October 4, 1955 FOMC Minutes

FOMC minutes

a.m. or 10 o'clock, and after brief discussion it was agreed that the meeting to be held on October 25 should be scheduled for 10 a.m. Mr. Sproul then referred to the discussion at the meeting on September 14 regarding a visit which Senator Douglas proposed to make to the Federal Reserve Bank of New York, probably between October 20 and November 1, 1955, accompanied by a member of his staff, for the purpose of observing the handling of open market operations. Mr. Szymczak reviewed a conversation he had had with Senator Douglas pursuant to the understanding at the meeting on September 14 dur ing which he stated that Senator Douglas proposed that Mr. Asher Achinstein, a member of the regular staff of the Library of Congress, accompany him on the proposed visit to assist in his discussions of the matters that he observed. There followed a discussion of the proposed visit at the conclu was agreed that Mr. Sproul, in his capacity as Vice sion of which it Chairman of the Committee, would communicate with Senator Douglas, stating to visit the New York Bank and to that he understood the Senator wished that he (Mr. Sproul) would be Mr. Achinstein with him and indicating bring convenient date. It was for such a visit on a mutually glad to arrange be glad to assist the while the New York Bank would understood that the operations of the securities and Mr. Achinstein in observing Senator Open Market Committee or the policy of the desk, information concerning continue to be made Market Committee would for the Open transactions

available only through the channels which have been established previously for formal transmission of information to Committees of Congress. Mr. Balderston stated that in a letter dated September 22, 1955, addressed to him as Vice Chairman of the Board of Governors, Congressman Wright Patman expressed the point of view that the Open Market Committee's operations should be removed from New York and located in Washington. The Board's reply of September 29, signed by Vice Chairman Balderston, indi cated that Mr. Patman' s point of view would be presented to the membership of the Open Market Committee. By this time, he said, each member of the Committee had doubtless received a copy of Congressman Patman's letter. Mr. Balderston said that he wished to record the fact that the request of Congressman Patman had also been presented to the Committee in formal session. Although he did not share Congressman Patman's view, because of the practical difficulties of conducting the desk at a distance from the New York financial center, he expressed the belief that Congressman Patman's suggestion should have careful consideration. Mr. Balderston then moved that Congressman Patman's proposal be the subcommittee that has referred to been studying the housekeeping arrange ments for the Open Market Account, pursuant to the action taken by the Committee at its meeting on March 2, This motion was put by the Chair and carried unanimously. Mr. Balderston stated a question from Mr. Robertson, In response to

that the intent of his motion was to refer Congressman Patman's letter to the subcommittee for its consideration with the understanding that in the normal course the subcommittee would report back to the full Committee on the matters which it had been requested to consider. Mr. Robertson recalled that at the meeting of the Committee held on September 14 it was noted that a subcommittee had not been appointed for the purpose of reconsidering defense planning for the Federal Open Market Committee. (This subject had been discussed at the meeting on July 12, 1955, with the result that Chairman Martin was then authorized to appoint a subcommittee for the purpose of making such a review.) Mr. Robertson went on to say that at the meeting on September 14, Mr. Sproul had suggested that he (Mr. Robertson) might do some advance thinking on the problem in order to facilitate the work of the Committee. In accord ance with this suggestion, he said, he had prepared a memorandum regarding defense planning for the Federal Open Market Committee, and he suggested that copies be distributed to all members of the Committee and to other Reserve Bank Presidents following this meeting with the thought that any the Committee members or other Presidents might wish to comments which to the Chairman of the Committee prior to the meeting make be transmitted on October 25. It was his further hope that it would be pos to be held subject matter at the meeting on October 25, in sible to consider the to appoint a subcommittee for event it might not be necessary which further work on this matter.

This suggestion was approved unani mously with the understanding that the Secretary would distribute copies of Mr. Robertson's memorandum following this meeting. Thereupon the meeting adjourned. Secretary.