

!I
d/

FOR AWD

34. 318, ':J(}j
2lt, 1I~6,t)OO

Err FEIWUCAL f'.t., Rllt OleTIUCTS.

Aooeeted
$

• !pElted,..

21,28',000 • $
4,S66,YJO
1,26),1&2$, }f)O
19,84S,ooo'
9,))U,().)O

76),S4~,ooo.

2S,88T ,000'
14,)98,000 J
)),872,000 I
1)6,114,000 t
26,698~OOO:

llh,229,·)(Y)
2,·J02,;):)O
l),924,~.)()

12).294,000

19,926,000

I
I

32,499,'JQO

)2,228,000
24,879,000

8,/)6,000
6,42),000
10,949. ,00

155,6.01, ),})

73,491,000

I
J

9,J6!f,OOO
lOO,lO?tOOO

:n,Jb3,J,})
~.2,.>91 ,)4L , JO'J

l!!!I'!J
4,414,.

61f'),16S._

4,3)4,_
.)9,119,2,001,_

10.'14,_
60,77Jt,-

1,001,.
4,91),-

10,M,"

p,aoo..

8,""-

$l,2\):),172,()X) ':/ 'li,596,.r;.l,00'J
$900,8",,Yaellidea .5251,;12,,)00 ~petit.1-vt-t6n era accepted at. the . . . . . . prlee or " ..
r"cludea '62, nB,())() noncOMpetit1ve ten"Jd"S accept,ecl at. the a....ace prlu of
On a eo.pOll i8sue of W. ~- lGagt,b aDd tor the--.. .ouA\ iDY..te4, the n .....
ton.. biU. vould pronde yields of ).59;, for ,~ 91-day blU_, and ).1)~, f . tilt
182-day billfJ .n~:,.. t rates on hUls are quClkd iD \enu of bank:
t.n. ,..turn related to the lace _out of tt. bUll PIl1&l~le a1. aatur1 t.y raUiu . . .
\he ..ount iDTe.t.ed and the1r l:DCt.h in act.ul D_~'.r of dip Nla\ed iO a ",...
In eonl.rUt, yi.1da on oerUf1oa\u, not.4!tl, and bon • an .apu\ed 18 __
of 1.at,erut. :Xl tJle ~0Uftt. tllT.ned, a..'td nlat.e the maber of ..,. r.1''''DIl ia •
iAteJ . .t pa,.'llleDt period to the aotual mat«" of' day_ ill the period, ldtJ2 •••1a."lnual o_pOWldiD 1;' RlO!"e than on. CCN on period i . 1nvolvtMt.
T7l'AW

".i'

a .........

re....

TREASUR~i

DEPARTMENT

FOR RELEASE A. M• NEWSPAPERS,
Tuesday, August 11, 1964.

August 10,

RF.3ULTS OF TREASURY f S T,iEEKLY BILL OJ:<"'FERING

The Treasury Department aTmounced last, \?vening that the tenders for two series of
Treasury bUls, one series to be an additional issue of the bills dated May 14, 1964, and
the other series to be dated August 13, 1964, which were offered on August 5, were opened
at the Federal. Reserve Banks on August 10. Tenders were invited for $1,200,000,000, or
thereabouts, of 91-day bills and for $900,000,000, or thereabouts, of 182-day bills.
The details of the two series are as follOl.Ts:
RANGE OF ACCEPTED
COMPETI'fIVE BIDS:

High
Low
Average

91-day Treasury bills
November 12, 1964
Approx. Equiv.
Price
Annual Rate
3.489%
99.118 ~
99.111
3 •.S17%
99.113
3.. 510%

maturin~

182-d~ Treasury bills
maturing February il, 1965
Approx. Equiv •
Price
Annual Rate
3.588%
98.186
3.620%
98.170
98.174
3.611%

'EI

a/ Excepting one tender of $300,000; bl Excepting one tender of $200,000
percent of the amount of 91-day bitls bid for at the low price was accepted
54 percent of the amount of 182-day bills bid for at the low price was accepted
TOTAL TENDERS APPL~D FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:

District
Ap'p1i,~d F~
Acce1?,ted
: Applied For
Accepted
Boston
$
43,h89,OOO $
27,289,000
$
4,566,000 $ 4,414,000
New York
1,487,175,000
163,545,000
1,263,425,000
616,165,000
Philadelphia
3J,46S,000
19,845,000
9,334,000
4,334,000
Cleveland
25,F)87,()OO
2),H87,OOO
44,229,000
39,229,000
Richmond
14,398,1)00
14,398,000
2,002,000
2,002,000
Atlanta
37, 7f:;h,c)OO
33 1 872,000
13,924,000
10,924,000
Chicago
J.71~,729,IJOO
136 1 '111,000
123,294,000
60,774.000
St. Louis
34,318,000
2~J698,ooo
8,738,000
7,008,000
Minneapolis
24,046,1)00
19,926,000
6,423,000
4,923,000
Kansas City
33,383,000
32,~28,OOO
10,949,000
10,949,000
Dallas
32 ,h.99 , 000
2LI ,879,000
9,369,000
8,909,000
San Francisco
155,601,IJOO
73,.491.0~O
100,100,000
71,200,000
TOTALS
$2,091,34h,I)OO $,1,20),,'172,000
~1,596,353,OOO $900,891,000 ry
:/ Includes $257,912,000 noncompet.itive +.uckrrs ar.cepted at the average price of 99.113
d/ Includes $62, 718,000 noncompet i tiVp +,(," I ~1.f"'i''3 Flc::p.pted at the average price of 98.174
i/ On a coupon issue of the same 1en~h m1 j x'or the same amount invesljed, the return on
- these bills would provide yields of 3.59;;,for the 9l-day bills, and 3.73%, for the
l82-~ bills. Interest rates on bills ~-e quoted in terms of bank discount with
the return related to the face amollnt of the bills payable at maturity rather than
the amount invested and their 1 ~ngth in actual number of days related to a 360-day
year. In contrast, yields on certifi~at.P'8, notes, and bonds are computed in terns
of interest on the amo1U1t in"ITested, and rela.te the number of days remaining in an
interest payment period to th~ actnal mImb~r of days in the period, with semiannual compoundinr; if more t.han one c(n!~:J""~ period is involved.

9.1

D-1306

TREASURY DEPARTMENT
STATEMENT OF THE HONORABLE DOUGLAS DILLON
SECRETARY OF THE TREASURY
BEFORE THE
COMMITTEE ON BANKING AND CURRENCY
OF THE HOUSE OF REPRESENTATIVES
(SUBCOMMITTEE ON INTERNATIONAL FINANCE)
AUGUST 11, 1964, lO~OO A.M.
Mr. Chairman and Members of the Committee:
I am happy to appear before you today in connection with the
participation of the United States in the proposed exoansion of
the Fund for Special Operations (FSO) of the Inter-American
Development Bank (IDB).

This represents another important step

forward in United States support for the Bank -- and for the
Alliance for Progress.
The legislation before you would authorize the Secretary of
the Treasury as U. S. Governor of the IDB to vote in favor of an
increase equivalent to $900 million in the resources of the FSO
and would authorize the appropriation without fiscal year limitation of $750 million as the U. S. share of this increase.

The

payments would be made in three annual installments, of $250 million
each, in fiscal 1965, 1966 and 1967, and would be in the form of
non-interest bearing notes rather than cash.

Separate appropriation

legislation would be sought for each yearrs payments.

The

- 2 -

Latin American members of tIle IDB would contribute $1)0 million
a year in their own currencies.

The proposal would be effective

when approved by 14 countries with total contributions amounti.ng
to the equivalent of $860 million.
Increased U. S. participation in the FSO under this proposal
would be in lieu of any further contributions to the Social
Progress Trust Fund.
The National Advisory Council on International Monetary and
Financial Problems has considered this proposal and has issued
a Special Report strongly recommending Congressional approval.
Copies of the Report are before you.
Background of the Proposal
I would like to recall briefly, Mr. Chairman, the history
and structure of the Inter-American Develooment Bank and the
scope of the United States' participa.tion in this institut ion
and its activities.

The IDB came into legal existence on

December 30, 1959 and began operations in the fall of 1960.

Even

though the IDB was established prior to the Act of Bogota and
the Charter of Punta del Este, it has become the key link in
the emerging pattern of close cooperation between the United States

- 3 -

and the Latin American republ ics.

It is "the B;:mk of the

Alliance" and is clearly fulfilling this role with grc:>at success.
As the nrincipal financial institution of the Inter-American
system, the lDB constitutes one of the most essential operating
elements of our concerted drive toward economic and social
develooment in Latin America.

All of the countries of Latin

America are members of the IDB, w'ith the sole exception of
Cuha, which is no longer eljgible to join.
The Bank has up to nm.., carried on its financi.ng operations
through three "windows."

The first of these, Ordinary Capital,

provides development funds on conventional terms in mud", tl"e
Same manner as the Horlel Bank.

It commenced operations wi tll

governmental subscriptions but now obtains its funds from
private financial mar-kets in the same manner as does the Horld Bank.
The second "window" of the Bank is its Fund for Special Operations,
designed to offer financing where, for halance of paymeri: s or
other reasons

lending on conventional terms is not aopropriate.

The FSO's loans on easy repayment terms ar-e made entirely from
resources provided by the Unitec1 States and the Latin America.n
members of the Bank.
acted

rlS

In addition, since mid-l96l the Bank has

Administrator of the Social Progress Trust Fund (SPTF),

23
- 4 -

which amounts to $525 mi.llion, all of which has been provided
by the United States.

Loans from the SPTF are repayable on

easy terms and are made for four important areas of social
development - - water supply and sanitation, advanced edtlcation,
housing, and land settlement and improved land use.
It is with the second of these windows, the Fund for
Special Operations, that we are concerned today.

The initial

resources of the FSO amounted to $146 million, of which the
United States provided $100 million and the Latin American
countries provided $46 mi 11 ion.

La.st year, as lin interim

measure, the member governments agreed on a $73 million increase
in FSO resources, $50 million from the United States and

$23 million from the Latin American members.

Thus the total

resources of the FSO now amount to $219 million, of which the
United States has contributed $150 million.

Payment of these

contributions by memhers was made one-half in U. S. dollars
and one-half in national currency -- which i.n our case meant
that our entir2 contribution was in dollars.

All installments

have been fully paid by all member countries.
By July 31, 1964, $136 million of FSO resources had been
committed for loans and technical assistance.

Further, the

- 5 -

management of the Bank estimates that the remainder of the Fund's
resources, approximately $85 million, will be fully committed
by the spring of next year.

By July 31, 1964 only $114 million

remained uncommitted in the SPTF and it is also expected to
be fully committed in the near future.
Reasons for the Proposal
After approximately two years of operations with its three
windows, the IDB's Board of Governors concluded that the Bank
had reached a point in its development at which it would be
appropriate to consider the simplification and strengthening of
its structure.

Moreover, it was evident that the scope and

importance of the financing operations carried on by the Bank
on an easy repayment basis would soon require major additions to the
amount of capital available for these purposes.

Accordingly, at

the Fourth Annual Meeting in Caracas, Venezuela, in April 1963,
the Governors asked the Executive Directors to prepare a study
of the future relationships of the FSO to other activities of
the Bank and of the sufficiency of the Fund's resources.
At the Annual Meeting held in Panama this past April, the
Executive Directors reported to the Governors recommending
an expansion of the resources of the FSO and a broadening of its

- 6 -

functions to include those previously carried on by the SPTF.
T':le recommendation assumed that, concurrent with the expansion of
the FSO, the United States would discontinue further contrihutions
to the SPTF.
this ,.,7Ou1el

I have made it clear to the other Governors that
n fact be the case.

Thus, the B.qnk' s existing

three windows would be reduced to two.

One -- the Orclinary

Capital, obtaining its funds in the private capital mRrkets -- wovld
make loans on

conv~ntional

repayment terms; the other -- the FSO,

obtaining its funds from member contributions -on easy repayment terms.

t~ould

make loans

This arrangement would be quite similar

to that of the :,lorld Bank and IDA.
The advantage of such a consolidation of functions within
the Bank is readily apparent.
and economical.

Administration

t~ill

be more efficient

The 1)attern
of loan terms offered bv the Bank
,
~

will be more uniform, and the countries borrowing from the Bank
t"ill find that loan procedures are simpler and more understandable.
From the United States point of view, the expansion of the FSO
to include the functions of the SPTF -- and the termination of
further contributions to the SPTF -- means that ftmcls hitherto
provided entirely by the United States will hereafter be provided

28
- 7 -

in part by the Latin American countries.
Under the proposal of the Executive Directors, which the
B8nk's Governors have unanimously referred to their governments
for appropriate legislative action, the member governments
of the Bank would contri.bute $300 million per year to the FSO
in their own national currencies in each of the fiscal years
1966, 1967, and 1968.

The United States share of this annual

contribution would be $250 million, all payable in non-interest
bearinp notes which would not be cashed until the Bank required
the funds for disbursements.

The Latin American members of the

Bank would contribute $50 mi1li.on each year i.n their own national
currencies.
For comparison purposes the combined totals of past contributions to the FSO and SPTF have been as follows (in millions of
dollars} 7
Calendar Year
1961-62
1963
1964

United States

Other Countries

$494

$46

181

1961 and 1962 are lumped together since the United States
made a contribution of $394 million to the SPTF in 1961 with the
understandj.ng that it would cover both 1961 and 1962.

Contri.butions

that had originally been planned for 1963 were actually approved by
the Congress -- and the resources made available to the Bank -- in
January 1964.

- 8 From these totals it can be seen that the $250 million
annual contribution proposed for the United S.tates closely
approximates our annual contributions in 1961 and 1962 and
exceeds our 1964 contribution by 38%.

On the other hand, the

contributions by the Latin American countries will be
considerably more than twice their previous annual contributions.
In considering the need for funds to be lent on easy
repayment terms, the Bank's Board of Executive Directors has
taken account of Latin America's minimum needs for external
funds to implement the Charter of Punta del Este, of the
development programs which have been prepared by individual
countries, of the magnitude and types of loan applicati.ons and
inquiries made to the Bank, and of the Bank's capacity for
processing loan applications and controlling disbursements.
The Bank has also taken account of the balance-of-payments
and external debt problems of Latin America and the continuing
need -- as borne out by the experience of other lending
institutions -- for credit on special terms such as can be
offered by the FSO.

Taking account of these varied considerations,

the Bank regards a lending level equivalent to $300 million a
year, for loans on easy repayment terms, as desirable and

- 9 -

feasible in order for it to meet its minimum responsibilities
under the Alliance for Progress.
With the combined availabilities of the FSO and the SPTF
the Bank succeeded in achieving almost a $250 million annual
lending rate in the year 1962.

With the resources now being

proposed, the Bank will be able to reach and to maintain a
slightly higher lending level.

Moreover, with the assured

availability of funds for a three-year period, the Bank will
be able to avoid sharp year to year variations in the level
of lending -- such as have occurred over the past few years
because of uncertainties in the timing and amount of new
funds provided to the FSO and SPTF.

Loans from the two funds

aggregated $164 million in 1961, rose to $246 million in 1962,
and then fell to $80 million in 1963.

It seems clear that

the efficiency of the Bank's operations and its relationships
with borrowers would be greatly improved by the approval of
the three-year program now proposed.
Proposed Operations of the Expanded FSO
The operations of the expanded FSO will follow closely
many of the patterns and practices successfully established
in the past by the separate operations of the FSO and the SPTF.

- 10 The expa.nded FSO will continue to provide essentia 1 financial
assistance for high-priority development projects in the
economies of the Latin American members of the lOB.

The type

of projects which will be financed include -- in addition to
such basic projects as roa.ds, dams, water facilities and
industrial development projects -- programs in the fields of
low-income housing, improved land utilization, land settlement
schemes, and agricultural credit programs.

It is also expected

that the Bank through the FSO will furnish assistance for the
expansion of higher education facilities in La.ti.n America by
making loans to provide for the construction and equipment of
facilities at universities and technical institutions.

These

loans will provide training in the technical and managerial
skills so desperately needed if Latin America is to achieve
meaningful development of its society and resources.

Technical

assistance loans and the financing of studies of basic sectors
of the economy will also be provided.
In its administration of the proposed expanded FSO, the
Bank will continue to take into account the institutional
improvements which the borrowing country is undertaking, the
specific steps initiated to achieve the success of the project

- 11 -

proposed for financial assistance from the FSO, the extent to
which local contributions are made available for financing
the project, and, lastly but perhaps most important of all,
Mr. Chairman, the extent and effectiveness of the over-all
self-help practices of the borrower in conformity with the
principles established by the Charter of Punta del Este.
Through new institutional arrangements in the

B~nk,

senior official will advise the President of the Bank on the
formulation and review of development objectives, policies, plans
and programs.

This official -- who will be a United States

citizen -- and his staff will serve as the Bank's liaison with
the Inter-American Alliance for Progress Committee (ClAP), the
important new organ of Inter-American economic cooperation.
This advisory office will coordinate the effective programming
of the Bank's resources, and maintain close contact with other
sources of foreign capital, including our own AID administration.
The Bank's efforts to program its resources to achieve maximum
results will be greatly assisted by the assured availability of
funds for a three-year period, as now proposed.
Turning now, Mr. Chairman, to questions of operational
procedure, there are two matters I would like to review briefly

- 12 with you.
FSO.

First, the question of loan terms for the expanded

The Resolution to be voted on by the Board of Governors

of the IDB does not specifically state the terms on which
future loans from the expanded FSO are to be made.

The

Resolution states, however, that the Board of Executive
Directors of the IDB "in establishing financing policies :fOr
the (FSO) shall take into consideration the policies which
have guided the operations of the Social Progress Trust Fund."
I expect, therefore, that policy on loan terms would be

generally comparable to present policies for the FSO and the
SPTF.
On loans made by the SPTF interest rates of from 2 to
3-1/2 percent have been applicable, depending upon the nature
of the project.

Maturities have been from 20 to 30 years

including a grace period with repayment of principal and
interest in the currency of the borrower, but with provision
for maintenance of value and with optional payment in U.S.
dollars.

The interest rates I have mentioned include a 3/4

percent per annum service charge which is payable in U.S.
dollars.

FSO loans have been made on basically similar terms

although the interest rate has usually been 4 percent and there

- 13 is no separate service charge.

Some loans made by the FSO

have required payment of amortization and interest in the
currencies lent.
The second matter I wish to review is the question of
procurement policy.
~1ave

Previous U.S. contributions to the FSO

been available for world-wide procurement, while U. S.

contributions to the SPTF were available only for U.S.
procurement or procurement in other member countries of the
IDB.

Under this new proposal, the U.S. contribution to the

expanded FSO will be available on the same basis as the SPTF
procurement in the past, that is, only for the purchase of
goods and services in the United States or from the country of
the borrOlver; or in some cases, from other member countries of
tl1e Bank if such a transaction would be advantageous to the
borrower.

On the basis of past experience with the SPTF this

would mean that well over 80 percent of future U.S. contributions
to an expanded FSO would be utilized to finance U.S. exports.
Effect of Proposal on the U.S. Balance of Payments
This leads us directly to the matter of the effect of
this proposal upon the balance-of-payments position of the
United States.

As I have indicated earlier, the entire U.S.

33
- 14 contribution to the expanded resources of the FSO will be in
the form of non-interest bearing notes rather than cash and
consequently will have no immediate impact upon our balance
of payments.

These notes will only be encashed later by the

Bank as funds are required for disbursement.

Consequently,

the balance-of-payments impa.ct of these tra.nsactions will not
be reflected in our international accounts until the cash is
paid over to the Bank -- well after the funds have been
appropriated.

And when the balance-of-payments effect is

felt, the fact that over 80 percent of the expenditures from
the FSO will be ma.de in the United States will mean that the
impact of our contribution will be minimal.
Relationship to U.S. Bilateral Aid Policies
Both the manner in which the proposed contribution to
the expanded FSO will be utilized, and the over-all policies
of the 'IDB are fully in accord with the major policy guidelines
established by Congress for the U.S. bilateral aid program.
The availability of funds in the expanded FSO for the furtherance
of Alliance objectives will be fully taken into account in
the preparation of U.S. bilateral economic assistance programs
to Latin American nations, as is the availa.bility of funds from
other international lending agencies.

No funds to be provided

- 15 -

to the expanded FSO will be available to Communist bloc
countries, as membership in the lOB is limited to Latin
American nations, and Cuba has never joined the Bank and is
no longer eligible for membership.

1Vith respect to the

expropriation of private property without compensation, it
should be noted that in no case has it been necessary to invoke
the "Hicken looper Amendment" in Latin America requiring the
suspension of U.S. assistance.

If circumstances should arise

requiring such measures by the United States, parallel action
could easily be taken in the Fund for Special Operations,
since the U.S. vote of 42 percent is necessary to obtain the
two-thirds majority that is required for favorable consideration
of any loan made by the Fund for Special Operations.
Proposed Legislative Action
The proposed legislation for which favorable committee
action is requested would:

(1) authorize the Secretary of

the Treasury as U.S. Governor of the lDB to vote in favor of
the Resolution calling for a $900 million increase in the
resources of the FSO and, upon adoption of the Resolution by
the Board of Governor s, to a,gree on beha1 f of the United
States to a subscription of $750 million in accordance with
the terms of the Resolution, (2) authorize the appropriation

... 16 ...
without fiscal year limitation of $750 million, and (3) delete
certain technical provisions in the existing language which
limi.t the total of non-interest bearing notes which may be
issued to the total of previous subscriptions and contributions
to the Ordinary Capital and the FSO.

This last action will

permit substitution of notes for the full amount to be
authorized under the proposed increase.
The Governors of the IDB contemplated that action would
be taken by members by December 31, 1964, although the Executive
Di.rectors are authorized to extend the timetable as necessary.
The need for the first installment of $250 million was taken
into account in formulating the current budget and a formal
appropriation request will be submitted upon approval by
Congress of the authorizing legislation.

Two further annual

requests will be made in the normal manner for fiscal 1966 and
1967.

Conclusion
In conclusion, Mr. Chairman, I would 1i.ke to reiterate
that the Inter-American Development Bank is a vital part of
the financial structure of the Alliance for Progress.

Therefore,

it is most important that the Bank have not only adequate resources,
but also the structure most suitable to accomplish the tasks

-17 facing it.

The administrative advantages of simplifying the

Bank's structure through consolidation of the operations of
the FSO and the SPTF are clear.

The bounda.ries between lend-

ing for social development a.nd lending for economic development
are indistinguishable and, therefore, provide no reason to
continue the maintenance of separate financing sources 'vlLich
are inseparable in practice.
The FSO's resources will be exhausted in early 1965 and
are in need of replenishment.
also nearing exhaustion.

The resources of the SPTF are

This provides a desirable opportunity

to terminate further contributions to the Social Progress Trust
Fund and to make future contributions only to an expanded Fund
for Special Operations.

The proposed U.S. contribution of

$250 million per year for the

t~lree

years 1965, 1966 and 1967

will permit the Inter-American Development Bank to finance
a level of lending on easy repayment terms which is appropriate
to fulfill Alliance objectives and necessary if these objectives
are to be met.
I urge that you act favorably on this bill.
Thank you, Mr. Chairman.

- 2 -

T,-.'o other coin presses, previous 1)' owned by the

~1int,

have been reacquired.

They have been recondi tj oned and ''iill be making coins this 1110nth at Denver.
In December, proof coin production in Philadelphia will cease and the
presses, space and personnel of that operation I'd 11 be used in regular coin
production.
Conzress 11a5 no\'l ::tpproved funds to keep both
7-day \",eek schedule.

Funds for the nel",

have also been approved by Congress.

~'int

~'ints

on a

24-i~our

in Philac1elphia, $16,500,000,

Land has been set aside and the

General Services Administration is rushing

day 1

~) lans

for construction.

August 11.. 19 64
FOR RELEASE A.M. NEWSPAPErs

Wednesday, August 12, 1964
COIN PFODUCTION UP

71 rEHCENT

The Treasury Department today reported the first month's results
of its~a~program to double coin production during the current fiscal
year.
In July, the two Mints in Philadelphia and Denver turned out 458.4
million coins -- 71% higher than the same month last year.

Production of

quarters was 165% higher.

Dime production rose 26j%.

Still larger increases are expected this fall.

The Denver and

Philadelphia Mints are converting to additional coin press

operations~

space and facilities formerly used for production of nickel and bronze "strip".
The latter materials are now being bought from private industry.
Space in the San Francisco Mint building, which was closed as a coinage
Mint in 1955, is being cleared for the production of nickel and bronze ''blanks''
ready for final stamping into nickels and cents at the Denver Mint.
Facilities of the Frankford Arsenal in Philadelphia are being utilized
to anneal and clean coin blanks for the Philadelphia Mint.
The Mint presently has 60 coin presses.

This number will be doubled by

early next year.
Eleven new coin presses are being built and will begin producing coins
in November at both Mints.
Bids to furnish still another 15 coin presses have been received and
orders will be placed this week for delivery beginning in January 1965.
Sixteen surplus presses, formerly used by the Department of Defense to
manufacture ammunition, are being converted to coin production.

The first

of these will be installed and operating in October, and the rest in November.

TREASURY DEPARTMENT
FOR RELEASE A.M. NEWSPAPERS
Wednesday, August 12, 1964

WASHINGTON, D.C.

August 11, 1964

COIN PRODUCTION UP 77 PERCENT
The Treasury Dapartment today reported the first month's
results of its program to double coin production during the current
fiscal year.
In July, the two Mints in Philadelphia and Denver turned out
458.4 million coins -- 77 percent higher than the same month last
year. Production of quarters was 165 percent higher. Dime production
rose 265 percent.
Still larger increases are expected this fall. The Denver and
Philadelphia Mints are converting to additional coin press operations
the space and facilities formerly used for production of nickel and
bronze "strip". The latter materials are now being bought from
private industry.
Space in the San Francisco Mint building, which was closed as a
coinage Mint in 1955, is being cleared for the production of
nickel and bronze "blanks" ready for final stamping into nickels and
cents at the Denver Mint.
Facilities of the Frankford Arsenal in Philadelphia are being
utilized to anneal and clean coin blanks for the Philadelphia Mint.
The Mint presently bas 60 coin presses.
doubled by early next year.

This number will be

Eleven new coin presses are being built and will begin producing
coins in November at both Mints.
Bids to furnish still another 15 coin presses have been
received and orders will be placed this week for delivery beginning
in January 1965.
Sixteen surplus presses, formerly used by the Department of
Defense to manufacture annnunition, are being converted to coIn
production. The first of these will be installed and operating in
October, and the rest in November.
0-1308

- 2 -

Two other coin presses, previously owned by t(!e Mint, ~fave been
reacquired. They have been reconditioned and will be makiHg coins
this month at Denver.
In December, proof coin production ill Philadelphia will cease and
the presses, space and personnel of that operation will be used in
regular coin production.
Congress has now approved funds to keep both Mints on a 24-hour
day, 7-day week schedule. Funds for the new Mint in Philadelphia,
$16,500,000, have also been approved by Con~ress. Land has been set
aside and the General Services Administration is rushin~ plans for
construction.

000

- :3 -

B1'TA - MODIFIED

and exch8.nge tenders will receive equal trea.tment.

Cash adjustments vill be made

for differences between the par value of maturing bills accepted in exchange and
the issue price of the new bills.
Tbe income derived from Treasury bills, whether interest or gain trom the Ale
or other disposition ot the bills, does not have any exemption, as such, and

1088

trom the sale or other disposition of Treasury bills does not have any special
treatment, as such, under the Internal Revenue Code ot 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 a.uthority.

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

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 tor
which the return is made, as ordinary gain or loss.
Treasury Department Circular No. 418 (current revision) and this notice, prescribe the

te~s

of the Treasury bills and govern the conditions of their.issue.

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

- 2 m:rA - MODIFIED

decimals, e. g., 99.925.

Fractions may not be used.

It is urged that tenders

be made on the printed forms and forwarded in the special envelopes which will

be supplied by Federal Reserve Banks or Branches.on application therefor.
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 penmitted 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 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

secreta.ry 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
ing until ma.turity date on

May 21, 1964

5¢d<)

November 19, 1964

, (

oaax

days remain-

) and noncompetitive tenders for

5¢DO{
$ 100,000 or less for the

X5(:OO()OC

182 -day bills without stated price from anyone

C0i)C

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 made or completed at the Federal Reserve
Banks on _ _
Au_gu_s_t"'P:"2:"'0....,_1_9_6_4__ , in cash or other immediately available funds or

COOO
in a like face amount of Treasury bills maturing

August 20, 1964

-----::xxt«i)5t~=f=:-----

•

Cash

TRFASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,

August 12, 1964
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

X(ti
cash and in exchange for Trea.sury bills maturing

AUguS~

1964 , in the amount

of $ 2,103.,000 , as follows:
91 -day bills (to maturity date) to be issued August 20, 1964

Cd¢<

in the amount of $ 1,200,000,000 , or thereabouts, represent-

ing an additional amount of bills dated
and to mature

-,,;;,~~,""~19~,_1_9_6_4_,

May 21, 1964

originally issued in the
an additional $100,086,000 was issued July 29,
---";;"-;"4o.r--."--,--' the a.dditional and original bills
1964)

to be freely interchangeable.
182

-day bills, for $ 900,000,000

9Q.2i){

j('JQXIX)(
AUgust~1964

, or thereabouts, to be dated

,and to mature

_F_e_b.;..ru.;,;.a_r..::.y~1~8~,. ,;;1;;,.;.9_6_5__ •

bi){

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,

b»Each

Tenders will not be received at the Treasury Department, Washington.

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:
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 August 20, 1964, in the amount of $2,103,036,000, as
follows:
91-day bills (to maturing date) to be issued August 20, 1964, in
the amount of $1,200,000,000, or thereabouts, representing an additional
amount of bills dated May 21, 1964, and to mature November 19, 1964,
originally issued in the amount of $900,490,000, (an additional
$100,086,000 was issued July 29, 1964) the additional and original bills
to be freely interchangeable.
l82-day bills, for $ 900 ,000 ,000, or thereabouts, to be dated
August 20, 1964, and to mature February 18, 1965.
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 Daylight Saving
time, Monday, August 17, 1964.
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.
D-1309

- 2 Immediately after the clos~ng hour, tenders will be opened at
the Federa.l Reserve Banks and Branches, following which public
announcement will be made by the Treasury Department of the amount
and price range of accepted bids. Those submitting tenders will be
advised of the acceptance or rejection thereof. The Secretary of
the Treasury expressly reserves the right to accept or reject any or
all tenders, in whole or in part, and his action in any such respect
shall be final. Subject to these reservations, noncompetitive
tenders for $ 200 ,000 or less for the additional bills dated
May 21, 1964,
(91days remaining until maturit¥ date on
November 19 1964) and noncompei,itive tenders for, 100,000
or les8 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 Redpral Reserve Banks on August 20, 1964,
in cash or other immediately available funds or in a like face
amount of Treasury bills maturing August 20, 1964. 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 1ssue price of the new bills.
The income derived from Treasury bills, whether interest or
gain from the sale or other dispo11tton of the bills, does not have
any exemption, as SUCh, and loss rrom the sale or other disposition
of Treasury bills does not have :'lhy ~pecial treatment, as SUCh,
under the Internal Revenue Code of 1954. The bills are subject to
estate, inheritance, gift or oth~r excise taxes, whether Federal or
State, but are exempt from all tRxation now or hereafter imposed on
the prinCipal or interest thereof by any state, or any of the
posseSSions of the United St~tce, or by any local taxing authority.
For purposes of taxation tr~ amou~t of discount at which Treasury
bills are originally sold by the United states 1s 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 \,lhich the
return is made J as ordinary galr 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. Copi~n of the circular may be obtained f~m
any Federal Reserve Bank or Branch.
000

1108

-2-

Unit
of
:Quantity

lmportsas of
August 1,.l!!

1,200,000

Pound

Quota Filled

1,000

Pound

530

Peanuts, shelled or not shelled,
blanched, or otherwise prepared
or preserved (except peanut
12 mos. from
butter) •••..••••..••..••....••• A~gust 1, 1963

1,709,000

Pound

Quota Filled

12 mos. from
August 1, 1964

1,70 9,000

Pound

382,494

(;OMffiodity
Absolute

Period and Quantity

Quotas~

Butter substitutes containing
over 45% of butterfat, and
butter oil ••••••••••••••••••

Calendar Year

Fibers of cotton processed
but not spun ••••••••••••••••

12 mos. from
Sept. 11, 1963

.!/Imports through A'..lgust 10, 1964.
~/Imports

through August 7, 1964.

I
I
I
I

1108

I
I
I
I
I
I

T i',EA;:; J'{ Y Dfr Alar 1[. NT

\Jashington

D-1310

The Bureau of Customs announced today preliminary figures on imports for consumption of the following commodities fro~ the beginning of the respective quota
periods through August 1, 1964:

Commodity
Tariff-~ate

~eriod

and Quantity

Uni t
Imports
of
as of
:Quantity: August I, 12,6

Quotas:

Cream, fresh or sour •••••••••••••

Calendar Y(-,ar

1,50U,CJUU

Gallon

651,308

\Jh01e Hi lk, fi:esh or

Calendar Year

3,000,OuO

Gallon

SO'l!:" • • • • • • • •

Cattle, 700 1bs. or more each
<other than dairy cows) •••••••

July 1, 1964Jept. 30 , 1964

120,000

Head

680

April 1, 1964

200,000

Head

49,739

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

Calendar Year

24,861,670

Pound

quota Filled

Tuna Fish ••••••••••••••••••••••••

Calendar Year-

60,911,870

Found

21,726,482

12 mos. from
114,OOU,000
3ept. 15, 1963 4S,GOU,OOO

round
Pound

73,808,110
Quota Filled

::ov. 1, 1953Oct. 31, 1964

Pieces

Quota Filled

Cattle Ipss than 200 Ibs. each •••

.!hite or Irish potatoes:
Certified seed •••••••••••••••••
Other ••••••••••••••••••••••••••

Knives, forks, and sroons with
stainl~ss 3t0~1 handles ••••••••

12 mos. from

69,00u,00U

l/Imports for cO:lsumption at ':h~ q'lota rate are limited to 18,646,252 pounds during
tr.e first nine months of the calendar year.

TREASURY DEPARTHF,NT

Washington
IMMEiHATE RELEASE

D-1310

THURSDAY, AUGUST 13, 1964

The Bureau of Customs announced today preliminary figures on imports for consumption of the following commodities from the beginning of the respective quota
periods through August 1, 1964:

Commodity
Tariff-~&te

reriod and Quantity

Unit
Imports
of
as of
:Quantity: August 1, 1964

Quotas:

Cream, fresh or sour •••••••••••••

Calendar Year

l,5 0U ,uuu

Gallon

651,308

Milk, fresh or sour ••••••••

Calendar Year

3,OOO,OlJu

Gallon

~ole

Cattle, 700 Ibs. or more each
(other than dairy cows) •••••••

July 1, 1964Sept. 30, 1964

120,000

Head

680

12 mos. from
April 1, 1964

200,000

Head

49,739

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

Calendar Year

24,861,670

Pound

Quota Fi lled

Tuna Fish •••.•••••.•••••••••••.••

Calendar Year

60,911,870

Pound

21,726,482

'.fuite or Irish potatoes:
Certified seed •••••••••••••••••
Other ••••••••••••••••••••••••••

12 mos. from
Sept. 15, 1963

114,000,OUO
45,000,000

round
Pound

73,808,110
Quota filled

Knives, forks, and spoons with
stainless steel handles ••••••••

Nov. 1, 1963Oct. 31, 1964

69,000,000

Pieces

Q1lota Pi llr:d

Cattle lp.ss than 200 Ibs. each •••

Vlmports for consumption at the quota ra,e are limited to 18,646,252 pounds during
the first nine months of the calendar year.

- < -

Period and Quantity

Commodity

Unit
of
: Quantity

Import;
as of
August 1L 1

Absolute Quotas:
Butter substitutes containing
over 45% of butterfat, and
butter oil ••••••••••••••••••

Calendar Year

Fibers of cotton processed
but not spun ••••••••••••••••

12 mos. from
Sept. 11, 1963

Peanuts, shelled or not shelled,
blanched, or otherwise prepared
or preserved (except peanut
12 mos. from
butter) •••..•••••••...•...•..•• A:Jgust 1, 1963

1,200,000

Pound

Quota Fillf

1,000

Pound

1,709,000

Pound

Quota Fillr

1,70 9,000

Pound

382,494

12 mos. from

August 1, 1964

l/lmports through August 10, 1964.
~/lmports

through August 7, 1964.

-2-

10
COTI'ON WASTES
(In pounds)
COTTON CARD STRIPS made from cotton having a staple of less than 1-3/16 inches in length, COMBER
WASTE~ LAP WASTE, SLIVER WASTE, AND ROVING WASTE, WHETHER OR NOT MANUFACTURED OR OTHERWISE
ADVANCED IN VALUE: Provided, however, that not more than 33-1/3 percent of the quotas shall
be filled by cotton wastes other than comber wastes made from cottons of 1-3116 inches or more
in staple length in the case of the following countries: United Kingdom, France, Netherlands,
Switzerland, Belgium, Germany, and Italy:
Established
TOTAL QOOTA

Country of Origin
United Kingdom ••••••••••••
Canada ••••••••••••.•••••••
France •••••.•••••••.•.••••

India and Pakistan..
• ••
Netherlands ••••••••
Switzerland.
• ••
Belgium.
• •.••••••
Japan. . • .
. .....•.•.••••
China •••••••••••••..••••••
Egyp t. • •
• .••••..••••••
Cuba ••••••••••••••••••••••
Ge rmany •••••••••••••••••••

Italy...

. ..•...•......•

Total Imports
:
Sept. 20, 1963, to
August 10. 196k_:

Established:
Imports
~I
33-1/3% of: Sept. 20, 1963,
Tot~lQu()ta :_ to_Aumst 10. 1961..

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

1,0B7,369
239,690
221,909
19,284
11,249
34,147
33,511
59,000

1,441,152

287,669

75,807

55,151

35,738

25,443
7,088

5,482,509

1,741,897

1,599,886

22,747
14,796
12,853

Other, including the U. S.

Included in total

~Tep_Ted

~mports,

column 2.

the Bureau of Customs.

342,820

,
'-

TREASURY DEPARTI1ENT

\.~.

Washington, D. C.

IMMEDIATE RELEASE
THURSDA Y, ADJUST 12. 1964

D-1311

Preliminary data on imports for consumption of cotton and cotton waste chargeable to the quotas established by
Presidential Procl~nation No. 2351 of 3eptember 5, 1939, as amended, and as modified by the Tariff Schedules of the
United :5tates which became effective August 31, 1963.
(The country designations in this press release are those specified in the appendix to the Tariff Schedules of the
United states. There is no political connotation in the use of outmoded names.)
COTTON (other than linters) (in pounds)
Cotton under 1-1/8 inches other than rough or harsh under 3/4"
IrrmQrt3_----'J ept~her 2~_ 196~-__Aug1.1st_)._QJ __1964
Country of Origin
;~gypt and :3udan ••••••••••••
Peru •••••••••••••••••••••••
India and Pakistan •••••••••
China ••••••••••••••••••••••
r~fexico •••••••••••••••••••••

Brazil •••••••••••••••••••••
Union of ~)oviet
~~ocialist Republics ••••••
~reentina ••••••••••••••••••
JIai tie •••••••••••••••••••••
Ecuador ••••••••••••••••••••

AI
&!

E:stablished Quota
783,816
:247,952
2,003,483
1,370,791
8,883,259
618,723

Imports
628,215
24,045
159,692
8,883,259
600,000

475,124
5,203
237
9,333

Country of Origin
Honduras ••••••••••••••••••••
Paraguay- ••••••••••••••••••••
Colombia ••••••••••••••••••••

Iraq ••••••••••••••••••••••••
British East Africa •••••••••
Indonesia and lJetherlands
New Guinea ••••••••••••••••
]/Bri tish \v. Indies •••••••••••
Nigeria •••••••••••••••••••••
YBritish \"I. Africa •••••••••••
Other, including U.S ••••••••

Established

~uota

Imports

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

Except BarbadOS, Bermuda, Jamaica, Trinidad, and Tobago.
Except Nigeria and Ghana.
Cotton 1-1/~' or more
Established Yearly Quota - 45.656.420 1bs.
~-3/811

staple Length
or more

1-5/32" or more and. under
1.-3/8'1 (Tanguis)
1.-1/8'1 or more and. under
1.-3/9"

Allocation

39,590,778

Imports Year ended July 31, 1964

39,590,778

1.,500,000

282,597

4,565,642

4.565.642

Imports Aug. 1, 1964.to Aug. 10,

39,590,778
956.016

196~

TREA3URY DSPARTI1SNT
~'lashington,

lJ1!'lill Ii\. T'~

R(;L~A;3I:

TIJTT::;>tSD4.Y
~.
..
J ,

_A.··'fT~'T"
'- "Ie' ~ . L : ,

D. C.

19·"Oll

D-1311

Preliminary data on imports for conswnption of cotton and cotton \"laste chargeable to the quotas 2stab1isile<l by
?residential Proclamation !Jo. 2351 of ,:3eptember 5, 1939, as amcIl'Jed, and as modified by tho Tariff :3chedules of the
Uni t~ states which became effective .AuL'Ust 31, 1963.
(The country designations in this press release are those specified in the appendix to the Tariff Schedules of the
United States. There is no political connotation in the use of outmoded names.)
COTTON (other than linters) (in pounds)
Cotton under 1-1/8 inches other than rough or harsh under 3/4"
~t.s __Sept~h~r_ 20--,- 199~n ___Au~sj,_ 10~ 1964
Country of Origin
Egypt and Sudan ••••••••••••
Peru •••••••••••••••••••••••
India and Pakistan •••••••••
China~~.w~

•••••••••••••••••

I·1exico ..................... .

Brazil •••••••••••••••••••••

Union of .::::oviet
Socialist Republics ••••••
.~gentina ••••••••••••••••••
Haiti ••••••••••••••••••••••
Gcuador ••••••••••••••••••••

11
~

Established Quota
7$3,816
247,952
2,003,483
1,370,791
8,883,259
618,723

Imports
62$,215
24,045
159,692
8,883,259
600,000

Country of Origin
Honduras ••••••••••••••••••••
P a.1" agu.a:y- ••••••••••••••••••••

Colombia ••••••••••••••••••••
Iraq ••••••••••••••••••••••••
British East Africa •••••••••
Indonesia and IJetherlands
IJ ew Guinea ••••••••••••••••

lIBritish H. Indies •••••••••••
Nigeria •••••••••••••••••••••
YBri tish ,,'J. Africa •••••••••••
Other, including U.S ••••••••

475,124
5,203
237
9,333

Established Qqota

Imports

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

Except Barbados, Bermuda, Jamaica, Trinidad, and Tobago.
Except Nigeria and Ghana.
Cotton l-lI~' or lnore
Established Yearly Quota - 45.656.420 Ibs.
:'.>tap1e Length
Allocation
1-3/811 or more
39.590,778
1-5/32" or more and under
1-3/8'1 (Tanguis)
1-1/8" or more and under
, _':I./AtI

~.500.000

Imports Year ended July 31. 1964
39.590,778
282,597

Imports Aug. 1, 1964.to Aug. 10. 1964
39.590,778

-2-

COTroN WASTES
(In pounds)
COTTON CARD STRIPS made from cotton having a staple of less than 1-3/16 inches in length, COMBER
WASTE, LAP WASTE, SLIVER WASTE, AND ROVING WASTE, WHETHER OR NOT MANUFACTURED OR OTIfERWISE
ADVANCED IN VALUE: Provided, however, that not JOOre than 33-1/3 percent of the quotas shall
be filled by cotton wastes other than comber wastes made from cottons of 1-3116 inches or more
in staple length in the case of the follOwing countries:
United Kingdom, France, Netherlands,
Switzerland, Belgium, Germany, and Italy:

Established
TOTAL QIDTA

Country of Origin

Total Imports
Sept. 20, 1963, to
Augu~t_10~_1964

United Kingdom..
• •••••
Canada •••• ~.
• •••••••
France ••••••••••••••••••••
India and Pakistan..
• •••
~etherlands •••••••••
Switzerland •••••••••••••••
Belgium...
•••
• •••••
Japan......
•••
• •••
China.............
• ••••
Eg}'P t. . .

. •.•••.•••

Cuba.. . .
. ..•••
Germany..
• ••
Italy •••••••••••••••••••••
Other, including the U. S.

in the

Bu~eau

Imports
I'
Sept. 20, 1963,
to August 10. 1961.&.

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

1,087,369
239,690
221,909
19,284
11,249
34,147
33,511
59,000

1,441,152

287,669

75,807

55,151

35,738

25,443
7,088

5,482,509

1,741,897

1,599,886

Included in total imports, column 2.

F~epa~ed

___ --=

Established
33-1/3% of
Total Quota

o£ Customs.

22,747
14,796
12,853

342,820

I
I

1110

I
I

'-.,1.

Tt\IASURY DEPA,"ZTMFtJT
\~ashington

IHHEV lATE

l~ELE ASE

D-1312

TPU?SDAY, AU!1UST 13, 1961J

The Bureau of Customs has announced the following preliminary figures
showing the imports for consumption from January 1, 1964, to August 1, 1964,
inclusive, of commodities under quotas established pursuant to the Philippine
Trade Agreement Revision Act of 1955:

Commodity

Established Annual
Quota Quantity

Unit
of
Quantity

Imports
as of
August la 1964

Buttons ••••••••••••••

680,000

Cigars •••••••••••••••

160,000,000

Number

Coconut oil ••••••••••

358,400,000

Pound

289,296,249

Cordage ••••••••••••••

6,000,000

Pound

4,368,141

Tobacco ••••••••••••••

5,200,000

Pound

2,901,845

Gross

123,745
9,239,954

TREASURY DEPARTMENT
Washington
IMMEDIATE

~ELEASE

D-1312

THURSDAY, AUGUST 13, 1964
The Bureau of Customs has announced the following preliminary figures
showing the imports for consumption from January 1, 1964, to August 1, 1964,
inclusive, of commodities under quotas established pursuant to the Philippine
Trade Agreement Revision Act of 1955:

Commodity

EstabUshed Annual
Quota Quantity

Onlt
of
Quantity

Imports
as of
August 1. 1964

Buttons ••••••••••••••

680,000

Cigars •••••••••••••••

160 ,000 ,000

Number

Coconut oil ••••••••••

358,400,000

Pound

289,296,249

Cordage ••••••••••••••

6,000,000

Pound

4,368,141

Tobacco ••••••••••••••

5,200,000

Pound

2,901,845

Gross

123,745
9,239,954

TREASURY DEPARTMENT

Washington, D. C.
IMMEDIATE hF...L~SE

D-131J
196}~
PHELllmURY Dl,T,A ON IMPORTS FOR CONSl.'MPTIC'N OF UNMANUFACTURED LEAD AND ZINC CHARGEABLE TO TP.E QUOTAS ESTABLISHED
BY PRESIDl!:NTIAL PRCCLAMATION NO. 3257 OF SEPTEMBF.R 22, 1958, AS MODITIED BY '!'HE TAHI~F SCHEDULES or '!'HE
lJNITli;D STATES, WHICH BF.GAME EFFF,cTIVE AUGUST 31, 1963.

THU:1S0A Y, AUGUST 13

OUAR'l'rnr,y QUOTA. PERIOD -

July 1, 1964 - September 30, 1964

IMPORTS - July 1, 1964 - August 7, 1964 (or as noted)
ITEM 925.01-

J
J

Lead-bearing ores
and materials

Country
of
Production

ITEM 925.04e

IThM 925.02-

ITEM 925.03 e
Uurrought lead ani
lead waste and. scrap

:
I

Zino-bearing ores and
materia1s

Uawrought zinG (exoept al1GYs
of zino and zinc dust) aDd
zinc waste &D4 sera,

Imports

Australia

11,220,000

22,540,000

9,320,970

Belgium and
Luxemburg {total}
Boline.
Canada

5,040,000

• ·-4,003,500

13,440,000

"·1,829,528

15,920,000

9,574,095

66,480,000

66,400,000

Ita1y

7,520,000

37,840,000

12,776,182

3,600,000

Merloo
16,160,000

Peru

16, HiO,OOO

36,880,000

17,348,274

70,480,000

30,202,773

6,320,000

3,199,2~9

12,880,000

4,251,486

35,120,000

16,382,135

3,760,000

3,182,361

5,440,000

"·3,251,SL'.4

6,090,000

6,080,000

R.pub1io of the Congo
(formerly Belgian Congo)
-Uu. So. Afrioa

:L4,980,000

14,880,000

YugoslaTia
A.ll other
oountries (tota1)
-See Part 2,

6,560,000

Append~

•• e1,207,483

to Tariff Sfthedu1es.

eeR.pub~1.o of South Afri.oa •
•••YmPorla &a of August 10, 1964.
~.uu:D

7,520,000

XN 'J."H& ~u

CUSTCaIB

15,760,000

·"3,536,118

6,080,000

11,840,000

17,840,000

TREASURY DEPARTloiEN'l'

Waahi.ngton, D. C.

D-1313

D6iEDIATE R.ELI:ASI:

THURSDAY

AUGUST 13 1964

PHELiMduRy DATA ON IMPORTS FOR CONSL'MPTION OF UNl.iANUrACTURED LEAD AND ZINC CHARGEABLE TO THE QUOTAS ES'I'AELISHED
BY PRESIDl:N'I'IAL PRcx::LAMATICfi NO. 3257 or SEPTEMBF.R 22, 1958, AS MODIJ'IED BYf'HE TARr~ SCHEDULES Of 'rBE
liNITJW STATES, WHICH BIX:AMI: ETnCTIVE AUGUST 31, 1963.

OUAR'l'l.::RLY QUOTA PERrOD - July I, 1964 - September 30, 1964

IMPORTS - July 1, 1964 - Aug\J.8t 7, 1964 (or as Doted.)
ITJi).f

925.01-

ITDt 925.03·

IT:t1o(

ITEM 925.04·

925.02.
S

I
I

COUD'b7

Lea4l-beariDg ores
aDd aateri.aU

ot
ProcluotiOJl

UDrrcnlglrt lead . . .
lead waate &Del scrap

I
I

a UIIIrrought ziDo (eJa)8pt all.,..

Z~eariDC

oros aU.
materiala

:
:

s~y OUota
: DRt1.ab10 10M

sQll&i'ter~,. QiiOt&

( pOiiiIi)

~1UtraUa

11.,220,000

Import. : :o.rt1abl0 lAtU.

1l,22O,OOO

( POUDai)

22,540,000

:U\1iOi"tirlOi Qilota
Imports: ZiDc Content

( Bi6iiii)

:ClDii"'f8l'~"

Import.:

9,320,970

BolgiUID and.
lADemburg (total)

Bolirlll
CenMI-

5,040,000

··~,OO3,500

13,440,000

•••1,829,528

15,920,000

9.574,095

66~,OOO

66,400,000

Mlxl.oo

Pora

:r.poria

7,520,000

37,840,000

12,776,182

16,1.6Q.000

16.160.000

36,880,000

17,348.274

70,.480,000

30,202,773

6,320,000

3,199,259

12,880,000

4,zsl.,486

35.uo,ooo

16~.135

3,760,000

3,182,.361

5~,OOO

."3,251.844

6,Oao.cxx>

6,080,000

of the CoIICo
(tormorly Be14i&D Congo)

~110

114,980,000

So. J..trioa

1..4.880.000

YugosJ.arla
.All other
oountries (total)

6.560,000

·.·1.207,483

-See Part 2. Appendix to Tariff Schedules •
••RepUblic of South Atrioa •
•••x.pen. .. o~ .i.uga1: 10. 1964.
PRKPAIU:D IN

auta

Br We1CN

3,600,000

Ital.y

.-ua.

. f dDO aDd ziDo auat) ....
zlDo wute aD4 ......

'J.'R)I;

BtlRDU

ctlS'rCIIB

15,760,000

.··3,536.118

6,0fk>,OOO

6,080,000

11,840,000

17,840,000

Auguat 14"

1964.

fIne Treasury Depru-tment today announced the subscription aDd allD~
1'igu:n;::; with 1'eflpect to the current 01 ferlag 0:1' 5-7/Wfc Tre&BUl'7 Bote. ot
Series C-1966, due February 15 1 1966.
Subscriptions and nllotamts were diVided among the several l'e4eral
f:eserve Distrf cts and the Treasury as follovs:

Total Subaerlp-

Federal Be:Jerve
District

tiona Received

Boston
~lew Yorh
Rl11nde lphia
Cleve U">.nd
Picbmond
Jd.lsnta
Chicae;o
St. Louis
t·Iinneapo 11 G
KansB.rJ City
Dallas

San Francisco
Txensury

Totals

510,192,000
8,202, 8ll, 000
259 ,647,000
756,829,000
329,107,000
454,101,000
1,585,851,000
316 ,222,000
182,960,000
366,145,000
258,684,000
1,620,282,000

9,535,000
$14,852,366,000

SubscrlptionB by investOl' classes:
States, political subdivisions 01" instrumental1 ties thereof J public pension
.gnd n::ti:rement and othe:r public :f'Und.8,
international organizations in vhlch the
Un1 ted States holds memberShip I foreign

central banks and foreign States which
rece1 ved full allotment - ... - - - - - - - - - -

Cooaereial
(own____________
account) --------All
Others Benks
________
~

~~~_R

Total
Fed. Foes. Banks &: Govt. IrIv. Aects. ---CraDd Total

82,606,000

1,518,P.04,OOO
5,324,~,OOO

$12 ,985 ,416 ,000

1,868,950,000
$14,852,366,000

Total
Allotaaat.
$ 81,lSa,ooo
2,850 ,'38,000
,",272,000
l23,998,000

55,5:50,000
98,553,000

213,976,000
60,570,000
35,977,000

B3,BM,ooo

46,479,000
278,4oiO,OOO
6,305,000

$',039,910 ,000

TREASURY DEPARTMENT
(

August 14, 1964

FOR IMMEDIATE RELEASE

SUBSCRIPl'ION AND AI...LOTMEN.r FIGURES FOR TREASURY I S CURRENT CASH OFFERING
The Treasury Department today announced the subscription and allotment
figures with respect to the current offering of 3-7/Bi Treasury Notes of
Series C-1966, due February 15, 1966.
Subscriptions and allotments were divided among the several Federal
Reserve Districts and the Treasury as follows:
Federal Reserve
District
Boston
lew York
Philadelphia
Cleveland
R1chmond
Atlanta
Chicago
St. IQuis
Minneapolis
Kausas CitY'
Dallas
Sau Francisco
Treasury

Total Subscriptions Received

Total
Allotments

510,192,000
8,202,811,000
259,647,000
756,829,000
329,107,000
454,101,000
1,585,851,000
316,222,000
182,960,000
366,145,000
258,684,000
1,620,282,000
9,535,000
$14,852,366,000

81,488,000
2,850,438,000
44,272,000
123,998,000
55,530,000
98,553,000
273,976,000
60,570,000
35,977,000
83,884,000
46,479,000
278,440,000
6,305,000
$4,039,910,000

Totals
Subscriptions bY' investor classes:

States, political subdivisions or instrumentalities thereof, public penSion
and retirement and other public funds,
international organizations in which the
UDited States holds memberShip, foreign
central banks and foreign States which
82,606,000
received full allotment ---------------- $
7,578,804,000
CommerCial Banks (own account) --------5,324,006,000
All others ----------------------------$12,985,416,000
Total
Fed. Res. :Banks

D-1314

Govt. Inv. Accta. ---Grand Total

1,866,950,000
$14,852,366,000

r" );{ :"FL.! '\

!',. F'.

:.;C;,;~j?O\~)

~~~_.,

fuesdai' !1.~4il3t, 18, 1964.
Auguat 17, 1964
:.I"S -L 1'..1 )F ·'::l·.ASJ!\'Y':, rJ~'KLY BILL oJ.'FE:um
'fhe masurY Dej8I'tment announced last. evening that the tenders tor two eed. Of
Treasur.r bills, ~ Series to be an add! t10nal 18.u. of the bUll dated Mq 21, l~.
and the other scrips t.o be dated Au,JUSt 20, 1964, which wen ott8red on Aagut 12, ...
opened at the Federal ii.eserve .3anks on AU1?,USt 17. Tenders wes'. invited tor $1,200,1m,1
or thereab)ut.s, ot 91~ bills and for S90),·LO,OOO, or tt.reab )ut.s, ot 182-&y bUla.
'!'he r;eWlUs of t.he two series are as followsl
~A:·nr.

)F i,CCF?r"V
rl',_' YD:~:

C·)t"p.~·r:

lii~h

Low
:;~ra;:e

[;1:(, ;)f the arn~:.mt of 91-day '0:119 bid for at the low price vas accep\ed
5 ::)f i,i;-:, 8:' J,~n1~ of If'2-(Il1j' b-i 113 bid for at t.he low price was accepted

District

Boston
IJaw 'iorL

?hi1-~de1phia

A,plied For

:~:

37,eU , S5i'5

1,S03, 917 "m

Gloveland
;-(icrunond
;.tJ.anta
Chic8.j.~o

6,~9,OOO

6,641,000

1. 1:1,35;,000

7>;'-,598,00)

;/49,000
7,652,000
S,~JU,OOJ

162,06f,OOO

So, 171, oct)

2.;,,;':£,000:
1),912,iY.}O

10".)97,000
S,772,(1)U

f',:Jl7,00J

)141 T'L, ,;}j;)
,-C. 3 , /x~
-"1 , 'J'..)
)'"V'I

1-'~ , "'.1.
X+LI , O)J
"

14,485,000
:I ,1 t 1, O'JO

118,342,')))

)5,2~7,'XjQ

126,897,000

:-'~'1 [1-S
lJU.1.

$ ~ t13e,~

12,7)0,000

2~,160,()')J

A~t:d

19,474,OJO
1,619,212,000
9,9';4,000
42,S82,OOO

11,930,000
)O,14B,())O

;~2, J7 J,f92,t))Q

a/ incL"G ~; ; 21_6,2 ~2,

b-'

11,930,/);)
)1,h84,',})O
19-:::, . 94, JiJJ
1;. :n~~, ');_D

T )fAL~-)

[))6,iJ87,000

Applied For

16,96'j,O)Q

3J,2:)("J)IJ

~~ ~·r:lnci~cJ

25, 747 ,&50

3G,'J69,Y'))
25,201 ,;Joo

St. Louis
Xinnea.polis

Kansa8::it~'

A.::ceDted

)O,~,:)l,J;)O:

:sl,20:;,292,:YJO !I~2,~1,1Jl,OOO

),272,cm
9,JJb,OO:>
I , a77 ,IJW
(VY\
,,~

..1?J4h7.000

$. 9Ol,~::4,OOO!

}oj -' lL,nc J[111yt~t,ive ttm",ers accept:r: at. t.be average price af j'9.W
:-:clude::~ .:::,2,Ulj,0}) noncaml;ctitiv,:: ten- ·ers accepted at l.he average price of 96.16)
't. a COU;)OO : ~'·sue of t.he SatHe lengt.(. and for the same am;)unt invested, the returD ~
these 0:113 w<)uL: pr,wide yields ()f ).59,i, tor the Yl~ bills, and 3."'), !Jr tbt
l~:-d.,.,:, !'-JUls. Ir.',er:·::lt. r~;u;·; :.)[1 bill::; 're quot/-d in terms of bank diec'ltlnt vitJl
tt.e !'r:t'JT!l reI' ted t~) tille face a:r.')l....nt of t.tHc bills r)ayable at matur1t.y ratber t.bID
the arr. ·unt in\' ,it,:'d crtG their len-'~t. in act.ual number (d days rclat,ed t:> f1 J6~
;re.:r. In e mt,r::.st, y-Le1ds ')n CEL't~ fica:t.e", notes, and bonds are computed in tenlll
UIlt inv·,!::ted'3~~t,e the nur.!b;:r ()f da¥s r..'nil\.1 iJllD
~f :ntere~,'., )n
inter st :_13~lI'Ir.nt, ;:>erJ.yj ~:) the actuSl num
of da.;..-s in tne period, with cem1-annual
e 1!Tl;)()U(1(i~ n.,' if' more :hanJn," c.)upOft P'Jriod :'8 involv· ,d.

::.y,.fff

TREASURY DEPARTMENT

~OR

RELEASE A. M. NEWSPAPERS,
fuesday, August 18, 1964.

August 17, 1964
RESULTS OF TREASURY'S WEEKLY BILL OFFERING
The Treasury Department announced last evening that the tenders for two series of
J'euury bills, one series to be an additional. issue of the bills dated May 21, 1964,
Illd the other series to be dated August 20, 1964, which were offered on August 12, were
)pened at the Federal Reserve Banks on August 17. Tenders were invited for $1,200,000,000,
)r thereabouts, of 91-day bills and for $900,000,000, or thereabouts, of 182-day bills.
~e details of the two series are as follows:
,lANGE OF ACCEPTED
91-day Treasury bills
182-day Treasury bills
;OMPETITIVE BIDS:
maturing November 19, 1964
maturing February 18, 1965
Approx. Equiv.
Approx. Equiv.
Price
AmaBaJ/Rate
Price
Annual Rate
High
99.115
3.501%
3.618%
98.171
Low
99.111
3.517%
98.161
3.638%
Average
98.163
3.634% !/
99.112
3.511% !I
81% of the amount of 9l-day bills bid for at the low price was accepted
5% of the amount of 182-day bills bid for at the low price was accepted

mAL TENDERS APPLIED FOR A~m ACCEPTED BY FEDERAL RESERVE DISTRICTS:
District
Applied For
AcceEted
AcceEted
AEElied For
Boston
$ 37,818,000 $ 25,741,000
6,138,000
$ 19,474,000 $
New York
806,081,000
1,503,917,000
1,619,212,000
759,598,000
Philadelphia
16,969,000
36,969,000
3,649,000
9,954,000
Cleveland
25,160,000
25,287,000
42,582,000
7,682,000
Richmond
11,930,000
11,930,000
6,649,000
6,649,000
Atlanta
30,148,000
37,484,000
12,730,000
9,530,000
Chicago
195,694,000
144,059,000
162,068,000
50,977,000
St. Louis
25,068,000
33,256,000
10,097,000
8,097,000
Minneapolis
13,972,000
19,942,000
3,272,000
5,772,000
Kansas City
30,551,000
34,119,000
9,338,000
14,485,000
Dallas
15,344,000
9,181,000
4,077 ,000
23,534,000
San Francisco
55,257,000
110,342,000
128 z897 z000
32 z447 zOOO
$2,070,892,000 $1,200,292,000 !I $2,~1,101,000
$ 901,454,000 £1
TOTALS
Includes $246,252,000 noncompetitive tenders accepted at the average price of 99.112
Includes $62,843,000 noncompetitive tenders accepted at the avera~ price of 98.163
On a coupon issue of the same length and for the same amount invested, the return on
these bills would provide yields of 3.59%, for the 91-day bills, and 3.75%, for the
182-day bills. Interest rates on bills are quoted in terms of bank discount with
the return related to the face amount of the bills payable at maturity rather ~han
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 semi-annual
compounding if more than one coupon period is involved.

- 13 indu8try J and by making the American ecOftcay continually more

attractive to both f.:.1rei6Tl and domestic investment.

time -- while

thcs~

At the _

10ng-run policies are gradually taking hold ••

·'-le nrust continue I)Ur et forts to hold dow our current internatiODIl
deficit.

'\'e ..::antlot relax until balance ia ac.hieved.

Both in our home economy and in our international accounts,
our poli·::ies over the last three and a half years have born. abua4lat
fruit.

There is no reason ;;-Ihy the next three and a half year•••

and beyond - .. should not hold equal, or greater. accompl1ahMftti
in store, i2 only we build upon the policies which have proven 10
success ful.

ie must cent inue to be flexible

affit."1D8tive aDd. p1"Udeat.

Thus, and thus onlYl can our nation continue to move forward to full
strength and full stride -- creating ita full .hare of abundance
for all Americans.

000

- 12 -

returned to the levels prevailing just prior to the outbr..k of the
';econd

~or Id

,-Jar.

,,,hile we have been strengthening vur ecOG<ay at hOlll8 -- ud

putting the nationls financial affeh:. on • • ound and v1&bl. baal•••

we have also made real and Lasting
national accounts into balance.

pro~r.s.

1n br1nglng our inter-

During the three years 1961-63 .-

compared with the preceding three year. -- we bave cut the balaace

of payments deficit by 33 perceot, the gold outflolll by 59 percent.
Det military expeoditures abroad by 17 p4lrcflDt, 8DCl we have 1Acr....

exports by 20 percent and our favorable trade balance by 62

,.r~t.

Thua we have subatant1ally strengtheaed our tl&tiOD&l ••curlty_

For

a sound and strong dollar is as ... ential to the def.... of fr. . . .
throughout the world

..at cODtinue

it 1. to our prosperity here at

ru...

employ long-run policies that will briD&

lasting prosress in our ba lance of payments by encouragiDl export.

and price stability} by

inc~easin1

the competitiveness of

~1C11

t......trJ.

- 11 -

creating inflationary pressures.

Despite the .teady advance io

business activity and the enormous

8ro~~h

in the demand for credlt.

the long-term interest rates important to home buyer., eonau..rl ,
state and local govetmaents) and businesses. are generally lower

today than

th~y

were three and a half years ago in the depth. of •

recession.
At the same time. by

effeetlv~

management, we have prudently

lengthened the average maturity of the federal debt, in marked eOD-

trast to the continual shortening that characterized the 1950' ••
And, finally. we have reduced the real burden of our public

debt.

M is. true in the case of a private debt, the burden of the

national debt can be mea~t'ed accurately only in relation to the

income of the debtor.

Today)

at 5!1t of our current gr08. aatlODal

product, down from the post-war peak of 12~) the relation.hlp of

out' national debt to ouT" national product has, for the fir.t tille.

retul"Ud to eM

- 10 ...

Vital as it is, however,
the lon'I;> run assure us of

in the short run.

f!xpen~tture

contt'ol alone e&ftIlOt in

balanced budget _. if,

b~d.ed,

Our only sure road to a balanced budget t.

through both expenditure control and rising Federal revenues -which can only be generated by strong and balanced
That 1s the road \.'e have follo·lI.1ed

years -- the road that has brought

durinr.~

econ~lc

growth.

the last three and a halt

within &i3ht of a ba18Dced

budget in a balanced economy -- the road we must continue to

foll~

in the years ahead.
-!e have accepted the transitional deficits entailed by tax
reduction as the temporary and unavoidable price of enlarging the
role of the private economy> of breaking the pattern of succe •• ively

shorter and weaker

r~coveries(

and 0f reducing unemployment.

"-Ie hsve financed these deficits .... and the public debt ._

~ithout

constricting the flow of credit to other borrowers or
creati,. inflatitlllf

- 9 •

£be fLrst time th4lt haa been done since 1956_~
listed ovnall employmentl

~4ur:es.

the blki,ee- flr'et

The coat reduction progr. . It

the Defense Department last year produced identifiable and verified
savings of $2.5 billion, more than half ita ulti. . te co.t reductloa
goal of $4.6 billion annually.

In the Post Office, employaeDt lJl

June, 1964, \-las 3 J2l1i) less than in June, 1962, although _11 volu.

was greater by 3.7 billion pieces.

From f18cal 1961 throUJh fl.eal

1964, the Trea5ury s Division of Disbursement increa.ed it.
l

pr~·

t1v1ty per employee hy &4% -- equivalent to a savings of 855 ..,10,..
/\Od one could multiply these examples throughout every Govet...at
department.

I personally venture to say that never hal our
pursued a program of

e~penditure

GoveI~t

control with such vigor and per-

sistence as during the last three and a half years.

It 11 ...eetul

that our Government continue to pursue that program with
9tren~th

all the

at its command.

J11tal .. It II,

-8risen by $2.1 billion l •• s than during the J)recediDl four ~.
In this fiscal year -- fiscal 1965 -- Federal .pendina

will....

fot' a smaller pOT'tion ot our national output thaa in an, ,... Ii. .
1951.

And in this fiscal year, the rigid economy prosr- ill "ff.t

throughout the Federal Government will enable ua to financ.

~t~

needed new programs, such as the val." on poverty. without aJ!!!dlg ..

,£..en!

m~e

of Feder8;l money. th~ during th!

filcal 1!U ••

and this despite much needed pay ineTea••• for federal offf.ciala.

higher interest costs on the public debt, and other virtually
automatic increases.
'lbroughout the Government

un.re1enting eeonomy

ctriw 11 ...

tinually cutting costs and raising eEft~leney -- reaultiaa 111
output ::rcm fewer ~ loyees.

At the end of the pUt fieeal

If"

year -

1964 - ... Government employment was 22,000 below. year earl~ ~
'l'he ~iscal 1965 budget provides for an aetna! clt"Op in

,"'ral.l.ut

..,16,.,-6

-7repeal oC a few of the•• tans 1. no .oblti_.
based on a comprehensive .tudy of them all.

haa juat such. study undentay.

ActlOD _ _1. . .

'dle TI'eUuIy D.,.,

~f1t

It viII

the evidence &malsed by the House Vaya aa4 . .-

the public: heariDp that haft jute ended.

eaozwoul,
Cc

rn.

Ittee-lII

ODe. tile j _ of

rwiI"

penit additional reduci10nl 10 tae. . tuea ill tM , . . . . . . . .

'l'be record an 8Xpe1lditure control 1. . . . . lly e1ear.

. . ....

aecOIIlpanied tax reduction fen" economic .0........ .., • _ t

."1' I

aDd .u8tained. ezereise in fiscal diactpline -- a thrifty . . . .'
of the public busin••• without profl1pte

public nee..

Th. facta ailllply canaot be

~ . f . . . .tial

--taM

lut three

aDd a half yean have witneased a eontrol UPOD ....n.ent axpeD4ital

that bas been both UDdeviatingly striet &ad "li0D8tnbly .~e.atful.
Exeept for the ilapentift ~ of def_. . . . .pace, .11

budget expenditures :or the four fill

y~. l~£'l.19A5

vill bnI

1 ~ S·"{l

;,y

-6contained important reforms which reduced the tax burden by three-

quarters oi a billion dollars for many upon thaD it weiped _llid,
~~e

have, in short. done more to improve our

' f l t - •• 1a

terms both of fairnes8 and of economic: growth -- in the last tbI'II
and a half years than in any other period of our history.

W• .at

build on that record, for there is more to b. done 1n tmprov1aa

equity of our tax system -- and in cutting tax•• even further ..

warranted by our economic and bud,.tary position.
In looking ahead to further tax reduction J it would appear dill

high priority should be given to a thorough oveThaul of the
F-odge of excise taxes remaining frca World War II claya.

these taxes no longer serve their original purpOia.

Maa7

Inateacl tIaI7

increase buainess cost., weigh unevenly on cona\llDer8 aDd ara ottaa
an unnecessary nuisance to taxpayers and IOWnament .1iM. 1Mn
are about 75 categories of such tax.. on the boou today-

ILl

repeal of

-5prime mover in our economic life.

wa.

'lb. tax cut enaeted thb , . .

the largest reduction in individual and cOI"pOrate t . . . 1D OR

history, adding roughly $11.5 billion annually to the take-ba.e
pay of Americana in every ineome group and to the profltab111tJ of

American business, large and small.

The tax mealure. adopted 1.

1962 -- the 7 percent investment tax credit and the rev!." ru1.

for the tax

trea~t

of depreeiaeion, enhanced the profltabilit7

of inve8tment in new equipment by more than 20 percent -- an a.ouat

equivalent, in terms of incentives to invest, to • eut in the
corporate profits tax from S2 percent to about 40 pere-t. Struct1ll'll

reforms in our tax laws in 1962 and 1964 raised aovernment

r.~"

by $1.7 billion annually -- three time. more thaa the r . . . . . ra~
by all other tax law refont8 since 1910, and nine

was rai.ed in the years 1913 through 1960.

tta.

lION

1he 1964 Act a1.0

tbIa

-4-

very largely upon fiscal poliey ... upon tax and eXpeDclltun polily.
lbe ques t ion vas:

Should we embark upon larp IOftrDMDt 'p"iq

programs, or should we cut taxe.?

Should we en1arae the role of

the private sector of our economy or of the public .actor?

1ft17

in 1961, we made our basic decision:

pols..,

to rely _iDly

Oft tax

to expand the role of the private sector of our economy .. the
pr~ry

force in achievtng our national economic loala.

'!bese, then J have bean our bu Ie po lier cIec u iou.
briefly review their resulta in four key .r... :
expend1tu~

tax

Let_

policy,

eontrol t the anag. .nt of our public debt. aDd our

balance of payments.

We have enacted the most cQaprebenalve

proar-

of iac. . tal

reduction and reform in our nation'. history -- • proar- that,
by freeing the private economy fro. unduly high tax rat.. , baa

&iven new vigor and buoyancy to our fr.. eDterpri..

',Ie. .. till
prt.

_.it

-3-

We baaed our pol ic:

i..

upon the carta iDty that a • troo& aDd

growing domestic economy va. ie.elf the ...ential lolut!_, DOt
only to chronic unemployment, under-investment, and budpt "fietta
but to our international paymenta neede u

vell.

In 1961 -- a. now -- the differing demanda .ada UpOD lIOIletary

policy by

OUT

home economy and by our international account. ruled

out both very low short-term inter.at rates and high lOllI-tent
ratel.

Very low ahort-term rate. would have invited .... lva out-

flowa of short-term capital -- with great harm to the .tr-ath of
the dollar, while hiah long-term rates would have stifled . .
already languishing domestic eeonoey.

n..

job of aooetary

polte,.

1n short, .,.. a. limited a. it va. crucial ancl clearly defiDed:

DQU1"i.h investment at home without provokina outflowa of capital

abroad.
'ftle taak, therefore, of. expanding the dome'tie aeonc.J f.ll

yery

,...1, ...

-2-

ruliatic, both flezible in teelmi. . . . . . flm tft purpen. HtIa

fntpl in upendlturea and relponaible to Mtlonal ......

!ben ..na many who claimed that _
eeonOll)' at hOM hand-tn-had with
pa)'lHftta.

eoul.

proan"

DOt . . , . . . . .

ltl oar balue. of

Some de_ndeet that we reattain c ....it ami n1.. tile

peera1 1_..1 of interest rate. to blprow our bal... of ,.,. I tI.
Jut thi' would haw iDer...ttd uneaplo,..at at "cae aM . . .t.t

or prevent" reeowry.
dome.tie taeODCll1 -

Others lui.ted that for the .... of ...

ludulp in hap . . , ....at1e

-padilla

,"pi P

ant' aIMI aboft the DIIee.auy build up of oar at.lltuy " , . ,••
But this vculd haft put ua on the roe4 to iaflatiOll, ...,...

"ftata

la our balance of payMlltl, and .... larpr 10.••• of IOld ... et

cOIlfldence in the dollar.

Both of the•• pnscripti_ . . . ataar

aad .oth would have eourted dlaaeter.

