March 4–5, 1953 FOMC Minutes

FOMC minutes

3/4-5/53 There was unanimous agreement with Chairman Martin's statement that there appeared to be no objection to the practice described by Mr. Rouse; and that the practice referred to in the subcom mittee's recommendation should be avoided. Recommendation The subcommittee finds that there is a serious gap in the structure of the money market as it affects the functioning of the market for Government securities. Continuously in recent months, funds available to dealers to carry portfolios have been inadequate in volume and available only at rates higher than the yield of their portfolios. This deficiency could not exist so continuously in a central money market equipped (1) to attract temporary idle funds from over the country to New York, and (2) to make these funds available on call to dealers in the money market. The subcommittee recommends that the feasibility of re-establishing a central call money post for dealers be explored. Approved unanimously. D. Federal Reserve Reports Recommendation The subcommittee finds that the Federal Reserve System can improve the data which it makes available to inform the market operations. It recommends that the following information on its be shown henceforth on the weekly condition statement of the Fed eral Reserve Banks: held on repurchase agreement. (a) Securities indebtedness held by the System. Special certificates of (b) of member bank borrowing. (c) Weekly averages Rouse, Chairman Martin and Mr. response to a question by Mr. In information had of publishing such additional stated that the idea Craft the subcommittee conferred the dealers with whom the general approval of figures would of repurchase that the segregation on the grounds last summer

3/4-5/53 -55 be helpful and should be a part of the information regularly made available through System publications, It was stated, however, that one of the 17 dealers who commented on the suggestion expressed hesitancy in having the information on repurchase agreements published, his feeling being that publication of the data might be open to misinterpretation. Mr. Sproul stated that if the dealers did not object to disclosure of the extent to which they were using Federal Reserve credit in carrying bills, the Committee should not object. Mr. Robertson felt that the information should be made public even though there were objections on the part of some of the dealers. Thereupon, the subcommittee's recommenda tions regarding the weekly condition statement of the Federal Reserve Banks were approved unanimously. This concluded the consideration of the recommendations in the hoc subcommittee. In a discussion of the procedure to report of the ad be followed in connection with the actions that had been taken, Chairman that the staff be instructed to review the actions and Martin suggested would be necessary in the way of changing direc report on the steps that to carry out changes in procedures agreed tives or issuing new directives this procedure would be followed. It was understood that upon. disappointed in the discus stated that he was somewhat Mr. Bryan he felt there had been an inade of the subcommittee's report because sion philosophies involved. of the problems and underlying quate discussion

3/4-5/53 He said that he might wish to send to the individual members of the Com mittee a memorandum expressing his personal views on some of the underlying points which he felt had not been clearly or completely dealt with. Chairman Martin stated that the Committee would be glad to receive from Mr. Bryan or any other members of the Committee or any President of a Federal Reserve Bank who was not now a member of the Committee additional comments he might wish to submit in writing. Chairman Martin, in referring to the assistance which Mr. Craft had given to the ad hoc subcommittee in its work, stated that he would like to have it understood that Mr. Craft would be continued as a consultant so services would be available in the future work of the subcommittee that his from time to time. This suggestion was approved unanimously Mr. Evans' suggestion, it was agreed and, at Chairman Martin should express the appre that of the Federal Open Market Committee ciation to Mr. Craft's employer, Guaranty Trust Company York, for the services he had given in of New with the study of the Government connection securities market. understood that recommendations suggested that it be Mr. Robertson not been taken be final action had report on which in the subcommittee before the Federal Open the subcommittee and brought studied further by

3/4-5/53 Market Committee. It was understood that this suggestion would be carried out. Thereupon the meeting adjourned. Secretary