August 5, 1949 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, D. C., on Friday, August 5, 1949, at 10:10 a.m. PRESENT: Mr. McCabe, Chairman Mr. Sproul, Vice Chairman Mr. Clayton Mr. Draper Mr. Earhart Mr. Eccles Mr. Gidney Mr. Leach Mr. McLarin Mr. Morrill, Secretary Mr. Carpenter, Assistant Secretary Mr. Vest, General Counsel Mr. Thomas, Economist Messrs. Thompson and Williams, Associate Economists Mr. Rouse, Manager of the System Open Market Account Mr. Riefler, Assistant to the Chairman, Board of Governors Mr. Leonard, Director of the Division of Bank Operations, Board of Governors Mr. Young, Associate Director of the Divi sion of Research and Statistics, Board of Governors Mr. Miller, Assistant Vice President, Fed eral Reserve Bank of New York Mr. Smith, Economist, Government Finance Section, Division of Research and Statistics, Board of Governors Economist, Federal Reserve Bank Mr. Raisty, of Atlanta duly made and seconded, Upon motion vote, the minutes of the and by unanimous Federal Open Market Commit meeting of the June 28, 1949, were approved. tee held on duly made and seconded, Upon motion the action of the by unanimous vote, and of the Federal Open executive committee
Market Committee, as set forth in the minutes of the meeting of the executive committee held on June 28, 1949, were approved, ratified, and confirmed. Mr. Rouse then read the important sections of a report of open market operations prepared by the Federal Reserve Bank of New York, covering the period June 28 to August 2, 1949, inclusive. He also presented a supplemental report covering commitments executed on behalf of the System account on August 3 and 4, 1949. In submit ting these reports, Mr. Rouse called attention to the fact that lead ing banks in the country in their current publications had interpreted the action of the Federal Open Market Committee on June 28 as the termination of the policy of maintaining a fixed pattern of rates for Government securities and of the close relationship of System open market policies to Treasury financing policies that had existed during and since the war and as an important forward step. Upon motion duly made and seconded, and by unanimous vote, the transactions in the System account for the period June 4, 1949, inclusive, were ap 28 to August proved, ratified, and confirmed. because of the absence of Mr. Morrill stated that recently, members of the executive committee of the Fed members and alternate to call on Mr. it had been necessary eral Open Market Committee, the committee, in connec alternate member of who was not an Szymczak, before the com the problems coming of some of tion with consideration Mr. Szymczak had a vote, and that he did not have mittee even though Federal Open Market given by the consideration be suggested that
Committee, either at this meeting or at the organization meeting in March of next year, to the desirability of amending the by-laws so that every member of the Federal Open Market Committee would be a principal or alternate member of the executive committee. Mr. Mor rill also said that, if this suggestion were approved, Section 1 of Article III of the by-laws might be amended to read as follows: "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 Execu tive Committee shall consist of three members of the Board of Governors of the Federal Reserve System and two repre sentatives of the Federal Reserve banks. At any duly a majority of the Executive Committee shall called meeting, constitute a quorum for the transaction of business. Four alternates to serve in the absence of members of the Board and three to serve in the absence of representatives of shall be selected at the same the Federal Reserve banks and in the same manner as members of the Executive time such absences in the and they shall serve during Committee the time of their selection." order prescribed at Inasmuch as the by-laws provided amended at any meeting that they could be Committee by a vote of the majority of the of the entire Committee, of the members and seconded, it was upon motion duly made to adopt the amendment voted unanimously above, effective immediately. as set forth duly made and upon motion Thereupon, unanimous vote, Mr. seconded, and by to serve until the Szymczak was elected at the first of his successor selection Open Market Commit of the Federal meeting as the fourth 28, 1950, tee after February Eccles, and Messrs. McCabe, alternate for of the executive as members Vardaman
committee, and Mr. Earhart was selected to serve until the selection of his suc cessor at the first meeting of the Fed eral Open Market Committee after February 28, 19.0, as the third alternate for Messrs. Sproul and Leach as members of the executive committee. Chairman McCabe reviewed important developments since the meeting of the Committee on June 28, 1949, and the reception and effect of the announcement following that meeting. He also said that he and Mr. Sproul had not conferred with the Secretary of the Treas ury since that meeting and, therefore, had not had an opportunity to discuss the problem of refunding of issues of Government securities maturing during the balance of this year, but that in preparation for this meeting there had been several discussions by members of the Board and the staff, including a conference in Washington last week attended by Mr. Rouse and members of the Board's staff, for of discussing the problem of reserve requirements of the purpose their relationship to open market operations and member banks and so that the Federal Open Market other instruments of credit control, what action should be be in a position to determine Committee would policy at this meeting. with respect to open market taken a meeting of the Board he stated that at In that connection, that, if the Fed were of the opinion the members present yesterday act to allow the be willing to Market Committee should deral Open the market in to go into of Treasury securities System's holding be released by that would absorb the reserves sufficient to amounts
