March 18, 1936 FOMC Minutes: Full Text
A meeting of the Federal Open Market Committee was held in the offices of the Board of Governors of the Federal Reserve System in Washington on Wednesday, March 18, 1936, at 10:20 a. m. PRESENT: Mr. Eccles Mr. Broderick Mr. Szymczak Mr. McKee Mr. Ransom Mr. Morrison Mr. Harrison Mr. Fleming Mr. McKinney Mr. Hamilton Mr. Morrill, Secretary of the Board of Governors of the Federal Reserve System Mr. Wyatt, General Counsel of the Board of Governors of the Federal Reserve System Chairman Eccles stated that this meeting of the Federal Open Market Committee, which was the first meeting of the Committee as constituted by Section 12A of the Federal Reserve Act as amended by the Banking Act of 1935, had been called for the purposes of organization of the Committee, the adoption of by-laws, the adoption of regulations required by Section 12A of the Federal Reserve Act to be issued by the Committee, and such other action as might be found to be desirable. He suggested that the Committee first elect a temporary chairman, a temporary secretary, and temporary counsel. Upon motion duly made and seconded Mr. Eccles was elected temporary chairman, Mr. Morrill was elected temporary secretary, and Wyatt was elected temporary counsel. Mr. copies of the records of was informed that certified The Committee Fleming, Hamilton and McKinney as the elections of Messrs. Harrison, and of Mr. Roy A. Young, the Federal Open Market Committee, members of
President of the Federal Reserve Bank of Boston, as alternate for Mr. Harrison, and of Mr. Oscar Newton, President of the Federal Reserve Bank of Atlanta, as alternate for Mr. McKinney, had been received by the Board of Governors. No question was raised by any member of the Committee as to the election or eligibility of any of the presidents referred to for service on the Committee in the respective capacities stated. The Committee then took up for consideration a tentative draft of proposed by-laws which was read and discussed paragraph by paragraph. At the conclusion of the discussion, upon motion duly made and seconded, and by unanimous vote, by-laws were adopted in the following forms "ARTICLE 1. MEMBERS "Section 1. Organization - Prior to the first meeting of the Committee following March 1 each year, each member of the Committee representing the Federal Reserve banks and each alternate elected to serve in the absence of such shall forward the record of his election or a certi member to the Secretary of the Committee; and, fied copy thereof question be raised as to the election or eligibility if any alternate, the Committee shall determine of such member or such member or alternate to such question before permitting participate in the meetings. - An alternate shall be entitled "Section 2. Alternates only in the absence from meetings of the Committee to attend whom such alternate is elected of the member for a meeting have the same status as cases the alternate shall but in such for whom he is serving. the member member of the Federal Open "Section 3. Oath - Each take the same oath each alternate shall Market Committee and for officers by the Constitution as that required of office of the United States. (including alternates Quorum - Seven members "Section 4. shall con absence of members) and acting in the present but less of business; for the transaction stitute a quorum a quorum is time to time until may adjourn from than a quorum in attendance.
"Section 5. Meetings - The Committee shall meet in Washington, D. C., at least four times each year and oftener if deemed necessary. Meetings shall be held upon the call of the Chairman of the Board of Governors of the Federal Reserve System or at the request of any three mem bers of the Committee. Notices of calls by the Chairman to other members shall be given by the Secretary. Requests of any three members for the calling of a meeting shall state the time therefor and shall be filed in writing or by telegram with the Secretary who shall forthwith notify all members of the Committee in writing or by telegram. When the Secretary shall have sent notices to all members of the Committee that a meeting has been requested by three members and of the time therefor, a meeting shall be deemed to have been called. Whenever any member of the Committee representing Federal Reserve banks shall find that he will be unable to attend a meeting of the Committee, he shall promptly notify his alternate and the Secretary of the Committee in writing or by telegram. "Section 6. Conduct and Deliberations - The proceed ings, deliberations, discussions and actions of the Committee, except as required by law and except as author ized by the Committee, shall be strictly confidential, and no information shall be released except as authorized by the Committee and in the annual report required to be made to Congress by section 10 of the Federal Reserve Act as amended. Except as herein provided, no reports on the meetings of the Committee shall be made to any person or persons whatsoever. of Business - The following shall "Section 7. Order to be followed at meetings of the be the order of procedure Committee: shall present the minutes 1. The Secretary meeting of the Committee and the of the last of all meetings of the Executive Committee minutes held since such meeting. Manager of the System Open Market 2. The of all operations of shall make his report Account since the Market Account occurring the System Open preceding meeting. shall make his re The Committee Economist port. Committee shall then consider open 4. The market policies. the Committee may of members present, By a majority vote for any particular meeting. order of business adopt a different