REHARI<S BY THE HONORABLE DOOOLAS DILLOlI
SECRETARY OF nm TREASURY
BEFORE TKE DEMOCRATIC PLATFOIM COMM11T11
AT THE SRERA'l'ON-PARE HOTEL. WASBDIGTOI. D. C••
TUESDAY J AOOUST 18, 1964, 10: 15 A.M •• 1M'

81Ii

happy to appear before this COIIImitt.. ,

_0..

cba1leDaila

Assignment is to recoanend a progrSUl for .America', future.

program must recognize where we now are and how we

In this prosperous year of 1964, it i8

sot

~portaat

Sueb.

hen.

to r.call

that only three and a half years ago, our economy ... bo&IId ...
in its fourth postwar recession.

Today, we ue in the alde11e of

our fourth year of continued economte advance -- the period of

peacetime prosperity in· our entire modern history.
I cite this contrast simply becauae it tell. u. graphicall,
how sound have been our economic policies during the p•• t three
and a

hal~'

years.

The success of those ;'olicies has one simple aource:

.. haW

rejected extremes -- and have, instead, been both creati. . . .

realistie. bocIa

FOR RELEASE P.M. NEWSPAPERS,
TUESDAY, AUGUST 18, 1964
REMARKS BY THE HONORABLE DOUGLAS DILLON
SECRETARY OF THE TREASURY
BEFORE THE DEMOCRATIC PLATFORM COMMITTEE
AT THE SHERATON-PARK HOTEL, WASHINGTON, D. C.,
TUESDAY, AUGUST 18, 1964, 10:15 A.M., EDT
I am happy to appear before this Committee, whose challenging
assignment is to recommend a program for America's future. Such a
program must recognize where we now are and how we got here.
In this prosperous year of 1964, it is important to recall that
only three and a half years ago, our economy was bogged down in its
fourth postwar recession. Today, we are in the middle of our fourth
year of continued economic advance -- the best period of peacetime
prosperity in our entire modern history.
I cite this contrast simply because it tells us graphically how
sound have been our economic policies during the past three and a
half years.
The success of those policies has one simple source: we have
rejected extremes -- and have, instead, been both creative and realistic,
both flexible in techniques and firm in purpose, both frugal in
expenditures and responsive to national needs.
There were many who claimed that we could not expand our economy
at home hand-in-hand with progress in our balance of payments. Some
demanded that we restrain credit and raise the general level of
interest rates to improve our balance of payments. But this would have
increased unemployment at home and stunted or prevented recovery.
Others insisted that for the sake of our domestic economy we indulge
in huge new domestic spending programs over and above the necessary
~uild up of our military defenses.
But this would have put us on the
road to inflation, deeper deficits in our balance of payments, and
even larger losses of gold and of confidence in the dollar. Both of
these prescriptions were extreme and both would have courted disaster.
We have based our policies upon the conviction that a strong
and growing domestic economy was itself the essential solution, not
only to chronic unemployment, under-investment, and budget deficits
but to our international payments needs as well.
D-1316

- 2 -

In 1961 -- as now -- the differing demands made upon monetary
policy by our home economy and by our international accounts ruled out
both very low short-term interest rates and high long-term rates.
Very low short-term rates would have invited massive outflows of
short-term capital -- with great harm to the strength of the dollar,
while high long-term rates would have stifled an already languishing
domestic economy. The job of monetary policy, in short, was as
limited as it was crucial and clearly defined: to nourish investment
at home without provoking outflows of capital abroad.
The task, therefore, of expanding the domestic economy fell very
largely upon fiscal policy -- upon tax and expenditure policy. The
question was: Should we embark upon large government spending
programs, or should we cut taxes? Should we enlarge the role of the
private sector of our economy or of the public sector? Early in 1961,
we made our basic decision: to rely mainly on tax policy to expand
the role of the private sector of our economy as the primary force in
achieving our national economic goals.
These, then have been our basic policy decisions. Let me briefly
review their results in four key areas: tax policy, expenditure
control, the management of our public debt, and our balance of payments.
We have enacted the most comprehensive program of income tax
reduction and reform in our nation's history -- a program that, by
freeing the private economy from unduly high tax rates, has given
new vigor and buoyancy to our free enterprise system as the prime
mover in our economic life. The tax cut enacted this year was the
largest reduction in individual and corporate taxes in our history,
adding roughly $11.5 billion annually to the take-home pay of Americans
in every income group and to the profitability of American business,
large and small. The tax measures adopted in 1962 -- the 7 percent
investment tax credit and the revised rules for the tax treatment of
depreciation, enhanced the profitability of investment in new equipment
by more than 20 percent -- an amount equivalent, in terms of
incentives to invest, to a cut in the corporate profits tax from
52 percent to about 40 percent. Structural reforms in our tax laws
in 1962 and 1964 raised government revenues by $1.7 billion annually
three times more than the revenue raised by all other tax law reforms
since 1940, and nine times more than was raised in the years 1953
through 1960. The 1964 Act also contained important reforms which
reduced the tax burden by three-quarters of a billion dollars for
many upon whom it weighed unfairly.
We have, in short, done more to improve our tax system -- in terms
both of fairness and of economic growth -- in the last three and a
half years than in any other period of our history. We must build on

- 3 that record, for there is more, to be done in improving the equity of
our tax system -- and in cutting taxes even further as warranted by
our economic and budgetary position.
In looking ahead to further tax reduction, it would appear that
high priority should be given to a thorough overhaul of the hodgepodge
of excise taxes remaining from World War II days. Many of these taxes
no longer serve their original purpose. Instead they increase
business costs, weigh unevenly on consumers and are often an
unnecessary nuisance to taxpayers and government alike. There are
about 75 categories of such taxes on the books today. Random repeal
of a few of these taxes is no solution. Action should be based on a
comprehensive study of them all. The Treasury Department has just
such a study underway. It will benefit enormously from the evidence
amassed by the House Ways and Means Committee during the public
hearings that have just ended. Once the job of revising excise taxes
has been completed, continued economic growth should permit additional
reductions in income taxes in the years ahead.
The record on expenditure control is equally clear. We have
accompanied tax reduction for economic abundance by a most stringent
and sustained exercise in fiscal discipline -- a thrifty management
of the public business without profligate disregard of essential
public needs. The facts simply cannot be denied: the last three and
a half years have witnessed a control upon government expenditures
that has been both undeviatingly strict and demonstrably successful.
Except for the imperative demands of defense and space, all budget
expenditures for the four fiscal years 1961-1965 will have risen by
$2.1 billion less than during the preceding four years. In this
fiscal year -- fiscal 1965 -- Federal spending will account for a
3maller portion of our rntional output than in any year since 1951.
And in this fiscal year, the rigid economy program in effect throughout
the Federal Government will enable us to finance urgently needed new
programs, such as the war on poverty, without spending one cent more
of Federal money than during the last fiscal year -- and this despite
much needed pay increases for federal officials, higher interest costs
on the public debt, and other virtually automatic increases.
Throughout the Government an unrelenting economy drive is
continually cutting costs and raising efficiency -- resulting
in greater output from fewer employees. At the end of the past
fiscal year -- 1964 -- Government employment was 22,000 below
a year earlier, and the fiscal 1965 budget also provides for another
drop in Federal civilian employment. The cost reduction program
at the Defense Department last year produced identifiable and
verified savings of $2.5 billion, more than half its ultimate cost
reduction goal of $4.6 billion annually. In the Post Office, employment

- 4 in June, 1964, was 3,200 less than in June, 1962, although mail volume
was greater by 3.7 billion pieces. From fiscal 1961 through fiscal
1964, the Treasury's Division of Disbursement increased its
productivity per employee by 64 percent -- equivalent to a savings
of 855 employees. And one could mUltiply these examples throughout
every Government department.
I personally venture to say that never has our Government pursued
a program of expenditure control with such vigor and persistence as
during the last three and a half years. It is essential that our
Government continue to pursue that program with all the strength at
its command.
Vital as it is, however, expenditure control alone cannot in the
long run assure us of a balanced budget -- if, indeed, it can in the
short run. Our only sure road to a balanced budget is through both
expenditure control and rising Federal revenues -- which can only
be generated by strong and balanced economic growth. That is the
road we have followed during the last three and a half years -- the
road that has brought us within sight of a balanced budget in a
balanced economy -- the road we must continue to follow in the years
ahead.
We have accepted the transitional deficits entailed by tax
reduction as the temporary and unavoidable price of enlarging the role
of the private economy, of breaking the pattern of successively shorter
and weaker recoveries, and of reducing unemployment.
We have financed these deficits -- and the public debt -- without
constricting the flow of credit to other borrowers or creating
inflationary pressures. Despite the steady advance in business
activity and the enormous growth in the demand for credit, the longterm interest rates important to horne buyers, consumers, state and
local governments, and businesses, are generally lower today than they
were three and a half years ago in the depths of a recession.
At the same time, by effective management, we have prudently
lengthened the average maturity of the federal debt, in marked
contrast to the continual shortening that characterized the 1950's.
And, finally, we have reduced the real burden of our public debt.
As is true in the case of a private debt, the burden of the national
debt can be measured accurately only in relation to the income of the
debtor. Today, at 50 percent of our current gross national product,
down from the post-war peak of 128 percent, the relationship of our
national debt to our- national product has, for the first time,
returned to the levels prevailing just prior to the outbreak of the
Second World War.

- 5 While we have been strengthening our economy at home -- and
putting the nation's financial affairs on a sound and viable basis
we have also made real and lasting progress in bringing our international accounts into balance. During the three years 1961-63 -compared with the preceding three years -- we have cut the balance of
payments deficit by 33 percent, the gold outflow by 59 percent, net
military expenditures abroad by 17 percent, and we have increased
exports by 20 percent and our favorable trade balance by 62 percent.
Thus we have substantially strengthened our national security. For a
sound and strong dollar is as essential to the defense of freedom
throughout the world as it is to our prosperity here at home.
We must continue to employ long-run policies that will bring
lasting progress in our balance of payments by encouraging exports
and price stability, by increasing the competitiveness of American
industry, and by making the American economy continually more
attractive to both foreign and domestic investment. At the same time
while these long-run policies are gradually taking hold -- we must
continue our efforts to hold down our current international deficit.
We cannot relax until balance is achieved.
Both in our home economy and in our international accounts, our
policies over the last three and a half years have borne abundant
fruit. There is no reason why the next three and a half years -- and
beyond -- should not hold equal, or greater, accomplishments in store,
if only we build upon the policies which have proven so successful.
We must continue to be flexible, affirmative and prudent. Thus, and
thus only, can our nation continue to move forward in full strength
and full stride -- creating its full share of abundance for all
Americans.
000

A,lgust 18, 196L

19'~~.

'iEPAPJ)

~?.A~JNON

':'JF'A~UPY'S

NAMED ASSOCIATED I EECTOR

OFFICE OF TAX

A~TALYSIS

The Treasury announced today the appointment of Gerard M. Brannon
as Associate Director of the Office of Tax Analysis.
In his new capacity,

Mr. Brannon will assist the Deputy Assistant

Secretary (Tax Policy), who is also Director of the Office, in directing
the preparation of economic, statistical, and technical analyses rel. ating to
Federal tax policies.

Mr. Brannon has served as Assistant to the Director and Chief of the
Special Studies Staff for the Office since May 1963.

Prior to joining the

Treasury in 1963, he was for six years the economist on the staff of the
House Ways and Means Committee, and before that for six years he was an
economist on the Staff of the Joint Committee on Internal Revenue Taxation.
In both positions he was responsible for
issues involved in legislative

-1.~\\ ~.• j)

analY~

fj.. •

on the entire range of tax

t~~,

G'W¢pOFI'8NY.

Prior to 1951, Mr. Brannon was Assistant Professor of Economics at the
University of Notre Dame.

Since 1951 he has been a Lecturer at the Graduate

School of Georgetown University.
Born in 1922 in Manila, Philippines Islands, Mr. Brannon holds A.B. and
M.A. degrees from Georgetown University and a Ph.D. degree from Harvard University
where he was a Littauer Fellow.

Mr. Brannon is married to the former Frances Maguire.

They have five

children and make their home at 4813 North 24th Street, Arlington, Virginia.

000

D-1317

TREASURY DEPARTMENT

FOR IMMEDIATE RELEASE:

GERARD M. BRANNON NAMED ASSOCIATE DIRECTOR
OF TREASURY'S OFFICE OF TAX ANALYSIS
The Treasury announced today the appointment of Gerard M. Brannon
as Associate Director of the Office of Tax Analysis.
In his new capacity, Mr. Brannon will assist the Deputy Assistant
Secretary (Tax Policy), who is also Director of the Office, in directing
the preparation of economic, statistical, and technical analyses
relating to Federal tax policies.
Mr. Brannon has served as Assistant to the Director and Chief to
the Special Studies Staff for the Office since May 1963. Prior to
joining the Treasury in 1963, he was for six years the economist on the
staff of the House Ways and Means Committee, and before that for six
years he was an economist on the Staff of the Joint Committee on Internal
Revenue Taxation. In both positions he was responsibile for analyses on
the entire range of tax issues involved in legislative consideration.
Prior to 1951, Mr. Brannon was Assistant Professor of Economics at
the University of Notre Dame. Since 1951 he has been a Lecturer at the
Graduate School of Georgetown University.
Born in 1922 in Manila, Philippines Islands, Mr. Brannon holds A.B.
and M.A. degrees from Georgetown University and a Ph.D. degree from
Harvard University where he was a Littauer Fellow.
Mr. Brannon is married to the former Frances Maguire. They have
five children and make their home at 4813 North 24th Street, Arlington,
Virginia.
000

D-13l7

- 3 -

and exchange tenders viII 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 fI'Olll the

or other disposition of the bills, does not have any exemption, as such, and loss
trom the sale or other disposition of Treasury bills does not have any special
treatment, as Buch, under the Internal Revenue Code of 1954.

The bills are subject

to estate, inheritance, gift or other excise taxes, whether Fe de raJ.. 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 ot, 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 8uch
bills J 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 BraIlcb.

- 2 ~'lrltMx

decimals, e. g., 99.925.

}l'r&ctions

not be used.

It is urged that tenders

be made on the printed forms and forwarded in the special envelopes which Yill
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 thaD

banking institutions will not be pennitted 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 JlUst be accompanied by payment of 2 percent ot

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.:f'ter the closing hour, tenders will be opened at the rederal
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. '!'he
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 shaJJ. be
final.

Subject to these reservations, noncompetitive tenders for $

less for the additional bills dated
1ng until maturity date on

•

~oooor less for the

May 28

1964

November 27. 1964
182

Xii10

+D>J

, (92

2yO

days remain-

J(D9

) and noncompetitive tenders

tor

-~ bills without stated price from any one

bidder will be accepted in full a.t the average price (in three decimals) of accepted caupetitive bids for the respective issues.

Settlement for accepted ten-

ders in accordance with the bids must be made or completed at the Federal Reserve
Banks on August 2 . 6 4

tunds or

, in cash or other immediately available

in a like face amount of Treasury bills maturing

August 27, 1964

Uif

•

cash

~mlIID

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,

August 19, 1964
TREASURY I S WEEKLY BIU. OFFERING

The Treasury Department, by this public notice, invites tenders for two seriel
of '.('reasury bills to the aggregate amount of $ 2,100,000,000 , or thereabouts, tor
cash and in exchange for Treasury bills mat\1ring

XXWX

Augustx:fijx1964

,in the 8IIOWlt

of $ 2 rlY,OOO , as follows:
92 -day bills (to maturity date) to be issued

4!J

August 27, 1964

JOq«¥

in the amount of $ l,204:W'000 , or thereabouts, represent.
ing an additional amount of bills dated
and to mature

November~

amount of $ 900 ,~OOOZ

Ma.~

284i¥4

1964
, originally issued in the
addi tiona1 $100 086 000 was is~u~d July ~
' the MCl1tional'and 'original billS 19~

to be freely interchangeable.
182 -day bills, for $ 900,000,000

XfDJ

August 27, 1964

XfDf

,or thereabouts, to be dated

, and to mature

February 25, 1965

tUf

•

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 tom oDl)',

and in denominations of $1,000, $5,000, $10,000, $SO,OOO, $100,000, $500,000 ud

$1,000,000 (maturity value).
Tenders will be received at Federal Reserve Banks and Branches up to tbe
Daylight Saving
clOSing hour, on~-thirty p.m., Easten,i~ time,
Monday, AUGJ24 1 1964 _'
Tenders will not be received at the Treasury Department, Washington.

Each teadel'

must be for an even multiple of $1,000, and in the case at competitive tenders till
price oftered must be expressed on the basis of 100, with not more thaD three

TREASURY DEPARTMENT

"OR 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 Augus t 27, 1964,
in the amount of
$2,101,786,000, as follows:
92-day bills (to maturity date) to be issued August 27, 1964,
in the amount of $1,200,000,000, or thereabouts, representing an
additional amount of bills dated May 28, 1964, and to mature November
27, 1964, originally issued in the amount of $900;091,000 ( an additional
$100,086,000 was issued July 29, 1964), the additional and original bills
to be freely interchangeable.
l82-day bills, for $900,000,000,
or thereabouts, to be dated
27,1964, and to mature February 25,1965.

August

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 Federal Reserve Banks and Branches
to the closing hour, one-thirty p.m., Eastern Daylight Saving
time, Monday, August 24, 1964.
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.
up

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-1318

- 2 -

Immediately after the closing hour, tenders will be opened at
the Federal Reserve Banks and Branches, followin~ which public
announcement will be made by the Treasury Department of the amount
and price range of accepted bids. Those submitting tenders will be
advised of the acceptance or rejection thereof. The Secretary of
the Treasury expressly reserves the right to accept or reject any or
all tenders, in whole or in part, and his action in any such respect
shall be final. Subject to these reservations, noncompetitive
tenders for $ 200,000 or less for the additional bills dated
May 28, 1964
(92days remaining until maturitr date on
November 27, 1964) and noncompetitive tenders for $ 100,000
or les8 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 August 27, 1964
in cash or other immediately available funds or in a like face
amount of Treasury bills maturing August 27, 1964 Cash and
exchange tenders will receive equal treatment. Cash adjustments
will be made for differences between the par value of maturing
bills accepted in exchange and the issue price of the new bills.
The income derived from Treasury bills, whether interest or
gain from the sale or other disposition of the bills, does not have
any exemption, as such, and loss from the sale or other disposition
of Treasury bills does not have any special treatment, as such,
under the Internal Revenue Code of 1954. The bills are subject to
estate, inheritance, gift or other excise taxes, whether Federal or
State, but are exempt from all taxation now or hereafter imposed on
the prinCipal or interest thereof by any state, or any of the
possessions of the United states, or by any local taxing authority.
For purposes of taxation the amount of discount at which Treasury
bills are originally sold by the United states is considered to be
interest. Under Sections 454 (b) and 1221 (5) of the Internal
Revenue Code of 1954 the amount of discount at which bills issued
hereunder are sold is not considered to accrue until such bills are
sold, redeemed or otherwise disposed of, and such bills are excluded
from consideration as capital assets. Accordingly, the owner of
Treasury bills (other than life insurance companies) issued hereunder
need include in his income tax return only the difference between
the price paid for such bills, whether on original issue or on
subsequent purchase, and the amount actually received either upon
sale or redemption at maturity during the taxable year for which the
return is made, as ordinary gain or loss.
Treasury Department Circular No. 418 (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

- ::> -

f.ll'('

exempL from all tD..xution noW' or hereafter :i.mposed on the principal or interest

Lllcrcof by nny Sta1.e, or any of the pOGocssions of the Un! ted States, or by any

local. tnxJnr: auLhor.i ty.

For purpOGCfJ of tt1 xat.:ion t.hc amount of discount at which

1'reo.sul'Y ldlls (u'c originally sold by t.he United states is considered to be intel~est.

Under Scctions 4:54 (b) and 1221 (5) of the Internal Revenue Code of 1954

t.he amount of discount at lIhich bills issued hereunder are sold is not considered

to accrue until such bilh: arc sold, redeemed or otherwise disposed of, and such
bill9 m'('

C)~cJ.u(krl

from cOnf.,inerntion

rH;

c:'.pitaJ.

a";~1ct::;.

Accordingly, the owner

of' 'l')·Co.Gury b:i.1J.s (othel' tlwn lIre .i.nsuruncc companies) issued hereunder need in-

clude In his income tax return only the difference betvreen the price paid for such
billG, .·rhether on oriGinnl Inl;uc or on !;Ilbr,cqucnt purchase, and the amount

act~

l'ccl!ivcd either upon sale or redemptj.on at ma.turity durine the taxable year for
l-Thich tho return is mude, as orcllnD.ry cain or loss.
'l'rcnsury Department Circular No. 418 (current revision) and this notice, pre·
scribe Lhe terms 01' the Treastu;! bills and govern the conditions of their issue.
Copies of the circular may be obta.ined from any Federal Reserve Bank or Branch.

- 2 -

banking institutions will not be pcrml tLed to subnti t tenders except for their own

nCC01ll1t.

Tenders ,vi11 be received ",-i. thout deposit from

incorporat~d

banks 8J1d

trust companies and from responGible 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 bank or trust company.
Irrunediately after the closing hour, tenders wlllbe opened at the Federal He ..
serve Bonks and Branches, follmril1(i "hich public announcement '\viII be made by the

'rrcasury Department of the Dmount and price range of accepted bids..

ting tenders ,nIl be advised of the acceptance or rejecLion thereof.

'lhose Gubml t-

The

Secret~ry

of the 'l'reasury e;:pressly reGerves the riGht to accept or reject any or all tenders,
in ,·,hole or in part, and his· action in any ouch respect shall be final.
to these reservations, noncompetitive tenders for

*2006

Subject

or less' without

stated price from anyone bidder vrill be accepted in full: at the average price (in
three decimals) of accepted competitive bids.
a~corda:nce

Settlement for accepted tenders in

vnth the bids must be made or completed at the Federal Reserve'

_~-.x~t~~=lb)=19;;..64:;;..;;..___ ,

Ban1~

in cash or other ].mmediately available funds or in a like

face amount of Treasury bills matu:r1.nl3

tenders ,Till receive equal treatment.

Aulmst 31, 1964

tii)

Cash .a.ndexchunge

Cach idjustments '\viII be made for

differ~

ences betYleen the par value of maturil'l[; bills accepted in, exchange .and .the."is.sue
pr:lce of the nevT bills.
The income derived from Treasury bills, "mether interest or gain fr.om .the sale
or other disposition of the bills, does not have any excmpt~on, as such;" and 10lSs
from the sale or other disposition of Tl'c'asury bills. does' not have any special
treatment, as such, under the Internal Revenue Code of 195.4.

The billa are subj e 9t

to estate, inheritance, gift or other excise taxes, vThether Federal or state, but

TREASURY DEPARTMENT

Washington
FOR It1MIIDlATE RELEASE,
Ullih a

August 19, 11M
•

'fflXDlD i xx i MJl~URY REFUNDS

ONE-YEAR BILLS

The Treasury Department, by this public notice, invites tenders for

$ 1,,000,000 , or thereabouts, of
in exchange for Treasury bills maturing
of $ 1,OOi\43,OOO

365

iii

-dB¥ Treasury bills, for cash and

August

1964

, in the amount

, to be issued on a discount ba.sis under competitive and

noncompetitive bidding as hereinafter provided.
dated

tit

August 31, 1964

The bills of this series will be

and will mature

the face amount will be payable without interest.

~ 31, 1965

when

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
Da;rlisht Saving
closing hour ,one-thirty p.m., Eastern J»iiiGtl time,
'fu.e8dstrfirJAyu't 25, 19....
Tenders vill not be received at the Treasury Department, Washington.

Each tender

must be for an even multiple of $1,000, and in the case of competitive tenders ~
price offered nmst be expressed on the basis of 100, with not more than three
1mals, e. g., 99.925.

Fractions may not be used.

these bills will run for

365

(II)

de.

(Notwithstanding the fact that

days, the discount rate will be computed on a bali

discount basis of 360 days, as is currently the practice on all issues of Tre8S1l1'J
bills.)

It is urged tha.t tenders be made on the printed foms and forwarded in

the special envelopes which will be supplied by Federal Reserve Banks or

BraDclJeI

on application therefor.
Bank1.'lg !nstitutions generally

submit tenders for account of

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

cus~rs

Others tbaD

TREASURY DEPARTMENT

lOR HillED lATE RELEASE:

TREASURY REFUNDS ONE-YEAR BILLS
The Treasury Department, by this public notice, invites tenders for
1,000,000,000, or thereabouts, of 365-day Treasury bills, for cash and
n exchange for Treasury bills maturing August 31, 1964, in the amount
f $1,001,143,000, to be issued on a discount basis under competitive and
oncompetitive bidding as hereinafter provided. The bills of this series
ill be dated August 31, 1964, and will mature August 31, 1965, when
he face amount will be payable without interest. They will be issued in
earer 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
o the closing hour, one-thirty p.m., Eastern Daylight Saving time,
uesday, August 25, 1964. Tenders will not be received at the Treasury
'epartment, Washington. Each tender must be for an even mul tiple of
1,000, and in the case of competitive tenders the price offered must be
xpressed on the basis of 100, with not more than three decimals, e. g.,
9.925. Fractions may not be used. (Notwithstanding the fact that these
ills will run for 365 days, the discount rate will be computed on a bank
iscount basis of 360 days, as is currently the practice on all issues
f Treasury bills.) It is urged that tenders be made on the printed forms
nd forwarded in the special envelopes which will be supplied by Federal
eserve 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 submit
enders except for their own account. Tenders will be received without
eposit from incorporated banks and trust companies and from responsible
nd recognized dealers in inves tment securi ties. Tenders from others
ust be accompanied by payment of 2 percent of the face amount of
reasury bills applied for, unless the tenders are accompanied by an
xpress guaranty of payment by an incorporated bank or trust company.
Immediately after the closing hour, tenders will be opened at the
ederal Reserve Banks and Branches, following which public announcement
ill be made by the Treasury Department of the amount and price range
f accepted bids. Those submitting tenders will be advised of the
cceptance or rejection thereof. The Secretary of the Treasury
- 1319

- 2 -

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.
Settlement for accepted tenders in accordance with the bids must be
made or completed at the Federal Reserve Bank on August 31, 1964, in
cash or other immediately available funds or in a like face amount
of Treasury bills maturing August 31, 1964. Cash and exchange tenders
will receive equal treatment. Cash adjustments will be made for
differences between the par value of maturing bills accepted in
exchange and the issue price of the new bills.
The income derived from Treasury bills, whether interest or gain
from the sale or other disposition of the bills, does not have any
exemption, as such, and loss from the sale or other disposition of
Treasury bills does not have any special treatment', as such, under the
Internal Revenue Code of 1954. The bills are subject to estate,
inheritance, gift or other excise taxes, whether Federal or State, but
are exempt from all taxation now or hereafter imposed on the principal
or interest thereof by any State, or any of the possessions of the
United States, or by any local taxing authority. For purposes of
taxation the amount of discount at which Treasury bills are originally
sold by the United States is considered to be interest. Under
Sections 454 (b) and 1221 (5) of the Internal Revenue Code of 1954
the amount of discount at which bills issued hereunder are sold is not
considered to accrue until such bills are sold, redeemed or otherwise
disposed of, and such bills are excluded from consideration as
capital assets. Accordingly, the owner of Treasury bills (other than
life insurance companies) issued hereunder need include in his inco~
tax return only the difference between the price paid for such bills,
whether an 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
from any Federal Reserve Bank or Branch.

000

- 2 -

"Storekeepers, cashiers and tellers who cash checks or
bonds without requiring proper identification from the holders
are inviting their own losses," Chief Rowley warned.
The Chief's report gave highlights of the principal
counterfeiting and forgery cases in which the Service was
v
involed during the year. It also credited local, State and
i\.

other Federal law enforcement agencies and individual
citizens for their part in helping the Secret Service
suppress these

cr~es.

The report cited the development of graphic arts and
improved printing equipment as the reasons for the increase
in counterfeiting, and said that the incidence of all crimes
over which the Secret Service has investigative jurisdiction
"remains generally consistent with the nationwide crime
trend."

A copy of the Secret Service's Annual Report
is attached.
,..

Att.

P~lt;'ASt: A" ":~~S~A?E:P.s
MONDAY, A1V',;JST
196L

2u,

It also stated that only

one out of every 12 known counterfeits manufactured resulted
in a loss to the public, and 98 percent of all the cases
of counterfeiting, forgery of government checks and bonds
and other miscellaneous crimes brought to trial by the Secret
Service resulted in convictions.
~ ), 75-;;1 "r;"c
In dollar terms, of the $-1,736,417 faceYfllue of
7J "'S 30} "r~L/
counterfeits taken by the Secret Service, only $516,618
resulted in loss to the public.
Forgeries of government checks continued to be a major
enforcement problem for the Secret Service, Chief Rowley
reported, although the number of cases investigated declined.
During the past fiscal year, more than 41,000 cases involving
more than $4.1 million were investigated, and 3,192 persons
were arrested.

TREASURY DEPARTMENT

FOR RELEASE A.M. NEWSPAPERS
MONDAY, AUGUST 24, 1964

COUNTERFEITING REMAINS HIGHLY UNPROFITABLE
TO CRIMINALS, SECRET SERVICE REPORT SHOWS
Counterfeiting of U. S. currency increased during the past year,
but hope for illicit profits by counterfeiters continued to fade,
according to James J. Rowley, Chief of the United States Secret
Service.
Chief Rowley's annual report to Treasury Secretary Douglas Dillon,
released today, revealed that the Service seized a record amount
of $7.2 million in bogus money before it could be passed on to the
public. It also stated that only one out of every 12 known counterfeits
manufactured resulted in a loss to the public, and 98 percent of all
the cases of counterfeiting, forgery of government checks and bonds
and other miscellaneous crimes brought to trial by the Secret Service
resulted in convictions.
In dollar terms, of the $7,752,450 face value of counterfeits
taken by the Secret Service, only $530,434 resulted in loss to the
public.
Forgeries of government checks continued to be a major enforcement problem for the Secret Service, Chief Rowley reported, although
the number of cases investigated declined. During the past fiscal
year, more than 41,000 cases involving more than $4.1 million were
investigated, and 3,192 persons were arrested.
"Storekeepers, cashiers and tellers who cash checks or bonds
without requiring proper identification from the holders are inviting
their own losses," Chief Rowley warned.
The Chief's report gave highlights of the principal counterfeiting
and forgery cases in which the Service was involved during the year.
It also credited local, State and other Federal law enforcement agencies
and individual citizens for their part in helping the Secret Service
suppress these crimes.

D-1320

(OVER)

- 2 -

The report cited the development of graphic arts and improved
printing equipment as the reasons for the increase in counterfeitin~
and said that the incidence of all crimes over which the Secret
Service has investigative jurisdiction "remains generally consistent
with the nationwide crime trend."
A copy of the Secret Service's Annual Report is attached.

Attachment

TREASURY DEPARTMENT
UNITED STATES SECRET SERVICE
WASHINGTON, D.C.

20220

OFFICE OF THE CHIEF

August 18, 1964

MEMORANDUM TO THE SECRETARY

Attention:

Mr. Robert A. Wallace
Assistant Secretary

Frem:

Mr. James J. Rowley
Chief, U. S. Secret Service

Subject:

Secret Service Annual Report

The Annual Report of the activities and
accomplishments of the U. S. Secret
Service for the Fiscal Year ended June 30,
1964, is herewith submitted.

/- ,,(~-.Z(
,,}

~~--

U. S. Secret Service
Annual Report
Fiscal Year Ended June 30, 1964
The major functions of the United States Secret Service
defined by Section 3056, Title 18, United States Code,
are the protection of the President of the United States,
the members of his

~ediate

family, the President-elect,

the Vice President or other officer next in the order of
succession to the office of President, and the Vice Presidentelect; protect a former President, at his request, for a
reasonable period after he leaves office; the detection and
arrest of persons committing any offenses against the laws
of the United States relating to obligations and securities
of the United States and of foreign governments; and the
detection and arrest of persons violating certain laws relating to the Federal Deposit Insurance Corporation, Federal
land banks, and Federal land bank associations.

By long-standing custom, the Service does not make
public reports concerning its assignment of providing
protection for the President and Vice President and their
families.

The protective responsibilities of the Service

- 2 -

were broadened this past year by the action of the Congress
in authorizing protection for the widow of President
Kennedy.

During fiscal year 1964 Special Agents of the United
States Secret Service seized a record amount of $7.2 million
dollars in counterfeit currency before it could be passed
on to unsuspecting citizens.

Only one out of every 12

known counterfeits manufactured resulted in a loss to the
public.
The seizures reflected increased counterfeiting
activity which the Secret Service charged to three major
factors:

First, the growth in the crLme rate and the fact

that the constant pressure on gambling and other illegal
activities have driven

cr~inals

from these fields into

other illegal enterprises, such as counterfeiting.

Second,

the development of the graphic erts and Lmproved printing
equipment have enabled individuals to turn out counterfeits more easily and faster.

And third, certain supposedly

trusted employees, who have access to costly printing
equipment used for legitLmate purposes, are manufacturing

- 3 -

counterfeit after normal working hours without the knowledge of their employers.

In addition, pseudo legitimate

printing shops are often used for this illegal purpose.
This past fiscal year 737 persons were arrested for
counterfeiting offenses and 44 counterfeit plants were
seized.

Counterfeit currency received during the past

year amounted to $7,752,450, with only $530,434 resulting
in a loss to the public.

Special Agents of the Secret

Service seized the record amount of $7,222,015 in counterfeit.
This year, as in the past, the bulk of bogus money
was seized before it became a financial threat to the
American public.

It is necessary for the Secret Service

to take quick and effective action to suppress counterfeiting at its source because today counterfeit notes are
rapidly manufactured and distributed.
counterfeiting case summaries include
why this

cr~e

The following
pr~e

examples of

showed small profits in fiscal year 1964:

During June 1963 nine men joined forces in San Francisco
and produced more than two million dollars in counterfeit

- 4 $20 and $50 Federal Reserve Notes.

This group included

two tavern owners, a proprietor of a mailing service, three
commercial printers, a lithographer, an electronics technician and a truck driver.

Three of the men had prior

felony convictions.
The photographic work was done in a small private
house rented specifically for this purpose.

The counter-

feit plates were made in the offices of the mailing service
operated by one of the defendants and the printing was done
in the print shop of a nearby California State College
where one of the defendants was employed.

The notes were

taken to the rented house where they were treated to give
them an aged appearance.

Then the group began looking

for prospective customers among their underworld contacts.
One of their first customers was an individual who
agreed to buy one-half million dollars of these counterfeits
from one of the tavern owners.

In reality this customer

was an undercover Secret Service Agent, and on July 3,
1963, prior to completing the transaction, several of the
defendants were arrested and $446,000 was seized.

The

remaining conspirators were quickly apprehended and a total

- 5 -

of $2,163,040 in the counterfeits was seized, with less
than $2,000 being passed on the public.

- ---~

In July 1961 a man was released from prison after
serving a sentence for burglary.

From that time, until

February of 1963, he toured the country stealing from poor
boxes in churches, accumulating a saving of $4,500 which
he used to set up a counterfeiting plant.
He attended a school specializing in offset printing
in March 1963, but remained only one week as he was dissatisfied with the instruction.

The next month he settled

in Frankfort, Indiana, and began purchasing the equipment
necessary to operate his plant.

At this time because of

certain suspicious actions on his part, he came to the
attention of the Secret Service office in Indianapolis and
~ediate1y

became a subject of surveillance.

It readily

became apparent that he was not using his equipment for any
normal legitimate purposes and the investigation was intensified to determine his interest in the printing trade.
OR July 30, 1963, he returned his press to the supplier,

- 6 stating he was going out of the printing business.
Agents, who had followed

Special

to the store, approached his

car and found $1,712,000 in counterfeit $10 Federal Reserve
Notes, together with 194 counterfeit plates, stored in the
trunk.

He admitted manufacturing the notes and said he had

finished his work tland was on his way to pass the notes"
when he was arrested.

He had worked 12 hours a day for

three months to perfect his notes, all of which were seized
before any had been passed on the public.

On July 26, 1963, the Secret Service received information indicating that a proprietor of a small printing
shop in Delaware, Ohio, intended to manufacture counterfeit $20 Federal Reserve Notes and was looking for
customers.
The Secret Service was able to arrange a meeting
between the proprietor and a prospective buyer.

The buyer

was actually one of our Special Agents acting in an undercover role.

The print shop owner told the undercover

agent that he could print any amount of counterfeit notes

- 7 and agreed to sell hLm $250,000 in counterfeits for $30,000
in genuine currency.

During their negotiations, the pro-

prietor took the agent to his plant and allowed him to act
as lookout while he printed the notes.

On September 8, 1963, shortly before delivery of the
notes to the Agent, the printer was arrested and $278,800
in counterfeit $20 Federal Reserve Notes was seized before
any had been passed on the public.

A complete counter-

feiting plant, including press, plates, and negatives was
confiscated, and the counterfeiter is now serving a 20-year
prison sentence.

A new deceptive counterfeit first appeared on
May 10, 1962, when several mutilated notes were found near
a "sump pump" at a service station in Detroit, Michigan.
The notes soon began appearing throughout the country and
it was determined that they were being distributed by a
criminal element in Detroit.

Our investigation was in-

tensified in that area and to date 90 persons have been
arrested for passing and distributing this particular

- 8 counterfeit note.

Five persons were arrested in Los

Angeles while in possession of $45,000 of the notes.

They

had recently passed counterfeits at "Disneyland" in
California.
The arrest of a distributor in Detroit enabled the
Secret Service to seize $211,960 in these notes.

another instance, two men were arrested for selling these
notes to undercover agents and $250,000 was seized.

Finally,

in June 1964, $812,000 in counterfeits was seized from a
Detroit food importer, described as the "Kingpin" of this
organization.

The importer and two associates were im-

mediately arrested.
To date, $1,494,680 of this particular counterfeit
note has been seized with $92,100 having been placed
in circulation.

With the most recent seizure it is believed

the back has been broken on this counterfeit money operation.
Investigation has determined that the counterfeit plates
and other paraphernalia had been previously destroyed.

------

- 9 -

During May 1963 an experienced offset printer took
a second part-time job as a bartender in a cafe in Little
Rock, Arkansas, to supplement his income.

While working

in the cafe, he met three men who exhibited an interest
in his printing experience and a conspiracy developed
between the four to print counterfeit money.
The printer experimented with various methods of reproducing notes for the next several months, and finally
on June 20, 1963, he printed between $50,000 and $70,000
in counterfeit $10 Federal Reserve Notes.

After examining

the notes more closely, the group destroyed all but about
$15,000 as being unfit for passing.

Three of the "partners"

then drove to St. Louis, where they passed about $100 in
counterfeit.

However, when they returned to Little Rock

they decided the notes were not good enough to pass and
they destroyed the plates, negatives and about $8,500 in
the notes.
One of the men kept about $6,500 of the counterfeits
and made a trip to Jackson, Mississippi, during which he
passed 15 notes.

At Jackson he decided to telephone an

alleged bootlegger named Harold Spencer (fictitious name)

- 10 -

at Memphis, Tennessee, wham he had never .et, but wbo bad
been reca.aended to him as a possible custaaer for the
notes.

Through a coincidence, he was connected with tbe

wrong Spencer in Memphis, and unknowingly offered his
illegal proposition to aD honest citizen.
cepted the proposition and asked
to Memphis.

Spencer ac-

to caae

~ediately

Be then informed our Memphis office of this

proposition and when the counterfeiter arrived in Memphis
he made a deal to sell all of the notes to a "friend" who
was actually an undercover Secret Service Agent.

This

man was arrested that same night, but not before he had
told his entire story to the "customer" and had identified
his associates and the location of the plant.

The printer

and the other members of the group were quickly arrested
and this plant was silenced before it could reopen with
a new issue counterfeit.

-----In August 1961 a new issue counterfeit $20 Federal
Reserve Note appeared in Little Rock, Arkansas.

It was

one of the most deceptive counterfeits produced in recent

- 11 years, and the victims who had accepted these notes were
unable to identify the passer.

The counterfeiter traveled

throughout the country, passing his notes in very limited
numbers in 40 of the 50 states.
Through research, Secret Service Agents determined
that the quality of this note was quite similar to the
work of a former counterfeiter who was at that time serving
the remaining year of a 15-year sentence for a previous
money making venture.

Records disclosed that he schooled

a nephew in his trade; therefore, the investigation centered
upon locating this man.

This proved difficult since he was

"on the move" with few close associates and no fixed address.
On February 4, 1964, two men entered a department store
in Tacoma, Washington, and proceeded to make several small
purchases from various cashiers.

They soon aroused the

suspicion of the floor manager, as in making each purchase,
one man would approach the clerk, pay for the item, and then
return to his partner and deposit the item in a bag he
carried.

The man would then approach another clerk and

repeat the process.

The "customers" finally noticed they

were being watched by the floor manager and fled from the

- 12 -

store.

Although they were followed by store employees, they

managed to elude their pursuers and disappeared on the city
streets.

In retracing their movements in the store, the

manager found that these men had used separate $20 notes in
making each purchase.

Suspecting that the notes might be

counterfeit, our Seattle office was contacted.

All of the

$20 notes passed were of this type counterfeit, and for the
first time in two years we had witnesses who could identify
the passer.
The moment of truth arrived when the agent exhibited a
group of photographs of known counterfeiters to the store
clerks, including those of our suspect and a known associate.
The clerks not only identified the suspect but also positively
identified his. friend as the man who actually passed the
notes.
The suspect's partner was located when he surrendered
to authorities on a stolen car violation.

Although he would

not admit being involved with this counterfeit, he admitted
knowing the suspect and said he "hoped we would never find
him."

However, he was found in April, 1964, in Seattle,

Washington.

In searching his car incident to the arrest,

- 13 agents found $17,600 in the counterfeit $20 notes which had
been secreted inside a rear door panel behind the automatic
window motor.

The counterfeiter then decided to cooperate

and drew a map of the location of his plant which he had
buried on the side of a mountain near San Gabriel,
California.

Special Agents located it the following day.

The following table is a summary of the seizures of
counterfeit notes and coins during the fiscal years 1963

and 1964:
Counterfeit Currency
Loss to the Public
Seized before Circulation
TOTAL

1963

1964

$ 564,321. 91

$ 530,434.45

2,848,005.31

7,222,015.78

$3,412,327.22

$7,752,450.23

Forgery of government checks remains a major enforcement problem for the Secret Service.

During the past fiscal

year the Secret Service investigated 41,236 cases involving
the amount of $4,121,346.02 and a total of 3,192 persons

- 14 were arrested for check forgery offenses during the year.
The Secret Service also investigated 5,795 cases involving the forgery of U. S. Savings Bonds, representing a
maturity value of $730,457.62.

During the year 74 persons

were arrested for bond forgery offenses.
Storekeepers, cashiers and tellers who cash checks
or bonds without requiring proper identification from the
holders are inviting their own losses.
The following case summaries are representative of
the various types of people involved in this

cr~e

and the

varying size of their forgery violations:
Two men in New York City, both narcotic addicts, were
arrested July 1963 for stealing, forging and cashing 131
U. S. Treasurer's checks totaling $17,472.82.

These two

forgers, one a repeater, used fictitious bank account
numbers as a part of the endorsements to create the illusion
that they were regular customers.

The proceeds of the

forged checks were divided by the two men and for the most
part were used to purchase narcotics to satisfy their
addiction.

In October 1963 the defendants were each

sentenced to serve 18 months to be followed by 18 months
probation.

- 15 -

---A husband and wife forgery team traveled almost constantly from April 1961 until June 1963 when they were
arrested for the forgery and negotiation of over 100
Treasurer's checks.

These violations were committed during

their travels through Texas, Arkansas, Tennessee, Missouri,
Oklahoma, Kansas, Colorado, Wyoming, Utah, Idaho and
Montana.

The two defendants were sentenced in Federal

Court, Boise, Idaho; the wife was placed on probation for
two years while the husband was sentenced to serve five
years.

Three men were arrested and convicted through the
mutual efforts of the Secret Service and Postal Inspectors.
On

December 31, 1963, the three defendants stole three

pouches of mail at Wadena, Minnesota, which included, among
other items, approximately 150 U. S. Treasurer's checks.
Thirty-two of the stolen Treasurer's checks were forged and
cashed by the defendants in various cities in Minnesota,
Milwaukee, Wisconsin, and in Chicago, Illinois, and they

- 16 burned the remainder.

The three defendants were sentenced

on May 1, 1964, in Federal Court, Minneapolis, Minnesota;
two received five-year prison sentences and the third was
sentenced to serve three years.

-- --

Two men and two women were arrested during September
1963 by the Secret Service at Little Rock, Arkansas, for
the forgery and negotiation of one U. S. Treasurer's check.
The two men stole the check in the course of burglarizing
the payee's home, and in their attempt to conceal the
burglary, set fire to the house, later returning to the
scene to be spectators as the home burned.

The men then

enlisted the assistance of the two women to forge and cash
the check.

The payee made

cla~

for a duplicate check,

thinking at that time that the check had burned along with
her home.

The subsequent investigation of the original

check established not only the details of the forgery and
negotiation but the disclosure of the burglary, and that
which previously had been a fire of unknown origin was
determined to be arson.

The defendants were turned over

- 17 to local authorities for prosecution of the burglary and
arson offenses.

-• - - ~

A check thief was arrested at Cleveland, Ohio, on
July 25, 1963, for the theft, forgery and negotiation in
the Cleveland area of 34 U. S. Treasurer's checks involving in excess of $3,500.

He had a lengthy criminal

record dating back to 1937 which included a previous
arrest by the Secret Service in 1944 for sllnilar offenses.
In most instances he stole the checks from mailboxes.
was sentenced on September 20, 1963, in Federal Court,
Cleveland, to serve four years.

-----

During the night of February 10, 1959, the walk-in
vault of a lumber company in Kansas was burglarized.
Among the items stolen were 159 U. S. Savings Bonds registered to a woman.
On March 12, 1963, a man and woman representing

themselves to be husband and wife, opened an account in

- 18 the registered owner's name and rented a safe deposit box
at a bank in Mississippi.

On April 2, 1963, the woman

forged the above 159 bonds at the bank and deposited the
proceeds, $3,634.44 to her account, from which she immediately withdrew $3,600 to purchase a cashiers check
payable to the man passing as her husband.

To accomplish

the redemption of the bonds, she convinced the bank
employees that her maiden name was that of the registered
owner.
She was arrested on December 5, 1963, at Jacksonville,
Florida.

Investigation also disclosed the man's true name,

which revealed him to be an ex-convict with a lengthy
criminal record extending back to 1945.

He was arrested

on September 10, 1963, for other offenses and is presently
serving a l5-year sentence in the Atlanta Penitentiary.

-----

Three men and a woman were arrested in New York City
in October 1963 for forging and uttering 897 U. S. Savings
Bonds having a redemption value of $167,238.

The bonds

were taken in eight different burglaries, six of which

- 19 occurred in either homes or offices in New York or Chicago,
and two in banks located in Illinois and Texas.

In the

bank burglaries a large number of safe deposit boxes were
rifled.

The bonds were cashed in Dallas, Fort Worth, and

San Antonio, Texas; Detroit, Michigan; Warren, Girard, Niles
and Youngstown, Ohio; Gardiner, Freeport, and Portland, Maine;
Utica and New York City, New York; and Kansas City, Missouri.
It is believed that they and their associates are
responsible for the theft of bonds registered to 118 owners
and having a maturity value of $577,369.

To date, 4,032

of the bonds have been cashed for a value of $348,557.

The following table shows the number of criminal and
non-criminal investigations completed by the Secret Service
in fiscal years 1963 and 1964.

This table reflects the

arrest of 171 persons in fiscal year 1964 for crimes other
than counterfeiting and forgery, bringing the total of persons
arrested to 4,174 in fiscal

y~ar

1964.

Cases of all types

investigated by the Secret Service, totaled 72,015.

- 20 Cases Investigated

FY 1963

FY 1964

Counterfeiting
Forged Government Checks
Forged Government Bonds
Miscellaneous Crtminal
Miscellaneous Non-Criminal

10,378
47,505
7,169
1,080
5.837

12,166
41,236
5,795
2,217
10,601

71,969

72,015

662
3,343
81
121

737

3,192

4,207

4,174

Total
Arrests
Counterfeiting
Forged Government Checks
Forged Government Bonds
Miscellaneous Crimes
Total

171

A total of 3,609 persons were convicted for offenses
investigated by the Secret Service.

Of all Secret Service

cases brought to trial in the past fiscal year,

98.0~

re-

sulted in convictions.
The incidence of

cr~es

over which the Secret Service

has investigative jurisdiction remains generally consistent
with the nationwide crime trend.
Local, state and Federal law enforcement agencies
deserve much credit for their part in assisting the Secret
in the suppression of counterfeiting and government check
forgeries.

The interest and assistance of citizens also

1ided Lmmeasurably.

t.he

f;a I.e 01'

;3 -

othcr dlspor.i tion of 'l'reasury bills does not have any specia.l treatment,

f,uch, under the Internal Revenue Code of 1954.

The bills are subject to estate, inhel'

:f.tonce, gift or other excise taxes, whether Federal or State, but are exempt from all
to..."{at.ion no,., or hereafter imposed on thc principal or interest thereof by any State, 01
ony of the possessions of the United states, or by any local taxing authority.
pUl'pOGCS

of taxation the amount of d:i.seount at which Treasury bills are

by the United States is considered to be interest.

For

origlnal~ BOU

Under Sections 454 (b) and 1221 (5;

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

he:re~

under nre sold ts not considered to accrue until such bills are sold, redeemed or othel
wise dispoocd of, and such bills are excluded from consideration as capital assets.
AccordlJl6ly, the elmer 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, 'Hhether on original issue or on subsequent pruchase, and the

aJDOUD

actually received either upon sale or redemption at maturity during the taxable year
for \mich the return is nmrle, 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.
the circular may be obtained from any Federal Reserve Bank or Branch.

C~ies

- 2 -

Bnnkinc; institutions Generally may submt t tenders for account of customers proed the names of the customers arc set forth in such tenders.

Others than bankinr,

titutions will not be permitted to submit tenders except for their own e,ccount.
ders will be received lnthout deponit, from incorporated banks and trust companies
from responsible and recognized dcnlers in investment securities.

Tenders from

ers must be accompan:Led by payment of 2 percent of the face amount of Treasury bills
Ued for, unless the tenders arc accompanied by an express guaranty of payment by an
orporated bank or trust company.

lks and Branches, fol101nng which public announcement \rill be made by the Treasury
lartment of the amount and price range of accepted bids.
.1 be advised of the acceptance or rejection thereof.

Those submitting tenders

The Secretary of the Treasury

,ressly reserves the right to accept or reject any or all tenders, in whole or in part,
lhis action in any such respect shall be final.
Ipetitive tenders for $200,000

Subject to these reservations, non-

or less without stated price from anyone

lder "rill be accepted in full at the average price (in three decimals) of accepted
Ipetitive bids.

Payment of accepted tenders at the prices offered must be merle or

tpleted at the Federal Reserve Bank in cash or other innnediately available funds on
~rnber .1964

. .

~n!!j~)t!HIJU('D(~ac:Q(Q(!lI!3!!jkx:t.Ol:E:X'R"tWJD~()!!I,«1)at

~'k'hlclJlPctlXl'!lI:x~il1l!c~
The income derived from Treasury bills, "mether interest or gain from the sale

other dispOSition of the bills, does not he.ve any exemption, as such, and loss from

TREASURY DEPARl'l,m:NT
'-Tashlncton
August 21, 1964

FOR IIlInIDIATE RELEASE,

$1 BIILION IN MARCH TAX BILLS
The Treasury Department, by this public notice, invites tenders for
or thcrcabouts, of

201

$lJooWOO,OC

-day Treasury bills, to be issued on a discount basis under

fdf

competitive and noncompetitive biddiIlG as hereinafter provided.

The bills of this ser

'\-rill be desj.gnated Ta.."t Anticipation Series, they 'tnll be dated _S:;;:;.e;::.op...,t:.;:e_m:;D e r,..;2=.L.!-=1~9~64;....._
iRilil
M

and they uill r:lo.ture _Ma_r....c....h~21"'!:2~,~1_9_6_5_ _ __
payment of income

tiJ

taxes due on

They will be accepted at face value in
March 15, 1965

iii

, and to the extent t

are not presented for this purpose the face amount of these bills will be payable mth
out interest at maturity..
1965

Taxpayers desirj.ng to

app~

these bills in

p~nt

of March

,income :JLICIix1'x lIiUJIi taxes ha.ve the privilege of surrendering them to any

Fedc:co.l Reserve Bank or Drench or to the Office of the Treasurer of the United StateD,
Hashincton, not more than fifteen de-yo before

March 15, 1965, Md receivIng receipts

therefor ohOi-TiIl6 the face Br.lOunt of the bills so surrendered.
SUbl:D.tted in lieu of the bills on or before
0;

Intel'nal TIcvenue

1'01'

March 15, 1965

These receipts

,to the District Direcu

the District in which such taxes are payable.

The bills ldlll

issued in bearer form only, £.l1d in denominations of $1,000, $5,000, $10,000, $50,000,
:;>100,000, :;;SOO,OOO and *1,000,000 (maturity value).
Tenders 1-Till be received at Federal Reserve Banko and Dranches up to the closing
Daylight Saving
hour, one-thirty p.m., Eastern/:8I. iIXivlI!ilx" time , wedneSda:y~u@st ,60 J 964' Tenders wI:
not be received at the Treasury Department, Hashington.

Each tender r.mst be for en evl

nrultiplc of :;1,000, and in the case of competitive tenders the price offered must be
CJ:prez3cd on the bo.sis of 100, lrith not more than three decimals, e. g., 99.925.
Fro.ctions moy noL be used.

It is urged that tenders be made on the printed forms and

:Lo:nvarded in the special envelopes vlhich will be supplied by Federal Reserve Banks or
nranches on application therefor.

TREASURY DEPARTMENT

FOR IMMEDIATE RELEASE:

TREASURY OFFERS $1 BILLION IN MARCH TAX BILLS
The Treasury Department, by this public notice, invites tenders
for $1,000,000,000, or thereabouts, of 20 I-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 September 2, 1964,
and they will mature March 22, 1965. They wi 11 be accepted at face
value in payment of income taxes due on March 15, 1965, and to the
extent they are not presented for this purpose the face amount of these
bills will be payable without interest at maturity. Taxpayers desiring
to apply these bills in payment of March 15, 1965, income taxes have
the privilege of surrendering them to any Federal Reserve Bank or
Branch or to the Office of the Treasurer of the United States,
Washington, not more than fifteen days before March 15, 1965, and
receiving receipts therefor showing the face amount of the bills so
surrendered. These receipts may be submitted in lieu of the bills on
or before March 15, 1965, 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 Daylight Saving time,
Wednesday, August 26, 1964. 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
~ithout deposit from incorporated banks and trust companies and from
responsible and recognized dealers in investment securities. Tenders
from others must be accompanied by payment of 2 percent of the face

D-1321

- 2 -

amount of Treasury bills applied for, unless the tenders are accompani,
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 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 expresl
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 September 2, 1964.
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, b~
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
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
from any Federal Reserve Bank or Branch.

roll f(ytF', ~ ' . ;' .';::\lt~~:'I.yl'ueed!)·. "U,,i'Us1.

25' lW..

.'J

iil-S.;Lr.1
"t'te

rw...ry

bUl.,

;)1 ~~JiA~}~aY

,.~_&AJ."l

au.

~r."""Dt ~ 1Nt, ~

Oio'ftUWll

tbet tbe ~~ f~r

tam.

tw') MI1.tI

rr.a.~'
one eeri•• t,o 0. _ er:kll.i-.l ta ... of . .
d't~1 ~~' 26, U6Ii,
and Ule other' "Jlies to be dat.'!'d
27, 19'1t. t*i4b .... otten 3ft A\i...,..et. U
~r~ at U. Federal ....nf:! DanA _ A_" at.. 1eIadare "'~.nYited

or t.hereabout.,

det.a1l2

tuauet.

r
fl.r:>o,_

or ~ b1119 and tor t9OO.000.aoo. or ~"~" ?f 1~2-dt.J ~
the Wo .riea ... .. followe.

TREASURY DEPARTMENT

RELEASE A. M• NEWSPAPERS,
~, August 25, 1964.

August 24, 19~

RESULTS OF TREASURY'S '\'j'EEKLY BILL OFFERING

The Treasury Department announced last evening that the tenders for two series of
to be an additional issue of the bills dated May 28, 1964,
dated August 27, 1964, which were offered on August 19, were
lfDed at the Federal Reserve Banks on August 24. Tenders were invited for $1,200,000,000,
::thereabouts, of 92-~ bills and for $900,000,000, or thereabouts, of 182-day bills.
e details of the two series are as follows:
~easury bills, one series
~ the other series to be

NGE OF ACCEPTED
MPETITIVE BIDS:

92-day Treasury bills
maturing November 27, 1964
Approx. Equiv.
Price
Annual Rate
99.106 a/
3.h98%
99.100 3.~22%
99.102
3. Sl31 b ~/

182-day Treasury bills
maturing February 25, 1965
Approx. Equiv.
Annual Rate
Price
98.166
3.628%
9U.15e
3.644:t
98.160
3.639

High
Low
Average
'Excepting two tenders totaling $3,796,000
57~~ of the amount of 92-day bills bid for at the low price was accepted.
33% of the amount of 18d-day bills bid for at the low price was accepted.
'TAL TENDERS APPLIED FeR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:
District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco

Applied For
'" 34,399,000
~
1,464,360,000
35,391,000
20,966,000
12,238,000
25,558,000

l53ll17,0~

102,6;14,000

~O'rALS

$2,049,479,000

$l,201,2~6,oOO

190,~48,OOO

35,7l9,000
22,086,000
24,60?,OOO
30,h28,000

Accepted
$ 1,e49,ooo
661,485,000
4,534,000
44,895,000
56,'195,000
),010,000
3,010,000
8,801,000
10, 1:l01, 000
34, 1.~66 , 000
143,001,000
1,102,(JOO
4,633,000
4,9H),OOO
5. , 01;j ,000
I:l, 25.~, (JOO
0,656,000
), 2i3, ]l)U
8,223,000
115.J..7..7 0, 000
_lJO, .600,000
$1,962,021,000 $901, 904,000 ~/

Applied For
$ 12,316,000
1,505,965,000
9,534,000

Accepted
$ 30,099,000
785,880,000
19,101,000
20,966,000
12, 231:l,000
21,085,000
119,840,000
21,053,000
19,226,000
22,706,000
20,4~8,OOO

£I

Includes $221, '7 31) 000 noncompetitive tender,s accepted at the average price of 99.102
Includes $56,OJO,uOO noncompetitive tenders accepted at the average price of 98.160
On a coupon iSJue of the same length and fo:!' the same am~unt invested, the return on
these bills would provide yields o~ 3.59% for the 92-day bills, and 3.76/, for the
182-riay 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 ann their length in actual mUlll;er of days related to a 360-day
year. In contrast, yields on certificates, notes, and bonds are computed in terms
?f interest on the amount invested, and relate the number of days remai.~ng in an
lntereat payment period to the actual number of days in the period, with semiannual
compounding if more than one coupon period is involved.
)-13?~

I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I

I
I

TREASURY DEPARTMENT

Augus t 24, 1964

FOR IMMEDIATE RELEASE

United States and Israel to Discuss New
Income Tax Convention

Discussions are to be held in the near future between the United States
and Israel for the purpose of entering into a tax convention between the
two countries for the avoidance of double taxation and to facilitate trade
and investmentG
A proposed convention betVleen the tViO countries was signed several years
ago but Vias never made effective, because it contained a so-called tax sparing
clause under which the United States Vlould have been obligated to alloVi a
credit to its taxpayers for taxes given up by Israel under its investment
promotion laVi

A neVi convention, it is contemplated, would not contain such

a provision.
In general, any

nevi

convention agreed upon is expected to be similar to

other tax treaties, and Vlill be concerned with the tax treatment of trading
and other business enterprises, investment income and income from services.
Persons in the United States desiring to make suggestions as to
provisions that should be considered for inclusion in a convention are
invited to submit the::'.r -,;'ieVis to Stanley So Surrey, Assistant Secretary of
the Treasury, Washington

25, D.C.

Deadline for the receipt of comments is

September 100

000

D-1323

TREASURY DEPARTMENT

August 24, 1964

FOR IMMEDIATE RELEASE

United States and Israel to Discuss New
Income Tax Convention

Discussions are to be held in the near future between the United States
and Israel for the purpose of entering into a tax convention between the
two countries for the 'avoidance of double taxation and to facilitate trade
and investment o
A proposed convention between the two countries was signed several years
ago but was never made effective, because it contained a so-called tax sparing
clause under which the United States would have been obligated to allow a
credit to its taxpayers for taxes given up by Israel under its investment
promotion law.

A new convention, it is contemplated, would not contain such

a provision.
In general, any new convention agreed upon is expected to be similar to
other tax treaties, and will be concerned with the tax treatment of trading
and other business enterprises, investment income and income from services.
Persons in the United States desiring to make suggestions as to
provisions that should be considered for inclusion in a convention are
invited to subrni t their 'v-iews to Stanley So Surrey, Assistant Secretary of
the Treasury, Washington 25, D.C.

Deadline for the receipt of comments is

September 10.

000

D-1323

.. I

, . . A. N. .1. . . .,
P, MM •
. . . . til _ _ _

7".' . .

fII

tllD'8 • 4 II _

an'

1M twl.., II.... r. . . . . . . . lMt eea• • --- ... t.III ••• :far

."It

_ u. ...._ fit

to._

$l,JOO,.,,.

MI •.., l'J.-.y \\&JI8 to lie . . . . . . . . . . . . ~, ad
51, 1911, whieh . . . oftww4 _ ..... 19, . . . . . . . . . . . tile Federal . . . ..

. . hi . . . . . .

DIe

25.

tnsUa of w.. 1. . .

aN . .

fell_.

",00t,__

( ...."1• •
1Itbd OIl . . . . .
05 •• "".,. . . . . . . . .
1D tull

., b

..... et acOQtel "

..,te4

. . . . . . . . . IIbsua belov)

""tift ......

· ".110 1Ial..u. ....
tit...
•

•

98.112
M.280

•

fit ...........,.•• :So 61~~ per _
5. 6)~ II
II
....
•
3 rJVttl..
..

.-.-,,.

.....

9,468,000
, 64 SA! 000

, ,

... t.a
1U1n1alpbu

1,033,000

cn.....

~,82~,OOO

."Lld
.1.....

2,7:S,OOO
',202,000

Cbi....
ft. r.n

5,481,000
' .. i~38,oao
4,100,000
",986,000

".n.,lS.
r__ C&tr

.u.
......uaoo

5,*,000

I. 1111

58,128,000

tI,CXX>,2U,oao

JI 011 a . . . S_ of the _

J. . . . . . t . __ _
[1 IIII Uuillte4, tbe .....
_ tbMe \ltlla UO 1M ,..,... • ,...,. '" I.... . . . . _ . . . . . blll.t 1ft . . .
... _ _ ttl .... lI.e .....tIl . . . . . . . .JAW .. \lie t_ e•• lt of the .uII
,....J. at ..wrlt7 Jdbu' __ u. II . . . . ." . . . tIIIU IIIIIth 1D
1Mtr fit tare NlaYt to • ,."..,.,.... III ......., ,..'. . . ellttt1catd, . .
............ ...... 18 . . . . fill ......... till 1111.' Wsut'll, aa4
• • • fII .... IDlrt. . . ill _ .......... rEl , . . . . . . . . . .
....,.,.~
II II II II II IlMst... it . . . . . . _
•• ,11 ,..1.. 11

.hI' •

"- .....,.tal

,,1

,.late"

Angust 25, 1964
RE3UI1l'S OF REF'UNDING OF $1 BILLION OF ONE-YEAR B:rI.aU3
The Treasury Department announced last evening that the tenders for $1,000,000,000,
thereabouts, of 365-day Treasury bills to be dated August 31, 1964, and to mature
ust 31, 1965, which were offered on August 19, were opened at the Federal Reserve
ks on August 25.

The details of this issue are as follows:
Total applied for - $1,940,054,000
Total accepted
1,000,214,000

(includes $40,009,000 entered on a noncompetitive basis and accepted. in full
at the average price shown below)

fumge of accepted competitive bids:
High
Lev

96.270 Eq,uivalent rate of discount approx. 3.679% per annum
96.252
11
It
II"
II
3.697~
tI
II

Aver~e

96.260

"""

"3.688%"

(82% of the amount bid for at the law price was accepted)
Federal Reserve
District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Mtnnee.pol1s

Total
Applied For
$ 30,558,000
1,484,392,000
12,933,000
85,623,000
2,793,000

5,202,000
175,437,000
9,538,000

San FranCisco

TOTAL

9,468,000

764,692,000
1,933,000
38,823,000

2,793,000
4,202,000
95,487,000

21,424,000
91,268,000

$1,940,054,000

$1,000,214,000

11,486,000

Dallas

4,938,000
4,100,000
9,986,000
5,C64,OOO
5A,7?8,OOO

8,400,000

Kansas City

Total
Accepted

a coupon issue of the same length and for the same amount invested, the return
bn these bills would provide a yield of 3.asi. Interest rates on biJ..lE are quoted
Iln terms of bank discount vi th the return related to the face amount of the bills
~le at maturity rather than the amount invested and their length in actual num~er of days related to a 360-day year. In contrast, yields on certificates, notes,
'-i bonds are computed in terms of interest on the amO'Ullt invested, and relate the
.'number of d~ remaining in an interest payment period to the actual number of days in
Ithe period, with semiannual compounding if more than one coupon period is involved.
l:)n

n·13~11

FOR IMMEDIATE RELEASE
"f

INCOME TAX TREATY BETWEEN THE UNITED STATES
AND PORTUGAL TO BE DISCUSSED

../.00
\...

Representatives of the United States are expected to meet with
representatives of the Portuguese government in the near future to
resume discussions on a possible income tax convention to avoid double
taxation of income and promote trade and investment between the two
countries.

Discussions previously held were suspended pending Portuguese

revision of its tax laws.

Jrevision#

h~now been

completed.

It is anticipated that among the subjects to be discussed will be
the tax treatment of trading and other business enterprises, investment
income, and income from services.
Persons in the United States who desire to submit comments on the
scope of the discussions or to submit information relating to the
subjects mentioned are invited to send their views to Mr. Stanley S. Surrey,
Assistant Secretary of the Treasury, Washington 25, D. C. Persons who
~.A' ~
QQmm~ieabcd their views in connection with the earlier discussions

,-September k 1964.

need not repeat them.

The deadline for receipt of comments is

TREASURY DEPARTMENT

FOR IMMEDIATE RELEASE
INCOME TAX TREATY BETWEEN THE UNITED STATES
AND PORTUGAL TO BE DISCUSSED
Representatives of the United States are expected to
meet with respresentatives of the Portuguese government in
the near future to resume discussions on a possible income
tax convention to avoid double taxation of income and
promote trade and investment between the two countries.
Discussions previously held were suspended pending
Portuguese revision of its tax laws.

That revision has

now been completed.
It is anticipated that among the subjects to be
discussed will be the tax treatment of trading and other
business enterprises, investment income, and income from
services.
Persons in the United States who desire to submit
comments on the scope of the discussions or to submit
information relating to the subjects mentioned are invited
to send their views to Mr. Stanley S. Surrey, Assistant
Secretary of the Treasury, Washington 25, D.C.

Persons who

sent in their views in connection with the earlier discussions
need not repeat them.

The deadline for receipt of comments

is September 15, 1964.
000

D-1325

- 3 -

and exchange tenders viII receive equal treatment.

Cash adjustments viII 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 loss
from the sale or other disposition of Treasury bills does not have any spec1&!
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 actuail)
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 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 -

decimals, e. g., 99.925.

Fractlons may not be used.

It is urged that tenders

be made on the printed forms and forwarded in the special envelopes which Yill

be supplied by Federal Reserve Banks or Branches on application therefor.
Banking institutions generally may submit tenders for account of customers
provided the narr,,,,s 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 ot

the face amount of Treasury bills applied for, unless the tenders are accompanied
by an express guaranty of payIIlent by an incorporated bank" or trust company.
Immediately after the closing hour, tenders will be opened at the FedenU
Reserve Banks and Branches, following which public announcement will be made by
the Treasury Department of the amount and price range of accepted bids.

Those

submitting tenders will be advised of the acceptance or rejection thereof. The
secretary of the Treasury expressly reserves the right to accept or reject

any

or a.ll. 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

June 4" 1964

days remain..

ing until maturity date on

4lfij
DeCembeW! 1964 fdC#) and noncompetitive
tenders tor

$ 100,,000 or less for the

182 -day bills without stated price from sn.y one

ail

bidder will be accepted in full a.t the average price (in three decimals) of ac ..
cepted competitive bids tor the respective issues.

Settlement for accepted ten..

dera in accordance with the bids must be made or completed a.t the Federal Reserve
Banks on

September 3, 1964

, in cash or other immediately available funds or

in a like face amount of Treasury bills maturing

September 3" 1964 •
_--'-:_-m!'::"I'-:-_-

Cash

TREASURY DEPARTMENT
Washington
Aquat 26, 19M

FOR IMMEDIATE RELEASE,

TREASURY'S WEEKLY BILL OFFERING

The Treasury Department, by this public notice, invites tenders for two Berti

(If ,000 ,

of Treasury bills to the aggregate amount of $ 2,100
cash and in exchange for Treasury bills matl,lring

or thereabouts, tol

septembli:3. 1964 , in the

)

amow

of $ 2, 104af' 000 , as follows:

91 -day bills (to maturity date) to be issued SeptemberJl1964

JlIi:k

in the amount of $

1,200~,OOO

, or thereabouts, represent-

ing an additional amount of bills dated
and to mature

December 3, 1964

June 4, 1964

, originally issued in the

EM:

amount of $ 9Q4~OOOt

' the additional and original billa
additional $100,086,000 vaa i ••ued
to be freely interchangeable.
Julf 29, 1964)
AD

182 -day bills, for $

iQIIk)

900,.000 ,

or thereabouts, to be dated

September 3, 1964 , and to mature

QI&k

March 4~65

•

The bills of both series will be issued on a discount basis under competit1ve
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).
~nders

will be received at Federal Reserve Banks and Branches up to the
Daylight Saving
clOSing hour, on~-thirty p.m., Eastern bWWHKi time,
Monday, . 3 1 , 19M
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 tile
price offered must be expressed on the basis of 100, with not more than three

TREASURY DEPARTMENT
u

-OR IMMED IATE

RELEASE
TREASURY'S WEEKLY BILL OFFERING

The Treasury Department, by this public notice, invites tenders
or two series of Treasury bills to the aggregate amount of
2,100,000 ,000, or thereabouts, for cash and in exchange for
reasury bills maturing September 3,1964, in the amount of
2,104,412 , 000, as follows:
91-day bills (to maturity date) to be issued September 3, 1964, in
:he amount of $1,200,000,000, or thereabouts, representing an
Idditional amount of bills dated June 4, 1964, and to mature
~c~mber 3, 1964, originally issued in the
amount of $904,729,000 (an
Idditional $100,086,000 was issued July 29, 1964), the additional and
Jrigina1 bills to be free ly interchangeable.
182-day bills, for $900,000,000, or thereabouts, to be dated
eptember 3, 1964, and to mature March 4, 1965.

The bills of both series will be issued on a discount basis under
ompetitive and noncompetitive bidding as hereinafter provided, and at
laturlty their face amount will be payable without interest. They
r111 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
to the c losing hour one-thirty p. m., Eas tern Daylight Saving
lme, Monday, August 31, 1964.
Tenders will not be
'ece1ved at the Treasury De~artment, Washington. Eac h tender must
Ie for an even multiple of $1,000, and in the case of competitive
enders the price offered must be expressed on the basis of 100,
ith not more than three dec imals, e. g., 99.925. Frac t ions may not
'e used. It is urged that tenders be made on the printed forms and
o~a~ed in the special envelopes which will be supplied by Federal
eserve Banks or Branches on application therefor.
lp

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
Ubmit tenders except for their own account. Tenders will be received
ithout deposit from incorporated banks and trust companies and from
esponsible and recognized dealers in investment securities. Tenders
rom others must be accompanied by payment of 2 percent of the face
mount of Treasury bills applied for, unless the tenders are
ccompanied by an express guaranty of payment by an incorporated bank
r true t company.
D-1326

FOri R::L~AS).' A.

Ji"\.i;' ;(·.F -,:,; I

Thursday, A~ut,t 27, l:l6b.

T". Tree.url ".epartment annntmeed last f.tTenln,1 that the tendere tor 11,000,000,000
or ther.. b~Jt~, of 'l'ax '\nticipation ~e-rie~ ?Ol-~ay j'reasury 0111. to b. dated 3e~1
l}6h, and to _twa !1arch 22 J 1965, which were oftE'rrc on !.~u.st 21, were opened ., \obe
tteder·!J 1 I .t!'r·erve ~t,ankr on AU~U5t 26.

10tal a;.lplled for .. $2,2)4,144,000
Total accppted
1,OOO,715,~)

'i~cl\ldes

i.2S ,944,000 entered.

u~nCGIIIPet.i tl ve

OIl •

basi. aDd acoepted 111

lull at the <Average price abow below)

:ll.6 U
Low
A.ye:ra~1d

9d.012

97.No
:10.001

:quivalent
!1

I'a"_ or di.oo\m\
<!

•

). $61.l per
3.586! "

.3.,80~

lDaI

"
"

(29-' of toll. amount bi:l for "it toe 10. proio. .. s accepted)
teaerye

~'ederal

,;istrict
8o."'ton
146\00' YorjC
;Jhiladolp i-.ia

Clewland

Total
Flled tor

20,610,006

1,74),11$,000
21,000,000

S60,ooo

19),)55,000
),000,000

8,517,000
J,108,000

61,JSS,OOO

-ti.ctmonn

),108,000

c\tlant.3

2,)6,,000

~icay,o

2)),87),000

2,.36,,000
149,86),000

6, 59S,OOO

~iinnes,'oli ~

8,810,000

',595,000

City

),78),000

1,712,000
frt),OOO
J2,lOO,OQQ

;t. Loui ..
~~anPJaE

-allae
an ranciBco

',.)10,000

'5,Q70,000
92,lQ2,OOO
3~,'214,7h4,OOO

11 C}n

10Ul
AOCl!(lt!Cl

...

$1,000,

ns,ooo

I coupon iaBus of toe 8&IIIi llOt.-th and for the B&!Ile a.mount inv.:sted, the ret....
t:!881 .Jill ~ ,",oi.lld p!'ovid~ a yield. of .3. 70~;. ~nt.re5t rater 00 bills are quoted 11
ter:'lS of ;jaIL< diacount with the return related to the tace a.JUJr\ of the W .... ,.,..
at Yrlatnr1 ty ratner til&ll the U'lOunt Lt11'e8te4 and t.betr lUlgth in aotal mabel' et ..,
related to a .36O-da/ 'Feu'. In oontI"8't., yie118 on eC"tLtlc.a'\eB, no--..1Id bIIIII ....
COJllt)ute4 ~n ter"l ot inte1'8et on the amount invested, and nate the DtIIDer et - .
re.rlairL.n~: 1 '1 an interer;t P&lm€t)t perlod to the .,ctual nWloer of day. in tbl per1Id.
wi ttl ~~ mianc;ual cornpoundin;! Lf .;ore tnan one cr/upon period i8 involftd.