a reduction in reserve requirements, the Board should reduce reserve requirements by 2 percent of demand deposits of all member banks, to become effective for central reserve and reserve cities at the rate of 1/2 percentage point each on August 11, August 18, August 25, and September 1, 1949, and for nonreserve city banks at the rate of 1 percentage point each on August 1 and August 16, 1949. The Chairman also said that, in the discussions of the ef fect of this reduction on the Government securities market, the sug gestion had been made, having in mind that maturing certificates might be refunded at 1-1/8 percent, that the range of yields at which bills should be purchased and sold by the System account might be in the neighborhood of .95 to 1.05, with the exact range to be de termined from time to time by the executive committee to meet chang ing conditions, it being understood that, as the yield moves away from the average of the range, purchases or sales, as the case may be, would be made in increasing amounts. It had also been suggested, Chairman McCabe said, that a desirable range for certificate yields might be from 1.08 to 1.12. He made the further statement that it was the view of the now in effect at the to reduce the discount rates Board that action until shortly after the Banks might well be deferred Federal Reserve could be considered again. September when the matter first of that might be of the reasons was a general discussion There at this in reserve requirements and against a reduction advanced for
time. It was the unanimous view that developments since the meeting on June 28 had clearly demonstrated that it was not possible to keep a stated amount of excess reserves in the market, in addition to op erating requirements as determined by the market, without substan tially lowering short-term rates, and that a reduction in reserve re quirements should not be made for that purpose. It was agreed that a reduction was not necessary for the purpose of affecting the level of interest rates in the market as that could be brought about by open market transactions, that for the purposes of present policy the existing multiple credit factor of bank reserves need not be in creased, and that changes in reserve requirements should not be used to effect short-term credit policies but should be reserved to meet fundamental changes in the economy and the financial situation. There was also agreement that a reduction should be made only with the understanding that the reserves thus released would be absorbed by allowing securities in the System account to go into the market so that there would be no material decline in interest rates as the reduction. It was pointed out that money rates had result of the since the war, that the action of the been at a low level during and 28, 1949, had resulted in a reduction of approxi Committee on June rates, and that there of 1 percent in short-term mately one-eighth was no need, in carrying out the System's policy of monetary ease, short-term rates to go lower. to allow whether a reduction of the Committee questioned Some members
could be justified at the present time. It was suggested that a period of freedom from frequent changes would be welcomed, even though no bank would object to a reduction in its requirements, and that such action could well be deferred until some future date when it would meet a real need for funds. Others felt that a reduction should be made now in order to emphasize the reversal of our anti inflationary policy which had led to increases in reserve require ments last year, to bring reserve requirements to a level from which they could be raised in the event of a return of inflationary con ditions, to offset the decline in banks' earnings that would result from lower interest rates, to relieve the System account of the necessity of bidding each week to replace the System's holdings of maturing bills and thereby work toward a freer bill market, to take advantage of the present favorable conditions, and (as an inci dental reason not associated with credit policy) to place member banks on a more favorable competitive basis with nonmembers which subject to lower reserve requirements. are McCabe referred to a letter During the discussion, Chairman of the Fed First Vice President from Mr. Rounds, which he received July 26, 1949, with under date of Bank of New York, eral Reserve in relation to prices of bank stocks the present low respect to read the of the Committee that all members values and suggested book letter. condition of declining as long as the was agreed that It
economic activity continued the System should see to it that a con dition of monetary ease and low money rates was maintained as a means of encouraging business activity, and that, because of the im portance of the American economy in the world picture and the danger to the rest of the world of a serious depression in this country, every effort should be made to prevent such a condition from concur ring. On the other hand, it was felt that the decline of approxi mately one-eighth of 1 percent in short-term rates since the June 28 action of the Committee was an important indication of the ef fectiveness of the easy money policy now being followed by the Com mittee and that it would be desirable to maintain yields at about the present level with a view to a rate of 1-1/8 percent on the next issue of certificates. Mr. Gidney felt that, regardless of whether a reduction of reserve requirements was made, the Federal Reserve Banks should undertake to get member banks to utilize more fully their existing excess reserves in order to improve their earnings. He felt that this could be done without affecting existing market rates in any about a tight money market. He also felt that steps way or bringing to obtain more complete information should be taken by the System relative to earnings of nonmember banks than is now available to the System and which he believed would show that the earning record favorable in comparison with nonmem for member banks is much more supposed to be. represented or is generally banks than it has been ber
