Senator BRIDGES. Instead of the appearance of a regular old-fashioned E-bond, these are more like a check.

Mr. HEFFELFINGER. Yes, sir. They have the same appearance as the previous paper bond except they are just reduced in size to coincide with the size of a check. It has the same appearance as the paper bond.

Senator BRIDGES. What is the advantage of the punchcard?

Mr. HEFFELFINGER. The first advantage is that we save $500,000 in printing costs for 1 year's supply. That is a continuing saving from year to year. With the punchcard we can adapt the ultimate processing of the records of the bonds to machine operation where we feel that within 2 years we will be saving another $1 million in the expense of bookkeeping-the issue and the redemption records.

Senator BRIDGES. There is no idea on the part of the Treasury of calling in E-bonds to substitute the new ones? You are going to let the old type bonds be in force?

Mr. HEFFELFINGER. That is right.

Senator BRIDGES. That is an inquiry I get. Therefore, it means from October when you put out a new E-type bond it does not change the bonds existing at that time.

Mr. HEFFELFINGER. Oh, no.

Senator BRIDGES. Do you contemplate it for anything else other than E-bonds?

Mr. HEFFELFINGER. No, I don't think it would be adaptable. The large volume of E-bonds makes it readily adaptable for that.

Senator DIRKSEN. Could you insert in the record a statement showing the differences between all these different bonds, E-bonds, F-bonds, K-bonds, G-bonds, with their attributes and so forth, of tabular information?

Mr. HEFFELFINGER. Yes, sir.

Senator DIRKSEN. You get out a folder on that, of course, but I still think it is pretty good information to put in the record in tabular form. And, among other things, of course, indicate where you continue to hold them after maturity so that these various distinctions are pretty carefully recited. I have seen your folder, but you mislay them, and every once in a while somebody wants to refresh himself on it and does not know where to put his hands on the folder if the question should arise on the Senate floor.

Mr. HEFFELFINGER. I will be glad to do that. (The information referred to follows:)

UNITED STATES SAVINGS BONDS

Series A to D savings bonds were on sale prior to May 1941. These were of 10-year maturity, and all had matured before May 1951. No extension option was provided.

Series E savings bonds have been continuously on sale since May 1, 1941. Effective May 1, 1951, owners of maturing series E bonds were offered these options: (1) cash redemption, (2) extension up to 10 additional years. (3) exchange for current income G- or K-bonds. (This option lapsed in April 1957.) Series E issued from May 1, 1952, to January 31, 1957, carried increased investment yields-both intermediate and full term. Also, intermediate and fullterm yields were increased for the optional extension period on all series E bonds maturing on and after May 1, 1952.

Series E issued on and after February 1, 1957, carry further increased investment yields--both intermediate and full term. Extension option terms, if any, have not yet been determined. The annual purchase limit was reduced by one-half.

Series F and G savings bonds were issued from May 1, 1941, to April 30. 1952, when they were withdrawn from sale.

Series J and K succeeded series F and G on May 1, 1952, and were withdrawn from sale April 30, 1957.

Series H current income savings bonds were first offered for sale June 1, 1952, as a companion piece to the series E bond. Interest is paid semiannually by United States Treasury check. Yields were increased on series H bonds issued February 1, 1957, and after, comparably with series E bonds.

Although known by many names since they were first offered for sale baby bonds, defense bonds, war bonds, and security bonds-they are all United States savings bonds, backed by the full faith and credit of the United States.

ESSENTIAL FEATURES

All issues of savings bonds are free from market fluctuations. They are not callable prior to original or (in the case of series E bonds bearing issue dates from May 1, 1941-January 1, 1957) extended maturity and they cannot be pledged as collateral.

Facilities for purchase

Series E bonds for investors other than individuals and series H bonds are issued only by the Federal Reserve banks and branches and the Treasurer of the United States. However, in either case, applications for purchase may be sent direct to those agencies or forwarded through the purchaser's own bank.

Series E bonds for individuals (that is, natural persons in their own right) may be purchased locally at banks, trust companies, mutual savings banks, and other financial institutions.

They may also be purchased on the payroll savings plan by employees of many industrial and commercial firms; and on the bond-a-month plan by individual depositors of many commercial banks.

Redemption

Savings bonds of all series and denominations are redeemable at stated values, at the option of the owner, after specified short periods of holding. If he so desires, the owner of a savings bond of any series in a denomination larger than the minimum for that series may redeem it in part at current redemption value, in amounts corresponding to denominations authorized for bonds of the particular series. The remainder will be reissued as of the original date without loss: of interest.

Taxable status

Interest on savings bonds is not exempt from Federal income taxes. The bonds are subject to estate, inheritance, gift, or other excise taxes, Federal or State, but are exempt from all taxation imposed on the principal or interest thereof by any State, any possession of the United States, or by any local taxing authority.

A taxpayer who owns series E, F, or J savings bonds may report the interest thereon in either of 2 ways: (1) He may defer reporting the interest until the bonds are cashed or final maturity, whichever occurs first, in which case the total interest must be included as income for that year, or (2) he may, if he so elects in accordance with income tax regulations, report the interest each year as it accrues.

Change of registration (reissue)

In many cases the registration of savings bonds may be changed without cashing the bonds and therefore without loss of interest. Regular forms for various classes of reissue transactions may be obtained from any Federal Reserve bank or branch. Under this method of changing the registration, which is referred to as reissue, new bonds are issued bearing the same issue dates as the originals. Persons entitled to reissue may have the new bonds registered in their names in any authorized form of registration. Some of the types of cases in which reissue of bonds is authorized are described below.