TREASURY DEPARTMENT

Foa rlELEASZ A. M. N~wSPAPE:tiS,
Thursday, August 27, 1964.

August 26, 1964

hS.3 1 'LtS 03' Tl~EASTTRYI S $1 B~1LION ~Ol-DA{ TA..~ ANTICIPATION BILL OFFZRlr.:G

T;18 Treasury Department announced last evenl' n.C1o that the tenders for <ltl 000 , 000 , 000 ,
or thereabouts, of Tax Anticipation Series 201-day Treasury bills to be dated September 2,
1964, and to mature lv'iarch 22, 1965, which were offered on August 21, were opened at the
~P,

Federal lteServe Banks on August 26.
Tne details of

t~~

Tnt~l anplied for Total acc2pted

issue are as follows:
$2,234,744,000
1,000,715,000

,tange of accepted competitive bids:
high

Low
AveraGe

98.m.?
97.998
98.001

(includes $28,944,000 entered on a
noncompetitive basis and accepted in
full at the average price shown below)
(Excepting one tender of $200,000)

~quivalent

"
II

rate of discount approx. 3.561"i per annum
""
"
"
3.586;t; II
II
II
II
II
"
3. 580;.b II
"

(29,; of the amount bid for at the low price was accepted)

Federal teSerV8
lJistrict
Boston

Total

Nel.j Yor~
lJl1ila delpllia

Cleveland
iicL'.tond
Atlanta
C:licag()
..il. LouiE
ilinnc.'J.poli ;:
Kans~,:; City
:";Illa~

San

rancisco

TarAL

for
$ 20,810,000
1,743,175,000
21,000,000
52,355,000
3,108,000
2,365,000
233,873,000
6,595,000
8,810,000
3,783,000
35,970,000
92,900,000

Total
Accepted
~
560,000
793,355,000
3,000,000
8,577 ,000
3,108,000
2,365,000
149,863,000
2,595,000
2,310,000
1,712,000
970,000
32,300,000

$2,234,744,000

$1,000,715,000

Ap~lied

On a coupon issue of the senne length and for the same amount inv2sted, the return on
theSE: billf' would provide a yield of 3. 70i~. Interest rates on bills are quoted in
terms of bank discount with the return related to the face amount of the bills payable
at maturity rather than the amount invested and their length in actual number of days
related to a 360-day year. In contrast, yields on certificates, notes, and bonds are
computed in terms of interest on the amount invested, and relate the number of days
remaining in an interest payment period to the actual number of days in the period,
with semiarmual compolli1ding if more than one coupon period is involved.

D-1327

1~11

Joint Statement on the United States - Philippine Tax Treat}:
Delegations from the United States and the Philippines, having met
in Washington, D.C. from August 17 to August 28, 1964, have reached
agreement on the content of an income tax convention between the two
countries to avoid double taxation and prevent fiscal evasion, to
facilitate trade and investment between the two countries, and to
encourage joint ventures. The convention incorporating the principles
agreed upon is in the process of preparation. This will be submitted
to the respective governments for formal signature. It will become
effective after the Senate of the United States and the Senate of the
Philippines each give their consent to ratification.
It has been agreed that a business enterprise of one country shal1
not be subject to tax in the other country on its industrial or
commercial profits unless it operates there through a permanent establishment. Temporary visits to one country by residents of the other
will be permitted without tax being imposed on their earnings if they
remain there for less than 90 days in the course of a year and earn
less than $3000. Longer stays and larger amounts of exempt income are
provided for professors and others under certain circumstances.
To foster the existing ties of good will between the two countrie~
it has been agreed that United States taxpayers who make contributions
to nonprofit institutions in the Philippines may, subject to the
limitations of United States law, claim a deduction for such contributions in determining their tax liability.
Income derived by a resident of one country from the rental of
buildings in the other, it has been agreed, will be taxable on a net
basis rather than on a gross basis.
A set of rules to determine the geographic source of income under
different circumstances has been agreed to. These rules will be used
in determining which country has a prior right to tax the income from
certain transactions and which country shall give a credit for the
tax. The agreement reaffirms that neither country will discriminate
against citizens and corporations of the other resident within its
borders.
Provision has been made for exchanges of information and consulta·
tion between the authorities of the two countries.
The respective delegations were headed by Rufino G. Hechanova,
Secretary of Finance of the Philippines and Stanley S. Surrey,
Assistant Secretary of the Treasury of the United States.

000

AJJ~ust 2a,

1964

J,)inl Statement on the United States - Philippine Tax Treaty

Delegations from the United States and the Philippines, having met
in Washington, D.C. from August 17 to August 28, 1964, have reached
agreement on the content of an income tax convention between the two
countries to avoid double taxation and prevent fiscal evasion, to
facilitate trade and investment between the two countries, and to
encourage joint ventures. The convention incorporating the principles
agreed upon is in the process of preparation. This will be submitted
to the respective governments for formal signature. It will become
effective after the Senate of the United States and the Senate of the
Philippines each give their consent to ratification.
It has been agreed that a business enterprise of one country shall
not be subject to tax in the other country on its industrial or
commercial profits unless it operates there through a permanent establishment. Temporary visits to one country by residents of the other
will be permitted without tax being imposed on their earnings if they
remain there for less than 90 days in the course of a year and earn
less than $3000. Longer stays and larger amounts of exempt income are
provided for professors and others under certain circumstances.
To foster the existi_ng ties of good will between the two countries,
it has been agreed that United States taxpayers who make contributions
to nonprofit institutions in the Philippines may, subject to the
limitations of United States law, claim a deduction for such contributions in determining their tax liability.
Income derived by a resident of one country from the rental of
buildings in the other, it has been agreed, will be taxable on a net
basis rather than on a ;:;ross basis.
A set of rules to determine the geographic source of income under
different circumstances has been agreed to. These rules will be used
in determining which country has a prior right to tax the income from
certain transactions and which country shall give a credit for the
tax. The agreement reaffirms that neither country will discriminate
against citizens and corporations of the other resident within its
borders.
Provision has been made for exchanges of information and consultation between the authorities of the two countries.
The respective delegations were headed by Rufino G. Hechanova,
Secretary of Finance of the Philippines and Stanley S. Surrey,
Assistant Secretary of the Treasury of the United States.

000

August 28, 1964

POI aLIAS! 1. M. R,.;'SP1P£RS J

, ...... !!RtI

'D!r 1. 196Il.

__ •• U.

R1StJLfS OF fR!l8tnrt"

WDIJ,' IIJ.L

_t.

onaI •

t.,

. . Tnua7 ~ ........ 1_ wi ..... t.bat U.
n , . ... ItI"1II ..
'tr • . . . , b1ll.a, one MI"iu \0 ... _
1 __ ., tM lJI1Ja ..... , . . •• U6ft,
\be othIr ........ to .. claW Slpt.aw ), lHk.
wre ottuM _ A..... 16, ....
opI•• d at \he ,ecIIftl RltIAN BIaka t W I " ' " illdW,.. •• 200,.. UlenabollU, of 91-c1q law.. ... t . tfOO,O'JO,OOO, .. ~. fit
bUll
..,. dda1l.8 of tbe t.1Io _l"lu aN . . foU, ••

"'".-1

'--')1.

IWfQB OF ACCIPftD
CCMPEII!m BIDS.

111.""

TREASURY DEPARTMENT
(

QR RELEASE A. M. NEWSPAPERS,

uesdqJ September 1, 1964.

August 31, 1964

RESULTS OF TREASURY I 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 iSlJue of the bills dated June 4, 1964, and
he other .eries to be dated September 3, 1964, which were offered on August 26, were
~d at the Federal Reserve Banks on August 31. Tenders were invited for $1,200,000,000,
r thereabouts, ot 91-day bUls and tor $900,000,000, or thereabouts, of 182-day bUls.
he details of the two series are as follows:
ANGE OF ACCEPTED
OfPETITIVE BIDS:

High
Low

Average

91-~

Treasur.y bills
maturing December 3,2 1964
Approx. Equiv •
Price
Annual Rate
99.115
3.501%
99.11Q
3.521%
99.112
3.512% Y

·••
·
·•
·
·••

182-d~

Treasury bills
maturing March 4,2 1965
Approx. EqUiv.
Price
Annual Rate
98.171
3.618%
98.161
3.638%
98.165
3.629%

percent of the amount ot 91-day bills bid for at the low price was accepted
78 percent of the amount of 182-day bills bid for at the low price was accepted

OTAL TENDERS APPLIED FOR AND ACCEPTED BY FEDERAL

District
Boston
New York
Philadelpbia
Cleveland
Richmond
Atlanta
Chicago

St. Louis
MinneapOlis
Kansas City
Dallas
San Francisco
TOTALS

AEP1ied For
$ 31,394,000
1,542,543,000
36,211,000
28,692,000
13,406,000
30,423,000
213,574,000
38,362,000
20,490,000
32,486,000
25,981,000
115,483,000
$2,129,045,000

RE,sER~

Acce;eted
$ 16,394,000
782,168,000
15,984,000
27,915,000
13,056,000
26,1)8,000
159,199,000
30,752,000
16,340,000
29,986,000
16,431,000
65,928,000
$1,200,291,000

:
•

·
·
·
·
··
!I

DISTRICTS:

AE£1ied For
$ 17,451,000
1,130,468,000
10,774,000
52,978,000
5,414,000
9,741,000
169,703,000
8,663,000
6,709,000
8,884,000
9,995,000

Acce;eted
$ 12,451,000
603,268,000
9,444,000
50,778,000
5,414,000
8,469,000
101,603,000
7,163,000
6,209,000
8,884,000
8,995,000

91~702~00Q

77~602z00~

$1,522,482,000

$900,280,000

Includes $236,842,000 noncompetitive tenders accepted at the average price of 99.112
Includes $63,455,000 noncompetitive tenders accepted at the average price ot 98.165
On a coupon issue of the same length and for the same amount invested, the return on
these bills would provide yields of 3.59%, for the 91-day bills, and 3.75%, for the
182-dq bUls o 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 Ulount i.nvested and their length in actual number of days related to a 36o-day
;rear. In contrast, yields on certificates, notes, and bonds are computed in terms
or interest on the IDlOunt invested, and relate the number ot days remaining in an
intereat payment period to the actual JlUlIber of days in the period, with semi-annual
cC!Ilpounding if' more than one coupon period is involved.
D-1328

- :3 -

and exchange tenders vill receive equal treatment.

Cash adjustments vill 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 Hle
or other disposition of the bills, does not have any exemption, as such, and 1088
fram 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 8ubJect

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 intere8t

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 ot 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
bills are excluded from consideration as capital assets.

ot, 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 tor 8uch
bills, whether on original issue or on subsequent purchase, and the amount ac:tuall:
received either upon sale or redemption at maturity during the taxable year tor
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 ot their.is.ue.
Copies of the circular may be obtained from any Federal Reserve Bank or BrUch.

- 2 -

dec:1Jlal.a, e. g., 99.925.

}Practions mq not be uaed.

It is urged that teDdeI'l

be made on the printed foms and forwarded in the special envelopes which vtll
be supplied by Federal Reserve Banks or Branches on application therefor.
Banking institutions generally may submit tenders for account

ot custaaera

provided the n.ames ot the customers are set torth in such tenders.

Others tbua

banking institutions will not be permitted to sul:lnit tenders except tor their
own account.

Tenders will be received without deposit from incorporated baUJ

and trust companies and tram responsible and recognized dealers in in"lestmerrt
Tenders trom others IlUst be accompanied by payment ot 2 percent 01'

securities.

the face amount of Treasury bills applied for I unless the tenders are accompm1e4
by an express guaranty 01' payment by an incorporated bank" or trust c01ll})aD1.
DmIlediately a.:f'ter the closing hour, tenders will be opened at the federal
Reserve Banks and Branches, following which public announcement will be made by
the

~reasury

Department ot the amount and price range of accepted bids. bae

submitting tenders will be advised

ot the acceptance or rejection thereot.

The

secretary ot the Treasury expressly reserves the right to accept or reject Il11
or all tenders, in whole or in part, and his action in any such respect ab&ll be
tinal.

Subject to these reservations, noncompetitive tenders tor $

less tor the additional. bills dated
1ng until maturity date on

• l~OOO

June

~ 1964

December 10, 1964

, (

iii)

2.000

daya rema.1D-

) and noncompetitlve tenders tor

iii)
or less tor the 182 ..d.a¥ bills without stated price
iIf)

from·BZr/ one

bldder will be accepted in tun at the average price (in three decimals) 01' accepted canpetltlve blds tor the respective issues.

Settlement for accepted teD-

ders in accordance vith the bids must be made or completed at the Federal
Banks on

Be""'

September 10. 1964 , in cash or other immediately available tuD4a or

jIi)

in a like i'a.ce amount ot Trea.aury bills maturing

September 10. 19M

Pi)

• cash

. ". "...

" •. t . .J ••••••• ~.~:..:.(.::,~

~~.~.

TREASURY DEPARTMENT
Washington
Auguat Sl, 19~

FOR IMMEDIATE RELEASE,

•

TREASURY'S WEEKLY BILL OFFERING

The Treasury Department, by this public notice, invites tenders for two aerie

of '.l'reasury bills to the aggregate amount of $ 2,200

000 , or thereabouts, tor

cash and in exchange for Treasury bills mat'\lring September 10, 1964: , in the

of $ 21101~95,OOO , a8 follows:
91-day bills (to maturity date) to be issued

September 10, 1964 ,

-W~

in the amount of $

1IS00~,000,

6i)

or thereabouts, represent-

ing an additional amount of bills dated
and to mature

ImOUD

June

1l~64:

December 10. 1964 ,originally issued in the

6i)

amount of $ 9OO.518 t OOOt

6iCO

.
the additional and original bills

van addit10nal $100,086,000 was i.sued
to be freely interchangeable.
Jul1' 29, 19")

182 -day bills, for $
-

900,~OOO

, or thereabouts, to be dated

. ::S-=e...p_te~mbe=~r~10F-t__l_9_64
__QWrQU
, and to mature

(iiii

March

1fL.w1965
\11&1

The bills of both series will be issued on a discount basis under competitive
and noncompetitive bidding as hereinsf'ter provided, and at maturity their face
amount. will be payable without interest.

They will be 1ssued 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
Daylight Saving
cloaing hour, onlC!-thirty p.m., Eastern , . . . . " time, Friday, September 4:, 196'

(iB)
'!'enders 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 tbaD three

TREASUR,*· DEPARTMENT

FOR IMMED IA TE 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
$2,200,OOO,000,or thereabouts, for cash and in exchange for
Treasury bills maturing September 10,1964, in the amount of
$2,101,395,000, as follows:
91-day bills (to maturity date) to be issued September 10, 1964,
in the amount of $1,300,000,000, or thereabouts, representing an
additional amount of bills dated June 11, 1964, and to mature
December 10, 1964, originally issued in the amount of $900,518,000
(an additional $100,086,000 was issued July 29, 1964), the additional
and original bills to be freely interchangeable.
l82-day bills, for $900,000,000, or thereabouts, to be dated
September 10, 1964, and to mature March 11, 1965.
Tenders will be received at Federal Reserve Banks and Branches
up to the clOSing hour, one-thirty p.m., Eastern Daylight Saving
time, Friday, September 4, 1964.
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.
D-1329

- 2 Immediately after the closing hour, tenders will be opened at
the Federal Reserve Banks and Branches, following which public
announcement will be made by the Treasury Department of the amount
~nd 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
June 11 1964
~l-days remaining until maturit~ date on
Decembe~ 10, i964) and noncompetitive tenders for ~OO ,000
or lesa for the 18~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 September 10, 1964,
in cash or other immediately available funds or in a like face
amount of Treasury bills maturing September 10,1964 .cash and
exchange tenders will receive equal treatment. Cash adjustments
will be made for differences between the par value of maturing
bills accepted in exchange and the issue price of the new bills.
The income derived from Treasury bills, whether interest or
gain from the sale or other disposition of the bills, does not have
any exemption, as such, and loss from the sale or other.disposition
of Treasury bills does not have any special treatment, as SUCh,
under the Internal Revenue Code of 1954. The bills are subject to
estate, inheritance, gift or other excise taxes, whether Federal or
State, but are exempt from all taxation now or hereafter imposed on
the prinCipal or interest thereof by any state, or any of the
possessions of the United States, or by any local taxing authority.
For purposes of taxation the amount of discount at which Treasury
bills are originally sold by the United States is considered to be
interest. Under Sections 454 (b) and 1221 (5) of the Internal
Revenue Code of 1954 the amount of discount at which bills issued
hereunder are sold is not considered to accrue until such bills are
sold, redeemed or otherwise disposed of, and such bills are excluded
from consideration as capital assets. Accordingly, the owner of
Treasury bills (other than life insurance companies) issued hereunder
need include in his income tax return only the difference between
the price paid for such bills, whether on original issue or on
subsequent purchase, and the amount actually received either upon
sale or redemption at maturity during the taxable year for which the
return is made, as ordinary gain or loss.
Treasury Department Circular No. 418 (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

TREASURY DEPARTMENT

lOR IJI{EDIATE RELEASE

August 31, 1964

TREASURY TO INCREASE AMrolIT OJ' OFFERIIGS OF 3-M)lft'H
TREASURY BILIS MATURDfG IECDmER 10-31

The Treasury announced today that 1 t is advancing to Friday, September
4 its weekly auction of Treaaury bills because of the Labor Day holiday on

M::Inday, September 7.

At the same t1llle the Treasury announced that it Will

increase the amount of :5-month Treasury bill.s included in this auction by
$100 million.

The total 8.JIX)unt offered will be $1.3 billion maturing

December 10, 1964 and $900 million maturing March ll, 1965.
The Treasury further announced that 1t intends to increase by similar
amounts of' $100 m1llion the succeeding three auctions of 3-month Treasury
bills which will mature on December 17, 24 and 31, 1964.

The corresponding

weekly offerings of 6-month bills are expected to remain at $900 mill1on.
The decision to increase the amount of these offerings of 3-month bills

was made in order to meet the heavy seasonal demand for December maturities
which has already resulted in comparatively low interest rates for the issues
outstanding on those dates.

000

D-1330

TREASURY DEPARTMENT
(

September 1, 1964
FOR IMMEDIATE RELEASE
TREASURY ANNOUNCES DRAWING FROM
INTERNATIONAL MONETARY FUND
-{"s.J 0 4t '~ I
Secretary of the Treasury Douglas Dillon announced a third
drawing of foreign currencies by the U. S. fr~ the International
Monetary Fund. LThe drawing is for $50 mi11ion~and is the first
under the new stand-by arrangement of $500 milLion announced on
July 23, 1964. It brings total drawings to $300 million."
•
1: •
5 IE .' e ~o drawings of $125 million ea~~"~~~n
,"""
February 13 ana June 1 of this year.
~ /J'''.;t.. '<.I tv
tJr
_._:..._" . ~ ~
As •
the case ~ the previous drawings...>the:·currencies
obtained ~y the U. S. will be sold for dollars t~other Fund
members for their use in making repayments to the Fund. . .
.~ this drawing was occasioned by Italy's repayment of
$65 milIlon..... to the IMF, fully restoring d ...tt...El.l!~?:,~., P~~l~2:.?~. .~,.,.~.-"....
The Italian repayment reflects the improved financla~ position
of that country since March 13 when credits totaling $1 billion
were made available to Italy by the United States and others
in addition to the $225 million Italian Fund drawing at the end
of March.

,I .'

include~or

The current U.S. drawing
the first time the
currencies of Austria, Belgium, the ~l~erlands~and Swede~ in
addition to German marks which had been incluqeq in .the ,.... A,-:, '"
earlier drawing~ aD dIP,/ After meeting Italian requirements,
a balance will remain fro~he proceeds of this drawing
sufficient to cover other presently scheduled repayments to
Fund over the next several weeks.

000

D-l33l

/'
~.,

74. A. /"'"'

TREASURY DEPARTMENT
September 1, 1964

FOR IMMEDIATE RELEASE
TREASURY ANNOUNCES DRAWING FROM
INTERNATIONAL MONETARY FUND
Secretary of the Treasury Douglas Dillon today announced
a third drawing of foreign currencies by the U. S. from the
International Monetary Fund.
The drawing is for $50 million, and is the first under the
new stand-by arrangement of $500 million announced on July 23,
1964. It brings total drawings to $300 million. Two drawings
of $125 million each were made on February 13 and June 1 of this
year.
As in the case of the previous drawings, the new currencies
obtained by the U. S. will be sold for dollars to other Fund
members for their use in making repayments to the F~nd.
This drawing was occasioned by Italy's repayment of $65
million to the IMF, fully restoring that country's quota position.
The Italian repayment reflects the improved financial position
of that country since March 13 when credits totaling $1 billion
were made available to Italy by the United States and others in
addition to the $225 million Italian Fund drawing at the end of
March.
The current U. S. drawing includes, for the first time, the
currencies of Austria, Belgium, the Netherlands, and Sweden in
addition to German marks which had also been included in the
earlier drawings.
After meeting Italian requirements, a balance will remain
from the proceeds of this drawing sufficient to cover other
presently scheduled repayments to the Fand over the next several
weeks.

000

D-1331

62 percent in fiscal 1964 over the previous
~

$3,477,000 and that

est~ated

savings from all phases of

Treasury's Management Improvement Program rose to an all time
high of $29.5 million in fiscal year 19640
Taking note of President Johnson's drive for further
economy in Government operations, Secretary Dillon said
"This is a very good record -- but it can be improved".
Secretary Dillon

was

h~self

awarded a lapel emblem

for having completed 15 years of Government Service.
A Color Guard and Band from the United States Coast Guard
provided the entertainment for the Ceremonyo
Attached is a listing of the employees recognized and
their citations.

heroin valued at several millions of dollars -- the largest
seizure ever made on the Mexican Border; and a team of two
Coast Guard officers and one Coast Guardsman whose suggestion
led to a conversion and improvement in existing Coast Guard
and Navy aircraft radio equipment for an estimated savings of
$6 million.
In his remarks, Secretary Dillon said:

"On the occasion

of Treasury's l75th Anniversary, it is especially appropriate
that we honor employees who have made outstanding contributions
to the Department.

The strength and progress of the Department

depends upon the kind of employee performance and ingenuity we
recognize here today".

He reported that estimated [list

~ savings from the civilian employee contributions

recognized under the Treasury's Incentive Awards Program rose

Winners of the Department's top awards spanned a wide
range of job responsibilities.

Included were a civilian

lighthouse keeper in the United States Coast Guard; a Narcotic
Agent in Rome, Italy; and a high level Internal Revenue Service
official.
A wide range of job responsibilities was also found
among the Treasury personnel cited for outstanding suggestions
or services.

These included a machinist in

the Bureau of

Engraving & Printing who modified a large stitching machine,
thereby eliminating the need to purchase new equipment costing
more than $16,000; a card punch operator in the Bureau of
Public Debt, Parkersburg, West Virginia, whose average
production for the past 4 years was 34 percent above the top
standard range for her job; two Customs Inspectors who seized

FOR RELEASE: PM PAPERS
~DNESDAY, SEPTEMBER 2, 1964
TREASURY HONORS 236 EMPLOYEES IN
FIRST ANNUAL AWARDS CEREMONY
Treasury Secretary Douglas Dillon this morning honored
more than 200 Treasury employees in the Department's first
annual awards ceremony.

The ceremony, held in the

Departmental Auditorium, Washington, D. C., marked Treasury's
175th anniversary.
A total of 236 employees were recognized for their outstanding service and significant contributions to Treasury
operations during fiscal year 1964, which ended June 30th.
Treasury's two top awards -- for Exceptional Service or
Meritorious Service -- went to 44 employees.

34 employees

received recognition for outstanding suggestions or service,
and 14* in the Washington area were cited for more than
40 years of Federal service.

TREASURY DEPARTMENT
September 2, 1964

FOR RELEASE:

P.M. NEWSPAPERS
Wednesday, September 2, 1964
TREASURY HONORS 236 EMPLOYEES IN
FIRST ANNUAL AWARDS CEREMONY
Treasury Secretary Douglas Dillon this morning honored more
than 200 Treasury employees in the Department's first annual
awards ceremony. The ceremony, held in the Departmental
Auditorium, Washington, D. C., marked Treasury's l75th anniversary.
A total of 236 employees were recognized for their outstanding
service and significant contributions to Treasury operations
during fiscal year 1964, which ended June 30th.
Treasury's two top awards -- for Exceptional Service or
Meritorious Service -- went to 44 employees. 34 employees
received recognition for outstanding suggestions or service, and
144 in the Washington area were cited for more than 40 years of
Federal service.
Winners of the Department's top awards spanned a wide range
of job responsibilities. Included were a civilian lighthouse
keeper in the United States Coast Guard; a Narcotic Agent in
Rome, Italy; and a high level Internal Revenue Service official.
A wide range of job responsibilities was also found among
the Treasury personnel cited for outstanding suggestions or
services. These included a machinist in the Bureau of
Engraving & Printing who modified a large stitching machine,
thereby eliminating the need to purchase new equipment costing
more than $16,000; a card punch operator in the Bureau of Public
Debt, Parkersburg, West Virginia, whose average production for
the past 4 years was 34 percent above the top standard range for
her job; two Customs Inspectors who seized heroin valued at
several millions of dollars -- the largest seizure ever made on the
Mexican Border; and a team of two Coast Guard officers and one
Coast Guardsman whose suggestion led to a conversion and
improvement in existing Coast Guard and Navy aircraft radio
equipment for an estimated savings of $6 million.
D-1332

(MORE)

- 2 -

In his remarks, Secretary Dillon said: "On the occasion of
Treasury's l75th Anniversary, it is especially appropriate that
we honor employees who have made outstanding contributions to the
Department. The strength and progress of the Department depends
upon the kind of employee performance and ingenuity we recognize
here today". He reported that estimated savings from the
civilian employee contributions recognized under the Treasury's
Incentive Awards Program rose 62 percent in fiscal 1964 over the
previous year to $3,477,000 and that estimated savings from all
phases of Treasury's Management Improvement Program rose to an all
time high of $29.5 million in fiscal year 1964.
Taking note of President Johnson's drive for further economy
in Government operations, Secretary Dillon said "This is a very
good record -- but it can be improved".
Secretary Dillon was himself awarded a lapel emblem for
having completed 15 years of Government Service.
A Color Guard and Band from the United States Coast Guard
provided the entertainment for the Ceremony.
Attached is a listing of the employees recognized and their
citations.

EMPLOYEE SUGGESTIONS AND SERVICES
Recognition by the Secretary of outstanding suggestions or exemplary
services which served to effect significant monetary savings, increased
efficiency, or improvement in Government operations.
HENRY T. DOUMMAR, Construction Representative, Seventh Coast
Guard District, Miami, Fla.
For unstinting effort and diligence in inspecting the construction
of barracks at the Coast Guard Base, Charleston, S.C., which
resulted in substantial monetary savings and intangible benefits.
Award-$525.
JOSEPH GRUBACH, Customs Appraiser, Detroit, Mich.
For compiling and subsequently revising "Digest of Decisions
and Rulings Relative to Appraisement and Classification of
Imported Merchandise." Used as a daily reference book by
Customs employees and as a textbook for training line examiners.
Award-$l,OOO.
EDWARD H. GUTOSKY, Machinist, Construction and Maintenance
Division, Bureau of Engraving and Printing
For adopted suggestions to modify two eight-headed stitching
machines, thereby eliminating the contemplated purchase of a
new stitching machine. Estimated one-time savings-$16,OOO.
Award-$650.
JOHN O. HALLY, Attorney-Adviser, Office of the General Counsel,
Office of the Secretary
For superior work in carrying out assigned responsibilities for
nearly a full year as (Acting) Assistant General Counsel-a
position two grades above the one he held. Award-$500.

NORMAN F. LEMNAH, Tax Law Specialist, Tax Rulings Division,
Office of the Assistant Commissioner (Technical), Internal Revenue
Service
For adopted suggestion to revise Form 1128, Application for
Change in Accounting Period, so it can be mailed in window
envelope without an accompanying form letter. Estimated firstyear savings-$8,300, plus intangible benefits. Award-$SOO.
DAVID T. LINK, Chief, Reports and Information Retrieval Activity,
Office of the Chief Counsel, Internal Revenue Service
For developing objectives and plans for a Reports and Information Retrieval Program thereby insuring more consistent treatment of taxpayers, eliminating duplications of work, and
providing a more effective legal research system. Award-$SOO.
FRED W. MAGUIRE, Customs Inspector, Miami, Fla.
For effecting seizure of approximately 11 pounds of cocaine,
one of the largest seizures ever made at Miami International
Airport. Award-$750.
ISABEL MILLER, Supervisor, Administrative Unit, Plate Printing
Division, Bureau of Engraving and Printing
For adopted suggestion which realined job duties, devised a new
plate record system, and eliminated certain forms, thereby saving
4 man-years, or $17,760 per annum. Award-$695.
EL MERITO OVERSTREET, Chief, Accounts Maintenance Section, Collections Division, Internal Revenue Service, Jackson, Miss.
For suggested usr of TY-15, Unidentified Voucher, as a posting
document in lieu of preparation of an additional form, resulting
in savings of $18,000 in man-hours and $1,100 in supplies.
Award-$645.

M. SUE PHILLIPS, Card Punch Operator, Bureau of the Public Debt,
Parkersburg, W. Va.
For consistently and significantly exceeding required performnn;e
standards. Her average production for the past 4 ye:m was J4
percent above top standard range. Total awards-$l,014.

GAYLE E. RUHL, Criminal Investigator, Bureau of Narcotics, Chicago,

Ill.
For exceptional courage in a high speed auto chase and ensuing
gun battle during which he was seriously wounded and his assailant, a notorious narcotic trafficker, killed. Award-$l,OOO.
IRVING SALEM, Staff Assistant to the Chief Counsel, Internal Revenue
Service
For leadership and outstanding service in developing, reviewing,
and rewriting rules and regulations under various sections of
the Internal Revenue Code. Award-$800.
JAMES M. TINGLE, Management Analyst, Administration Division,
Southeast Region, Internal Revenue Service, Atlanta, Ga.
For designing and building a mail opening and sorting table
which reduced fatigue and increased production. A lighting
device enables employee to check envelopes to make sure all
contents have been removed. Estimated tangible savings$57,000. Award-$935.
PATSY C. BLANKENSHIP, Formerly Clerk-Stenographer, Audit Division,
National Office, Internal Revenue Service
FRED DUBITSKY, Conference Coordinator, Audit Division, Manhattan
District, Internal Revenue Service
RICHARD N. FELT, Conference Coordinator, Audit Division, Salt Lake
City District, Internal Revenue Service
JOE L. FINCH, Technical Advisor, Appellate Division, Central Region,
Internal Revenue Service
MURRAY H. HENDEL, Coordinator, Audit Division, National Office,
Internal Revenue Service
WARD E. HOLLAND, Chief, Audit Division, Jacksonville District,
Internal Revenue Service
For their excellent Task Force review of the IRS Informal Conference Function and adopted recommendations resulting in
clearer delineation of authority and responsibilities and substantial reduction in paper work and clerical activities. Estimated
savings-$924,450, plus many intangible benefits. Group
Award-$2,690.

M. COLETTE BOWDEN, Digital Computer Systems Analyst
RALPH K. CONVERSE, Chief, Electronic Systems Staff
WALTER R. CRAIG, Digital Computer Systems Analyst
PAUL I. HOWARD, Digital Computer Systems Analyst
JENNINGS O. YOST (Retired)
Office of the Assistant Commissioner (Planning and Research),
Internal Revenue Service
For integrating the computer processing for the Statistics
Division Activity into the Service's 7074 System without disruption of scheduled deadlines or loss in programing efficiency.
Estimated first-year savings-$230,000. Group Award-Sl,500.
LCDR ALVA L. CARBONETTE, 14th Coast Guard District, Honolulu,
Hawaii
CHRELE EDWARD PETROSKI (Retired)
LCDR JOHN VUKIC (Retired)
For adopted suggestion which converted ANI ARC-38 RT-311
radio sets to single sideband operation, thus improving Coast
Guard and Navy !lircraft operational capabilities and saving 56
million. Initial Group Award-$1,500 paid in 1961. Supplemental Group Award $3,000.
\VILLlAM GREENBERG, Criminal Investigator
JOSEPH E. IACONO, Criminal Investigator
DAVID REIs, Inspector
Alcohol and Tobacco Tax Division, Ne\Y York Regional Office,
Internal Revenue Service
For breaking up an operation which involved an estimated 12,000
barrels of spurious Scotch whisky sold in the United States for
approximately $21 million. Investigation covered 2 Yz years and
resulted in an 85-count indictment of the persons involved.
Group Award-S1,000.

PETER. D. PARKER., Customs Inspector
HYMAN SCHEU, Customs Inspector
Port of Laredo, Laredo, Tex.
For discovery and seizure of heroin valued at millions of dollars.
This was the largest seizure of heroin ever made on the Mexican
border and led to arrest and indictment of members of a
criminal ring. Group Award-$2,250.
LCDR M. J. REUBENS, Medical Division, Coast Guard Headquarters,
Washington, D.C.
CHMACH W. A. SHAFFER, JR., 12th Coast Guard District, San
Francisco, Calif.
For adopted suggestion proposing use of welded instead of
seamless stainless-steel tubing for vent tubes on Coast Guard
buoys. Estimated annual savings-$l1 0,000. Group Award$2,000.

'139-618-64-2

AWARDS TO SUPERVISORS
Recognition by the Secretary of notable flCnietJements by supervisors
jn encouraging employee contributions to efficiency and economy.
These supertlisars were selected from Bureau nominees gfter con·
sideration of such fflCtars as the size of groups supertJised, the value of
contributions, and the nature of flCtion by the supertJisor.
IDA F. BRENDEMIHL, Supervisor of Series H and K Subunit, Regis.
tered Accounts and Interest Section, Division of Loans and
Securities, Bureau of the Public Debt, Chicago, Ill.
For exceptional supervisory abilities in maintaining excellent em·
ployee morale and operating efficiency despite heavy workload
pressures.
PHILIPS P. BROOKS, Chief, Coin Branch, Cash Division, Office of the
Treasurer of the United States
For ability to couple cost-consciousness with effectiveness in
maintaining high morale and a sense of duty among his per.
sonnd. He effectivdy urged his employees to submit ideas and
recognized their contributions with appropriate awards.

Rum M. DEAN, Forewoman, Finishing Unit, Note Processing
Section, Surface Printing Division, Bur~au of Engraving and
Printing
For outstanding leadership and stimulation of employee interest
in improving work efficiency, resulting in a substantial increase
in production for her Unit.
ANNA S. DOUGHERTY, Chief, Diversified Payments Branch, Phila.
delphia Regional Office, Bureau of Accounts
For effectiveness in training and encouraging employees to per.
form at a high level and providing appropriate recognition for
deserving personnel under her jurisdiction.

135

LEO C. INGLESBY, Chief, Position Programs Branch, Personnel Division, Internal Revenue Service
For outstanding contributions to management improvement
through effective direction of the Internal Revenue Service
Incentive Awards Program during fiscal year 1964.
EDGAR M. LINK, Foreman of Plate Printers, Bureau of Engraving and
Printing
For initiative, resourcefulness, and effective leadership in promoting the Incentive Awards Program as manifested by many
significant contributions of his employees.
A. KATHLEEN MARTINSON, Supervisor, Voucher and Check Preparation Section, Chicago Regional Office, Bureau of Accounts
For outstanding skill in training and motivating employees to
a high level of production through continuing performance
appraisal, counseling, and appropriate recognition of accomplishment.
WALTER PANICH, Administrative Officer, Bureau of Narcotics
For his excellent staff leadership in promoting effective use of
the Incentive Awards Program to improve productivity and
reduce operating costs within the Bureau.
JAMES W. POLK, Assistant Collector of Customs, Buffalo, N.Y.
For notable achievements in stimulating emplcyees to improve
Customs operations, resulting in a 400-percent increase in
suggestions submitted and a 250-percent increase in those
adopted within his District during the second half of fiscal
year 1964.
GEORGE P. ROWLAND, Assistant Regional Commissioner (Alcohol and
Tobacco Tax), Northeast Region, Internal Revenue Service, Boston,
Mass.
For outstanding effectiveness in motivating his 175 employees
to participate in the Incentive Awards Program, resulting in
102 suggestions submitted and 35 adopted <kIring fiscal year
1964, plus 4 performance awards.

PInUP G. SEEGER., Foreman, Machine Shop, Construction and Maintenance Division, Bureau of Engraving and Printing
For his outstanding leadership in promoting employee participation in the Incentive Awards Program, resulting in his employees
making substantial contributions to the improvement of work
operations.

H. WILKINS, Chief, Mail Distribution and Messenger Section, Bureau of Accounts

LoRENZO

For exceptional ability in eliciting high production, initiative,
and morale in the Section, which earned Superior Performance
Awards for 83 percent of his employees during fiscal year 1964.
ROLAND

WISE,

District Director, Internal Revenue Service, Salt

Lake City, Utah
For significant achievements in encouraging employees to participate fully in the improvement of government operations with
the result that tangible benefits from employee suggestions
increased over 100 percent in his District.

THE SECRETARY'S ANNUAL AWARDS
TREASURY INCENTIVE AWARDS
PROGRAM
The Secretary of the Treasury presents two honorary awards each
year to recognize bureaus for outstanding participation and results
in the Treasury Department's Incentive Awards Program. One is
given to the bureau showing the best average results in the sugges·
tion phase of the program and the other to the bureau showing the
best average results in the performance phase of the program.

SECRETARY'S AWARD FOR PERFORMANCE
PHASE OF PROGRAM

Bureau of Narcotics
For effective use of incentive awards to recognize employees who significantly exceeded normal job requirements.
In recognition of such performance, 16 percent of all
Narcotics personnel received cash awards and 1 percent
received withing-grade pay increases for high-quality
performance during fiscal year 1964.

SECRETARY'S AWARD FOR SUGGESTION
PHASE OF PROGRAM

Bureau of Engraving and Printing,
For outstanding achievement in the Bureau's suggestion
program during fiscal year 1964. Per 100 employees on
its rolls, the Bureau had 3.8 adopted suggestions and
estimated savings of $1,473.

CAREER SERVICE RECOGNITION
Recognition by the Secretary of employees in the Washington, D.C.,
area who had attained 40 years or more of Federal service as of
June 30, 1964.

50 Years of Federal Service
Alan H. Pottinger
(Retired)
William A. White

Bureau of Customs
Bureau of the Public Debt

45 to 50 Years of Federal Service
Elna M. Anderson
Jennie Anderson
Mary E. Barrett
Aldora Beach
Louise P. Bishop
Edna Bone
Louis T. Boswell
Leonie H. Boyd
Cornelia E. Bradbury
George F. Breen
Harry C. Broderick
Robert Buckner
Eugene L. Callaghan
Marie A. Castle
Patrick J. Cavanaugh
Ethel C. Cawley
Katherine Cleary
Marion B. Cole
Harry E. Corrick

Internal Revenue Service
Internal Revenue Service
Office of the Treasurer, U.S.
Internal Revenue Service
Internal Revenue Service
Internal Revenue Service
Internal Revenue Service
Bureau of the Public Debt
Bureau of Engraving and Printing
Internal Revenue Service
Internal Revenue Service
Internal Revenue Service
Bureau of the Public Debt
Bureau of the Public Debt
Internal Revenue Service
Internal Revenue Service
Bureau of the Public Debt
Office of the Treasurer, U.S.
Bureau of Narcotics

Fabius H. Dailey
Samuel Donelson
James C. Filgate
Burke H. Flinn
Rachel E. Fox
Eleanor M. Gallagher
Virginia W. Giddings
Gertrude Giggard
T. LeRoy Greer
Ruth B. Haines
Winifred S. Haines
Kenneth S. Harrison
Paris Henderson
Thelma Herring
Henry J. Holtzclaw
Herbert B. Hunt
Cora L. Johnson
Lillian M. Kelly
Reuben Klaben
Eva B. Lanahan (Retired)
Patricia R. Levin
Lawrence Levy
Madeline M. Light
Ferris E. Long (Retired)
Lillian M. Long (Retired)
Bessie B. Mack
Emma E. McGill
Agnes E. McLane
Donald R. McLeod
Ivy K. McLoughlin
Nora T. McNulty
Gertrude F. Menk
Cecile G. Miller
Emory N. Miller
Frances Miller
Lawrence Montgomery
Earl M. Morison

U.S. Coast Guard
Internal Revenue Service
Bureau of Engraving and Printing
Bureau of Customs
Bureau of the Public Debt
Internal Revenue Service
Internal Revenue Service
Internal Revenue Service
Office of the Treasurer, U.S.
Internal Revenue Service
Internal Revenue Service
U.S. Coast Guard
Internal Revenue Service
Internal Revenue Service
Bureau of Engraving and Printing
Internal Revenue Service
Bureau of Engraving and Printing
Internal Revenue Service
Bureau of Customs
Bureau of the Public Debt
Internal Revenue Service
Bureau of Accounts
Internal Revenue Service
Internal Revenue Service
Bureau of Engraving and Printing
Bureau of Engraving and Printing
Internal Revenue Service
U.S. Coast Guard
Bureau of Engraving and Printing
Internal Revenue Service
Internal Revenue Service
Bureau of Accounts
Internal Revenue Service
Internal Revenue Service
Internal Revenue Service
Office of the Secretary
Internal Revenue Service

Grant R. Newton
Maurice Parshall
George A. Payne
Florence B. Pearson
Frank N. Proctor
Mary E. Reilly
Eula Rorer
Thomas E. Shaw
Eugene A. Smith
Cecelia Stansfield
Jesse Swain
RoseE. Tabb
Mary E. Taylor
Ida C. Tichner
Gordon Stanley Turner
Etoile M. Vaden
Percy A. Waddill
William Fred Wallace
Eleanor M. Ward
Harriet A. Ware
May B. Young
Joseph S. Zucker

Bureau of the Public Debt
Internal Revenue Service
Bureau of Engraving and Printing
Internal Revenue Service
Office of the Treasurer, U.S.
Internal Revenue Service
Internal Revenue Service
Office of the Treasurer, U.S.
Bureau of Engraving and Printing
Bureau of the Public Debt
Bureau of Engraving and Printing
Internal Revenue Service
Bureau of Engraving and Printing
Internal Revenue Service
Internal Revenue Service
Bureau of Engraving and Printing:
Bureau of Engraving and Printing
Internal Revenue Service
Bureau of the Public Debt
Bureau of Engraving and PrintingBureau of the Public Debt
Internal Revenue Service

40 to 45 Years of Federal Service
Joseph R. Amato
David Beazell
Wright W. Betts
Norma L. Bigelow
Clarence M. Bowles
Thelma M. Bresnahan
Jesse A. Brooks
Leslie M. Brough
Helen W. Brown
Phyllis G. Brown
Ethel V. Burr

Office of the Secretary
Internal Revenue Service
U.S. Secret Service
Bureau of Engraving and Printing
Bureau of Engraving and Printing
Bureau of Engraving and Printing
Bureau of Engraving and Printing
Internal Revenue Service
Internal Revenue Service
U.S. Coast Guard
Office of the Treasurer, U.S.

Robert W. Campbell
Julian F. Cannon
Allan Chaimas
Robert A. Dillon
Wallace D. Edington
Arth ur D. Etienne
Elizabeth B. Farr
Matthew D. Fenton (Retired)
Edward Ferneyhough
Gordon R. Furr
Daisy F. Gambon
Russell H. Gant
Marian E. Goodman
Frank Goodyear
Edmond F. Harrigan
Rudy P. Hertzog
'Sarah M. Hirshman
Marion R. Hueter
Bessie E. Jett
Elizabeth A. Jewett
Laurence P. Johoson
Elizabeth L. Kangas
Sadie Lipshitch
Ruth E. Loveless
-George A. Marcey
Esther M. Mathes
Earl C. McClure
Frederick Middleton
John F. Moran
Maude L. Morgan
Charles L. Morris
William A. Mueller
Joseph J. Murray
John E. Nead

Bureau of Engraving and Printing
Bureau of Accounts
Internal Revenue Service
Office of the Secretary
Bureau of Accounts
Internal Revenue Service
U.S. Coast Guard
Bureau of Engraving and Printing
Office of the Treasurer, U.S.
Bureau of the Public Debt
Bureau of Engraving and Printing
U.S. Coast Guard
Internal Revenue Service
Internal Revenue Service
U.S. Secret Service
Internal Revenue Service
Internal Revenue Service
Internal Revenue Service
Bureau of Engraving and Printing
Office of the Treasurer, U.S.
Bureau of Customs
U.S. Coast Guard
Internal Revenue Service
Bureau of Engraving and Printing
Internal Revenue Service
Internal Revenue Service
Internal Revenue Service
Bureau of Engraving and Printing
Bureau of the Public Debt
Bureau of Engraving and Printing
Office of the Treasurer, U.S.
Office of the Secretary
U.S. Coast Guard
Bureau of Customs

Forrest P. Neal
E. Ferne Perkins
Grace Price
Elsie M. Ray
C. Maynard Robey
Elsie Rodenha~r
Eva M. Sanford
Helen J. Shepard
Carl W. Staats
Roscoe D. Stevens
Edith B. Sullivan
Olga M. Treanor
Raymond L. Trego
Jessie E. Walden
Rae R. Zaontz

Internal Revenue Service
Office of the Treasurer, U.S.
U.s. Coast Guard
Bureau of Engraving and Printing
Bureau of Engraving and Printing
Bureau of Engraving and Printing
Internal Revenue Service
Office of the Secretary
Bureau of Engraving and Printing
Bureau of Engraving and Printing
Office of the Secretary
Internal Revenue Service
Bureau of Accounts
Bureau of Engraving and Printing
Internal Revenue Service

MERITORIOUS SERVICE AWARD
The Meritorious Service Award is next to the highest award which
may be recommended for presentation by the Secretary. It is conferred on employees who render meritorious service within or beyond
their required duties.
JOHN H. ATKINS (Retired») Formerly Operating Procedures Assistant
to the Commissioner of the Public Debt
For his major role in systems development which resulted in
recurring annual savings of over $2Yz million and significant
reductions in manpower requirements related to operating
procedures.
LAWRENCE BANYAS, Associate Director, Office of Debt Analysis,
Office of the Secretary
For his unique skill and untiring effort in effectively resolving
difficult and complex problems connected with the management
of the public debt, including improvement in its maturity
structure.
RAY T. BATH, Deputy Commissioner for Systems, Bureau of Accounts
For sustained leadership in achieving improved financial management in the Bureau of Accounts, Treasury Department, and
the Government as a whole, including lower costs in cash
financing.
ERNEST C. BETTS, Jr., Director, Office of Budget and Finance, Office
of the Secretary
For positive leadership in the D~partment's financial management, contributing significantly both to more adequate funding
support and the prevention of unwarranted increases in funds
and personnel.

SIDNEY F. CARWILE, Supervisory Auditor, Bureau of the Mint
For demonstration of unusual initiative, ingenuity, and administrative skill in coordinating all aspects of a program to more
than double the coin production of the Mint •
.ALWYN COLE, Examiner of Questioned Documents, Office of the
Treasurer of the United States
For his invaluable service, superior skill, and devotion to duty
as an Examiner of Questioned Documents which have won for
him a place among the foremost experts in his field.
JANE M. CULLEN, Special Assistant to the Assistant Secretary for Administration
For her high efficiency and major contributions to the effective
and timely discharge of the responsibilities of the Office of the
Assistant Secretary for Administration
LAWRENCE P. Doss, Assistant Director, Operations Division, Data
Processing, Internal Revenue Service
For his major contribution toward the maintenance of voluntary taxpayer compliance through correction of deficiencies in
two District Offices and the development of an improved integrity
program.
MOSES DOUGLAss, Helper General, U.S. Coast Guard Aircraft Repair
and Supply Center, Elizabeth City, N.C.
For his skill and careful attention to duties which consistently
permitted him to produce from 20 to 50 percent more finished
products than the average journeyman working in his field.
bVING FISHMAN, Assistant Deputy Commissioner of Customs, New
York,N.Y.
For outstanding leadership and competence in establishing and
administering a nationwide program to carry out the Department's statutory responsibilities for screening propaganda entering the United States.

LEON C. GREEN, Assistant Director, Audit Division, Internal Revenue
Service
For his leadership as Chairman of an Integrity Committee in
Internal Revenue appointed to restore confidence in the Service's
operations and the Nation's voluntary taxpayer compliance
program.
DOUGLASS HUNT, Special Assistant to the Under Secretary
For valuable assistance to the Under Secretary and significant
contributions to the Revenue Acts of 1962 and 1964, the recendy
enacted silver legislation, and various fields of tax administration.
THOMAS L. HUSSELTON, Director, Sales Staff Development, U.S.
Savings Bonds Division
For significant contributions to the U.S. Savings Bonds program,
including the initiation of a sales training program and leadership
in organizing the National Conferences of Savings Bonds
Volunteers.
ROBERT A. KLAYMAN, Formerly Associate Tax Legislative Counsel,
Office of the General Counsel, Office of the Secretary
For his outstanding contributions in recent years to major
income tax revisions of vital significance to the maintenance of
a sound and expanding economy.
JACKSON N. KRILL, Chief Inspector, U.S. Secret Service
For effective leadership of an expanded management program
for the Secret Service, including introduction of electronic data
processing equipment and measures to better utilize existing
resources.
AMos N. LATHAM, Jr., Director of Personnel, Office of the Secretary
For his exemplary leadership and outstanding contributions to an
effective personnel management program in the Treasury
Department.

LoIlEN W. LoOKER (Retired), formerly Regional Disbursing Officer,
Bureau of Accounts, Kansas city, Mo.
For qualities of leadership, management, and exemplary service,
culminating in an exceptional record of the Kansas City Office
in converting to automatic data processing without impairment
of efficiency.
DANIEL D. MOORE, Deputy Administrative Assistant to the Comptroller of the Currency
For superior competence and unusual initiative in developing
management improvement programs which have saved substantial funds and manpower.
DONALD T. NAIUMATSU, Electronics Mechanic,
Base, Sand Island, Honolulu, Hawaii

u.s.

Coast Guard

For consistently outstanding ability and unusual ingenuity in
the field of electronics testing, ckvelopment, repair and maintenance.
PHILIP

B. NEISSER, Technical Consultant to the Director of the Mint

For skillful management of highly technical aspects of an
emergency program to greatly increase the production of coins
in the United States.
MARIAN L. O'CONNELL, Secretary to Assistant Secretary Stanley S.
Surrey
For outstanding performance, over a period of years, in assisting
Treasury officials concerned with tax legislation in the smooth
flow of communications between the Department and the
Congress.
ARTHUR B. WHITE, Special Assistant to Chief Counsel, Internal
Revenue Service
For effective leadership of a task force which made a detailed
analysis of legislative reference material to prepare for congres~
sional hearings on Federal supervision of charitable trusts and
foundations.

LISLE WIDMAN, Director, Office of Industrial Nations, Office of
International Affairs, Office of the Secretary

For outstanding professional ability and creative initiative
activities supporting the wide range of Treasury interests
international economic affairs.
HURT

WILBUR,

In
In

Civilian Lighthouse Keeper, U.S. Coast Guard

For outstanding technical and administrative skills and exemplary
efficiency in operating and maintaining his station at Warwick,

R.I.
F. ZIEGENFUS, Technical Assistant to the Commissioner of the
Public Debt

HENRY

For technical excellence, zeal, and efficiency demonstrated over a
period of years in connection with administrative aspects of public
debt management

EXCEPTIONAL SERVICE AWARD
TAu ;s ,A, Ai,A,s' . . .~ ",Aid trUlY be reeommen4,J for presm"'·
t;o,. by';' Stcr,,,,,, TIu . .~;s cottfm,J 08 employees wAo
Jislinp"A ,Aemselv" by "e~tiDtUll ur"ice witA;" or ~"4 ,Am
r~,,;retl tluties.
D. ACUlI, Assi.tant Commissioner of Internal Revenue
(lnJpection)
For hit achievements in auuring integrity of operations by 60,000
employee. enJapi ita lJlIlual collection of over 1100 billion of
revenue, resulting in increaJed public respect for the Service'.
ability to police its own affairs.

VONON

E. AVls (Retired), Formerly Director, Alcohol and Tobacro
Tax Division, Internal Revenue Service
For sound planning and effective leadership in directing the
Alcohol and Tobacco Tax Division, resulting in improved
tax collection and gnarly reduced traffic in nontax liquor.

DwiGHT

E. BRAZEll, Formerly Deputy Assistant Secretary for Tax
Policy and Director, Office of Tax Analysis, Office of the Secretary
For his major role in recent tax policy development and tax legitlation and achievement of high professional standards throughout
the Office of Tax Analysis.

HAIlVEY

JOIDf K. CARLOCK, Fiscal Assistant Secretary
For his outstanding contributions to effective and efficient
management of the manifold 6.scal operations of the Department
during the 2 yean he has served as Fiscal Aasistant Secretary.

ROUaT CHAMBERS (Retired), Formerly Chief Counsel, Bureau of
CwtoDll

For .ignificant achievementa and lasting contributiolU to impro.Co
ment, .implificatiOll, aDd e8ectivc administtation of Customala..
and regulation•.

BERTRAND M. HARDING, Acting Commissioner of Internal Revenue
For his leading role in the accomplishments of the Internal
Revenue Service in launching a nationwide automatic data
processing system; absorbing heavy workloads generated by the
Revenue Acts of 1962 and 1964; and realining its fidd offices.
CLINTON¥'HILL, Special Agent, U.S. Secret Service
For extraordinary courage and heroic effort in the face of
maximum danger to protect the PresIdent and First Lady of the
United States at the time of President John F. Kennedy's
assassination in Dallas, Tex., on November 22, 1963.
HENRY

HOLTZCLAW, Director, Bureau of Engraving and Printing

For vigorous leadership in modernizing and improving the
Bureau of Engraving and Printing, resulting in greatly increased
efficiency and substantial reductions in operating costs.
THOMAS F. LEAHEY, Assistant Director, Office of Tax Analysis, Office
of the Secretary
For outstanding performance and leadership of his staff in carrying out the complex and highly important responsibility of estimating the Nation's tax revenues.
DONALD C. LUBlcK, Formerly Tax Legislalive Counsel, Office of the
Secretary
For outstanding contributions to the Department and to the
Nation in the indispensable applications of his talents to the
passage of the Revenue Acts of 1962 and 1964.
HENRY L. MANFREDI, Narcotic Agent, Rome, Italy
For his productive relationships with foreign governments and
his outstanding performance of investigative duties leading to
curtailment of illicit international narcotic traffic.
FRANK E. MORRIS, Formerly As~istant to the Secretary for Debt
Management
For professional competence and uncommon ability in management of the public debt which served to promote economic gains
for the Nation and to maintain America's leadership in international affairs.

WILLIAM H. NEAL, National Director, U.S. Savings Bondi Division
For capable leadership, initiative, and untiring efforts in promoting the sale of U.S. Savings Bonds. Since taking office $20.7
billions of Series E and H Bonds hav~ been sold and the volume
outstanding has increased $5.04 billions.
PHILIP NICHOLS, Jr., Commissioner of Customs
For his exceptional leadership and success as Commissioner of
Customs in modernizing the U.S. Customs Service to cope with
the demands of ever-growing and increasingly complex international travel and commerce.
R. DUANE SAUNDERS, Director, Office of Debt Analysis, Office of the
Secretary
For his effective leadership and distinctive contributions in
formulating Treasury Department policies and decisions in the
management of the public debt and broadening public understanding of debt management.
SIDNEY S. SoKOL, Assistant Commissioner of Accounts
For outstanding management ability in stimulating high quality
performance within the Bureau and for distinctive service as a
Treasury representative on the Joint Financial Management
Committee.
B. STRUBINGER (Retired), Formerly Assistant Commissioner of
Customs

DAVID

F or his consistent record of achievements and lasting contributions to the effective administration of the U.S. Customs Service
and the com petent performance of its mission.
FREDERICK W. TATE, Assistant Director of the Mint
For his competent leadership and exemplary aptitude for achieving highly effective and economical operations, resulting 10
savings of many millions of dollars.
RUFl;s

W. YOVNGBLOOD, Special Agent, U.S. Secret Service

For his outstanding courage and voluntary risk of personal
safety in protecting the Vice President of the United States at
the time of the assassination of President John F. Kennedy, in
Dallas, Tex., on November 22, 1963.

SPECIAL CITATION
GEORGE H. WIWS
Director, Oftice of International Mairs
OSice of the Secretary
For his remarkable achievements during the palt several years as the
Senior Staff Adviser to United States Delegations which were responsible for intricate and important negotiations in the international
monetary field.

27
u.s.

;OVERNIIENT ,..1"1.

orriCK. 1114

- 2 ADYISERS - Continued
Joseph M. J1oWllUUl, Jl:., Asaiatsnt to tlui Secr-t&r¥--of the

*
*

Treasury for Congressional Relations
Benjamin Caplan, Director, Office of International Finance
and Economic Analysis, Department of State
Robc::r'c Gd.~:t!well, Special Assistant to the Secretary of the
Treaslll'Y

~arles A. Coombs, Vice President, Federal Reserve Bank
of New York
V·Dewey Daane, Member, Board of Governors, Federal Reserve
System
Dixon Donnelley, Assistant to the Secretary of the Trealury
for Public Affairs
E. Jay Finkel, Deputy Director» Office of International
Financial Policy Coordinati.on, U.S. Treasury
~fred Hayes, President, Federal Reserve Bank of New York
~ner Ackley, Counci.l of Economic Advisers
Ralph Hirschtrltt) Special Assistant to the Assistant
Secretary of the Treasury for International Affairs
and Temporary Alternate Executive Director, IBRD
John S. Hooker, Alternate Executive Director, IMF
Douglass Hunt, Special Assistant to the Under Secretary
of the Treasury
~ Griffit.h Johnson, Assistallt Secretary of State for
Economic. Affairs
I Tom Ki.l1efer , U.S. Executive Director, Inter-American
-,
Development Bank
t,....Imrold F, Linder) President and Chairman) Export-Import

Bank of Washington
tjiilliam McChesney Martin) Jr.) Chairman, Board of Governors,
Federal Reserve System
l.awrence C. McQuade, Deputy Assistant Secretary of ComIIeree
for Financial Policy
* Robert G. Pelikan, Financial Attache, American Embassy, To~
l~in O. Reischauer, U.S. Ambassador to Japan
¢.4ames J. Saxon, Comptroller of the Currency, U. S. Treasury
Fred B. Smith, Deputy General Counsel, U. S. Treasury
George H. Willis, Director, Office of International AffauI,
U. S. 'treasury

,------_. ---* Wife accompaaying

UNITED STATES DELEGATION
1464 ANNUAL MEETINGS
7)0 - IBlW - IFC - .J.DA
TOKYO, J~p!f""

.~R
* Douglas

Dillon, Secretary of the Treasury
TEMPORARY ALTERNATE GOVERNORS

~ert

V. Roosa, Under Secretary of the Treasury for
J~ Monetary Affairs
~John C. Bullitt, Assistant Secretary of the Treasury
and U.S. Executive Director, IBRD
~illiam B. Dale, U.S. Executive Director, IHF
CONGRESSIONAL ADVISERS

~senator

Russell B. Long, Committee on Foreign Relations,
u.s. Senate
~ Representative Henry S. Reuss, Committee on Banking and
Currency, House of Representatives
~* Representative Clarence E. Kilburn, Committee on Banking
and Currency, House of Representatives
CONGRESSIONAL OBSERVERS

Senator~. ~8~o~r on, ,Committee on Banking and
CurreJtc~~·

.. .
na
/
* Se¥t~ a ce : / eJ:;y, CoDInittee on Banking and
j ~
eu~e
, . en /
~ Representative Abrah~ J. Multer, Committee on Banking
and Currency, House of Representatives
~~pr~ent;lt:iv~ J8JD)fs )!~e}j;cq?mnittee on Banking and

Cutren~r, H6llStV4f~epr'eeentfatives

ADVISERS
(alphabetically)

VJoseph

W. Barr, Chairman, Federal Deposit Insurance Corpor.til
Henry J. Bittermann, Director, Office of International
Financial Policy Coordination, U.S. Treasury

In addjtion to Secretary Dl1ilion, the delegation includes:

Dilmon Heads U.S. Delegation to

secretary

Annual World BAnk and Fund Meeting

L,,,Treasur y

S~cretary

Douglas Dillon leaves Washington

__ from Andrews Air Force Base at 10:00 tomorrow (Thursday)
aboard a special MATS 11
1&_ jet
morning for Tokyo, where he will heAd the United States Delegation

A
to the annual meeting of the Governors of the International Monetary
Fund and the International Bank for Reconstruction and Development
from September 7 - 11.
route, the Socretary and his party will overnight at
in Honolulu, where they will be the guests of Governor John Burns
of Hawaii.

,,!

~.gl.llg&gk[g? 9l!!l't~t~iIM_!tJg• •~.-·

(Correspondents: Arrival in Hawaii, 3:50 p.m., local time.

SA7 (/ ~ Ot+ V.~

P."'"

Departue 11:00 a.m. Friday. Arrival Tokyo: 8ki

Tokyo time.)

II ••'k

2:00 p.m.,

TREASURY DEPARTMENT
(

FOR IMMEDIATE RELEASE
SECRETARY DILLON HEADS U. S. DELEGATION TO
ANNUAL WORLD BANK AND FUND MEETING
Treasury Secretary Douglas Dillon leaves Washington from
Andrews Air Force Base at 10:00 tomorrow (Thursday) morning aboard
a special MATS jet for Tokyo, where he will head the United
States Delegation to the annual meeting of the Governors of the
International Monetary Fund and the International Bank for
Reconstruction and Development from September 7 - 11.
En route, the Secretary and his party will overnight in
Honolulu, where they will be the guests of Governor John Burns of
Hawaii.
(Correspondents: Arrival in Hawaii, 3:50 p.m., local time.
Departure 11:00 a.m. Friday. Arrival Tokyo: Saturday, 2:00 p.m.,
Tokyo time.)
In addition to Secretary Dillon, the delegation includes:
TEMPORARY ALTERNATE GOVERNORS
Robert V. Roosa, Under Secretary of the Treasury for
Monetary Affairs
John C. Bullitt, Assistant Secretary of the Treasury and
U. S. Executive Director, IBRD
William B. Dale, U. S. Executive Director, IMF
CONGRESSIONAL ADVISERS
Senator Russell B. Long, Committee on Foreign Relations,
U. S. Senate
Representative Henry S. Reuss, Committee on Banking and
Currency, House of Representatives
Representative Clarence E. Kilburn, Committee on Banking and
Currency, House of Representatives

0-1333

- 2 -

CONGRESSIONAL OBSERVERS
Representative Abraham J. Multer, Committee on Banking and
Currency, House of Representatives
ADVISERS
Joseph W. Barr, Chairman, Federal Deposit Insurance
Corporation
Charles A. Coombs, Vice President, Federal Reserve Bank of
New York
J. Dewey Daane, Member, Board of Governors, Federal Reserve
System
Alfred Hayes, President, Federal Reserve Bank of New York
Gardner Ackley, Council of Economic Advisers
G. Griffith Johnson, Assistant Secretary of State for
Economic Affairs
Tom Killefer, U.S. Executive Director, Inter-American
Development Bank
Harold F. Linder, President and Chairman, Export,-Import Bank
of Washington
William McChesney Martin, Jr., Chairman, Board of Governors,
Federal Reserve System
Edwin O. Reischauer, U. S. Ambassador to Japan
James J. Saxon, Comptroller of the Currency, U.S. Treasury

000

The '1'rMa1lry hu 41_0Il~iDue4 the MpU.t:e
publication of the ftat1ltOCy Debt Liaitatioa
8tat-.tt. 'fbi• .atloa .... Uk_ 1D the ~
of 8C0D0.y aiDee all the 1afoaatiaa iDal.... ia
the Statutory Debt L1a.1tatloa .tata.aat i . IIhcMa
in the 1JlOftth-end Daily ftat.aDt of the UU~. .
Stat•• '1Teuuy which iDGl.... out.a1a of the
1DfolWatiOD in . . . 4etaJ.l. AlttO, _ , of the
naipi_te of the 8t:.atutatry Debt L1alutloa Rag..
. .t aleo receive the IIOIlth-.a4 4&111' fteu8r
.ut...at~~o. . who 40 aot.)&Dd have . . . . . f .
the infomaUoo) -1' .w.ol'ibe thI"oagh tbe
S\apel'bteDdat of Doc.lnta, U. S. ~t
iTint.ing Office, \faahiDgt_. D. C. 20402.

8ABvana leba

8/31/64

TREASURY DEPARTMENT
(

September 3, 1964
DISCONTINUANCE OF STATUTORY DEBT
LIMITATION STATEMENT
The Treasury has discontinued the separate publication
of the Statutory Debt Limitation statement.

This action

was taken in the interest of economy since all the
information included in the Statutory Debt Limitation
statement is shown in the month-end Daily Statement
of the United States Treasury which includes certain
of the information in more detail.

Also, many of the

recipients of the Statutory Debt Limitation statement
also receive the month-end daily Treasury statement.
Those who do not, and have a need for the information,
may subscribe through the Superintendent of Documents,

U. S. Government Printing Office, Washington, D. C. 20402.

000

POR

tH(W:~E

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lL_Z?AP rlS,

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1264 •

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me Treanry repartaent ........ lad --1IIc t.}-.G \be tell" ,.. . . 8II'1M.
tNU\&I"1 btll., one ..riAl. \Q be an add1t.1ou11 . . . of \he ~!11a dO.. ~ U, lHIa
... \he o~,.,. 1MJ'1a. to be date4 .. ~. .bt.r 10, 1964, 1Ih1M ..,. ott.... • Aupn l1t
.... opeoed at. the Federal .~ Duka an . •, ..... 4. r ...... wn l.ant.ed htr
$1,)OO,OOO,Q10, or therealtout.., or 91.., bl11a and tor $90),OOO,CXlO, _ 'hereabCN\e,
ot 182-da)r bUl.. ..he ~la of \1* two NJi... are .. toll....
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a/ boe ,\1ng one ~ ot $100,000
12 peNen\ or t.he _)\U1t of 91...., btlla bid for at the 1_ prloe . . . . . .p\e.
40 pe~ of the 8:),..nt ot 181-da;y bill. bid tor ., 'Soh. 1.. priee _ ao..~
n.l'J9

Low

Aftra.l,.

MTAL

rE~T;~nS

A.'P'Lr.'!.D ~)R ANt' ACCgnd'l BY

O1.tr1n

::'~

?hl1ade1phia
Cl....l.ad
U.-one!
l"-n\a

Cb1eago
8'_ Loui.
J1~1a
Kanau ely
;)all..

San

P'rana1...

lppli.ed FOI'

33,)61,:)00

l.~:. 7.,000

lL ,22),000

27,911,:ilO
11,63.0,Oy')
: ),17S,()()()

2?5,07y,~»J

)3,2':06,000
29,110,000
3),911,000
;.>f,l71,;)JO

_ • 9!l74~'2":?2

MALS,2,168,477 ,')00

r:w·lW.

RiI~S

A!o!p\N
$ IF. ,t61,)')O

RYE DISra!cu.
I
I

671,124,000 I
1..,463,100 J
27.91"7,()(X) I
11,6)5,0.10'
29,l29,:-m I
142,56J,iXlO r
2; ,590,(») $
27,450,000 I
);,1$2,000'

Aj}Rlled'or
•
14,IY6,{JOO
1,161,2)1,000
t ,478,YJO
21,078,000
1,71),IXJO
11, ')46,{).JO

!tcepW
• 14,2)6,ooa

619,211,OOC
J,47t,OJ(J
27,'')18,)JfJ
1,71),))0

141,4)0,000

l),~.,O~
71,;lIJ,OOU

7,S96,000

6,Q--)8,0')J

9, 017, O'JO

.',)77,Joo

1),081,IJoJO
1),)t7,nl)
20.'n,o.~ s
11, ~6,OOO
, )L6,JOO
1~-t421.,0Q0
5S,Jlb",)'X). I,O)ij,~
~:l,)OO, '179,000 ,£/ $1,46),276,000
.JlJO,lS2,OOO

!v. lDOludee
iJ

l'l

~2)6,)tJ7 ,001) ~Cllpet.i\l'" tenciuw ....pted .t \M ........... of 99.1
Iael. . . $6O,S6),000 DODCape'l'ift tend.... -.pted at. \he ......... priM of
:II • cOGpOll 1. . . or tn. . . . ItDC'b and tor the • _ _ a_1IrfNWt \be ,.......
t.t... bW. would proY1de y1el~ ot 3.SH, tor the 9l-cIaJ bille, . . .
t. ,
152-da,r bUl.. 11lt.eren rat.Q _ bill..... qwot.ed 1a tMM of .... aeec-\ v1~
"'un nl.t.d to t,t.. t ... • own or the hUla pqa~ ., . .
t.nan ~
-.ow1\ 1Jmtned ancl thea l.nlth ill aRual DUaber t4 dAl' Nl..... __ • )60-4111'
In oont.ran, yielu on eert.U'1cate., ROWe, aDd boaQ .... ~. . . Sa ..,.. ~t
in\eftn on t.be DOUn\ lllY•• Wel, &Dd r.l... tr. rratMl' ttl da7. rndldec 1D 1ft
1ft'-"" ~'" j)eftod '0 the .nual Iluaber ;,f daJ' 1a \be ,......., II1ttl ......
•~.a'" 11 .ore t.::,An ane OOllpan per10d 1. lmolYe4.

,.77.,

111'1. ,...