Reference was made during the discussion to a staff memo randum on the framework for System credit operations under peace time conditions. A draft of the memorandum had been sent to all members of the Federal Open Market Committee on July 29, 1949, and copies of a revision of the memorandum, prepared in the light of comments made in connection with the earlier draft, were distri buted at this meeting. Mr. Sproul in commenting upon the memorandum said that he did not think it possible to have a free bill market while the rest of the market is being controlled and that the entire market was interrelated. He said the fact that we are working with rates in all sections of the market, as a measure of central bank influ ence, was demonstrated by the reaction of the market following the action of the Committee on June 28. Be also expressed the view that, as long as present conditions continued, the System should not lose contact with the bill market; that, while there should be flexibility in that market and a willingness on the part of the sell bills at a range of rates, it was not de System to buy and to divorce itself from contact with any part sirable for the System Mr. Eccles agreed with Mr. Sproul's view on this of the market. point. Earhart felt that statements in Messrs. Leach, Gidney, and from the long-established System memorandum implied a departure the from the Federal banks obtain advances under which member policy
Reserve Banks for temporary periods and on a day-to-day basis in order to meet unforeseen or seasonal needs and that it contemplated a policy under which the banks hereafter would be permitted to use the rediscount privilege only in very unusual cases and as a last resort. They felt that it would be very disturbing to member banks if such a change in policy were advocated or adopted and this be came known because the banks had been told repeatedly that the Fed eral Reserve Banks would take care of their reasonable credit needs both for ordinary operations and in times of difficulty, and that any departure from this policy would be contrary to the intent of the Federal Reserve Act and would have a seriously adverse effect upon the attractive ness of membership in the Federal Reserve Sys tem. Messrs. Thomas and Riefler in commenting on the above state ments made it clear that this was not the intention of the memoran dum and that it was believed that the differences indicated by the statements were differences of interpretation rather than of prin raised by the statements agreed that the questions ciple. It was point in the meeting. discussed at a later should be given to had been whether consideration Rouse inquired Mr. well as on demand deposits as on time reserve requirements reducing to be made in reduction was that, if the and suggested deposits, and as a step in the situation change of a fundamental recognition could again increase which the System to a point from to get back
reserve requirements to meet inflationary conditions, it would ap pear to be logical to effect some reduction in reserve requirements on time deposits which were now at the ma imum, authorized by the law. This point was discussed and there was general agreement that it should have consideration by the Board of Governors. During a discussion of discount rates in relation to short term rates it was the consensus that there was no need for a re duction in discount rates at the Federal Reserve Banks at this time but that such action might be taken in September as a further in dication of the System's policy of maintaining easy money market In his comment on this point Mr. Earhart called atten conditions. tion to the fact that developments over the past several years have tended to influence banks to adjust their reserves by trans New York market rather than through the local Fed actions in the that in the earlier period the local banks not eral Reserve Bank, the Federal Reserve Banks for the purpose only rediscounted with but that there was also a local banker's of obtaining needed reserves, Banks financed the dealers and the Federal Reserve acceptance market and the banks bought through repurchase agreements in acceptances of adjusting their reserves. sold acceptances as a means and Mr. Bartelt this had talked with stated that he Mr. Rouse the Treasury, that be new money borrowings of morning regarding savings notes it would not large sales of tax cause of the unusually additional new funds to borrow any necessary for the Treasury be
until December, but that apparently the Treasury had decided to increase the weekly offerings of Treasury bills to build up Treasury balances. He also said that Mr. Bartelt had stated that no use would be made of the $1 billion of free gold held by the Treasury without consultation with representatives of the System. He made the further statement that if reserve requirements were reduced along the lines discussed it would be necessary in the interest of an orderly market for the Federal Reserve Bank of New York to sell bills, certificates, notes and bonds, that during this period there probably would be a tendency on the part of the banks, at least the money market banks, to over-invest, which after the transition period would result in tighter a condition in the market, and that the System's buying rate would be the effective rate on bills. He added that with the increase in weekly offerings of Treasury bills it might be necessary for the Federal Reserve Bank of New York, as fiscal agent of the Treasury, to arrange with the dealers to see that there were sufficient bids to cover the offerings. Referring to the earlier discussion of a change in discount rates at the Federal Reserve Banks, Mr. Rouse suggested that if the not to be reduced at this time consideration be discount rate were the authority granted to the Federal Reserve Banks given to amending by the executive committee on January 20, 1948, pursuant to action 9, 1947, to authorize the Federal by the full Committee on December to enter into repurchase agreements with dealers in Reserve Banks