"ARTICLE II. OFFICERS "Section 1. Chairman and Vice Chairman of the Committee At its first meeting after March 1 of each year the Committee shall elect a Chairman and a Vice Chairman to serve until the first meeting after March 1 of the next year. The Chairman of the Committee shall preside at all meetings thereof and shall perform such other duties as the Committee may require. The Vice Chairman shall perform the duties of the Chairman in the absence of the Chairman, "Section 2. Secretary - The Secretary of the Board of Governors of the Federal Reserve System shall be the Secretary of the Committee. It shall be his duty to keep minutes of all meetings of the Committee and a complete record of the action taken by the Committee upon all questions of policy relating to open-market operations and shall record the votes taken in connection with the determination of open-market policies and the underlying reasons assigned therefor. He shall have custody of such minutes and records and shall perform such other duties as the Committee may require. In the absence of the Secretary an Assistant Secretary of the Board of Governors of the Federal Reserve System shall act as Secretary pro tem. "Section 3. Economist and Associate Economists - At its first meeting after March 1 of each year, the Committee shall elect an Economist to serve until the first meeting after March 1 of the next year. The Committee shall also from time elect one or more Associate to time, as it may decide, The Economist shall prepare for the use of the Economists. to it such information about business Committee and present as will assist the Committee in the and credit conditions policies, and shall perform such determination of open-market duties as the Committee may require. other Counsel - At its first meeting "Section 4. General year the Committee shall elect a after March 1 of each General Counsel to serve Counsel and an Assistant General of the next year. It meeting after March 1 until the first to furnish such legal duty of the General Counsel shall be the In the absence of the the Committee may require. advice as shall act as General Counsel Counsel, the Assistant General Counsel pro tem. General Market Account - The of System Open "Section 5. Manager to execute trans Reserve bank select a Federal Committee shall Such bank shall Market Account. the System Open actions for Account who shall System Open Market a Manager of the select at the He shall serve to the Committee. be satisfactory attend all meetings of of the Committee and shall pleasure Executive Committee. and the both the Committee
"Section 6. Filling Vacancies - At any meeting the Committee may fill any vacancy in the office of Chairman, Vice Chairman, Economist, General Counsel or Assistant General Counsel. ARTICLE III. EXECUTIVE COMMITTEE "Section 1. how constituted - The Committee at its first meeting after March 1 of each calendar year shall select from its own members an Executive Committee of five members, including the Chairman of the Committee who shall be Chairman of the Executive Committee. The Executive Committee shall consist of three members of the Board of Governors of the Federal Reserve System and two representa tives of the Federal Reserve banks. At any duly called meeting, a majority of the Executive Committee shall con stitute a quorum for the transaction of business. Three alternates to serve in the absence of members of the Board and two to serve in the absence of representatives of the Federal Reserve banks shall be selected at the same time and in the same manner as members of the Executive Committee and they shall serve during such absences in the order pre scribed at the time of their selection. "Section 2. Secretary - The Secretary of the Federal Open Market Committee shall act as the Secretary of the and it shall be his duty to keep minutes Executive Committee meetings of the Executive Committee, furnish copies of all of the Executive Committee, and per thereof to the members as may be required. In the absence form such other duties Secretary of the Board of of the Secretary, an Assistant System shall act as Secre of the Federal Reserve Governors tary pro tem. - The General Counsel of "Section 3. General Counsel Counsel of the Executive shall be the General the Committee duty to furnish such legal and it shall be his Committee In the absence of the as the Committee may require. advice General Counsel of the Counsel, the Assistant General Counsel pro tem. shall act as General Committee Committee shall Meetings - The Executive "Section 4. or upon the request of the Chairman thereof meet on the call Notices of all with the Secretary. two members filed of any given by the Secretary. calls shall be such The Executive Committee and duties - "Section 5. Powers it in the regulations prescribed for perform the duties shall and duties as may and such other functions of the Committee time by the Committee. from time to to it be assigned
"ARTICLE IV. AMENDMENTS "These by-laws may be amended at any meeting of the Committee by a majority vote of the entire Committee." The meeting then recessed and reconvened at 2:40 p. m. with the same attendance as at the morning session. The form of oath of office required by Section 5 of Article 1 of the by-laws was executed by each member of the Federal Open Market Committee present and filed with the Secretary. Upon motions duly made and seconded, and by unanimous votes, the following officers of the Federal Open Market Committee were elected to serve until the first meeting of the Committee after March 1, 1937: Marriner S. Eccles Chairman George L. Harrison Vice Chairman E. A. Goldenweiser Economist John H. Williams Associate Economist Walter Wyatt General Counsel J. P. Dreibelbis Assistant General Counsel Upon motion duly made and seconded, and by unanimous vote, the Federal Reserve Bank of New York was selected to execute trans actions for the System open market account. President Harrison indicated that he would recommend that the Federal Reserve Bank of New York select Mr. W. R. Burgess, Vice President who had managed the System open market account under the of the bank, Open Market Committee, as manager of the direction of the old Federal Harrison stated that as a matter System open market account. President for the New York Bank in it would be necessary, of course, of practice act as a bank through its for the committee to executing transactions regularly assigned officers as well. other
Upon motion duly made and seconded, and by unanimous vote, it was decided that the selection of Mr. Burgess by the New York Bank as manager of the account would be satisfactory to the Committee. A tentative draft of a proposed regulation to be adopted by the Committee with regard to open market operations by Federal reserve banks was then taken up, read, and discussed paragraph by paragraph. Mr. Fleming raised a question as to the adequacy of existing bonds carried by the Federal reserve banks to cover losses that might be suffered by the banks through defalcations in connection with the System open market account and during the course of the discussion Mr. Harrison suggested that the question be considered by the Presidents' Conference. At the conclusion of the discussion the meeting adjourned with Committee would meet again at 10:15 a. m. the understanding that the tomorrow. Secretary. Approved: Chairman.