".lS

TREASURY DEP,AR'fMENT

4$ UWU'JlllllII!....

auwe

FOR RELEASE A. M. NEWSPA.PF~~,
Saturday: Sep'~ember 5, 19~;:
RESULTS OF TREASURY! 5 11l1F..EKLY !fLLL OFFERl NG

The Treasury Department a.nlJl)\Ul~.d lut eVl@nl.ng tl'lat ltha tli!t)ijJ~r" tal' two "erie.
Treasury bills, one series to be an add1t,ional i3sue of th~ billa dated June ll, 1964,
and the other series to be dat,ed Septemi~:r lD,fl 1964. whl ~ W~I't\ <';!JIttered on Augu,st 31,
were opened at the Federal Re~Gr.vre &nk~ OK~ ~Ir~~~~r 4~, "f~KJ\Mrl!l 1dl£H'~ invited tor
$1,300,000,000, or thereabou"!is, of 91-day bill3 ~J~ct tQl" $900,OOO"OfJO, or thereabouts,
of 182-day bills. The detaile of the two ~el'""l~i:!l 9I're a:~ fallows~
91~day

RANGE OF ACCEPTED
COMPETITIVE BIDS:

'freasury

bill~

matur1~ Dec;embelr 1~.l964.=

ippl"ox. EquIv"