Upon the death of an owner, savings bonds of any series may be reissued in the name of the surviving beneficiary or coowner (if any) designated on the bonds; if there is no such survivor, the bonds may be reissued in the names of the persons entitled to share in the owner's estate. Bonds registered in the

name of an owner payable on death to a designated beneficiary may be reissued to eliminate the name of the beneficiary, if the beneficiary dies first. During the lifetime of the beneficiary the owner has no absolute option to have the bonds reissued to eliminate the name of the beneficiary, but such reissue is permissible with the beneficiary's written consent. Bonds registered in the names of two persons as coowners may not be reissued merely at the option of either to eliminate the name of the other, but in certain limited classes of cases (marriage of one of the coowners or divorce between them after the issue of the bonds and certain cases involving close family relationships) they may be reissued upon the request of both to change one of them from coowner to beneficiary or to eliminate his name altogether. No reissue may be made which would adversely affect the interest in savings bonds of a minor or any other person under legal disability.

For complete information concerning the reissue of savings bonds owned by individuals in their own right and bonds registered in the names of trustees and organizations, see Department Circular 530, Eighth Revision.

Safety

If bonds are lost, stolen, or destroyed, the owner should give prompt notice to the Bureau of the Public Debt, Division of Loans and Currency, 536 South Clark Street, Chicago 5, Ill., stating the serial numbers (with prefix and suffix letters), the issue dates (month and year), and the name or names and address on the bonds. The Division of Loans and Currency will then send a special form which the owner should execute in accordance with the instructions thereon in order to obtain relief by the issue of substitute bonds.

Owners should keep a personal up-to-date record of their bonds handy, but not with the bonds themselves.

Offering circulars.

Complete details of the several issues of savings bonds will be found in the official Treasury circulars:

No. 653, Fourth Revision, as amended, offers series E

No. 905, Revised, as amended, offers series H

No. 530, Eighth Revision, contains the general regulations governing United States savings bonds.

These circulars may be obtained from Federal Reserve banks or branches or from the Division of Loans and Currency in Chicago.

UNITED STATES SAVINGS BONDS, SERIES E

Price, 75 percent of maturity value.

Dated first day of month in which payment is received by an authorized issuing agent.

Mature 8 years and 11 months from issue date.1

Yield, 34 percent compounded semiannually when held to maturity.1

Since the following is only a summary, reference should be made to the govern ing official circulars for detailed information.

1. Denominations (maturity value): $25, $50, $100, $200, $500, $1,000, $10,000, $100,000.2

Corresponding issue (cost) prices: $18.75, $37.50, $75, $150, $375, $750, $7,500, $75,000.2

2. Registration: Issued in registered form only: in name of one individual; in names of 2 (but not more) individuals as coowners; or in name of 1 individual payable on death to 1 other designated individual. They may also be issued in the names of fiduciaries (including but not limited to guardians and trustees of all classes), in the name of the owner or custodian of public funds, or of any partnership, unincorporated association, or corporation (public or private). They may not be registered in the names of commercial banks, which for this purpose are defined as those accepting demand deposits. They cannot be transferred, sold, or used as collateral or as security for the performance of an obligation. 3. Who may own: See paragraph 2 above.

1 Applies to bonds purchased on and after February 1, 1957.

2 $100,000 series E bonds are issued only to trustees of employees savings plans.

4. Limit on holdings: The limit is $10,0003 maturity value ($7,500 issue price) each calendar year. It applies to bonds originally issued during a calendar yearto and held by any investor. For the purpose of computing this limit, bonds issued to coowners may be applied to the holdings of either or apportioned between them. 5. Interest: Interest accrues through increases in redemption value at the end of each half-year period from issue date with an additional increase for the 5-month period from 81⁄2 years to maturity, to provide an annual investment yield of 34 percent, compounded semiannually, if held to maturity.

6. Redemption: At the option of the owner, they may be redeemed any time after 2 months from issue date, without advance notice, generally at the same classes of agencies from which they may be bought. Not callable by Treasury prior to maturity.

7. Options at maturity: The Treasury Department offers the holder of maturing series E bonds two options:

Option 1: To accept cash by presenting the matured bonds, with proper identification, to any authorized paying agent.

A. Bonds issued prior to May 1, 1957, may be held up to 10 years after maturity and earn interest on the face amount at the rate of about 3 percent, compounded semiannually. The interest rate is slightly lower for bonds which matured prior to May 1, 1952. See table on series E bonds issued May 1941 through April 1942 for the extended maturity period.) No action is required of an owner desiring to take advantage of this option. Extended E bonds may be cashed at any time the owner desires, at values shown in the redemption table on the next page. B. Bonds issued May 1, 1957, and thereafter-the terms of an extension, if any, will not be announced until later. (See note to table on redemption values and investment yields.)

TABLE OF REDEMPTION VALUES AND INVESTMENT YIELDS (BASED ON $100 Bond, ISSUE PRICE $75)

NOTE. No extension option has been announced for these bonds. However, owners of bonds bearing issue dates of February through April 1957 have the option to continue holding their bonds after maturity. The redemption values of these bonds during the extended maturity period are the same as for bonds issued May 1952 through January 1957.

3 For employees' savings plans the annual purchase limit is $2,000 (maturity value) multiplied by the highest number of participants in an employees' savings plan at any time during the year in which the bonds are issued.