April 15, 1958 FOMC Minutes

FOMC minutes

Federal Reserve Bank to operate the Account and that, if both the Chairman and Vice Chairman should be unavailable, the Committee would have authority under its by-laws to fill the vacancies at any meeting of the Committee. With regard to the other question, that the Interim Committee authorized by the Open it was suggested Market Committee resolution would have the same authority to elect a Vice Chairman and to fill vacancies that the a Chairman and its by-laws. Accordingly, no necessity regular Committee has under resolution to provide for a Chairman was seen for a change in the or Acting Chairman. being no question raised, the There from Mr. Hackley was accepted memorandum by the Committee. President of the Marsh, Assistant Vice At this point Mr. to join the meeting New York, was invited Reserve Bank of Federal emergency planning. of a problem of for discussion planning for at this point emergency Mr. Marsh said that entirely on the was focused almost open market operations System that was indicated if to supply liquidity, of the System ability on the responsibility emergency, and policy in an as a national the Government in reactivating take the leadership System to of the objective. and Treasury both a System which was market, securities as it related as far been internal had of the planning far, all Thus done about including little had been operations and to open market to prepare planning except in the dealers securities the Government

a list of dealers' offices and a list of key personnel. It had been recognized from the start that something more would have to be done with the dealers and that they would have to do more on their own account to fit into System planning and the over-all planning for the financial community. This planning, it was felt, should provide particularly for the System to obtain dealer aid in achieving the liquidity which the System presumably would be trying to bring about, and to get it as soon as possible after the emergency. This would apply also to getting the dealers' help in reactivating the Government securities market and completing unfinished business. The American Bankers Association had taken the leadership in developing an approach to planning for the com so it seemed important at this time to consider what mercial banks extending the System's efforts and planning should be done about particularly in view of the fact in the direction of the dealers, Defense Mobilization had issued a directive that the Office of in the field of money and the System broad responsibility giving time what plans the dealers It was not certain at this credit. arranged to keep duplicate made, but a few may have might have outside the city. records thought was to Mr. Marsh said, the In the circumstances, and probably representatives of nonbank dealers, call a meeting in order to banks also, of commercial the dealer departments of

have a unified approach. At such a meeting an effort would be made to try to get a good reception for the idea of planning in general and to get the dealers to appoint a committee which would work with the System in developing a coordinated planning approach. While there would be other possible approaches, this was the one that appeared best; it was thought preferable to an approach under which the System would do all the planning. Mr. Marsh suggested that it would also be desirable to advise the Treasury what was in mind in general terms, ask for any suggestions, and inquire whether the Treasury wished to participate. Following a discussion of the plan outlined by Mr. Marsh, the Committee authorized proceeding along the lines indicated, with the understanding that Chairman Martin would discuss the matter with the Treasury. It was also understood that Mr. Allison, Special Consultant to the Board, would be invited to participate in the program as it developed and that Mr. Robertson would keep closely in touch with develop ments. Martin then inquired whether anyone had suggestions Chairman other than in con in open market operating procedures for changes agreements, which of the rate on repurchase nection with the question no suggestions were at this meeting, and had been discussed earlier heard.

It was agreed that the next meeting of the Federal Open Market Committee would be held on Tuesday, May 6, 1958, at 10:00 am Thereupon the meeting adjourned. Secretary