United States Government securities (other than dealer banks), who are qualified to transact business with the System open market account, at rates slightly below the discount rate on advances under sections 13 and 13a of the Federal Reserve Act, so that these dealers could carry short-term securities during the current period if the bank lending rates to dealers should get out of line in relationship to market rates on short-term Government issues. Turning to the range at which bills should be purchased and sold for System account Mr. Rouse suggested that there should be sme leeway in the operation of the range, as it would be necessary for Reserve Bank of New York to do some experimenting in the the Federal operation. He raised the question also whether, interest of effective a period during the fall of increased currency as we moved toward business borrowing, and increased need for circulation, increased deficit financing, it would be the reserves arising from Treasury influence of these factors to be of the System to allow the policy of this latter point it in the market. In the discussion reflected question would have to that the answer to Mr. Rouse's was suggested depend on the situation at the time. dates upon which the proposed reference was made to the Further if it included a reduction reserve requirements (which reduction of approximately $1.8 billion) time deposits would total of 1 per cent of timing should be was agreed that the effective, and it should be made and so that the market effect as possible as to have as little such
released reserves could be absorbed as much as possible by allowing the System's holdings of maturing bills to run off. During the discussion, the members of the Committee indicated that if the Board of Governors should act to reduce reserve requirements by the amount proposed they would favor action to reduce the System's holdings of securities to absorb the released reserves so that the reduction would not result in a further lowering of short-term rates. The members of the Board of Governors stated that action to reduce reserve require ments would be taken this afternoon. With respect to the rates at which the Federal Reserve Bank of New York would buy and sell Treasury bills, it was agreed unanimously that the Bank should sell securities vigorously until the transition to the lower reserve requirements had been made. During the discussion Mr. Miller stated that a desire on the part of the Committee for flexibility within an agreed range would determine the policy with respect to purchases and sales within the range. He pointed out that substantial sales as the rate moved up or down would reduce the flexibility of the market and would make it possible for banks and others to invest their surplus funds without as great a risk of having On the other hand, he said, if the market were to sell at a loss. allowed to move freely within the range the greatest degree of flexibility would be obtained. Mr. Miller added that conditions might wish to ease the market, in which case be such that the System might buy bills at something less than the maximum it might be desirable to
of the range, which would also affect the flexibility of the market. If the objective, he said, was to discourage banks from maintaining a fully invested position, sales and purchases of bills should be made largely at the maximum and minimum of the range. Consideration was also given to the question raised by Mr. Rouse as to the desirability of allowing the market to go below or above the outside limits of the range and then operating vigorously in the market to bring the rate back within the range. All of the various aspects of operations under an agreed upon range within which bills would be purchased and sold were con sidered. In connection with a comment by Mr. Eccles that in the present period of recession the System's operations should be in short-term securities only, Mr. Rouse expressed the view that the of bonds should not become static as had been the case System holdings in the thirties, that it would be desirable to make for a long period some change in the System's total holdings for the sake of change, opportunity through shifts of issues and that there would be ample altering materially the total bring about such a change without to He also suggested that occasion might holdings in the System account. or decrease bank would be easier to increase arise in which it than to effect the operation bond sales or purchases reserves through through short-term securities. that under that the suggestion was reached The consensus to move two or three bill market be allowed conditions the certain
