December 3, 1957 FOMC Minutes

FOMC minutes

Mr. Hayes expressed the view that the Committee established its statement of policy at each meeting. If this was correct, he would interpret the renewal of the present directive as calling for some moderation from where we are at the time of the renewal. Mr. Irons responded that if this were done over and over, at some point we would reach a point where we had "moderated" to a very excessive degree. Mr. Johns said that in the past the Committee had not attempted to state the degrees of restraint in its directive, but whether we were on the side of restraint. He thought the discussion was making a very literal definition of the word "moderating." Mr. Vardaman said that in order that there might be no misunderstanding, it might be desirable for Messrs. Robertson and Shepardson to state exactly what they would like to see done. Mr. Robertson said that the Chairman's summary had covered his dissenting view. Mr. Shepardson said that he had made the statement that he Committee should continue about the present degree of thought the restraint,which in line with the comments by Mr. Rouse he would take moderated position from that contemplated at the to be a somewhat last meeting. could play with these words too Chairman Martin said that we trends and he had put Mr. thought we were talking about much. He

Shepardson in the category of leaning some in the direction of having no moderation in pressures. He inquired whether the Committee would be reasonably happy with the summary conclusion as he had stated it. In response to a question from Mr. Robertson as to whether it was necessary to readopt a directive at this meeting, Chairman Martin said that he thought this was necessary. In further response to Mr. Robertson's question as to how the phrase "by moderating the pressures on bank reserves" appearing in clause (b) of paragraph (1) of the directive was to be interpreted, Chairman Martin said that he thought the correct interpretation should be that this called for a continued moderating of pressures on bank reserves. Mr. Hayes said that he thought it would mean that we were to move to a somewhat lower level of pressure than in the period since the preceding meeting of the Committee. Mr. Robertson said that this was his interpretation also that basis he would find it necessary to dissent from and that on the action renewing the present wording of the directive. Thereupon, upon motion duly made and seconded, the Committee voted to direct the Federal Reserve Bank of New York until otherwise directed by the Committees (1) To make such purchases, sales, or exchanges, and allowof maturing securities, (including replacement for the off without replacement) to run ing maturities market or, in the in the open open market account System

case of maturing securities, by direct exchange with the Treasury, as may be necessary in the light of current and prospective economic conditions and the general credit situation of the country, with a view (a) to relating the supply of funds in the market to the needs of commerce and business, (b) to fostering sustainable growth in the economy without inflation, by moderating the pressures on bank reserves, and (c) to the practical administration of the account; provided that the aggregate amount of securities held in the System account (including commitments for the purchase or sale of securities for 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 Treasury, shall not be increased or decreased by more than $1 billion; (2) To purchase direct from the Treasury for the account of the Federal Reserve Bank of New York (with discretion, in cases where it seems desirable to issue participations to one or more Federal Reserve Banks) such amounts of special short-term certificates of indebtedness as may be necessary from time to time for the temporary accommodation of the Treasury; provided that the total amount of such certificates held at any one time by the Federal Reserve Banks shall not exceed in the aggregate $500 million; (3) To sell direct to the Treasury from the System account for gold certificates such amounts of Treasury securities maturing within one year as may be necessary from time to time for the accommodation of the Treasury; provided that the total amount of such securities s sold shall not exceed in the aggregate $500 million face amount, be made as nearly as may be practicable and such sales shall at the prices currently quoted in the open market. Votes for this action: Mr. Martin, Chairman; Mr, Hayes, Vice Chairman; Messrs. Allen, Balderston, Bryan, Leedy, Shepardson, Vardaman, and Williams. Mills, this action: Mr. Robertson. Vote against dissenting were the his reasons for Robertson stated that Mr. the wording of the for dissenting from as those stated previously same on November 12. adopted at the meeting directive

It was understood that the next meeting of the Committee would be held at 10:00 a.m. on Tuesday, December 17, 1957, and that tentatively the following meeting would be held at 10:00 a.m. on Tuesday, January 7, 1958. Thereupon the meeting adjourned. Secretary