Price

High
Low

99.11
99,,109

Average

99.112

!.nnw. Rat~
3.J;9"3J
3c525%

3e514%

]L,82""w\y Treasury bills
~~~t~ March 11, 1965

Approx. EqUiv.

Annual Rate

3.6)6%
3.. 661%
3.649%

a/ Excepting one tender of $100,000
t2 percent of the amount of 91-day b5.l1~ bid foy:" .att,he low price was accepted
40 percent of the mnount of' 182~day bill~ bid for at the 1011 pri,ce was accepted
TOTAL TENDE.RS APPLIED FOH AND ACCEPTED EX FED&&L RESERVE DL3TllIC'IS:
~plied F~~

District
BOlton
New York
Philadelphia
Cleveland
Richmond

33 J 361,OOO

1,585,124,000

Acc~E:1€ld

27,917,000

871,124~o()n

27Jj9771!()()(j

U,635,OOO

~1~6J5J)QOO

33,175,000
225,079, 000

29))129,000
]J~2~ 58),000
25 J),90~()(JO

33,200,000
29, 210jlClOO
\
J, :;" ,1 91')L 000
~

28 ,171~ 000
9211~h,ooo
....>.J...:...;.""'""

_---::~

$2,168 j hTi J OOO

TO'NJ.S

18,;961,0'00

14,463 b OOO

34,223 .. 000

Atlanta
Chicago
St. Loui13
Minneapolis
Kansas City
Dallas
San Francj,sco

!2pJJ~d ~r
i(

~
~
0

14,296,1)000

1~1629231.?OOO
8,,418~OOO
2?,,018~OOO
1~TI3.\lOOO

lI~5tl-8fOOO
JJJu,Ij)J30 1 000
1 ~5ge ~ooo
:tl)071 $)000

27 ))L~50.\lOf;O

',) ') IS:,,.. <'J~T »'-11
f'u'XJ:'"
~
291,lJOOOi
~_~!r,L~2~J;0!!~

't ~,} "
., 08?.• (\lOO

,l-k ~

$,Ij))OQ,~

,000 ~/

Ilj 31.16;)000
S:~,tJ34,ooo
.=

=,~,~~~~,=

fSJ~~J6)ft216_.000

Accepted
$ 14,236,000

679,2)1,000
3,478,000
21,018,000

1,773,000
10,204,000
71,510,000

6,098,000
9 11 077,000
13 I• 087
i ' ' '• 000
9,346,000

55,0)4,000
$900~152,OOO

'Y Include~

~1!236,307'1000 :rJionQ~~titi~~ t~Jnldt':r,8 @l~:w~pt<'$d ~,t, ~b6 ;t1rflI"&geJ p1"1e* ot 99.112
$60.056),000 nGj1)c~tlti?fe t(~ud:?J]i~/'§ W-\.-Jc:ulP~;J@lcl
~~}I@,;~W;)?J!g~ prl~~ gf 98.155
On ~ Goupcn iSR1U) af,tl:)(; 0Hl.111£ len,gt,b ~VJ. fOT:
I&ltlM :~llll:mmt :LIw(&stad, the return on
these bill$ wuld p:rQwlde :r:t01~ af ) ",5?%';: l\n th~ ;/l~tj2;JThl.lJ.. ~jl ~Thd 3" 71%,j for the
182~day bUl~
Intel"€Jst !'ates "':0 biJ.l~ :aJ('1i": qiG,ot.®d iJrr, t~lTll..$ Gf 1bank diaoount with the
retUl'D r.'01ated t..o the fac.~ ~cnjJlt of tb ,c~ bU. Il"i f\~iISiill,blql i!if~ '!\i:21};-;·lJTt"lI. ty X"9.t'bel" than the
.... t i nveat.ed rmd thei,J~ 18oKtb, i,111\
J"" ~
"I J.
,,1t.n .<i""" VIIIIar •
_oun
\>lllJii,;~rjl~ Il8;'Wf! :r""6lJ~,"(c,1,1 ~i' $ ,)O~"~,I""

c/ Includes

~ coXl\t;rast;J :yj,@lds

mterest on thfJ amount

~~-(('tlfica~r,e;s!l

:U'lClf8Z, ~dj

~x~

r,J-FAc1

ji)ill.~ ):'rtaJLir(r;.,s: t~h'1:!:

interest pa:yment. period t.o the ,ijct,i~f~l v:IH~I.~W':"(
cOlI\pou:nd.:ing if :more th-ru:, 0)('*'1 (;O'lrpon J,)3riod i~

0"1334

V,ill!tg,YV("A"l:J,

JT!,telBB of

oi 1jJ);,f~ r~uiu:ilUg i.:fi M
lJ>l. {I.{h~ )Jt'-~"1,od): Tilith I$em.\armual

DV;ttlbf:<T

?~~J ft!(

jJl}ti71)t~;e(L

- 2 -

Retore i;.hose
Df

finance

wishes

raeetin~s

Japan, i'1r. lZakuei Tanaka, to coovey to him the b.lt
6ov~rnment

iuplJort 01 the people
~e

be6in, I nope to call OD the Minilter

in the United

t.li

ana to assure him of the friendship and
the United :.>tates.

~tatG8

are full of admiration tor the maDDer

in which the Japanese economy is moving swiftly ahead to providl
a h4her: standard of 1 iv1ng and a brighter prOUllse for the future

at the

Ja~ane&e

p(Nple.

made under a democratic

.~e

salute that progre.s, which hal been

;a~ernment

and a private eoterpri ••• Ylt...

&nG ,tiiah to .xpress our dea1t'e to CQfttinue to be the frieDel. ad

allies

such an industrious and vigorous people.

000

,) T.\Tu·if.NT UP0N ARRIVAL IN TOKYO BY THE
!i0Nt...I l\;..Bl.£ oo001.A::; DILLOM
iE~~£Tk~Y OF tHE TR£ASOlY
~f rdl UNITED StAT£S

nl~

TV AlTEIW THE ARWAL MDTIRG or
INTfJU1ATIOlw.. MONETARY FUND AND THE

INTt:RNATIC,iNi,J,.. BA."iK FuR R£CONSTRUCTlON AND Ih:.-V£LOPKDIT
~Al1JrtJ»'Y, ~f.fT~ 5, 1964, 2: 00 , .H.. 'RKYO 'lUll

~reat

It is a
Jyna.:aic
../ith

ci~y

r.tu~

roo\l~L"1l pro~ress

tv uke the visitor (roe abroad fe.1 wana1J

and 1 are here to attend the 4anual ....tlDp

the Governors ot the International Monetary Fund

IntenlAtional Bank for Reconstruction and

cip&te that t.b..ese
the

to Japaa aDd to thi.

,mcI'e tradition .nd courteay comblae .0 chandaalJ

~<ly colle~ues

pleasure for me to

~O&l

~etinia

Develo~t.

tbe
We _tl-

will _ke aubatautlal cODtrlbutiou to

ot international ilaOl\etary atab111ty and liquidity that

is ahared by the &overnmenta CJi Japan, the United Statal f .-4 all
other tHGber& ot the aank and Fund.

Before tho ••

STATEMENT UPON ARRIVAL IN TOKYO BY THE
HONORABLE DOUGLAS DILLON
SECRETARY OF THE TREASURY
OF THE UNITED STATES
TO ATTEND THE ANNUAL MEETING OF
THE INTERNATIONAL MONETARY FUND AND THE
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
SATURDAY, SEPTEMBER 5,1964, 2:00 P.M., TOKYO TIME
It is a great pleasure for me to return to Japan and to this
dynamic city, where tradition and courtesy combine so charmingly
with modern progress to make the visitor from abroad feel warmly
welcome.
My colleagues and I are here to attend the Annual Meetings
of the Governors of the International Monetary Fund and the
International Bank for Reconstruction and Development. We
anticipate that these meetings will make substantial contributions
to the goal of international monetary stability and liquidity that
is shared by the governments of Japan, the United States, and all
other members of the Bank and Fund.
Before those meetings begin, I hope to call on the Minister
of Finance of Japan, Mr. Kakuei Tanaka, to convey to him the best
wishes of my government and to assure him of the friendship and
support of the people of the United States.
We in the United States are full of admiration for the manner
in which the Japanese economy is moving swiftly ahead to provide
a higher standard of living and a brighter promise for the future
of the Japanese people. We salute that progress, which has been
made under a democratic government and a private enterprise system,
and wish to express our desire to continue to be the friends and
allies of such an industrious and vigorous people.

000

TREASURY DEPARTMENT

September 8, 1964

FOR D!MEDIA'I'E RELEASE
TREASURY MARKET TRANSACTIONS IN AUGUST
During August 1964, 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 $223,383,900.00.

000

D-1335

TREASURY QEPARTMENT
September 8, 1964

FOR IMMEDIATE RELEASE
TREASURY MARKET TRANSACTIONS

m AUGUST

During August 1964, 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 $223,383,900.00.

000

D-1335

1vv

L~~i~ ti:~

r 1v---~'Jfq.;J f; If(r.

<(.-

The Treasury Department today made two announeements in connection
with itl two-.onth old program to double coin production and case the
coin shortages Which have been felt in some parts of the country.
1.

August output at the Philadelphia and DelIVer Mints was 590 million

coins -- an increase of 132 million pieces over monthly production in

July. This brought production up to an annual rate of 7 billion coins,
Which compares with a

..ilSta1~g
60 'id

~ate

of 4.3 billion during fiscal 1964. Meanwhile,

additi~lh'1in;ge.;:: ~::t~~:.:::::I ~

....w ~

Pl'~~~" i _ - , --5...... Ill.

5; ~ ~ns~r~~

'q(.,;

.::t.'ll)/

2. " , . e o

'th authority provided

by'-~ taw

c.o

M-SaO,

approved by the Pres ident on September 3. 1965,"..w coins manufactured
after January 1, 1965 will continue to bear the 1964 date.

The purpose

of this JDOve is to discouraae . . hoarding of I U . . . . by those who buy
~
. . . by the roll and by the bag and hold them out of circulation in hope{
5

of higher numisllati£ values. 1'J1e number of coins to be produced wi tIl the
1964 date will be at leao;t 10 billion pieces -- faT too numerous to become

~ cc>l1 ""tC>v'~

tellS •

TREASURY DEPARTMENT

September 8, 1964

FOR IMMEDIATE RELEASE
MINT OUTPUT INCREASES; NEXT YEAR'S
COINS TO BEAR 1964 DATE
The Treasury Department today made two announcements in
connection with its two-month old program to double coin
production and ease the coin shortages which have been felt
in some parts of the country.
1. August output at the Philadelphia and Denver Mints
was 590 million coins -- an increase of 132 million pieces
over monthly production in July. This brought production
up to an annual rate of 7 billion coins, which compares with
a rate of 4.3 billion during fiscal 1964. Meanwhile, the
60 additional coinage presses now being purchased and installed
by the Mint will bring coin production up to an annual rate
of over 9 billion coins a year, by June 30, 1965.

2. The Treasury said it would invoke the authority
provided by Public Law 88-580, approved by the President
on September 3, 1964, so that coins manufactured after
January 1, 1965 will continue to bear the 1964 date. The
purpose of this move is to discourage hoarding by those who
buy coins by the roll and by the bag and hold them out of
circulation in hope of higher numismatic values. The number
of coins to be produced with the 1964 date will be at least
10 billion pieces -- far too numerous to become future
collectors' items.

000

D-1336

17uC
.....

UNITED STATES NET MJNETARY GOLD TRANSACTIOKS WITH
FOREIGN COUNTRIES AND INTERNATIONAL INSTITUTIONS

January 1, 1964 - June 30, 1964
(In millions of dollars at $35 per fine troy ounce)

Negative figures represent net sales by the
United States; positive figures, net purchases
First
Q.uarter
1964
Algeria
Argentina
Austria
Brazil
Cambodia
Congo (Leopo1dville)
Dominican Republic
Egypt
Finland
France
Germany
Guinea
Honduras
Israel
Italy

Mldagascar
Mexico
Peru
Philippines
Salvador
Spain
Surinam
Switzerland
Syria
1\misia
Turkey
Uni ted Kingdom
Vatican City
Yugoslavia
All Other
Total

-32.1
-1.0

-.7
-5.0
-101.3

Second
Q.uarter
1964

-23.2
+28.1

-2.5
-8.4
-101.3

-200.0

-2.0
+200.0

+9.9
-2.2
+2.5

-.1
-2.0

-2.7

-30.0
-.1
-.5

-1.2
+109.3

+15.0
+220.9

-.6

-.7

-.4

-.2

-27.5

+95.0

Less than $50,000
Figures ~ not add to totals because of rounding.

Fiscal Year 1964
JuJs" 1, 1963 June 30, 1964
-15.0
-30.0
-87.5
+54.4
+3.2
-3.1
-2.5
-10.4
-5.0
-517.7
-200.0
-2.8
-1.1
-9.0
+200.0
-2.3
-4.0
-10.6
+9.6
-2.2
-2.0
+2.5
-30.0
-3.0
-.5
+9.8
+535.0
+1.0
-203
-2.6
-128.0

1706

TREASURY DEPARTMENT

FOR IMMEDIATE RELEASE

UNITED STATES FOREIGN GOLD TRANSACTIONS FOR
SECOND QUARTER OF 1964

u.s.

net monetary gold transactions during the

second quarter of 1964 resulted in a net purchase of
$95.0 million.

In the first quarter of the year,

there was a net sale of gold of $27.5 million.
The Treasury's quarterly report, made public
today, summarizes monetary gold transactions with
foreign governments, central banks and international
institutions for the first two quarters of Calendar
Year 1964, and for the Fiscal Year 1964.

000

D-1337

TREASURY DEPARTMENT
September 8, 1964
FOR IMMEDIATE RELEASE

UNITED STATES FOREIGN GOLD TRANSACTIONS FOR
SECOND QUARTER OF 1964

U.S. net monetary gold transactions during the
second quarter of 1964 resulted in a net purchase of
$95.0 million.

In the first quarter of the year,

000

D-1337

UNITED STATES NET WNETARY GOLD TRANSACTIONS WI'll{
FOREIGN COUNTRIES AND INTERNATIONAL INSTITUTIONS

January 1, 1964 - June 30, 1964
(In millions of dollars at $35 per fine troy ounce)
---

Negative figures represent aet sales by the
United States; positive figures, net purchases
First
Quarter
1964

Second
Quarter
1964

AJ..geria

Argentina
Austrja

-32.1
-1.0

Brazil

-23.2
+28.1

Cambodia
Congo

(Leopoldville)

Dominican Republic

Egypt
Finland
France

-.7
-5.0
-101.3

Germany

-200.0

Guinea
Honduras

Israel
Ita.ly

-2.0
+200.0

Jedagascar
.J.ie:x:ico
Peru
Phj lippines
Salvador

+9.9
-2.2

Spain
Surinam
Switzerland
Syria
Tunisia

+2.5

Turkey
Uni ted Kingdom

-101.3

-.1
-2.0

rrIJ:y

not

add

-3.1
-2.5
-10.4
-5.0
-517.7
-200.0
-2.8
-1.1
-9.0
+200.0
-2.3
-4.0
-10.6
+9.6
-2.2
-2.0
+2.5
-30.0
-3.0
-.5

-30.0
-.1
-.5

-1.2
+109.3

+15.0
+220.9

-.,

+9.8
+535.0
+1.0

-.7

-2.3

-27.5

+95.0

-.2

* Less than $50,000
Figures

-15.0
-30.0
-87.5
+54.4
+3.2

-2.7

--.6

Vatican City
Yugoslavia
All Other
Total

-2.5
-8.4

Fiscal Year 1964
July 1, 1963 ..
June 30, 1964

to totals because of rounding.

-2.6
-128.0

whole, was better than 5 percent in real terms. Our gross national
product increased by more than $40 billion. Job opportunities
began to overtake the rapid growth in our adult labor force and,
i~ July of this year, unemployment dropped below 5 percent for the
hrst time since 1957 -- despite the accelerating automation of
farms and fac torie s •

D-1338

(FOLLOWING ADV~NCF MATERIAL NOT RPT NOT TO
',' 1 '0 Gi1T Sf PT. ~,)
TEXT: DILLON AT li'ir ~1EF.TING (2, 9CO)

TOKYO, Sf PT. ~--F'OLLOiMINC IS THE TEXT OF U.S.

RfLFAS[D

S£~~ETARY

irrO~r

Of THf

TRFASURY C. DOUGLAS DILLON'S SPEECH TUESDAY AT THE A'JNUAL tiEETING

THF

I~TrR~ATIONAL

(~PJ

MONETARY FUND:

TEXT)

~y COLLFAGUFS A~D L A~r DELIGHTFD TO aF IN THIS ~As\'r~ATINr. '::ITy,
~HFRF T~ADITION AND C-OURTESY COM8INE SO CHAR~H~CLY~ITH t~ODER~ITY
A~D ?lH)CRFS~. IHIS ~"1F~rTING rOLLOWS SHORTLY AFTIP. .lAPA,lf S ACHIEI![MLH
OF ARTICLE VIII STATUS IN THE LUND -- ANOTHr~ MAJ'.W AC~IFVFME\lT IN

JAPA"J'S AUWS"r-'INCREDItlLE RECOftD Of RAPID ECONOr:J'::' GRO',;TH OVER
'fHE TwELVE YFARS SINCE SHE JOVJED THE INTE~NATIO,-lAL ;;OI~[TARY F"UND.
;, THE PAST YEAR HAS r,HTN[SSED A CRATIFYING MOVEl'lt 'JT-r1Y i'.jOST COU~TRIES TOWARD THE fINANCIAL [QUILIBRIUM FOR ~HI~H ~E HAVE ~[E~
STRIVlr-.JG. ~ONTINU[D LEADERSHIP BY THE .LNTERNATIO~AL tjO\JfTARY [U~D
UNDER THE S~ILLVUL GUIDANCE OF ITS ~AN~GING DI~FCTOR A~D EFrFCTII![
rOOPERATION IN THF FOREIGN EXCHANGF~1ARKETS ~AV[ CO~TAINED THf NE~
PRESSURES THAT HAVE OCCURRED AND REINFORCED THE STR~NGTH JHICH HAS
3EEN DEVELOPING.
'AS FOR MY OWN COUNTRY, DURING FISCAL YEAR 196~, THF y~ITED
.STATES SET IN OPERATION THE LATEST EL[NENTS OF I, 'E,'J Ar\;) tlA''JV-SIDFD
fCONOf'aC PROGRM1 SF:GUN IN 1961 -- A PROG~AM DESlr:\n:-,D TO PROMOTE
INTERNAL EXPANSIO~, ENLARGE [MPLOY~ENT OPPORTUNITlfS, A~D, AT
THE SAME TIt1E, FACILITAT[ ORDE~LY AND STEADY P1tO(;f~\'-S5 To"rflROS dALANC[
IN OUR EXTERNAL ACCOUNTS. OUR PROGRAt1 PLACES MA.JClR r.r~PHf\SIS UPON
H~PROVED PRODUCTIVITY A,ND GREATER CQ{1PETITIVEN[~S -- UPC\J L~CF~TIVfS,
.R A.!.Hf i _tliA.bl-LLP.Di'lt Jtf..S!JU!'J ~Q\J.S. AWl..c !.l~T..B..D Ls.. .:~ _.u~J~ JJTll a.2...~ ~ 0.s..1'.- ______ _
It1POPTANT, UPO;.J THE HEALTHY frJJNCTIOrHNG
FRFF ~i\!TF'RPRISF:.

DV~JA,'

,)V {J,

Ie SYSTai OF'

·_""'"'.v

Tt:;VV.V

lEdagascar

-2.3

J4e:x:ico

-4.0

Peru

-10.6

Philippines

+9.9
-2.2

Salvador
Spain
Surinam
Switzerland
Syria
Tunisia

+2.5
-2.7

Vatican City
Yugoslavia

All Other

Total

-2.0
-30.0
-.1

-.5

Turkey
Uni ted Kingdom

Less than $50,000
Figures my not add

-1.2
+109.3

--.6

+9.6
-2.2

-.1

+15.0
+220.9

-.7

-·4

-.2

-27.5

+95.0

to totals because of rounding.

I
1\
Ii
II

II;'
Ii

It'I

-2.0

+2.5
-30.0

-J.O
-.5

+9.8
+535.0
+1.0
-2.3

.. ~.~

-128.0

whole, was better than 5 percent in real terms. Our gross national
product increased by more than $40 billion. Job opportunities
began to overtake the rapid growth in our adult labor force and,
i~ July of this year, unemployment dropped below 5 percent for the
flrst time since 1957 -- despite the accelerating automation of
farms and factories.

D-1338

PAGE

T~O

DILLON

-ftGNtrI~A~T

-- AND, I BELIfVE, SUSTAINED -- ~[SULTS ARt NOW
CLfARLY APPARENT.
J~E UNITED STATES ECONOMY GONTINUES TO EXPAND IN WHAT IS NOW
THE LONGEST, ST~ONGEST, AND ~EST-~ALANr.[D ADVANCE OF ANY PEACETIM[
P[~IOD IN THIS C[NTU~Y. DURING THE PAST FISCAL YEAR, THE RATr OF
G~OWTH I'~ INDUSTRIAL PRODUCTION, AND IN OUR [CONm1Y AS A~IHOLE,
WAS ar.TTER THAN 5 PERCENT IN ~EAL TE~M~. ~U~ GROSS NATIO'~Al P~ODUCT
INCREA SED iY i10RE THAN $40~ bILLION • .J.Oi OPPORTUNITU.:S tJEGAN TO
OVERTAKE THE RAPID GROWTH IN OUR ADULT LA~R FOler AND, I"J JULY or
THIS YFAR, UNEMPLOYMENT DROPPED IELOWfIlff PERCENT FOR THr 1o"HST
TIME SI~CE 1~51--D[SPITE THE ACCELERATING AUTOMATION OF rARM~
AND FA CTOP. I ES.
tlfANWHILE, OU~ PRIcrs HAVE ftEMAINED VIRTUALLY STAIL[. THE
INDICES 0, WHOLESALE PRICES ARE STILL AT THE LEVELS or SIX YF~R~
AGO. CONSUMER PRICE INDICES HAVE EDGED UPWARD aUT VEKY SLOWLY,
ONLY; LITTLE t10RE THAN eH{/ PERCENT PER YEAft •. AT THE SAI'lf TH1E. AL~OST
ALONE AMONG THE LEADING INDUSTRIAL COUNTRIES, WE ARE NO~ FOR THE
THIRD STRAIGHT YEAR EXPERIENCING A DECLINE IN UNIT LAlOR COSTS ~OR
MANUFACTURING INDUSTRIES AS A ~HOL[.
MONETARY POLICY AND DEST MANAGEMENT HAVE STRUCK A NON-INFLATIO~Aqy
3ALANCE iETW[[N SUPPLY AND DEMAND FOR 1.IQUIDITY INSTJtUME\lTS.
~OMMERCIAL 8ANK HOLDINGS OF FEDERAL COVERNMENT DEiT CONTI\UED TO
DECLINE OVER THE PAST fISCAL YEAR ay MORE THAN $4~ tiILLION
[VEN THOUGH TH[ ADMINISTRATIVE iUDGET orFICIT EXCFEDED il~~;
iJILLION. WHAT IS MORE, LESS THAN A MONTH AFTER THE END or THE nS~AL
YEAR, THE FULL AMOUNT OF THAT SUnGET DEFICIT WAS IN EFFE'eT,
FINANCED OUT OF ~tAL SAVINGS AS vr ADDED NEARLY $9~ bILLION TO
OUR LONGER TERM GOVERNMENT SECURITIES •
.IT WAS WITHIN THIS DOMESTIC FRAMEWORK THAT THE UNITED STATES
CONTINUED ITS EFFORTS TO RESTORE .ALANCE IN ITS INiftRNATIONAL
ACCOUNTS. IN DISCUSSING THOSE EFFORTS, IT SHOULD ALWAYS 3E dORNF.
IN MIND THAT THE UNITED STATES HAS THE ABILITY TO ACHIEVE 3ALANcr
IN ITS INTFftNATIONAL PAYMENTS AT ANY TIME THROUGH THE USE OF DRASTIC
MEASURES OF A RESTRICTIVE NATURE. BUT -- AS WE HAVE CONSI~Tf~TLY
POINT[D OUT -- ~F HAVE NEITHE~ THi·D[SI~E NOR THE INT[NTIQ~ OF
uTILIZI~G SUCH MFASURES, SINcr THEY COULD IRING HARSH REPERCUSSIONS
TH~OUGHOUT THE WORLD. INSTFAD, WE ARE ~OftKI~G TO ACHIEVFiALA~CF
GRADUALLY THROUGH NOR~1AL liARKF.T PJlOCrSSES, WITHOUT INJUP{ Te QUR
fRIENDS IN OTH[R NATIONS.

-.Spain
Surinam
Switzerland

+2.5

Syria
Tunisia

-2.7

Turkey
Uni ted Kingdom

Vatican City
Yugoslavia
All Other

Total

-2.0
-.1

-2.0
+2.5
-30.0
-3.0

-.5

-1.2
+109.3

+15.0
+220.9

-.4

-.7
-.2
+95.0

+9.8
+535.0
+1.0
-2.3
-2.6
-128.0

--.6

-27.5

-30.0

Less than $50,000

Figures ~ not add to totals because of rounding.

whole, was better than 5 percent in real terms. Our gross national
product increased by more than $40 billion. Job opportunities
began to overtake the rapid growth in our adult labor force and,
i~ July of this year, unemployment dropped below 5 percent for the
first time since 1957 -- despite the accelerating automation of
farms and factories.
D-1338

PAG[ THREE DILLON
" il1 PRO V[ D ? ROD UCTIV IT Y, I NAG RI CULTURE A~m I~' A II:J r A(; TI! ~d :\j G ~ LI Kr ,
HAVE ~1ADE ?OSSIiLE SUiSTANTIAL GAINS IN OUR TRADE POSITION OVER
THIS PAST FISCAL YEA~ •• GAINS THAT wE~E, AS WE wELL KNOW, IN
SOME PART ~OftTUITOUS, iUT GAINS ~EVERTH[L[SS, THAT W[ EIPECT TO
SUSTAIN -- AND, EVENTUALLY, E~LA~G[.
WE A~[ ALSO PEftSISTING IN OUR ,EFrO~TS TO REDUCE DOLLAR OIJTLAYS
AJR()AD fOR DEfENSE AND DEVELOPME~T ASSISTANCE, ~ITHOUT IMPAIRINr.
ESSENTIAL ELEMENTS IN THE DEFENSE OF THE fR£f WORLD O~ I~ OUR VITAL
ASS I STANCE PROGKM1S. THE aALANC[ OF PAYt1ENT S COST S OF THOSE PROGR At' s
~ILL HAVE SHRUNK dY AN ANNUAL RATE or $1,~ .ILLION 8Y THE [NO or
THIS CALENDAR YEAR.
jHEN WE LAST MfT, IT WAS ou~ CAPITAL ACCOUNTS THAT POSED THF
GREATEST TH~[AT TO OUR jALANC[ OF PAYMENTS. A CASCADING OUTFLOJ OF
PORTFOLIO CAPITAL HAD fORCED US TO PROPOSE THE INTEREST fQUALIlATIO~
TAX IN THE SUMrEft Of 1963. THAT TAX IS NO~ LAW. IT HAS WO~KED CUT
AS PLANNED AND CAN 1E EXPECT[D TO HOl.D PORTfOLIO CAPITAL QUTFLOI~S
TO A REASONABLE fIGURE ~HIlE l.[AVING OU~ MA~KETS OPEN TO FO~EIGN
aOJtROWfftS WILLING TO ASSUME INTEREST COSTS CONSIDERED NO~i1AL -.Jtin.. "(llVaL J...OW- ..!"'.:-l.N..J:10s.t.."OO:l:lD.-~W) USILl.AJ....-C Qij.NJ',1 I i.s ... _ .... __ ... _ ....... _ ... _____ _
~ITH OUft TftADE POSITION IMPROVING, GOVERNMENT EXPF.NDITU~F~
OVEftSEA5 CONTINUING TO DECLINE, CAPITAL OUTFLOWS ftESTAAI~ED -- AND
WITH OUR EARNINGS ON SERVICES [XPANDING AT ROUGHLY THE SA~I ~AT[ AS
OUR RISING NET OUTPAYMENTS ON TOURISTS ACCOUNT _. WE HAVE 9fEN
MOVINC BACK TOWAftD EXTFRNAL BALANCE.
LO~ EXAMPLE, OUR GROSS DEfICIT ON REGULAR TRANSACTIONS IN vrSCAL
1964 WAS $1,750 ~ILLION. JHIS WAS A HEARTENING GAIN OVER THE RESULTS
or THE PAST SIX CALENDAR YEARS WHEN COMPARAILF DEFICITS ~A~GFD
""OM $3,191 MILLION TO $4A~ ~HLLION. AND IT WAS A VAST Ir:PRovn1ENT
OV[~ THE F 1ft S1 HALF or CALENDAR YEAR 1953, IIHEN AccrLERAT I '~G Dn1A'lD~
FROM AiROAD FOft LONG-TERM FUNDS LED TO A DOLLAft OUTFLOW AT AN ANNUAL
!tATE or $5~ ~ILLION •• A rUTE WI: SIMPLY COULD NOT _:,:1IOi' SUSTAIN
AND THAT FAR SUftPASSED ANY LEGITIMATE ~ORLD WIDE ftEQUIREMENTS fOR
DOLLARS. ~UT, DESPITE THIS IMPROVEMENT, WE ARE ONLY HAL;-~AY
ijACK TO EXTERNAL BAL~NCE. jE CANNOT ~~-Ne, RELAX .- NOR no WE
INTEND TO.
-- -- ·'~A&IIc.n

'"~

111.~!!lft.

,"40R THE INTENTIO'I.J OF

COULD IRING HARSH REP\:"P.f)'C:SIONS
THROUGHOUT THF WORLD. INSTFAD, ~E ARE ~OftKING TO ACHIEVE ~~~t~cr
GRAD~AlLY THROUGH 'WfH1AL ::ARKET PROCrSSES, WITHOUT INJUftf TO QUR
FRIENDS IN OTHER NATIONS.
UTILIZING SUCH t'1FASURES, SINCE THE.Y

Spain
Surinam
Switzerland
Syria
Tunisia

+2.5

Turkey
Uni ted KingdCBIl
Vatican Cl ty
Yugoslavia
All Other

Total

-2.0

-2.7

-30.0
-.1
-.5

-1.2
+109.3

+15.0
+220.9

--.6
-.4

-27.5

--.7
-.2

+95.0

Less than $50,000

Figures ~ not add to totals because of round'l.ng.

-2.0
+2.5
-30.0
-3.0
-.5
+9.8
+535.0
+1.0
.. 2.3
.. 2.6
-128.0

whole, was better than 5 percent in real terms. Our gross national
product increased by more than $40 billion. Job opportunities
began to overtake the rapid growth in our adult labor force and,
i~ July of this year, unemployment dropped below 5 percent for the
flrst time since 1957 -- despite the accelerating automation of
farms and factories.

D-1338

PAGE FOUR DILLON
IN SEn<INC TO IMPROVE OUR PAYMENTS POSITION, lia:: RiA£}1l.Y RL:OCNl~&.
THAT WE MUST CA~[FULLY WEIGH -- AND, WHE~EV£~ P~ACTICAILI
AND APPROP~IATE, MINIMIZr --THE IMPACT OF OUR 'ROSS DErICITS UPON
TH[ LIQUIDITY Of THE ~EST OF THE WO~LD. [ITM THE COOPERATION or
OTH[~ MONETARY AUTHO~ITIES WE HAVE, TH[RErOftE, IN LAleI PAftT AiSO~i[D
DOLLAR 3ALANCES WHEft[VER THE~ HAVE TENDED TO OUTKUN .[QUI~[MENTS.
1AST YIAft, FO~ [XAMPLE, THROUGH SALES OF COLD, USE or rO~FIGN
CURRENCY 3ALANC[S, DPtAWINGS ON THt lNTERNATIONAL rl0NITAltY lUND, AND
A VA~l[TY OF OTHER SPECIAL TftANSACTIONS, WE AISORIED MORT TH~N
$1~250 ~ILLION THAT HAD rLo~rD TO SOME EUROPEAN COUNTRIES. AT THE
SA'ME T(f1E, DEMANDS lilY crJtTAIN MONETAPtY AUTHOIHTIfS OUTSIDE J"UftOPE
-- AND, TO SOME EXTENT, THE DEMANDS OF PRIVATE BANKS AND TRAD[~S
EVERYWHERE -- CALLED FOR MORE DOLLAJtS THAN COULD jE SUPPLlfO OUT
Of OUR DEFICIT. THOSE DEMANDS, AMOUNTING TO SEVERAL HUNDRED rHLLION
DOLLA~S, WFftE MEl ~Y TRANSfERS fROM ~ROPEA~DOLlA~ MONETARY ftEStRVrs.
IT WAS WITHIN THE ENVIRONMENT OF A SHftIN~~INC ~NITrD ~TATFS
PAYMENTS D[FICIT THAT THE INT[~NATIONAl~O~rTARY rUND CONDUCTED
ITS STUDY or THE I~T[RNATIONAL ~~N[TA.Y ~YSTEM OVER THE PAST YE~R.
~.oNCURRENTLY, ANOTHER STUDY WAS .[INC CAIUUED rO~WAI:D iV THF GR OUP
or TEN COUNTRIES, WHICH HAD, IN 1961, ACCEPTED SPECIAL .ESPON~I~ILITY
FO~ PftOVIDING SUPPLEMENTAL RESOURCES TO THE fUND IN THE EV[~T THAT
UNUSUAL ST~AINS WERE TO DEVELOP IN THE INTERNATIONAL MONETARY SYSTEM.
IT IS HIGHLY SIGNI;:ICANT THAT 90TH STUDIES CONCLUDED THAT TH~'
'~r.SE~T SYSTEM IS fUNCTIONING WELL AND THAT ANY CHANGES SHOULD BE
DESIGNED, IN THE WORDS OF TH[ .tUND ftEPOftT, TO It SUPPLEMENT AND IMPRovr
THE SYSTEM WHE~E CHANGES A~[ INDICATED, RATHER THAN TO lOOK FO~ A
REPLACEMENT or THE SYSTEM IY A TOTALLY DIFF[~ENT ONE.IHE 1'iO STUDIES ALSO AC~EED ON THE ADVISAIIlITY or [XPANDII~G Tlil
!ESOU~Crs OF THE fUND THROUGH A COM~lNATION or CENERAL AND SELECTIVE
QUOTA INCftEASFS. SUCH INCREASES SEEM CLEARLY APPftOPJIATE IN VIEW Of
THE CONCLUSION IN~CHAPTE! 3 or THE lUND NEPORT THAT THE NEXT
DECADE IS LIKELY TO SEE A STEADY RISE IN THE DEMAND rOI INTERNATIONAL
LIQUIDITY, COUPLED WITH A SLOWER ANNUAL RATE OF GROWTH I~ THE
TYPES OF LIQUIDITY ON WHICH CHlfF RELIANCE HAS IEEN PLACED DURI~G
~F.C[NT YEAR S.
l.HE UNITED STATES HOPES THAT THE GOVERNORS AT THIS ME[TI:~G l"ILL
~r.QU[ST-THE EXECUTIVE DIRECTORS TO STUDY THE NEED fOR SUCH INC~EAsrs
AND THE WAYS-IN WHICH THEY MIGHT irST IE C~Pt~IED OUT. IT IS OUR HOPE
THAT THE !XECUTIVE j!IR£.CTORS COULD, AS THEY DID IN 195i, CO~lPLrTF
THEIR WO~K AND MAKE SUCH ~ECOM~ENDATIONS AS THEY FIND AFPROPRIATE
TO THE J;OVEftNORS OF THE JU~D BY THE END OF THIS YEAPt, THUS ALLo:nt~C
TIME rOR MEM9FR COUNTRIES TO COMPLETE NECESSARY LEGISLATtvr ACTION
DURING 19:55.
..w.JtUU

+2.5

Switzerland
Syria
Tunisia

-2.7

-.1

-.5

Turkey
Uni ted Kingdom
Vatican City
Yugoslavia
All other

-1.2
+109.3

--.6

Total

-30.0

+15.0
+220.9
-.7

"·4

-.2

-27.5

+95.0

Less than $50,000

Figures

TIIJ:y

not add to totals because of rounding.

+2.5
-30.0
-3.0
-.5
+9.8
+535.0
+1.0
-2.3
-2.6
-128.0

whole, was better than 5 percent in real terms. Our gross national
product increased by more than $40 billion. Job opportunities
began to overtake the rapid growth in our adult labor force and,
i~ July of this year, unemployment dropped below 5 percent for the
flrst time since 1957 -- despite the accelerating automation of
farms and factories.

D-1338

PAGE fIVE DILLON

-_~_~I~l~~~~~JWa~s~_~~~~!~~~~~~

___ ~

COUNTRIES ENTER THE NEXT PHASE IN THE EVOLUTIONARY DEV[LOPMENT or
THE INTERNATIONAL MONETA~Y SYSTEM -- A PHASE IN WHICH TIE GREATIR
NEEDS A~E LIKELY TO CENTER, AT LEAST FOR A TIME, ON THE INLARCIM[NT
AND ELAaORATION OF CREDIT FACILITI[S fOR TRANSFERRING R[SERVES
AMONG COUNTRIES, RATHER THAN UPON INC~EAS[S IN THE OVER-ALL SUPPLY
or RESE~vrs. IN THIS R[CARD, OU~ -THINKING ONCE AGAIN PAftALLELS THE
fINDINGS IN THE fUND'S ANNUAL ~[POftT R[GARDING THE NEED FOR INCREASES
IN WHAT THE REPORT LABELS ~CONDITIONAL LIQUIDITY.~
I~DAY, EVEN IN THE FREE INDUSTRIALIZED COUNTRIES, THERE IS NO
'qi£&J COM~';ON ECONOMIC PATTER~, RUT A MIX, VARYING fftOM NATIO'i TO
NATION~, OF PRODUCTIVITY, PRICES, TRADE RESTRICTIONS, AND CAPITAL
MAftKET fACILITIES. llS A RESULT, THE jUlK OF THE IHCRlAS[S IN RESEftVES
HAvr, rOft THE PAST SEVERAL YEARS, flOWED TO A rEW OF THE INDUSTRIALIZ£D
COUNT"Irs, AND PARTICULAftlY To~rSTEJtN .b,UROPE. lUftTH~ft SU;~STANTIAL
INCREASES IN R£SFRvrs ~OULD, FOft THE MOST PART, ONLY INC~[ASE
THAT FLOW -- UNLESS AND UNTIL THOSE COUNT~Its REDUCt TH[IR CHRONI~
SURPLUSES THROUGH A ~rlATIVE RISE IN IMPOftTS, AN INCREASE IN TH[I~
CAPITAL [XPOftTS, Oft ANY OTHER AccrPTAiLE COMiINATION or ACTIO~S THAT
WOULD OVERCOME THEIR PROPENSITY TO ABSORB WHATEVER NEW
LIQUIDITY MAY IE ADDED TO THE SYSTEM IN THE rO~M OF OWNED RFSERVES.
LCONOMIC DISPARITINtES iETWEEN COUNTftI£S ARE NO DouaT IN[VITA8LE
IN A DYNAMIC WOftLD. lIME, SO LONG AS ALL COUNTRIES ACTIVELY
PURSUE THE OBJECTIVES F LIIERAL, MULTILATERAL TRADE POLICIES, TH£
NEEDED ADJUSTMENTS WILL SURELY IE ACCOMPL ISHED • .t1,.EANWHIlF, l~E MUST
3£ AS CAREfUL IN DEvrlOPING OUR INTERNATIONAL FINANCIAL ARRA~r.fMrNTS
AS WE ARE IN DESICNINC MON[TA~Y MEASURES rOft ou~ DOMESTIC NEEDS. AND
~E MUST CONSTANTLY GUARD ACAINST THE OVER-SIMPLIfIED CONCLUSION THAT
A SIMPLE ADDITION TO THE INTERNATIONAL MONEY SUPPLY -- OR AN AGREED
LIMITATION UPON IT -- OR A CONTRACTION OF IT -- WILL P~OVIDf AN
ADEQUATE SOLUTION.
~~.U~U~IT, ~UUFL~D WITH A SLOWER ANNUAL RATE OF GROWTH IN THE
TYPES or LIQUIDITY ON WHICH CHlrF RELIANCE HAS BEEN PLACED DURI~G
~r.crNT YEA~S •
.tHE lI.NITED _~.TATF~S HOPES THAT THE ~OVERNOJtS AT THIS MEETING 'rJILL
~r.QUEST THE EXECUTIVE ]IRECTORS TO STUDY THE NEED fOft SUCH INC~EASFS
A~D THE WAYS IN WHICH THEY MIGHT ~EST iE C~~Rl[D OUT. IT IS OUR HOPE
THAT THE JXECUTIVE ~IRECTORS COULD, AS THEY DID IN 1951, cmlPLfTF
THEIR 'jORK AND MAKE SUCH ~ECOt1i'ENDATIONS AS THEY FHln APPHOPRIAT[
TO THE .GOVE~NORS OF THE FU~D BY THE END OF THIS YEAR, THUS ALLo:ni~G
TIME FOR MEM9FR COUNTRIES TO COMPLETE NFC£SSARY LEGISLATtVF ACTION
DURING 19:55.

- _ _ J.JC\.W

+2.5

Switzerland

Syria
Tunisia

-2.7

-.5

Turkey
Uni ted Kingdom

Vatican City
Yugoslavia
All Other

Total

-30.0
-.1

-1.2
+109.3

-.,

-.6
-27.5

+2.5
-30.0
-J.O
-.5

+15.0
+220.9

+9.8
+535.0
+1.0

-.7

-2.3

+95.0

-2.6
-128.0

.. "

Less than $50,000

Figures my not add to totals because of rounding.

whole, was better than 5 percent in real terms. Our gross national
product increased by more than $40 billion. Job opportunities
began to overtake the rapid growth in our adult labor force and,
i~ July of this year, unemployment dropped below 5 percent for the
flrst time since 1957 -- despite the accelerating automation of
farms and factories.

0·1338

PAGE SIX DILLON
.AS THE FREE JORLD'S FINANe IAL OFrICIAl..S, 'NE nUsr 16£ AS (;~~i~_
,ITH C~EDIT AS WE ARE ~ITH MONEY. lIQUIDITY CONSISTS NOT OILY 0' 111m
RESERVES, dUT or CREDIT FACILITIES. AND IT SEEMS TO Ht TO I' A,
IMPORTANT TODAY TO ~HIrT THf EMPHASIS TOWARD C~EDIT AS IT VAl IN
TH[ FI~ 5T Y[AR S AFTER ~OR LD VolAR IJD. TdHEN, TOTAL RESERV[S VIII
At~PLE 3Y ANY ABSOLUTE STANDARIJ -- aUT MOST OF THEM .rKE IN THE ltHlnD
STATES. DURING THAT PERIOD, iiHILF. THE PftOCESS[S OF READJUSTMlNT
wERE GETTING UND[~WAY, LITTLE ~OULD HAVE iEFN GAINED BY fUITHtR
INC~EAsrs I~ OWNED ftESERVES, FOR THOSE, TOO,WOULD HAVE rtowED TO
THE UNITED STATES. INSTEAD, A REDISTRIiUTION wAS NfEDED. iT WAS LARGtLY
ACCOMPL I SHE"D TH"OUG'H THE MASS IVE CRFD ITS AND cr. ANTS '«HICH TH[ JlNITED
STATES COV[RNt1ENT EXTENDED, NOT 1M' ,.IT ONLY iILAT£RALLY AND MULTJ[ATE~ALLY, JUT THROUCH DOLLARS USED IN THE DRAWINGS WHICH OTHEft
COUNT~IES REQUESTED or THF ~ON[T~RY ~UND •
.sor1E SEVEN Y£ARS AGO, THE INTERNATIONAL MONETARY SYSTEM f.NT[IUD
A SECOND PHASE IN WHICH A SUCCESSION OF LARGE JLNITfD ~TAT[S'
PAYMENTS DEFICITS 3rCAMt THE PRISCIPAL SOU~CE or ADDITIONS TO THE
P~IMARY RESERVES or OTHER COUNT~IES. AND NOW, WITH OVER-ALL
INTER~ATIONAL RESERVES AT AN ADEQUATE LEVEL AND WITH THE UNITED
~TATES i'IOVING TO~ARD liALANCE IN ITS PAYMENTS, THIS SECOND-PHASE
IS ALSO COMING TO AN END. ONCE AGAIN, THE NEED IS FOR ADDITIONAL
CREDIT FACILITIES.
IHAT IS WHY IT HAS iEEN 80TH APPROPRIATE AND NECESSAftY TO SET UP
BILATERAL CREDIT ARRANGEMENTS TO HANDLE THE VOLATILE MOVEMENTS OF
fUNDS ~HICH NOW OCCUR AMONG INDUSTRIALIZED COUNTRIES WITH CONVERTIILf
CURRENC IES. ~HERE IS
NO IMPA IRt1ENT or THE FUND'S ROLE WHEN THOSE
FACILITI[S ARE USED INSTEAD or, OH SOMETIMES IN ADVANCE OF,
RECOURSE TO THE fUND ITSELF. ~ATHER, THERE IS AN ECONOMY OF RESOURCES
AND A ~HNIMIZI~C or ST~AINS. THE RISK IS THAT A COUNTRY MIGHT DRIFT
INTO HEAVY AND CONTINUOUS RELIANCE UPON SUCH ESSENTIALLY SHORTTERM CREDIT FACILITIES, DELAYING TOO LONG THE ~FCFSSARY CORftECTIVE
ACTION THAT SHOULD dE TAKEN TO ADJUst ITS aALANCE or PAYMENTS.

-=-,.....

- -..AS .... m .A. tll¥.. .JU Uu..~-OM..RA.I.lOllI.,.....IlIA I. ..!.Y.E [. ...n.r_lll.SJL.t1US.1_ ilL .AJlwr..n~ .... _....
THE WAY TO DO IT IS TO PROVIDE FOR A FULL -- THOUCH INITIALLY
LARGELY CONFIDENTIAL -- EXCHANGE OF INFO~MATION AMONG THE COUNTRIES

DlftECTLY AFfrCTED, AND TO ASSURE FREQUENT OPPORTUNITIES FOR DISCUSSION
AMONG THFI~ MONETARY AUTHORITIrs. IT IS FSSENTIAL TO ~EVlr~ AND
APPRAISF TOGETHER THE ACTIONS EAC~ IS TAKING TO FINANcr ITS nEfICIT
Oft TO CARRY ITS SURPLUS -- INCLUDING THE DEGREE or DIRECT IMPINC[MENT
Of ONE UPO~ THF OTHE~.
\M/
tHAT IS \.IIH~.T L U~DERSTAND TO iE THE M[A~ING or THE *\l'ULTILATEIAL
SURV[ILLANCE~ WHICH THE COUNTRIES IN THE GROUP OF TEN HAvr UNDtRTAKEN
TO PURSUE JOINTLY, A~D I~ ~LOSE LIAISIO~ iITH THE iANK FO~
!NTER~ATIONAL .SE~TLEtILHS, THE OECD, AND, OF rOlJl~sI, THF 1111' ITSELF.
IT FULFILLS t r.OfH SYSTFl;J!TICALLY,THE 03JECTIVF:S lJHICH TliE .WHT£O
~T,ATES HAS LO:'JG FURSUED r": ITS FULL Rr:PORTI;~G OF ITS OW'~ ACTIVITIES.
I~ OUR VIE), TYle PATTE~~ or INF~R~ATION AND SO~SULTATION,

~YSTH1.Gi,TICALL,( [XTE ~DED M:C~G !;'lDUSnnALlzrn COUNTRIES SUrsJECT TO
VOL.ATILE /iLO\~S OF CAPITAL, C!<'j ADD ",1\1 H~PORTA,~T 2IMfNsrON TO TH[

p~l~r~T

USE OF

suC~

~RrDIT

Vatican City
Yucoslavia
"'f::>

All Other

_
-.

-.4

Total

~ASILITI~S.

-27.5

+1.0

-.7

-2.3

+95.0

-2.6
.128.0

Less than $50,000
Figures ne.y not add to totals because of rounding.

~1ll~L"U\l~U prOUUC [..LV .LLy

emu

gJ..ca-te~

compe:-ti-a-venei!ft -

upott

incentives, rather than upon restrictions and control'S -- and,
perhaps most important, upon the healthy functioning of a dynamic
system of free enterprise.
Significant -- and, I believe, sustained -- results are now
Clearly apparent.
The United States economy continues to expand in what is now
the longest, strongest, and best-balanced advance of any peacetime period in this century. During the past fiscal year, the
rate of growth in industrial production, and in our economy as a
WhOle, was better than 5 percent in real terms. Our gross national
product increased by more than $40 billion. Job opportunities
?egan to overtake the rapid growth in our adult labor force and,
l~ July of this year, unemployment dropped below 5 percent for the
first time since 1957 -- despite the accelerating automation of
farms and fac torie s •
D-1338

,.1"-)'\/,

.I ...

PAGE SrVF\ DILLC~
THE SCOPE fOR GRfATER RELIANCE rpo~ PURELY ~ILAT[RAL Cal.IT
~ACILITIFS, U~rER THE AFGIS OF 4MULTILATfRAL SURVEILLANC[-, MAY
'~=VF"J 3[ -nDD~. !liF SUPPORT THF SUGGESTION MADf IN THE ~~OUP or lEN
17/
RFPORT THAT rOUNTRIES WITH LARGE AND GRO~ING ~[Sf~VES SKOULD
ACTIVELY EXPLORE THE FOSSISILITv or LONG-TfRM LENDING TO OTH[I
INDUSTRIALIZED COV~TRIfS IN ~F[DOr ADDITIONAL RESFRVES, IUT WHO![
PROSPECTS FOR R[SfRV[ GROWTH, THOUCH PROMISING, MAY ONLY it FOft
RELATIVELY St'lALL A'lNL'AL INCRFtl[NTS ST~rTCHED OUT OVER MANY VrAfts.
SUCH LfNDINGIJOULD NtA£
~OT ONLY :if Of VALUE TO THE STAf3ILITY
or THE CURRENCIES OF THE I~DUSTRIALIZ[D COUNTRIES, IT WOULD ALSO
FACILITATE ~~ ADEQUATE AND UNI~TFRRUPT[D TlOW or D£VFLOPM[NT
A~,SISTANCE FROM ADVA,'lCED NATIONS TO DEVELOPING COUNT"IES. IN ADDITION,
COUNT~If~ :lITH LAPGE AND PERSISTFNT SURPLIISE~ SHOULD -- I'J THrIft O!JN
INTE;E~TS AND IN THE INTERESTS OF ACCELE~ATED ECONOMIC DEVELOPMENT
-- CAREFULLY RFFXAMINE THE POSSIBILITY OF INCREASING THE LEVEL AND
QUALITY or THEIR ASSISTANCE PROGRAMS.
JUT, ASIDr FRC~ CONTINUING P~OGR~MS or ECONOMIC ASSISTANCF,
THE CREDIT rACILITIES THAT ~ILL Bf OF MOST DIRECT USE TO THf NONpmUST~ IALIZED ~~nHERS OF THE fl'ND ARE THOSf OF THE FUND ITSELF.
TliAT IS '.IHY THE UNITED STATES JELIEVES THAT PRO~PT CO~SIDEftATIO~J
~HOUlD dE GIVFN ~o ft GE~rRAL E~LARGFM[NT OF aUOT~S. IN ADDITION,
SPfCIAL I~C~EAsr5 WOUL~ SEEM APPROPRIATf IN A NUM3fR or CASES
PARTICULARLY FO~ THOSE MEMdENS WHOSE CURRENCIES HAvr 8ECOM[ sl~ONCrft
AND MORE ~IDrLY USED OVER TH[ SIX YEARS ~I~CF QUESTIONS
or THIS KIND ~rRf LAST OISCUSSfD IN NEW DfLHI. WE WELCOME THE
ATTAINMENT iY OTHE~ COUNTRIES Of SITUATf6:'lS WHERE' THEY CAN NOW
PROVIDE A G~EATER PROPORTION or THE FUND'S RESOURCES, WITH A
CORR[SPONDI~G ~EDUCTICN IN OUR SHARf OF THE FUND'S ~ESPONSI~ILITY.
~Tf HAVE JFEN HOPE~U L THAT THf MEMBER S OF THE- EUR OPE A'~ ECONOM I C
COi';;-;UNITY, IN PA~rICULAR, ~'T!LL ASSUMF A LARGER SHAPlf, AND A~E
GRATIFIED THAT SOME ~f~DIN[S~ TO DO so HAS BrE~ INDICATED •

.tII'

.... .... ..AS .... iN.. .A l:lI ¥. ...Ill.A ti ~'l(; .... 0P...r...R A. ~,. ....utA 1. -J..l'~ L -llJ '-' fL ~ 1:l.I.L."l.l ~ IIIJL.. .AJl LlL/..1,JJ &. __ ... __ _
THE i~AY TO DC IT IS TO PROVIDE FOR A FULL -- THOUGH INITIALLY
LARGELY CONFIDFNTIAL -- £XCH"~JGF OF INFORt1ATIGr-J A1~O'JG THE COU~TRIfS
DIRECTLY AFrrCTFD, AND TO ASSURE FRFOUENT OPPORTUNITIES FOR DISCUSSION
AMONG THFI~ MONETARY AUTHORITIES. IT IS FSSF~TIAL TO ~rVIE~ AND

APPPAISF TOGFTHFR THE ACTIONS EACH IS TAKING TO FINANCE ITS DEFICIT
OR TO CAQRY ITS ~U~PLUS -- INCLUDING THE DEGREE OF DIRECT IMPINCEMENT
Of ONE lJPO\J THE"
IHf\,T IS ~HAT

CTK[~ - . 1 , 1 /

F~D[RSTAND

TO iE THE

~~EA\JING

or THE -:.tULTILATEftAL
GROUP OF TEN HAVE UNDERTAKEN
JITH THE dANK FOR
INTF~\JATIO'~AL,S~,TT~:-!~::~~<;, ~rT OEeD, ~.\JD, OF rOUI{sf, THF It1f ITSELF.
IT rULFILLS t ",lK! >Y<::d':tTlt~,tLLV, THE Q3.JECTIVES .JHICH THE U~IT[D

SURVFIlLANCE~ ~~ICH THE COUNT~IfS IN THE
TO PURSUE JOI~TLv, A~n I~ ~LOSE LIAISIO~

<:'T,llT~('; HA~; L'J:~G ;:'.;i?5tl~= 1:: I'TS rULL RrrORTI'~G OF ITS O'N~ AC'TIVITIES.
l"~ 8L'R VIf'), T'HC' i.'CTTE':::< :-;r I'~T:'t):>I'~~T.In,.\;
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J:)LATILF j;"LC\~lS

LXrE '\DfD 1\' (\:'; IOL'<;T(dALIZ[~ ~OLi\TRIES SiFjJECT TO
OF (:APITI\L, r~', ,~0D t,!~ I:"PC'-;TP"H ;::Ir1E~SIO'~ TO TH[
r~ 1 :-: [ ': T US f 0 V sue 1i '"' \ f I) IT;'!\ elL I T J :; C •
V81.1can City
+1.0
Y'II$:(>:::' ~ a v -:'8
A:... :. . 0t::;er

-.6

Total

-.7

-·4

-.2

-27.5

+9.5.0

Less tt~ $50,000
F:g-u:res n:ay not add to totals because of round'lDg.

r~
I

-2.J

-~.2

-128.0

incentives, rather than upon restrictions and controls -- and,
perhaps most important, upon the healthy functioning of a dynamic
system of free enterprise.
Significant -- and, I believe, sustained -- results are now
clearly apparent.
The United States economy continues to expand in what is now
the longest, strongest, and best-balanced advance of any peacetime period in this century. During the past fiscal year, the
rate of growth in industrial production, and in our economy as a
whole, was better than 5 percent in real terms. Our gross national
product increased by more than $40 billion. Job opportunities
~egan to overtake the rapid growth in our adult labor force and,
l~ July of this year, unemployment dropped below 5 percent for the
flrst time since 1957 -- despite the accelerating automation of
farms and fac torie s •
0-1338

~AGF

DILLOi

fI~HT

~E ALSO ~FLIEV[ IT I~E.VITAjLE: THAT A GkCn~JG INTr~NATIONAL
l'I{:nFTAf{Y SYSTUi l"iUST ~II\jD ~[!~ ~AYS TO rC0N:)MI.!E THF SUPPLY OF'
~OLD, JUST ~s I~DIVIDUAL NATIO~S HAVE DO~E FOR SO LONG IN
L'JTF.RNAL l'lO~F.TARY SYSTftjS. Tf1E fIXEr) PHICF OF GOLD IS, or COURSE,
THE ANCHOq o~ P~ICE ~TAaILITY rOK THE ~O~LD. 3UT ~O~LD T~ADE AND
~APITAL ~iOVHlF::~TS S[EM CFRT.~IN TO fX?A.~D -- A-NO ~T A FASTER PACt
THAN THE STOC~, OF' G,JLD, TrlUS H1POSI'JG Tll!' ['';OST CAREFUL rCONOMV
IN ITS USE. THAT IS ~HY THE U~ITED ~TATES, AS THE O~LY COUNTRY
JHICH ~AINTAI~S THE FSSENTIAL LINK ~ITH GOLD ON ~HICH THE ENTIRE

THEIR

IjF ~YSTEM RESTS, ~ELCO~[S THE nrrfRENCE I~ THE.FUND REP~RT, AND
.£l.f_ t.iii-. C ~cu.w _c.1~..11: ~r..I.o -tlf.ASu.R£S - UlI'I- sa. ~U ~ D.U.bIr; ~J~ Il...llUOlA. ____ _
SU'jS~ftIPTIONS ,,~ "TO !';ITIG~Tf THE ~tPFRCUSSIO"lS OF GOLD PAYMENTS ON
THE. GOLD ~EsrRVES Of THF CONTRIBUTING ME:1JERS A~D CF THE RESERVE

.l~JJ;{..A ~

THAT MAY JE

CE~T[R~

AFrECTED.~
~,'l INCRFASE IN F'UND OUOTA,S :JILL r:rFT THF CUR~PJT
~EQUI~f~FNTS
THE INTERNATIO~AL MONETARY SYSTErl, ~E CANNOT REST
ON OUR O~R~. ~OTH THE GROUP or TEN A'lD THE FU~D RrpO~T RFCOGNIZF

..:HILf

THE
l~E

POSSI,dLIfy THAT Nr~ AND ADDITIONAL MEASURES r~AY 13ECQt'1E NfcrSSARY.
p ~ )I TIC ULA RLYAP PRE CI ATE THF C0 ~ CLUDI ~ G STAT £1'1 £ NTIN THE LI QUI DIT Y

srCTI01 or TrlE rU~D'S QEPORT I~DICATING THAT THE rxrCUTIVF DI~ECTORS
INTF~D TO CARRY fOR~A~D THE FUND'S STUDIES or NEW APPROACHES;
INCLUDING EASIER ~CCESS TO A PORTION or THE' CREDIT .IntANCHES,jN:t--'
l'tiwtfti, THE FOSSIdLE USE OF GOLD CERTIFICATES I~ PLACE Of THE
PRFSfNTLY' REOUIHfD GOLD SlIBSCRIPTION, AND THE POSSISILITY OF lUND
INVF~TM[~T~. ~EAN~HIL[, THE GROUP OF ,TE~ ~ILL BE CAR~YING ON
PARALLEL STUDIES Of THFS[ AND OTHER POSSIBILITIES, INCLUDING THE
USE CF co; POSITE RfSERvrs. IHE RESULTS or THESE ~TUDI[S SHOULD PUT
US IN ~ POSITIO~ TO MFET ANY ~£rD fOK ENLARGED SUPPLIFS OF UNCONDITIONAL
LIQUIDITY THAT t~AY DEVELOP OVER THE CmHNG YFA~S.
l~ CO~CLUSlaN, trT Mf SAY TriAT IT IS ~ITHIN OU~ CAPACITY TO
~~HIFvr 3CT~ ADEQUATE MONFTAGY SUPPORT A~D CONTINUING MONETARY
ST,ll,\31LITY. I:.[T US DO SO AS OUR PKOPER CO,'HRldUTION TOwA~D THE
STFADY rXF-N~ION or rkEF AND UNRESTRICTED ~ORLD TRADE AND THE
::TfADY I\"'JD PP-,PJD GRC',:n,r OF' ALL OF OUR ~ATIONAL ~CCNorI;IFS.G-EN-9--Tt.x.t.}
(P~FCEDI~G ADVA~Cr MATERIAL NOT RPT NOT FOR ~[lEASF j[FORE 0100
Sf PT. :-.) I Tnf'J

G~"T

OR TO rA"RY ITS ~URPLUS -- INCLUDING THF DEGREE OF DI~icT-iM~i~~i~iNT
OSF UPO\j TH~ C)TKPl.
- /
IHAT IS,."'~A~. ! l.l'\iDf,RSTAND TO .iE THF ~~FA\)I~G or THE .'~LTILATEftAL
SURVFILLAN~~ ~rlICH THE ~OV~r~I[S IN THE GROUP or TEN HAVE UNDERTAKEN
T~ ~ ~:~ SUF ~ ~ ,I ,'1 ; ~ ~, ~ ,'j ~ ,!: ;~ ~ :;,~ ELI AI S I 0 ~J J I TH THF ~ ~ ~J K r 0 R
OF

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-27.5

•

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+1.0

~.7

+95.0

- • tim

Lfss tr~ $50,000
F':"b':"~[; may not add to totals 'oecause of round'

lDg.

-2.3
-~I~

-128.0

REMARKS OF THE HONORABLE DOUGLAS DILLON
SECRETARY OF THE TREASURY OF THE UNITED STATES OF AMERICA
BEFORE THE ANNUAL MEETING OF THE
INTERNATIONAL MONETARY FUND
OKURA HOTEL, TOKYO, JAPAN
TUESDAY, SEPTEMBER 8, 1964
My colleagues and I are delighted to be in this fascinating city,
where tradition and courtesy combine so charmingly with modernity
and progress. This meeting follows shortly after Japan's achievement of Article VIII status in the Fund -- another major achievement
in Japan's a lmos t incred ib Ie record of rapid economic growth over
the twelve years since she joined the International Monetary Fund.
The past year has witnessed a gratifying movement by most
countries toward the financial equilibrium for which we have been
striving. Continued leadership by the International Monetary Fund
under"the skillful guidance of its Managing Director and effective
cooperation in the foreign exchange markets have contained the new
pressures that have occurred and reinforced the strength which has
been developing.
As for my own country, during fiscal year 1964, the United
States set in operation the latest elements of a new and manysided economic program begun in 1961 -- a program designed to promote
internal expansion, enlarge employment opportunities, and, at the
same time, facilitate orderly and steady progress towards balance
in our external accounts. Our program places maj or emphasis upon
improved productivity and greater competitiveness -- upon
incentives, rather than upon restrictions and controls -- and,
perhaps most important, upon the healthy functioning of a dynamic
system of free enterprise.
Significant -- and, I believe, sustained -- results are now
clearly apparent.
The United States economy continues to expand in what is now
the longest, strongest, and best-balanced advance of any peacetime period in this century. During the past fiscal year, the
rate of growth in industrial production, and in our economy as a
Whole, was better than 5 percent in real terms. Our gross national
product increased by more than $40 billion. Job opportunities
began to overtake the rapid growth in our adult labor force and,
i~ July of this year, unemployment dropped be1~ 5 percen~ for the
flrst time since 1957 -- despite the acce1erat1ng automat1on of
farms and factories.

D-1338

- 2 -

Meanwhile, our prices have remained virtually stable. The
indices of wholesale prices are still at the levels of six years
ago. Consumer price indices have edged upward but very slowly,
only a little more than I percent per year. At the same time almost
alone among the leading industrial countries, we are now for the
third straight year experiencing a decline in unit labor costs for
manufacturing industries as a whole.
Monetary policy and debt management have struck a noninflationary balance between supply and demand for liquidity instrume
Commercial bank holdings of Federal Government debt continued to
decline over the past fiscal year by more than $4 billion -- even
though the administrative budget deficit exceeded $8 billion. What
is more, less than a month after the end of the fiscal year, the
full amount of that budget deficit was in effect, financed out of
real savings as we added nearly $9 billion to our longer term
Government securities.
It was within this domestic framework that the United States
contiriued its efforts to restore balance in its international
accounts. In discussing those efforts, it should always be borne
in mind that the United States has the ability to achieve balance
in its international payments at any time through the use of
drastic measures of a restrictive nature. But -- as we have
consistently pointed out -- we have neither the desire nor the
intention of utilizing such measures, since they could bring harsh
repercussions throughout the world. Instead, we are working to
achieve balroce gradually through normal market processes, without
injury to our friends in other nations.
Improved productivity, in agriculture and in manufacturing
alike, have made possible substantial gains in our trade position
over this past fiscal year -- gains that were, as we well know, in
some part fortuitous, but gains nevertheless, that we expect to
sustain -- and, eventually enlarge.
We are also persisting in our efforts to reduce dollar outlays
abroad for defense and development assistance, without impairing
essential elements in the defense of the free world or in our vital
assistance programs. The balance of payments costs of those
programs will have shrunk by an annual rate of $1 billion by the
end of this calendar year.
When we last met, it was our capital accounts that posed the
greatest threat to our balance of payments. A cascading outflow of
portfolio capital had forced us to propose the interest equalizatioo

- 3 tax in the summer of 1963. That tax is now law. It has worked out
as planned and can be expected to hold portfolio capital outflows
to a reasonable figure while leaving our markets open to foreign
borrowers willing to assume interest costs considered normal -and even low -- in most other industrial countries.
With our trade position improving, Government expenditures
overseas continuing to decline, capital o~tflows restrained -- and
with our earnings on services expanding at roughly the same rate as
our rising net outpayments on tourists account -- we have been
moving back toward external balance.
For example, our gross deficit on regular transactions in fiscal
1964 was $1.750 billion. This was a heartening gain over the results
of the past six calendar years, when comparable deficits ranged from
$3.1 billion to $4.2 billion. And it was a vast improvement over
the first half of calendar year 1963, when accelerating demands
from abroad for long-term funds led to a dollar outflow at an annual
rate of $5 billion -- a rate we simply could not sustain and that
far surpassed any legitimate world wide requirements for dollars.
But, despite this improvement, we are only half-way back to external
balance. We cannot relax -- nor do we intend to.
In seeking to improve our payments position, we readily
recognize that we must carefully weigh -- and, wherever practicable
and appropriate, minimize -- the impact of our gross deficits upon
the liquidity of the rest of the world. With the cooperation of
other monetary .authorities we have, therefore, in large part
absorbed dollar balances wherever they have tended to outrun
requirements. Last year, for example, through sales of gold, use
of foreign currency balances, drawings on the International Monetary
fund, and a variety of other special transactions, we absorbed more
than $1.250 billion that had flowed to some European countries.
At the same time, demands by certain monetary authorities outside
Europe -- and, to some extent, the demands of private banks and
traders everywhere -- called for more dollars than could be
supplied out of our deficit. Those demands, amounting to several
hundred million dollars, were me t by transfers from European
dollar monetary reserves.
It was within the environment of a shrinking United States
payments deficit that the International Monetary Fund conducted
its study of the international monetary system over the past year.
Concurrently, another study was being carried forward by the
group of ten countries, which had, in 1961,accepted special

- 4 -

responsibility for providing supplemental resources to the Fund
in the event that unusual strains were to develop in the
international monetary system. It is highly significant that both
studies concluded that the present system is functioning well and
that any changes should be designed, in the words of the Fund
report, to "supplement and improve the sys tem where changes are
indicated, rather than to look for a replacement of the system by
a totally different one."
The two studies also agreed on the advisability of expanding
the resources of the Fund through a combination of general and
selective quota increases. Such increases seem clearly appropriate
in view of the conclusion in Chapter 3 of the Fund report that the
next decade is likely to see a steady rise in the demand for
international liquidity, coupled with a slower annual rate of
growth in the types of liquidity on which chief reliance has been
placed during recent years.
The United States hopes that the Governors at this meeting will
request the Executive Directors to study the need for such increases
and the ways in which they might best be carried out. It is our
hope that the Executive Directors could, as they did in 1958,
complete their work and make such recommendations as they find
appropriate to the Governors of the Fund by the end of this year,
thus allowing time for member countries to complete necessary
legislative action during 1965.
An increase in Fund quotas seems to us the right move as member
countries enter the next phase in the evolutionary development of
the international monetary system -- a phase in which the greater
needs are likely to center, at least for a time, on the enlargement
and elaboration of credit facilities for transferring reserves
among countries, rather than upon increases in the over-all supply
of reserves. In this regard, our thinking once again parallels the
findings in the Fund's annual report regarding the need for
increases in what the report labels "conditional liquidity."
Today, even in the free industrialized countries, there is no
common economic pa~te~n, but a mix, varying from nation to nation,
of productivity, prices, trade restrictions, and capital market
facilities. As a result, the bulk of the increases in reserves
have, for th~ past several years, flowed to a few of the
industrialized countT~es, and particularly to Western Europe.
Further su.bstantial increases in reserves woul.d, for the most part,

- 5 only increase that flow -- unless and until those countries
their chronic surpluses through a relative rise in imports,
increase in their capital exports, or any other acceptable
combination of actions that would overcome their propensity
absorb whatever new liquidity may be added to the system in
form of owned reserves.

reduce
an
to
the

Economic disparities between countries are no doubt inevitable
in a dynamic world. In time, so long as all countries actively
pursue the objectives of liberal, multilateral trade policies, the
needed adjustments will surely be accomplished. Meanwhile, we must
be as careful in developing our international financial arrangements
as we are in designing monetary measures for our domestic needs. And
we must constantly guard against the over-simplified conclusion that
a simple addition to the international money
supply -- or an
agreed limitation upon it -- or a contraction of it -- will provide
an adequate solution.
As the free world's financial officials, we must be as concerned
with credit as we are with money. Liquidity consists not only of
oomed reserves, but of credit facilities. And it seems to me to be
as important today to shift the emphasis toward credit as it was in
the first years after World War II. Then, total reserves were
ample by any absolute standard -- but most of them were in the
United States. During that period, while the processes of readjustment were getting underway, little would have been gained by further
increases in awned reserves, for those, too, would have flowed to
the United States. Instead, a redistribution was needed. It was
largely accomplished through the massive credits and grants which
the United States Government extended, not only bilaterally and
multilaterally, but through dollars used in the drawings which
other countries requested of the Monetary Fund.
Some seven years ago, the international monetary system entered
a second phase in which a succession of large United States'
payments deficits became the principal source of additions to the
primary reserves of other countries. And now, with over-all
international reserves at an adequate level and with the United
States moving toward balance in its payments, this second phase
is also coming to an end. Once again, the need is for additional
credit facilities.

- 6 That is why it has been both appropriate and necessary to set
up bilateral credit arrangements to handle the volatile movements
of funds which now occur among industrialized countries with
convertible currencies. There is no impairment of the Fund's
role when those facilities are used instead of, or sometimes in
advance of, recourse to the Fund itself. Rather, there is an
economy of resources and a minimizing of strains. The risk is that
a country might drift into heavy and continuous reliance upon such
essentially short-term credit facilities, delaying too long the
necessary corrective action that should be taken to adjust its
balance of payments.
As in any banking operation, that type of risk must be averted.
The way to do it is to provide for a full -- though initially
largely confidential -- exchange of information among the countries
directly affected, and to assure frequent opportunities for
discussion among their monetary authorities. It is essential to
review and appraise together the actions each is taking to finance
its deficit or to carry its surplus -- including the degree of
direct impingement of one upon the other.
Tha t is wha t I unders tand to be the meaning of the "multilateral
surveillance" which the countries in the Group of Ten have undertaken to pursue jointly, and in close liaison with the Bank for
International Settlements, the Organization of Economic
Cooperation and Development, and, of course, the International
Monetary Fund itself. It fulfills, r.lore systematically, the
objectives which the United States has long pursued in its full
reporting of its own activities. In our view, this pattern of
information and consultation, systematically extended among
industrialized countries subject to volatile flows of capital,
can add an important dimension to the prudent use of such credit
facilities.
The scope for greater reliance upon purely bilateral credit
facilities, under the aegis of "multilateral surveillance", may
even be wider. We support the suggestion made in the Group of
Ten Report that countries with large and growing reserves should
actively explore the possibility of long-term lending to other
industrialized countries in need of additional reserves, but whose
prospects for reserve growth, though promising, may only be for
relatively small annual increments stretched out over many years.

- 7 -

Such lending would not only be of value to the stability of
the currencies of the industrialized countries, it would also
facilitate an adequate and uninterrupted flow of development
assistance from advanced nations to developing countries. In
addition, countries with large and persistent surpluses should
in their own interests and in the interests of accelerated
economic development -- carefully reexamine the possibility of
increasing the level and quality of their assistance programs.
But, aside from continuing programs of economic assistance,
the credit facilities that will be of most direct use to the nonindustrialized members of the Fund are those of the Fund itself.
That is why the United States believes that prompt consideration
should be given to a general enlargement of quotas. In addition,
special increases would seem appropriate in a number of cases,
particularly for those members whose currencies have become stronger
and more widely used over the six years since questions of this
kind were last discussed in New Delhi. We welcome the attainment
by other countries of situations where they can now provide a
greater proportion of the Fund's resources, with a corresponding
reduction in our share of the Fund's responsibility. We have been
hopeful that the members of the European Economic Community, in
particular, will assume a larger share, and are gratified that
some readiness to do so has been indicated.
We also believe it inevitable that a growing international
monetary system must find new ways to economize the supply of
gold, just as individual nations have done for so long in their
internal monetary systems. The fixed price of gold is, of course
the anchor of price stability for the world. But world trade and
capital movements seem certain to expand -- and at a faster pace
than the stock of gold, thus imposing the most careful economy
in its use. That is why the United States, as the only country
which maintains the essential link with gold on which the entire
IMF system rests, welcomes the reference in the Funi Report, and
in that of the Group of Ten, to measures for so handling Fund
quota subscriptions as "to mi tiga te the repercuss ions of gold
payments on the gold reserves of the contributing members and
of the reserve centers that may be affected."
While an in~rease in Fund quotas will meet the current
requirements of the international monetary system, we cannot rest
on our oars. Both the Group of Ten and the Fund Report recognize
the possibility that new and additional measures may become
~ecessary.
We particularly appreciate the concluding statement
ln the liquidity section of the Fund's Report indicating that the

.. 8 -

Exc(uti'Je Directors intend to carry forward the Fund's studies of
new approaches, including easier access to a portion of the credit
tranches, the possible Dse of gold certificates in place of the
presently required gold subscription, and the possibility of Fund
investments. Meanwhile, the Group of Ten will be carrying on
parallel studies of these and other possibilities, including the
use of composite reserves. The results of these studies should
put us in a position to meet any need for enlarged supplies of
unconditional liquidity that may develop over the coming years.
In conclusion, let me say that it is within our capacity to
achieve both adequate monetary support and continuing monetary
stability. Let us do so as our proper contribution toward the
steady expansion of free and unrestricted world trade and the
steady and rapid growth of all of our national economies.

000

Letterhead

September 8, 1964

Following is the text of the communique issued by the Mintters
and Governors of the "Group of Ten" in Tokyo, for rilease 4:00 A.M.,
EDT, Monday, September 7, 1964:

Working Party III of the Organization for Economic Cooperation
and Development on the adjustment process, the study by the
deputies on the creation of reserve assets, and the arrangements being made to strengthen international monetary
cooperation through 'rnu1ti1atera1 surveillance.' They
recalled their views expressed in the ministerial statement
of August 1, 1964, supporting prospective increase in Fund
quotas.
"The Ministers and Governors also reviewed with the
Managing Director of the Fund and approved a working program
initiated by the deputies to consider the attitude of the
participants toward the renewal of the general arrangements
to borrow on which decisions must be taken under the
provisions of these arrangements by October, 1965."

000

TREASURY DEPARTMENT

Following is the text of the communique issued by the Ministers
'and Governors of the "Group of Ten" in Tokyo, for release 4:00 P.M.,

EDT, Monday, September 7, lS64:

"On the occasion of the annual meeting of the International
Monetary Fund, the Ministers and Central Bank Governors of the
ten countries (Belgium, Canada, France, Germany, Italy, Japan,
The Netherlands, Sweden, the United Kingdom and the
United States), participating in the general arrangements
to borrow, met under the chairmanship of Mr. Kakuei
Tanaka,
Minister of Finance of Japan. Mr. Pierre-Paul
Schweitzer,the Managing Director of the International
Monetary Fund, took part in the meeting which was also
attended by the Secretary-General of the Organization for
Economic Cooperation and Development, the General Manager
of The Bank for International Settlements, and the President
of the Swiss National Bank.
"The Ministers and Governors reviewed developments in
the international payments situation and received reports
from their deputies on plans and procedures being developed
for carrying out decisions taken in the ministerial statement
of August: 1, 1964. These include the study to be made in
Working Party III of the Organization for Economic Cooperation
and Development on the adjustment process, the study by the
deputies on the creation of reserve assets, and the arrangements being made to strengthen intprnationa1 monetary
cooperation through 'multilateral surveillance.' They
recalled their views expressed in che ministerial statement
of August 1, 1964, supporting prospective increase in Fund
quotas.
"The Ministers and Governors also reviewed with the
Managing Director of the Fund and approved a working program
initiated by the deputies to consider the attitude of the
participants toward the renewal of the general arrangements
to borrow on which decisions must be taken under the
provisions of these arrangements by October, 1965."

000

- 3 BSTA

t40DIrIBD

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.
Tbe 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 10s8
from the sale or other disposition of Treasury bills does not have any spec1al
treatment, as such, under the Internal Revenue Code of 1954.

The bills are subjec

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

Accordingly, the owner

of Treasury bills (other thaD life insurance companies) issued hereunder need include in his income tax return only the difference between the price paid for suc)
bills,· whether on original issue or on subsequent purchase, and the amount actual
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, pre
scribe 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 BE'lA

MOBIPI:8B

decimals, e. g., 99.925.

Fractlons

not be used.

It is urged that tenders

be made on the printed forms and forwarded in the special envelopes which Yill

be supplied by Federal Reserve Banks or Branches on application therefor.
Banking institutions generally may submit tenders for account of customers
provided the nsm",s 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 bEU1ks

and trust companies and :from responsible and recognized dealers in investment
securities.

Tenders from others must be accompanied by payment of 2 percent ot

the face amount of Treasury bills applied for, unless the tenders are accompan,iec
by an express guaranty of payment by an incorporated bank or trust company.
]mmediately 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 a.ll tenders, in whole or in part, and his action in any such respect shsJ.l be
final.

Subject to these reservations, noncompetitive tenders for

less for the additional bills dated
ing until maturity date on

June l8! 1964

December 17, 1964

(17)

200,000 or

t4&f

days rema.1n·

(18)

) and noncompetitive tenders for

=ti§f

$ J.OO.OOO or less for the 182
faO+
tat

-day bills without stated price from anyone

bidder will be accepted in f'u.ll a.t the a.verage price (in three decimals) of a.ecepted competitive bids tor the respective issues.

Settlement for accepted ten-

ders in accordance vi th the bids must be made or completed at the Federa.l ReseI'V1
Banks on

September 17, 1964

fMf

, in cash or other immediately available funds or

in a like face amount of Treasury bills maturing

September 17, 1964

• Cash

BEfA = MODIPIlID

TREASURY DEPARTMENT
Washington

September 9, 1964

FOR IMMEDIATE RELEASE,

TREASURY'S WEEKLY BILL OFFERING

The Treasury Department, by this public notice, invites tenders for two aer
of Treasury bills to the aggregate amount of $ 2.20~O.ooO' or thereabouts, t
cash and in exchange for Treasury bills mat\lring

loW .000

of $ 2. o9

September 17,

, a8 follows:

196~

in the amo

91 -day bills (to maturity date) to be issued September 17, 1964:

'+51

in the amount of $

1,300~,000

:w-

, or thereabouts, represent-

ing an additional amount of bills dated June 18
and to mature December 17, 1964
amount of

, originally issued in the

$ 901,~Of

,the additional and original billa
an additional $100,086,000 was issued
to be freely interchangeable.
July 29 , 1964)
~-day

tHt-

bills, for $ 900,000,000

, or thereabouts, to be dated

(12)
septembe~ 1964

, and to mature

March 1:W65

'!'he bills of both series will be issued on a discount basis under competitl'
and noncompetitive bidding as hereinafter provided, and at maturity their face
amount. will be payable without interest.

They will be issued in bearer form on1;

and in denominations of $1,000, $5,000, $10,000, $50,000, $100,000, $500,000 and
$1,000,000 (maturity value).
'!'enders will be received at Federal Reserve Banks and Branches up to the
Daylight Saving
closing hour, on~-thirty p.m., Easten:v'.... ·ijm,,:a time, Monday. September 14:. 1964

tl5fEach tendel

'!'enders will not be rece i ved a.t the Treasury Department, Washington.

must be for an even multiple of $1,000, and in the case of competitive tenders tl
price offered must be expressed on the basis of 100, with not more than three

TREASURY DEPARTMENT
&

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
$2 200,000,000, or thereabouts, for cash and in exchange for
Tr~asury bills maturing September 17, 1964 ~n the amount of
$2,099,465,000, as follows:
91-day bills (to maturity date) to be issued September 17, 1964,
in the amount of $1,300,000,000, or thereabouts, representing an
~ditional amount of bills dated June 18, 1964, and to mature
~ce~er 17, 1964, originally issued in the amount of $901,049,000
(an additional $100,086,000 was issued July 29, 1964), the additional
md original bills to be freely interchangeable.
182-day bills, for $900,000,000, or thereabouts, to be dated
September 17, 1964, and to mature March 18, 1965.
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
'11111 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
Eastern Daylight Saving
time, Monday, September 14, 1964.
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,
wlth 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 spec ial envelopes which will be supplied by Federal
Reserve Banks or Branches on application therefor.
IIp to the cloSing hOl,lr, one-th.1rty p.m.,

Banking institutions generally may submit tenders for account of

~ustomers 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
~SPons1ble and recognized dealers in investment securities. Tenders
I'om others must be accompanied by payment of 2 percent of the face
amount of Treasury bills applied for, unless the tenders are
~ccompan1ed by an express guaranty of payment by an incorporated bank
I' trust company.

D-1339

- 2 Immediately after the closing hour, tenders will be opened at
the Federal Reserve Banks and Branches, followin~ 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 ~OO,OOO or less for the additional bills dated
June 18, 1964,
(91~ays remaining until maturit¥ date on
December 17, 1964) and noncompetitive tenders for ~ 100,000
or less for the 18~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 ir. accordance with the bids must be
made or completed at the Federal Reserve Banks on September 17,1964,
in cash or other immediately available funds or in a like face
amount of Treasury bills maturing September 17,1964Cash and
exchange tenders will receive equal treatment. Cash adjustments
will be made for differences between the par value of maturing
bills accepted in exchange and the issue price of the new bills.
The income derived from Treasury bills, whether interest or
gain from the sale or other disposition of the bills, does not have
any exemption, as such, and loss from the sale or other disposition
of Treasury bills does not have any special treatment, as such,
under the Internal Revenue Code of 1954. The bills are subject to
estate, inheritance, gift or other excise taxes, whether Federal or
State, but are exempt from all taxation now or hereafter imposed on
the prinCipal or interest thereof by any State, or any of the
posseSSions of the United States, or by any local taxing authority.
For purposes of taxation the amount of discount at which Treasury
bills are originally sold by the United States is considered to be
interest. Under Sections 454 (b) and 1221 (5) of the Internal
Revenue Code of 1954 the amount of discount at which bills issued
hereunder are sold is not considered to accrue until such bills are
sold, redeemed or otherwise disposed of, and such bills are excluded
from consideration as capital assets. Accordingly, the owner of
Treasury bills (other than life insurance companies) issued hereunder
need include in his income tax return only the difference between
the price paid for such bills, whether on original issue or on
subsequent purchase, and the amount actually received either upon
sale or redemption at maturity during the taxable year for which the
return is made, as ordinary gain or loss.
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.
~reasury

000

1758

TREASURY DEPARTMENT

Viashington, D. C.
:rMM!:DIA TE bF.LUSE

FRIDAY ,

D-1340

SEPTE~BER
P

11 1984
LIMINARY hATAN IMPORTS

FOR CONSI.,'MPTICN OF UNMANUFACTURED LEAD AND ZINC CHARGEABLE: TO TP..E C,UCYl'AS ESTABLISHED
BY PRE::>lDf:NTIAL PROCLAMATION NO. 3257 OF SEPTEMBF.R 22, 1958, AS MODIFIED BY THE TAHl"'F SCHEDULES C'V' 'l'HE
uNITli;D STATES, WHICH BF.cAME ITFJI'.cTIVE AUGUST 31, 1963.
OUAR'l'1iliLY QUOTA. PUUOD IMPORTS ITEM 925.01.

30, 1964

July 1 - September 8,

1964 (

or as noted)

ITEM 925.04·

ITl:M 925.02.

ITEM 925.03.

Lead-bearing orea
and materials

Country
of
Production

July 1 - Septelllber

Uuwrought lead and
lead we.ste and scrap

s
s

...

:
I

Zino-bearing ores and
materiaJ.s

: Umrroug'ht 'Zinc (exoept alloys
of dno and 'Zinc duat) aDd
'Zinc lflLste and serap

.
:

:Quarterly OUota
: IMtlable lead
A.Wltralla

11,220,000

:QU.iJ"terly QUotalmtIorts : Dutiable lead.
11,220,000

22,540,000

:ou:&rterly QUota
Imports: Zinc Content

:o.u&rterly Chiot.
Imports

Canada

5,040,000

5,040 11 000

13,440,000

3,237,672

15,920,000

15,79 0,033

66.480,000

66,480,000

Italy

16,160,000

]A.,~eo,ooo

7,52°11 000

37,840,000

29,280,482

31,869,702

70,480,000 ••• 49,531,541

6,320,000

4,919,6;}

12,880,000

10,413,244

35,120,000 ••• 18,659,076

3,760,000

3,75'),7 61

5,440,000

3,251, S.'1

6,000,000

6,080,Oul.

14,880,000

Yugos1a....la
All other
oountrles (tot&l)

7,520,000

36,880,000

Repub1I0 of the Congo
(formerly Belgian Congo)
"Un. So. Afrioa

Imp orb

3,600,000

Mexioo
Peru

Wei~t

13,416,054

BelgIum and
Luxemburg (total)
Bo11....18.

6,560,000

2,342,742

-See Part 2, Appendix to Tariff Sehedules •
•• Repub~10 ot South Atrioa.
··-Import. as ot Septe.ber 4,

1,64.

15,760,000

7,268,896

6,080,000

17,840,000

TREASURY DEPARTMENT

Washington, D.
IMMEDIATE hf~MSE

FRIDAY

SEPTE~BER 11
P

D 1340
. ~

1964

LIMINARY t)"TA ON IMPORTS F'CR CONSL~,fpTICN OF UNMANUFACTURED LUD AND 2INC CHARGEABLE TO TF..E WOTAS ESTABLISHED
BY PRESIDl:NTIAL PROCLAMATION NC. 3257 OF S~PTEMBF.R 22, 1958, AS MODIFIED BY THE TAFFF SCHEDULl:S CT 'I'HE
lJNIT1i.:D STATES, WHICH BECAME EITF,cTIVE AUGUST 31, 1963.
OUAR'l'DU.Y QUOTA. PERIOD -

IMPORTS -

Lead-bearing ores
and materials

Production

Au.atralia

11,220,000

July 1 ... September )Op 1,64

July 1 - September 8, 1~64 ( or as noted )
IT~

ITEM 925.03-

ITEM 925.01-

Country
of

11,220,000

Umrrought lead and
lead W'II-ste and scrap

22,540,000

ITEM 925.04-

925.02·

I
I

Zino-bearing ores and
materials

Canada

5,040,000

5,040g000

13,440,000

)p2J7 p672

15,920,000

15,no,oJ,3

66,480,000

Italy

So. Afrioa

16,160,000

16,16c,000

L4, s:mo,ooo

oountries (tot&1)

7,520,000

7,)20,000

37,840,000

2,,280,482

)l,869~702

70,480,000

••• 491>531»541

6,320,000

4,919,679

12,880,000

10,41),244

35,120,000 ••• 18,,659,076

3,760,000

:,,759,761

5,.wo,OOO

),251p844

6,090,000

6,080 g 000

14,,880,,000

YugoslaTia
A.11 other

zinc waste &114 serap

36,880,000

Republio of the CODgo
(formerly Belgian Congo)

"'Uu.

of z1no and 'Zinc dust) aJUl

3,600,000

Merloo

Peru

t Umrroug'ht z1no (exoept al.lcys

1),416,054

Belgium and
Luxemburg (total)
Bolina.

6,560,000

2,342,742

-See Part 2, Append~ to Tariff Sohedu1es •
••ReDub~~c of South Afr~oa.
···Laporta &9 or Sept •• ber 4. 1~64o

15,760,000

7,268,8~6

6,080,000

1.7,940,000

17g 840,OOO

1757

Commodity

2 -

••

: Uni t :
Imports
Period and Quantity:
of
:
as of
: Quanti ty :Ausust 29, ]

·
·

-Absolute Quotas:
Butter substitutes containing
over 45% of butterfat, and
butter oil •••••••••••••••••••

Calendar Year

Fibers of cotton processed
but not spun •••••••••••••••••

12 mos. from
Sept. li, 1963

1,200,000

Pound

Qu 0 ta F:l.lle

1,000

Pound

Peanuts, shelled or not shelled,
blanched, or otherwise prepared
or preserved (except peanut
12 mos. from
butter) .••.•.•.••••.......•••
August 1, 1964 1,709,000

Pound

604,2

II Imports

through September 8, 1964.
~I Imports through September 4, 1964.

D-1341

1757

TREASURY DEPARTMENT
Washington

FOR IMMEDIATE RELEASE
FRIDAY, SEPTEMBER 11, 1964

D-1341

The Bureau of Customs announced today preliminary figures on imports for consumption of the follo1'11ing commodities from the beginning of the respective quota
periods through August 29, 1964:

Commodity

Period and Quantity

: Unit : Imports
:
of
:
as of
: Quanti ty:August 29
j

Tariff-Rate Quotas:
Cream, fresh or sour •••••••••••••

Calendar Year

1,500,000

Gallon

Nilk, fresh or sour ••••••••

Calendar Year

3,000,000

Gallon

1~:rhole

Cattle, 700 Ibs. or more each
(other than dairy cows) •••••••

664,

July 1, 1964Sept. 30, 1964

120,000

Head

Cattle less than 200 Ibs. each •••

12 mos. from
April 1, 1964

200,000

Head

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

Calendar Year

24,861,670

Pound

Quota Fil

Tuna Fish ••••••••••••••••••••••••

Calendar Year

60,911,870

Pound

26,29 0,

12 mos. from 114,000 ,000
Sept. 15, 1963 45,000,000

Pound
Pound

Quota Fil

Nov. 1, 1963Oct. 31, 1964

Pieces Quota Fil

Hhite or Irish potatoes:
Certified seed •••••••••••••••••
other ...•.•..•.••.......

0 ••••••

!rnives, forks, and spoons with
stainless steel handles ••••••••

69,000,000

73,808,

l!Imports for consumption at the quota rate are limited to 18,646,252 pounds ~
first nine months of the calendar year.

TR}~SURY

DEPARTMENT

Hashinr,ton

FOR IMMEDIATE RELEASE
FRIDAY, SEPTEMBER 11) 1964

D-1341

The Bureau of Customs announcen today preliminary figures on imports for consumption of the follmnng commodities from the her,i!lI1inr, of the respective quota
periods through August 29, 196)):

CO"!TJJ'Tlodity

Period and Quantity

Unit
Imports
of
as of
:Quantity:August 29,

1964

Tariff-Rate Quotas:
Cream, fresh or sour •••••••••••••

Calendar Yeri.r

1, Soo ,000

Gallon

11fhole Milk, fresh or sour ••••••••

CRlendar Year

3,000, QCX)

Gallon

Cat tIe, 700 Ibs. or more eRch
(other than dairy cows) •••••••

664,461
49

July 1, 1964Sept. 30, 1964

120,000

Head

3,215

8attle less than 200 Ibs. each •••

12 mos. frOM
April 1, 1964

200,000

Head

51,654

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

Calenjar Year

2h,861,670

Pound

Quota Filled

Tuna Fish ••• e ,

Cale~dar

60,911,870

Pound

26,290,792

12 mos. from Ilh, 000 , 000
Sept. 15, 196,3 4S,OOO,000

Pound
Pound

Quota Filled

Pieces

Quota Filled

•••••••••••••••••••

Hhite or Irish potatoes:
Certified seed •••••••••••••••••
Other •••••••••••••••••••••••••.

Knives, forks, and spoons '\oTi th
st aln
. 1ess steel handles ••••••••

1/
Year

73,808,110

Nov. 1, 1963Oct. 31, 19611

69,000,000

j/rmports for consumption at the quota rate are limited to lB,6h6,252 pounds during
~ne first nine months of the calendar year.

Commodity

Period and Quantity

: Uni t
Importf
:
of
:
as of
:Quanti ty :Au~st 29,.t

Absolute Quotas:
Butter substitutes containing
over 45% of-butterfat, and
butter oil •••••••••••••••••••

Calendar Year

Fibers of cotton processed
but not spun •••••••••••••••••

12 mos. from
Sept. 11, 1963

Peanuts, shelled or not shelled,
blanched, or otherwise prepared
or preserved (except peanut
butter) ........•..•.......•..

1,200,000

Pound

1,000

Pound

12 mos. from
August 1, 1964 1,709,000

Pound

Imports through Sep~ber 8, 1964.
~I Imports through September 4, 1964.

D-1341

Quota Fir

604,

I
I

1758

I
I

THEASURY DEPARTMENT
l,Jashington
D1MEJIATE RELEASE

FRIDAY, SEPTEMBER 11, 1964

D-1342

The Bureau of Customs has announced the fo11o~~g preliminary figures
shOt-ling the i:nports for consumption from January 1, 1964, to August 29, 1964,
inclusive, of com~odities under quotas established pursuant to the Philippine
Trade Agreement Revision Act of 1955:

·
··

Established Annual
Quo ta Quantity

Unit
of
Quantity

Buttons ••••••••••••••

680,000

Gross

Cigars •••••••••••••••

160,000,000

Number

9,972,429

Coconut oil ••••••••••

358,400,000

Pound

Quota Filled

Cordage ••.•••••••••••

6,000,000

Pound

4,861,206

Tobacco •••••.••••••••

5,200,000

Pound

3,559,345

Commodity

Imports
as of
A~ st 29, 19/:
138,274

TREASURY DEPARTMmT

Washington
IMMEDIATE RELEASE

FRIDAY, SEPTEMBER 11, 1964

D-1342

The Bureau of Customs has announced the following preliminary figures
showing the imports for consumption from January 1, 1964, to August ?9, 1964,
inclusive, of commodities under quotas established pursuant to the Philippine
Trade Agreement Revision Act of 1955:

Commodity

·••
·•
·

Established Annual
Quota Quantity

: Imports
· Unit
.
of
as of
··· Quantity
August 29,

1964

Buttons ••••••• o •••• o •

680,000

Cigars •••••••••••••••

160,000,000

Number

9,972,429

Coconut oil ••••••••••

358,400,000

Pound

Quota Filled

Cordage ••••••••••••••

6,000,000

Pound

4,861,206

Tobacco ••••••••••••••

5,200,000

Pound

3,S59,345

Gross

138,274

-2-

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

Established
TOTAL QOOTA

Country of Origin

United Kingdom.
Canada............

France............

• ••••
. ••••

. ....

India and Pakistan.
Netherlands ••••••••
Switzerland..
• •••
Belgium.
• •••
Japan..
• •••
China...
• •••••••••••
Egyp t •••
Cuba ••••
Germany.
Italy...
• ••••••••
Other, including the U. S.

Total Impgrts
Sept. 20, 19 3, to

Sept.

8, 1964

Established
33-1/3% of
Total Quota

Imports
11
Sept. 20, 19 b3, to Sept. 8, 1964

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

1,087,369
239,690
221,909
u6,138
11,2u9
3u,147
33,511
59,000

1,441,152

287,66)

75,807

55,151

35,738

25,443
7,088

5,482,509

1,768,751

1,599,886

1/ Included in total imports, column 20

22,747
14,796
12,853

342,820

THEASURY DEPARTMEl'IT
Washington, D. C.

FOR IMMEDIATE RELEASE
FRIDAY, SEPTEMBER 11, 1964

D-1343

Preliminary data on imports for consumption of cotton and cotton waste chargeable to the quotas established
Presidential Proclamation No. 2351 of September 5, 1939, as amended, and as modified by the Tariff Schedules
of the United States which became effective August 31, 1963.

(The country designations in this press release are those specified in the appendix to the Tariff Schedules of the
United States. There is no political connotation in the use of the outmoded names.)
COTTON" (other than linters) (in pounds)
Cotton under 1-1/8 inches other than rough or harsh under 3/4"
Imports September 20, 1963 - September
1964

Country of Origin
Egypt and Sudan •••••••••
PeI'tl ••••••••••••••••••••

India and Pakistan ••••••
China •••••••••••••••••••
Mexico ••••••••••••••••••
Brazil ••••••••••••••••••
Union of Soviet
Socialist Republics •••
Argentina •••••••••••••••
Haiti •••••••••••••••••••
Ecuador ••• o • • • • • • • • • • • • •

Established Quota

783,816
247,952
2,003,483
1,370,791
8,883,259
618,723

Imports

Country of Origin

Established Quota

628,215
24,045
159,692

Honduras •••••••••••••••••••
Paraguay •••••••••••••••••••
Colombia •••••••••••••••••••

8,883,259
600,000

British East Africa ••••••••
Indonesia and Netherlands
New Guinea •••••••••••••••
1/ British W. Indies ••••••••••
- Nigeria ••••••••••••••••••••
2/ British vJ. Africa •••••.••••
- Other, including U.S •••••••

Iraq •••••.•.•••••••••.••••.

475,124
5,203
237
9,333

1/ Except Barbados, Bermuda, Jamaica, Trinidad, and Tobago.
~/ Except Nigeria and Ghana.
Cotton 1-1/8 11 or more
Established Yearly Quota - 45,656,420 Ibs.
Imports August 1, 1964 - Sept. 8, 196&
St.aple Lengt.h

1-3/8 11 or more
1-5/32" or more and under
1-3/~1I

(Tanguis)

Allocat.ion

39,590 ,778

1,500,000

Im~orts

39,90,778

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

Imports

TREASURY DEPARTMENT
Washington, D. C.

FOR IMMEDIATE RELEASE
FRIDAY, SEPTEMBER 11, 1964

D-1343

Preliminary data on imports for consumption of cotton and cotton waste chargeable to the quotas established
by Presirlential Proclamation No. 2351 of September 5, 1939, as amended, and as modified by the Tariff Schedules
of the United States which became effective Augus"i.; 31, 1963.
(The country designations in this press release are those specified in the appendix to the Tariff Schedules of the
United States. There is no political connotation in the use of the outmoded names.)
COTTON (other than linters) (in pounds)
Cotton under 1-1/8 inches other than rough or harsh under 3/4"
Imports September 20, 1963 - September 8, 1964
Country of Origin
Egypt and Sudan •••••••••
Pe:ru. ••••••••••••••••••••

India and Pakistan ••••••
China •••••••••••••••••••
Mexic:o ••••••••••••••••••

Brazil ••••••••••••••••••

Established Quota
783,816
241,952
2,003,483
1,370,791
8,883,259
618,723

Import,s

Established Quota

628,215
24,045
159,692

Honduras •••••••••••••••••••

8,883,259
600,000

British East Africa ••••••••
Indonesia and Netherlands
New Guinea •••••••••••••••
1/ British W. Indies ••••••••••
- Nigeria ••••••••••••••••••••
2/ British W. Africa ••••••••••
- Other, including U.S •••••••

Union of Soviet

Socialist Republics •••
Argentina ••••• ~ •••••••••
Haiti •••••••••••••••••••
Ecuador •••••••••••••••••

Country of Origin

47.5,124
.5,2 0 3
237
9,333

Paragllay •••••••••••••••••••

Colombia •••••••••••••••••••
Iraq •••••.•••••••••••••••••

1/ Except Barbados, Bermuda, Jamaica, Trinidad, and Tobago.
Except Nigeria and Ghana.
Cotton 1-1/8" or more
Established Yearly Quota - 45,656,420 1bs.
ImpQrts August 1,1:96_4 -_Se~~J,__!964

'2/

Staple Length
1-3/8 11 or more

1-5/32"

Allocation

39,59 0 ,778

Im~orts

39,90,778

or more and under

1-3/1;3" (Tanguis)

1,500,-000

1-3/8 0

4~565~"6L.2

1-1/8" or more and under

:l..~457~BB5

752
871
124
195
2,240
71,388
21,321
5,311
16,004

Imports

-2-

COTrON WASTES
(In pounds)
COTTON CARD STRIPS made from cotton having a staple of less than 1-3/16 inches in length, COMBER
WASTE, LAP WASTE, SLIVER WASTE, AND ROVING WASTE, WHETHER OR NOT MANUFACTURED OR OTHERWISE
ADVANCED IN VALUE: Provided, however, that not more than 33-1/3 percent of the quotas shall
be filled by cotton wastes other than comber wastes made from cottons of 1-3116 inches or more
in staple length in the case of the following countries: United Kingdom, France, Netherlands,
Switzerland, Belgium, Germany, and Italy:
Es tab l i shed
TOTAL QOOTA

Country of Origin
United Kingdom ••••••••••••
Canada •••• ~..
• •••••••
France..........
. ••..
India and Pakistan ••••••••
Netherlands •••••••••••••••
Switzerland •••••••••••••••
Belgium....
• •••
Japan ••••••
China.....

. .•.

Egyp t •••
Cuba ••••
Ge rmany. •

•. •••

• ••

Italy •••••••••••••••••••••
Other, including the U. S.

Established
33-1/3% of
Total Quota

Import&.
11
Sept. 20, 19 b ], to Sept. 8, 1964

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

1,087,369
239,690
221,909
46,138
1l,249
34,147
33,511
59,000

1,441,152

287,669

75,807

55,151

35,738

25,443
7,088

5,482,509

1,768,751

1,599,886

1/ Included in total imports, column 2.
Prepared in the Bureau of Customs.

D-1343

Total Impgrts
Sept. 20, 19 3 , to
Sept. B, 1964

22,747
14,796
12,853

342,820

~ARDS OF
~YERNORS
1964

NNUAL
IHTlNGS

INTERNATIONAL MONETARY FUND
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
INTERNATIONAL FINANCE CORPORATION
INTERNATIONAL DEVELOPMENT ASSOCIATION
Press Release No. 26

September 9, 1964

HOLD FOR RELEASE
ON DELIVERY, about 11:00 a.m.
Wednesday, September 9, 1964

Statement by the Hon. DOUGLAS DILLON, Secretary of the
Treasury and Governor of the Fund and the Bank for
the UNITED STATES, at the Bank, IFC and IDA
Annual Discussion

We meet here in common purpose: to advance international cooperation in speeding the economic growth of the Fr~e World's less developed
nations. The World Bank, under the dedicated and imaginative leadership of its President, has been lighting our way in this task.
For more than a year, the Executive Directors and the management.
and staff have been engaged in a penetrating review of the policies and
operations of the Bank, the International Development Association and
the International Finance Corporation. With the variety of tasks referred
to the Bank by the United Nations Conference on Trade and Development,
these studies will take on new importance in the coming year.
This review has already produced results of great importance to an
increased contribution by the Bank family to our common task. Equally
significant for the future, however, is the evidence these results provide
of the readiness and ability of the Bank family to seek out new and
improved techniques for meeting the development problem. It is this
spirit whiCh enables us to rely on the Bank for leadership in meeting the
challenges that lie ahead.
One of the Bank's primary concerns is the growing debt burden of
the developing nations. This arises, on the one hand, out of the
necessity for developing countries to grow more rapidly than their meager
foreign exchange earnings will permit. On the other hand, countries
exporting capital goods are often reluctant to offer credit on suffiCiently easy terms to permit the borrowing country time to develop an
economy capable of financing imports on a current basis.

- 2 -

Press Release No. 26

Too often in the past, the remedy has been periodic debt consolidation, resulting in uncertainty, delays in development, and needless
friction between creditor and debtor. Such a remedy is actually no
remedy at all.
At each Annual Meeting it becomes clearer that the solution to the
debt burden problem has two aspects: First is the long-recognized need
for credit on very easy repayment terms. Second, and equally important,
is the less well recognized need for restraint by both creditor and
debtor countries in financing sales on inappropriately short terms.
As to the first, the Bank has consistently urged the need for credits
on very easy repayment terms. In my own~country's assistance programs, we
have long recognized that need and we expect that other economically
advanced countries will do the same--although progress to date leaves much
to be desired.
It was to help meet the need for easy credit that IDA was created.
Although the Bank itself has, where appropriate, recently lengthened
grace periods and maturities, IDA must continue to be the principal
instrument for reconciling the capital requirements of the developing
countries with the need to preserve and expand a stable international
credit structure. It was in recognition of this need that Part I
countries have agreed to increase their contributions to IDA over the
next three years.
I heartily welcome the recommendation of the Executive Directors
that the Bank contribute directly to alleviating the debt burden problem
by transferring S50 million of last year's earnings to IDA. With the
action of the Executive Directors in removing the Bank's one per cent
commission, the previous practice of allocating these amounts to the
Special Reserve will end. This will significantly increase the earnings
available for future transfers to IDA.
However, as the resolutions adopted at the United Nations Conference
on Trade and Development in Geneva emphasize, these amounts alone are not
sufficient, and there is widespread interest--among developed and
developing countries alike--in further increasing the resources which can
be administered by the Bank family on IDA terms. I am hopeful that the
results of the Bank's studies will provide useful guides as to the sources
and magnitude of those funds.
The second aspect of the problem lies in the recurrent buildup in
many countries of obligations on too short terms--obligations that should
be on terms more closely related to the economic life of the project or
equipment involved, as well as to the debt-serVicing capacity of the
purchaser's country.

- 3 -

Press Release No. 26

We simply must find methods of restraining the extension and
acceptance of credit on inappropriate terms, We must push beyond traditional arrangements, usually worked out on an ad hoc basis from crisis to
orlS1S. The Bank, working in close cooperation with the Fund, can make
a major contribution in this area.
I also look forward to further improvements in the Bank's ability to
offer constructive advice to its members regarding appropriate policies
for the over-all development of a member's economy. Here again, close
cooperation with the Fund will yi~ld the best results.
To a considerable extent, the limitation on Bank activity in many
developing countries today--particularly in the newly-emerging ones--is
the absence of clearly defined priority projects suitably drawn up for
Bank or IDA financing. The Bank has now moved to fill this need by
inviting the technical experts of other specialized .agencies in the
United Nations family to join with the Bank in searching for and
developing needed information on suitable priority projects.
Turning to another area, I welcome the proposal to permit the Bank
to lend to the International Finance Corporation. In carrying out its
mission of encouraging the growth of productive private enterprise in
developing member countries this Bank affiliate has been active in a
variety of ways. It has helped to mobilize local and foreign private
capital. While the full extent of the demand for fu~ther resources
cannot be forecast, the proposal would endow the IFC with the necessary
flexibility to meet probable future needs,
Finally, there is another proposal on which we are asked to take
further steps at this Meeting that could bear importantly on the growth
of investment around the world and on the pace of development. I refer
to the suggestion for a Bank-sponsored facility for arbitration and
conciliation of investment disputes. Such disputes can often poison
the whole climate for foreign private investment in a country. Worse
still, neighboring countries may be the innocent victims of investor
reluctance induced by a well-publicized dispute in the same region.
The United States, therefore, supports the proposal that the Ex~cutive
Directors be requested to draft a convention establishing voluntary
institu~ional facilities to help cope with such situations.
Over the past year, while the Bank has been conducting careful
reviews and charting new courses, it has also compiled a record of solid
lending accomplishment. The Bank, IDA, and IFC have together committed
more than Sl.l billion for new power.Jprojects, new industries, new roads,
ports, and railroads--each designed to inject fresh, productive potential
into the economic mainstream of the borT~,~ountry. The major part
of this activity has been conducted by the World Bank, which resumed its
high rate of lending with a total of $810 million in loans for 1964.

- 4 -

Press Release No. 26

The importance of broadening the Bank's support from private
financial markets is now greater than ~ver. Funds raised by sales of
the Bank's bonds and by sales from its portfolio have been the backbone
of the Bank's operations. If its lending cannot be adequately financed
in this manner, many of th~ new policy initiatives we are considering
are not likely to be effective. They would be branches vithout a trunk
on which to grow. The level of Bank funds available for disbursement
has been declining. Soon the Bank will have to re-enter the c~pital
markets on a substantial scale. And the higher level of operations
currently forecast for the Bank will bring still larger needs for capital.
In resuming substantial net new borrowings after a period of several
years, the Bank should, in my view, intensify its efforts to assure that
another kind of development is fostered--namely, the development of more
effective facilities for mobilizing private savings in the capital markets
of industrialized countries that are accumulating international reserves.
Unless such facilities are developed, the Bank will run the risk of having
to limit its operations because of excessive reliance on the markets of
tee United States.
In some countries, the critical barrier is the high cost of borrowing,
It is important that more imagination and effort be devoted to mitigating
the impact of these high costs of money on the Bank's operations.
Enlarged borrowing facilities in other markets would not only assure the
Bank and the developing countries of a broader base on which to rely tor
financial support, but would be consistent with our common objectiVe of
promoting international balance and the effective functioning of the international monetary system, thus meshing with the efforts of the Fund.
Although our immediate concern is with actions to be taken now, our
outlOOk is long range, for the problems of economic development and its
financing will extend far into the future. We can take well-deserved
satisfaction from the fact that our group of institutions is today more
closely knit than ever before. If we give them the support. they so
richly deserve, we can be sure that the mutually reinforcing operations
of the Bank, the International Development Association, and the
International Finance Corporation will move us steadily toward our common
goal of a better life for all peoples in peace and freedom.

- le -

(~.uestion)

Article

Mr. Secretary,

nation status in the 1MB".

in April of this year, Japan Inoved into an

Cn the basis of this Japan has greatly

reduced restrictions on long term investments from abroad.

Is this, in

your mind l satisfactory in the way that Japan has done -- is that adequate?
Whether you foresee a considerable increase in capital investments from
the U. 8. in Japan?
(The Secretary) I think the achievelnent of Article 8 status by Japan
is a big step forward and is a concrete example of the very great economic
progress that Japan has made and is continuing to make. I think that the
relation of various restrictions which were involved in achieving Article
8 status is a move in the right direction and I am sure that movement will

continue still further as the Japanese economy and balance of payments
strengthens further.

I feel that as far as investments in Japan -- direct

investment by the U. 3. is concerned -- that there is an interest by our'
business people in the possibility of investment here and I think that such
invest.llent will increase provided it is welcomed here freely by the Japanese
Government and I would hope that would be the case increaSingly as the
years go by because that would tighten economic relations between our countries
and contribute to rapid economic growth of Japan by making this capital
aVailable from the outside.

***

- 17 -

However, what multilateral surveillance does not mean was very clearly
spelled out by the British Chancellor of the Exchequer when he quite clearly
reported that it does not give 8.i.1Y veto to any individual countries or any
group veto on the actions that any two countries might take on a bilateral basi
(';~uestion)

Could you say something about techniques which might be

used to prevent a drain of gold reserves from the U. S. and U. K. as a
result of the increase in quotas?
(The Secretary) This particular problem can be handled in a number
of ways.

In the first place, many more countries now have very substantial

gold reserve! of their own and such countries could very well pay, out of theiJ
own gold assets without replenishing them from the U. S. or U. K. Secondly,
there could be negotiations of one sort or another between the International
Monetary Fund and the two reserve currency centers which could help to
offset purchases of gold as might be necessary from those countries which
do not have supplies of gold of their own on hand. Third, there is a question
which was raised in the Fund Report regarding the use of -- to some extent -of gold certificates rather than actual gold in payment of 250/, gold quotas.
I cite these as illustrations because this is a technical matter and there are
a series of ways in which this strain on the reserve currency from a gold
payment could be mitigated.
(more)

.. 16 ..

understand that it would necessarily involve any replacement of India as
the country having the fifth largest quota in the RInd.
(Question) Mr • Secretary, may I ask a question on multilateral
surveillanee? The French have made it understood on several occasions
that they consider surveillance as a sort of factor to introduce all sorts
of discussions on the coverage of deficits through assets in reserve currencies

••• as a playground for discussion on gold pollcy of a certain country or on
the composite of reserves. How far would you draw this code of these
discussions? As I gathered from your speech which you made yesterday,
I have the impression that your understanding of this code of surveillance

is severely more restricted.
(The Secretary) I do not understand the French position to be :
partieularly different from our own on this matter. VIe look on multilateral
surveillance as a decision by the countries .... industrial countries .. - whose
capital is subject to rapid nows, one way or the other, to exchange information
among each other on a regular basi s regarding means of financing any
surpluses or deficits they may have. Certainly from what the French
Minister said in his statement here to tlle IMF Conference, nothing else
was involved. Cf course, when one does report methods of finance, you would
expeet that there would be discussion of these methods and we would expect that,

(more)

- 15 ..

(~ueltioD)

II the Prench proposal to pay the lold portion of the

quota increases in two stagel satisfactory to the U. S. or would you prefer

to pay in five st.,es?
(The Secretary)

I think that this is a question, in detail

that 8hould be decided by the Executive Directors of the Fund.
I would only recall the last time there was a quota increase
there was a provision for countries that found it desirable to
pay in five stages.

I would think that this time the Fund would

not want to make any changes.

I do not think such a proposal

or a staging of the payments would adequately answer the entire
problem of payments in gold.

I think other stages are needed

but these are technical matters that can and should be discussed
and determined by the Board of Directors of the IMF.
(~.uest1on)

In the Japanese newspapers here recently it has been

8~id

that in the light of Japan's recent economic growth, there is a case for
Japan replacing Indf.a as a permanent executive of the Fund. Can you
tell

your view on this?

(T~le

Secretary) I haven't heard of any such suggestion. 1 have

heard that Japan would like to have a special increase over· and above the
25% general inCl'eue, and I think that, in the light of Japan's progress, mear.,

that such an increase 1. heartUy deserved. I have not seen what the size
of that specia11ncrease that Japan might wish to ask

(more)

tor, but I do not

- 14 -

countries. About what period of time, or what type of standard, would
you consider appropriate standard in relation to trade with Communist
countries? Also, in relation to this, in the same press conference that
Mr. W-aucUing held, he said that Great Britain made no discrimination
between trade with the Soviet Union and Communist China as far as trade
in terms of non-strategic goods is concerned. I would lUte to get your views

on the matter.
(The Secretary) 'tP e feel that in the trade with Communist countries, we
should tollow porma! trade practices whJ..ch mean a normal time for credit,
depending on the type of item involved, but in no case extendine beyond
five years, which nas generally been the accepted standard of medium term
credit that was set in Europe by the Berne Union to which we belong, and
we teel anything beyond that begins to partake

the characteristics of aid

and the farther you go beyond that, the more like

aid it becor.-.es. As to trade

with Communist China by the U,S.,as you know, does not trade with Communist
China because they refuse to give up a policy of armed aggression and
they have never agreed to make peace in Korea and, therefore, we do not
trade with them. Some other countries do and that naturally is for them to
determine. They may have different relations and different problems.
(more)

• 13 (~ue.tlon)

I bu. this que.tion on the tenor and tone of the reIr.&rk. abc

the French position. Do you think the U. S. tntends to prell actively in the
months ahead for new ways of creatine expanding IntemaUcmalliquidity,
presumably throueh the Fund, or otherwise?
(The Secretary) My answer to that, certainly the U. S. believes, al doe:
the International Monetary Fund and other student. of the problem, that
International liquidity, as of now, is adequate ... fully adequate. We hope th.
the important step which has been taken here in Tokyo to agree to an increu.·
in quotas of the IMF will take care of any problem that we can foresee in the
next few years -- 2, 3,

year8, We do foresee, however, the possibility,

maybe the likelihood, that as U. S, balance of payments comes into balance
and the deficit disappears, that there will be a need of some additional methoc,!
of creattng reserve assets to back up expanding world trade. Therefore, we
hope that we have a space of time now where we can look at this problem, not
in an atmosphere of cr18es, but in an atmosphere of calm, but that does not

mean we did not move ahead, We would like to look ahead and come to lome
conclusions which would strengthen the monetary system of the world in the
long run, This does not mean that we feel it necessary to install such a new
system in the next few months.
(~uesUon)

In relation to the other question about your remarks on the

1S-year credit Great Britain hu given to the Jov1et Union, which you regard

as aid, I would like to ask a general question on trade with the Communist
(mnl"~\

- 12 As to the idea of a composite currency reserve, we are glad to explore

such an idea in detail, It lTiay be possible that it can be found to be useful,
provided that it is used as a way of adding to wbat we now have and of
creating additional liquidity when that is necessary rather than being used
as a means to restrict what we now have, which we understand is the basic

thrust of the French position. But we look forward open-miridetily to discuss
all these questions indetall, subject to the broad considerations which 1 have

outlined earlier.
(~uestion)

Mr. 3ecretary, do you agree with the views expressed here

this week by Mr. Maudling that there is nothing unusual in the recent"
arrangements made by the Jnited Kingdom to ship a fiber plant to Russia
under a I5-year credit guarantee?
(The Secretary) We do not think that a credit guarantee by a gover-arnent,
in this case the British Governn.1ent, for as long as 15 years can be considered
normal commercial practice. To us it seems to partake of aid and we think it
not appropriate to give aid to the Soviet Union.

We regret the British action.

They apparently feel that this is a normal British practice, but we are sorry
that they feel that way.

We do not think it is a good contribution to our general

relations with the Soviet Union because by making credit for these necessary
peaceful purchases avallable on this long terr1l as 15 years we allow the 30viet

Union to divert other resources to military and unpeaceful purposes, and we
do not think that that is a wise course to pursue.

(rr.1.ore)

- 11 -

the capital field can change a situation was shown in Germany this year
when they had a very large surplus in the early months of the year which

w.. embarrassing to them and it was caused by an inflow of capital into
Germany which was entirely unnecessary at this time.

So they changed -- th

made some new legal proposals which would reduce the incentive for outside
capital to come into 3ermany, increased the incentive for 3erman capital to
go abroad, and now for the last few months their payments are in balance.

So it is our feeling that tile problems of the European countries with inflation,
the surplus countries of Europe, are their own problems, that they can be
solved by corrective action largely in Europe.

We intend to end our deficit;

we are moving to end it; we will end it, but it is not responsible for their
inflation and certainly because they happen to have infiationary problems
is no reason to deprive the rest of the world of liquidity

whic~

t;pey may need.

On the final point, and a short one, we believe that we should build
Oft

the system we presently have, which everyone recognized has worked

well, rather than try to develop a new and substitute syatem just because
j

there are some theoretical difficulties that lie ahead with our present system.
As for the specific suggestions that the French may have, the French Mlnistel.
cUd not make any such suggestions. VIe do look forward with interest to
a detailed devel~ent of the French position which we expect will take
place in discussions that are scheduled to continue through the next year

in the Group of 10.
(more)

.. 10 -

to the continuance of deficits in the balance of payments of the reserve
countries and they talk of this as "imported intlation". Vie do not feel that
we are to blame here.

We do not feel that there Is general inflation in the

world. There is certainly no inflation in the United States..

we have no

infiation to export. I was glad to see that Mr. Schweitzer this morning
clearly agreed with our thesis ahd said that he did not believe that there
was much substance to this idea of "imported inflation". Certainly there
have been inflationary problems in some of the countries of Western
Europe because they have grown very rapidly and the demands for goods have
been greater than what they could supply. Eut it is very easy for them,
11 they wish, to handle this problem by removing some of the many trade
restrictions which they still maintain in spite of the fact that they are in
heavy surplus, particularly in the aaricultural field, where the countries
~

the European Economic -:ommun1.ty are highly restrictionists. They could

lolve the whole problem of their infiation by removing some of these

restrictions and, secondly, in the question of capital flows, they could
greatly ease any infiationary problem they have by .... for example -.
traditional method of handling a serious long term exceas of demand by sending
sorne of their capital abroad.

This is what the United Kingdom did in the

19th Century. This is what the United States did after the First Werld War
and again after the Second World War.

An example of how quickly action in

(more)

- 9-

and to decide for the relt of the world how much liquidity they should have.
VIe strongly reject that thesis since we believe that this is a matter of interest

to all the countries of the world and we very strongly support the position
taken by the

r-.~anaging

Director of the Fund, Mr. Sehweitzer, in this regard.

Thatls our first basic objection.
2ul: second point is that the French proposal i8 basically designed to
be restrictive in nature and to limit the amount of additional Uquidity that may
be available. 'Tle do not think that that Is the problem. We do agree with
the I'rench view - - I thinl< everybody agrees with this too - - that the world
should not be dependent solely on deficits, payment deficits in the reserve
currency countries for the supply of liquidity. Some additional means will
probably have to be found in the future to make an adequate

supply of liquidity

available as world trade grows and we think that the problem is to find in adequ
time a new way and a new source of making additional liquidity available
to the world as the U. S. beJ.anoe of payments deficits comes to an end. And
this is quite contrary to the basic French thesis.
Third, we disagree with the diagnosis in the French thesis as to what
may be wrong with the present system. They apparently feel that because
a few industrialized countries in Vlestern Europe, including France, are
having troubles with inflatlon that tbia Is not their own problem but is due prim l
(more)

- ethe general discussion

ot the problem. We have a very buic and important

difference of view on matters ot substance with the French position, but
I do think that it is useful to have the French position on the public record
80

that we can now proceed with a more informed discussion on a world-

wide basis regarding the best solution to the problem.
(~uestion)

Mr. Secretary, would you please be willing to spell out

the American difference particularly in reference to the "CYlTeflcy rate of

thtJtDit

oJ" the

Monetary Fund?

(The Secretary) I would be glad to spell out our differences with the
French proposals which are tar more fundamental than the details of a
composite unit. I think our basic differences can be summed up in four
categories. In the first place, we believe strongly in the multilateral
framework for handling problems ot world liquidity. We believe that the
Group of 1C countries was an important and is an important group tor
discussion to advance the final decision, but it is not, and we have never
considered it an action group to take decisions regarding a matter that
is as important for the rest of the world as the value of international
liquidity. We think these decisions should be taken within the Fund and
they 8hould be multilateral.

The French position lookS clearly to the

establishment of a small group of presumably the 10 to take these decisions
(more)

- '1 -

will feel it necessary to ask the Congress to extend this law. We would hope
that that would not be necessary, but it's not pO.Ilble to predict now. That

will depend on developments over the next six month. or so.
As to the third question, about the Gore Amendment on banks, we
had not originally felt this was necessary. This is not something that the
Treasury Department had asked for. The Congress of the United States
decided to add that to the law to give the President this extra power, and it
certainly would only be used -- and the Congress made clear this was their
inteption -- if it becomes clear that lending through banks is being used to
Cil'cun-.. vel1t the intent of the tax. So far we have not seen that that is the cas
We have had close records kept of our bank lending and it seems to be

relatively normal in character, although it was larger than before and
larger than we expected, but it did not seem to be circumventing the tax.
(~uestion)

Mr. Secretary, will the French staten.. ent on liquidity at

this meeting advance, fan to advance or retard the achievement of a forroul,
for supplementing the liquidity?
(The Secretary) We have been discussing the question of liquidity for
a year within the International Monetary fWld and also within the Group of

10. The discussions within the Group of 10 have been private and the detailf

of the positions put forward by various countries have not been on the public
record. I think it is a constructive and helpful thing that the French MinistE
outlined the basic French position publicly because I think that will advance
(more)

- 6 (-~uestion)

Mr, Secretary •••

(Mr. Nishiyama) Excuse me, there are two ffiore questions in addition
to the questions the gentleman asked that are related here. The second
question is: We understand that at present the law on the equalization tax
is to terminate next year.
does

t~lis

Would this mean that once that is terminated,

mean, first, that since you have already said that the balance of

payments picture for the United States is moving in a favorable direction
very rapidly and you expressed confidence in t:1e restoration of the balance,
does this n:ean that you would expect the equalization tax law to be terrriinated
next· year and that by that time your balance of paYffients will have been -will put into balance? What is the outlook on this matter? That is the next
question.
(The 3ecretary) Most certainly.
(Mr. Nishiyama) The third one, which is relatively sin. pIe. This
amendment that was put in the bill, the Gore Amendment, authorizing the
President to use his discretionary power on bank loans, what is the outlook
0!1

whether that will be invoked; what are the possibilities that will be invoked?
(The Secretary) As to when the tax will come to an end, certainly it

is our intention that as soon as our balance of payr{lents reaches a situation
Where we no longer need this tax, we would not ask for it to be continued.
TJnder the law at present it would end on December 31, 1955, and a decision

Will have to be taken soriietime next spring as to whether or not the President
(more)

- 5 ..

and also the United States bought more from Japan, goods, than any other
country and would continue to do so, helping Japanese trade to expand, an
then I told him that since he had raised a number of other matters in conrl
tion with the tax which did not directly -- not directly connected with my .
~epartment,

I would naturally report the whole matter to my fellow Cabine

members when I returned to Washington, also to the President. I don't
think that that meant it would necessarily be any change in the Interest
Equalization 1kxi I did not intend it to mean that, because I pointed out to
-Mr. Tanal{a the great legal difficulties we would have in making a partial
exemption for Japan.

Our law provides an exemption can only be given

in a situation where the stability of the international payment system is
involved, and it is clear from what has happened so far, and certainly in t
present situation, that there is no such danger as far as Japan is concernf
and we are glad because we would like to see Japan moving ahead. We ha
also said that should such a danger arise we would, of course, be glad to
consider the matter anew with Japan.

What I did mean was that I would

talk with mYfompatriots in Washington and we would have a further revie

of all aspects of our economic relations of the type which we have every
year when we have our joint cabinet meetings.

Mr. Tanaka gave me a brc

list of items and I will go back and discuss all of them when I am in
Washington.
(rr.ore)

- 4 -

is important to all trading nations, including Japan. A year has now passed
and the tax has now become law. :Curing that year the Japanese economy
has not suffered and has continued to expand and this despite the fact,
because of the uncertainty as to whether this proposal would become law
or not, the Japanese business and people frOln other countries were naturally
reluctant to make use of our markets and they made no use of them.

Now

that the law is in effect, the markets are open and we would assume that
the Japanese firms if they need money would mal<e use of our markets. I
explained these matters to Iv.::inister Tanaka and he, I think, understood.
I think there is a greater understanding now in Japan among business men

and others that this tax will not have any basic effect on the Japal1ese economy
since they can still raise such funds as are necessary in the New York market.
However, he in talking about the interest tax with me mentioned a great

many other matters, both economic and political, having to do with the
overall relationship of the United States and Japan, and I agreed with him
. that this tax had to be looked at in the overall framework of our relations
which it was important that there be benefits from those relations on both
sides. I pointed out to him that the United States contributed SUbstantially
to the Japanese balance of payments in something like 35C million dollars
a year alone as a result of paYIllents for defense purposes here in Japan,

(more)

- 3 -

to the President about this.
followin~

::';0

in relation to this I would like to ask the

questions: When you said that you would go oack to the United .]tatel

to spea:( about this matter to the President, did this indicate that there was
some change that has taken place in, your thinking about t!1is matter as a resu)
of your conversations with Finance Minister Tanaka, or was this merely a

diplomatic gesture on your part? (Laughter)
(T11e Secretary) That I s a very

~ood

question, and I t11ink to answer it

we better go back a little bit in time to last year.

V'hen the tax was proposed

there was great concern in Japan that it would cause serious difficulties and
serious damage to the Japanese economy_

There was a feeling that because

of the tax Japan would be unable to obtain in the United States the long term
capital that Japan might require to keep her growing moving ahead.

We in

the United States did not feel tllat this would be the economic result of the tax,
and in our conversations with the Japanese Government at that time we made
clear that our rna rkets would stay open and that when the tax was in effect
we felt that Japan could continue to obtain funds, even though they would cost
them about one per cent more in interest than they had before.

Put this cost

would still be much cheaper t:1an the cost of borrowing inoney here in Japan
where the interest rates are much heavier.

And we explained that we had

to put tha tax in effect as suggested in order to protect the stability of
the dollar, which is used in trade all over the world and whose stability
(more)

- 2 -

(The Secretary) Gentlemen, I want to say before I start that I think
we have had a most fruitful conference here and I have been particulllt"ly

impressed by the extent of the coverage of this conference in the Japanese
press and also by the understanding and thoroughness with which the Japanese
press treats economic matters of importance.

I imagine there is no place

in the world where these sort of questions get such important treatment in

the press, so I'm glad to be here with you today. I will be glad to answer
your questions.
(Qlestion) First, I would like to express my appreciation for those

fine words you gave to the Japanese press and now in order for us to have
something from you, Mr. Secretary, that we call really write about in our
articles in the press, I hope you will answer the following questions in as
much detail as possible. (Laughter) The first question I would like to put
t. you, sir, is in relation to Japanese- P merican relations, especially in
the field of the Equalization Tax which came up as a subject last year, and at
that time it was indicated by the Japanese Government that they would want to
have either exemption or some kind of alleviating measure if that law should
go into effect, and a great deal of representation was made to the American
Government on that score.

And the Finance Minister, Tanaka, when he

mat you here at this time for

-a number of conversations,

1 Wlcierstand , received

the reply from you that when you returned to the United States you would speak
(more)

TRANSCRIPT OF NEWS CONFERENCE BY
u. S. SECRETARY OF THE TREASURY, DOUGLAS DILLON,
TOKYO, SEPTEMBER 11, 1964, DURING ANNUAL MEETING OF
THE INTERNATIONAL MONETARY FUND AND WORLD BANK

·Ladies and Gentlemen, I would like to introduce
Mr. Dixon Donnelley, Assistant to Secretary Dillon.
charge of the Secretary's public affairs.

He is in
..

Mr. Donnelley.

(Mr. Donnelley) We are very pleased to welcome you here
this afternoon.
record.

This press conference is, of course, on the

Please feel free to quote Secretary Dillon by name.

The

conference will be conducted in both English and Japanese, and
we'd like to.allow sufficient time for the question to be put in
both languages first and then the answer, of course, subsequently
in both languages.

(More)

TRANSCRIPT OF NEWS CONFERENCE BY
U.S. SECRETARY OF THE TREASURY, DOUGLAS DILLON,
TOKYO, SEPTEMBER 11, 1964, DURING ANNUAL MEETING OF
THE INTERNATIONAL MONETARY FUND AND WORLD BANK

Ladies and Gentlemen, I would like to introduce
Mr. Dixon Donnelley, Assistant to Secretary Dillon.
charge of the Secretary's public affairs.

He is in

Mr. Donnelley.

(Mr. Donnelley) We are very pleased to welcome you here
this afternoon.
record.

This press conference is, of course, on the

Please feel free to quote Secretary Dillon by name.

The

conference will be conducted in both English and Japanese, and
we'd like to.allow

~uffici~nt

time for the question to be put in

both languages first and then the answer, of course, subsequently

m both

languages.

(More)

-2-

(The Secretary) Gentlemen, I want to say before I start that I think
we have had a most fruitful conference here and I have been particululy

impressed by the extent ot the coverage of this conference in the Japanes8
press and also by the understanding and thoroughness with which the Japaneae
press treats economic matters of importance. 1 imagine there is no place
in the world whsre thase sort of questions get such important treatment in
the press, so 11m glad to be here with you today. I will be glad to answer
your questions.
(Q,lestion) First, I would like to express my appreci.Uon for those
fine words you gave to the Japanese press and now in order for us to have
something from you, Mr. Secretary, that we can really write about in our
articles in the press, I hope you will answar the following questions in as
much detail as possible. (Laughter) The first question I would like to put

t. you, sir, is in relation to Japanese-}merican relations, especially in
the field of the Equalization Tax which ,came up as a subject last year, and at
that time it was indicated by the Japanese Government that they would want to
have either exemption or some kind of alleviating measure if that law should
go into effect, and a great deal ot representation was made to the American
Government on that 8core.

And the Finance Minister, Tanaka, when he

met you here at this time for i number of conversations, l" uncierstl1l1d, recei'
the reply from you that when you returned to the United States you would speal

(more)

- 3 -

to the President about this.

30 in relation to this I would like to ask the

following questions: When you said that you would go oack to the United 3tates
to spea!{ about this matter to the President, did this indicate that there was
some change that has taken place in. your thinking about tbis matter as a result
of your conversations with Finance Minister Tanaka, or was this merely a

diplomatic gesture on your part? (Laughter)
(The Secretary) That's a very good question, and I t~link to answer it

we better go back

a. little bit in time to last year. When the tax was proposed,

there was great concern in Japan that it would cause serious difficulties and
serious damage to the Japanese economy. There was a feeling that because
of the tax Japan would be unable to obtain in the United States the long term
capital that Japan might require to keep her growing moving ahead.

We in

the United States did not feel that this would be the economic result of the tax,
and in our conversations with the Japanese Government at that time we made
clear that our markets would stay open and that when the tax was in effect
we felt that Japan could continue to obtain fWlds" even though they would cost
them about one per cent more in interest than they had before. Put this cost
would still be much cheaper t:lan the cost of borrowing money here in Japan
where the interest rates are much heavier. And we explained that we had
to put the tax in effect as suggested in order to protect the stability of
the dollar, which is used in trade all over the world and whose stability
(more)

- 4-

i. important to all trading nations, including Japan. A year has now pUle
and the tax has now become law, J;uring that year the Japanese economy
haa not suffered and has continued to expand and this despite the fact,
because of the uncertainty as to whether this proposal would become law
or not, the Japanese business and people from other countries were natural
reluctant to make use of our markets and they made no use of them. Now
that the law is in effect, the markets are open and we would assume that
the Japanese firms 11 they need money would make use of our markets. I
explained these matters to l\(inister Tanaka and he, I think, understood.
I think there is a greater understanding now in Japan among business men
and others that this tax will not have any basic effect on the Japanese econor
since they can still raise such funds as are necessary in the New York mad
However, he in talking about the interest tax with me mentioned a great
many other matters, both economic and political, having to do with the
overall relationship of the United States and Japan, and I agreed with him
. that this tax had to be looked at in the overall framework of our relations
which it was important that there be benefits from those relations on both
sides. I pointed out to him that the United States contributed substantially
to the Japanese balance of payments in something like 35C million dollars
a year alone as a result of payments for

d~fen8e

purposes here in Japan,

- 5-

and also the United States bought more from Japan, goods, than any other
country and would continue to do so, helping Japanese trade to expand, and
then I told him that since he had raised a number of other matters in connee··
tion with the tax which did not directly -- not directly connected with my

Department, I would naturally report the whole matter to my fellow Cabinet
members when I returned to Washington, also to the President. I. don't
think that that meant it would necessarily be any change in the Interest

Equaliz.ation n.xi ! did not intend it to mean that, because I pointed out to
:Mr. Tanaka the great legal difficulties we would have in making a partial
exemption for Japan.

Our law provides an exemption can only be given

in a situation where the stability of the international payment system is
involved, and it is clear from what has happened so far, and certainly in the
present situation, that there is no such danger as tar as Japan is concerned
and we are glad because we would like to see Japan moving ahead. We have
also said that should such a danger arise we would, ot course, be glad to
consider the matter anew with Japan.

What I did mean was that I would

talk with my -,ampatriots in Washington and we would have a turthe r review
of all aspects of our economic relations

ot the type which we have every

,ear when we have our joint cabinet meetings. Mr. Tanaka gave me a broad
list of items and I will go back and discUS8 all of them when I am in
Waahington.

(ruore)

- 6 -

(~uestion)

Mr, Secretary •••

(Mr. Nishiyama) Exoule me, there are two ffiore questions in addit1c
to the questions the gentleman asked that are related here. The second
question is! We understand that at present the law on the equalization tax
is to tern1inate next year.
does

t~1is

Would this mean that once that is terminated,

mean, first, that since you have already said that the balance of

payments picture for the United States is moving in a favorable direction
very rapidly and you expressed confidence in

t~e

restoration of the balance,

does this n:ean that you would expect the equalization tax law to be terrrJna1
next· year and that by that time your balance of payrr:.ents will have been -will put into balance? What is the outlook on this matter? That is the next
question.
(The 3ecretary) Most certainly.
(Mz:. NislUyama) The third one, which is relatively siu.ple. This

amendment that was put in the bUl, the Gore Amendment, authorizing the
President to use his discretionary power on bank loans, what is the outlook
.011

whether that will be invoked; what are the possibilities that will be invoJ<!
(The Secretary) As to when the tax will come to an end, certainly it

is our intention that as soon as our balance of payments reaches a situationi
where we no longer need this tax, we would not ask for it to be continued.
r.Inder the law at present it would end on December 31, 1955, and a decisiol
will have to be taken son.etime next spring as to whether or not the Presid4

(more)

- e-

til. '_1'11 dlaOU••1CD of the problem. W. have a v'l')' buic IDd importaDt

dItr.reDC8 of vi•• CD .attar. of IUbltaDce with the French po.ltlon, but
I do tIdDk that it I. utlul to hay. the French polltlon on the public record

.0 that .e can now proc.ed with a more inform.d eIi.cu••ion on • worldwid. bull re,ardiq the bel' .Glutton to the problem.
(Question) Mr. Secretary, would you please be willing to
spell out the American difference particularly in reference to
the.composite reserve unit and the Monetary Fund?
(The Secretary) I would be

,lad to .pe11 out our differences

with the

Fr.nch propoaal. whioh are far more fuodamental than the details of a

oompoaite unit. I think our bulc dltterenee. can be .ummed up in four
oat..orie.. In the fir.t place, .e belleve Itronr1y In the multilateral
framework for handlhll problemI of world Uqu1c:Uty. We believe that the
Group olIO countri•••u an important and 11 an importut ,roup tor

cU.ou.s1on to advance the final d eelalon, but It 1. not, and we have never
OClftlldered It an action ,roup to take decialon. re,ardin, a matter that

t. u important for the ren

the world .. the value of International

liquidity. We tblnk the.e deol.loM Ihould be taken within the Pund and

til.,

.bould be multilateral. The PreDCh po.ltion lookl clearly to the

••tabU.bment oIa.1Ilal1 poup

pnlUJllably the 10 to take theae deetalou
(m~")

- "l -

wUl feel it necessary to ask the Congress to extend this law. We would hoPf
that that would not be necelsary, but it'a not pOllible to predict now. That
wW depend on developments over the next .Lx monthl or

80.

As to the third question, about the Gore Amendment on banks, we

had not originally felt this was necessary. Th18 1s not something that the

Tr.asury Department had asked for. Tbe Congress of the United States
decided to add that to the law to give the Pre.ident this extra power, and it
certainly wO'Jld only be used -- and the Congress made clear this was tnelr
1nt.~tion

- ~ if it becomes clear that lending through banks is being used to

circu.mve;,1t the lntent of the tu. So far we have not seen that that is the cal
w~

have had close records kept of our bank lending and it seems to be

rf!!abve}y normaltn character', altnollgh it was larger t11an before

ano

larger than we expected, but it did nat seem to be circumventing the tax.
<;;:'uestion) Mr. Secretary, will the French stateuJent on liquidity at
thi&
f~:,r

:~~eeting

advance, faU to advance or retard the achievement of a formul

elJ.pplementmg tne liquidity?
(Th~ Se.:..r!'i.a.l'y}

It yl!t.r

1 j.
o~

~1a\"e

been disCUSSing the question of liquidity for

wit1".m tnt' international Monetary £:'Wld and alao within the Group of

The disc"..lsa:&.ons within the Group of 10 have been private and the detaL

tht' positionS! put forward by various countries have not been on the puhUr

record. i thir-k it 1& a constructive and helpful thing that the French Ministl
outUned the bas:;, £.'rench posidon pubUcly because I think that will advance

(more)

- 9 -

IIld to decide for the rest of the world how much liquidity they should have.
We Itr0l1l1y reject that the.is since •• belleve that WI 1. a matter 01 interes~

to all the eountrie8 of the world and we very strongly support the position
taken by the Managing Director of the Fund, Mr. Schweitzer, in this regard.

That', our first basic objection.
2uc second point i8 that the

}l'r~ch

propolal ill baeieally designed to

be re8trictiv~ in nature and to limit tht Amount of additional liquidity that may
be a~able.

Vie do not think tbat that t.e the ~•.r()blem. We do agree with

the rrench view -- I think everybody

.,r"~8

with this too -- that the world

should not be dependent 801ely on defleits. p..yrr~ent deficit. in the reserve

currency cOl1ntriea for the supply olllquidityo Some additional means will
probably have to be found 1n tile future

t\l

available as worlfi trlAe grows Mtl 91'8

t~l_nk. l~l.t

time anew way and .. new
to the world ..s

th~

U, S.

J,101,1r~ft

t.a.l~ce

r:I
of

m aka an adequate
the problern

supply of 11quidity
j.8

to find in adequate

MIJr,l~ .~~ld(lflall~q\lldlt:1 &vl.n~le
payr.::.~atte

dettdt. comes to an elld. And

this i8 quite contrary to thf!! b9.S1C F'~.h~;h theils.

Third, we di.agree with the dlatIuoa'.• in the French thelia as to what

tnay be wrong wUn the present

Iyett"n~.

"'~t!y ~plU'lf!-ntly

feel that bp.cause

atew lndumrlllized t!ountriee in Vl~~t'f,)') ~u"bpe~ i!lchldlng Fl'aJlce, are
hiVing troubles with lnflatlon tha.t t);JD fa ",.?t their own pf'oblem but is due primarily.
(more)

.. io -

to the continuance of deficits in the balance r4 paymata t:l the rele"_
countries and they talk of this ... "Imported 1nI1at1on". VIe do not teel that
we are to blame here. We do not teel that there i. ,eneral1nfiationln the
world. There is certainly no intlation in the Unit.d Statel" so we have no
inflation to export. I was glad to lee that Mr. Schweitzer this mornine
clearly .,reed with ourthe.la alA said that he dld not beUeve that there
wu much substance to this idea c4 "imported inIlation". Certainly there
bave been inflationary problems in some of the countries

at Western

Europe becauae they have grown very rapidly and the demands tor ,ooda have
been greater than what they could supply. But it il very easy for them,

11 they wish, to handle this problem by removing some of the many trade
re.tricUon8 which they stUl maintain in spite of the fact that they are in
heavy IUrplul, particularly in the agricultural fleld, where the countrl••

at the European J:oonomic ':ommunlty are hiahly re.trictionistl.

They could

• • • the wbole problem of th.ir inflation by removing .ome of the••

.u.

r ••trictione and, secondly, in the question of capital
gf.atly

flOWI,

th.y could

any inflationary problem they have by •• for example -.

tndltional method of handling a .eriou8 Ion, t.rm .xc... ~ dem&ncl by.tadtIl

some cl their capital abroad. This ie what the United KlnIdcm did in the
19th Century. Thia i. what the United Stat•• cU.d after the PiHt W..w War

and ..ain atter the Second World War. An example ~ bow quicldy act10a III
(more)

.. 1 J ..

the capital field can change a 81tu&\loo .aa ahotm !D. !lermany this year
wbID they had a very large 8urplua in thflt earlY n-~onths of the year which

made some new legal proposal,_

whll'~h

w,-",-"d t'fh1uce th"

the lurplus Po{Juntrlea of Europe .. tu'+' theIt

(:1iiJf'

1..'!.1~t1,tive

for outside

rroolf!t:::n ..:s: tha.t tht"y can. be

.ol,ed by corrective ac-tion llU'gely t.n Europe.

.1 are moving to end it: we will enJ U. bat it

nllt respon6ihl.e tor' their

t. no reuon 10 ~ep!'h'" the tedt

I·f thteit'orIrl of.

intend tt' end our deficit;

Hquldity whtth tJiev may need.

there are 80me theoretical d1tflcl.4lti" .. that lie ahead with

iIa th, Group

10.

aurpr'tfl~nt

system.

- 12 -

As to the id•• of • corn.,.lte currenc1 Nllrve, . . are ,lad to 1.10.
lueh an idea in detail, It may be possible that it can be found to be

UI.,ul,

provided that it 11 us.d u a way of addin. to what we now have and of
creating additional liquidlty when that 18 n.ce •• ary rather than being used
as a means to restrict what we now have, which we understand is the basic
thrust ot the French position, But we look torward open -mtridect1y to disc"
all these questions lndetaU, subject to the broad considerations which I hll

outlined earlier.
(~uestion)

Mr. 3ecretary, do you agree with the views expressed he

this week by Mr. MaaadUng that there is nothing unusual in the

rec~nt

arrangements made by the Jnited Kingdom to ship a fiber plant to Russia
under a 15-year credit guarantee?
(The Secretary) We do not think that a credit guarantee by a govel"lUi,

in this case the British Oovernrnent, for as· long 18 15 years can be consi~
normal commercial practice. To us it seems

not appropriate to give aid to the Soviet Union.

to partake of aid and we thb~
We regret the British actl

They apparently teel that this ia a normal Br1tiah practice, but we are

801,

that they feel that way. We do not think it is a good cona-lbution to our ge"
relatioos with the Soviet Union because by making credit for these necess
peaceful purchuea avallable on this long term .. 15 year. we allow the 3
Union to divert other resources to militarY and unpeaceful purposes, and

13 ..

('u.sUon) I bu. thia qUet.tiM on Us.

the milch position. Do you think lb. U6 S~
aUI,tbI ahead for new ways of c;re.tJnl

l..~r,i!,~ ~td

~,t4fld.1I

tt)fte of the

l"'efi:~U"k'

about

tu PH" actively In the

e:~l~'1.n~'I1ntematiOJ)a1liquldity,

pn.umabl)' throQ.h tbe Fundf or otbel·___·il.f;·'~ l'
(.;,u'tWl~,Y

(The Secretary) My anlwer to that&,
the International Monetary Fund and other

~~mt.nt.

\hl Ue Be believea, as does

'0£ the

p"Qble~n,

that

lnt.mIUonalliquidlty, .. of now, 18 adequate ..... fully adequate. We hope that
the important step which has been taken heA'"4! in Tokyu to agree to an inere ...

in quotas of the IMF will take
Iltxt I.w years

.0 2, 3,

~are

of my

year., We do

PI'f~bA~n,.

fOl"•• ee~

ihi.t we

C8.fi

hoftvel"~

foresee in the

the possibility,

maybe the likelihood, that as U" S. ballA"'lC;e of payrn.nts comes into balanee
and the deficit diaappears, that

of creatln,

rel~rve

hope that we have a

ther~

aefJets to back up

will be

iiI

need

expMHjin~

world

Ipatl61 ~t tune )fl(~W w'(it!r~ Wtt t!Wt

in an atmolphere of erg.a.. but in m atmo"ph~)f~
lilian we did Pot ID,QV.

Ih'Hlu~.

0;' lo;{ne

t}f

additional method

t:t~,de~

Therefore, we

look ai this problem, not
cabn c but that does not

W(~hlld ,.iI~\;;,. tf& Lt;~k '.h~ad

aiind come to lome

COIlclUl1ona which wowd .trengthen the mou6tu'Y lysi8U, of'tbe world in the

1aq ruD. Thla doetl ~oi m.• an that . . feel it U!tt'IiUJllary to in_tall sUl:h a new
IJitem In the next few month, ~
(~uelt1Q1:n~ Ira "ftlaUQl;Q -to the ~~thelr tlu'~~~~f.,J~t ~~.J1out yOllll' l'ea.~a.rg on ~.he

11-year credit GNat Britain haa given to the Jt1vUtf; Unioft, which you regard
II ald, I would

m. tOl uk: .. f.f.ll~~.r.cU qu.fii!Ht~:~ eN")
\'tJne't'(~~

1~;i!f1i,7j~, W'i,~

the

(1)D'U1l1lln:lst

- 14 -

cowstrlel. About what perloc:l of time, or what type of ltaftdard, would

you consider appropriate Itandard in relaUon to b"ade with CommUDiIt
countries? Also, in relation to thia, in the lame pre.s conterence that
Mr. MaUrlling held, be said that Great Eritain made no discrimination
•

between trade with the Soviet Union and Communift China .. far as trade
in terms of non-ltrat8l1c goods 18 concerned. I would Uke to get your vie.

on the matter.
(The Secretary)

't' e feel that in the trade with Communist countriel,

.hould follow pormal trade practicel wh.i...~h mean a normal time tor credit.
depending on the type of item involved, but in no case extendine beyond
tive years, which has generally been the accepted standard of medium term:
credit that was set in Europe by the Berne Union to which we belong, and
we teel anything beyond that begins to partake tne characteristics of aid
and the farther you go beyond that, the more like

aid it becorr.es. As to t

with Communist China by the U,S.,as you know, does not trade with

Comm~

China because they refuse to give up a pollcy of armed aggression and
they have never agreed to make peace in Korea and, therefore" we do not
trade with them. Some other countries do and that naturally is for them to
determine. They may have ditterent relations and <flfferent probleml.
(more) ,

• 15 •

<;....ltloa) I. the J'rlDch prapo.a1 to

p.,. the ,old portion 01 the

qu_ incNU" In two .t.....atlatlCtory to the U. S. or would you pref.r
• ,.,. 1ft Itve . _•• ?
(The Secretary)

I think that this is a question, in detail,

that should be decided by the Executive Directors of the Fund.
I would only recall the last time there was a quota increase

there was a provision for countries that found it desirable to
pay in five stages.

I would think that this time the Fund would

not want to make any changes.

I do not think such a proposal

or a staging of the payments would adequately answer the entire
problem of payments in gold.

I think other stages are needed

but these are technical matters that can and should be discussed

and determined by the Board of Directors of the IMF.
~est1on)

In the Japaneae newspapers here recently it has been .aid

tbat in the light of Japan's recent "economic ,rowth, there i. a case for

lIPID replacing Indla

a permanent executive of the Fund. Can you

tell u, Joar vi•• on th1e?
(TAle

Secretary) I haven't heard of &nJ such suggestion. I have

beard that Japan would Uke to have a apecia11ftoreu. over" ud above the
11I • •era1 iDea..., MCI I tblDk that.. in the U,bt of Japan'. progre•• , means

. . IUCh an iDcreue 1. heari1ly deserved. I bave not s.en what the .ize
tI . . apec1a1lacr.... that Japan milht wieh to uk tor, but I do not

(more)

.. 16 •

understand that it would necessarily involve any replacement of India &8
the country having the fifth largest quota in the P\md.
(Question) Mr. Secretary, may I ask a question on multilateral
surveillance? The French have made it understood on several occasions
that they consider surveillance as a sort of factor to introduce all sorts
of discussions on the coverage of deficits through assets in reserve currer;
• •• as a playground for diacussion on gold polley of a certain country or

the composite of reserves. How far would you draw this cod, of these
discussions? As I gathered trom your speech which you made yesterday,
I have the impression that your understanding of this code

ot surveillance

is severely more restricted.
(The Secretary) I do not understand the French position to be
partieularly different trom our own on this matter.

We look on multUaterl

surveillance as a decision by the countries .... industrial countries • - whoa
capital is subject to rapid flows, one way or the other, to exchange inform
among each other on a regular basi 8 regarding means of financing any
surpluses or deficits they may have.

Certainly trom what the French

Minister said in his statement here to C1e IMF Conference, nothing else
was involved.

Cf course, when one does report methods of finance, you w

expect that there would be discussion of these methods and we woold eX'!lec
(more)

How.ver, what multilateral surveillance doe. not mean was very clearly

.,.ned out by the BriUah Chancellor of the Exchequer

when he quite clearly

reported that it doe. not glve any veto to any individual countries or any
,roup "eto on the actions that any two countries might take on a bilateral basis.
(~uestion)

Could you say something about techniques which might be

uaed to prevent a drain of gold reserves from the U. S. and U. K. as a

r.ault of the increase in quotas?
(The Secretary) This particular problem can be handled in a number
tI .ays. In the first place,

many- more countries now have very substantial

,old reserves of their own end such countries could very well pay, out of their

on ,old aBsets without replenishing them from the U. So or U. K. Secondly,
th.re could be negotiations of one sort or another between the International
Monetary Fund and the two reserve currency centers which could help to

aftaet purchases of ,old as might be necessary from those countries which

do not have supplies of gold of their

OW"'1

on hand. Third, there is a question

which was raised in the Fund Report regarding the use of - '" to some extent ~

of gold certificates rather than actual gold in payment of 25% gold quotas.
1oite thele as illustrations becaus~ this 1s a htchnieal matter

L'ld

there are

'aeries of ways in which this straW on the reserve currency from a gold
PQment could be mitigated.
(more)

- Ie (;.ueltion) Mr. Secretary, in April ~ W. Y'IoI', Japan moved into
Article

nation Itatus 1n the

IM~

III

en the bull of this Japan has greatly

reduced restrictions on long term investment. trom abroad. Is this. in
your mind, satisfactory in the way that Japan has done -- is that adequate?
Whether you foresee a considerable increase in capital investments from
the U.:3. in Japan?
(The Secretary) I think the achievement cI Article 8 status by Japan
is a big step forward and is aconcrete example of the very great economic
progress that Japan has made and is continuing to make. I think that the
relation of various restrictions which were involved in achieving Article
B status is a move in the right direction and I am sure that :movement will

continue still further as the Japanese economy and balance of payments
strengthens further. 1 feel that as far as investments in Japan -- direct
investment by the U. S. is concerned -- that there is an interest by our'
business people in the possibility of investment here and I think that such
~veatment

will increase provided it is welcomed here freely by the JapaneSE

Government and I would hope that would be the case increasingly as the
years go by because that would tighten

econ~ic

relations between our count

and contribute to rapid economic growth of Japan by making this capital

available from the outside.

.**

;t .. i're&SUl'y .•~nt. 8.nnQuM&d last. .ftn1.~ t.tt&t. t.he ~ tor \We
bUla, one serie. too he an addt\i--.1 1__ .t tM bUla da'-l ....

N~~U.ry

~1at.edfll.)t.saber 17, 191.... , wf!loh WN 'llt.reeI CIa "".'11
ffaltl'ft 8Mka on Sept ••• r 111. ,Mldlt'. . . . ~,.
t1.erwiib''>uts, of 91-dB.J bUla and for . 900, ().:X), C),)O, 01' the ..........,

llf).: t.he ot.her ser1f!S t.o
~.re 0

..aiu •
11, ~

.)8

14Nl4MI at t.he ....daHl

1,)) j~

Jti},0j,),

')1' If" -ct~ blUe.

1he d·t,all, oJ: \.hv ' " Mrie. are .. roll. . .

})i.lOJ

vera'"

toLe ..wnt. 01 ~11"" btU. bid fw- .~
low ,..:i.oe wu ....,...
lS ..~rc~rlt tJi' th. ~.;:)unt.Jr lc2- c.3.. b~lll bid tor at toM low prioe va_ uoept.ecl

(;5 ;.)ttI"cen\ ot

~}'I"l,l£d F'~~

·,lat.rict
'1oit:;';'~-'-'"-r,. \( Y(u"k
.~)iladelp~ ia
J ·. .land

!.7,'i.i",. ~
1,417,136, .00
JJ,1170.·)J1J

:-<Lneapoli,
Y,~tUfAa \-;1t,v
'AlUU

S"n :'l"&.ncisco

~J,(i)7,rxx>
3J,O).. ,,)JO
'" I
lO
3'), - ''',,''t
127.. ~i.. ;,:))O

r"''''AL~~';MthF',()M

3~ .. 9rj'-X))
79S,~'ft~.00"J
16,h10,OOO
,o,S~'9,00)
Ib,2fB,OOO

If ,2f~',!))O
33.231,000
2l:',JU.!X)Q
3tt,Slt,~

AtllUlta
Gl iC&8':)
[t. Lou1a

~c.2.2\ed.

3'>,529,':00

,!.ar;non',:

",906,000

~11,", '01"

.ilt,710,@
1,'l~~,l61,OOO

e,;26,:jQ()

St,-,OtIO

4,(;Ll.000
la, lOS.~

162,f16,O:}()
2i,1~.~!
20,197, e»o
3J,0.\.. ,-)00
..,.. , OIl,
,;;.&. ... 36,v~
f
106. 7YS~UOO t

:'115d1,m;~

1)'8,t,,(:;),000

14,911.000
9,51),000

1),~i2:1.~

6
11,1(;',«»0

~,;,QQO

't,b,

.C5Od

a/r .. cl:ld--. ;;2'0,) u,OOO ·~~t.it.i" teftden ~ . , ___ . . . . . . JIri... ., ...
E/:',cl:j(",! :-,'?u,t;:l":,ljt) -!')~)CJr!;}Bt, t.ive 14rd~T8 acoer'v'd e-t, the aftrace prl• ., fI.Il
a o.>1IPOft 18.- of tJle .... ~ ~ hr the . . . aotet. s.aw...... _ .., ..
;-Jh~ ~ b .lls w-m1fi t;·r:Wic.e J'ield-.9 of ).1;2 for tJi. l-d&.f b:r..lla. . . ).8.., , . •
H:2-.... bUl.. ;nter~uilt. r<t.wa on tills .t.l"e qUQt.~d in t.ent.a ot ..,. 411 . . . . . . ..
:,:;e ret.:.;rn r"~l ~d T,', t.he face W\ouut. of ~ billa l/AJl1hle at aaWl'1t.1 "\l1li' •
. re .-:runt .nv(>.~t.eJ end t.heir l.en.-:t.l- in aot.ual IJUJIbet of dap NlaW te • )604
year.
n clll:rutH.. , ,/1.Jldf on cer-t.if'1cat.",!, n~t~'a, and boftcia . . . . . . . .
Sa ...

y:.n

:;If

nt.. r-est.

00 tt-.~ .iB\~.lUnt

i.n'li'ltst.e(i, and Nlat.e t.be nuab·"

,-\~nt :,qj ci i.. -' t.rlA!
c .~ ;~nd1l'H~ U' fr.Jre t..r.an me c

interest

'*'
01 daTa .... ".... Sa •

act.lo.&! maber oi dals ia t,M period,
Ij!.;Or.

i~~rl ..)d is 1nY:)l't~d.

_til .... .

TREASURY DEPARTMENT
(

PlR RELE1SE A. M. NEWSPAPERS,
!!!'h September 1S, 1964.

September

14, 1964

RESULTS O? TREASURY'S WEEKLY BILL OFFERING
!he Treasury Department armounced lut 8Yelling that the tenders tor two series ot
be an additional issue ot the bUls dated June 1b, 1964,
ad the other siries to be dated September 17, 1964, which were otfered on September 9 J
II8l'8 opened at the Federal Reserve Banks on September 14. Tenders were i.nvl ted tor

IreISID'1 bills, one series to

$1,)00,000,000, or thereabouts, of 9l-day bUls and for $900,000,000, or thereabouts,
of 182-dq bills. The detaUs of the two series are as follows:
BAD OF ACCEPTED
IXIIPETITIVE BIDS:

9l-day Treasury bUls
maturinS December 1701 1964

l82-~

Approx. Equiv.

Price

.Anm1al. Hate

High

Treasury bills

maturing March 181 1965

Price
98.3.40
9C.129
98.133

••

Approx. &luiv •
Annual Rate

99.11h
3.SOS%
3.67~
••
99.103
3.549%
3.701%
Average
99.105
3.5U% !I
3.693;1)
6S percent ot the amount ot 91-da.y bUls bid tor at the low price was accepted
15 percent ot the amount of 182-day bills bid tor at the low price was accepted
Low

tam TENDEBS APPLIED FOR Aiill
Dlatrict
Boston

"York
JIIJiladel.phia

Cleveland
IlDond
ltlanta
rId.cago
Bt. Louis
l1mIeapo11s
__ City

DaUaa
Sa Francisco
TOTALS

ACC1!;P~;D

Applied For
:I; 41,906,000
1,457,1.36,000
33,470,000
)0,529,000
18,288,000
33,2)1,000
212,34l,000

34,514,000
23,607,000
33,034,000
30,886,000
127 2545,1000
$2,082,489,000

BY FEDERAL· RESERVE DISTRICTS:

Accepted
•• Applied For
$ 14,710,000
35,915,000
$
•
795,886,000 • 1,038,161,000
8,928,000
18,470,000 ••
51,806,000
30,$29,000 ••
4,647,000
18,288,000 ••
•
10,705,000
29,906,000 •
198,66'),000
162,816,000
14,977,000
28,164,000 ••
•
9,515,000
20,197,000 •
•
13,tj29,OOO
33,034,000 •
11,1~9,OOO
21,536,000 ••
91 2 265 2000
10627951000 :
$l,30l,596,00b !I $1,474,395,000

Accepted
~ 11,110,000
592,961,000
3,92&,000
51,506,000
4,647,000
6,605, coo
122,L6,),OOO
12,917,000
6, 090, ooc)

13,829,000
9,189,000
61,1615 2000

$900,020,000

£1

~udes $280,054,000 noncompetitive tenders accepted at the average price of 99.105

~udes $7h,675,OOO noncompetitive tenders accepted at the average price of 9t.1)3
Vt'a a coupon issue of the same length and for the same Ulmmt invested, the return on
tllese bills would provide yields o£ 3.62% tor the 91-day bills, and 3.82%, for the
182-dq bills. Interest rates on bUls are quoted in teru of bank discount with
the return rele.ted to the face Dount ot the bills pqable at maturity ra ther 'Llw~
the aount invested and their length in actual number of dqs related to a JeO-day
7Iar. In contrast, yields on certificates, notes, and bonds are computed in terms
of interest on the amount invested, and relate the number of days reIIlaining in an

interest payaent period to the actual DUllber of days

in the period,

~ it aore than one coupon period is inVolved.
J).13L~

with

ser.;;"-w"14'1u:".:

- :5 -

and exch&nge tenders will receive equal. treatment.

Cash adjustments vill be made

tor differences betveen the par value of maturing bills accepted in exchange and
the issue price of the new bills.
111e income derived from Treasury bills, whether interest or ga.1n trom the I&le
•

or other disposition ot the bills, does not have any exemption, as such, and 10.1
trom the sale or other disposition of Treasury bills does not have &DY special
treatment, as such, under the Internal Revenue Code ot 1954.

'!'he bills are subject

to estate, inheritance, gift or other excise taxes, whether Federal or state, but
are exempt from all taxation now or herea.f'ter imposed on the principal or interelt
thereof by any state, or any of the possessions of the United states, or by &DY
local taxing authority.

For purposes ot taxation the amount ot d1scount at vh1ch

Treasury bills are originally sold by the United states is considered to be illterest.

Under Sections 454 (b) and 1221 (5) ot the Internal Revenue Code ot 1954

the amount of discount at which bills issued hereunder are sold i8 not considered
to accrue until such bills a.re sold, redeemed or otherwise disposed ot, and 8uch
bills are excluded from consideration as capital assets.

Accordingly, the OVIler

ot Treasury bills (other than life insurance caDpanies) issued hereunder need

in-

clude in his income tax return cmly the difference between the price paid tor such
bills, whether on orig1nal. issue or on subsequent purchase, and the 8IIlOUDt actuall;
received either upon sale or redemption at maturity during the taxable )'ear tor
Which the return is made, as ordinary

saiD or loss.

, Treasury Department Circular No. 418 (current revision) and this notice, prescribe the terms ot the Treasury billa and govern the conditions ot their.is.ue.
copies ot the circular may be obtained from any Federal Reserve BaDk or B1'8Ilch. .

decimals, e. g., 99.925.

Fractions mq not be used.

It is urged that tenure

be made on the printed forms and forwarded in the special envelopes vh1ch v111
be supplied by Federal Reserve Banks or Branches .on application therefor.
Banking institutions generally may submit tenders for account of custOll8re

provided the names ot the customers are set f'orth in such tenders.

otbers thua

banking institutions will not be permitted to sul:mit tenders except for their
own account.

Tenders will be received without deposit from incorporated b8Aka

and trust companies and from responsible and recognized dealers in invest_nt
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'

~ent

by an incorporated bank or trust company.

Dmnediately atter the closing hour, tenders will be opened at the rederal
Reserve Banks and Branches, follOwing which public 8DDouncement 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 thereot. The
. secretary of' the Treasury expressly reserves the right to accept or reject 8ZJ1
or all tenders, in whole or in part, and his action in any such respect sh&ll be
finaJ..

Subject to these reservations, noncompetitive tenders for $ 200,000 or

less for the additionaJ. bills dated June 25, 1964
ing until maturity date on

4DJi

December 24, 1964

, (91

(WI

da7s raain-

4IIJ

) and noncompetitive tenders tor

$ 100,000 or less for the 182 -day bills without stated price from any
taJl)
¥JiDt)t

ODe

bidder will be accepted in tull. at the average price (in three dec1maJ.e) of accepted competitive bids for the respective issues.

Settlement for accepted teD-

ders in accordance with the bids must be made or completed at the Federal
Banks on

September 24, 1964

lX,4iijC

Reae~

, in cash or other immediately available f'uII4I or

in a like face amount of' Treasury bills maturing

September 24, 1.96" • caah

\Zi#

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,

September 16, 1964
TREASURY'S WEEKLY BILL OFFERING

The Treasury Department, by this public notice, invites tenders for two seriE
of Treasury bills to the aggregate amount of $ 2, 20~ ,000 , or the rea.bout s , fOI
cash and in exchange for Treasury bills maturing

September 24, 1964, in the amoUI

of $ 2,10.1,000, as follows:
91 -day bills (to maturity date) to be issued

Y($Jt

xmx

September 24, 1964 ,

(4f

in the amount of $ 1,300,000 ,000, or thereabouts, represent-

xxpp: -

ing an additional amount of bills dated June 25~64
and to mature

December 24, 1964 ,originally issued in the

l{#)<
amount of $ 900,. .000

,the additional and original bills

to be freely interchangeable.
182 -day bills, for $ 900,000,000

't\W

,or thereabouts, to be dated

1{W'}X
September 24, 1964, and to mature

March

~ 1965

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
Daylight Saving
closing hour, one-thirty p.m., Ea.stern~ time,

Monday, s e . e r 21, 196·

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

FOR IMMEDIATE RELEASE

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
$2,200,000,000, or thereabouts, for cash and in exchange for
Treasl1ry bIlls maturIng September 24 1964 in the amount of
$2,101,511,000, as follows:
"
91 -day bills (to maturity date) to be issued
in the amount of $ 1,3002,000,000, or thereabouts J
addit10nal amount of bil.1s dated June 25, 1964,
lIatureDecember 24, 1964, originally issued in the
$900,065,000, the additional and original bills
interchangeable.

September 24, 1964,
representing an
and to
amount of
to be freely

182 -day bills, for $ 900,000,000,
or thereabouts, to be dated
September 24, 1964,and to mature March 25, 1965.

The bills of both series will be issued on a discount basis under
and noncompetitive bidding as hereinafter provided, and at
maturIty their face amount will be payable without interest. They
w111 be issued in bearer form only, and in denominations of $1,000,
$5,000, $lO,OOO( $50,000, ,100,000, $500,000 and $1,000,000
(matl1ri ty value J •
co~et1tlve

Tenders wl11 be received at Federal Reserve Banks and Branches
up to the clOSing hour, one-thirty p.m., Eastern Daylight Saving
t1me,Monday, September 21, 1964.
Tenders will not be
.
rece1ved at the Treasury De~artment, Washington. Each tender must
be for an even multiple of ,1,000, and 1n the case of competitive
tenders the pr1ce offered must be expressed on the basis of 100,
nth not more than three decimals, e. g., 99.925. Fractions may not
be used. It is urged that tenders be made on the pr1nted forms and
~NarQed 1n 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
~8Pons1ble and recognIzed dealers in investment securities. Tenders
1'0111. others must be accompanied by payment of 2 percen I": of the face
8!Rount of Treasury bills applied for, u.nless the tenders are
aCCOmpanied by an express guaranty of payment by an incorporated bank
01' trust company.

D-1345

- 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 Depa~ent of the amount
and price range of accepted bids. Those submitting tenders will be
advised of the acceptance or rejection thereof. The Secreta~ 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, noncompetit1ve
tenders for $ 200 000 or less for the add1 tiona1 b1l1s dated
June 25, 1964, '~1 days remaining until maturitr date on
December 24, 1964) and noncompetitive tenders for, 100,000
or lesa 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 muet be
made or completed at the Federal Reserve BankS on September 24, 1964,
in cash or other immediately available funds or in a like face
amount of Treasury bills maturing September 24, 1964.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 lOBS 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 r~
any Federal Reserve Bank or Branch.
000

the needs of our rapidly changing economic scene.

It is those

characteristics that have enabled us to simultaneously achieve
different, even disparate, economic goals.
responsive to events can be equal to events.

Only policies that art
Should we ever revel

to policies that neither respect nor reflect the rapidly changing
realities of today's world, then we must be prepared once again

be overwhelmed by events.
If, instead, we have the will to persevere with economic
policies that have proved themselves to be both sound and sensibl
realistic and responsible -- then there is every prospect that
the solid accomplishments of the past three and a half years can
not only be sustained, but surpassed.

000

-18our international payments.

~c..
.~e

have accomplished much in nearly four years, but

much more

t~complis~NO

UI M'I

future challenge will be more crucial

than maintaining our excellent record of cost-price stability and

~:.
avOidi'~tion that cou ld ~a-t-u-pr#-""" gains we have struggled~.

-t;6

t:N~4~~~';'

L~~J ~

to achieve, threaten the value of our dollar,

a~stroy~

efforts to bring our international payments into balance.
As we stand, then, on the threshold of 1965, we find ourselvE
on firm economic ground, on the secure foundation of three and a
half years of unparalleled progress on all economic fronts.

Equa'

great gains lie before us if only we adhere to the policies to
whose soundness and success our economy attests on every hand as
it continues its record-breaking march.
Those policies are distinguished by their practicality -- by
their flexibility -- by their prudence -- by their freedom from
extremes and from rigid dogma -- and by their ability to

adap~._

';~e

have also st

losses, which began

7~~~~~// ,

annually for the thr
those losses in 1961

has actually increas
the annual meet'longs

ago,

Jih81 61j~: '_IiWQ,'~:'
'::i

there

ability to maintain
dollar that anchors
Beh'In d these gaLns
.

Our competitL've posi

...-r,..e

to 0 ur capabilities
o
~ , 1 tA ~ • That ef.c:
.L r t must be continued and .
11
'--i!-t!,..,,,. / .
1ntensified.

atE

'!'tJ!.m=-1
:=.,.ptt.D!§••••. itQwaP!io
n

--..

our gOal o[

.J.. _
p'.1']

._1

balance in

-16-

In the conduct of economic policy, moderation is no vice
it is an absolute and virtuous necessity.

It is that quality,

among others, that has accounted, not only for the remarkable
progress in our domestic economy during the past three and one-hal
~

years, but also fo~sfactory progress in reducing the
deficit in our balance of payments.
As you know, our international accounts are much improved.
In the first half of last year, the balance of payments deficit
on regular transactions ran at an annual rate of $5 billion.

the first half of this year, the deficit on this same basis was

~J ('t.~J':-t~~

6 oeu·~C

~_'r.1",,"""-""""'~~'i~

~1II~

"'0 .•

reduced-Ito an annual rate of $1.8 billion.

~{e

can credit this

sharp improvement to smaller capital outflows as a result of the
special measures \.;e took in July of 1963) to the continued improv
ment in our

e~~?orts,

spending overseas.

and to continuing reductions in Government

-15this reason that the Treasury opposed a "quickie" tax cut in
the surmner of 1962, even though many siSesi mse••
economists and business leaders were calling

~-4"d-",
f~H~~

O,e!-,
~

feared that a recession was imrninent7)()(t was for this very same
reason that the Treasury last spring strongly opposed the

fiscall~

irresponsible attempt to attach, without the slightest examinatiol
in the proper Congressional Committees, an additional half billim
dollar excise tax cut to this year's carefully considered income
tax reductions.
And it is for precisely the same reason that no one with the
slightest understanding of fiscal affairs and economiLevents -with the slightest awareness of how fluid is their current shape,
let alone their future course -- could countenance the prospect
of blindly and irrevocably binding us to annual tax cuts for
many years ahead regardless of the future state of the economy.

-14-

Jk~
~e8e

buoyant results raise the prospect of further tax

cuts in the future.

By next year, we should be in a position

to undertake an overhaul of the welter of excise taxes remaining
from .vorld h1ar II days.

i.Je

have about 75 categories of such

taxes on the books today, and their labyrinthine complexity requi
not the
.......

random repeal of a few taxes, but a thorough-going revisi

based on a comprehensive study of them all, which the Treasury
already has well underway.

It will benefit enormously from the e

amassed by the House '\-Jays and Means Committee during public heari
~/.,
"...>----~

this past surrnner ~-Y·.6'nce our excise system is revamped, further
economic

advance~

~h;:~open

the way to additional reductions in

income taxes in the years ahead.
A word about timing may be in order here:

Taxes are a1l-

pervasive and deeply influence all facets of our lives.
should be changed only after the most careful study.

They

It was for

-13-

an increase of $26 billion in the marketable debt maturing in
more than five years, while at the same time the under-five-year
debt has been reduced by $7-1/2 billion.

By thus lengthening

the average maturity of the debt and placing large amounts of

4P.~t.' t-j.. tu,..j
longer-term seee

8 •• £2217

in the hands of institutional investors

we have avoided any build-up in inflationary potential.
As you know, one of the basic beliefs underlying our economi,
policies is that the chronic budget deficits which began in the
mid-Fifties are not the willful product of wasteful spending.
Instead, we view them as the unwanted, unwelcome children of a

delinquent economy -- an economy
potential.

that~ liv~to
not

its

Today, the rising revenues generated by a growing

economy are carrying us toward one of our primary goals -- a
balanced budget in a balanced economy.

Our policy of tax reducti

coupled ,;vith rigorous expenditure control, is clearly working and

-12year 1964 are now expected to exceed $44 billion -- 13 percent
more than in 1963.
Our satisfaction over such economic advances is compounded
by our success in achieving a record of price stability unexce11ec

~
by any other major industrialized country in tiiYfree
An

~rld.

essential element in maintaining price stability has been

the Treasury's successful effort to finance our budget deficits
in a conservative, non-inflationary manner.

Since January 1961,

commercial bank holdings of Government securities have declined
by $3-1/2 billion.

Not only have our deficits

be~~·

outside the commercial banking system, but we have lengthened the
average maturity of the marketable debt from four years and six
months in January 1961, to five years and four months at the end
last month, the highest since mid-1956.

The total increase in tt

Government's marketable debt from January 1961 to August 1964
amounted to $18-1/2 billion.

This has been more than matched by

-111964 saw the highest annual recurring savings ever achieved under
this program.

Moreover, fiscal 1962 and 1963 were the third and

fourth best years of the entire program.

Our four year total

savings exceed those of any earlier four year period by almost
50 percent.
~/ith

this I rest my case.

The figures speak for themselves.

They show that the past four years have witnessed the most frugal
operation of our Federal Government in many years.
It is precisely because expenditure increases since 1961 have
been so strictly limited to clearly essential items that it was
possible in 1963 to propose -- and this year to set in motion -the large additional boost in investment incentives contained in
the Revenue Act of 1964.

The stimulative effect of

together with ~ depreciation reform and the investment tax
credit, will be large and lasting.
clearly evident:

The response is already

Plant and equipment expenditures for the full

-10-

On the contrary, with all items

includ~Federal

budget

expenditures in fiscal 1965, as a percentage of Gross National
Product, will be at their lowest point since 1951, and the nationa

debt,Yas a percentage of Gross National Product, will be lower tha
it was in 1939

~·~<-. ~ ~~..J..i.:·.Tj~/u¥,'£'/ ~.. .I~D ..

Ten years ago, 33.3 pe:cent of all Government

employees were Federal; today, only 24.9 percent are.
Beginning with his first Budget Message, President Johnson
has demonstrated amply and repeatedly his conviction that Government must apply the sternest tests of efficiency and frugality
to all of its activities.

For example, he has ordered three

successive drops in Federal employment ceilings, and actual
Federal employment at the end of this past fiscal year was more
than 20,000 below the level of a year earlier.

For another

example, in my own Treasury Department we have
Improvement Program in effect for the past 18 years.

nagement
Yet fiscal

-9-B
also leaves out the basic policy decision to step up our space

program and regain the lead

of Sputnik.

~le

lost to the Soviet Union at the tinu

However much one may disagree with that decision, it

alone cannot be used to characterize the record of the past four

years as a "spending spree. IT

-9-Aand planned, on all Federal budget items other than defense, space
and interest, will have been

l~ited

to a total of about $4 billio

I wonder
wild
ria Hkiia spending spree" would characterize the record of the

~
preceding four fiscal years, 1957-61, when

~tese

same expenditure

items increased by a full $6 billion -- or by half again as much?
As a former member of

Administration, I can
to hold down government spen

testify that he

, for that very

cl
reaso~1ieve

that President Johnson, and Presle

deserv~lest credit for their success in
reducing thst earlier $6 hillion increase by a full 33~.~reCQ~

Kennedy before him,

that this comparison between Administrations leaves out the substl
-- and unavoidable -- increases in defense expenditures since 1961
But I do not think that in these days any responsible person can
question the national need

~ ~1"
~quate
aefense.

That comparison

-9-

in cncouragint; greater cafita1 formation and faster economic
6rowth.

This was, of course, the 1964 tax cut, which reduced

individual and corporate income taxes by $11.5 billion dollars.
Those reductions could not prudently have been proposed any sooner
For, from the beginning

0,:::

1961, it was clear that an increase

in Government outlays for defense and

s~ace

was inevitable, and

we had to expect continued moderate increases in the interest
cost on the national debt.
Because of those unavoidable increases for defense, space, at
debt service, it was iml-'erative that we exercise the closest contl
over all other budget costs.
success~:u1,

In this we have been supremely

as one simF1e comf-arison makes crystal clear:

Over

~/Pt-C
the ~our fiscal years 1961"5i" expenditure increases, incurred

-3-