points above or below an agreed upon range with the understanding that it would be promptly brought back within the range through market operations should not be followed and that all purchases and sales of bills should be within the authorized range. At the conclusion of the discussion, upon motion duly made and seconded, and by unanimous vote the following under standing with respect to operations in Treasury bills and certificates was approved: "Having in mind the desirability of rates in the short term market which would call for the refunding of maturing October certificates at 1-1/8 per cent, the range of yields at which bills would be purchased and sold for the System account should be in the neighborhood of .94 to 1.06 with the exact range to be determined from time to time by the executive committee to meet changing conditions, it being understood that as the yield moved from the average toward the maximum or minimum of the range purchases or sales, as the case might be, would be made in increasing amounts. It was also agreed that a desirable range for certificate yields would be 1.06-1.12 for the time being." This action was taken with the understanding that pending action by the executive committee all bill transactions would be within the range of .94-1.06. that he understood what was intended to be Mr. Rouse stated by the above understanding and that the New York Bank accomplished but that the situation in which it would do its best to carry it out, would operate would be a difficult one. of the suggestion by Mr. Rouse There was a further discussion be authorized to enter into repurchase that the Federal Reserve Banks securities at less than the discount rate agreements on Government
with nonbank dealers pending a decision to reduce the discount rate at Federal Reserve Banks. He stated that while it was not expected that the authority for such agreements would be used immediately it would be desirable to have it available for use in the case of need. In response to an inquiry he suggested that the Committee authorize the agreements at a rate of 1-3/8 percent. There was a question whether the Committee should act to approve the repurchase arrangement at this time or whether the executive committee should be authorized to approve it if a need therefor should however, that the full Committee should arise. There was agreement, act at this meeting to grant the authority. Thereupon, upon motion duly made and seconded, it was voted unanimously to authorize each Federal Reserve Bank until such time as action temporarily, to reduce the discount rates was taken at the Federal Reserve now in effect sections 13 and 13a of the Banks under Federal Reserve Act, to enter into agreements with nonbank repurchase in United States Government dealers qualified to trans securities who are the System open market act business with that (1) such agreements account, provided not below 1-3/8 percent, (a) are at rates of not to exceed 15 (b) are for periods cover only short-term days, (c) calendar selling at a yield Government securities the issuing rate for of not more than obligations, (d) are one-year Treasury of strain, with used only in periods a means of as care and discrimination, types of in the special last resort reviewed in and conditions situations of January 2, 1948, Mr. Rouse's memorandum meeting of the at the which was considered on January 20, 1948, executive committee of such transactions (e) that reports and
shall be made to the Manager of the System Open Market Account to be in cluded in the weekly report of open market operations which is sent to the Federal Open Market Committee, and (2) in the event Government securities covered by such an agree ment are not repurchased by the dealer pursuant to the agreement or a renewal thereof, the securities will be sold in the market or transferred to the System open market account. In taking this action it was understood that after the effective date of action reducing the existing discount rates at the Federal Reserve Banks under sections 13 and 13a of the Federal Reserve Act, the exist ing authority with respect to re purchase agreements with dealers would again apply. At this point Chairman McCabe left the meeting to keep another important appointment, At Mr. Thomas' suggestion copies of memoranda relating to (1) economic situation and prospects, and (2) rates on savings notes, were distributed. The latter memorandum recommended that the Committee take the position in its advice to the Treasury that no change in the rates on savings notes is advisable for the time being. In connection with the second memorandum, Mr. Rouse stated that he had suggested to Mr. Bartelt that, while the sales of tax savings notes had increased very materially because of the attractive rate, no made in the rates on the notes for the reason that change should be there would be a substantial Treasury deficit and they afforded a means
of financing from nonbank sources at a rate which was attractive to the Treasury. Mr. Rouse added that since he first talked with Mr. Bartelt the latter had indicated a desire to make no changes in the rates on savings notes and that the matter might be discussed with the American Bankers Asociation Committee on Government Borrowings later in the month and with representatives of the savings banks and insurance companies if the Treasury should meet with them. Mr. Young summarized the information contained in the memo randum on the economic situation and prospects and his statement was followed by a brief comment by Mr. Williams on the British exchange situation and the problem of devaluation of the British pound. There was unanimous agreement among the members of the Committee that in discussions with the Treasury the recommendation should be made that the rates on tax savings notes should not be changed for the time being. or recommendations should be made The question what comments to the Treasury with respect to September financing was considered in the action of the Committee at the meeting on June 28, the light of committee to make it authorized the executive 1949, at which time to the Treasury as seemed desirable in the light such recommendations few weeks and of the view of the full of developments over the next by the Treasury through the new money should be raised Committee that issuance of an intermediate security, probably a four- or five-year note.
