(e) Exempt, both as to principal and interest, from all taxation now or hereafter im
posed by the United States, any State, or any of the possessions of the United States, or
by any local taxing authority, except (a) estate or inheritance taxes, and (b) graduated
additional income taxes, commonly known as surtaxes, and excess-profits and war-profits
taxes, now or hereafter imposed by the United States, upon the income or profits of in-
dividuals, partnerships, associations, or corporations. The interest on an amount of
bonds authorized by the act approved Sept. 24, 1917, as amended, the principal of which
does not exceed in the aggregate $5,000, owned by any individual. partnership, associa-
tion, or corporation, shall be exempt from the taxes provided for in clause (b) above. For
the purposes of determining taxes and tax exemptions, the increment in value of savings
bonds represented by the difference between the price paid and the redemption value
received (whether at or before maturity) shall be considered as interest.

Attention is invited to Treasury Decision 4550 ruling that bonds, notes, bills, and cer-
tificates of indebtedness of the Federal Government or its agencies, and the interest
thereon, are not exempt from the gift tax

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

Receivability in Payment of Certain Taxes:

Federal estate or inheritance taxes. Treasury bonds and Treasury notes, bearing inter-
est at a higher rate than 4 per centum per annum, which have been owned by any person
continually for at least 6 months prior to the date of his death and which upon such date
constitute part of his estate are receivable by the United States at par and accrued interest
in payment of Federal estate taxes.

Federal income and profits tares.-Treasury notes, Treasury certificates of indebted-
ness, and Treasury bills, maturing on tax-payment dates, are receivable at par in pay-
ment of income and profits taxes payable at the maturity of the notes, certificates, or bil s.

1 After deducting amounts of funds deposited with the Treasurer of the United States to meet interest payments.

? Includes only bonds issued and outstanding.

3 Includes only unmatured bonds issued and outstanding.

Funds have been deposited

with the Treasurer of the United States for payment of matured bonds which have not
been presented for redemption.

Does not include $10,000,000 face amount of Series bonds and accrued interest thereon, held by the Treasury and reflected in the public debt.

Does not include $665,945,431.04 face amount of notes and accrued interest thereon,

held by the Treasury and reflected in the public debt.

Notes in the face amount of $9,000,000 are held by the Treasury and reflected in the public debt.

4,306, 329, 338. 26

Figures as of August 31, 1938-figures as of October 31, 1938, are not available. Offset
by cash in designated depository banks and the accrued interest amounting to $99,621,-
042.96, which is secured by the pledge of collateral as provided in the Regulations of the
Postal Savings System, having a face value of $100,276,708.29, cash in possession of System
amounting to $68,083,173.60, Government and Government-guaranteed securities with a
face value of $1,105,354,950 held as investments, and other assets.

Held by the Reconstruction Finance Corporation.

In actual circulation, exclusive of $8,812,256.74 redemption fund deposited in the Treasury and $271,175,115 of their own Federal Reserve notes held by the issuing banks. The collateral security for Federal Reserve notes issued consists of $4,668,000,000 in gold certificates and in credits with the Treasurer of the United States payable in gold certificates, and $6,488,000 face amount of commercial paper.

DETAIL OF CONTINGENT LIABILITIES AS SHOWN ABOVE, OCTOBER 31, 1938

date of issue, bear such rates of interest not exceeding 4 percent per annum, be subject to
such terms and conditions, and be issued in such manner and sold at such prices as may be
prescribed by the Authority with the approval of the Secretary of the Treasury. Such
obligations shall be fully and unconditionally guaranteed upon their face by the United
States as to the payment of both principal and interest.

Debentures authorized to be issued by the United States Maritime Commission under
the Merchant Marine Act, 1936, as amended, shall be fully and unconditionally guar
anteed as to principal and interest by the United States.

The Secretary of Agriculture is authorized pursuant to act of May 12, 1933, to borrow money upon all cotton in his possession or control and deposit as collateral for such loans warehouse receipts for such cotton.

The faith of the United States is solemnly pledged to the payment of the deposits
made in Postal Savings depository offices. with accrued interest thereon.

The Tennessee Valley Authority is authorized and empowered to issue on the credit
of the United States serial bonds not exceeding $50,000,000 in amount, having a maturity
not more than 50 years from the date of issue thereof, and bearing interest not exceeding
32 percent per annum.

7 Federal Reserve notes are obligations of the United States and shall be receivable by
all national and member banks and Federal Reserve banks and for all taxes, customs, and
other public dues. They are redeemable in lawful money on demand at the Treasury
Department, in the city of Washington, District of Columbia. or at any Federal Reserve
bank.

Tax Exemptions:

Such debentures as are issued in exchange for property covered by mortgages insured after
the date of enactment of the National Housing Act Amendments of 1938 shall be exempt,
both as to principal and interest, from all taxation (except surtaxes, estate, inheritance,
and gift taxes) now or hereafter imposed by the United States, by any Territory, de-
pendency, or possession thereof, or by any State, county, municipality, or local taxing
authority."

Exempt, both as to principal and interest, from all taxation (except surtaxes, estate,
inheritance, and gift taxes) now or hereafter imposed by the United States or any District,
Territory, dependency, or possession thereof, or by any State, county, municipality, or
local taxing authority.

d Exempt, both as to principal and interest. from all taxation (except surtaxes, estate,
inheritance, and gift taxes) now or hereafter imposed by the United States, by any Ter-
ritory, dependency, or possession thereof, or by any State, county, municipality, or local
taxing authority.

Bonds issued by the Tennessee Valley Authority on the credit of the United States as
provided in the Tennessee Valley Authority Act of 1933, as amended, shall have all the
rights and privileges accorded by law to Panama Canal bonds authorized by section 8 of
the act of June 28, 1902, chapter 1302, as amended by the act of December 21, 1905 (ch. 3,
sec. 1, 34 Stat. 5), as now compiled in section 743 of title 31 of the United States Code.

122256-39-pt. 1-3