~~~'#.tt..~
T'le

con:b ~ne(1 e -: 'ect c<:"

ty:. ~:.cal investment in
im~:;dct

8'!5th • •

ne~v

n,,,. m

l~et1. :.31!~.@

~ilj lfl!U!i&t!·· eli

tutES

add tli'@4

J.A

equipment by more than 25 percent . . . . .

SaLGS

in terms o·F incentives to invest was

.-?quivalent to a reduction in the corporate profits tax from 52
percent to about 38 percent.
In this connection, the Treasury has, as you know, contracted
with the National Industrial Conference Board to conduct a survey

AI
uf colpany experience with the 1962 Depreciation Guidelines. and Rt

The resul ts

tha t survey,

whic~1

tvill be available in a few weeks

should provide valuCl.ble data for a broad review of: those GuidelinE
and in Farticular
~lelp~:ul

the

~eserve

Ratio test.

They should be most

in determining what, if any, adjustments may be necessary

in our current r2gulctions.

This year we took another -- and even larger -- fiscal step

-7bus-:'ness

i_ngenu~tty

and drive, freed of artificial brakes u",;'on

ex::-ansion and given ';lro;:,er Government encouragement, could not
only meet the challenge

=oreign com;,etit:on but could also

provide the jobs that were so badly

need~me.

We saw no

reason to continue w:i.th !)olic :es that hindered i.nvestment.
we moved quickly to carry out two major
l~,rovi.de

~or

~iscal

stens that would

substantial and long overdue increases i.n the incentives

private domestic investment 1.n new plant and equipment:
First, the Treasury comrletely revised

'::or tax purposes.

That was the

':~rst

de~reci.ation

such revision

twenty years - - a 1 thou.gh those twen ty years had

guidelinE

more than

w'~ tnessed

vast

changes in i.ndu.s tr~ a 1 ·."lrac ti.ce.
Seconc-) a tax credi_t o. seven ;:ercent on new -investment i.n
n'achin2ry and equ"..:'ment was 1.n(:!.uded as a key element

'~n

the Reve'

-6"hard-core" unem.jloyment in our history.
Long-ra.nge gains in

em~~loyment

and outr)\Jt also depend

critically upon our ability to carryon a high rate of capi.tal
fits and starts, but steadily over time. in
response to expanding markets and emerging

:"lro:-~t oprortun~ti.es.

~or

There was a di.sturbing tendency -in the 1.950' s
investment to decline as

a~:

Even worse, that decline was

ercentage
~.ermi..tted

total nati.onal out""'ut.

to occur at a time when

many other countries were rapidly expanding their
and replacing obsolescent plant and

bus ·!ness:-=ixed

equi.~ment.

coun tries became increas ing1y :ormidab Ie

ca?ita~_

.·~aci..l ;t'

As a result,

cornl~eti tors

thOSE

in inter-

national markets.

v.Then we were confronted with this situati_on in early 1961,
recognized that American ':ree enterprise was

that had long been restricting investment.

ham~.ered

by ;.>011.cies

We be1teved that Alner

-5:arm em: loyment has risen by 4.3
~ercentage 0':"

mill~on.

Unem~'loyment

the civilian labor force has fallen

as a

rom 6.9

~;s.~r ?/~".jItf:Jt ~
Fercent in :.'ebruary 1961 to 5.1 percent.itt AnII' " 1 86(.
that same

~:eriod,

the rate

0,·:

unemployment

;~or

During

married men --

an important indicator -. declined even more sharply, 2rom 4.7
percent to 2.6 percent.
As the economy conti.nues to rise we will continue to bring
the

unern~loyment

interim goal of

rate down.
:~our

However, the closer we come to our

1,ercent unemr loyment) the nearer we get to

so-called "hard core,"

or "structural," unem:';loyment.

Polic'i,es

designed to speed overall economi.c growth cannot in themselves
alleviate that kind

unemr-loyment, which calls ::or speci..al

measures, both government and private, specifically designed to
root out its causes.

That is a major goal 07 the recently-enacte

anti-poverty bill, the most power-:ul and i.maginative attack on

it is essential that we continue to make large productivity
increases and to exercise overall restraint i.n wage bargain·i.ng
and in pricing poli.cy.
More than anythi.ng else, it has been the rapid stri.des in
producti.vity over the past three and a half years that have
helped to kee? manufacturing labor costs !,er unit
rising, despite steady increases in wages.

0·-::

output . rom

Wholesale price

levels have been stable since early 1961, and increases in consurner prices have been very moderate.
expanded.

Profits have steadily

As a result, our competitive position abroad has be-

come much stronger --

and~~~~e,

the gains ::rom a more ?roduc-

tive economy are being widely and equitably shared, instead

0(-

being eaten up by price increases.
We have also made good rrogress j.n reducing unemf'loyment.
although we still have a long way to go.

Since February 1961, nm

-,".f l-I.. l.,

to dupta, r.arkMl. Yipr aM ltata...

!tala ....

Itraaltb. aDd Nla••• 11 parti••lart, illpneal.. 1D

J'Ita. ehe ftnt
CIIU.Y

~tw

of 1961 to the _oat . .n. .1

Groa. lfatlenal PrcNIuet ill ........ t 4011an hu ri• •

bi111011 _. . . . . . . 1 nte ef i ....... ill real

ttciia

t.aa ri • • ..,. . . . aharply_

,""'tion

1" _

.f ....

By Aupat

1_. ••

fII.7

of . . .C 1.1

of thu ,.ar, till

21.' ,.n_t above it. ,ebnary 1"1 1...1 -

_ ...... 1 rate of iBerMM of 7.3 penat.
come much stronger - - and ,~t hOIT;e, the gains

rorn a more ;'lroduc-

tive economy are being widely and equitably shared, instead

being eaten ur by rrice increases.
We have also made good progress in reduci.ng unemt~loyment,

although we still have a long way to go.

Since February 1961, not

1~1l

. . . . . . . lou apaasiou taporartl)' achieved corr..pondina

~l..

..1M ill outpUt, tboee . .1na . .re frequently accompanied by aharp
riMI iD eMU aBCl prie...

Ute _urneS.

'l'bia tiM t no such di.ruptive 1ner.....

They need not occur» and. if we hope to maintain

tbe _.ret 8lIp&1l81on, they . .t not occur.

To forestall

th.,

-2check by narrowing profit margins."
Then, Mr. Palmer sums up the prea.t by .aying:
"In the palt several yeara I however, Americao buslD...

haa enjoyed one of the longeat peacetime recoveries of thi.

century.

nte vie.lity of the current reccwery ia r ...8UrlD,

evidence of the underlying Itrength of the econo.y."

This remarkable ch.inge did not just happen.

It . . . due to tb

conscious and 8uccessful efforts of government to provide a clt-at
in which our free eoterpriae system could flourish -- • COllIcloua

deciaion to place primary emphasis

stimulating the private

sector of aur economy rather than on ma.sive govelm.otal actiOD.
Before diacussing theae policies let ua look at the record.
'nle current recovery.

you know) i. now we 11 iDto it. fourth ,..

and -- if we measure it against previous experience -- .bould 1. .
ago have drawn its last breath.

Neverthele.s, the exp.aloD cODci

REMAilCS BY THE HOHORABLE DOUGLAS DILLON
SECRETARY OF mE TREASUl.Y
BEFORE THE NATIONAL INDUSTRIAL CONFERENCE BOARD
AT TliE WALDORF-ASTORIA HOTEL. lEW lOB. N.Y.
THURSD~Y,

In assessing

th~

SEPTEMBER 17, 1964, 12:00 P.M. EDT.
economic outlook for 1965, it is Lmportant

.
that we take stock of where we are and how we got beret
·~tTlpvrtant.

in the buoyant, even

exuberant~

It ia al.1'

8COftOlllie elimate of

this rall, to recall how different was the clialate in the Fall of

1960.

I have read no better description of those daye than the

words of your PL'esldent, Bruce Palmer, who, in aettinl the ton.
for this meeting, said, and I quote:
"~\t

the beginning of the Sixties both the ehort-term

and the long-term business outlook were clouded with uncertainty.

In particular, much attention va. directed to

the fact that the voatwar expansions were gettina ahorter,
and that the rate 0: economic growth appeared to b.

alewina.

The unemployment rate seemed to be deterioratina proansaivel.

and business expansion and investment were beiRI held fa

TREASURY DEPARTMENT
Washington

FOR SIMULTANEOUS RELEASE
IN NEW YORK AND WASHINGTON
AT 12:00 NOON, EDT, THURSDAY,
SEPTEMBER 17 1964
J

REMARKS BY THE HONORABLE DOUGLAS DILLON
SECRETARY OF THE TREASURY
BEFORE THE NATIONAL INDUSTRIAL CONFERENCE BOARD
AT THE WALDORF-ASTORIA HOTEL, NEW YORK, N.Y.
THURSDAY, SEPTEMBER 17, 1964, 12:00 P.M., EDT
In assessing the economic outlook for 1965, it is important
that we take stock of where we are and how we got here. It is also
important, in the buoyant, even exuberant, economic climate of this
Fall, to recall how different was the climate in the Fall of 1960.
I have read no better description of those days than the words of
your President, Bruce Palmer, who, in setting the tone for this
meeting said, and I quote:
"At the beginning of the Sixties both the short-term
and the long-term business outlook were clouded with
uncertainty. In particular, much attention was directed
to the fact that the postwar expansions were getting
shorter, and that the rate of economic growth appeared
to be slowing. The unemployment rate seemed to be
deteriorating progressively, and business e~pansion and
investment were being held in check by narrowing profit
margins."
Then, Mr. Palmer sums up the present by saying:
"In the past several years, however, American business
has enjoyed one of the longest peacetime recoveries of
this century. The vitality of the current recovery is
reassuring evidence of the underlying strength of the
economy."
This remarkable change did not just happen. It was due to
the conscious and successful efforts of government to provide a
climate in which our free enterprise system could flourish -- a
conscious decision to place primary emphasis on stimulating the
private sector of our economy rather than on massive governmental
action.
Before discussing these policies let us look at the record.
The current recovery, as you know, is now well into its fourth
year, and -- if we measure it against previous eyperience -- should
D-1346

- 2 long ago have drawn its last breath. Nevertheless, the eypansion
continues to display remarkable vigor and balance. This record of
longevity, strength, and balance, is particularly impressive in
view of the successively shorter lives of earlier postwar expansions.
From the first quarter of 1961 to the second quarter of 1964,
our Gross National Product in constant dollars has risen by $93.7
billion -- an annual rate of increase in real terms of about
5.3 percent. The Federal Reserve Board's index of industrial
production has risen even more sharply. By August of this year, the
production index was 28.9 percent above its February 1961 level -an annual rate of increase of 7.3 percent.
When previous expansions temporarily achieved corresponding
gains in output, those gains were frequently accompanie? by sharp
rises in costs and prices. This time, no such disruptive increases
have occurred. They need not occur, and, if we hope to maintain
the current expansion, they must not occur. To forestall them,
it is essential that we continue to make large productivity increases
and to exercise overall restraint in wage bargaining and in pricing
policy.
More than anything else, it has been the rapid strides in
productivity over the past three and a half years that have helped
to keep manufacturing labor costs per unit of output from rising,
despite steady increases in wages. Wholesale price levels have
been stable since early 1961, and increases in consumer prices
have been very moderate. Profits have steadily expanded. As a
result, our competitive position abroad has become much stronger
and, here at home, the gains from a more productive economy are
being widely and equicably shared, instead of being eaten up by
price increases.
We have also made good progress in reducing unemployment,
although we still have a long way to go. Since February 1961,
non-farm employment hRS risen by 4.8 million. Unemployment as a
percentage of the civilian labor force has fallen from 6.9 percent
in February 1961 to last month's 5.1 percent. During that same
period, the rate of unemployment for married men -- an important
indicator -- declined even more sharply, from 4.7 percent to
2.6 percent.
As the economy continues to rise we will continue to bring the
unemployment rate down. However, the closer we come to our interim
goal of four percent unemployment, the nearer we get to so-called
"hard core," or "structural," unemployment. Policies designed to
speed overall economic growth cannot in themselves alleviate that

- 3 -

kind of unemployment, which calls for special measures, both
government and private, specifically designed to root out its
causes. That is a major goal of the recently-enacted anti-poverty
bill, the most powerful and imaginative attack on "hard-core"
unemployment in our history.
Long-range gains in employment and output also depend critically
upon our ability to carryon a high rate of capital formation -not just in fits and starts, but steadily over time, in response
to expanding markets and emerging profit opportunities. There was
a disturbing tendency in the 1950's for business fixed investment
to decline as a percentage of total national output. Even worse,
that decline was permitted to occur at a time when many other
countries were rapidly expanding their capital facilities and
replacing obsolescent plant and equipment. As a result, those
countries became increasingly formidable competitors in international
markets.
When we were confronted with this situation in early 1961,
we recognized that American free enterprise was hampered by policies
that had long been restricting investment. We believed that
American business ingenuity and drive, freed of artificial brakes
upon expansion and given proper Government encouragement, could not
only meet the challenge of foreign competition but could also
provide the jobs that were so badly needed here at home. We saw
no reason to continue with policies that hindered investment. So
we moved quickly to carry out two major fiscal steps that would
provide substantial and long overdue increases in the incentives
for private domestic investment in new plant and equipment:
First, the Treasury completely revised depreciation guidelines
for tax purposes. That was the first such revision in more than
twenty years -- although those twenty years had witnessed vast
changes in industrial practice.
Second, a tax credit of seven percent on new investment in
machinery and equipment was included as a key element in the Revenue
Act of 1952, and was further strengthened in the Revenue Act of 1964.
The combined effect of those two measures has been to increase
the profitability of a typical inv~stment in new equipment by more
than 25 percent. Their impact in terms of incentives to invest was
equivalent to a reduction in the corporate profits tax from 52
percent to about 38 percent.
In this connection, the Treasury has, as you know, contracted
with the National Industrial Conference Board to conduct a survey
of company experience with the 1962 Depreciation Guidelines and

Rules. The results of that survey, which will be available in 8
few weeks, should provide valuable data for a broad review of
those Guidelines Bnd in particular of the Reserve Ratio test:. Th~:;1
should be most helpful in detennining what, if any, adjustments
may be necessary in our current regulations.
This year we took another -- and even larger -- fiscal step
in encouraging greater capital formation and faster economic growth.
This was, of course, the 1964 tax cut, which reduced individual
and corporate income taxes by $11.5 billion. Those reductions
could not prudently have been proposed any sooner. For, from the
beginning of 1961, it was clear that an incre;38e i~ Gover:'1!ment
outlays for defense and space was inevitable, and we had to expect
cont inued moderate increases in the interest Cust on the national
debt.
Because of those unavoidable increases for defense, space, and
debt service, it was imperative that we exercise the closest control
over all other budget costs. In this we have been supremely
successful, as one simple comparison makes crystal clear: Over
the£our fiscal years 1961 through 1965, expenditure increases,
incurred and planned, on all Federal budget items other than defense,
space, and interest, will have been limited to a total of about
$4 billion.
I wonder how those who have recently characterized that increase
as "a wild spending spree" would characterize the record of the
preceding four fiscal years, 1957-61, when those same expenditure
items increased by a full $6 billion -- or by half again as much?
As a former member of President Eisenhower's Administration, I can
testify that he worked long and hard to hold down government
spending. For that very reason I believe that President Johnson,
and President Kennedy before him, deserve the fullest credit for
their Success in reducing that earlier $6 billion increase by a full
.33 percent.
I recognize that this comparison between Administrations leaves
out the substantial -- and unavoidable -- increases in defense
e~enditures since 1960.
But I do not think that in these days
any responsible person can question the national need for an
adequate military defense. That comparison also, leaves Ollt the
basic policy decision to step up our space prograrTi and J':'~~8Ln the
lead we lost to the Soviet Union at the time of SputnLL. ;-lG"',~,ever
much one may disagree with that decision, it 210ne ~anno he used
to characterize the record of the past four year§ as a ilspending
spree. "

- 5 On the contrary, with all items included, Federal budget

e,cpenditures in fiscal 1965, as "a percentage of Gross National,
Product, will be at their lowest point since 1951, and the national
debt, also as a percentage of Gross National Product, will be lower
than it was in 1939 before the onset of World War II. Ten years
ago, 33.3 percent of all Government employees were Federal; today,
only 24.9 percent are.
Beginning with his first Budget Message, President Johnson
has demonstrated amply and repeatedly his conviction that Government
must apply the sternest tests of efficiency and frugality to all of
its activities. For example, he has ordered three successive drops
in Federal employment ceilings, and actual Federal employment
at the end of this past fiscal year was more than 20,000 below the
level of a year earlier. For another example, in my own Treasury
Department we have had an active Management Improvement Program in
effect for the past 18 years. Yet fiscal 1964 saw the highest
annual recurring savings ever achieved under this program. Moreover,
fiscal 1962 and 1963 were the third and fourth best years of the
entire program. Our four year total savings exceed those of any
earlier four year period by almost 50 percent.
With this I rest my case. The figures speak for themselves.
They show that the past four years have witnessed the most frugal
operation of our Federal Government in many years.
It is precisely because expenditure increases since 1961 have
been so strictly limited to clearly essential items that it was
possible in 1963 to propose -- and this year to set in motion -the large additional boost in investment incentives contained in
the Revenue Act of 1964. The stimulative effect of that tax cut,
together with depreciation reform and the investment tax credit,
will be large and lasting. The response is already clearly evident:
Plant and equipment expenditures for the full year 1964 are now
e~ected to exceed $44 billion -- 13 percent more than in 1963.
Our satisfaction over such economic advances is compounded by
our success in achieving a record of price stability unexcelled by
any other major industrialized country in the entire free world.
An essential element in maintaining price stability rn s been
the Treasury's successful effort to finance our budget deficits in
a conservative, non-inflationary manner. Since January 1961,
c~ercia1 bank holdings of Government securities have declined by
$3; billion. Not only have our deficits been completely financed
Outside the commercial banking system, but we have lengthened the
average maturity of the marketable debt from four years and siy
months in January 1961, to five years and four months at the end
of last month, the highest since mid-1956. The total increase in

- 6 -

the Government's marketable debt frmn January 1961 to August 1964
amounted to $18~ billion. This·has been more than matched by an
increase of $26 billion In the marketable debt maturing in more than
five years, while at the same time the under-five-year debt has been
reduced by $7~ hi Ilion
By thus lengtheming the average maturity
of the debt and placing large smounes of longer-tem securtties in
the hands of institutional investors, Tile have avoided any build-up
in inflationary potential.
0

As you know, one of the basic beliefs underlying our economic
policies is that the chronic budget deficits which began in the
mid-Fifties are not the willful product of wasteful spending.
Instead, we view them as the unwanted, u:nwelcome children of a
delinquent economy -~ an economy that has not lived up to its
potential. Today, the rising revenues generated by a growing
economy are carrying us toward one of our. primary goals -- a
balanced budget in a balanced economy. Our policy of tay reduction,
coupled with rigorous expenditure control, is clearly working and
working well.
These buoyant results rai se the plcospect of further t ax cuts
in the future. By next year, we should be in a position to undertake an overhaul of the welter of excise taxes remaining from
World War II days. We have about 75 categories of such taxes on
the books today, and their labyrinthine complexity requires, not
the random repeal of a few taxes, but a thorough-going revision
based on a comprehensive study of them all, which the Treasury
already has we 11 underway"
I t will benefit enormously from the
evidence amassed by the House Ways and Means Committee during public
hearings this past summer. And once our e¥ci.se system is revamped,
further economic adv.ances can open thf' W8Y to additional reductions
in income taxes in the years ahead.
A word about timj~ng m.ay be in order here: Taxes are a11pervasive and deeply influence all facets of our lives. They should
~ changed only after the most careful study.
It was for this
reason that the Treasury opposed a "quickie" tBX cut in the SlmUller
of 1962, even though many econom.ists and business leaders were
calling for just such a cut bec:ause they feared that a recession
was imminent. And it was for this very same reason that the
Treasury last spring strongly opposed the fiscally irresponsible
attempt to attach, without the s lightes t eX81minat ion in the proper
Congressional Connnittees, ar. additional. h,Blf billion dollar E:xcise
tax cut to this yearV § ca:rref"Jl1y considered income tal{ reductions.
. And it is for precisely the same t'f.'·3Sf)):1 that no one wi th the
shght
r-.
-;
" . ~n d. econ.oml.C
. events r."_
.
est un d erstan d·
.l.ng 0_f' ::CJ;.,§C~V
a f'f··'
.. ."tn"I''':;
With the slightest awareness of how flui.d ts their cut'rent shape,

- 7 -

let alone their future course -- could countenance the prospect
of blindly and irrevocably binding us to annual tax cuts for many
years ahead regardless of the future state of the economy.
In the conduct of economic policy, moderation is no vice
it is an absolute and virtuous necessity. It is that quality,
among others, that has accounted, not only for the remarkable
progress in our domestic economy during the past three and one-half
years, but also for our satisfactory progress in reducing the deficit
in our balance of payments.
As you know, our international accounts are much improved.
In the first half of last year, the balance of payments deficit
on regular transactions ran at an annual rate of $5 billion. In
the first half of this year, the deficit on this same basis was
reduced by over 60 percent to an annual rate of $1.8 billion. We
can credit this sharp improvement to smaller capital outflows as
a result of the special measures we took in July of 1963, to the
continued improvement in our exports, and to continuing reductions
in Government spending overseas.
We have also stemmed the decline in our gold stock. Gold
losses, which began on a large scale in 1958, averaged $1.7 billion
~nua11y for the three years 1958 through 1960.
We managed to
~proximately halve those losses in 1961 and 1962, and then cut
them to well under $500 million in 1963. So far this year, our
total gold stock has actually increased. And that is not all. On
August 31, for the first time since 1957, when the Suez Crises sent
gold pouring to our shores, our total gold stock showed a modest
gain over the previous year. Twelve months without the loss of a
single ounce of gold -- a far cry from the situation just four
years ago, when fears for the soundness of our dollar sent the
price of gold in London skyrocketing to over $40 an ounce. Having
returned only a few days ago from the annual meetings of the
International Moneta"ry Fund and the World Bank in Tokyo, I can
certify that today, unlike four years ago, there is everywhere the
fi~st confidence in our ability to maintain the fixed relationship
ootween gold and the dollar that anchors the entire international
financial system. Behind these gains lies constant effort to
strengthen our competitive position in the world and to limit our
cOOGitments to our capabilities. That effort must be continued and
intenSified until we reach our goal of full balance in our
international payments.
We have accomplished much in nearly four years, but there is
m~hmore to be accomplished.
No future challenge will be more
crucial than maintaining our excellent record of cost-price
" stability and avoiding the inflation that could eaSily eat up the

- 8 gains we have struggled so hard to achieve, that could once again
threaten the value of our dollar, and that could destroy all our
efforts to bring our international payments into balance.
As we stand, then, on the threshold of 1965, we find ourselves
on firm economic ground, on the secure foundation of three and a
half years of unparalleled progress on all economic fronts. Equally
great gains lie before us if only we adhere to the policies to
whose soundness and success our economy attests on every hand as
it continues its record-breaking march.
Those policies are distinguished by their practicality -- by
their flexibility -- by their prudence -- by their freedom from
extremes and from rigid dogma -- and by their ability to adapt to
the needs of our rapidly changing economic scene. It is those
characteristics that have enabled us to simultaneously achieve
different, even disparate, economic goals. Only policies that are
responsive to events can be equal to events. Should we ever revert
to policies that neither respect nor reflect the rapidly changing
realities of today's world, then we must be prepared once again to
be overwhelmed by events.
If, instead, we have the will to persevere with economic
policies that have proved themselves to be both sound and sensible,
realistic and responsible -- then there is every prospect that the
solid accomplishments of the past three and a half years can not
only be sustained, but surpassed.

000

TREASURY DEPARTMENT
Washington

FOR RELEASE 12:00 NOON EDT
FRIDAY, SEPTEMBER 18, 1964
REMARKS OF THE HONORABLE DOUGLAS DILLON
SECRETARY OF THE TREASURY
BEFORE THE COMBINED FEDERAL CAMPAIGN RALLY,
CONSTITUTION HALL, WASHINGTON, D.C.
SEPTEMBER 18, 1964, 12:00 NOON, EDT
Ladies and gentlemen -- my fellow workers -- our first
meeting here today launches a brand new endeavor: the first
Combined Federal Campaign ever undertaken by Government employees
in the Washington area. It is truly a great step forward.
Only eight years ago, fund-raising within the Federal
establishment was in a state of chaos. Many worthy
organizations, all equally deserving of our help, were asking
us to give, not only our money, but our time to support their
various needs. Inevitably, this meant considerable duplication
of effort. What's more, it wasted countless thousands of
manhours as we were called upon to help in one campaign after
another.
The first major reform was instituted in 1956. To bring
a more orderly and economical way of campaigning within the
Federal establishment to us here in Washington, President
Eisenhower, by executive order, reduced the number of campaign
periods to two: the United Givers Fund, which included the
Red Cross, in the FQll, and the campaign for the Joint Federal
Crusade and the National Health Agencies in the Spring. As a
result, we were asked to give only twice instead of many times,
and there were impressive savings in the manhours required for
the two campa ign periods
0

Still, the situation was far from perfect. An obvious
question remained: if significant economies are achieved by
combining a multiplicity of campaigns into two, wouldn't even
greater savings in time and campaign costs be realized by

- 2 combining two into one? The question was translated into
action two years ago, when President Kennedy ordered work begun
in earnest to see if the two campaign periods could be combined.
This year, the Civil Service Commission, the United Givers Fund,
the National Health Agencies, and the International Service
Agencies, reached an agreement making possible the Combined
Federal Campaign
which, in this initial-prone city, will be
familiarly known as the CFC.
This first combined Federal campaign is a test drive -- one
of six being carried on in various cities across the nation. As
we begin, let us keep this fact in mind:
The CFC has come into existence primarily because we, as
Government employees, wanted it. It is, therefore, doubly
important that we in the Washington area make this kickoff
campaign a real success so that it will be continued here and
ultimately be extended to other cities.
All of you know that President Johnson is vitally concerned
with effecting economies in the work of Federal agencies. That
is one reason why he has given his enthusiastic support to the
CFC drive.
There are approximately 25,000 workers in the drive. They
will devote the equivalent of about two days to their assignments.
Since, thanks to the CFC, they will be doing this good work just
once, not twice, we will save about 400,000 manhours -- a truly
impressive economy of the taxpayers' time and money.
There is another, even more important factor: there are
many causes -- more than 150 in all -- included in this CFC
campaign. They all have varying degrees of appeal and have
earned varied allegiance. Some contributors may be
particularly interested in" the work of the Red Cross because
of its life-saving blood program. Others may have children in
the Scouts or know of some one who may have been helped by the
agencies for retarded children. Many may feel a deep attachment
to the work of the hospitals and health agencies because of a
family experience with a cancer victim, a heart patient, or some
other severe illness. Still others may feel the compassionate
need to help impoverished people in other countries through
CARE.

- 3 Whatever our differing loyalties may be, all of us share one
thing in common: to be sure that the greatest possible share
of the contribution we give goes to the work we choose to support.
This year's single CFC drive is uniquely constituted to ensure
just this. By combining the drives of three separate groups of
agencies into one fund-raising costs will be substantially
reduced. This means that the agencies of UGF, the National
Health Agencies, and the International Service Agencies all will
have more money to carryon their important work.
A third and possibly even more important factor in the
CFC campaign -- and a goal we have long sought -- is that for
the first time, contributing will be made easier by the
provision for voluntary payroll allotments. Payroll allotment
is not only convenient to the individual giver, it is
economical
and efficient for the benefitting agencies. A
contributor making a gift by payroll allotment can budget his
charitable contribution throughout the entire year. This will
uke it easier to give more generous gifts, and you should bear
this in mind in all your campaign efforts. This arrangement
will also save time and money for the various agencies by
cutting down on the amount of paper work and direct billing
previous ly required.
When
theirs, I
of others
even more

you make your gift to CFC, and ask others to make
hope your compassion and understanding of the needs
will make your contributions and volunteer efforts
generous than they have been in the past.

As President Johnson said in his special message of June 11:
"Your dollars will work for the many in your community, the
Nation, and around the world who so greatly need our help. I
urge you to give generously to the combined appeal."
Our Government-wide quota is $4,350,000. Our goal should
be far in excess of that. We should strive for a minimum of
$5,100,000. And we should achieve that goal.
Thank you for agreeing to be a part of this Combined
Federal Campaign.

000

PI'P

excrnl,i. 1.'1"0J.1 all ta.xati on now or hcrenfl:.cr

j mpofl(~d

on the principal or

:r-nl.~rcr

LlI(!rcof hy nny Dl.a1.c. or ony of the ponocssions of the Un.tted g-to.tes, or by any

locul. t.ux.i.n1; !luthor.ay.

li'or purponcf.l of

tl~xaUon

l.hc amount 01' discount nt wh:l.ct

'lll'eo.Gury ldllG ('.rc orlgJ.nn.lly Gold by the United States is considered to be inl.erCGt.

Urulcr Scctlons -1:54: (b) and 1221 (5) of the Internal Revenue Code of lOS.

the runount of discount at ,dlich billa issued hereunder are sold is not considerel

to o.C!cruc until 'such bills a.rc Dold., rcu.cclnt'd or otherwise disposed of, and such
bills nn'
oi'

e~;.clttlhl

'l1),CD.SUl'Y

from conni(lprati.Cln

b.tl.lr. (other

;.lln.n ".I

:1.[;

e:'.pr.tul

n.,>t~cto.

Accordingly, the owner

i 'j'e .i nourUllCC companies) iDsucd hereunder need in.

eludc 1.n hio income tax rctun1 only :th(~ difference between the price paiel for

GU:

bi.lID, lihether on oriG.i.nnl .i.:mue or on mlhne'lltent purchase, and the amount aC"tua:

received eithcr upon Dale or

rCdE-~ITIJ't:i.on 0.1.

maturity durine the taxable year for:

\orhieh the return io mrule, nf: oJ:'cli.no.r,y odn or 10so.

'l'rcnsury Dcpo.rtmcn"t Ci.reulo.r No. {18 (current revision) and this notice, pro
serj.bc I.he termD 01' the Treasury hills ond govern the conditions of their issue .

Copies of the circular mo.y

b{~

obtained from any Federal ReGerve Bank or Branch.

banking inGtitutione will not be pcnll.tI.{,~d. to submit tenders except for their own

Recount. Tenders will be reccjved

"T.l

t.llont. depoo:i.t from incorpornt~d banks and

trust companies and from responsible wld l'ccoc;nized deniers in investment securities.
'lemcrs from oLhers

IJIUS'l.

be nccoJllpan"i..cd by Plll'lncnt of 2 percent of' the face amount

of Treasury bills applied for, unloaD the tenders are accomponied by an express

fIII.IlI'8D"ty of payment by an incorporated bonJ.\: or truot company.
Imedlat(,}l.y after the clonJ.nc; hour, tcndcrG will be opened at 'tne ,lI'eaera.J. l{escm Danks and Bronches, folloldnn ,,115 ch pub] lc announcement will be made by the

Treasury Department of the Dmount and price range of accepted bIds.
till6 tenders will be advised of the a.cceptance or rejec('ion thereof.

of the 'l'reasury

e~qlrcssly

reserveo the

rl~ht

o.cc(~lr\i

~"hoEle Gubml~-

The Secretary

or reject any or all tenders,

in whole or in part, and his nction in any ntlch rcopcct shall be final:.

to these reservations" noncompetitive tenders for

Subject.

or less without

200,000

Wil9

stated price from any one bidder will be accepted in full at the average price" (in
three decimals) of acceptcd compctitive bldo.

Settlement; for accepted tenders in

accordance with the bids muot be made or completed nt the Federal Jieserve Banlt on

8eptelber

30,

Xl(W)C

1964

,in caoh or

oth~l' immediately avo.illlble funds or in a like

face 8II1OWlt of Treasury bil10 lnnturine September 30, 1964
tenders will receive equal treatment.
~sbetween

price

the

XfClIJ

•

Cash and exchDlJ8e

eaoh adjustments will be made for did'fer...

the par value of maturine bills accepted in exchange and the

llCW

ipD~

bills.

lJbe income derived from Tl'co.oury bille, 'Whether interest or gain [rom. tbe sa:le

or other disposition of the billo, does not have MY

1'raa the sale or other disposition of

cxclllp·~ion,.

as such, and. loas

Treasury bills does not ha.ve an:y specia.l

t~a~t, as such, under the Internal Revenue Code of

In54. The billa are· subject

~estQte, inheritance, gift or other oxcioe taxos" whether Federal or State" but

MM.

TREASURY DEPARrMENT

Washington
September 18, 1964

FOR INr·IEDIATE RELEASE,

~TREA~

REliUlfDS ONE-YEAR BILLS

The Treasury Department, by this public notice, invites tenders for

:Ii 1,000,000,000 , or thereabouts, of

xtnX

365 -day Treasury bills, for cash and

in exchange for Treasury bills maturing

xtJtx

September 30, 1964

, in the amount

xmx .
issued on a discount basis under competitive and

of $

1,001,960,000 , to be
X(iiJ
noncompetitive bidding as hereinafter provided.
dated

September 30, 1964

xtiJi·

and

The bills of this series will be

will mature

the face amount will be payable without interest.

September 30, 1965

xmx

,when

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
Daylight Saving
closing hour, one-thirty p.m., Eastern/1lWlII time, Thursda~tember 24, 19
Tenders \n1l not be received at the Treasury Department, Washington.

Each tender

must be for an even multiple of $1,000, and in the case of competitive tenders th
price offered must be expressed on the basis of 100, with not more than three dec
imBls, 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 ban
~
d!scOWlt basis of 360 days, as is currently the practice on all issues of Treasur
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

TREASURY DEPARTMENT

FOR IMMEDIATE RELEASE

TREASURY REFUNDS ONE-YEAR BILLS
The Treasury Department, by this public notice, invites tenders
for $1,000,000,000, or thereabouts, of 365-day Treasury bills, for
cash and in exchange for Treasury bills maturing September 30, 1964,
in the amount of $1,001,960,000, to be issued on a discount basis
under competitive and noncompetitive bidding as hereinafter provided.
The bills of this series will be dated September 30, 1964, and will
~ture September 30, 1965, 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 Daylight Saving
time, Thursday, September 24, 1964. 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 ~dll 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
t~ Federal Reserve Banks and Branches, following which public
announcement will be made by the Treasury Department of the amount
D-1347

- 2 -

and price range of accepted bids. Those submitting tenders will b~
advised of the acceptance or rejection thereof. The Secretary of
the Treasury expressly reserves the right to accept or reject any or
all tenders, in whole or in part, and his action in any such respect
shall be final. Subject to these reservations, noncompetitive tende
for $200,000 or less without stated price from anyone bidder will b
accepted in full at the average price (in three decimals) of accepte
competitive bids. Settlement for accepted tenders in accordance
with the bids must be made or completed at the Federal Reserve Bank
on September 30, 1964, in cash or other immediately available funds
in a like face amount of Treasury bills maturing September 30, 1964.
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 authori
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 excludE'(:
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 tl,
price paid for such bills, whether on original issue or on subsequet
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 th
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

TREASURY DEPARTMENT
Washington

FOR SIMULTANEOUS RELEASE UPON
DELIVERY IN MONTREAL AND WASHINGTON

REMARKS BY STANLEY S. SURREY
ASSISTANT SECRETARY OF THE TREASURY
BEFORE THE TAX EXECUTIVES INSTITUTE
MONTREAL, QUEBEC, CANADA
SEPTEMBER 21, 1964 - 9:30 AM, EDT
THE UNITED STATES TAX. SYSTEM AND INTERNATIONAL
TAY RELATIONSHIPS -- PERSPECTIVE IN 1964
I appreciate the opportunity to meet with you and discuss
recent trends in international tax relationships. Much has
happened in the last four years respecting United States tay policy
in the international field. It may therefore be helpful to review
these developments and place them in perspective. The main focus
in this consideration will be to project these developments into
the future, and to ascertain some of the aspects that will require
our thought and attention in the next few years. I will divide
this consideration into three main parts -- income tax treaties,
United States statutory taxation of foreign income, and United
States statutory taxation of foreigners.
Since the consideration covers a wide area and in some instances
is rather detailed, it may be helpful to summarize at the outset
the principal matters discussed. The following summary represents
the significant. areas of current activity in United States
international tax relationships.

SUMMARY
The Treasury Department is seeking in a wide range of activity
to improve the rules and procedures applicable to the ta~ation of
income earned abroad by United States ta~ayers and income earned
in the United States by foreigners. The governing purpose of
this activity is to modernize international tax rules and mechanisms
in the interest of: (1) reducing tax restrictions on the free
flow of capital and goods between developed countries, and
D-l14R

- 2 -

(2) increasing United States private activity, especially private
investment, in less developed countries.
The reduction of tax restrictions on international trade and
investment between developed countries lies primarily in lessened
taxation by the country in which the income arises. This step
should be of material assistance to United States companies
trading abroad in developed areas and to United States companies
which have established operating activities abroad, since it will
remove a number of tax problems now faced by such companies in
these countries. In the same fashion, a removal of problems faced
by foreigners under United States taxation will promote increased
foreign investment and trade in the United States.
As respects less developed countries, the approach is that
of encouraging United States private activity through United
States tax incentives to private investment in those areas.
This approach is to be accompanied by a lessening of the tax
problems now arising for our investors, traders and others under
the laws of the less developed countries, without at the same
time causing those countries a revenue sacrifice which they find
unacceptable.
This overall program is being carried out by: (1) reshaping
our income tax treaties with developed and less developed
countries, (2) the issuance of comprehensive Regulations under
the 1962 Revenue Act provisions relating to foreign income,
(3) improvement in the guidelines and procedures applied by our
Internal Revenue Service in the administration of our laws relating
to foreign income, and (4) consideration of a broad revision of
United States statutory rules governing the taxation of
foreigners receiving income from the United States.
1. As to treaties with develo ed countri s, the United
States is engaged in an intensive re-examinat'on of our existing
income tax treaty provisions, prompted by the desire to modernize
these provisions and, where appropriate, bring them into
conformity with the recently published OEeD Model Draft. This
~-examination substantively moves in the direction of lessened
taxation by the country of the source of income -- for eyample,
non7t~xation of capital gains of foreigners, allowing increased
actlv1ty by trading companies without subjecting those activities
to taxation at the source, separating the taxation by the country
of Source of operating activities from that of investment income
t~reby leaving the latter usually subject to the lower rates of'
tax under the treaties.

- 3

This substantive re~examination is being accompanied by
improved drafting techniques, a revision of the method of issuing
Regulations under the treaties with the objective of achieving
a master set of Unl ted States treaty Regulations, and =. ., a very
significant matter -~ an improvement in the treaty techniques
for inter-governmental arrangements. The objective of the last
mentioned matter is to eliminate, or reduce, possible double
taxation growing out of administrative allocations of income and
expense by the tax authorities of the Uni ted States or other
countries between the related entities of a taxpayer engaged in
operations in the United States and abroad.
2. As to treaties with less developed countries, the United
States is engaged in discussions with a number of less developed
countries on the basis of a new approach to income tay treaties
with them. In order to encourage private investment in these
countries the United States is offering to extend, through such
treaties, a 7 percent credit comparable to that now allowed on
investment in the United States (adopted in the 1962 Act), to
investment in less developed countries. As a companion treaty
tax incentive it is also suggesting deferral of current taxation
by both the United States and the foreign country of compensation
received in the form of stock in a foreign corporation in return
for transferred technical know-how, patents, technical services,
and the like. This extension of the 7 percent credit by treaty
is separate fr0m the consideration now being given tn Congress to
the President's recommendation for a 30 percent credit through
statutory enactment, on which it is presumed hearings will be held
next year. The new approach also involves 8 lessening, through
appropriate treaty provisions, of the problems for our investors,
traders, business visitors, and others arising u.nder the tax laws
of these countries without at the same time involving them in a
loss of tax revenues which they would find unacceptable.
Tentative agreements have already been reached with Thailand
and the Philippines. The former incorporates various provisions
relating to investment including the 7 percent credit and tax
deferral on stock compensation, and both embody significant clauses
protecting the taxpayers of one country against di.scriminatory
tax treatment by the other treaty country.
3. As to Regylations_~_ndel~the!962 .J\C!, the Treasury
expects to complete publication of all the foreign income regulations
by the end of the year. These Regulations, comprehens i ve in scope,
are designed to facilitate the transition to the new 1962 rules.
The Regulations on the determination of the earnings and profits
of a foreign subsidiary, formulated with the invaluable advice of
experts drawn from our major international accounting firms, are

- 4 -

significant step in the development of international tax account~ng rules. The Service plans to continue to obtain expert
consultant guidance in its application of these rules •. Th~ .
Regulations on the minimum distribution rule adopt a s~mpl~fLed
application of that rule permitting a taxpayer to obtain the
protection the rule affords without being involved in complex
detail.

4. As to improved tax administration, the Treasury expects
that comprehensive proposed Regulations governing section 482
allocations and a comprehensive RevenUe Procedure regarding
section 367 rulings will be issued by the end of this year. These
steps are a phase of the study of the problems now arising under
section 482 allocations and related matters. Another example of
the steps here being taken is the consideration of various
methods of alleviating a double taxation situation for past years
where foreign taxes have been paid on income subject to reallocation under section 482. One approach which the Internal Revenue
Service is considering is that of adjusting any proposed deficiency
by the amount of foreign taxes paid. As respects internal
Internal Revenue Service procedures, a Service order to be issued
in the near future will place the existing Field Groups of the
Office of International Operations under the supervision of the
District Directors, with close coordination between the field
activities and Washington to be assured under "the regular procedures
for that purpose. The combination of these actions should
eliminate many of the present problems facing taxpayers and the
Service alike in the transition to an improved tax administration
capable of handling with wisdom and responsibility the tax
issues involved in modern international tax relationships.

5. As to the United States taxation of the income of
foreigners, the Treasury is engaged in a comprehensive
re-examination of our hitherto little-noticed statutory rules
governing the tax liabilities of foreigners receiving income from
the United States. This re-examination, stemming in large measure
from the recent Report of the President's Task Force on Promoting
Increased Foreign Investment in United States Corporate Securities
(the Fowler Report), bears promise of legislative proposals which
would modernize this area through removing aspects of our laws
that are unnecessarily restrictive to the investment or other
activity of foreigners in the United States and further
coo r d·~nate t hese legislative developments with
" our tax treaty
,
program.

- 5 -

INCOME TAX TREATIES

The pace of income tax treaty negotiation and the scope of
the issues relating to these treaties have increased materially
in the last year or so. The causes are varied, and can best be
considered, along with their consequences, by separating the
subject into three principal classes -- income tax treaties with
developed countries, those with less developed countries, and
discussions involving international agencies and conducted on a
multi-national basis.
Developed Countries
As respects the developed countries, the ratification of
the treaty with Luxembourg gave the United States a full complement of tax treaties with the European Common Market countries.
MOreover we have treaties with almost all of the developed countries,
the principal exceptions being Spain and Portugal. But the
co~clusion of tax treaties cannot remain a static process.
The
impact on internal tax legislation of changing currents in the
business, financial and political spheres is evident to all who
follow that subject, and is responsible for constant revision and
development in domestic tax legislation. But while these changes
are equally present in the international scene, their effect on
the substance and scope of the tax treaties to which the United
States is a party has until recently been far less pronounced.
The balance is now being redressed, however, as the result of
several forces, and as a consequence, the United States is now
engaged in a wide ranging re-examination of the provisions
contained in its tax treaties.
Dne major force has been the publication in 1963 of the DEeD
Draft of a model income tax Convention. This effort, commenced
in 1958, was designed to provide "a means of settling on a uniform
basis the mos t connnon problems of double taxation." Once
published, despite the many reservations of the participating
Countries -- and the United States had significant reservations
the Draft Convention has become the starting point for the
developed countries as they engage in treaty discussions. Most
of the European countries, for example, desire at least to begin
with the text of the Draft Convention and to follow it as closely
as possible. In turn, however, as countries apply the Draft
Convention to concrete treaty issues, the many problems of
interpretation and application that are involved begin to emerge.
Any concentrated examination of the precise words and effect of
a tax provision that penetrates below the surface of the
provision is bound to disclose ambiguities, shortcomings and

- 6 -

unsolved questions. The effort to deal with these difficulties
has involved the United States in a very considerable concentration
on the technical aspects of our treaties.
Another force for change has been the spillover to treaties
of the concentration of technical attention that has characterized
United States tax legislation. As tax expertise spreads wider
and as the impact of taxation on the expanding horizons of business
produce more and more "tax problems", more people are seeking to
embody solutions to more of these problems in the provisions of
tax treaties. The money value of these problems has also risen
in significance with the growing importance of international
business. In addition to its responsibility for considering
these problems thus presented to it, Government also has its own
rising tide of problems that demand attention. The increasing
importance of balance of payments factors adds a new dimension
that must constantly be borne in mind. The adeptness with which
tax experts -- here and abroad -- join tax treaty provisions
with domestic legislation tends to produce exquisite structures
of ,tax reduction and avoidance -- witness the arrangements flowing
from the Netherlands Antilles tax treaty before its recent
rev~s~on.
This demands an equal alertness and agility on the
part of Government. In addition, changing national tax
legislation and policies have their impact on international rules,
and thereby require re-examination and renegotiation of those
rules.
Combined with these two forces is the fact that many of our
treaties were concluded some time ago -- the treaty with France
Signed in 1939 is an example -- so that they are in need of
revision almost in their own right apart from these forces. With
the increasing tempo of events, these earlier treaties more
clearly show their age.
'Substantive

Re~examination

These are some of thefurces for change. Let us turn to the
treaty provisions in which they are likely to produce change.
Almost every provision of our tax treaties is undergoing
re-examination, both in substantive scope and drafting, so
that an exhaustive description is impossible. I have therefore
selected for mention several of the more significant matters.
!prce of Attraction
The standard U. S. tax treaty has up to now provided that
if a foreign taxpayer has a permanent establishment in the

- 7 United States, then all of its investment income and all of its
business income from United States sources becomes subject to
our regular rates of tax. As a consequence, for example, any
reduced rates of withholding tax applicable under the treaty to
dividend, interest or royalty income cease to apply. In this
sense the permanent establishment "attracts" the income not in
fact attributable to it. The OECD Draft Convention, following
some of the European treaties, takes a contrary approach which
does not embody this "force of attraction". Under it the
presence of the permanent establishment permits taxation of the
profits in fact attributable to it, but other items of income
continue to be taxed under the treaty rules independently
applicable to the various items.
The United States entered a reservation to this OEeD Draft
approach. Nevertheless, we have been giving it considerable
study. Our present view is that we are ready to explore with
other treaty countries the development of an appropriate clause.
Su~h an approach which departs from our traditional provisions
in the direction of the OECD approach, but which attempts to avoid
some of the administrative problems and policy dilemmas which we
believe would be entailed by outright acceptance of the OECD
clause, would be in keeping with our overall national policy of
encouraging international trade. For example, under this
approach a U. S. exporter whose affairs required a degree or form
of activity involving permanent establishment status abroad would
not at the same time subject its other income to increased
foreign taxation. It would make unnecessary the practice under
the existing treaties of artificially "isolating" the business
activities in a subsidiary solely to prevent the force of attraction from affecting the taxpayer's other foreign income.
Moreover, this approach, as respects activity in the United States,
would be in accord with our policy of encouraging foreign
investment in ,the United States.
Under such a provision investment income and also business
income from activities unrelated to the business in which the
permanent establishment is engaged would not be attracted to it
and would not be taxable as part of its income. The agreement
with Germany on the matters to be incorporated in a new protocol
embodies a provision to this effect. We are proceeding carefully
with this approach, trying to eliminate at the start problems
which may result from the interaction of the provision with
our domestic source rules and also keeping an eye on the
administrative problems involved.

- 8 Definition of Permanent Establishment
The DEeD Draft Convention has introduced further particularity
into the definition of permanent establishment, the overall
thrust of the changes being to restrict somewhat the scope of
the definition. Put differently, a taxpayer engaged in trade
and related activities can under the OECD Draft undertake more
extensive activities in a foreign country before it acquires a
permanent establishment status that subjects its business profits
to taxation by that country. Our policy position is to move
in this direction, again in keeping with our overall policy of
encouraging international trade. A number of drafting difficulties
are involved in the attempt to state the boundary lines, and the
OECD Draft provision in turn presents some unforeseen ambiguities.
We are working through these technical issues, guided by the policy
direction I have indicated. We would hope that the countries
involved can achieve a greater clarity and completeness in the
OECD definition of a permanent establishment.
Capital Gains
The standard U. S. tax t~eaty up to now has not restricted
the jurisdiction of the United States to tax the capital gains
of foreigners. On the other hand, the OECD Draft Convention,
following the European treaties, restricts taxation of capital
gains to the country of residence, other than gains on real
property and property forming a part of a pe~anent establishment.
In considering some of our earlier treaties, the Senate was
unwilling to relinquish United States tax jurisdiction in this
area, influenced partly by the scope of trading activities
conducted in this country by World War II refugees. Therefore
the United States originally entered a reservation on this subject.
Recently, however, we have been exploring the desirability of
the OECD approach. It is likely, given the wider scope of capital
gains taxation in this country, that other countries will seek
t~is change in our treaties.
Such a change would be in keeping
wlth our policy of encouraging foreign investment in the United
States. Accordingly, we are now willing to consider the inclusion
of such a provision, though we are giving continued consideration
to whether we should exempt the trading gains of a foreigner
who remains in this country for significant periods of time.
Als? ~e.must work through the issues relating to an appropriate
d~flnltlon of capital assets for this purpose. The agreement
Wlth.G:rmany on a new protocol embodies a capital gain exemption
~rovlslon and the lines of the new approach will be worked out
1n that document.

- 9 -

Undistributed Profits
The standard U. S. tax treaty has reserved our right to apply
our tax on accumulated profits and our personal holding company
tax to the income derived by a foreign corporation from the
United States. Again, the OECD Draft Convention takes the
opposite approach and would prohibit the application of these
taxes. Here also we are exploring the policy and technical
ramifications of moving to the OECD approach.

