January 24, 1956 FOMC Minutes

FOMC minutes

this matter was decided by a split vote 9 to 3, but that he felt he should not reveal how the individual members voted without clearing with the Committee, even though a statement of the action and the individual votes would be made public later in the Annual Report of the Board of Governors covering the year 1955. Chairman Martin in quired whether any of the individual memoers of the Committee or the Committee as a whole would object to his furnishing the Chairman of the Senate Committee on Banking and Currency with the information which Senator Douglas had requested prior to the date this informa tion was made public in the Board's Annual Report. Upon motion by Mr. Earhart, duly seconded, Chairman Martin was author ized by unanimous vote to furnish the Chairman of the Senate Banking and Currency Committee with the names of the individual members of the Committee voting for and against the action in question. Secretary's note: Pursuant to the fore going authorization, Chairman Martin sent a letter to the Honorable J. William Fulbright, Chairman, Committee on Banking and Currency, United States Senate, under date of January 21, 1956, reading as follows: "In the course of the questioning when I was before your Committee last Friday, Senator Douglas requested the vote on of the Federal Open Market Committee last December an action was 9 to 3. Senator Douglas asked and I stated that the vote voted in the negative and I demurred that I me to state who would be preferable to await the annual report thought it and would contain in a couple of months since it would be out discussion of the matter. a full fact that Congress, as you know, has "I had in mind the as the regular method for reporting established that procedure

"to the Congress the actions and policies of the Federal Open Market Committee with the votes and reasons therefor. However, I said I was perfectly willing to say that I voted for the action but that I hesitated to give the names of my absent associates before I had had an opportunity to consult with them. I have now done so and since no objec tions have been raised, I wish to report that those voting against the action were Governors Mills, Robertson, and Vardaman. Those voting for the action were, besides my self, Messrs. Sproul, Balderston, Earhart, Fulton, Irons, Leach, Shepardson, and Szymczak. "I trust that this is the information Senator Douglas wishes to have." At Chairman Martin's request, Mr. Thurston commented upon in quiries being made regarding the dates of meetings of the Federal Open Market Committee, which subject had been discussed briefly at the meet 10. Mr. Thurston said that he felt no special signifi ing on January be attached to a meeting date and that it would be prefer cance should on this question by stating that Committee able to respond to inquiries frequently. He added, in response to meetings were held regularly and he would not hesitate to state that inquiry from Mr. Robertson, that an tentatively scheduled for or next meeting of the Committee was the date unless the Chairman of the Committee would be held on a specified decided to depart from that day. or some members of the Committee suggested by Mr. Thurston that the procedure It was understood the dates of meet of inquiries regarding followed in the event would be ings of the Committee. up the problem of press reports Chairman Martin then brought and actions regarding discussions to give information which presumed He asked that Market Committee. the Federal Open meetings of taken at

Mr. Thurston also comment on this problem. Mr. Thurston referred to the report in the January 14, 1956 issue of Business Week which purported to give the substance of dis cussion at the meeting of the Committee held on January 10. He stated that he understood that a reporter for Business Week had been making calls to the Presidents of the various Federal Reserve Banks a day or so before meetings of the Committee and, while he was not suggesting the Presidents should not talk with reporters under such circumstances, it occurred to him that some might unintentionally provide information which the reporters would use in preparing stories purporting to tell what went on at the meeting. Mr. Williams stated that a representative of Business Week Magazine had called him before the meeting of the Open Market Com mittee held on January 10 and that he had talked with him regarding the business situation. However, Mr. Williams felt that the reporter should not have inferred in his story that what Mr. Williams talked with him about prior to the meeting was a portion of the discussion at the meeting. Mr. Williams expressed doubt as to whether it was desirable to talk with reporters in such circumstances. Chairman Martin stated that he thought there could not be a single rule which would apply to inquiries from the press but that he thought this was a problem which all of those attending Open Market Committee meetings should bear in mind. Riefler commented on the Martin's request, Mr. At Chairman the report of the Subcommittee on Defense procedure for implementing

1/24/5 -27 Planning for the Federal Open Market Committee, approved at the meet ing on January 10, 1956. Mr. Riefler stated that, to carry out the last paragraph of the Subcommittee's report, he would suggest that Mr. Vest be requested to prepare drafts of resolutions to be adopted either by the Committee or by the Board of Governors to carry out certain of the recommendations of the Subcommittee; that Messrs. Rouse and Thomas be requested to prepare guides for open market transactions by the individual Federal Reserve Banks and for training of personnel as sug gested in the Subcommittee report, with the understanding that they would consult with Mr. Leonard, Director of the Board's Division of Bank Operations, who had been working on defense planning matters for the Board and the System; both of these requests being with the under standing that he (Mr. Riefler) as Secretary would work with Messrs. material to be brought Thomas, and Leonard in preparing Vest, Rouse, before the Committee. suggestions were approved These unanimously. It was tentatively agreed that the next meeting of the Committee be held on Tuesday, February 14, 1956. would Subsequently, further Secretary's note: checking resulted in setting Wednesday, at 10:45 a.m. as the February 15,1956, time for the next meeting of the date and Committee. meeting adjourned. the Thereupon Secretary