It was the consensus that the issuance of an intermediate security for the September refunding would still be desirable although there was considerable doubt whether the Treasury would be willing to follow that course. It was understood that the executive committee would consider the matter further and make its recommendations to the Treasury in the light of the comments at this meeting. Mr. Sproul stated that it was too early to reach any de dision [sic] at this time with respect to the refunding of the October and December maturities. Reference was then made to the study being made by members of the staff of the program of long-term debt management and copies of a further memorandum prepared by Messrs. Rouse, Thomas, and Riefler on this subject under date of August 4, 1949, were distributed. Mr. Riefler reviewed the memorandum and the reasons the for recommendations contained therein (1) that the Federal Open Market Committee, in its discussions with the Treasury on future financing, take the position that fully marketable issues be confined to maturties of ten years or less, and (2) that the executive committee be authorized to explore with the Treasury and outside the feasibility of a long-term tap issue ineligible for ownership by banks, such an to be shiftable but with limited marketability and either instrument of the G type or of the instalment retirement type now under analysis by the staff committee.
In the discussion of the first recommendation Mr. Eccles stated that bank eligible securities should have a maturity of less than ten years and Mr. Riefler stated that the recommendation contemplated that ten years would be an absolute maximum. After a brief discussion, upon motion duly made and seconded, the recommendations contained in the memorandum were approved unanimously with the understanding that the Open Market Committee was not making any commitment with respect to the securi ties contemplated in the second recom mendation but was approving the recom mendation as a basis for discussion. In accordance with the action at a previous meeting of the Committee there were on the agenda for further consideration at this meeting the questions (1) whether savings bonds, particularly series E bonds, should be made eligible as collateral for bank loans, and (2) whether further inducements should be provided to holders of E bonds to reinvest in savings bonds. Because of the it was agreed that these subjects should be con pressure of time tinued on the agenda for a later meeting. revised memorandum on the was made to the Further reference operations under peacetime conditions, framework for System credit by Mr. Thomas that the memo and approval was given to a suggestion to be held of System economists discussed at a meeting randum be and that comments be prepared during the latter part of September, at this meeting which would made of the memorandum on the criticisms
be sent to the members of the Committee and other Presidents of the Federal Reserve Banks with the understanding that the memorandum would be considered at the next meeting of the full Committee. It was understood that in the meantime if any of the members of the Committee had any suggestions or comments with respect to the memorandum they would send them in. Mr. Rouse stated that, in view of the proposed action by the Board of Governors to reduce reserve requirements of member banks by approximately $1.8 billion, the direction issued by the Committee to the executive committee covering operations in the System account should renew the authority of the executive committee to reduce the securities in the account by $3 billion pending another meeting of the Committee. Thereupon, upon motion duly made and seconded, the following direction to the executive committee was approved unanimously with the understanding that the limitations contained in the direction would include commitments for the System open market account: The executive committee is directed, until otherwise directed by the Federal Open Market Committee, to arrange for such transactions for the System open market account, either in the open market or directly with the Treasury (including purchases, sales, exchanges, replacement of maturing securities, and letting maturities run off with out replacement), as may be necessary, in the light of changing economic conditions and the general credit situation of the country, for the practical administra tion of the account, for the maintenance of orderly con ditions in the Government security market, and for the purpose of relating the supply of funds in the market to the needs of commerce and business; provided held in amount of securities that the aggregate
the account at the close of this date other than special short-term certificates of indebtedness purchased from time to time for the temporary accommodation of the Trea sury shall not be increased or decreased by more than $3,000,000,000. The executive committee is further directed, until otherwise directed by the Federal Open Market Committee, to arrange for the purchase for the System open market account direct from the Treasury of such amounts of special short-term certificates of indebtedness as may be necessary from time to time for the temporary accom modation of the Treasury; provided that the total amount of such certificates held in the account at any one time shall not exceed $1,500,000,000. There was unanimous agreement that the next meeting of the should be subject to call of the Chairman, it being under Committee might be desirable to have another meeting before the stood that it meeting of the Presidents of the Federal Reserve Banks which is to during the early part of November. take place in San Francisco Thereupon the meeting adjourned. Secretary. Approved: Chairman.
Also: Record of Policy Actions·Minutes of the Executive Committee, August 5, 1949