It will be seen that the thrust of the matters I have been
discussing is in the direction of restricting the scope or degree
of taxation in the country of source. It cannot be said that all
of this is in response to firmly held views in the countries
concerned that policies be consciously shaped to this end. On
the other hand these developments are in keeping with the pattern
of double taxation treaties between developed countries. While
the policies to be taken into account in the United States do not
all uniformly point to the same result, it seems clear that
the direction is toward restricting the scope of our taxation of
foreigners currently taxable in the United States on their
United States income, if at the same time foreign countries are
willing to move in a similar direction.
Effect of Split Corporate Tax Rates and Other Factors on Withholding
Rates on Dividends
In several recent negotiations the United States has been
presented with the need to consider the relationship of the
standard treaty withholding provision on dividend income to a
variety of domestic tax policies of the other treaty countries.
These tax policies have caused the other contracting parties to
seek a treaty withholding rate on dividends going to the United
States which w'ould be higher than the United States rate on
dividends going to the foreign country. For example, in Germany
the tax policy involved is that of a split rate corporation tax
under which distributed profits are taxed at a substantially lower
rate than undistributed profits. Such an internal policy is said
to require a higher withholding rate on dividends paid by a
German subsidiary to its foreign parent than is customary under
standard treaties and the OECD Draft -- which is 5 percent in
certain parent-subsidiary cases and 15 percent on other dividends.
In other situations, as in Belgium, the problem may arise from an
Opposite approach to the internal double taxation of dividends,
~der which the domestic shareholder receives a tax credit for
a part of the corporate tax, and from the internal development

- 10 of that policy. In other cases, as in Canada, the problem may
arise from a desire to differentiate between domestic subsidiaries
with a high degree of foreign ownership and those with greater
domestic participation.
Whatever the cause of the issue, the United States has found
itself in the position of being asked to agree to a treaty
provision under which our withholding rate on dividends to a
particular country would be less than the rate levied by that
country on dividends moving to the United States. We have in
these cases -- in order to protect our investors from an increased
level of foreign taxation and to protect the United States from
revenue loss under the foreign tax credit -- taken the firm
position that international withholding rates should be reciprocal
and hence we cannot agree to an upward adjustment by other
countries to accommodate to their internal tax policies. In the
simplest case, for example, the fact that a foreign country may have
a corporate tax rate of 30 percent compared to the U. S. 48 percent
rate does not warrant a non-reciprocal set of withholding rates
under which the rate of the foreign country would be higher than ours.
Moreover, we do not prefer a solution which makes the rates
reciprocal through an increase in our rate as well, since that
course is both contrary to the DECD Draft and to the policy behind
that Draft of relieving double taxation and granting more freedom
to international capital movements.
Clearly issues of this nature are difficult of resolution,
stemming as they do from domestic tax policies of the other
country which present difficulties for it in its international
economic relations. The United States has held firm to its basic
position while at the same time accommodating the most acute
problem which that position entailed for the other country.
Thus, the tentative protocol with Belgium reduces the Belgian
statutory rate from 18.2 percent to a reciprocal 15 percent for shares
held in registered form, which form of holding characterizes
parent-subsidiary investment, while permitting the higher rate
on bearer shares to remain until administrative difficulties
involved in applying a reciprocal rate could be solved. Moreover,
it was found that in actual practice the Belgian law was such that
the rate on bearer shares rarely in fact exceeded 15 percent.
The agreement with Germany on a new protocol retains a reciprocal
withholding rate of 15 percent but permits Germany to impose an
additional 10 percent when the United States parent immediately
reinvests the dividend in situations where the reinvestment is
more than minor in amount. In Canada, the Canadian Government
found that the reduction in the United States corporate tax rate
resulting from our 1964 tax legislation permitted the problem to
be solved automatically, so it could retain a maximum Canadian

- 11 -

withholding rate that is the same as the United States rate, thus
eliminating a treaty problem.
Income From Independent Personal Service
The standard United States tax treaty as respects the income
derived by professional and other persons through their personal
services is to subject the income to taxation in the source
country only when the person is present in the country more than
180 days in the taxable year. The OECD Draft, however, places
jurisdiction to tax at the source on the existence of a "fixed
base regularly available" to the taxpayer in the source country.
Since this "fixed base" concept is foreign to our tax concepts
and its scope and effect are thus uncertain, we entered a
reservation on this provision. As another approach, some countries
seek to tax at the source in all cases where the payments are
deducted by their domestic taxpayers. The general thrust of these
approaches would appear to be in the direction of a larger scope
for the source country, especially if the "fixed base" concept is
given a wide application. We believe that the entire matter
requires further study and, while we have not as yet made a
final decision on our policy in this area, our thinking is in the
direction of retaining a time period criterion rather than
introducing a new concept.
The above are some of the significant prov~s~ons under
re-examination. Others, for example, relate to the treatment of
interest in the case of financial institutions, the treatment of
life insurance premiums, permission to collect in the United States
on an adversary judgment obtained by the tax authority in a
country whose legal development corresponds to our own, the
problems in the taxation of dividends and interest payments
moving over international borders and then returning in the
case of the international corporation with various foreign
subsidiaries, .and so on. Recently, the Treasury Department held
a two day meeting with lawyers, accountants and executives
interested in the tax treaty area to discuss the issues raised
by our re-examination of the tax treaty provisions. Further
conferences will be held as our study progresses.
Drafting
Closely allied to this substantive revision is a comprehensive
re-examination of the drafting of our tax treaties. Experience
OVer the years with the existing terminology, the closer
scrutiny that has come with more eyes and minds poring over the
words and details, and the existence of the OECD Draft have led
us to the view that drafting improvements are both needed and

- 12 possible. A part of this redrafting will involve a reorganization
of the order and arrangement of treaty provisions.
Clearly all this will take time, for often the press of
problems does not permit the patient consideration that both
countries would have to give to a new treaty draft. Moreover,
it is an extremely difficult task to achieve a high level of
standardization of terminology in a process that, after all,
involves intricate negotiation and the inevitable compromises in
thought and phrasing necessary to surmount the differences that
arise. All of this is likely of course to lead to greater
technical complexity, and those with a nostalgia for a simpler
era of international tax relationships will shake their heads.
But as national tax systems grow more complex, and as the expertise
of those engaged in domestic tax matters spreads to those,
in Government and out, dealing with international tax matters,
one cannot expect to retain simple international bridges between
intricate national systems.
Interpretation
One way of meeting the growing complexity of tax treaties
is to improve the interpretative process applicable to these
treaties. For example, we are exploring the desirability of a
single master income tax treaty regulation covering all the
income treaties. There would then be appendices to show the
points at which the several treaties contain provisions, if any,
at variance with the master framework. This approach, if it
proves feasible, should have several advantages: It will permit
more rapid promulgation of regulations since only the
variations of a particular treaty must be noted; it will permit
a clear awareness of the precise places at which a particular
treaty varies substantively from the standard form; it will
indicate that ,differences in phrasing -- so often occasioned by
problems of language, the stylistic tastes and idiosyncrasies of
the particular negotiators, sticky points of internal law, the
phrasing required to embody carefully structured compromises or
the like -- do not involve intended differences in result.
In addition, the publication of more descriptive material
will be helpful. The Treasury has expanded the technical explanations which it presents to the Senate Committee on Foreign
Relations and which are in turn published by that Committee.
We are also hopeful of increasing the number of published rulings
relating to treaties.

- 13 Implem.entation of Treaty Provisions
Improvements in substantive provisions must be followed by
improvements in the administrative implementation of those
provisions, or else the full benefits of substantive change will
not be realized. Thus, the techniques of allocation of income
and expenses between parent and subsidiary and of the allocation
of expenses to a permanent establishment need modernizing so that
rational allocations are pursued by both countries and inconsistent
determinations avoided as far as possible.
Moreover, efforts must be made to develop treaty mechanisms
which permit the appropriate accommodation of allocations made by
the tax authorities of one country and accepted as proper both by
the taxpayer and by the tax authorities of the other country.
Such a treaty mechanism could, for example, remove impediments
of domestic law to the accommodation, such as statute of limitations or the finality of previous assessments. Further, where
the tax authorities disagree as to the appropriate allocation,
mechanisms should be sought which would permit any resulting
double tax burden to be shared among the two Governments and the
taxpayer in a proper fashion, so that all three would have an
interest in keeping differences in allocation approaches to a
mlnlmum. Indeed, thiS subject of proper international allocations
and the mechanisms for handling changes in allocations and the
differences that arise in concrete cases represents one of the
most important areas of treaty development.
Other illustrations of matters where improvement would
appear desirable are: The mechanics of applying reduced dividend
withholding rates to bearer shares and the determination of the
amount of the credit to be granted by the other country in these
situations require re-examination, in view of the complexity of
ascertaining the applicable rate under some European systems
where the dividend is paid, for example, by a corporation which
in turn derives income from other corporations. The responsibility
of one treaty country to "pick up" the differential between the
regular withholding rate and the treaty rate of the other country
when the former finds an income payment flowing to one who is not
a resident must be met with more fidelity. The information to
be exchanged between treaty countries must be in a form more
susceptible of use by the various countries, and in turn should
be used. The competent authorities must keep in closer contact
to be more fully aware of double tax situations, in addition to
the allocation problems earlier mentioned, and other difficulties
that their nationals may be experiencing through the defective
meshing of two administrative determinations.

- 14 Currency of Tax Treaties
I believe the discussion so far has been sufficient -perhaps more than sufficient -- to indicate that the technical
substance and terminology of tax treaties are likely to undergo
significant changes in the next few years. Moreover, this is a
steadily evolving process in which the United States can play
only its role in a large cast. As treaties are constantly written
and revised between other countries, the new patterns that emerge
are in turn related to our treaties. If, for example, Germany
enters into a revised treaty with France that embodies what both
countries believe is an improvement over a standard clause,
then either France or Germany in turn is likely to present the
improvement to the United States when a protocol or revision of
their treaty with us is under consideration. In other words,
unlike domestic legislation, the pace of change in the treaty area
is shaped by the thoughts and imagination of many Treasury
Departments and Finance Ministries.
This constant pressure for change, and for changes that a
variety of countries regard as appropriate, makes it difficult
to keep our treaties current. A desirable change may be made
in the technical definition of permanent establishment in a
treaty we make with say, Germany. How do we proceed to incorporate
this technical improvement into our other treaties? At the
present the only course is to await a time when enough matters
accumulate or an important event suddenly occurs to warrant a
protocol or revision of a treaty with, say, France or Belgium
and then seek to incorporate the German improved permanent
establishment definition. The process is of course shaped by the
procedures of treaty approval -- negotiation, initialing of a
draft by the delegations, signature by the President's
representative, hearing by the Senate Committee on Foreign
Relations, and Senate ratification. Clearly, if possible we
should avoid having the Senate Committee sit constantly to
consider technical treaty changes.
Consequently, as the network of treaties expands, as the
treaties grow in complexity, and as the pace of technical
change becomes faster, it would appear desirable to see if a
procedure can be devised which would permit more rapid accommodation of existing treaties to these developments. One possible
avenue for exploration is to provide in each treaty that its
technical provisions may be altered through an exchange of notes.

- 15 The change would have to be in accordance with a prOV~SLon already
approved by the Senate in another treaty, so that the Senate would
thereby have passed upon the substance of the matter involved.
The Secretary of the Treasury would be authorized to make such
a finding and would be required to notify the Senate Committee
of all such exchanges of notes. Under this approach, a technical
change in the definition of penmanent establishment approved,
say, in the German treaty could by an exchange of notes be applied
to the Luxembourg treaty. The Senate Committee would, through
new treaties or extensive revisions of existing treaties, be
scanning all these technical provisions from time to time. It
thus would be in a position in effect to keep under review the
activities of the Executive Branch in these note exchanges, since
if it decides in a new treaty not to approve a similar provision,
the authority for future note exchanges respecting that particular point would end unless the Committee indicated otherwise.
The entire procedure would of course be limited to technical
matters and would not extend to basic substantive matters such
as the rates of withholding. Since, of course, treaty provisions
essentially provide rules ameliorating national law so as to
prevent double taxation and avoid inconveniences, such a
procedure to keep the treaty rules current would be of distinct
benefit to taxpayers. It is interesting in this regard to note
that several of our existing treaties may by Executive action
be extended to territories of the treaty country, "with such
modifications as may be found necessary for special application
in a particular case" (quoting from the United Kingdom treaty).
Estate Tax Treaties
The discussion above has been in tenms of income tax
treaties. The United States has twelve estate tax treaties,
but this phase of the treaty process has never reached the pace
of the income tax treaties. The OECD Fiscal Committee, however,
"is now turning"its attention to a draft of a model estate tax
convention. It is to be expected that this development, combined
with the increasing number of taxpayers who are citizens of or
residing in one country while holding investments in other
countries, will cause an increased interest in these treaties.
The Treasury Department is therefore commencing to re-examine
the positions taken in the existing treaties and the technical
drafting of those treaties, together with a consideration of the
matters in the estate tax area appropriate for international
accommodation.

- 16 Less Developed Countries
The United States has concluded income tax treaties with
practically all of the developed countries. But it has in
force only two treaties with less developed countries, that with
Pakistan ratified in 1959 and that with Honduras, whic h was ratified in 1957 but which on the initiative of Honduras is scheduled
to terminate at the end of 1964 unless a new agreement now under
discussion is reached. Curiosity alone would lead us to inquire
as to the causes for this sharp contrast in treaty development.
Indeed, the commitment of the United States to the economic growth of
the less developed nations has involved the Treasury in a thorough
e~loration of the whole subject of tax treaties with these nations.
Desirability of Such Treaties
The first question is, why do we care at all about the
present situation -- in other words, is it in the interest of the
United States to have treaties with less developed countries?
Viewing this question from the standpoint of our citizens, some
of the main benefits involved in such treaties would appear to be
along the following lines: A treaty with appropriate source rules
~~ld provide predictability in this area, in contrast to the
present uncertainty occasioned by the absence of formulated source
rules in many countries; the application of the permanent
establishment definition would free our traders of nuisance or
hampering taxes and here also afford predictability in place of
uncertainty; the application of treaty provisions regarding the
taxation of business and cultural visitors would have similar
results for our executives and professional persons traveling
on business to these countries and our teachers temporarily in
schools in these countries; adoption of a foreign tax credit
approach by the less developed countries would aid our citizens
living in those countries; the establishment of definite rules
permitting the proper allocation of expenses and other items
between a U. S. parent and its foreign subsidiary and to foreign
branches would produce a proper measure of net income in the less
developed countries; a reduction in the dividend rate of withholding in situations where the combined corporate and withholding
rates exceed our rate (especially in the absence of a grossing-up
requirement in establishing the amount of the dividend to be
included in the parent's income) would eliminate unused foreign
tax credit; the taxation of real estate rentals on a net basis
and the exemption or reduced taxation of royalty income would produce
~ore appropriate results; the adoption of a clause preventing discriminatory tax treatment of our individuals and corporations would prevent a disparity in treatment between the taxpayers of the country
and our citizens with activities in that country; the establishment
of a consultative mechanism between the two tax administrations and
the general air of tax stability that can accompany a tax treaty
Would be reassuring to our investors and traders.

- 17 -

This is not to say that every treaty would necessarily
exhibit this entire gamut of benefits, but certainly each could
embody a reasonable number of these aspects as well as others
that could be of benefit in particular situations. In sum, our
investors and traders can receive benefits through such
treaties, and these would be an item on the plus side when the
question arises of investment or trade with the less developed
countries. The United States, as a Government, is in turn
interested in steps which improve the plus side of private
U. s. activity in less developed countries.
Given these reasons for our having an interest in such
treaties, how do they appear when seen by the less developed
countries? Of course the benefits to our investors are one
side of a coin of which the other side could be regarded by
most less developed countries as distinctly helpful if it
would increase U. S. private investment in their country.
But they could also view the other side of the coin as
involving losses in revenue -- through lowered withholding
rates, net income taxation, the impact of certain source
rules or of the permanent establishment definition -- resulting
from reduced taxes on income leaving their borders for the U.S.
Thus the question becomes that of seeing what for them is
the other side of the coin -- or, put more accurately since
both of these effects are on the other side of the coin, how
is the balance to be cast. It must be remembered that in
large part this would be the only coin involved under the
standard form of tax treaty. This form, however, was shaped
by the economic and tax relationships existing between
industrialized countries, where there are two coins, since
the investors and traders of each country are aided. While
each country has revenue losses reflecting the benefits
obtained by the investors and traders of the other country,
similarly in turn it has gains for its own investors and
traders. But there are fewer investors and traders in less
developed countries with activities in the United States,
though it is true that the welfare of those that do exist may
be of significance to these countries.
In addition to this lack of equivalent reciprocal benefits,
the revenue losses involved in standard treaty provisions are
likely to be a more significant percentage of the overall
revenues of a less developed country
Also, as a psychological
matter, as well as an absolute matter, a sacrifice of revenues
from income accruing to foreigners is likely to be viewed by
the less developed country as a more serious step. As a
0

,. 18

consequence less developed countries in the past have been
concerned about entering into a tax treaty with the u.s. unless
the standard treaty is altered to be more in their interest as
they regard it than is t-he present form. Two lines of suggested
departure can be seen: one is the adoption by the United States
of an incentive -- in addition to our unilaterally granted
Code incentives, such as the lower Western Hemisphere Trade
Corporation tax rate, a foreign tax credit) and the non-application
of "grossing-up" to that credit -- to our investors to invest
in the less developed countri.es; the other is a scaling back
of the revenue sacriflce which the standa~d treaty demands of
the source country.
Treaty Incentives to U. S" Investment in Less Developed Countries
For a number of years it has appeared that an investment
incentive feature has been regarded by many of the less
developed countries as critical to the consideration of tax
treaties with the United States. HO~7ever, our treaty
negotiations with less developed countries had led into the
blind alley of "tax sparing". I need not here digress to
consider at length the pros and cons of a credit for tax
sparing. This matter had been carefully considered in 1961 and
1962 by the Department of State and the Treasury Department,
and it was concluded that a tax treaty with a credit for
sparing as a possible incentive had serious weaknesses.
Those weaknesses were such as to outweigh the advantages
of tax treaties with less developed countries. As a consequence
the three tax sparing treaties (India Israel, United Arab
Republic) which had been pending before the Senate Committee
on Foreign Relations since 1960 were withdrawn earlier this
year.
j

Tax Credit for Investment
The Treasury Department late in 1962 had indicated that
incentives tied to the act of new investment would seem to
offer more fruitful possibilities than tax sparing. The view
was then expressed that an approach similar to the investment
credit enacted in 1962 to stimulate U, S. domestic investment
deserved consideration. Our exploration of this approach
since then has led us to conclude that an application through
treaties of the principle of the 7 percent domestic investment

- 19

credit to investment in a less developed country would be
appropriate. Under such an approach, a United States investor
investing in a domestic or a foreign corporation operating
in a less developed country could be permitted through a
treaty to obtain a credit against his U. S. tax, on income
from any source, of 7 percent of the amount of the investment.
In view of the fact that the Congress has in a variety of
tax measures sought to grant a preference to investment in
less developed countries as compared with developed
countries, this extension to less developed countries of a
type of investment incentive already approved by the Congress
as desirable tax policy in the United States would thus appear
appropriate in a tax treaty. It could be provided in the
treaty that the adoption of this credit would be subject to
re-examination after the expiration of a specified period, say
five years.
The President has recommended that a 30 percent credit be
granted by statute to stimulate investment in less developed
countries. Such a large and direct tax preference to that
form of investment should be authorized by statute rather than
by a treaty. The amount of the credit involved, its simultaneous
application across-the-board to the less developed areas, and·
its initial grant without the development of the types of
appropriate complementary measures on the part of less developed
countries considered above, are factors which underlie such a
statutory approach rather than the treaty procedure. The
extension in a treaty to an investment in a less developed
country of a credit at the same 7 percent figure as applicable
domestically is thus both a different matter and one not in
any way at variance with the recommendation for a very much
larger statutory credit. The technical detail used to
implement the. treaty credit could of course draw on the
structural underpinning worked out in connection with the
30 percent credit proposal, since they would be similar in
their basic structural aspects.
Deferral on Know-how Contributions
In addition to this 7 percent credit, two other measures
which could operate as incentives are considered appropriate
for inclusion in a treaty with a less developed country. The
first is a provision for tax deferral where technical matter
or information, such as patents, processes and know-how, or
technical services are provided by a U. S. person to a foreign

20 -

corporation in return for stock of that corporation. Under
this provision, the recipient could elect not to include the
stock in income for the purpose of both the U. S. tax and the
foreign country tax, this deferral to continue until some
later date, such as a sale of the stock. This procedure
would avoid the cash problem involved in having to pay a
current tax on the receipt of stock which the U. S. person
desires to hold rather than sell. The second is a provision
permitting a charitable deduction (within the statutory
percentage limits) from the U. S. tax for a contribution
made to an organization in the less developed country which
is a charitable organization under the laws of both countries.
(A similar provision is present in the U.S.-Canada treaty.)
This would permit in some cases a simpler, direct procedure
for the making of gifts to charitable activities in the
less developed country.
Scaling Down of Revenue Sacrifice by Less Developed Countries
As to the second line of departure from the standard
tax treaty, that of the scaling down of the revenue sacrifice
of the source country, here the less developed country, it
is clear that there is room for accommodation. In view of
the United States tax credit, what must be weighed by the
source country in the appraisal of a tax treaty is the balance
between the loss of revenue that it may suffer when taxation
at the source is restricted compared with the benefits to the
foreign investor or trader, and in turn to the less developed
country, of the elimination of inconvenience and travail.
A lesser sacrifice of revenue by a less developed country, i.e.,
a less restrictive effect on source taxation than under the
standard tax treaty, means ipso facto continued payment of tax
to that extent by our investors and traders. In most cases,
no problem of tax burden is involved in view of our foreign
tax credit, and what remains may be the detail and
inconvenience of filing tax returns, paying tax etc. to the
less developed country in a situation where this would not be
so as respects a developed country a party to a standard treaty.
(Of course, where the developed country treaty provision only
reduces the rate of taxation rather than providing exemption,
then the detail and inconvenience are equally present whether
the country is developed or less developed.) On the other hand,
however, this drawback to our investors and traders would seem
clearly outweighed by the benefits involved in having the treaty
itself -- certainly a modified type of treaty has advantages as
against no treaty at all -- and by the special incentives above

- 21 described which would not bp. included in the standard treaty
with a developed country. Consequently, if a less deve] oped
country desires to cast th(' balance more to its favor through
a lessening of the rest:·Lcti()n':~ on source jurisdiction, the
United States, keeping in mJnrt the benefits to be obtained
from a treaty and the ~bst:!nce of the reciprocal factors
usually preRent in many of thE p~ovisions in the case of
industriaL{ zed countries) could in its own interest find it
appropriate to conC'lr in that approach. This is so, however,
if the modific::.;.tions ft'utll ~:.he standard treaty operate to
involve only a smal..l.,:!r shy il~k.age in the amount of the
resulting foreign t~~ cr~~it granted by the United States
than 1.S ?roduc~d by the starldard form. In this event the U. s.
Government is in effect bearing the revenue burden of the
modificattons rath:·:r th~n " ~le taxpayer being affecte·j through
still pay",ng a t.1X :l.t the source in excess of the 8,mount
which it ,'an cr-edic .qp:a~.r!~t '1i.s United States tax. 1'101'tSOver,
tre :nodif;crltLm~ &hl)~dd ~c,t swing too far from the standard
t:red tV. "l.- thar thE' rcsulc;.ng n~w balance still remains
accpptdble 0verall.
W'j t:"h aj 1 this :; n mrnd, \.112 are engaging in discuss~ons
wirh a numb€t" of le.-;:;s de. velopf:d countries on the fr.:lmework
~f (\ m:Jd:-...f5 eli form of treaty v.:hich we would cnnsi::ler appropriate
ti) '1'1::
t~x relations with those countries.
Tt:te modi fied
forer· w('l'ld i.tlclude tr.e three .!.pc'~'1.tives mentioned above -- the
e,rtf.'lr't 'n of the 7 rercent c'-:-eC:il) tax deferral for stock
r':c.e·i.v~·:i for technic..ql items, C"nd A deduction for direct
c.hari.ta·)Je contri.butions -- .:ira w;)l"lld, as respects the
prjncip':;.l treaty Clf ·.lses invoh'~d, deve} op along the following
lw.es:

Dividends.....
The standard tax treaty iE:'nerally provides rates of
tax for dividend withholding ur: 1 '-, ?€'r~ent for dividends
on porttolio ip.vestment and fr,"a: j tc.: 15 perc:2!nt for parentSubEidiary dividends, with 5 f'!':"-OTt in the (''SeD Draft.
For many less develored cr;,unt'r::i.es, such rates would be distinctly
l()l,Jer than their present r·{tes and thUB would present them with
revenue corsiderations. :t'ne 5!i.~0·.:'tant a.3pect~ as respects
our investors, is that. ,:)t parf.-ilt -.:;ub8idiary investment and
the concern is that the rate (t La,.. on ..-he fot'eign subsidiary
combinE'o i.·lith the present {lIiith~"-i.dj.ng rat<.;s proJuces in some
countries a tax in excess of rh,~ Urited ~:tates l~:ax, especially

- 22 since there is no grossing-up for dividends from less developed
countries. Any excess over our allowable foreign tax credit
becomes an added tax burden on the investor. We therefore
are seeking in our modified treaty to achieve whatever reduction
in the dividend withholding rate of the less developed country
is needed to prevent such an excess credit, and are pointing
out the importance of this step to increased investment in the
less developed country. We would not in appropriate cases,
however, feel it necessary to refuse to enter into a treaty
solely on the ground that the withholding rate was not reduced
still further if the less developed country does not find it
possible to do so.
Interest
The standard tax treaty generally reduces the withholding
rate on interest to 15 percent or less, and often exempts
interest entirely. We are pointing this out to less developed
countries and are indicating that such a reduction could result
in a reduction in the interest rates paid by their borrowers
if the U. S. lending institutions are presently increasing
their interest rates to pass on to the borrower the cost of the
foreign withholding tax. However, some less developed countries
are apparently not interested in sacrificing revenues to
subsidize their borrowers, and would therefore object on revenue
grounds to a reduction in their withholding rate on interest.
If such objection is made, we would not insist, in otherwise
appropriate situations, on following the standard treaty.
Some less developed countries are willing to eliminate their
withholding rates on interest paid on loans made by governmental
organizations and perhaps charitable organizations which are
tax exempt in the United States.
Royalties
The standard treaty often exempts royalty payments on
patents, know-how, motion picture rights and the like, from
withholding, and in the case of natural resource royalties and
real estate rentals provides for taxation on a net income basis.
Many less developed countries appear unwilling to yield any
revenue obtained from patent and know-how royalties, and hence
many strongly object to outright exemption in suchcases.
In appropriate situations complete exemption need not be a sine
qua non of the treaty. However. it would seem desirable to

- 23 -

place the tax on a basis that reflects expenses involved in
earning the royalty in cases where such expenses may be
significant. In view of the concern that some less developed
countries may have over administrative difficulties in this
approach, it would be appropriate to seek a reduced rate of
tax if the rate is to be based on the gross royalty payment,
or some other ad hoc method of taking significant expenses
into account. In the case of mineral royalties and real estate
rentals, a net income approach appears desirable.
Business Visi"tors and Personal Service Income
The standard treaty, here reflecting the desire to avoid
inconvenience to the temporary visitor, usually provides for
exemption from taxation of the personal service income of
business visitors where the stay is temporary and the income
not large. Thus, many treaties use such standards as $5,000
and 180 days as dividing lines. We would regard the standard
treaty approach as generally appropriate to a less developed
country as well, for here the factor of eliminating
inconvenience to the temporary visitor would seem more significant
than the possible revenue loss to the less developed country.
But this is an area where different countries are likely to cast
the balance over a range of many possible variations, depending
on their attitudes toward such visitors, and indeed to the
various classes of visitors -- employees of u.S. corporations,
independent professional people such as engineers or lawyers,
cultural visitors, entertainers and so on. Hence a variety
of tests are likely to emerge, and it is difficult to stress
too strongly any single approach. We do regard it as desirable
to seek approaches that are simple and certain in their
application, which are the attributes possessed by the standard
treaty provision.
Permanent Establishment
The trend in the standard treaty is slowly to add more
particularity to the definition of permanent establishment in
the direction of contracting its scope. The result of course
is favorable to traders, since it permits a greater range of
activity without the inconvenience of a tax payment in the
Country to which he exports. But some less developed countries
may not be as receptive to this freeing of the trader from tax
contact with them if it means a loss of revenue. They are

- 24 -

more likely to want to expand rather than contract the
definition. Thus they are troubled by the fact that exporting
to a developed country may, because of the country's size,
volume of imports, and the like require, if the trading
is to be successful, a degree of activity that will often
involve the trader in acquiring a permanent establishment
status and thus subjecting itself to tax in the developed
country. But in same less developed countries, their small
size and small volume of trade may permit a successful trader
to handle the trade through only short trips of his employees
to the less developed countries. The degree of "presence"
within the less developed country may in relative terms bear
the same ratio to its volume of trade as in the case of
exports to a developed country, but in absolute terms fall
·short of the "presence" required to constitute a permanent
establishment under the standard treaty. Consequently, in a
situation in which a less developed country feels that these
issues are important, where otherwise appropriate we have explored
adding to the definition of permanent establishment such factors
as an agent who regularly secures orders in the less developed
country, or maintains a stock of goods from which he regularly
makes deliveries. Also, the use of an agent of independent
status could constitute a permanent establishment if the agent
acted almost exclusively for the exporter and engaged in these
activities. In addition, it may not always be appropriate to
eliminate the force of attraction principle.
Source of Income Rules
Many less developed countries do not have in their tax
laws a formulated set of source rules sufficiently comprehensive
to cover the usual run of international transactions. Since
tax treaties depend for their operations on the existence of
such rules, we desire that a treaty with a less developed
country in such a situation embody as far as possible the
standard source rules that have gained general international
approval. We do not see any special reasons or situations
which would make the same source rules less appropriate for
less developed countries than for developed countries. Thus,
we do not see that it is required in the case of a less
developed country to adopt a rule that allocates the income
from personal services to the country from which payment for
those services is made, or as respects a country with significant

- 25 exports of one or more commodities to adopt a rule that allocates
the income of the trader (importing from that country) to the
place of purchase if no other activity is there involved.
There are a few additional treaty provisions in which
less developed countries may have an interest that may differ
from that present in treaties between developed countries.
For example, they may desire somewhat greater freedom from
taxation in the U. S. for the students, trainees, teachers
and government officials they send to the United States; they
may seek some reassurance that their tax administrations
can cope with the provision which allows as deductions to
a permanent establishment executive and administrative expenses
wherever incurred and can prevent the "overreaching" by the
foreign taxpayer which they fear may exist under this
provlslon. Here the reassurance may well lie in a discussion
of the problems and careful analysis of their worries rather
than any explicit treaty change, since the allowance of
properly allocable expenses of this nature is important to
arriving at the correct net income.
The Treasury believes that a modified tax treaty can be
devised to form the basis of discussions with less developed
countries. We are in effect developing two standard tax
treaties, one for developed countries and one for less
developed countries. Of course the division is not rigid and,
depending on the particular countries, some treaties would
involve an appropriate blending of the two forms. We have
engaged in discussions with a number of countries and others
are scheduled.
Agreements with Thailand and Philippines
Discussions with the Government of Thailand have
resulted in substantive agreement at the working level.
The proposed treaty would embody the 7 percent investment
credit provision, and in many other respects follow the lines
of development suggested above. This agreement is subject
to the review and approval of both Governments, and we are
very hopeful that final agreement can be reached in the
weeks immediately ahead. Also, discussions with the
Government of the Philippines have resulted, as previously

- 26 -

announced, in the initialling of a draft agreement. While
this agreement contains many of the approaches discussed
above, it does not contain the 7 percent investment credit
or the tax deferral for stock received for technical
matters, nor does it contain any major reductions in the
Philippine taxes on investment income. The two Governments
believed the complex of provisions regarding investment
requires further study and hence they were not incorporated
at this time. But the Governments considered the agreement
on the remaining matters to be of such importance as to
warrent moving ahead with the draft agreement in that form
at this time. The Philippine draft agreement, as also in
the case of Thailand, does contain a provision preventing
discriminatory tax treatment of the taxpayers of the other
country, and this clause has been expanded to extend this
protection to enterprises of one country that are owned by
persons of the other country.
These two working agreements, both in their similarities
and dissimilarities, demonstrate that the United States
and less developed countries are able to enter into useful and
mutually beneficial income tax treaties along the lines of
approach I have discussed. These agreements also indicate
that flexibility in the application of these approaches is
important and necessary, and with that flexibility there is
sufficient room within these approaches to meet the differing
situations which particular countries and the United States
may face in their international economic relationships.
DECD Discussions
Many of the treaty matters which I have discussed in the
context of negotiations with other countries are also
presently being considered in the multi-national context of the
OECD Fiscal Committee. This Committee will pursue the numerous
questions marked for further study in the report accolJpanying
its Draft Convention, as well as the questions that will
arise from the intensive examination which that Draft will
undergo in the course of treaty negotiations. The DECD
Fiscal Committee is also studying on a broad basis such
matters as tax incentives for investment in less developed
countries, and the treaty problems growing out of differences
in jurisdictional concepts of taxation.

- 27 -

II.

UNITED STATES STATUTORY TAXATION OF FOREIGN INCOME

Our summary of the treaty area thus indicates we are in
a period of considerable activity marked by a number of major
new developments. These offer promise of taking us into an
entirely new stage in the treaty process. When we turn to
the unilateral aspects of our international tax relations,
and consider first the United States statutory taxation of
foreign income, the picture is that of quiet on the legislative side hut activity on the administrative side.
Revenue Act of 1962
This is an expected and appropriate development in the
light of the Revenue Act of 1962. That Act marked the most
extensive range of tax legislation affecting the foreign area
to be embodied in a single measure. It involved a revision
of our statutory international tax rules designed to bring
them into harmony with non-tax international developments
and to end the abuses which had been cumulating in this area.
The principal features of the 1962 revision are based
on a concept of "tax neutrality" between investment abroad
in developed areas and in the United States. Under this
concept it is inappropriate for our tax laws to offer artificial tax inducements to investments in developed countries,
since given the growing sLmilarity between the investment
climates of the United States and the developed world it is
no longer in our nation.al interest t.o offer tax incentives designed affirmatively to encourage investment to leave our
shores rather than to stay at home. The 1962 legislation
was thus directed at the three principal tax i.nducements
under prior law: first, the so-called "tax haven" form of
operation which combined the deferral feature of our law with
patterns of foreign organizati.on and operation to reduce
materially the overall rate of taxation; second, those
operations designed to combine the deferral feature with a
final sale or liquidation at capi.tal gain rates; and third,
the failure in connection with our foreign tax credit to gross
up dividends from foreign subsidiar~.es. While the deferral
feature is retained for non-tax haven operations, changes in
the United States tax law regarding domestic investment, such
as reduced corporate tax rates, liberal depreciation guidelines, and the 7 per cent investment credit limited to
domestic investment, are bringing our corporate income tax
close to the major European corporate taxes, with only a few
exceptions.

- 28 -

Along side these policies, the 1962 Act continued the
policy of using the tax system to encourage investment in
less developed countries, primarily, as respects this
legislation, through not extending the gross-up requirement
to less developed country dividends, and excepting from the
tax haven rules the holding company form of operation when
interest and dividend income derived from less developed
countries are reinvested in those areas.
In the field of personal taxation, the 1962 Act eliminated the abuses that had crept in through the unlimited
exemption of earned income for residents abroad, the
accumulation of tax-free income in foreign trusts, the use of
foreign investment companies to convert dividend income into
capital gain, and the investment in foreign real estate to
escape our estate tax laws.
These new legislative rules necessarily required a
fresh appraisal of tax planning and organization for foreign
investment. It is probably too early to mark clearly
definitive patterns, since there appears to be a rather
wide range of responses o Thus, one gathers that the type
of tax planning structured around the tax haven form of holding
companies or sales companies is largely disappearing -- certainly the number of new Swiss subsidiaries has plummeted
downwards. As respects existing tax haven organizations,
there appears to be a considerable number of orderly reorganizations designed either to eliminate those subsidiaries
no longer important to the overall structure without the tax
benefits they formerly provided or to convert them into
corporations outside the scope of the tax-haven rules
through adding non-tax haven income from sources such as
manufacturing operations or sales activities involving unrelated corporations. Some of the reorganizations are designed to probe the possibilities of "de-control", as by increasing the share of a European partner or in rather closely
held companies by spreading the United States ownership over
a number of 9 per cent friendly-oriented owners, so as to
reduce the relevant ownership below 50 per cent. There may
be a trend toward a greater use of Western Hemisphere Trade
c~orations, as a result of the court interpretations of the
applicable rules relating to these corporations and the
elimination of the 2 per cent tax on consolidated returns.
There also may be a trend toward a greater use of operations
in branch form abroad rather than operations through a foreign
subsidiary in response to the elimination of the consolidated

- 29 -

returns tax and to the equilibrium levels being reached by
our tax rates, taken in connection with the 1962 changes,
and foreign rates. New patterns are being considered for
new investments, such as joint ventures organized with a
foreign partner with that partn~r retaining control of the
selling corporation and the U. S. partner control of the
manufacturing corporation. All of this tax planning has its
frontiers on which the more venturesome operate, with an eye
both to possible interpretations of the United States law
and to possible tightenings in European tax rules dealing
with their own tax haven and similar difficulties.
Regulations Under 1962 Act
The 1962 Act also necessitated c=m intensive concentration
by the Treasury on the tax administration r,equirements of the
new legislation. Especially in its tax havpn provisions that
legislation embodied a variety of techniques new to our
statutory structure. The tax-haven legislation was a
pioneering technical task, for which there was no international
precedent to guide our tax technicans and draftsmen. This
has happened before in our international tax history -- for
it was the United States that pioneered the foreign tax
credit. Pioneering always involves a certain amount of
complexity, which in the tax haven area was increased through
the basic Congressional decision to retain a general deferral
rule but to withdraw the deferral privilege from a wide
variety of activities requiring particular delineation. In
recognition of these aspects of the legislation, the Treasury
has moved as rapidly as possible to issue comprehensive
Regulations, so that all of the Regulations under the 1962
provisions will have been published by the end of this year.
It has also acted to permit taxpayers to make the transition.
to the new rules in as informed and flexible a manner as
possible. It has been aided in these steps by the very
helpful assistance given to it by the Committee on Foreign Tax
Problems of the American Ba.r Association Section of Taxation
and the Committee on International Taxation of the New York
State Bar Association, and by the thoughtful comments submitted by this Institute and other industry groups in connection with the proposed regu1a.tions.
Two of these Regulations merit special attention. The
structure of much of the 1962 legislation turns on the concept of the "earnings and profits ll of a foreign subsidiary.
While this concept was involved in somE aspects of prior law,
such as the foreign tax credit. it had never heen seriouslv

- 30 -

approach to this concept, onp that would produce a careful
delineation of the operative t"ules. The Treasury was aware
that the accounting ~pproa~h to a consolidated statement of
the domestic and foreign operations of S0me of our international
corporations also ~nvolved thi..s r.oncept, Consequently it
formed an informal and ad hoc. C)rrnd ttp.e composed of representatives from our major internatto~~~ accoun:ing firms and
chaired by Profess0r Gerhard G. Mueller of the University of
Washington, an authority on international accounting. Working
for over a year through many meeting~ and drafts this group
has given the Treasury l.nvaluable ad'li~e on its Regulations
prescribing the determination of the earnings and profits of
a foreign subsidiary. These regulations are essentially
designed to merge accepted rules of international accounting
with requirements of the tax Code. They may well become a
strong ~petus to a greacer standardization of international
accounting and to a more mature consideration of many of the
basic concepts and rul~s, just as the presence of our domestic tax laws has meant so much to domestic accounting.
The Treasury intends to pursue this cooperative and
informed approach to the development of international tax
accounting. Thus, it now plans to have expert consultant
guidance in the task of examining the laws and accounting
practices of selected European countries so as to determine
the adjustments appropriate or required to meet the standards
set forth in the Regulations. Clearly such a careful and
informed approach is needed to guide the Internal Revenue
Service in its administration of the 1962 Acto
The other Regulation that is of srecial interest relates
to the minimum distribution concept of the 1962 Act, which
continues tax deferral for activities otherwise within the
tax haven rules if the enterprise is taxed at a combined
foreign and U. S~ tax rate net substantially below the
United States rate. Under this concept a schedule of overall effective foreign tax rates and corresponding percentages
of incorr.e distrib1ltions to t1:.:e UnL:ed State -- the lower the
foreign rate the higher the percentag~ of distribution required -- is provided which, if complied with, justifies foregOing the United States tax on the undist!'ibuted income of the
foreign corporation. In such a c~s€ the foreign form of
organization has not operated as a tax inducement to investment abroad nor involves abuse since no tax saving has
been effected, either because of the level of rates paid
abroad or the amount of foreign earnings that were actually
repatriated or a combination of both. In the application of
this concept, the Act sets a precedent for looking at the

- 31 foreign activities of a United States corporation on a consolidated basis, as if together they comprised a single
entity. In this respect the tax law is beginning to recognize the "international corporation" and to grapple with
the technical tax problems which it involves.
Recognizing the Lmportance of this concept, and its
potential for ready differentiation between cases where
deferral may be continued and where our tax should apply,
the Treasury has attempted to make the application of the
concept as feasible as possible. Thus the Regulations
permit the by-passing of much of the detail otherwise required for its operation by sanctioning a s~plified
approach under which the payment of a 47 per cent tax rate
(approximately 45 per cent in 1965 and thereafter) on the
foreign earnings operates as a "safe haven" under the tax
haven sections. As tax technicians develop greater
familiarity with the 1962 Act concepts, it is possible
these Regulations may in turn be further simplified.
Improvement in Administrative Aspects - Section 482 Allocation)
Section 367, and Related Matters
These aspects growing out of the 1962 Act are only one
phase of developments in the field of tax administration
relating to foreign income. The goal guiding the Treasury
in this field is that we must develop as quickly as possible
an informed tax administration capable of dealing wisely
and expeditiously with the problems that our expanding
foreign investment, our expanding foreign trade and -- the
inevitable and necessary response -- our expanding tax rules
will place before the Internal Revenue Service. The work
in the earnings and profits area, both in the formulation
of the Regulations and in the continuous informed research
and guidance required for their sensible application, is one
phase of this program
0

Another phase of the program is the development of rules
under section 482 responsive both to the scope of the problems
arising under that section and the needs of taxpayers and
revenue agents for rational guidance in meeting these problems.
Thus we are preparing Regulations, expected to be issued in
proposed form this year, formulating guidelines for determining
the "arms length price" to be used as the allocation standard
in a variety of situations. These guidelines will be as
refined as possible and as closely related to the actual facts
of the particular case as is possibleo The situations encompass, fo:r· ex;unpl~; t·lles by United States companies to

- 32 their foreign affiliates, sales by foreign companies to
their U.<S. affiliates, the use by one member of a controlled group of properties or patents owned by another member, and the payment by one member of the expenses of
another member. These guidelines in turn will be supplemented by rules on a number of critical issues arising
under the application of section 482, such as the treatment of interest-free loans, and whether reallocated income may be repatriated tax free.
These efforts to formulate appropriate standards to
govern allocations under section 482 and similar matters are
to be accompanied, as indicated above under the treaty
discussion, by intensified efforts to achieve appropriate
international techniques whereby the allocations of our taxpayers and administrators can be appropriately meshed with
the rules and procedures of the other countries involved.
We are also aware of the problems that are ar~s~ng as
a result of section 482 allocations and are closely studying those problems. For example, one of the problems confronting us is the avoidance of double taxation for past
years. The problem arises here because relief from any
double taxation resulting from the section 482 allocation
may not be available in the foreign country due to statutory
limitations or legal or other administrative factors. One
approach which the Internal Revenue Service is considering
is that of adjusting any proposed deficiency by the amount
of foreign taxes paid.
In much the same fashion the Service is moving to step
up the pace of developing appropriated guidelines in its
application of section 367, to be published this year in a
comprehensive- revenue procedure.
Another step in the process of keeping tax administration sufficiently informed and responsible in this area is
the forthcoming Internal Revenue Service order which will
place the existing Field Groups of the Office of International
Operations under the supervision of the District Directors.
This step will put issues in this area under the same procedures as any other matter as regards technical advice,
rulings and audit review, thereby assuring close coordination
between the field activities and Washington. The work of
the Chief Counsel 1 s Office in its interpretative and
regulations activities will also be kept closely coordinated
with problems arising in audit activity.

- 33 -

The activities of the Commissioner's Council on International Tax Administration is a phase of this overall
development.
The combination of these steps should in large part
elilninate present prob1enls facing taxpayers and the
Service alike in the transition to an improved tax adrninist~ation capable of handling with wisdom and responsibility
the tax issues involved in modern tax relationships.
Finally, we may note the statistical and othendata
which will become available to the Treasury for the first
time as a result of the processing of the returns required
by the 1962 Act. These data should be of material assistance
in keeping abreast of issues and developments respecting
the foreign operations of U. S. taxpayers.
In sum, our energies are here being directed to seeing
that tax administration respecting foreign income comes of
age, just as has happened in one area after another on the
domestic side in response to new problems -- and, I might
add, just as other Governments are beginning to recognize
in their handling of their foreign income problems.
Study of European Indirect Taxes
To complete this consideration of the U. S. statutory
taxation of foreign income mention whould be made of two
matters that take us beyond the 1962 Act and the tax
administration consequences we have been discussing. The
first of these relates to the effects which the European tax
systems, in their greater emphasis on indirect taxation, may
have on the foreign trade of those countries and of the United
States. In recent years considerable and increasing attention
has been given to the turnover and value added taxes of
Western Europe, and especially to the international trade
aspects of those taxes -- the rebates which free European
exports from their scope and the compensating taxes which
are levied on their imports -- our exports -- to bring them
within their network. The first round of attention brought
assertions that these foreign components and the very presence of these indirect taxes discriminated adversely against
OUr foreign trade, and the quick remedy suggested was a tax
subsidy under our income tax for our exports. But careful
study of that remedy disclosed many problems, ranging from
a large waste of revenue if the proposed tax benefits were
extended to existing exports on to the complexities and

- 34 -

disclocations in accepted patterns of exporting if the benefits
were offered only to increases in exports, and involving
difficult questions of just how and in what areas a tax subsidy would either be appropriate or helpful and what would be
the balance between revenue lost and benefits obtained.
Approaching these questions in difficulty were the issues
relating to international factors. Thus, would such a
subsidy be permissible under GATT rules; if permissible,
would the adoption of such a subsidy by a major exporting
country set in motion a chain reaction of retaliatory adoptions
by other countries.
The policy and technical difficulties presented by the
subsidy approach were sufficiently serious to shift attention
to an approach which involves an intensive analysis of the
European situation, and discussions within the DECD, to see
if the existing rules have a sound economic basis. At the
same time the U. S. in the DECD has pressed for a stand-still
in rebates and compensatory taxes to maintain the status quo
as far as possible pending the results of this study. The
basis need for additional economic data and further analysis
of the economic issues involved has become evident as the work
progresses.
30% Tax Credit for Investment Abroad
The second matter to be mentioned, and to which reference
was made in the discussion of tax treaties with less developed
countries, is that of the President's recommendation in connection with the AID legislation of a 30 per cent credit
against United States tax for investment in less developed
countries. The technical structure of such a credit, as
developed by the Treasury Department in conjunction with the
AID agency and the State and Commerce Departments, is embodied in the bill, H. R. 11524, introduced by Congressman
Boggs. It is presumed that hearings will be held on this
subject next year. The credit would operate as an incentive
to such investment and rests on the judgment of the AID
Administration and others both that an incentive of this nature
appears needed to increase the rate and amount of our private
investment in these countries and that such a development is
important as respects our policies regarding less developed
countries, and the further view that the tax system under these
circumstances is an appropriate method of effecting this type
of incentiveo

- 35 -

III.

UNITED STATES STATUTORY TAXATION OF FOREIGNERS

The past few years have thus witnessed extensive legislative
changes in 1962 respecting the U. S. statutory taxation of foreign
income followed now by a period of intensi.ve administrative
activity aimed at improving and modernizing tax administration in
this area. When we turn, however, to the topic of the United
States statutory taxation of foreigners receiving income from
this country, we perceive an almost complete absence of activity
in either the legislative or administrative field. Nor has
this quietude been a feature of only the recent past. For a
long period of time the taxation of foreigners has represented a
corridor of our tax Code in which the dust gathered and was
rarely disturbed. But now this corridor is being opened for a
careful examination which is quite likely to produce significant
legislative changes.

Interestingly enough, the main cause of the searching
inquiry into this hitherto little noticed aspect of our tax
law illustrates the importance of non-tax factors on international
tax relationships, and underscores the imperative need periodically
to.consider whether our tax rules are responsive to basic changes
in the economic and other aspects of international affairs. The
most significant economic aspect of our international position
has for several years been the balare e of payments situation of
the United States~ We have seen how this was one of the factors
responsible for a re-examination of our taxation of foreign income.
We have also witnessed how balance of payments problems were
responsible for the adoption of a brand new tax, the Interest
Equalization Tax -- a device which broke new ground in making a
ux system available as one of the ways in which a country could
meet temporary balance of payments problems. It thereby
significantly widened the flexibility and scope of our manoeuverability in this area. And now we find that the balance of
~yments situation is the factor which has prompted the study of
.our statutory ~axation of foreigners
0

All this does not mean that basic provisions of our revenue
aws should swing to and fro in response to balance of payments
~ements.
Of course a tax device which is designedly temporary
and which can be temporarily added without affecting the rest
of the tax system, such as the Interest Equalization Tax, is a
proper short-range response. But clearly, many if not most of
our tax provisions require a stability of concept and structure
that would be impaired if they had to bend this way or that to each
shift in balance of payments or other vital aspects of our economic
well-being. On the other hand, current imperatives can be the

- 36 -

occasion for a searctd ng r::heck of tax concepts and structures tn
ascertain if they embody ~learly outmoded patterns which would n01
serve us well for as flr as we can reasonably read the future. SC
it was with the Revenue Act of 1962, where the study showed both
a need to move toward greater tax neutrality and -- and here is
the ~portant relationship to balance of payments -- that such a
move at that time was consistent with our present balance of
pa~ents goals and hence could appropriately be made at that time,
The examination of our statutory taxation of foreigners is
of the same nature. Our balance of payments position is such that
it is desirable for t.:.5 at this time to obtain a highe!' leveJ c:··
foreign investment ·~i:: :he United States. In seeking ways tc
achieve and encourage that investment it is proper to ask whether
our tax laws affecting foreigners operate as a barrier to investment in this country by foreigners. If so, here also a shift to a
more neutral position -- i.e., a position which would make u.s.
taxes as neutral a factor as possible in the decision of a
foreigner whether to invest at home, in another country or in the
U.S. -- would seem appropriate. Such a shift of course would
have to be consistent with other tax policies. But assuming that
this consistency existed, then here also we can say that a change
at this time is appropriate since change now is in harmony with
our balance of pa:nnents program. In other words, balance of
payments objectives ~e:1 prompt the study of tax provisions and
can properly affect th.? timing of desirable basic changes in tax
concepts. But as far as possible, excepting measures specifically
linked to a temporary period -- such as the Interest Equalization
Tax -- the basic changes should be of such a nature that it would
be proper to retain the new prav~sions even if our balance of
payments posture
~-·0 ? t ter ,.
TV."··'

Coming now more directly to the taxation of foreigners~ 8
Presidential Task Force on Promoting Increased Foreign Invest. ment in u.S. Corpct'Rte Securities and Increased Foreign Fin&r.~_·· ;
for U.S. Corporati.cn::: Operating Abroad (the Fowler Report)
recoumended to Prf:<:'ir:le~.t Johnson on April 27, 1964, a series r<
tax and non-tax In<,.~·. ,t.: _"~-: to achieve the objectives its til:t~
embodied. The Treasu:i. ~;. Department was consulted by this Task
Force in the preparation of its report, and at the request of :.!-.(
President ia now engaged in intensive consideration of its t~x
recoumendations. Practically all of the tax recommendations
relate to the taxation of foreigners investing in the U.S .• and
represent in basic ap?~oach a reduction in the extent to wh~ch
the United State s nOv,l taxes such foreigners. The consideration. .-if
these recommendaticns and their implementation has involved tn(;
Department in the study of matters beyond the specific reCOmmejl0a-

37 tions of this Task Force o In large part the questions under
consideration can be grouped into several main subjects. The
discussion is here, as elsewhere in this paper, confined to the
income tax, though it should be noted that the application of
our estate tax to foreign decedents is also under examination.
Application of Progressive Rates
The United States applies a basic 30 percent withholding
tax, except as reduced under treaties, to most compensation and
investment income flowing to foreign individuals, but then
subjects the foreigner's total income from U.S. source to our
progressive individual income tax rates if the latter produce a
higher tax. At 1965 rates the point where the progressive rates
cut in is $21,200 of income. Few foreign individuals with
incomes above that level, however, in fact pay these progressive
rates, escaping them legally by making their U.S. investments
through personal holding companies incorporated abroad, or
illegally through the use of nominees to disguise their real
ownership or other devices which make it impossible for the Service
to cumulate the various income payments. Thus less than $1 million
in taxes is collected from the application of progressive rates
on non-residents. Given this situation, is it desirable to
continue the present approach'in the case of investment income?
While it might be regarded as correct in theory, although most
countries do not use this approach, is its complexity in administration worth the effort? Would elimination of this approach
lead Americans to give up their citizenship while still retaining
their investments in this country, and if so, should this be met
by some specific provision?
Relating to this matter of the progressive rates is the
present application of our personal holding company provisions
to foreign corporations having U.S. investment income, which
application is now required since this form of holding would
otherwise permit avoidance of the progressive rates. If progressive rates were to be dropped, then consideration could be
given in turn to dropping application of the personal holding
company tax. Some troublesome problems would have to be solved
such as a personal holding company with some U.S. shareholders,
or a company in a treaty country, favored by a reduced U.S.
withholding rate under the treaty, but owned by non-residents of
that country who would secure the lower U.S. treaty rate. Related
also to the progressive rates is our present source of income
rule which treats a dividend from a foreign corporation deriving
its income from U.S. sources as itself from U.S. sources. If
the progressive rate approach is dropped, could this "second

- 38 -

dividend" tax likewise be dropped at least where the U.S. source
income of the foreign corporation is itself dividend income rather
than trade or business income?
The dropping of the progressive rate approach means that
returns would not be required from any foreigner having only
investment income, so that his tax contact with the U.S. would
be only through the withholding system.
Foreign Investor Also Engaged in U.S. Trade or Business
As indicated above, a foreigner investing in the United Statel
can have his investment income subjected to rates above the
30 percent withholding rate if the income is large enough to bring
into play the progressive rates. But, under another rule, even
investment income below $21,200 can be subject to progressive
rates if the foreigner is engaged in trade or business in the
U.S., since then our Code requires that he be taxed on all his
u.s. source income at the regular U.S$ rates. The question here
is. whether this joining of the two types of income should occur,
or whether instead the investment income, assuming it is not
related to the trade or business, should be kept separam and
thereby subjected only to the withholding tax. This joinder rule
is, it may be noted, one of the "bitter-sweet" tax rules, since
some taxpayers benefit by the joinder. Thus, a taxpayer with
income from real estate not regarded as a trade or business can,
through joinder with a trade or business, transform a 30 percent
rate on the gross rentals into a tax at regular rates but on a
much lower net incame~ Royalty income is another example. The
allowance of a dividend received deduction to a foreign corporation which both receives dividends from U.s. sources and is
engaged in trade or 'business in the U.So is still another example.
Hence any change in the Joinder rule would require careful consideration of the gross income approach now applied to rental
or royalty income to see whether a net income concept is more
appropriate, even though the activity is not regarded by itself as
a trade or business.
Capi tal Gains
The United States system of t:axing u.s. capital gains of
foreigners places great stress on the physical presence of the
foreigner in the U.S. -- if he is here when the gain is realized,
or if he is here for a total of 90 days, then he is subject to
Our capital gains tax on his U.S. gains
Such a rule would seem
to invite only careful planning for its avoidance, so that it is
v

- 39 -

productive of nuisance but not revenue. Consideration could be
given to its abandonment, except perhaps where the presence in
the u.s. is of longer duration, such as six months, and perhaps
where the gains are also more speculative in nature, as short
term gains.
Withholding System
The issues discussed above indicate that we now place great
reliance on our withholding system to col~ct taxes on foreigners,
and may place even greater reliance on that method in the future.
Naturally, this leads to the question whether that withholding
system is functioning satisfactorily; for example, does it readh
all recipients; does it confine the various lower treaty rates
to the recipients intended to be benefited or are others as well,
such as residents of non-treaty countries, riding the coattails
of the treaties; is our exemption of U.S. citizens from this
withholding being abused by foreigners claiming to be citizens?
Prudence would require that we give the withholding system a
ca~eful scrutiny.
Basic Problems
These represent some of the matters currently being studied
by the Treasury Department. Since the overall thrust of the
possible changes is that of reduced U.S. taxation of foreigners
investing in the U.S., it can be argued that such changes would
attract more investment to the u.S. This is the belief of the
Presidential Task Force mentioned earlier. The types of investors
who would respond and the extent of the response are probably not
subject to empirical demonstration. Certainly changes of this
nature should, however, at the very least improve the U.S. investment climate for foreign investors. But the case for re-examination of these rules need not be pitched on proof of a large
absolute increase in foreign investment in the U.S. Rather, it is
necessary to consider whether changes are appropriate fIDm the
standpoint of a more rational application of our tax to foreigners
and hopefully one that would be somewhat simpler.
This approach in turn leads us to two important questions.
The first is that of ascertaining what are the criteria of
rationality when we are seeking to frame a tax structure applicabl,
to foreigners. Clearly we must keep in mind that we are here
dealing with international tax relationships. This means we
should see that any new rules are in conformity with acceptable
international norms. The U.S., with its large flows of capital
and goods in and out of our country, has a responsibility to take

- 40 -

a major role in developing a proper international tax framework
against which the tax rules of any particular country can be
considered. One basic facto;. in this respect is a fair and
sensiole allocation among the various countries of income fram
activities that reach acros~ international borders. Another
factor is a proper balance between the tax paid by our citizens
on their U.S. income and that paid by foreigners on the same
income. Still another factor is the desirability of maintaining
as far as possible the free movement of capital and goods, with
taxes in any country as neutral a factor as possible consistent
with the domestic policies to be served by a tax system.
For example, care must be taken to see that in making changes
designed to remove unwarranted tax barriers to investment in the
UoS. , we do not thereby turn the UoS. into a tax haven country
vis-a-vis foreign investors. Moreover, we must be careful to
prevent our adopting tax rules for foreigners that could be combined with the ~x rules of another country to transform that
country into a tax haven that would attract foreigners seeking
to invest in the U.S. We have ourselves seen the problems which
tax havens can cause for our tax system and economic policies,
and hence have our own obligations not to place such holes in
the international tax fabric. The recent changes in the Netherlands Antilles income tax treaty were made for this reason,
since the fo~er treaty when combined with the tax laws of the
Antilles had made it an artificial way station for foreigners
investing in the U.S. We now recognize that in all of our
treaties we must be careful to avoid another Antilles situation,
and the provision in the Luxembourg treaty guarding against this
possibility is an example of our approach. We must also keep
in mind the problems that can exist if our tax rules are so
attractive that we drain off capital from less developed areas,
such as Latin ~rica, which are badly in need of that capital
at home.
Relationship to Tax Treaties
The second question involves the relationship of these
statutory tax rules respecting foreigners to our income tax
treaties. Both these statutory rules and the treaties involve
the same subject matter -- that of the U.S. taxation of the income
of foreigners derived from U.S. sources. The Code rules considered above represent our statutory or unilateral approach;
the treaties represent our bilateral approach. The treaties have
the function, in this respect, of placing restrictions on the
unilateral rules, in that the treaty rules are more favorable to
foreigners than the Code rules. When we examine many of the

- 41 statutory changes under consideration, we find they are similar
to the changes discussed earlier in our new approach to income
tax treaties. Thus both move along parallel lines -- e.g.,
lessened taxation of capital gains, the elimination of the force
of attraction of a trade or business (statutory) or of a
per.manent establishment (treaty).
Any changes made unilaterally could thus present us with
distinct difficulties in the treaty area
For treaties are
bilateral and the restrictions are reciprocal. The concessions
we make in a treaty to the foreigners of Country X investing
in the U.S. are usually matched by the concessions Country X
makes in the treaty to our citizens investing in that country.
Hence, if we decide in a treaty to eliminate our taxation of the
U.S. capital gains of foreigners or to eliminate the force of
attraction of a pe~nent establishment in the U.S. for the
investment income of a foreigner owning that establishment, we
expect to receive similar treaty concessions fram the other country.
Such concessions both benefit our investors and traders abroad,
a04 through lowered foreign taxes, and hence lowered foreign tax
credits, provide us· with a revenue increase to balance the
revenue lost through our concessions. What, therefore, happens
to our bargaining powers if these concessions are unilaterally
made by the u.S. through a statutory change? This problem is a
very real one, since many treaty negotiations develop essentially
into formidable contract bargaining.
o

The desire to protect our revenues and own investors and
traders, and caution as well, would thus point to making any
changes, otherwise appropriate, only through treaties and not
unilaterally. The principal offsetting factor is that of time
treaties do move slowly and all else being equal if the changes
are desirable they should be made at this time. The problem
thus becomes one of searching for a mechanism which will protect
the treaty process and still permit unilateral change. One
pOBsibility worth consideration is that of making the unilateral
statutory changes but providing in the Code that the Secretary
of the Treasury can rescind the more important of these changes
as respects the residents of any foreign country if he finds
that the country is not taking reasonable steps in treaty
negotiations to grant relief to our citizens similar to the relief
granted to its citizens by our statutory changeso Several
present Code sections could be regarded as consistent, if not
direct, precedents: Section 883 excluding from our tax the
profits from the operation of foreign documented ships or aircraft if the country of documentation grants an equivalent
exemption to our shipping and aircraft; and section 891

- 42 -

authorizing the President to double the rates of our tax as to
citizens of a foreign country which he finds is subjecting our
citizens to discriminatory or extra-territorial taxes. The
objective in exploring the mechanism suggested, or others that may
be suitable, is to achieve a flexibility in approach to our
international tax relationships that will permit us to move in
har,mony both through statutory changes and treaty revisionsG
Conclusion
The Treasury Department is engaged in a wide ranging program
of improving our international tax relationships in the interest
of increased international trade and investment and of the
increased economic development of less developed areas. The
above description of this program is necessarily lengthy and
detailed. The program covers a range of activities reaching from
tax treaties and multi-national tax discussions to United States
statutory legislation and on to Treasury Regulations and operating
procedures of the Internal Revenue Service. MOreover, in the
tax field the full meaning and scope of any provision, be it in
a treaty, statute, regulation or other form, lie in the details
of that provision. Taxation is a technical subject and the details
count
0

A program of this breadth requires time for its full completion, and the persistent, patient activities of not only our
tax officials but also those of many countrieso It can also be
immeasurably aided by the informed and patient cooperation of
private tax experts, through associations or in their private
capacities, who can bring their experience and problems to the
shaping of the solutions. The Treasury welcomes this cooperation.
It believes that the goals involved in this program will commend
themselves to those concerned with international economic problems
and that the accomplishment of those goals will represent a
significant step forward in our international tax relationships.
000

ro~

RELii.ASR A. 1-1.

ru..daf,

:~r:'-'SPA?:":ri5,

Sept.ember 22. 1964.
a"SliLI'

O"LK~~l3rF{Y'S

Wt-:;:KLY BILL OP'IRDIG

I,..
_,,'7'.1
..n. "

The l'reasury nepartMnt aMOUDOH 1.., ....wag that \be teaclen tor ...
T"~ bUll, one aeries to be an addiUoaal 188_ of \be hill ...... June IS,
and the ot.ber _ri.1 to be dated septaber
196Q, tilden wn otteftcl wre opeDed at the r.denl Huene Beoka . . sept.ber 11. TeaMn . . . t.mW,.
n,300,()')(),OOO, or thereabo1lts, of 91__ bUll MIl tor $900,000,000, ............ ....
ot 182-dq bUla. the detaU.. or the \110 ..rleI are .. rcaU_.

14,

RA ;~; or ACGSP'l't.D
C'.l,\!PVf;TIV· ~;mt

1) jJeTcent of the 8O:.mt
96 percent ., the .,)UDt

9l-da,y bills bid tor at \be low price ... ....,...
\he low prioe Val . . .pH

ot 162-day bill. bid tor at.

Dist!.'lct
"Rolton

r~4jL,00I'l

'«Iv York

1,567,217,000

AP~ror

Atlant.a

)2,2c9,OOO
)8,111,000
16,Ja28.000
2$,092,000

Chicago

262,'":~6,OOO

Philadelphia
Cl....lanct
!d.ohaGDCl
~t..

Lmd.

35,800,000
2),981,000

MinnNPol1a

r;t;1'2,OOO
862,le2,OOO •
s
17,289,000

29,W&4,OOO

16,428,000
19,.JlO,OOO
119,)S6,(X)()
29,233,000
16,07S,OOO

Kana... City

)),)6),000

)0,)6),000

Dall..
San Frano1aoo
Totala

26,761,000

18,9S7,OOO

l02.06£zl OOO

61,871,000

$1,200,119,000

$1,)Ql,880,ooo

aI
'b/

•
I
I
I

I
I

•
I

" ,..

~l1ecl"'" "

i8,(6),Ciici ~'!I!'

671,=

1, 216, 06S , 000
lO,76S,OOO

"ta,l,..

ss,__:

16,999,000
S,06f,OOO
19,266,000

16,161,01

U,h22,OOO
7,0IS,OOO

'P,_,S,.,-

,1,,.,01

lSl,2Ol,OOO

1,,,,-

8,~l,OOO

9,hn,ooo

.. 88,514.000
$1,6I),n3,000

S,Ja1l,af1
IT•. ,

• ".J

JIC»,
,n.. .,

:z;246,116,fJOO nonoor.tpeti\i,. te..-r. ueap\ed ., \be ....r . . .
tnolwle. $65,66o,)()O noaea.pat.it.i.. t.em.r. __pted at t.be _ _ _ priee ., ,..&J
an • coupon iS8ue of the . - 1_ph and ttlr \be . . . _nnt inheW,
the.. billa voald proridJI ¥1elde or 3.6g, tor t.he 9l-&v btlll, ... ).11$,- , .
182-da.J- bUla. lDt.wut. ..tea on billa are qu.t.ed in t.e~ of . . . ti..... lilt
[r.clUti"~

* .....

tIHt ret.1U"n relaMd to t.he face -.o'JDt or t.ile bUlB p&11Ibl.e . , . .'-1\7 ....' .
t.l an tha .ount. inYeat.ed Md \ba1r lenc\b 18 Mtual Iftaber at . , . N1.aW ...
j6;.)..day)'Ul'. In oont.rMt, pel48 on eertit1catu, no\ea, . . __ . . . . . . . qdll
t.em. of ilRenat. an the ..ou.JIt 111'ftatM, -.d Nlde tbe D·. . . . r . , ....
P'd.
in an ifttierMt ~ftt p·-riod to the _tual nl8bw of Up 1a the ,.u4, . . .

'11

annual

if ,..or~ than ODe

0CMpGD p~'r1od

18 1_01....

TREASURY DEPARTMENT

roR RELEASE A. M. NEWSPAPF:RS ,

Tuesday, September 22, 1964.

September 2l, 1964

RESITL'T'S OF TREASURY'S WEEKLY BILL OFFERING

The Treasury Department announced last evening that the tenders tor two series of
Treasury bills, one series to be an additional issue of the bills dated June 25, 1964,
and the other series to be dated September 2L., 1964, which were offered on September 16,
were opened at the Federal Heserve Banks on September 21. Tender2!l were invited tor
$1,300,000,000, or thereabouts, of 9l-day billB and tor $900,000,000, or thereabouts,
ot 182-day bills. The details of the two series are as follows:
RANGE OF ACCEPfED

C(!t!PETITlVE BIDS:

High

Low
Average

91-day Treasury bills
maturing December 24 z 1964
Approx. Equiv.
Prir,e
Annual Rate
99.1u8
3.529%
99.103
3.549%

-~-----.----

3.542%

99.10~

182-dB~

Treasury bills

maturin~ Maroh 25 ~ 1965
Approx. Equiv •
Price
Annual Rate

3.. 687%
30697%

98.136
98.131
98$133

3.692%

19 percent of the amount of 91-day bills bid for at the low price was accepted
96 percent of the amount of 182-day bills bid for at the low price was accepted
TOTAL TENDERS APPLIED FOH AH1) ACCEPTED BY FEDERAL RESERVE DISTRICTS ~

District
Boston
New York
Philadelphia
Cleveland
Richmond

Atlanta
Chicago
St. Louis
MinneapOlis
Kansas City
Dallas
San Francisco
Totals

Applied For
$
36, ['34~ 000
1,567,217,000
-'32, 2c-l, 000

38, lll~, 000
16,~2tl,OOO
25,092,000
262, f]~6,OOO
35,800,000
2),981,000

"1 ..,}l~;I,
/ ~ 0'-)0
J.,."
l

26,767,000
102 zoeE z000
$2,200,219,000

Acce.l2ted

2l~J72,OOO

862,182,000
17)12b9,OOO
29,444,000
16,428,000
19,310.,,000
179,356,000
29,233,000
16,075,000
30,363,000
18,:;57,000
61 z..871 z000

$1,301,880~OOO

AE21ied

For
$ 18,083,000
1,216,065,000
10,765,000
76,999,000
5,069,l1000
19, 266f)OOO
15),201 DOOO
11,422,000
7,025,000
8.,043,000
9,471,000
88l5l42.000
~ $1,623,923,000

AccElEted
~

9,,883,000
677,645,000
3,865,000
55,595,000
4,169,000
16,261,000
18,901,000
7,922,000
5,005,000
7,943,000
5,471,000
27.! 934 z000

$ 900,9594,000

YIncludes $246,116,000 noncompetitive tenders accepted at the average price of 99.105
~ Includes $65,660,000 noncompetitive tenders accepted at the average price of 98.133
On a coupon issue of the same length and for the same amount invested, the return on
~ese bills would provide yields of 3~62%, for the 91~day bills, and. 3881%, for the
l82-day bills. Interest rates on bill,s ~re quoted in terms of bank discount with
the return related to the face amount of the bills payable at maturity rRth.er
than the amount invested and their length in actual nUlllber of days related to a
360-day year. In contrast, yields on certificates, notes, and bonds are eom~uted in
terms of interest on the amount invested, and relate the number IOf days remaining
in an interest p~ent period to the actual number of dayS! in the period t with semiannual compounding if more than one coupon period is involve~e

n..1349

- 3 -

BETA - MODll'IED
and exchange tenders vill receive equal treatment.

Cash adjustments vill be made

for differences between the par value of maturing bills accepted in exchange and
the issue price of the

ne~

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

trom 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

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

&Ctuall~

received either upon sale or redemption at maturity during the taxable year tor
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 -

BETA - MODIFIED

decimals, e. g., 99.925.

FractIons may not be used.

It is urged that tenders

be made on the printed forms and forwarded in the special envelopes which viII

be supplied by Federal Reserve Banks or Branches on application therefor.
Banking institutions generally may submit tenders for account of customers
provided the

DBllil;'S

of the customers are set forth in such tenders.

Others than

banking institutions will not be pennitted 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 at

the face amount of Treasury bills applied for, unless the tenders are accompanied
by an express guaranty of payment by an incorporated bank" or trust company.
Immediately after the closing hour, tenders will be opened at the Federal
Reserve Banks and Branches, following which public announcement will be made by
the Treasury Department of the amount and price range of accepted bids.

Those

submitting tenders will be advised of the acceptance or rejection thereat.

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

ttiJ

less for the additional bills dated January 3, 1964
, ( 91
days remain~
Uti
ing until maturity date on December 31, 1964
) and noncompetitive tenders for

1~OO

or less for the

182

tl4

-day bills without stated price from anyone

bidder will be accepted in :t"ull. at the average price (in three d.ec1ma.ls) at accepted competitive bids tor the respective issues.

Settlement for accepted ten-

ders in accordance with the bids must be made or completed at the Federal Reserve
Banks on

October 1, 1964

in a like

i~a.ce

tnt

, in cash or other immediately available funds or

amount of Treasury bills maturing October 1, 1964

Ui4i

•

Cash

TREASURY DEPARTMENT

Washington
FOR IMMEDIATE RELEASE,

September 23, 1964

TREASURY'S WEEKLY BILL OFFERING

The Treasury Department, by this public notice, invites tenders for two serie:
of Treasury bills to the aggregate amount of $ 2,200,000,000, or thereabouts, for
cash and in exchange for Treasury bills matl,lring

October 1, 1964

of $ 2,101tij4,000 , as follows:
91 -day bills (to maturity date) to be issued

,in the amoun'

October 1, 1964

0\i19

in the amount of $ 1,300,000,000 , or thereabouts, represent-

ing an additional amount of bills dated January 3, 1964
and to mature

tilt

December 31, 1964 , originally issued in the

amount of $ 1,OO~9,000{! the additional and original bills
an additional $900,402,000 vas issued
to be freely interchangeable.
July 2, 1964)
/
~

-day bills, fOr,$ 9OO,~0

tib

October

1964

,or thereabouts, to be dated

, and to mature April 1, 1965

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

tutiEach

Tenders will not be received at the Treasury Department, Washington.

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

September 23,

TREASURY'S WEEKLY BILL OFFERING
The Treasury Department, by th1s public notice, invites tenders
for two series of Treasury bills to the aggregate amount of
$2,200,000,000, or thereabouts, for cash and in exchange for
Treasury bills maturing October 1,1964,
1n the amount of
$2,101,624,000, as follows:
91-day bills (to maturity date) to be issued October 1, 1964, in
the amount of $1,300,000,000, or thereabouts, repres.enting an
additional amount of bills dated January 3, 1964, and to mature
December 31, 1964, originally issued in the amount of $1,000,309,000
(an additional $900,402,000 was issued July 2, 1964) ,the additional and
original bills to be freely interchangeable.
182-day bills, for $900,000,000, or thereabouts, to be dated
October 1, 1964, and to mature April 1, 1965.
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 fo~ 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 Federal Reserve Banks and Branches
up to the closing hour, one-thirty p.m., Eastern Daylight Saving
time, Monday, September 28, 1964.
Tenders will not be
received at the Treasury De~artment, Washington. Each tender must
be for an even multiple of $1,000, and 1n 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
~ 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 compan1es and Crom
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-1350

- 2 -

Immediately after the closing hour, tenders will be opened at
the Federal Reserve Banks and Branches, followi~ which public
announcement will be made by the Treasury Department of the amount
and price range of accepted bids. Those submitting tenders will be
advised of the acceptance or rejection thereof. The Secretary of
the Treasury expressly reserves the right to accept or reject any or
all tenders, in whole or in part, and his action in any such respect
shall be final. Subject to these reservations, noncompetitive
tenders for $200,000 or less for the additional bills dated
January 3, 1964, (91-days remaining until maturit¥ date on
December 31, 1964) 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 (1n three
decimals) of accepted competitive bids for the respective issues.
Settlement for accepted tenders ir. accordance with the bids must be
made or completed at the Federal Reserve Banks on October 1, 1964,
in cash or other immediately available funds or in a like face
amount of Treasury bills maturing Oc tober 1,1964. Cash and
exchange tenders will receive equal treatment. Cash adjustments
will be made for differences between the par value of maturing
bills accepted in exchange and the issue price of the new bills.
The income derived from Treasury bills, whether interest or
gain from the sale or other disposition of the bills, does not have
any exemption, as such, and loss from the sale or other disposition
of Treasury bills does not have any special treatment, as such,
under the Internal Revenue Code of 1954. The bills are subject to
estate, inheritance, gift or other excise taxes, whether Federal or
State, but are exempt from all taxation now or hereafter imposed on
the prinCipal or interest thereof by any state, or any of the
posseSSions of the United States, or by any local taxing authority.
For purposes of taxation the amount of discount at which Treasury
bills are originally sold by the United States is considered to be
interest. Under Sections 454 (b) and 1221 (5) of the Internal
Revenue Code of 1954 the amount of discount at which bills issued
hereunder are sold is not considered to accrue until such bills are
sold, redeemed or otherwise disposed of, and such bills are excluded
from consideration as capital assets. Accordingly, the owner of
Treasury bills (other than life insurance companies) issued hereunder
need include in his income tax return only the difference between
the price paid for such bills, whether on original issue or on
subsequent purchase, and the amount actually received either upon
sale or redemption at maturity during the taxable year for which the
return is made, as ordinary gain or loss.
Treasury Department Circular No. 418 (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 fron
any Federal Reserve Bank or Branch.
000

TREASURY DEPARTMENT

FOR IMMEDIATE REIEASE
TREASURY DECISION ON WlRE ROPE

UNDER THE ANTIDUMPING ACT
The Treasury Department has determined, following receipt of
evidence of price revisions, that wire rope 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 determination will be published in the Federal Register.
The dollar value of imports of the involved merchandise received during 1963 was approximately $1,300,000.

