March 1, 1952 FOMC Minutes

FOMC minutes

Upon motion duly made and seconded, and by unanimnus vote, the distribution of the weekly report of open market operations prepared by the Federal Reserve Bank of New York was ap proved as follows: 1. The members of the Board of Governors. 2. The Presidents of the 12 Federal Reserve Banks. 3. The Secretary, the Economist, and the Associate Economists of the Federal Open Market Committee. 4. The Secretary of the Treasury. 5. The Under Secretary of the Treasury. 6. The Assistant Secretary of the Treasury working on debt management problems. 7. The Fiscal Assistant Secretary of the Treasury. 8. The Chief of the Division of Bank Opera tions of the Board of Governors. 9. The officer in charge of research at each of the Federal Reserve Banks which is not represented by its President on the Federal Open Market Committee. 10. Mr. Treiber, alternate member of the Federal Open Market Committee; the Assistant Vice President of the Federal Reserve Bank of New York working under the Manager of the System Account; the Manager of the Securities Department of the New York Bank; the Vice President in Charge, and the Manager of the Research Department of the New York Bank; and the confidential files of the New York Bank as agent for the Federal Open Market Committee. Mr. Carpenter referred to the action taken at the meeting Committee on March 1-2, 1951, authorizing of the Federal Open Market a Federal Reserve Bank as of the Committee to appoint the Chairman case the Federal Re account temporarily in to operate the System agent stated that the to function. He New York was unable serve Bank of

authorization was given for possible use in the event of a bombing disaster and that it would appear desirable to continue it. Upon motion duly made and seconded, and by unanimous vote, it was agreed that there should be no change in the authorization given to the Chairman by the action taken at the meeting of the Committee on March 1-2, 1951. Chairman Martin referred to the action at the meeting of the Federal Open Market Committee yesterday, in which it was agreed that the Secretary of the Treasury should be advised that the Federal Open Market Committee, after considering the memorandum on Government Financing in 1952, agreed that the use of a marketable security would be preferable to a nonmarketable issue in long-term Treasury financing operations later this year. At that meeting it was also agreed unanimously that (1) the question of recommendations to be made to the Treasury concerning the ob taining of new money later this spring and other matters relating to Treas ury financing be left to the executive committee and (2) that no change should be made in the Committee's current policy of neutrality in the market under which market forces of supply and demand are permitted to have their effect with a minimum of System intervention except to the extent necessary to promote orderly market conditions. Upon motion duly made and seconded, and vote, these actions of the Com by unanimous mittee were reaffirmed and approved. be issued to the ex general direction to With respect to the the prospect that in view of Rouse stated that, committee, Mr. ecutive

the Treasury might wish to sell short-term securities direct to the Fed eral Reserve Banks in an amount approximating $1.25 billion in order to smooth the effect of tax collections on the reserve position of banks over the March tax payment period, he would recommend that the limitation con tained in the second paragraph of the direction relating to purchases direct from the Treasury of special short-term securities for the tempo rary accommodation of the Treasury be increased from the present figure of $1 billion to $2 billion. Thereupon, upon motion duly made and seconded, the following direction to the executive committee was approved unani mously with the understanding that the limitation contained in the direction would include commitments for the System open market account: The executive committee is directed, until otherwise di rected 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 without replacement), as may be necessary, in the light of current and prospective economic conditions and the general credit situation of the country, with a view to exer cising restraint upon inflationary developments, to maintaining orderly conditions in the Government security market, to relating the supply of funds in the market to the needs of commerce and business, and to the practical administration of the account; provided that the aggregate amount of securities held in the account at the close of this date other than special short-term certificates of indebtedness purchased from time to time for the accommodation of the Treasury shall not be increased temporary or decreased by more than $2,000,000,000. The executive committee is further directed, until other wise directed by the Federal Open Market Committee, to arrange the System open market account direct for the purchase for from the Treasury of such amounts of special short-term certifi cates of indebtedness as may be necessary from time to time for

the temporary accomodation of the Treasury; provided that the total amount of such certificates held in the account at any one time shall not exceed $2,000,000,000. In a discussion of a date for the next meeting of the Committee, it was tentatively agreed that it should be held during the week of June 16, 1952, at which time it was expected that there would also be a meeting and of the Board of Trustees of the Retire of the Presidents' Conference ment System of the Federal Reserve Banks. Thereupon the meeting adjourned. Secretary.