TREASURY DEPARTMENT
(

FOR IMMEDIATE RlWUSE

TREASURY DECISION ON WIRE ROPE
UNDER THE ANTIDUMPnll ACT

The Tre&8ur,r Department has determined, following receipt ot
evidenoe of price revisions, that wire rope from the United Kingdom
is not "being, nor likely to be, sold in the United stat".s at leas
than fair value within the meaning ot the Antidumping Act.

Notice

of the determination will be published in the Federal Regiater.

The dollar value of imports of the involved merchandi.e re-

oeived during 1963 was approx:lJJately $1,300,000.

TREASURY DEPARTMENT

September 24, 1964

raa~m

TIZASOJlf ZIIClSI<II QI , , _ GLA88
tDaR '1'BI ARtJll8'DII A11l

'roe 'lTeasUr:f ~t baa ~ tbat 1dndov

16-auDCe tb1"ouSb 28-0unce tAiakne.... , t1'OII

euebC*'.

1r1a 1.

beiDa, or 18 J..ikelY to be, eclcl at. leaa tban ra1r ~
the

RQiua

11".,
v1~

of tJle Antidulllptc Act.

AcC01"\i.1J:J8l¥, tJl18 cue 18 be1a& re.tene4 to tile UDS-tel
6't.a1;es TariN

ec-1 ••1or.l

ror _

IIIDUX7 ~OI.\.

Notioe af tbe d.etem1D&t1on ami of tbe ~ of

cue to the 'iVitt ~ ..lOD v1l1 be p!1b11Ned 1D tile felln1

Resister.
~e dollar 'VIIlue 01 1IIpOrt.s neei'ftMi dariDi tM , . . 1~3
liU

appl"Old.Jate~

.53,000.

000

TREASURY DEPARTMENT
September 24, 1964
FOR IMMEDIATE RELEASE
TREASURY DECISION ON WINDOW GLASS
UNDER THE ANTIDUMPING ACT
The Treasury Department has determined "that window glass,
16·ounce through 28-ounce thicknesses, from Czechoslovakia 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
1963 was approximately $53,000.

000

lila III gAS~ A. 14.

nwspusaa,

1'!1d!,y. Sept..ber 2S. 18.

leptt ....r . ,

USIJLTS 01 IU'UIiDUIl \11

BIWOI

1-.

OII-DU IILtI

,.tll. ,. ",000-:

to. 'freuU17 ~ anDO\1MIId laat ...... 111 ~, , or tblnaboU\., of )bS-dq " " " " biU. \0 be _\eel Sept.ellMr )), lf6ia, .....

lO, 1965, .hiGh ..... ott... ..
21&.

Bank. on 8ep\eaDe1'
'lba

dftau. or tJli.e

ToMl appllecl to~ -

Total. aocept,"

18, ..,..

op_. a' ,.. twllNl .....

1aaue an .. 1011_&

"',awt,ts68,oao

1,000,"",000 (iMl.. . . . . .,Ma,0G0 ....... _ •
. . . . . . .1tl_ ..............Wlll
h11 &*. , ......... prlee . . . . _ _)

..... of acoepUd • ..,-1\1..

a.w..

-..s.wte.\ ... ., eIl__. . . . . . . . , •.,..,.. a.

IIlcb

- 96.119

- 96.l6J·

Aftni.
(9H of

, •••raJ.

u. .... II1cl lor at.

a..,...

t.be 1R prl.. _

fetal

DiaV1_
.....

ca....l-..

l1eilloDd
AUat.a

1,1116,))1,oao

1lS,OOO,ooo

la7,toO,OOO

,,111,000

,,)1,000

lJl.,~,ooo

ObiO&lo

7,6)8,000

St. Louia
~

8,''',000
U,S78.ooo
16.&aS,ooo

Ql\7

Dall·.
au 'NDOle.

10$,&,.000
MAL

....p''')

i""':ieo
1, ,000
nIl,lST,OOO

12,_,000
a,609,000

Pb1JAdelplr1a

n,.· ·

,. nH·
).

•
•

!.-al

~Ai
.,000

... r.n

Ea...

•••
•••

".1711·

•
•

11,.... ,868,000

I,.,GOO
'~,ooo

121,S6$ ,aoo

lad",OGO
S~,OOO

7,S7I,ooo

1~,ooo

t!t,qv,ooo

a,ooo,m,ooo

"wpoI1 1. . . of t.he . . . 1--'0 aDd tor t.be __ . . . ., 1....w, u. ,.,•• I
..... bllle W1Ilcl JftYide • ]1eld of ).9kJ. xat..nn . . . . _ ""11. we .......
ieIw ot bull dlaeoat. 'W1\b the . . . . related t.e t.he fa.
tM ""'. JIll
d _twi-7 ...... \MIa tbl ••• - ' lafte\e4 ad their leIII'las.a --'-l a ' • . , .
NlRed \0 a )6O.das,... 18 . . . . . . ., 11el- _ owUft_'-, " . , MIA ......
1l1li4.... 111 tea. of l.at.erN\ _ , _ _ _ _ lafte\e4, HId relMe U.
~
. . .lai . . 1a _ 1atenn ~t perl" W t.a. aft8l
la t.M ,.....
wlth _1anaUAl. ..,0\811. It .... tbaD . . . . per1M 18 s..n.lftt.

}/ 011 •

M.a\.,
_blr"""

t. . .

TREASURY DEPARTMENT

FDa REIEASS A. H. NSIJSPAPERS,

September 24, 1964

Frijal, September 25, 1964.

rlESULTS OF REFUNDING OF $1 BILLION OF ONE-YEAR BILlS

The Treasury Department announced last evening that the tenders for $1,OOO,OOO,OooJ
to be dated September 30, 1964, and to mature
September 18, were opened at the Federal Reserve
Banks on Septf>mber 24.

~thereabouts, of 365-day Treasury bills
~~ember 30, 1965, which were offered on

Tile details of this

Total apr1ied for Total accepted

issue are as follows:

il,848,868,000
1,000,379,000

(includes 152,688,000 entered on a
noncompetitive basis and accepted in
full at the average price shown below)

aange of accepted oompetiti ve bids:

- 96.189 Equivalent rate of discount approx. 3.759% per annum
- 96.169
II
n
II
n
"
3.779% \I
II
_ 96.174"
11
n"
It
3.713% 11
It

Hi3h
10"1
Av~rage

(99~ of the

al"1ount bid for at, the low price was accepted)

Federal Reserve
District
Bost'Jn
New York
P\L hlflelnhia
meveland
Hi Cf111ond
~tlant..'i

Total
Applied for
$
24,280,000

Total
Accepted
$
1,780,000

1,346,337,000
12,908,000
115,000,000
B,609,000

714,857,000
2,,908,000
47,900,000
8,540,000
9,337,000
121,565,000
4,538,000
5,682,000
7,578,000
1,645,000
74,049,000
$1,000,379,000

9,787,000

Chicago
St. Louis
f:inneapoliS
Kansas City
Dallas
San Francisco

TOTAL

vOn a coupon

181,845,000
7,638,000
8,692,000
11,578,000
16,645,000
105,549,000
$1,848,868,000

issue of the same length and for the same amount invested, the return on

these bills would provide a yield of 3.94%. Interest rates on bills are q,loted in
terms of b.;nk discount "rit~ the return related to the face amount of the bUls payable

nmaturity 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
rell!aining in an interest payment period to the actual number of days in the period,
nth semiannual compounding if more than one coupon period is involved.
D-13S10

F\)1{

;'VII.:

A.:-: •.

,~; 'At:

;'::;,

ru..da: ' ;.. ;.:t.~b6r ~9« l~:h

J....,...s.
), ..

the fre4liU17'e;JaJ."'t.ment. announced last 8"fUl.rtc tot.at "'he MadW'. tor . .
1nauury tJ \ 11 s, :)n. series t.o tA an add1 t10nal i.au. 1)[ the billa date4
UI
and tJ.. O~L,,'il" !>q\ries t,.) be d~t..d ::;otober 1, 196U, wl1cb vere ottu.d Oft s.p,.... U.
were op.r~ed Qt ke 'ed@ral ·<.. serve ~ank. on eJ.tC4mher 2:'. 'renc1en wre innt.ed "'1,) i , i ) 'i,:lO, ')T ~!.('rea!y)::.t.~, of :ll-day 0:11. and tor ~9J..i,f)\.}O,IJJO. or therwabollta.
;)f 1~2"".ib., ~.'.l·tJ.:;. d~ta.ns ·:>f t.N. \,.,0 3eri•• are as toll . . .
'fl-(;.a), : r,;:· a 81 ~~ry iJ a 1.
!r..at...rlnK !'.. c~r ,p., 1964
" ~:proz. lqiiI'I' •
; ria.
f. :luual ~....t.e

).S)7~

99.106
19.100

,.S6O'
).5SS:I

99.101

l~2-day:rM8U1"1

"'!£!!I

bill.
Apr\l 1, lJ6S

•
t

&Jj. o.f t.he ..aunt of 91-d-.v bille bid for at. ttJ4t low pri. . . . . uoepW
19! 01 t.ne Mount. 'Jf 1 ~2-dq blll. bid for &\ the 1011 priM we ....,...

··,i,t.rict

~. : ork

1,479,6;'1.,000

/i.il4\·;eLLl.a
·.~leVflland

'iQ.l1"iOfd
i;.tla~,t.a
r:::tC&~:)

. ·t. ;,d.s
tnn.a.~ .lUll

':a ,:sU ~~ity

::a.llar.

r()J"
jS,lSZ,OOO

Applied

~£jo

1DCe
J.~

W!
.91&6,000 r
U
846,291,000,
I

~lt..4'or

2~.5<B,51)

1Me~

1,102,S1.6,OOO

&S",".OGO

20,240,000

a,lfO,OC»
),6)6,000
1),)75.000

14,S6l,OOO'
1l,261,c.YJO t

14,S29,tJOf,)
29,I",06,iYJO

14,$29,000'
22,610,000'

4,$)6,000
lS,)96,OOO

~),8)6,tXY)

172.l.I8,000'

US,754,000

71,",000

15,261,000

1),)$6,000

)1.0)O,~.

8,18S,OOO

J,J.IS,OOO

29,S62,!)QQ
31,261,000

1.\2,2)0, ,Y};)
19,129,U£Y)

11,949,m

1,15),000

27,68),':,)00

lS,211,OOO

,r)$'1,'X}:)

2), ,;)4'J, :" ..d

rl'l:c:sc:}'/:ll~3,'I)

14,·)00,)Q().
U,129,OOO
1),97),'.)')0 I
96.~1,JOO
n,)Jl,')22,'JOO!l Sl.~O,Ikil,OOO

5.15)'oao
lS.lIlf,OOO
T,'IJ,OOO

IlaOlT.oop

MOO.J6S.aI Incl~des '2JS,220,fj()!) ~OQOOIlpet.itlY. MftderI ueepWd a\ \he _"rap pn. .,
if lnolude8 $71,h~,~ nonc~tH.1.. tenders aooeP'ed at. the aYer&p pr10e . ,
r/ <k1 .. C()U.pOll iasue ~f tor", . . . ItHJPh and tor 10he . . . IMUIl\ lnwened, u. ftt . . .
- the.. biU. vO\lld provide ylolAa 01 3.64.', tor t..bft ;''1-*7 bille, aNt
182~' bill.. i.nLel'ttiSt. rat.e& on b111. an quoMd 111 toe... or bull
wi t.J; ~L. t'et,\ll'O relat,ed w t.f:a race _OUD\ or \he WJ.la ~le a~
rl
~t.... \t;. . .uunt, lOftat.d and tJ-.eir lerur\tl ill anul nuaber or ..,. nlaW M •
. 2.f6, /)2,

TJ!ALS

Ai)

".li
".11
,.a•• ,. ...'
cI1.,I.

_\Wi.,. ....

in o'mtra.t., y1elda !)fl cer\lticat.l, nGtiU, aM ~ .... Ins . .
interest ,)n the amount. inftat.ed, aM ...lat.e ~h. lU8ber ot . , . 'II .,.....
an lnt.enat ~nt. period t.o t.ra...'ual n~ 01 ~. in \bI peI'1od, td.t.b ..s.annual c,*~ 11' ao,.. t.nan one .~ period 1a inYOl.....
)6'J-da,l ,Year.

...".. "r

/~~~-'

WASHINGTON, D.C.

FOR RELEASE A. M• NEWSPAPERS,
TiJesday, September 29, 1964.

September 28, 1964

RESULTS OF TREASURY!S WEEKLY BILL OFFERING
The Treasury Department announced la::;t. ,:~verdng that the tenders for two series of
Treasury bills, one series to be an additional issue of the bills dated January 3, 1964,
,md the other series to be dated October 1, 1964, which were offered on September 23,
were opened at the Federal Reserve Banks on September 28. Tenders were invited for
$1,300,000,000, or thereabouts, of 91-day bills and for $900,000,000, or thereabouts,
of 182-day bills. The details of the two series are as follows:
RANGE OF ACCEPTED

-IMPETITlVE BIDS:

High
Low

Average

91-day Treasury bills
maturing December 31, 1964
Approx. Equiv.
Price
Annual Rate
3.537%
3.560%

99.106
99.100

3.555%

99.101

182-day Treasury bills
n aturing April I, 1965

Price

98.134
98.120
98.124

Approx. Equiv.
Annual Rate

3.691$
3.719%
.3.711%

fi:,% of the amount of 91-day bills bid for at the 10\1 price was accepted
of the amount of 182-day bills bid for at the low price was accepted

79%

OTAL TENDERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:
District
Boston
New York
Phlladelphia

Cleveland
~clwond

Atlanta

CMcago
St. Louis

~eapoliB

Kmsas City
~as
S~ Francisco

$EPlied For

Accepted

35,156,000
1,479,651,000
29,562,000
31,261,000
14,529,000
29,408,000
253,836,000
42,230,000
19,129,000
28,057,000
23,340,000
99,843,000
$2,086,002,000

29,946,000
$ 26,035,000
848,291,000: 1,102,546,000
14,562,000:
8,185,000
)1,261,000
20,240,000
14,529,000:
4,536,000
22,670,000
1$,396,000
172,128,000
128,754,000
37,030,000:
15,261,000
14,949,000
7,153,000
27,683,000
15,212,000
14,000,000
11,129,000
73,973,000
96,357,000
$1,)01,022,000 ~ $1,450,804,000
$

Applied For

Accepted
$ 2),825,000

645,416,000
3,185,000
19,190,000
),6}6,000
13,375,000
78,284,000
1.3,156,000
5,153,000
15,149,000
7,919,000
72,017,000
$900,)65,000 ~

TOTALS
~llicIUdes $235,220,000 noncompetitive tenders accepted at the average price of 99.101
~~clUdes $71,408,000 noncompetitive tenders accepted at the average price of 98.124

b On a Coupon

issue of the same length and for the same amount invested, the return on
3.64%) for the 91~day bills, and 3.83%, for the
182-day bills. Interest rates on bills are quoted in terms of bank discount
with the return related to the face amount of the bills payable at maturity rather
than the amount invested and their length in actual number of days related to a
360-day year. In contrast, yields on certificates, notes, and bonds are computed in
tenus ot interest on the aIn01.ll1t invested, and relate the number of days remaining in
t~se bills would provide yields of

an interest payment period to the actual number of days in the period, with semiannual CompOtUlding if more than one coupon period is involved.

135f

D..

- 18 as the principal source of credit facilities and the major guardian of the
financial conscience of the world, the International Monetary Fund.

But

we have also found, as time went on, that there was some place for purely
supplemental arrangements among countries whose special needs might be
adapted to special techniques, while yet adhering consistently to the Fund
itself.

And

are now in!tiating addi tiona! arrangements for improving

our performance with respect to those aspects of credit facilities that
are centered in the Group of Ten.
None of us has as yet surrendered any sovereignty to the Group of Ten.
None of us 1s bound to accept advice from the Group of Ten.

Each of us is

free to withhold or to grant credits in forms that come under multilateral
surveillance.

But we are gaining, every month and year, more experience

in working together to meet some of the special problems that are, at least
in a relative sense, unique among countries of the size and characteristics
included in the Ten.

How better then could

be poised for a testing, in

practical and operational terms, of the various kinds of considerations
that are certain to arise in the studies of reserve asset creation?
The monetary authorities, and those interested in monetary affairs, in
all countries are in a fortunate position.

Our studies are going forward,

pari passu, with the testing of some of the important premises on which a

chOice, among the various results of the studies,

may

ultimately depend.

It is an exciting, in some ways an unprecedented, opportunity for rational
progress in organizing international economic relationso
I know, every economist will want to partiCipate.
you will all join in.

It is one in which j

The debate is on;

I hope

- 11 by step, comparatively modest changes toward what might, of course, in time

prove to be a major change in the canposition of the world's monetary reserves.
By contrast, the French and some other countries believe that it v1ll

eventual.ly be necessary to make a clean start, in deliberately displacing or
replacing what we have, by consciOUsly and explicitly creating SCIIleth1ng that
is truly new.

Their SUggestion for the establisbment of a

c~site

reserve

unit vould involve a contribution by several of the leading industrial
countries, putting agreed amounts of their own currencies into a caamon pool.
Shirts among the participating countries in their cl.a1.ms on this pOol. would
then be linked by a fixed ratio to gold transfers among these same countries.
'rhe ratiO would naturally be changed as the participating countries altered
the volume of composite reserve units.
suggestion.

This is the heart of the French

Details might be spelled out in many 1ftqs I just as there are

many variants for possible creation of owned reserves through the InternatiamU

Monetary Fund.

No one I so far as I know I has an unalterable position on 8111

of these matters.

But we have taken clear initial positions in order to

make certain that the relevant issues w1l1 in fact be thoroughly debated and
analyzed as logically and fUlly as major decisions of this significance deserve.
I am sure you already see, with me, the very interesting parallels
between this debate over the future creation of owned reserves and the
pattern of experimentation that is now being followed as we proceed in the
current phase toward elaboration of credit facUities.

For we bave toda1,

- 16 III.
It was not multilateral surveillance that occasioned the differences
at Tokyo.

Those differences related to steps that might be taken at some

time further on in the future, not in connection with the use of credit
facilities, but in finding new ways to create actual, or owned, reserves.
I have promised you a word of explanation as to why the expression of these
differences came so fittingly at the current phase in the evolution of the
international monetary system, When we are not in fact concerned by any
shortage of owned reserves on a global basis but are instead pressing to
improve the distribution of existing primary reserves -- through the Fund
and bilaterallyo
The answer, bluntly abbreviated, is that the various approaches nov
being utilized for the elaboration of credit facilities can, if we watch
them closely, furnish important evidence bearing upon the other kind of
choice that may have to be made in later years.

Let me illustrate by

briefly characterizing two of the more prominent positions expressed as
to the future creation of owned reserves.
The United States, without pegging itself to an absolute commitment,
would genuinely prefer that any further additions to the world's arrangements
for creating owned reserves be establi"hcd within the International Monetary
Fund.

We would, at least in our present tninking, like to see any such

development, if it occurs, evolve out of practices with Which countries
are already familiar in the fund.

We lrould hope it could represent, step

- 15 their own funds Which represent true settlements of current transactions,
those Which represent long-term

investme~t,

and those which may be specu-

lative or capricious.
Multilateral surveillance involves the creation of no new institution,
but rather the strengthening ot activity already under way, and the e.tablishment of facilities for expediting and standardizing the flow of information among the Group of Ten (or Kleven) countries.

It does not, indeed

could not, require multilateral approval of particular transactions.
will not occasion delay in any foreign exchange transactions or the

tion of swap arrangements.

It
acti~

For it is the speed and flexibility with which

these facilities have been used that have given international monetary
cooperation its remarkable record of recent achievement.
It will be possible, as a result of the newly improved procedures,
however, for any of the countries to take better stock of the financial
factors affecting its own position as a basis for determining its own
individual course of action -- not merely in extending credits or arranging
to obtain them, but more importantly in formulating its own national economic
policies with a view to furthering its own adjustment toward balance of
payments equilibrium.

And this orderly exchange of information will, as

Secretary Dillon said at TOkyo, avoid any risk that a participating country
"might drlf't into heavy and continuous reliance upon such essentiall.y shorttenn credit facilities, delaying too long the necessary corrective action
that should be taken to adjust its balance of PEQ'Dlents. n

- 14 I was asked at a press briefing a few weeks ago, When the Group of
Ten statement of August 1 was published, Whether multilateral surveillance
meant that the countries involved would be giving us more advice than in
the past.

My reply then, and I think it is still tully applicable, was:

"It would be hard to say that either they or we could give or get more
advice than we have had in the last few months.

This only means that, as

the advice is being exchanged, the information base on which it rests is a
little more assured and a little more

CD ~:Y'nt."

And indeed it is in keeping

each other more systematically informed concerning the flows that are taking
place, as well as concerning the compensating action which one country or
another initiates, that the procedures under "multilateraJ. surveillance"

will make their major contribution.
As you well know, a great variety of private capital movements, in
addition to movements of official funds, are constantly exerting an impact
both upon officiaJ. reserves and upon commercial balances in the major
countries.

Some of these capital flows are equilibrating in nature, some

are disequilibrating, some are seasonal, sane are speculative..

Current

approximations as to the basic balance of payments implications for the
various countries can be reached much more rapidly, and we in the United
States can reach our own conclusions as to What they mean for us and the
position of the dollar with much greater assurance, if we can have promptly
available the best results that the responsible authorities of eacb country
can produce -- in attempting to distinguish between those movements of

- 13 capital transactions of the countries in the Group of Ten, now happily
joined for this purpose by Switzerland (Which is not a member of the International Monetary Fund), can, if they move seriously out of alignment, have
grave repercussions on the fUnctioning of the world economy as a whole.
Detailed, confidential and systematic exchanges among these countries are
clearly essential.

In effect, What the Ten (or Eleven) countries are now

providing through their arrangements for mu1 tllateral. surveillance is a
sort of international credit interchange bureaue
To assure efficient and informed processing of this information, the

Ministers and Governors of the Ten have called upon the management of the
Bank for International Settlements, Which has agreed to perform these

services.

To assure full access, in suitably confidential form, to the

management of the International Fund, representatives of the Fund have
partiCipated in all stages of the development of these new arrangements,
and senior officials of the Fund, including where appropriate the Managing
Director himself, will participate in any review and appraisal of the information being gathered.
Discussions based on this information Will occur, as they have informally for a number of years, among the Central Bank Governors and their
associates attending the monthly meetings of the BIS in Easle.

Critical

analysis by representatives of the various goverrnnents will occur as the
ne'W' and regularized flOW' of information is made available to Working Party

3 of the OECD, on which, for example, I represent the United States, accompanied ordinarily by a senior spokesman for the Department of State, the
Council of Economic Advisers, and, of course, the Federe.l Reserve System.

- 12 -

own reserves of gold and foreign exchange.

Bilateral credit facilities can

also be used to reduce in some measure the recourse Which countries have to
make to the International Monetary Fund, in calling upon multilateral credit
facilities to help settle balance of payments accounts.
Before we jump to the conclusion that we have discovered the Aladdin's
lamp of liquidity, however, we had best remember that credit of any kind,
however extended, is in fact a claim upon the real resources of whomever
extends the credit.

That is Why it is impractical to expect that there can

ever, on any massive scale, be "f'ully automatic" credit facilities on 'Which
countries in balance of payments deficit may freely draw.

The ultimate

decision as to wether or not additional credit can safely and usefully be
extended must remain with the crad! tor himself.
That fact, and the rapid recent increase in the use of bilateral
facilities, has made all of us aware of the need for a critical evaluation,
of the kind just conducted by both the Fund and the Ten.

We bad to determine

wether, and if so, how, to regularize and carry forward what has been so
successfully achieved, ad hoc, in these few recent years.

That is Why the

United States has, from the beginning, been scrupulous in publishing, as
soon after each event as prudence would permit, the full record of its
operations.

That is where, now, "multilateral surveillance" comes in.

Multilateral surveillance is essentially a means for imprOving the
information available concerning the credit extended and the debt contracted
by the leading industrial countries in the course of carrying their surpluses
or financing their deficits.

Quite obviously, the volume of trade and

- II -

assassination in November, 1963, and the possibility of imminent crisis
in the Italian foreign exchange market in March,

1964.

Over most of this

period, since late in 1961, a number of the same countries have also been
able to carry out joint operations in the London gold market -- discouraging
harmful speculation and encouraging a maximum flow of newly produced gold
into official reserves rather than into speculative private hoards.
These are the concrete, creditable and conspicuous results of the
cooperation.

But the needs to be met by the world's monetary system are

not only those calling for protection against crisis -- as important as
such protection is.

There are also regular needs for prOVision of the means

of payment used in carrying on the daily transactions of a growing and
diversifying world.

And the potential for international financial coopera-

tion extends beyond the averting of calamity to the helpful improvement of
facilities for settling the net differences among nations that result
from the conglomerate of their every-day trade and payments.
To generalize broadly, most of the direct uses thus far made by other
countries of the new bilateral facilities have been to forestall crisis;
most of the uses thus far made by the United States have been to smooth out
the patterns of balance of payments settlements, both between ourselves and
other countries and among other leading countries which make their settlements in dollars.

Bilateral credit facilities can now be used, in the

ordinary course (and distinct from crisis situations), as temporary supplements to the settlements wich nations make by using, or by adding to, their

- 10 -

A parallel opportunity had been found wi thin the OECD through the establishment of a limited membership group known as Working Party 3, in which
responsible representatives of most of these same governments and central
bank representatives could participate in a full review of their balance of
payments positions, the interactions between these and domestic economic
poliCies, the progress being made toward

e~uilibrium,

and the methods being

used by each to finance its external deficit, or carry its surplus.

addition, the creation of the General Arrangements to Borrow had itself
prompted meetings two or three times a year among the Finance Ministers and
Central Bank Governors of the Ten countries to assure that the evolving
situation was kept in view by all of -,;,
and able to act promptly in the event

::1 order that they would be ready
[,cc::c.

It was out of the combined results of these

fre~uent

contacts, and the

unprecedented opportunities they gave responsible officials to know more
about current developments affecting the economic policies and foreign
economic position of each other, at first hand, that programs of special
action have evolved for providing a tight ring of defenses around all the
world's leading currencies.

These made possible the almost instantaneous

activation of resources to meet and withstand the series of potential
speculative crises that have occurred over the past several years, including
the Canadian dollar crisis in mid-1962, the threatened criSis at the time of
the Cuban confrontation in October, 1962, the shock of the President's

- 9 liquidi ty spectrum, WhUe digesting and redistributing the large volmne of
owned reserves that has already been created.

If that pattern is :followed,

as seems widely expected at least for the next few years, then it is indeed
necessary, in our interest and that ot the Group of Ten and ot the IMF as a
whole, that all countries understand and use, as appropriate, the facilities
which those ot us who were "Deputies of the Ten!' bave feliCitously titled
"multUateral surveillance. n

II.
It was not altogether clear at first that a continuing role would be
found for bUateral financial arrangements in the form of swaps, or forward
operations, or the acquisition of foreign currencies on open account by the
United States itself, or by other countries, or for the issuance by the
United States of bonds denominated in other currencies.

But enough had

been accomplished 'With these facUities by the Autumn of 1963 to raise.
question as to the need for finding some way of keeping such bilateral
arrangements subject to a general review and appraisal by the other countries
which were most directly affected by them, and which were most likely to be
involved in them because of the strength and widespread use of their ow
currencies.
SUch appralssJ. had, in various informal ways, sJ.ready begun to evolve
at the monthly meetings of the Bank for International Settlements attended
by the various central. bank governors and their principal. associates.

- 8 U. S.

rr 0 r t . centered, quite properly, on the

band] 1ng

ot those aspects ot

its requirements that might be comparatively short-lived or reversible •

•
At the same time, as situations
occurred in which these bilateral facilities
could suitably be introduced, attention was also given to the possibility
1b.at these same arrangements might be used by other countries to n-.eet heavy
or unusual needs or their own.

And indeed, over the past three or more

years, the actual magnitude of the use of the neW' bilateral f'acili ties bas
been greater for meeting the unusual needs of other countries participating
in these arrangements than it has been for the united States itself.
Paralleling the increase in reliance upon the IMF as the source of
multilateral credit facilities, and as the worldng

cen~r

of the international

monetary' system, and accompan;ying the more recent elaboratjo n of bilateral
credit facilities, there have been the continued large balar.ce of payments
deficits of the United States.

While these deficits have poured billions of

dollars into the outright, or owned" reserves of' many countries" there must
be no doubt that the phase of large U. S. dollar deficits is nearing its end.
That is a principal reason.tbe present phase in the evolutiOnary progress
of the monetary system calls for increaSing reliance upon credit rather than
upon owned reserves, and upon cooperation rather than upon unilateral action
by us or any country.
As Secretary Dillon so forcefully emphaSized at Tokyo, this is nov the

time to make greater use of the whole .range of credit facllities __
multilateral and bilateral -- that form such an important part of the

- 7"rules of the game" provided by the International Monetary FUnd were fully
adequate to the new conditions.

The ansver then found was that a number

of the leading industrial. countries, whose currencies had became (or were
about to became) convertible, would have to accept an increasing degree of
special responsibility.

They would among themselves have to assure the

adequacy of resources available to the International Monetary Fund in the
event that others among them encountered heavy need to draw on the Fund,
most notably the United states.

That is why the so-called Group of Ten

was established to provide, within the framework of the Fund, the "General.

Arrangements to Borrow," making up to $6 billion equivalent in additional
resources available to meet the needs of these countries, in the large
magnitudes that such needs might reach, without impairing the capacity of
the FUnd to meet at the same time the current needs of any of its other
members.
It followed from this recognition of common interest and special
responsibility that the individual. countries should attempt, as possibilities
appeared, to develop additional arrangements for meeting and financing payments flows among themselves, in an effort to reduce somewhat the direct
burden that might have to be carried, in the event of more lasting needs,
through the

Fund~i"lt3cf~

With the United states, throughout this period of

convertibili ty, having moved into substantial. deficit, it had perhaps the
broadest opportunities for the development of new and flexible bilateral.
payments arrangements, in conjunction with other interested countries.

The

- 6 lateral basis could be suitably adapted to the :t'ul.l. range of differences in
relations among individual countries that might emerge, and whether the FUnd
itself or any possible supplementary arrangements could preserve the element
of discipline which must still be retained if the new resources were to be
kept revelving from one use to another and not drained permanently into the
continuing deficits of particular countries which proved unable or unwilling
to keep their external. accounts, over time, in balance.
What soon became compellingly clear, once most of the leading countries
were convertible (at least on current account), was that money was now much
easier and freer to move than goods or people or fixed capital.

Whenever

differences might then develop among countries, in the pace, or even in the
composition, of their continuing advance, or in their capacity and readiness
for trade, the compensating action could ordinarily be expected to occur
first through the movements of short-term funds.

And since the underlying

causes of such movements at the time were of'ten difficult to di scern and
slow to appear, there was a ready propensity for a"movement of funds in any
direction, once started, to became cumulative.

MOreover, the mere existence

of free and open markets in foreign exchange required the presence of private
speculators, performing their accustomed role in a free and flexible market,
so that sensitive market facilities for the transmission of capital flows
quite naturally and indeed necessarily developed.
In these Circumstances, it was.1nd .liappropriate, in 1961, to question
whether not only the facUi ties, but even more importantly, some of the

- 5the shattering depression which ,followed, "beggar_my neighbor" trade
policies, and eventuaU.y open economic warfare.
World War

Instead, the need a:f'ter

was for a system of guidelines and facilities, flexibly

utilized under a rule of reason.

In the monetary field, that need was to

be met by the International MOnetary FUnd.
The Fund introduced for the first time, on an organized and fully
multilateral basis, the principle of reliance upon credit facilities to
supplement the use of gold and the dollars, sterling or francs that had
become imbedded in the "owned reserves" of various countries.

In the IMF

system, provided that a given country's reserves came under pressure because
of unusual seasonal developnents, or because its cyclical phasing differed
from. that of many other countries with whom. it had extensive trade, or be-

cause its own growth pace had imposed strains that would require some time
to relieve, the Fund could 1'urnish credit for a period of three to five
years in order to help bridge over the needed adjustments.

As a country's

drawings became larger, in relation to its size as reflected in Fund quotas,
the degree of scrutiny and advice from the Fund would be intensified, and
interest charges would rise.

This could provide the needed measure of

discipline as a substitute for the grotesque and grueling "contraction into
balance" that the old gold standard, or presumably any purely automatic
arrangement, would impose in

to~'

s world.

The questions for the further future, once the Fund began to meet the
tests of wide-spread convertibility, were 'Whether its own resources were
adequate, 'Whether facilities for the use of such resources on a :f'Ul.l.y multi-

- 4'Whose performance can have wide repercussions upon the trade and payments
of the world as a whole, came with currency convertibility at the end of 1958.
The entire drive of the postwar period, through the successive miracles of
reconstruction and renewed development, was toward a world of greater freedom for trade and payments among nations.

The unprecedented flourishing of

prosperity during these two postwar decades testifies that the decision to
move in this direction has been sound and that the potential to be realized
by freeing the forces of the market-place is enormous.

But the problem has

been, as new strands created by the international division of labor wove
increasingly complex patterns of economic relations among countries, to find
and accept workable standards for normative behavior.
freedom meant chaos or anarchy.
'motion.

A lunge toward fUll

Yet the drive toward it had to be kept in

Quite understandably, it was to money -- or, more broadly, to

liquidity arrangements -- the common denominator of economic affairs, that
the world turned for some of its needed answers.
The world had already, at Bretton Woods in 1944, discarded the discredited concept of an automatic gold standard.

In creating, and adhering

to, the International Monetary Fund, the countries of a free trading world
'Were declaring that international economic relations could no longer, in
realistic practice, be guided by simple adherence to a system of rather
rigid rules.

No one was willing to repeat the turbulent history of the post

World War I period, when that kind of system, trying to f\mct1on within a
modern environment, brought the gold standard crisis ot the early 1930' s,

- 3was in fact a reassuring demonstration of the solid strength on which our
arrangements for international financial cooperation are now based.
I will not try today to re-state, nor to elaborate upon, the differences
in diagnosis that were brought forth in Tokyo.

I would like to take a brief

look, with you, at the nature and meaning of the kind of international
cooperation we have been evolving in the financial area.

To do that leads,

ini tially, to a look at some of the developnents that have brought about
this new eIIlJ?hasis upon international financial cooperation.

Then, a:f'ter

some further explanation of what the cooperation actually consists of,
perhaps I can make a little clearer the reasons why the debate which has
now been initiated fits so well into the current phase in the evolution of
that cooperation.

Or, to put all this another way, if I may use the rather

terrifying jargon of internationally negotiated language, I want to make a
few comments, first, about "multilateral and bilateral credit facilities,"
then second, about "multilateral surveillance," and third, about the possible
place of additional methods for the "creation of owed reserves."

Fortunate-

ly, I have to make some other speeches on these matters over the next few
weeks, so I will save a few thousand words for those efforts and will not
actually try to keep you here untU sundown, as perhaps you might apprehensively have suspected from this outline.

I.
The impetus to increased use of the International Monetary Fund, and
to increasingly active bUateral operatiOns among those leading countries

- 2 to raise questions about the shape that system might take, or be moving
to~~d,

some years in the future.

cern of the other.

Each fully understood the profound con-

Each recognized that the quality of any decisions that

might be necessary in the future would be improved if there could be wider
consideration of these various approaches inside and among all of the
countries participating in the International Monetary Fund.
Each also knew that a thorough analysiS of the current functioning of
the system had just been completed by the International Monetary Fund,
looking at the world as a whole, and by the so-called Group of Ten, looking
at some of the additional special problems centering in the more industrialized countries.

Each knew that, despite a number of genuine present needs for

specific measures of improvement, there had been a unanimous finding that
the basic structure of the system is sound, and its performance both healthy
and flourishing.

Moreover, every one of the principal actors on the Tokyo'

stage knew there was fir.m agreement that any unexpected crisis Which might
threaten to impair the smooth and sustained functioning of the international
monetary system could and would be met and overcome by utilizing facilities
which were fUlly developed, tested, and agreed upon.
There was no danger now of any speculative unrest because Ministers
revealed, with an invitation to public debate, the differences they had
discovered in their private discussions.

This is what I mean, then, when I

say that the open discussion of important differences in monetary analysis
and in possible prescriptions for the future, as this occurred in Tokyo,

;;'~~R S=~FTLTA \rEC'tTS DELF_~S~ ="1 PPlLADELPHlA AND ~1·,,~mroN AT 12 •.10
FOR~':aN'DEL~l

p.y. ,'EDT.

vO},TDAY, SEPTVr~Ep. 28, 1964.

Iffi·1ARKS BY THE HONORABLE ROBERT V. ROOSA
UNDER SECRErARY OF THE TREASURY FOR MONErARY AFFAIRS
AT THE SIXTH ANNUAL MEETING
OF THE NATIONAL ASSOCIATION OF BUSINESS ECONOMISTS
AT THE WARWICK HOTEL, PHILADELPHIA, PENNSYLVANIA
MONDAY, SEPTD4EER 28, 1964, 12: 30 P.M. (Em')
THE MEANING OF INTERNATIONAL FINANCIAL COOPERATION

You have undoubtedly heard much in recent years about international
fina..'1cial cooperation.

But you must also be wondering, from the newspaper

accounts of the past two weeks, what happened to cooperation in Tokyo.
To compound the confusion, I can assure you that the accounts were entirely
accurate.

Yet the answer I would give to that question, paradoxical as it

may seem, is that this Tokyo experience has been one of the most striking
evidences that has yet appeared of the strength and reliability of the
international financial cooperation Which now exists.
The differences expressed in Tokyo were not the unfortunate or accidental results of any failures of communication or of understanding.

They

were not the expression of suspicions or ambitions by one country or another.
They were instead an open invitation to every interested person everywhere
to begin to participate more fully, alongside the representatives of the
various governments, in a fundamental analysis of some of the issues Which
have arisen as those governments have attempted, thus far behind closed doors,
to survey the possible long-run course of the international monetary system.
The Minister or the Governor or the Chancellor or the Secretary Who
urged consideration of one possible line of thought or another at Tokyo
did so knOwing that there 'Would be no impairment of the effective current
functioning of the monetary system because one or another of them ventured

TREASURY DEPARTMENT
Washington

FOR SIMULTANEOUS RELEASE
IN PHILADELPHIA AND WASHINGTON
AT 12:30 P.M., EDT
MONDAY, SEPTEMBER 28, 1964
REMARKS BY THE HONORABLE ROBERT V. ROOSA
UNDER SECRETARY OF THE TREASURY FOR MONETARY AFFAIRS
AT THE SIXTH ANNUAL MEETING
OF THE NATIONAL ASSOCIATION OF BUSINESS ECONOMISTS
AT THE WARWICK HOTEL, PHILADELPHIA, PENNSYLVANIA
MONDAY, SEPTEMBER 28, 1964, 12:30 P.M. (EDT)
THE MEANING OF INTERNATIONAL FINANCIAL COOPERATION
You have undoubtedly heard much in recent years about
international financial cooperation. But you must also be wondering,
from the newspaper accounts of the past two weeks, what happened to
cooperation in Tokyo. To compound the confusion, I can assure you
that the accounts were entirely accurate. Yet the answer I would
give to that question, paradoxical as it may seem, is that this
Tokyo experience has been one of the most striking evidences that
has yet appeared of the strength and reliability of the international
financial cooperation which now exists.
The differences expressed in Tokyo were not the unfortunate or
accidental results of any failures of communication or of understanding. They were not the expression of suspicions or ambitions
by one country or another. They were instead an open invitation to
every interested person everywhere to begin to participate more
fully, alongside the representatives of the various governments, in
a fundamental analysis of some of the issues which have arisen as
those governments have attempted, thus far behind closed doors,
to survey the possible long-run course of the international monetary
system.
The Minister or the Governor or the Chancellor or the Secretary
who urged consideration of one possible line of thought or another
at Tokyo did so knowing that there would be no impairment of the
effective current functioning of the monetary system because one or
another of them ventured to raise questions about the shape that
system might take, or be moving toward, some years in the future.
Each fully understood tne profound concern of the other. Each
D-1353

- 2 -

recognized that the quality of any decisions that might be necessary
in the future would be improved if there could be wider
consideration of these various approaches inside and among all of
the countries participating in the International Monetary Fund.
Each also knew that a thorough analysis of the current
functioning of the system had just been completed by the
International Monetary Fund, looking at the world as a whole, and by the
so-called Group of Ten, looking at some of the additional special
problems centering in the more industrialized countries. Each knew
that, despite a number of genuine present needs for specific
measures of improvement, there had been a unanimous finding that
the basic structure of the system is sound, and its performance
both healthy and flourishing. Moreover, everyone of the principal
actors on the Tokyo stage knew there was firm agreement that any
unexpected crisis which might threaten to impair the smooth and
sustained functioning of the international monetary system could
and would be met and overcome by utilizing facilities which were
fully developed, tested, and agreed upon.
There was no danger now of any speculative unrest because
Ministers revealed, with an invitation to public debate, the
differences they had discovered in their privatP discussions.
This is what I mean, then, when I say that the open d~scussion of
important differences in monetary analysis and in possible
prescriptions for the future, as this occurred in Tokyo, was in
fact a reassuring demonstration of the solid strength on which our
arrangements for international financial cooperation are now based.
I will not try today to re-state, nor to elaborate upon, the
differences in diagnosis that were brought forth in Tokyo. I
would like to take a brief look, with you, at the nature and
meaning of the kind of international cooperation we have been
evolving in the financial area. To do trn t leads, initially, to
a look at some of the developments that have brought about this
new emphasis upon international financial cooperation. Then, after
Some further explanation of what the cooperation actually consists
of, perhaps I can make a little clearer the reasons why the debate
which has now been initiated fits so well into the current phase
in the evolution of that cooperation. Or, to put all this another
way, if I may use the rather terrifying jargon of internationally
negotiated language, I want to make a few comments, first, about
"multilateral and bilateral credit facilities ," then second, about
"multilateral surveillance ," and third, about the possible place
of additional methods for the "creation of owned reserves."

- 3 -

Fortunately, I have to make some other speeches on these matters over
the next few weeks, so I will save a few thousand words for those
efforts and will not actually try to keep you here until sundown,
as perhaps you might apprehensively have suspected from this
outline.
I .

The impetus to increased use of the International Monetary Fund,
and to increasingly active bilateral operations among those leading
countries whose performance can have wide repercussions upon the
trade and payments of the world as a whole, came with currency
convertibility at the end of 1958. The entire drive of the postwar
period, through the successive miracles of reconstruction and
renewed development, was toward a world of greater freedom for
trade and payments among nations. The unprecedented flourishing
of prosperity during these two postwar decades testifies that the
decision to move in this direction has been sound and that the
potential to be realized by freeing the forces of the market-place
is enormous. But the problem has been, as new strands created by
the international division of labor wove increasingly complex
patters of economic relations among countries, to find and accept
workable standards for normative behavior. A lunge toward full
freedom meant chaos or anarchy. Yet the drive toward it had to
be kept in motion. Quite understandably, it was to money -- or,
more broadly, to liquidity arrangements -- the common denominator
of economic affairs, that the world turned for some of its needed
answers.
The world had already, at Bretton Woods in 1944, discarded the
discredited concept of an automatic gold standard. In creating,
and adhering to, the International Monetary Fund, the countries of
a free trading world were declaring that international economic
relations could no longer, in realistic practice, be guided by
simple adherence to a system of rather rigid rules. No one was
willing to repeat the turbulent history of the post World War I
period, when that kind of system, trying to function within a
modern environment, brought the gold standard crisis of the early
1930's, the shattering depression which followed, "beggar-myneighbor" trade policies, and eventually open economic warfare.
Instead, the need after World War II was for a system of guidelines
and facilities, flexibly utilized under a rule of reason. In the
monetary field, that need was to be met by the International
Monetary Fund.

- 4 -

The Fund introduced for the first time, on an organized and
fully multilateral basis, the principle of reliance upon credit
facilities to supplement the use of gold and the dollars, sterling
or francs that had become imbedded in the "owned reserves" of
various countries. In the IMF system, provided that a given
I
country s reserves came under pressure because of unusual seasonal
developments, or because its cyclical phasing differed from that
of many other countries with whom it had extensive trade , or
because its own growth pace had imposed strains that would require
some time to relieve, the Fund could furnish credit for a period
of three to five years in order to help bridge over the needed
adjustments. As a country's drawings became larger, in relation
to its size as re flec ted in Fund quotas, the degree of scrutiny
and advice from the Fund would be intensified, and interest
charges would rise. This could provide the needed measure of
discipline as a substitute for the grotesque and grueling
"contraction into balance" that the old gold standard, or
presumably and purely automatic arrangement, would impose in
today' s wor ld .
The questions for the further future, once the Fund began to
the tests of wide-spread convertibility, were whether its own
resources were adequate, whether, facilities for the use of such
resources on a fully multilateral basis could be suitably adapted
to the full range of differences in relations among individual
countries that might emerge, and whether the Fund itself or any
possible supplementary arrangements could preserve the element
of discipline which must still be retained if the new resources
were to be kept revolving from one use to another and not drained
permentantly into the continuing deficits of particular countries
which proved unable or unwilling to keep their external accounts,
over time, in balance.
~et

What soon became compellingly clear, once most of the leading
countries were convertible (at least on current account), was that
money was now much eas ier and freer to move than goods or people or
f~ed capital.
Whenever differences might then develop among
Countries, in the pace, or even in the compos ition, of the ir
continuing advance, or in their capacity and readiness for trade,
the compensating ac tion cou ld ord inari ly be expec ted to occur
first through the movements of short-term funds. And since the
~derlying causes of such movements at the time were often difficult
to discern and slow to appear, there was a ready propensity for
a movement of funds in any direction, once started, to become
cumulative. Moreover, the mere existence of free and open markets
~ foreign exchange required the presence of private speculators,
performing their accustomed role in a free and flexible market,
So that sensitive market facilities for the transmission of capital
flows quite naturally and indeed necessarily developed.

- 5 -

In these circumstances, it was appropriate, in 1961, to question
whether not only the facilities, but even more importantly, some of
the "rules of the game" provided by the International Monetary
Fund were fully adequate to the new conditions. The answer then
found was that a number of the leading industrial countries, whose
currencies had become (or were about to become) convertible,
would have to accept an increasing degree of special responsibility.
They would among themselves have to assure the adequacy of
resources available to the International Monetary Fund in the
event that others among them encountered heavy need to draw on
the Fund, most notably the United States. That is why the
so-called Group of Ten was established to provide, within the
framework of the Fund, the "General Arrangements to Borrow,"
making up to $6 billion equivalent in additional resources available
to meet the needs of these countries, in the large magnitudes that
such needs might reach, without impairing the capacity of the
Fund to meet at the same time the current needs of any of its
other members.
It followed from this recognition of common interest and
special responsibility that the individual countries should
attempt, as possibilities appeared, to develop additional
arrangements for meeting and financing payments flows among themselves, in an effort to reduce somewhat the direct burden that
might have to be carried, in the event of more lasting needs,
through the Fund. With the United States, throughout this period
of convertibility, having moved into substantial deficit, it had
perhaps the broadest opportunities for the development of new
and flexible bilateral payments arrangements, in conjuction with
other interested countries. The U. S. effort centered, quite
properly, on the handling of those aspects of its requirements
that might be comparatively short-lived or reversible. At the
same time, as situations occurred in which these bilateral
facilities could suitably be introduced, attention was also
given to the possibility that these same arrangements might be
used by other countries to meet heavy or unusual needs of their
~.
And indeed, over the past three or more years, the actual
magnitude of the use of the new bilateral facilities has been
greater for meeting the unusual needs of other countries
participating in these arrangements than it has been for the
United States itself.

- 6 -

Paralleling the increase in reliance upon the IMF as the
source of multilateral credit facilities, and as the working
center of the international monetary system, and accompanying the
more recent elaboration of bilateral credit facilities, there
Mve been the continued large balance of payments deficits of
the United States. While these deficits have poured billions
of dollars into the outright, or owned, reserves of many
countries, there must be no doubt that the phase of large U. S.
dollar deficits is nearing its end. That is a principal reason
why the present phase in the evolutionary progress of the
monetary system calls for increasing reliance upon credit
rather than upon owned reserves, and upon cooperation rather
than upon unilateral action by us or any country.
As Secretary Dillon so forcefully emphasized at Tokyo,
this is now the time to make greater use of the whole range of
credit facilities -- multilateral and bilateral -- that
form such an important part of the liquidity spectrum, while
digesting and redistributing the large volume of owned
reserves that has already been created. If that pattern is
followed, as seems widely expected at least for the next
few years, then it is indeed necessary, in our interest and
that of the Group of Ten and of the IMF as a whole, that all
countries understand and use, as appropriate, the facilities
which those of us who were "Deputies of the Ten" have
felicitously titled "multilateral surveillance."

- 7 -

II.
It was not altogether clear at first that a continuing role
)uld be found for bilateral financial arrangements in the form of
laps, or forward operations, or the acquisition of foreign currencies
1 open account by the United States itself, or by other countries,
r for the issuance by the United States of bonds denominated in
ther currencies. But enough had been accomplished with these faciliies by the Autumn of 1963 to raise a question as to the need for
inding some way of keeping such bilateral arrangements subject to
general review and appraisal by the other countries which were
.'Jst directly affected by them, and which were most likely to be
nvolved in them because of the strength and widespread use of their
wn currenc ie s .
Such appraisal had, in various informal ways, already begun to
!volve at the monthly meetings of the Bank for International Settle~nts attended by the "various central bank governors and their
lrincipal associates. A parallel opportunity had been found within
:he OECD through the establishment of a limited membership group
mown as Working Party 3, in which responsible representatives of most
)£ these same governments and central bank representatives could
?8rticipate in a full review of their balance of payments positions,
the interactions between these and domestic economic policies, the
?rogress being made toward equilibrium, and the methods being used
by each to finance its external deficit, or carry its surplus. In
addition, the creation of the General Arrangements to Borrow had
itself prompted meetings two or three times a year among the Finance
Ministers and Central Bank Governors of the Ten countries to assure
that the evolving situation was kept in view by all of them in order
that they would be ready and able to act promptly in the event of
need.

It was out of the combined results of these frequent contacts,
~d the unprecedented opportunities they gave responsible officials
to know more about current developments affecting the economic
policies and foreign economic position of each other, at first hand,
that programs of special action have evolved for providing a tight
ring of defenses around all the world's leading currencies. These
~de possible the almost instantaneous activation of reSources to meet
and withstand the series of potential speculative crises that have
OQcurred over the past several years, including the Canadian dollar
crisis in mid-l962 the threatened crisis at the time of the Cuban
,
p
•d
I
confrontation in October, 1962, the shock of the res~ ent s
assassination in November, 1963, and the possibility of imminent
crisis in the Italian foreign exchange market in March, 1964.
~rmost of this period, since late in 1961, a number of the same

- 8 -

countries have also been able to carry out joint operations in the
London gold market -- discouraging harmful speculation and encouraging
a maximum flow of newly produced gold into official reserves rather
than into speculative private hoards.
These are the concrete, creditable and conspicuous results of
the cooperation. But the need3 to be met by the world's monetary
system are not only those calling for protection against crisis -as important as such protection is. There are also regular needs for
provision of the means of payment used in carrying on the daily
transactions of a growing and diversifying world. And the potential
for international financial cooperation extends beyond the averting
of calamity to the helpful improvement of facilities for settling
the net differences among nations that result from the conglomerate
of their every-day trade and payments.
To generalize broadly, most of the direct uses thus far made by
other countries of the new bilateral facilities have been to forestall
crisiS; most of the uses thus far made by the United States have been
to smooth out the patterns of balance of payments settlements, both
between ourselves and other countries and among other leading
countries whic h make their settlements in dollars. Bilateral credit
facilities can now be used, in the ordinary course (and distinct
from crisis situations), as temporary supplements to the settlements
which nattons make by using, or by adding to, their own reserves of
gold and foreign exchange. Bilateral credit facilities can also be
~ed to reduce in some measure the recourse which countries have to
gke to the International Monetary Fund, in calling upon multilateral
credit facilities to help settle balance of payments accounts.
Before we jump to the conclusion that we have discovered the
Aladdin's lamp of liquidity, however, we had best remember that
credit of any kind, however extended, is in fact a claim upon the
real resources of whomever extends the credit. That is why it is
i~ractical to expect that there can ever, on any massive scale, be
"fully automatic" credit facilities on which countries in balance
of payments deficit may freely draw. The ultimate decision as to
w~ther or not additional credit can safely and usefully be extended
must remain with the creditor himself.
That fact, and the rapid recent increase in the use of bilateral
facilities, has made all of us aware of the need for a critical
evaluation, of the kind just conducted by both the Fund and the Ten.
We had to determine whether, and if so, how, to regularize and carry
furward what has been so successfully achieved, ad h2£, in these
few recent years. That is why the Uni ted States has, from the
beginning, been scrupulous in publishing, as soon after each event
as prudence would permit, the full record of its operations. That
is where, now, "multilateral surveillance" comeS in.

- 9 -

Multilateral surveillance is essentially a means for improving
the information available concerning the credit extended and the debt
contracted by the leading industrial countries in the course of
carrying their surpluses or financing their deficits. Quite
obviously, the volume of trade and capital transactions of the countries
in the Group of Ten, now happily joined for this purpose by Switzerland
(which is not a member of the International Monetary Fund), can, if
they move seriously out of alignment, have grave repercussions on
the functioning of the world economy as a whole. Detailed, confidential
and systematic exchanges among these countries are clearly essential.
In effect, what the Ten (or Eleven) countries are now providing
through their arrangements for multilateral surveillance is a sort
)f international credit interchange bureau.
To assure efficient and informed processing of this information,
the Ministers and Governors of the Ten have called upon the management
of the Bank for International Settlements, which has agreed to perform
these services. To assure full access, in suitably confidential
form, to the management of the International Fund, representatives
of the Fund have participated in all stages of the development of
these new arrangements, and senior officials of the Fund, including
where appropriate the Managing Director himself, will participate
in any review and appraisal of the information being gathered.
Discussions based on this information will occur, as they have
informally for a number of years, among the Central Bank Governors
and their associates attending the monthly m=etings of the BIS in
Basle. Critic a1 analysis by representatives of the various
governments will occur as the new and regularized flow of information
is made available to Working Party 3 of the DECD, on which, for
example, I represent the United States, accompanied ordinarily by a
senior spokesman for the Department of State, the Council of Economic
Advisers, and, of course, the Federal Reserve System.
I was asked at a press briefing a few weeks ago, when the Group
of Ten statement of August 1 was published, whether multilateral
surveillance meant that the countries involved would be giving us
more advice than in the past. My reply then, and I think it is still
fUlly applicable, was: "It would be hard to say that either they or
Wa could give or get more advice than we have had in the last few
months. This only means that, as the advice is being exchanged, the
information base on which it rests is a little more assured and a little
more current." And indeed it is in keeping each other more systematically informed concerning the flows that are taking place, as well as
Concerning the compensating action which one country or another
initiates, that the procedures under "multilateral surveillance" will
make their major contribution.

- 10 -

As you well know, a great variety of private capital movements,
in addition to movements of official funds, are constantly exerting
an impact both upon official reserves and upon commercial balances
in the major countries. Some of these capital flows are equilibrating
in nature, some are disequilibrating, some are seasonal, some are
speculative. Current approximations as to the basic balance of
payments implications for the various countries can be reached much
~re rapidly, and we in the United States can reach our own conclusions
as to what they mean for us and the position of the dollar with much
greater assurance, if we can have promptly available the best results
that the responsible authorities of each country can produce -- in
attempting to distinguish between those movements of their o~n funds
which represent true settlements of current transactions, those which
represent long-term investment, and those which may be speculative
01' capricious.
Multilateral surveillance involves the creation of no new
institution, but rather the strengthening of activity already under
way, and the establishment of facilities for expediting and standardizing the flow of information among the Group of Ten (or Eleven)
countries. It does not, :indeed could not, require multilateral
approval of particular transactions. It will not occasion delay in
any foreign exchange transactions or the activation of swap arrange~nts.
For it is the speed and flexibility with which these facilities
Mve been used that have given international monetary cooperation
its remarkable record of recent achievement.
It will be possible, as a result of the newly improved
procedures, however, for any of the countries to take better stock
of the financial factors affecting its own position as a basis for
dete~ining its own individual course of action -- not merely in
extending credits or arranging to obtain them, but more importantly
in formulating its own national economic policies with a view to
furthering its own adjustment toward balance of payments equilibrium.
And this orderly exchange of information will, as Secretary Dillon
said at Tokyo, avoid any risk that a participating country "might
~ift into heavy and continuous reliance upon such essentially
short-term credit facilities, delaying too long the necessary
corrective action that should be taken to adjust its balance of
payments. "

- 11 -

III.
It was not multilateral surveillance that occasioned the
differences at Tokyo. Those differences related to steps that might
be taken at some time further on in the future, not in connection
with the use of credit facilities, but in finding new ways to create
actual, or owned, reserves. I have promised you a word of explanation
as to why the expression of these differences came so fittingly at
the current phase in the evolution of the international monetary
system, when we are not in fact concerned by any shortage of owned
reserves on a global basis but are instead pressing to improve the
distribution of existing primary reserves -- through the Fund and
bilaterally.
The answer, bluntly abbreviated, is that the various approaches
now being utilized for the elaboration of credit facilities can, if
we watch them closely, furnish important evidence bearing upon the
other kind of choice that may have to be made in later years. Let
me illustrate by briefly characterizing two of the more prominent
pOSitions expressed as to the future creation of owned reserves.
The United States, without pegging itself to an absolute commit~nt, would genuinely prefer that any further additions to the
world's arrangements for creating owned reserves be established within
t~ International Monetary Fund.
We would, at least in our present
thinking, like to see any such development, if it occurs, evolve out
of practices with which countries are already familiar in the Fund.
We would hope it could represent, step by step, comparatively modest
changes toward what might, of course, in time prove to be a major
change in the composition of the world's monetary reserves.
By contrast, the French and som~ other countries believe that it
will eventually be necessary to make a clean start, in deliberately
displacing or replacing what we have, by consciously and explicitly
creating so~ething that is truly new. Their suggestion for the
establishment of a composite reserve unit would involve a contribution
by several of the leading industrial countries, putting agreed
~ounts of their own currencies into a common pool.
Shifts among
tM participating countries in their claims on this pool would then
be linked by a fixed ratio to gold transfers among these sa~e
countries. The ratio would naturally be changed as the participating
countries altered the volume of composite reserve units. This is
t~ heart of the French suggestion.
Details might be spelled out in
many ways, just as there are many variants for possible creation
of owned reserves through the International Monetary Fund. No one,
So far as I know , has an unalterable position on any of these matters.
.
But we have taken clear initial positions in order to make certa1n
that the relevant issues will in fact be thoroughly debated and

- 12 analyzed as logically and fully as major decisions of this significance deserve.
I am sure you already see, with me, the very interesting parallels
between this debate over the future creation of owned reserves and
the pattern of experimentation that is now being followed as we
proceed in the current phase toward elaboration of credit facilities.
For we have today, as the principal source of credit facilities and
the major guardian of the financial conscience of the world, the
International Monetary Fund. But we have also found, as time went on,
that there was some place for purely supplemental arrangements among
countries whose special needs might be adapted to special techniques,
while yet adhering consistently to the Fund itself. And we are now
initiating additional arrangements for improving our performance
with respect to' those aspects of credit facilities that are centered
in the Group of Ten.
None of us has as yet surrendered any sovereignty to the Group
of Ten. None of us is bound to accept advice from the Group of Ten.
Each of us is free to withhold or to grant credits in forms that come
~der multilateral surveillance.
But we are gaining, every month
and year, more experience in working together to meet some of the
special problems that are, at least in a relative sense, unique among
countries of the size and characteristics included in the Ten. How
better then could wa be poised for a testing, in practical and
operational terms, of the various kinds of considerations that are
certain to arise in the studies of reserve asset creation?
The monetary authorities, and those interested in monetary affairs,
in all countries are in a fortunate position. Our studies are going
forward, pari passu, with the testing of som~ of the important
premises on which a choice, among the various results of the studies,
may ultimately depend. It is an exciting, in some ways an unprecedented:
opportunity for rational progress in organizing international economic
relations. It is one in which, I know, every economist will want to
participate. Tho; debate is on; I hope you will all join in.
000

t... ((

"'-c:.J-k ___

t'~J~::;IDi.::NT t

';. G~rrEE ON \oJA.RREN REPOR.T
HOLDS FIR:;T MEETING

The .t'r0s1dent! D Goonittee on the Warren Report, _ich he e-.l
last Sunday night to advise him "on the execution of the recOlllMlldations of the

~.Jarren

Commission," held ita firat meetiD, today at

the Treasury Department.
i'resent at the meeting, which beg_ at 11:00 a.m., aDd -.dad
at

.(~/ ~

were Secretary of the Treasury Doua1aa Dtllcm,

Acting Attorney General Nichol. . deB l.atztmbach, and SpecW
Mllt.tant to the l:'resident for Natioaal Security Affairs. HcGeor,e

Buady.

The fourth member of the paael, Cetral Iatel1igeace AI-.y

Director John A. McCone II

va.

out of towo.

The COIII!Iittee does not plan to atlDOUDCe ita workiDg ....1. . iD

advance, nor to issue public atat8lel1ta on ita pn»gr... or rae,*, ••da
tiona prior to submlssioo of ita _ , report to the

I·

) '.,

C! .

rr••1ct.t.

TREASURY DEPARTMENT
September 29, 1964

FOR IMMEDIATE RELEASE
PRESIDENT'S COMMITTEE ON WARREN REPORT
HOLDS FIRST MEETING
The President's Committee on the Warren Report,
which he named last Sunday night to advise him "on
the execution of the recommendations of the Warren
Commission," held its first meeting today at the
Treasury. Department.
Present at the meeting, which began at 11:00 a.m.,
and ended at 12:45, were Secretary of the Treasury
Douglas Dillon, Acting Attorney General Nicholas deB.
Katzenbach, and Special Assistant to the President for
National Security Affairs, McGeorge Bundy.

The

fourth member of the panel, Central Intelligence Agency
Director John A. McCone, was out of town.
The Committee does not plan to announce its working
sessions in advance, nor to issue public statements on
its progress or recommendations prior to submission of
its report to the President.
000

D-1354

TREASURY DEPARTMENT

September 30, 1964
FOR RELEASE AT 12 NOON (EDT)
WEDNESDAY, SEPTEMBER 30, 1964
TREASURY SECRETARY DILLON HONORS
TWO MARYLAND SAVINGS BOND VOLUNTEERS
The new and retiring volunteer State Chairmen for the U. S.
Savings Bonds program in Maryland were honored in a special
ceremony in the office of Secretary of the Treasury Douglas
Dillon today.
The Secretary presented a formal Certificate of Appointment
to Robert H. Levi, President of the Hecht Co. of Baltimore and
Washington, who will serve for the next two years, and a Distinguished Service Award to Charles P. McCormick, Chairman of the
Board of McCormick & Co., Baltimore, whom Mr. Levi succeeds.
Secretary Dillon said Mr. Levi's wide range of activity in
the fields of retailing and finance, coupled with his many civic
endeavors, would bring a background of broad experience into the
Bond program~ The Baltimore business man, associated with The
Hecht Co. since 1942, also is a member of the board of the
Mercantile Safe Deposit & Trust Co.; the Savings Bank of
Baltimore; many civic organizations both in Baltimore and
Washington, and is a trustee of Johns Hopkins and Sinai
Hospitals.
The Secretary also commended Mr. McCormick's leadership
in the fields of business, finance and civic activities which
had enabled the Savings Bonds program to strengthen the foundation of its public support during his tenure. He cited that
under Mr. McCormick, sales of Bonds had increased more than
19.5 per cent.
000

- 3 -

and exchange tenders will receive equal trea.tment.

Cash adjustments will be made

for differences between the par value of ma.turing 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 Pederal 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 ta.xa.tion 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

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 from any Federal Reserve Bank or Branch.

- 2 -

decimals, e. g., 99.925.

Fractions may not be used.

It is urged that tenders

be made on the printed forms and forwarded in the special envelopes which will

be supplied by Federal Reserve Banks or Branches on application therefor.
Banking institutions generally may submit tenders for account of customers
provided the names ot the customers are set forth in such tenders.

others than

banking institutions will not be pennitted 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 ot

the face amount of Treasury bills applied for, unless the tenders are accompanied
by an express guaranty of payment by an incorporated bank or trust company.
Immediately after the closing hour, tenders will be opened at the Federal
Reserve Banks and Branches, following which public announcement will be made by
the Treasury Department of the amount and price range of accepted bids.

Those

submitting tenders will be advised of the acceptance or rejection thereof.

The

. Secretary of the Treasury expressly reserves the right to accept or reject any
or all tenders, in whole or in part, and his action in any such respect shall be
Subject to these reservations, noncompetitive tenders for $ 200,000 or
({HJ
less for the additional bills dated
July
91
days remain(diiij
ing until maturity date on Janua.1965
) and noncompetitive tenders for
final.

9t&64

$10~O

or less for the

182 -day bills without stated price from anyone

bidder will be accepted in full a.t the a.verage price (in three decimals) of
cepted competitive bids for the respective issues.

&C-

Settlement for accepted ten-

ders in accordance with the bids must be made or completed at the Federal Reserve
Banks on

Octo oer 001964

, in cash or other ilmnediately available funds or

in a like face amount of Treasury bills maturing

October 8, 1964

{2il

•

Cash

TREASURY DEPARTMENT

Washington
September 30, 1964

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, 10C, 000,000 , or thereabouts, for
({a}
cash and in exchange for Treasury bills maturing October 8, 1964 ,in the amount

of $ 2, 101 ~ 267 ,000 , as follows:

;m:

-day bills (to maturity date) to be issued __0_c_t_ob_e_r-r;:8 ,_1_96_4_ _
T
¥)&
;u&
in the amount of $1,200,000,000 , or thereabouts, represent~
ing an additional amount of bills dated July 9, 1964
,
91

and to mature January 7, 1965

, originally issued in the

X£A){
amount of $ 900~OC

,the additional and original bills

to be freely interchangeable.
182 -day bills, for $ 900,000} 000
~

}QJJX
Octobe~ 1964

----~.,~~~------

, or thereabouts, to be dated

, and to mature

April 8, 1965
~

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 for.m 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
Daylight Saving
clOSing hour, one-thirty p.m., Eastern/~t1me, 1:'0 nday, October 5, 1964
~
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 IMMEDIATE RELEASE

September 30,

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 October 8,1964,
in the amount of
$2,101,267,000, as follows:
91-day bills (to maturity date) to be issued
in the amount of $ 1,200,000,000, or thereabouts,
additional amount of bills dated July 9, 1964,
mature January 7,1965, originally issued 1n the
$900,046,000,
the add1t1onal and original bills
interchangeable.
'

October 8, 1964,
representing an
and to
amount of
to be freely

182-day bills, for $ 900,000,000,
or thereabouts, to be dated
October 8, 1964 , and to mature April 8, 1965.
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 1n 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 Daylight Saving
time, Monday, October 5, 1964.
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
n!sponsible and recognized dealers in investment securities. Tenders
from others rnust 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.
0-1355

- 2 -

Immediately after the closing hour, tenders will be opened at
the Federal Reserve Banks and Branches, followin~ 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 $ 200,000or less for the additional bills dated
July 9, 1964,
(91-days remaining until maturit¥ date on
January 7, 1965) and noncompetitive tenders for $ 100,000
or lesa 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 ir. accordance with the bids must be
made or completed at the Federal Reserve Banks on October 8, 1964,
in cash or other immediately available funds or in a like face
amount of Treasury bills maturing October 8,1964. Cash and
exchange tenders will receive equal treatment. Cash adjustments
will be mad~ 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 d1spos1tion of the bills, does not have
any exemption, as such, and lOBS 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.
~reasury 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 Pederal Reserve Bank or Branch.

000

- 3 -

efficient repression of common law crimes and offenses, with the
strict exclusion of all matters having a political, religious,
or racial character.
Such topics as international traffic in narcotic drugs,
international counterfeiting, and major smuggling problems will
be discussed at the Caracas conference.

The delegates will also

discuss matters dealing with automation of criminal records,
ways to improve and facilitate exchange of information concerning
international criminals, and means of strengthening extradition
procedures against persons wanted for serious crimes.
000

- 2 Official United States observers attending the Caracas
Conference are:
Clark D. Anderson, Legal Attache, American Embassy,
Mexico City;
Byron Engle, Director, Office of Public Safety, Agency for
International Development, Department of State;
Frank A. Bartimo, Assistant General Counsel (Manpower),
Department of Defense.
Mr. Sagalyn is senior Vice President of
of its nine-man executive committee.

Interpol~

a member

He was elected to a three

year term at Interpol's General Assembly in Madrid in 1962 and
holds this office as a representative of the Western Hemisphere.
The President of Interpol is Mr. Fjalar Jarva, Commissioner of
Police, Ministry of Interior, Finland.

There are 90 member

nations in the organization.
The purposes of Interpol are to insure and promote mutual
assistance between criminal police authorities, within the limits
of the laws existing in the different states, and to work toward

September 30, 1964
~

-=-~

R.. ,K,I·)d?D" A,~

N.EL~tfs ~',

UNITED STATES OFFICIALS AT
INTERPOL CONFERENCE IN CARACAS
Four Treasury law enforcement officials are serving as
United States delegates to the 33rd General Assembly of the
International Criminal Police Organization (Interpol}, which
is meeting this week in Caracas, Venezuela.
Chairman of the delegation is Arnold Sagalyn, Director of
Law Enforcement Coordination for the Treasury Departmept.
Other delegates are:
George H. Gaffney, Deputy Commissioner, Bureau of Narcotics;
H. Alan Long, Director, Intelligence Division, Internal
Revenue Service;
Paul J. Paterni, Deputy Chief, U. S. Secret Service.
Alternate delegates are:

Thomas M. Allen, Senior Customs

Representative, Mexico City, Mexico; William J. Durkin, District
Supervisor, Bureau of Narcotics, Mexico City, Mexico; and
Frank W. Levya, Special Agent in Charge, U.S. Secret Service,
Puerto Rico.

35~

TREASURY DEPARTMENT

WASHINGTON. D.C.
September 30, 1964

__•__

FOR IMHEDIA TE RELEASE

UNITED STATES OFFICIALS AT
INTERPOL CONFERENCE IN CARACAS
Five Treasury law enforcement ~rricials are serving as
United States delegates to the 33rd General Assembly of the
International Cri~inal Police Organization (Interpol), which is
meeting this week in Caracas, Venezuela.
Chairman of the delgation is Arnold Sagalyn, Director of

Law Enforcement Coordination for the Treasury Department.
Other delegates are:
Thomas M. Allen, Senior Customs Representative,
Mexico City, Mexico;
George H. Gaffney, Deputy Commissioner,
Bureau of Narcotics;
H. Alan Lang, Director, Intelligence Division,
Internal Revenue Service;
Paul J. Paterni, Deputy Chief, U. S. Secret Service.
Alternate delegates are: William J. Durkin, District
Supervisor, Bureau of Narcotics, Mexico City, Mexico; and
Frank W. Levya, Special Agent in Charge, U. S. Secret Service,
Puerto Rico.
Official United States observers attending the Caracas
Conference are:
Clark D. Anderson, Legal
Mexico City; .

Attec~,

American Embassy,

Byron Engle, Director, Of:ice of Public Safety,
Agency for International Dev~lopment,
Department of State;
Frank A. Bartimo, Assistant General Counsel
Department of Defense.

»-1356

~npower),

- 2 Mr. Sagalyn is senior Vice President of Interpol, and
a member of its nine-man executive committee. He was elected to
a three year term at Interpol's General Assembly in Madrid in
1962 and holds this office as a representative of the Western
Hemisphere. The President of Interpol is Mr. Fjalar Jarva,
Commissioner of Police, Ministry of Interior, Finland. There are
90 member nations in the organization.
The purposesof Interpol are to insure and promote mutual
assistance between criminal police authorities, within the
limits of the laws existing in the different states, and to work
toward efficient repression of common law crimes and offenses,
with the strict exclusion of all matters having a political, religious,
or racial character.
Such topics as international traffic in narcotic drugs,
international counterfeiting, and major smuggling problems will
be discussed at the Caracas conference. The delegates will also
discuss matters dealing with automation of criminal records, ways
to improve 'and facilitate exchange of information concerning
international criminals, and means of strengthening extradition
procedures against persons wanted for serious crimes.

000

~ , * " ••,1..

1tI1lbe U. S. frca . .

1M ....... U t • •1I.I) _lUcID

"tMr:u.a..

TCItIa1 ..........

-/'

..,\

4IA:PJ.8pr4~:IPP:bnY64

......, '-".

sa tile .......S.. at GIl

tan

of 1Ib1oa _

at 'Ud.a ,..... . . _ . ., to WOO IIllllc:a•

Ia~

.... _

.t, ....

"""a•., 1,

TREASURY DEPARTMENT

September 30,1964
FOR IMMEDIATE RELEASE
TREASURY ANNOUNCES DRAWING FROM
INTERNATIONAL MONETARY FUND
Secretary of the Treasury Douglas Dillon today
announced a fourth drawing of foreign currencies by
the United States from the International Monetary
Fund.
The drawing is for $100 million in the currencies
of Germany and the Netherlands.

Total drawings, the

first of which was made on February 13 of this year,
now amount to $400 million.
As in the case of the previous drawings, the
currencies will be sold for dollars to other Fund
members for their use in making repayments to the
Fund, including a current $50 million repayment by
Canada.

000

D-1357

u 5 TREASURY LIBRARY

111111"

IllIl;llI!il;·!lnl!ill~

1 0031516

Full text of Press Releases of the United States Department of the Treasury : Volume 144

FRASER